Money on Tap Podcast Content

MOT 172  benefits of owning your own Business

Welcome to Money On Tap.

Money On Tap! Your personal finance headquarters where we bring out the professionals experience and some fun in what we call three dimensional investing, utilizing insurance brokerage and fee based planning. That's what we do on this show. We look at all sides of the issues, we bring a fully independent planning perspective to the table.

Welcome back. You are listening to money on tap. My name is Seth Crossman, and we got a big room of people here today. For starters, Mr. Benjamin Brayshaw. How are you doing today? Good, Seth. How are you doing? I am well, I am well, we got a good show today, Seth, and we actually have some guests. We have several partners here at Brayshaw Financial Group. And we've had both of these gentlemen on with us before they're a ton of fun. And for starters, it's Mr. Tony Scola, how are you today? I'm doing fine, Seth. All right. And Dan Michelon, joining us once again, it's good to have you back in the room with us, buddy. How you doing? Doing good, ready to share ready to learn. I like that. I've been working on that. Do you have that on your business card?

So what are we going to be talking about Ben, you said it's going to be good, we are going to be covering that self employed person. All the benefits about being self employed, having your own business, maybe it's a side business, but all the pieces that revolve around it. So today, you know, there's a lot of people out there that say, you know, I always wanted to own my own business, and what benefits would I have from that? And I think today, we're gonna cover a bunch of those. And I also think for the person who is self employed, we're going to talk about the benefits that they're actually either enjoying, or maybe ones that they're maybe overlooking. Yeah, before we get there, though, we have a couple of things that we want to make sure we cover. First of all, you can reach us at 855-226-8551, or info@yourmoneyontap.com.And for those of you that have been listening in reaching out and connecting, we want to thank you, it's a lot of fun to put this together. But it's even more fun to be able to sit down with you and find out where you're at in your in your financial journey, and how we can connect and how we can you know, bring some organization or some ideas and really do some planning work around this idea of retirement. Whether you're in that accumulation phase, or that distribution phase, wherever you're at, it's a lot of fun. And we really appreciate you reaching out and connecting with us and and for the rest of you out there that are just liking us in podcast land and listening and subscribing out there, we thank you too, because those are all things that you just give back to us here at Money on Tap. And you know what? It's appreciation. It's appreciation time here.

We're gonna segue right there into money in the news.

All right, folks, did you know that the Dow Jones Industrial Average has reached a milestone? And it's unbelievable - 125 years of Dow Jones, and we've done, Gosh, I it seems like we do a Dow Jones show at least once a year, at least we did it at the 30,000 mark the 20,000 mark, and you know, somewhere between there I think as well, like one underneath there, too. We did one at 18,000.

But it's it's tremendous. And it's incredible. It's so it's the longest storied index that we have available. And it's always a fascinating topic. And one that, frankly, always comes up whenever we're having conversations with clients too. Yeah, you know, I think everyone, you know, bases the market and if they had a good day or a bad day in the market, on the Dow, you see the Dow go up and you're like, oh, the markets doing good today. And then sometimes you look down your portfolio like oh, that's not exactly what the Dow is doing. You know, it's funny, because when you're, you know, a lot of people don't realize, you know, the Dow is, you know, the 30 large I wouldn't say largest because I don't think they actually officially do that anymore, but 30 large US companies and that's not a huge pool of companies. That's exactly what ; a lot of times people you know, absolutely they look at the Dow is a representation of the entire market and they seem to be shocked when I challenge them to tell me how many companies make up the Dow, but as you mentioned, it's only 30 and they're ordered. If you ever ask anybody to name some of the Dow companies, it's really amazing. They don't have any idea. They can't even name two or three. And that's hard, you know. So that takes away a lot from people's understanding what their portfolio is doing based on what the markets doing. I think for a lot of us, it's our first introduction to the market and some form of fashion too, like and just begin back sitting here right now. But in fourth grade, my teacher, Mr. Bibb, shout out to Mr. Bibb. But he would post on this chalkboard every day, the Dow Jones Industrial Average. And for all of us, you know, in fourth grade didn't mean a whole heck of a lot. But, you know, it sticks with you. And it becomes something that serves as an introduction to the market for a lot of us. And if you think about the number, the actual score the value of it, you know, in understanding today's the 125th anniversary, you saw some pretty interesting facts around that. It first crossed 100 at 1906. First crossed 2000 in 1972. Then cross 10,000 in 1999. And in the short time relatively since then we're at over 34,000 today. Yeah. I think I missed some of that in my life span. But it's crazy, though. That is a that's a big run. Well, apparently whatever Mr. Bibb was doing in fourth grade, he did it well, because Dan, you are one of the finest financial planners I have the privilege of sharing the mic. And you can pay me later for that. So we'll move on to --

You know, I don't think it would be a complete show here at Money On Tap, unless we were to just, you know, do a little bit of name dropping here and today, it happens to be Disney.

We are; I mean, we're like all Disney families here. Tony, are you a Disney family? Yes and no, my kids have had quite a bit of exposure to Disney throughout their life through their moms. So do you own Disney plus? We have Disney plus in the household. Yes. Okay, so we all do. You sounded like you would like we like we caught you at McDonald's eaten fries right there. What's wrong with Disney Plus?

Well, you know, my son in law happened to be at the house and had wanted to watch Mandalorian and we did not have Disney plus, now we do. Now we do. Interesting. You know, every time I think of Disney, I -- you know, I just see dollar signs, not dollar signs coming in. It's like a big fat negative right in front of every time I see Disney. I see the name Disney - I just think expensive. Do you guys have that feeling? I certainly have you know, took  a trip there with well now 15 year old but the time was like nine.

Yeah, that was brutal. That was a heck of a trip.

I think we should come up with a show like how to do Disney on a budget. Don't. And then at the same time, I'm like that would be an epic fail because that's not possible.

Define budget, alright, let's get into a full day at Disney. I'm sure you can save a little bit. So the reason we're all talking about this everyone who's listening saying why he's talking about Disney. Disney has been in this news a number of times, but today they're in the news for introducing the $100 sandwich. I mean, I don't know about you, but dropping 100 bucks at Disney sounds cheap. That's expensive.

That is really only $100, probably rounded down just make us feel better. And the genius of Disney is that they're marketing it - they're promoting it as one of the world's most expensive sandwiches. So they're not even apologetic about it. No, and people are gonna wear that like a badge of honor because they you know they went to Disney and they got the pym-ini. Which is the family sized pym-ini. So it's like a Panini, but it's like a pie. And you  chop it up like pizza. And hopefully, you're able to feed a family of five, which I guess is relatively on par. Right? Because you're doing 20 bucks a head at that moment. And that almost seems like a deal. Yeah. In all fairness actually, the article stated that it's supposed to serve up to eight, in which case it is a bargain. Yeah, well, it does. There's two articles that say one's a five one's at eight, now you know I'm looking at this thing saying to myself, the single serving is only 14,99. If I do the math, I'm kind of ahead of the game. But I think what's really interesting about this is that I was trying to figure out before I even got to down in the article thinking about what could possibly be in the sandwich. I was like, what could possibly be in the sandwich? I mean, this has got to be I mean, and then I go look at the first the first. The first ingredient is salami.

I was thinking we're gonna like have you know, I don't know, black truffles and I mean something like you know, like, very you know, flowery and foreign and you know, bring it in and gourmet. Yeah, I was gonna go right. It's like, salami, Rosemary ham, maybe that's what they're doing, you know, and you know, provolone, some sun dried tomatoes, and whatever, it can feed a bunch of people, supposedly. But at the end of the day, I guess if you're buying the $100 sandwich, you don't want to sit there and look at your kids and say you better eat that.

Especially if it serves 8. Right, exactly that's a good point. Yeah. How does Disney go wrong? It's like you buy you buy your children food, and they just don't eat it.

Yeah, I don't know how the salami is gonna hold up in the Florida heat. That's that's a rough one. Good point. Gosh. All right. Well, next up, we have an article from the Wall Street Journal here. This article is by Melanie Evans. And, you know, we're doing this article, because I think honestly, I don't think any of us are really excited about it. I mean, not to be a downer here. But I think it awareness articles really interesting here. But Google struck a deal with the hospital, HCA healthcare Incorporated, a stock that I have owned, and it's to develop an algorithm using patient records, to provide better health care. And, you know, basically just trying to consolidate and build all around that entire technological piece. Now, I know that there's companies out there that do some of this stuff, but it' Google, and I don't know about you, but it seems like Google knows everything. And I really don't want them to have my health records. I don't know how you guys feel. Yeah, I agree. It seems a little scary, but you know, they, purport to offer significantly higher efficiencies and really streamline the healthcare system. But, you know, as usual, a lot of data out there, and we gotta be mindful of exactly who's got it. Or who's mining it. True. What do you think, Seth, you all for this? I love that big tech is out there under a this idea that there really are helping people. And, there's a need there for you know, doctors to be more efficient, there's a shortage in the healthcare world. And, we've got the, you know, the population story of, you know, our aging population that's coming through, technology is  going to have to be a solution. But then when you put Google on it, there's just a part of me that definitely wants to take a step back and say, let's just put a pin in that buddy, let's just hold off.

Google also came up with a deal with the Mayo Clinic on storing medical records and doing some algorithms around that information as well, which is being pushed out into this article. But I had zero awareness of any of that stuff. And, you know, there's other tech giants out there too doing this, which is, you know, Microsoft is involved in trying to identify various IT development strategies. And I mean, all the big players, I don't know about you guys, but I, every time I turn around, I mean, I know these companies are large. But should they have their hand in every industry, every sector access to all this information? I mean, it's really it kind of kills me that every company has a piece of almost every pie, which makes them really not vulnerable to like, they're like, "Hey, listen, we'll just shut you all down," you know, and we can shut the whole economy down a, significant amount of concern around the control that they can acquire by holding our data. Right now, I've seen it as a double edged sword where, you know, they can justify it by saying that it they're offering better products and services based on the factors that they've been able to mine from spending habits, travel habits from traveling, you know, following your GPS and things like that to make things more efficient or more cost effective for you, but now you're getting into healthcare.  And even if it isn't a HIPAA privacy violation, whether it's not specific to you, you know, where where's this data going to be able to be used that to other ends of profit that you know, you haven't authorized? Yeah, where do we, as a consumer get to say under our HIPAA rights, that we don't want Google to have this information? I mean, that's really it's like where are you storing it? Well, and what are they using it for? I mean, even if it's innocent enough in there if they're going just for say profit, I liken it to you know, you buy a car and they they put the dealership sticker on your car or your license plate frame and, you know, it seems innocent enough, but you're providing free advertising from a product that you purchased and I see this as a very similar thing. You're you're going for service, you have a healthcare issue. And and they're basically using as an opportunity to mine data to find more ways to profit from from something that they haven't paid for. It's just another series of disclosures. We're gonna have to read through and sign off on as we enter a medical facility? And do we read them? No, nobody does. Yeah. So this is one of those areas that I think really needs some exploration by a lot of leadership, Seth, I mean, I pass this over to you a little bit. But I mean, at the end of the day, our whole economy, our whole world, every sector, every piece of our lives is just being, you know, brought together and at what point in time, are they going to connect all these points together with things we don't want anyone to know? And we have a right to privacy. You know, it might not be that we have anything to hide, but I mean, everyone has a right to say: "Hey, I don't want this information out there." And when is it going to be leaked? And when is someone going to hack them? And how is this going to happen? The article goes on, and in some level of fairness, which I'm not giving it, but they do go on to say that, you know, during the pandemic, that HCA had used its own technologies to monitor things and kind of the bringing together of these algorithms and everything else somehow impart with Google has helped prevent the spread of COVID-19.

And that they were able to provide better treatment and prevention. So they're acknowledging there's some benefits to that in the article.

And I can appreciate that. But it can be done with somebody other than Google, they've really shown their unwillingness to really budge on this online privacy and marketing piece, when you take a look at, you know, the social media and all these other things. What are they willing to do? What lengths are they willing to go to, to really keep you in the loop keep you buying keep you attached to them? And that's their model, that's their, that really is their how they make money. And to kind of think that there's like this Chinese wall or whatever, between, you know, the profit center of Google, in this idea over here, we're here to help.

You know, maybe those ideas start that way, but they've shown time and time again, that they will come back into the fold of Google and it will not be in the interest of the individual, it will be in the interest of you know, whoever's, you know, paying the most money out there, and frankly, that's the scary thing. It's like, you know, it is it's really a unfortunately, it's like a setup for a bad sci fi movie. Folks, you are listening the Money On Tap, that's gonna do it for us in money in the news, you can reach us at 855-226-8551 or info@yourmoneyontap.com. When we come back from this short little break here. We are going to get into the benefits of owning your own business. It's going to be a lot of fun. We're going to be talking side hustles we're going to be talking, you know, retirement plan and all the things that people are doing to augment income. And, gosh, I really cannot wait to get into the meat of this show with you guys. You're listening to money on tap. We'll be right back.

Folks, it is so much fun for us to bring you Money On Tap. My name is Seth Crossman, and I am one of the hosts here at money on tap. I'm also a financial planner. That's what we do. That's what Ben and I do. And the fun part is, is we get to have this radio show we talk about important things that we think you need to listen to and be aware of to help raise the bar as far as your financial literacy. It's a big part of what we're trying to do here. The other thing that we're doing here as well, as financial planners, we are welcoming you to come and call us and to join us at brayshaw Financial Group, experience what complete Wealth Management looks like. Let's take a look at all sides of the issue. Get a three dimensional perspective and put a plan around your next step. It's so critical and so many people just leave this part out and then they find out later if I only would have known. Hey, don't let that be your story. Give us a call at 855-226-8551 or info@yourmoneyontap.com. If you have $250,000 of investable assets today, our plan is free to you. We think it's important for you to know the facts and have a playbook so you can have a successful retirement. Give us a call at 855-226-8551, thanks for listening.

Now back to Money On Tap  with Ben and Seth.

Welcome back, you're listening to Money On Tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com. And it is a, it's gonna be a fun one for you folks. So hold on to your chair, as we get ready to go down the road of benefits of owning your own business. And it's a big topic, because there's so many neat things out there and stories around, you know, entrepreneurship and creating a side gig, side hustle, you know, all these kind of terms that are out there right now, you know, those kind of get tagged and pinned into the, under the fold of millennials a lot of the time, but it's not a concept that's foreign when we talk about people, you know, working for, you know, a company or something like that, and they're just like, Hey, I really have this need to either have another income for my family, or I just have a passion around this idea over here and launching their own business.

And there's quite a bit of information out there if this is you. And let's say that, you know, the kids have gone to college and you're trying to create a second income in the home, or maybe a third income in the home. That's a common theme. But there's just a lot of great information out there as we kind of started looking deeper into the topic and resources for people that are trying to find whatever that side gig might be or where that that business idea for you might be? Well, we're gonna try to keep this above and aboveboard today inside gigs.

Because, you know, the thing is, is the thing about a side gig is that, you know, there's always people doing stuff on the side, like, you know, sell a little bit here at Craigslist. And, you know, I made a little bit of cash. And it's not really reportable in my mind, you know, I mean, that we're talking about, I think this is what we're talking about is people who are saying, I want to engage this new entrepreneur kind of experience, or I'm going to open up my own business, or I'm going to do something and I'm looking for - to do this legitimately, I'm looking for, you know, this is going to be a company, and I'm going to sell something, I'm going to service something, I'm going to provide something of that nature. Now, there's a lot of people out there. And I've got, you know, I've got friends, I got family, people who, you know, they're always buying and selling stuff on eBay, or they're, you know, run around doing something for a friend as a favor, it's like a few 100 bucks. And, you know, there's plumbers, electricians, right, we've found ourselves in a bind, and we had a, you know, change a faucet and said, hey, listen, I know you're a plumber can just come over and do it here, hey, here's a $100, you know, I mean, that kind of stuff happens. In America, there's a lot of that stuff. You know, there's a lot of Americans out there doing that piece. But I think what we want to chat about today is, you know, really the, the crux of like starting something very intentional and, and trying to run that. So you know, for the person who either is thinking I want to own a business, or you already own a business, or you're looking to really create something, and build into a passion because you have a job, but you're not planning on leaving that. This show is for you.

So, I was thinking today, you know, as we were walking into, you know, Tony, I was thinking about your wife's company, and I was wondering if you could just share a little bit about that, because that's a pretty well known company. And probably a lot of our listeners here on the East Coast won't even have heard of it. Been there know about it? Sure,yeah. So she's  a representative for Rhode Island Fields. And the way they're set up is, you know, kind of that motto of, you know, being business for yourself, but not by yourself. Everybody owns their own business and they build it up, but it's a multi level marketing platform and, you know, that has kind of its own stigmas and things like that, but it's a legitimate business and it's a really great opportunity for people to get their feet wet in entrepreneurship, business ownership, and-- but she doesn't come and I was actually leading a totally different road, but she doesn't come from not owning her own business. Like this wasn't new for her because I was actually thinking about the business prior to that because-- Oh, right. Yeah, no, she spent a lifetime I mean, as a as a young person in college, she ran a cleaning business and that grew and then for 22 years owned a children's store that was a legitimate retailer. Before you know, the days of Amazon making it more challenging to be a retailer. But then, you know, she got into I think what you're referring to as her cupcake business. Yeah.

So I guess we'll go on to that. I mean, and that is kind of, I think what you were talking about, it was taking something that you had a bit of a skill with, you know, doing it for friends and family, and it kind of snowballed into, oh, you know, can I order something and it ended up really turning into a business that she had a tough time getting out of, because the demand was so great. Yeah, no, I know, I mean, to the point where, I mean, I, I'm not a cupcake, you know, kind of sore, but to the point where you'd mentioned it to my wife, and she's like, Oh, I know, that company. Like, it was just, you know, very interesting about how that, and I would honestly say that your wife is like a serial entrepreneur. Absolutely. Yeah. And she's, she's, she's very aware of that it always has an idea of, you know, something she gets involved within, a lot of times it comes from charity work, I mean, the cupcake thing, that's how it got revitalized recently was she started providing it for essential workers, and as a reward, you know, go online and submit somebody to win cupcakes for their, you know, the hospital department on a certain floor and things like that. And then through that, it just blew up again. Yeah, so it's, and, you know, so it brings me to my kind of the first point we were chatting about for today, which is, you know, freedom, you know, we use the word freedom in the business world, I'm thinking to myself, you know, what, honestly, we're all self employed here, we all work together, where we own this company. And, you know, it's like, when you think about, it's like, yeah, there are some freedoms, but there's a lot of freedoms you lose. So I don't know about you guys, but I think it's a not necessarily a pro, but it could be con too. Yeah. And that the notion of paid time off, you know, that that evaporates quickly, when you're doing your own thing, you measure a day differently, you measure your time differently. And it just brings a different value set to you know, how you go about your daily business. And it's an eye opener, but I think for people that have taken the plunge and I've went from a kind of corporate America job to run my own business, and, you know, you go into what kind of you thought eyes wide open, but there's some some quick realities that set in. But all in all, if you have the mindset for that, and you've really made the determination to be your own boss, then I think that is, it can be a tremendously rewarding experience and really the direction to go, but there's, there's a lot of understanding that you have to appreciate that-- had to sugarcoat it a little bit, a little bit, you know, I got sold a few things.

But the truth of it is, there is freedom in there, there really, truly is. It's, it's a balance, though, between the freedom, you know, you can take in the responsibilities, you know, you got to meet, and you always have to kind of weigh that and make the best decisions for yourself and for your family. And, you know, but I can tell you though, on a personal note, I went through some health struggles with a child and, and having the ability to, can make my own schedule during that period of time, you know, was was a lifesaver for my family, you know, my wife was employed and kind of had a different situation there. So the ability to, you know, use her schedule time off, and the freedom of my schedule to patch together a day was just absolutely critical. Yeah, that's definitely was a tough time. And I, you know, I was good.

You know, I think I think for a lot of people who do own their business that are listening, you know, a lot of us tend to fall into traps of just all in or all out, you know, and we kind of found a fall on those lines. And, you know, this is a reminder for you, if you're listening and you own your own business, you should have some freedoms, you know, yourwife or husband who's saying, Hey, listen, when you can take some time off, or what are we gonna do this? If you're getting those nudges, maybe listen to them a little more.

Yeah, I think that's important; that work life balance. It's easy to lose sight of it, but it's a critical thing.

Yeah, that can be so hard to do.

When you are the person that is responsible to, you know, your family, and that tie in that connection is so deep, that, you know, to say that I'm going to step away from the work that is providing for or is accomplishing our goals and taking care of our family's needs. It just is not it doesn't connect, it doesn't make sense for our brains a lot of the time to say, take a break, come back, you know, when you've had a little bit of time, it's going to be okay. And the benefit there can be that fresh perspective. The other benefits, I mean, we could add an item to those with you know, the family and the connections and the relationships that are really meaningful to us, and that being a critical component to the why we do what we do as an entrepreneur as a business owner is

Wow, all right.

 Number two, I came, you know, as I was kind of going through this, this is one of the things I came up with in a--you know, for a lot of people who are looking for that aren't really self employed, they're working a regular job, you know, this is a wonderful thing to have, if you have, if you work on building a business, if you if you work on having something like, even if it's just a little bit of revenue, if you did lose your job, if you did have something, you'd have something you could fall back on, you know, some of the greatest businesses and, you know, huge businesses all started from people who lost their job, and were working in another role, and then that just exploded because they couldn't find another job to replace it. So they just kept pushing through that, I think having something to fall back on is something that we don't have a lot of and we need to have in this country is just the ability to be able to protect ourselves financially, and so forth. So just one thought.

It sounds like you're talking about diversification.

That's another word for it. It'll be interesting. I haven't seen any stats on it, but I wonder how many new businesses have been born out of this pandemic, you know, people that, you know, had time on their hands, not by choosing to do so, but were, you know, forced to be at home, and I'm sure a lot of terrific inspiration came out of that, I actually have heard of, I'm not sure if any of you guys have heard the term, but COVID clarity. And that's folks that I know have who have actually made career changes or transitions to self employment to pursue their passion, based on the situation that happened last year, with a lot of their job changes to work from home, sometimes losing jobs, or the fear of losing a job, and realizing, you know, life is short, and you know, I have something that I really want to accomplish in life, and maybe now's the time to do it. So they used it as an opportunity to make the leap, and from what my understanding the vast majority, people don't regret it one bit.

Tony, you bring up a really great idea. And there's the other side of the coin here for our business owners that are that have the employees that maybe there's a concern about losing the talent, you know, and that can be really challenging in terms of developing that talent within your organization. And feeling like, okay, that is something that is now I have I have some ownership in or, you know, that person, I don't own them, but I feel like they're responsible to me now, in some way, shape, or form. And there's actually some great research out there, around the benefits of promoting that outside, you know, that secondary income, you know, for one, the employees love to be able to not feel like, you know, they're owned by their job, you know, these, these other alternative entrepreneurial opportunities can spur creativity, you know, the employees come back so much more happy.

You know, maybe they see that the grass is not greener on the other side, and that they really, you know, that side gig was not really what they're cut out for, and they come back with more of a passion in doing the work that you offer, and that you've developed and in and have them therefore, and then you know, they can also bring back a lot more skills and professional connections, and, it can prevent burnouts. So just some others, you know, some other things to consider when, you know, this topic might come up and you happen to be the employer. You know, one of the things that comes up fairly regularly, you know, in the conversations we have with people in retirement and talking about retirement is do you have a side job? You know, I mean, is there something else you're doing? Are you planning, when you retire from your kind of primary workload? Do you expect there to be a secondary piece of income, whether you're going to work as a consultant, you know, at your current position, are you going to do you have a little bit of a side job, side hustle, whatever it is, that is going to bring supplemental income in because those things are, I would say, the majority of the time, I would say that, I'm not thinking like 80% or 90% of the time, but I'm thinking 50% to 60% of the time we sit down, I sit down with somebody that says, Oh, yeah, when I retired, well, I'm not gonna be fully retired, I have this and I, you know, I work for the women's whatever, or I, you know, I run this or I'm planning it, I work at a golf course, or, you know, they're all doing something. They don't want to sit at home and read a book all day. I mean, they want to be doing something, there seems to always be some secondary income. What do you what do you what do you think? Oh, absolutely. I mean, that's one of the things I talked about as well when I do retirement planning is Is there anything that even if it's not a business or a hobby that may generate some activity, I'll use, you know, personal stories and examples, my mother - my brother had got her into painting as a hobby just to occupy her time and give her something to focus on but next thing she knew she had a bunch of painted canvases laying around her house that she couldn't give away fast enough because she was just really got into painting. So she ended up renting a table at a flea market and putting her paintings out and was shocked to find out that people were interested in purchasing them. And then that kind of steamrolled into our, you know, rolled into her learning how to get on eBay, as you mentioned earlier, and has now an online store for it. And so, yeah, basically is a legitimate artist. Yeah. And it's something that never would have considered and is actually generating, you know, some combination of an activity or retirement activity that's keeping our busy and stimulated, but also bringing in some supplemental income. And no, I think that can happen quite a bit.

Yeah, there's actually an article out there, if you're in this, you know, this phase are moving towards that retirement and kind of looking, there's a article out there 25 side gigs that you can start in retirement. And as I was looking through that, I was I was pretty impressed. I mean, there's, you'd be surprised what the what the call or the need is out there for things like an Interim Executive. Not everybody has to be an Uber driver, even though that's a really popular one.

How many times you get into the Uber, right? I've never done a Lyft before, but I got into an Uber and be like, so what do you do? You know, like, it's, but that's what they're doing. They're, you know, like, You're, you're like, hey, so what do you do for a living? They always have a job. Oh, yeah. I'm actually on my lunch break. Or I'm, I've had the funniest conversations with people that are like, doing like, legitimate, you know, career like high end career jobs just being like, yeah, just killing some time figure I'd make 20 bucks.

That's funny, right? I mean, I bet you most of our listeners, have you ever not asked an Uber driver, what they do, you do have some amazing conversations. And it really is the easiest side job you could possibly have. If you ask anybody. Do you remember your worst Uber experience? Everyone does.

You know, my, my brother in law, was actually a taxi driver. Back when there were taxis, and he was just over the other day having dinner with us. And, boy, some of those stories, oh my gosh, some of the stories that he has to tell. And I think that would be that would be the same. Something similar to if you're out there and you're connecting with the public and meeting their need, wherever they're at, you're gonna have some some things that you come back and you can have some dinner table conversation around. You know, I just think about all the different side jobs and stuff. You know, I know I'm, you know, I scoured the article, it's just kind of interesting, like people who are disc jockeys or you know, like on the side web developers who don't even do really web for job like they they do it, you know, use WordPress or whatever. And, yeah, took a class or two and where they go, Yeah, but I thought it was interesting. There was one job that I was kind of like, I might be interested in doing that. Like when I'm like done because I want to not waste my time. And it was

it was a I just want to get the official title tax preparer. I'm sure it was a tax preparer or the pen. Oh, no, no, no rumor. I actually was interested me, which was a city guide writer.

Just to tell you about the city like I like it, I was like, no, no, I can do that. Maybe, I don't know. But I could see you doing that. Yeah, history is kind of one of your passions. And that would be I could see you doing that. Like, hey, you know, go over here. Do this. See this? Yeah, I can see myself doing that. I just go experience the city for free just to go write it.

You never know. You might see me there one day, Seth. Ah, Ben, I have too many words to share how I  can't even get into how I feel about that.

Where do we go next? We go to, we're gonna take a quick break here at Money On Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. And we're gonna come back and we've got more to share around some of the benefits of being a business owner. If you have a passion for being an entrepreneur, if you're heading into retirement, if you're coming out of being full time parent and needing to take a look at another income. There can be so many things that you maybe haven't even maybe your business already you haven't even explored. Some of the things that we're going to be talking about is the benefits but we can't wait to share them with you. We'll be right back. You're listening to money on tap.

Call us today at 855-226-8551 and get your free consultation with Ben Brayshaw or Seth Crossman, or any one of our partners and find out what's going on in your plan.  Your estate plan your financial plan for what you're planning at all. If nothing, get it fixed. Get it right. Get it done today. Give us a call at 855-226-8551 and

Now back to money on tap with Ben and Seth.

Welcome back, you're listening to Money On Tap, you can reach us at 855-226-8551, or info@yourmoneyontap.com, and we are talking about benefits of owning your own business. And, you know, we had some fun kind of discussing just different scenarios where life meets us. And we have, you know, people discovering, being a business owner through COVID. And you know, that that need based, I got to find something and, you know, this thing wound up being the best thing ever, for me, because it completely blew away the income I was making before, there's, there's quite a few stories about like that. And that's very attractive, I think, for a lot of people that are looking to become their own business owner. But maybe you happen to be a business owner already. And in, you just really haven't taken a look at exploring what some of the other benefits are, in terms of, you know, this next year, and in possibly your tax filing, why? Why would being a business owner be a benefit to you? For for your taxes.

You know, Seth, this is probably the biggest reason that, you know, if you're listening and you're a business owner needs a delicate hand, because I have I mean, just even honestly, recently in this last year, because it's been a different year, right, so that businesses are running differently. They're functioning differently. They're managing their business in completely different roles. There's new expenses that haven't been endured by companies before, like, I mean, I don't know if you guys remember, but I remember I was looking for additional for an additional computer monitor from my office and like, the entire staples line out just lineups, like said sold out, sold out, sold out. And I was talking to a guy he's like, Oh, yeah, he goes, we had companies just ordering monitors and shipping them to people's homes. And then I thought about that, you know, I mean, you know, maybe I should have bought into monitor stock, I don't know. But you know, the the interesting part about this is that there has been a ton of new expenses and companies just to keep themselves going separate from the revenue that they were just trying to keep maintaining. So, you know, I'm just thinking that there's a lot of things I mean, with it, as a self employed person, there's a lot of write offs, you get to itemize. Okay, so we talked about taxes, and if, if you're starting off, you know, basically a little entrepreneurship thing, you know, and you're married is that there's an automatic deduction of like 24,200. And if you're single, there's an automatic deduction of 12,100. So you have to create enough deductions above that number, where you start itemizing, where you start writing down a list of everything you get to deduct and once you cross those thresholds, then your CPA says, Yeah, we want to do what we call a Schedule C, okay? We want to write down everything that you're doing all the tax items that you know, cost you money in your business. And that's when you start actually getting financial benefits for having your business. Now, if you have a really small business, you may not go over those natural automatic deductions, because when Trump raised that automatic deduction limit, that cut out like a ton of Americans to the point where only 7% of people are actually itemizing and doing the long forms. So, you know, that brings a lot of perspective to things. But if you're just starting out with your business, knowing that those numbers have to be reached, and so forth, you can start swaying your taxes to be itemized one year and not itemize the next year. Like, we have people to do that with charitable, you know, donations, I'm thinking about people who have done, you know, the deferred annuity gifts, you know, and where they will, you know, they'll shove three, four or five years worth of gifting all into one year. And they'll, you know, they'll say they gave $10,000 to charity every year for  the last decade, we'll say, Hey, listen, why don't you just put it in here. And we'll, we'll take the deduction of, say, five years today, 50,000 bucks, we'll donate the money there, they'll distribute it out over the next five for you. You get the deduction on the whole 50 itemize. And the next year, you'll just get the full $24,000 as if, you know, whatever, but you didn't happen to do the 10,000. Because the $10,000 you know, charitable gift never put you over. Okay, so we'll do that. But you can do the same thing with businesses. I mean, you can say, Hey, you know what, I'm going to buy all my technology stuff in every other year and force myself to make sure I go over and, you know, try not to another years. I mean, there's all sorts of ways of doing it. But with this pandemic, I mean, planning your taxes and understanding your taxes has only made it more relevant.

Oh, completely agree. I mean, prior to that, I think a lot of those self employed folks that I work with it We're looking at deductions a big thing was equipment, heavy equipment vehicles that they could take depreciation over a period of time and sometimes purchasing new equipment just to continue on being able to qualify getting the depreciation and now as Ben mentioned, with the work from home a lot, there's you know, there's a whole other opportunities for for depreciating purchases, whether it's, you know, technology and as you said, planning it out whether or not you're going to buy it all at once, or spread it out over multiple years. So you can, you know, qualify for a higher deduction or whether or not you want to save that up for another year and take the standard deduction, So, definitely can get creative with it.

Yeah, we did, we did a show a while back about people who kind of like, you know, got the PPP loan, and, you know, it wasn't used for employees, and they were buying stuff, you remember that stuff, some guy bought, like a Lamborghini or something crazy. It was just crazy. You know, and, you know, but you might, you know, I mean, different people in different scenarios, they had tough, a tough quarter. You know, I know, I know this from personal circumstances, but, you know, from a client, but they had a tough quarter PPV money came through, it became a cash flow, revenue business pick back up, and then it surged. And then all of a sudden, they had extra money. And we were talking about it, we said, Listen, you know, this is this PPV, money was for you, under Wellington, you know, use this to frontline your business to protect it from those drops in the future, what would you need to implement with those dollars today, so the next time there's a scenario like that, you don't have that law, because that PPV money may not be there. So use that to business, ensure business, protect business build, you know, start  gating your business in a way that, you know, you have walls up that protect yourself from that kind of stuff, but tax; taxes itemization how to handle that kind of ideas around that give us a call. I mean, this is something we work with business owners constantly on so we've heard how other people are you utilizing the tax laws, not not manipulating utilizing the tax laws for their benefit, we might have some wisdom to share on with you, because what I find is that people want to sit down with their CPA like April 14, you know, the day before filing or in this year, you know, may 14, or whatever. But, yeah, they're all right, they're ready to go out to coffee or lunch with you. Now they are on their hand, yes, taxes are filed, they're free, they're going on vacation. Yeah, you want to spend all the time in the world, now's the time to get in touch with a CPA, now's the time to plan for next year, and get things ramped up. And, you know, this is a constant conversation with people is getting to sit down with your CPA and your financial advisor and get that stuff organized. Well, there's so many different places that people can go to try to find that. And actually, while you're saying that I just had an idea, if your CPA is doing a lot of people's taxes, he or she's actually probably seeing a lot of these side gigs come through or side hustles come through, and would maybe be a person that you'd want to talk to you and say, Hey, who are you seeing? Or what are you seeing that's actually successful, because there can be a lot of places out there, people just dump money and don't find that they're successful, there's, there's a certain kind of person that you really do need to be able to sit down and work and be able to focus and try to get something like this launched. And, you know, I've just seen a fair amount of people just kind of like, go from one thing to the next and think it's gonna be the next you know, kind of get rich quick deal. And what I've seen more successful is a lot of people just doing some, you know, client like customer service type of activity where there may be a tutor or they're, you know, an elder care online educator, kind of a thing, helping helping that population with some of the the challenges of COVID there's some rural needs out there, and that's a great way to connect and maybe find, find what's gonna work for you, folks, you're listening to Money On Tap, and we've been talking about side gigs here, we've talked about all not necessarily side gig side hustles but business owners benefits of owning your own business. And we'd love a chance to share our experience with you here as business owners and and frankly, I think all of us kind of have an entrepreneurial spirit about us that we just, that's one of my passions is really helping people in those businesses as business owners and and, and then I think it I've constantly having conversation with you around these ideas as well. And Tony, you've got a ton of experience, yourself and in your family with developing business and, and, and in being business owners in different areas. So it's a it's a it's a lot of fun. It's a ton of information, a wealth of information we have here ready for you. You can reach us at 855-226-8551 or info@yourmoneyontap.com, folks, we've been talking about benefits of owning a business. And you know, one of the things that that we see a lot this is very common with, with clients and families is there's been a stay at home parent, or primary parent that really has taken some time out of the workforce and getting, you know, the kids kind of moved on and getting back to the workforce. This is one of the places where, you know, maybe the skills don't translate as well into corporate or some of those other areas where you're, you know, putting your resume out there. Owning your own business and buying your own business can be one of those, one of those great opportunities at this time. And, and speaking of buying your own business, Ben, I want to ask you, how's Tim doing?

Tim's doing good, Tim's doing good. He's talking about my brother in law, Tim Johnson, he has a company, it's first choice Business Brokers, it's called first choice, somebody you can get in touch with Tim is a, he's an amazing person who has gifts of management that are unlike almost second to none. I mean, the guy has worked for major corporations. And he got to the point where he got tired of working for other people, but he's so organized, he can almost step into any business no matter what it is, run it more efficiently and more effectively. And then he has sold the business. And he has done that so many times that he actually started helping people buy businesses, he works with him. And he helps people find businesses and he helps actually pair them with the right kind of business for them. Like, they might say, Hey, I'm looking to do this many hours, I'm looking to do this, these are my skill sets as well. And he has so much familiarity with owning so many businesses and having done it successfully, he not only helps them find the business helps match him up with the kind that would they be most likely to be successful with. But take the skill sets that they have, and try to match them up with businesses that are undervalued because they lack those skill sets. So that they can really maximize and it's really very interesting. And so you know, if you're listening to this show today, and you're saying yourself, I don't have a side hustle, I don't have a small business, but I'd like to have one and I do need some tax deductions. And I'm looking to have that business to be able to facilitate that, besides owning an apartment and renting it out or something like that. Give us a call, we have a contact for you. We have somebody who can can help you. And I mean, he's obviously my brother in law, but he is extremely good at this. And this is what he does professionally. Now. Tim Johnson First Choice Business Brokers, and he covers I think the entire eastern seaboard. So that's, you know, and if you're looking to sell a business, he does that, too. he'll sell and help you find the person who matches up with that. Seth, we should probably have a show with Tim on time to talk a little bit about of his experiences and what he's done that might really be, you know, valuable for people to hear what kind of businesses they engage with where to go, how to get there. I think we should do that here soon. Yeah, I mean, I would just have a lot of fun doing that with Tim, let's make it happen. Yeah, absolutely. I'll do that. As that, you know, you mentioned women and men and looking for part time roles and stuff like that. But I gotta tell you, there's so many people out there specifically women who have been able to create a small business, run it from home and be with their for their kids, when they go off to school, when they come home, it's really afforded them to give them the freedom to have a little bit of a, you know, a kind of a stay at home mother experience. But you know, not feel like they're gone nine to five child's daycare, I miss all their games, like if they wanted to get rid of that, that that's been a huge, a huge win for the stay at home mom. concept. So and it was just another thought there, as you'd mentioned.

Yeah, there's, you know, last but not least, the opportunity to follow your dreams. When you're engaged and really following your dreams. There's, there's so many benefits, you know, outside of just the financial part there being a creator, and having the flexibility to do what you're what you're really passionate about. There's health benefits that can come alongside of that. I think we're really big here, money on tap on freedom. It's a huge gift that we have here. And the ability to follow our dreams and matching you up with that and having those conversations how you can do that how you can craft that. That's one of the things we really enjoys doing with our clientele and our partners here to you've been listening to money on tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com. You can also find us at Facebook, we're at \3dinvesting. We're also on Twitter at BFG_LLC. And as always, you can also find us at your moneyontap.com. Thanks for listening. Thanks for liking our podcast. We appreciate you and we can't wait to make it a great day and a great life with you here at Money On tap.

The views expressed are not necessarily the opinion of this radio station and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein investing is subject to risks including loss of principal invested No strategy product material or tool mentioned can assure a profit or protect against loss. Please note that individual situations can vary therefore, the information products materials or tools mentioned should be relied upon when coordinated with individual professional advice. Past performance is not a guarantee of future results. This show may be subsidised in whole or in part by a product sponsor or issuer, securities and advisory services offered through sagepoint financial incorporated member FINRA SIPC, and a registered investment advisor. All other services offered through Brayshaw Financial Group LLC are independent of sagepoint financial sagepoint financial and Brayshaw Financial Group do not provide tax or legal advice main office is located at 116 South River Road, Bedford, New Hampshire 03110 and can be reached at Toll Free 855-226-8551

Well, bye.

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MOT 171 Summary Social Security Taxes

On this episode of Money on Tap, Ben and Seth cover social security taxes. They talk about how your social security income is getting taxed, and what are some of the options you have to maximize that income.

Ben and Seth also discuss Warren Buffett’s departure from Wells Fargo, a more than 31-year-old investment, after numerous customer service scandals, the digital hacking of the Colonial Pipeline, and the rise in the number of Americans moving states for tax purposes.

MOT 171 Transcript Social Security Taxes

Welcome to “Money on Tap”

[Music]

“Money on Tap”, your personal finance headquarters, where we bring out the professionals experienced in some fun, in what we call three-dimensional investing – utilizing insurance, brokerage, and fee-based planning. That’s what we do on this show, we look at all sides of the issues, we bring a fully independent planning perspective to the table.

Seth: Welcome back you’re listening to Money on Tap. My name is Seth Krussman. Ben, how are you doing today?

Ben: I'm doing good Seth

Seth: That’s Ben Brayshaw in case you were wondering. We’ve got such a great show for you guys today; we’re going to be talking about social security taxes

Ben: Social security taxes?

Seth: Yeah, I mean that’s an oxymoron right? Its like, here’s your social security, oh yeah by the way we’re going to take that back

Ben: Yeah, you know I'm excited about this show for the people who are really focused on you know maximizing the income, focused on where their income is coming from, and honestly, addressing how so much of our money gets funneled out on simple things like your social security income getting taxed, and people don’t even realize all the different minutia that plays into your tax return that ends up saying, hey listen we’re adding this much social security back in and you're going to have to pay it back to the US government. It’s like wait a minute, that’s not how people see it, but when they get their first tax return back and they're hit by that, it’s a shocking revelation

Seth: Yeah, and believe it or not there are ways that you can craft your income – I like to craft it

Ben: That’s a good word for you, Seth. That’s a good word for you you liked crafting that

Seth: I'm not super crafty, I'm not a crafty guy, but when it comes – that one there, I'm like we can pull this thing off, I think we can get some Elmer’s glue and some popsicle sticks and make it happen

Ben: Well right now with the amount of people working from home they probably all got a little school project with their kids they can grab that stuff with I'm sure so, but, this is not going to be that easy, but there's going to be a lot of, well this is the one concern I have, we both talked about this with the show, a lot of people we are going to potentially lose in the complexity of the information. So that is an issue. So bare with us, but I think we’re going to walk through it in a way you’ll be able to tangibly use this, and at least go have a confident conversation with your CPA or your tax provider or whoever

Seth: And if you’ve already started to look at your Pinterest feed or something else – shame on you. We shame you’re here at Money on Tap

Ben: Seth, you know the thing about this show is, what I'm actually thinking about is like, hey listen tax season just ended and a few of you are getting your tax returns back, we just went through Covid, you're trying to maximize your income, you're looking at what your want to do, hey you just ended up having a forced year off, and hey listen you just took some of my social security back, how do I deal with that? And I think this is a really kind of good moving forward thing as people are changing their budget, realizing that income matters, and starting to evaluate how to get that in the most effective way

Seth: Yeah. Hey, you know what else is good moving forward? You can call us at 855-226-8551 or you can reach us at info@yourmoneyontap.com. Now there's other ways out there, we’re not going to get into all the other ways you can reach us but, or why, but if some of this information pertains to you, i.e. you're going to retire, or would like to retire, or are in retirement, then yeah give us a call we’d love to help you out, we’d love to work out some of the ways we can craft together and see what we can come up with with reducing some of those social security tax abilities

Before we get into that, it is time for Money in the News

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Seth: First up folks, I always love it, this is a really easy thing, kind of a lay up for us when we start looking at what’s going on in the world today, anytime I see our friend over at Berkshire Hathaway making moves, we got to talk about it, got to talk about it, and yeah what does Buffett do? He’s out, he’s out –

Ben: Almost

Seth: of Wells Fargo

Ben: Almost. This is crazy. Buffett has been a Wells Fargo all in since like 1989. You know 32 years almost of investing in Wells Fargo, believing in a company brand, and just says, in its regulatory filing on Monday, said it owned 26.4 million shares in the fourth largest US bank as of March 31^st, down from around 32 billion in January of 2018. Now this article comes from Reuters, Jonathan Stempel, and he does a good job at kind of bringing about the impact, the magnitude, of Buffett just saying, hey listen Wells, we’re done with you. I mean we’re done with you on almost every level. I mean they dumped almost everything that they own in there. Now this comes based on a huge amount, I mean there's a lawsuit that was settled for, oh gosh for all sorts of you know, misgivings and poor representation of issues, scandals, mistreating customers. Seth, here why don’t you speak a little bit about that I know you have some knowledge on that area

Seth: Yeah, thanks Ben. There's just a little bit of history between myself and good old Wells Fargo and you know, personal stuff aside, I'm no longer a client how about that

[Laughter]

I went out on a good day that was the thing, before I fired Wells Fargo, is like, you know what, I'm not going to do it when I'm really really frustrated with them about the situation, I'm going to do it on a good day. So, but what were they doing with clients and customers, myself no longer one of them, it just was a ton of cross-selling, and it was upselling, and it was not based off of a customer’s ultimate, really it wasn’t based off of their needs, and it just overstepped a boundary that well, proof was in the pudding and I mean it was back as far as 2008, a long time ago, but they just didn’t do enough soon enough to make Mr. Buffett happy about their response and how they took care of their clients

Ben: Yeah, I think the thing is, I think ultimately the goals of the cross-selling and trying to make the most of the relationship and so forth, it just went too far is what it sounds like from the article, and I think you know, I would say the article does not say that Buffett kind of you know ran away from a kind of bad integrity issue, but it kind of alludes to that. I mean it kind of alludes that he's just done with that longstanding relationship, he expected more from them, a higher quality. There's adjectives in this article that kind of allude to that and now whether or not that’s really case I'm not sure. I am an owner, I own Wells Fargo stock, I mean you know it was something I bought with a number of different you know financials that I bought during the fall, the crisis, in Covid, I looked at all these bank stocks saying undervalued and I purchased some so I mean in full disclosure I own them, so this stuff does concern me but what I do think is really interesting, right, Buffett sells 26.4 – was it million – shares and yet the stock closes up after all of that

Seth: Somebody had to buy them

Ben: I know but the thing is if you think about it, right, if stocks going up right Seth, I mean more people are buying than people are selling and Buffett was one of the biggest owners of it, so kind of shocking to see that outcome in the stock even with that amount of selling, which is really interesting so

Seth: Yeah it did not make a whole lot of sense but you know what Ben, you're thank goodness one of the beneficiaries, I'm happy for you 

Ben: If you’d held on to it I’d be a bigger beneficiary

Seth: Folks did you know there was a little thing that happened last week, or a week or two ago now, over in New Jersey, I mean actually it was kind of a big thing right? The pipeline that got hijacked, and immediately I'm thinking of Bruce Willis, right, and Die Hard-est, would that be a Die Hard four or something like that? But that’s not what we’re talking about; we’re talking about the digital hijacking of the Colonial Pipeline and the payoff of 4.4 million dollars

Ben: Well first of all, how many people even knew Colonial Pipeline even existed before the hack, right, I mean I don’t think anyone had any idea and I don’t think anyone had idea that this private company provides roughly 45% of all the East Coast fuel

Seth: That blew me away

Ben: Right? That blows me away too. You have a private company who has literally the lion share control, I mean if anything all of our enemies have realized that we need to diversify, we have a monopoly issue going on here and it needs to be addressed. There's a vulnerability here, I mean we couldn’t even get, I mean they were struggling with planes getting in the air, there was a concern of like, hey listen if this lasts much longer we can’t fly people places without trucking the fuel all up and down the East Coast and from the West, I mean this reminds me kind of like the Civil War conversation of when you know Grant literally started shutting down, like his focus was to shut down the railroad system so they couldn’t get supplies. And I think –

Seth: Say that again. Like okay you're going way back there

Ben: Oh yeah I'm jumping back Civil War buddy, like this is standard military procedure, let’s shut them down

Seth: My Covid brain can’t handle that hold on a second

Ben: You know when they shut down, the whole goal was to shut down the railroad system to stop supplies and that’s how they beat the South, that’s how we beat the South. And so when you think about that they, I mean that’s what the ultimate –

Seth: I like it how you say you beat them

Ben: I know

Seth: I'm from here in Portland and I'm not even a part of that conversation

Ben: Seth you don’t even know where the Mason Dixon line is c’mon buddy

[Laughter]

Ben: So anyways, I mean when you really break down the vulnerability that this exposed for our country it’s phenomenal, but they paid Mr. Blount, Joseph Blount CEO of the Colonial Pipeline, paid 4.4 million dollars to –

Seth: Or his insurance did

Ben: Yeah, something did, somebody paid it

Seth: The cyber-insurance did

Ben: The cyber-insurance did. Yeah, I mean but even then, and they had this whole group of people negotiating with these, you know the dark, they call it the Darkside, I mean what was that, dark something or other, something out of a bad movie here

Seth: It’s pretty bad

Ben: And anyways they ended up paying him out in you know basically, coin

Seth: It’s a digital currency

Ben: Digital currency I mean –

Seth: Should we call it what it is?

Ben: Probably not, but its interesting, we were laughing about this, funny that basically all these digital currencies have taken a huge pullback with all the stuff that’s happened, I'm glad these hackers got like probably 30 or 40% less when it’s all said and done now

Seth: Now they got like 2 million over there. After they divvied it up among their cyber gang

Ben: Yeah, it’s Darkside

Seth: Of Eastern Europe

Ben: It is Darkside

Seth: Oh yeah, I'm sitting here looking at it, I just loved, I was hoping you might come up with some other names. See what else you got in the reservoir

Ben: Well anyways, this is, I mean I'm concerned; I'm concerned about a bunch of things. One, I'm concerned about all the different moving parts here, why a private company has that much power, I'm concerned about a lot of companies having private power. I thought it was interesting too that Darkside claims all sorts of different things. I found another article on the cyber attack from The New York Times, which said, it was talking about basically that, I'm going to quote here, we’re also to pursue and measure to disrupt their ability to operate, Mr. Biden said, in the line that seemed to hint that the United States cyber command, the military cyber warfare force, was being authorized to kick Darkside offline, much as it did to another ransomware group in the fall ahead of the presidential election. So I thought I was interesting that hers a whole other colonial article mentioning the presidential election and meanwhile we have like a bunch of people saying its impossible to hack our election system but they can hack the largest pipeline scenario we have out there. And I also think how stupid it is, and if you don’t agree with me tough luck because how stupid is it when we have the vulnerability of one pipeline that’s 5500 miles long for us to kick off this Keystone pipeline and say we’re not going to finish that when we have a vulnerability that’s 45% in the Southeast when we only have one pipeline basically, you know, for Canada now. I mean –

Seth: I wonder if there's, if a pipeline that covers 45, or provides 45% of the oil for the East coast might have a little bit of sway in trying to persuade that Keystone pipeline from not being completed

Ben: Well they don’t really have much to do with the Keystone, you're talking about the South verses the, you know North

Seth: I don’t even care about the South or the North

Ben: Of course, it’s more valuable

Seth: We don’t care

Ben: Well it’s more valuable for them, right, no I get it, I get it

Seth: We’re geographically challenged

Ben: But the thing is that if we don’t realize the need for more pipelines and we have one company that’s 45% of it, or we have allowed them to acquire up to 45% of the East coast need, that’s a problem. And it definitely spouts out that we need more people, more companies, that competition to break down these monopolies because, I mean, we’ve got I mean they talked about this Darkside –

Seth: I would say that is a monopoly right there

Ben: Oh absolutely. It says hours later, I'm quoting this New York Times article again, hours later the group Internet sites went dark. By early Friday Darkside and several other ransomware groups including Babuk, which has hacked Washington DC’s police department, again another government organization we can hack, announced they were getting out of the game. They retired, okay folks, one of the cyber organizations retired. For us to think that all of this stuff is nonsense, you know the elections couldn’t get hacked, the pipeline got hacked, but I mean it’s just we have one piece of crap news after another and, I'm sorry I'm just going off on my little tangent here, but this is a real problem and our country is not really addressing it well. And I thought it was really kind of, they didn’t once say at all, I can’t find anywhere how they got hacked. I mean if anyone knows please let me know. I've researched this, I can’t find, was it an email opened, I mean I may have missed it in the article somewhere but I've read a couple articles on it. I mean this is a, this is a big deal, I mean we don’t have a clue what they did, so how do we all protect ourselves against it, and what's the next pipeline and how are they sharing information to deal with this

Seth: Yeah, those are real concerns and good questions, and if you weren’t quite done hearing the rest of what Ben had to say there then give him a call at 855-226-8551 or info@yourmoneyontap.com because he would love to have a deeper conversation with you about that. And I just happen to have a couple of friends that work in that field that would love to have actually you know more of like an end, how do they help you not only stay secured, how do they help you be insured because, I've had friends, you're right it’s just open an email and its like boom their computer is locked up and there's nothing they can do. If they haven’t backed that thing up or already taken the precautions, that’s it, that’s it. So Ben, I feel like you’ve got more to say there and I'm just, I'm going to go onto the next article here, okay, before we get halfway into the show just on Money in the News

Ben: I have nothing else to say Seth

Seth: Whether or not you do, whether or not you do, I'm going to talk more about taxes because we’re going to talk about taxes motivating people to do some different things, possibly what could that be? Well, some lower tax states won big in 2020, is what this article is saying, that Americans are really moving to escape the taxman, and this is from Andrew Keshner, MarketWatch. It was a really fun read to go through and actually I thought it was a really good job, I thought it was a fair and balanced article that really brought up a couple of think tanks out there that are trying to take a look at this information and say, well is it the taxes that are the reason people are moving to the Southwest, or what are all the other motivating factors?

Ben: Well I think it’s interesting they talk about how California and New York are two of the seven states basically poised to lose seats in Congress because so many people have left their state. I mean that’s crazy and then you got Florida and Texas –

Seth: I just call that an answer to prayer I don’t know what you call it

Ben: Well I'm not sure that I do Seth because I'm looking at it saying, you have the two most liberal states and these people are moving for, I mean potentially they're conservative people moving to conservative states right, to keep it all balanced, but honestly I know, we have clients that we disagree politically but we get along great and you know it doesn’t really matter but, on the outside of this thing I look at it and say, if you sat there and you elected somebody in a democratic state that you supported and then you're moving away from there because you don’t like the current status of the state, don’t go to a new state and vote in basically the stupidity of what these states have done. Right, I mean don’t move to Florida and start voting a bunch of idiots back in, I mean that’s not what we’re here to do, I mean we need to get this country under control

Seth: You just brought up some really funny things that I've seen on social media with people in Texas doing, you know having some different statements about that whole thing happening right there, is people from California moving into Texas and saying no you guys are doing it all wrong here this is what you need to do

Ben: I know it’s like you voted all these people in you're going to come here and you're now going to vote the same way but you left where you were at. I mean it’s really kind of very; it’s humorous that people don’t even understand that or perceive that, I think it’s crazy. I look at New Hampshire and say, hey I love New Hampshire but I mean we’ve done a really bad job about putting the people in place in a lot of ways. I mean I'm not really a big fan of where things are going in this state, I mean I look at it and have a lot of concerns

Seth: I think the first place where you maybe stepped off out of balance there was just having this assumption that people are self-aware

[Laughter]

Seth: probably doesn’t lend itself to the outcome. So I’ll just say, there is all sorts of numbers, there was all sorts of outcomes here and I think that was, at the end of the article, if I wanted to kind of sum it up and say well what was the outcome, I mean was there a cause relationship with where people are going in the US? You know people are moving for all sorts of reasons and I don’t know how many of your friends or family have moved and they called you up and said, you know the taxes right, that’s why I'm doing what I'm doing today

Ben: Oh yeah. No, no there is some of that though, there are lawsuits all over the place between Mass and New Hampshire for income tax issues because people are working from home and they're saying well where do you report, so you know I mean there's lots, I mean people have, I mean people have –

Seth: Well people here too, I mean like Portland, Vancouver, Vancouver, Washington is right across the river, you know, family, they're living in Vancouver because the tax situation is what it is and its right there, I mean it’s practically Portland. I'm not saying that it’s not a motivation to like go like state to state but I mean we’re talking about like California moving to where? Texas?

Ben: Well I’d be happy with them just moving to Portland or Vancouver

Seth: They do. Oh yeah we just gained a seat buddy. We’re at a 9.9% tax rate, so that goes against the whole code right

Ben: Well not when you're at 12% in California so I mean they're still going down. Okay, so, you make a great point. I mean there's clearly there is clearly some, the numbers say there is some move for taxes, but if you're stuck at home you're like, well you know what I'm just going to go somewhere where I don’t have to be stuck in my house

Seth: Yeah

Ben: Anyways I think that does it for Money in the News for us. Hey listen if it wasn’t for taxes and it wasn’t for trying to save people tax dollars like we’re going to get into here in a minute with social security and trying to save you the tax dollars on those numbers, we wouldn’t have much of a show Seth, I got to be honest with you. Well expect for your blooming personality

Seth: That’s what I'm here for, I appreciate you for it, thanks a lot Ben

You're listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We are going to be talking about all those lovely tax dollars coming out of your social security or not, depending on how your income is coming through. So can’t wait to get into that with you Ben. Don’t go anywhere we’ll be right back

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Seth: We have a lot of fun doing this show, Money on Tap, and Ben and I have been financial planners for years and years and our goal here with you is to bring you into the room, have the conversations that we have, we think these are critical conversations for you, but we understand this is a limited space and what we’d love to do is to open the doors to you with us at Brayshaw Financial Group so you could experience what it means so have three-dimensional planning in your life. Let’s take a look at all sides of your situation, your scenario, and see how we can out together the best plan possible, taking into account your risk. How much can you have in the market? How much do we need to have set aside and doing different things for your life? That’s what we do as planners, how we engage with you, and we welcome you to do that with us. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Now if you have $250, 000 of investable assets today our plan is free to you. We want you to have the playbook to have a successful experience in retirement. Give us a call, 855-226-8551 or info@yourmoneyontap.com. Ben and I welcome you to Brayshaw Financial for complete wealth management

Now back to Money on Tap with Ben and Seth

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Seth: Welcome back you're listening to Money On Tap You can reach us at 855-226-8551 or info@yourmoneyontap.com. And folks if you have made it through Ben and myself and all of our Money in the News that we just brought to you

Ben: If you're still a listener

Seth: You stuck around for the meat of the show, ok, and we know that we talk about taxes, we talk about financial planning, and its just, it is what it is, you know, and what I mean by that is, if you have income, you probably have taxes, you probably live somewhere, and we got to try to understand this stuff. And one of the things that most people just don’t even really understand around how income and retirement income and taxes work is that they probably are paying taxes on their social security, or if you do understand that, you may not realize that there's some ways to put your income together differently to affect the taxes that you're getting taken out of those social security benefits. And that’s what this show is about and there are going to be numbers involved. There's going to be some part of this that might just be a little drier than others but it is the cake that we bake, you know. At the end of it we want to put this thing together in a way for you that really allows you to have control over the product, over the outcome, of your income. And that income can really mean a big difference from you know, decisions that you make all the time

Ben: You know Seth, you know one of the things about preparing income is just how much you get to keep, I mean that’s what people really, I mean that’s the conversation a lot of people don’t really understand how to communicate to financial people or CPAs is like, I just want to keep more, this is how much you need to keep. I tell you people come in the office and say, you know this is how much income I need and I'm like, is that how much you need to keep or is that how much you need to make? Because you don’t know how they're calculating it. Everyone is looking at it differently, and you’d think most of them are like well I need $50, 000 to live off of, well that’s one way of communicating it but you still don’t know if they're calculating their taxes in that. And so we have to have that clear conversation and invariably every one of the people who are entering retirement right now are absolutely considering that social security is a primary provider for their retirement

I would say that people in our, you know 25 year-old age bracket don’t consider social security as even a possibility, right, so us twenty year olds we’re out there we’re saying hey listen social security is not going to be there for us, and folks I'm just kidding we’re not in our twenties, but that’s really, there's a big disparity between ages of who thinks social security is going to play that primary role or be an instrumental in their retirement and who doesn’t think that. And everybody in between has some variable of that, I mean I honestly got to tell you, I'm not sure that social security is going to play much if any role in my retirement, I just don’t think so. I mean I'm not preparing for that, I mean the clients I work with in our age bracket I communicate that, I'm not sure, I mean I know it’s by the claims paying ability by the US government and yadda, yadda, yadda, but my last social security statement that they mailed to me, which was forever ago, said that in 2034 they were going to run out of money in social security, so to me that tells me they're going to run out before I retire so, those are the kinds of things that I'm concerned about. And I look at the hundred and some odd trillion dollars of basically unrealized, you know, expenses we have coming as something that we’re not really sure that our government’s going to be able to pay, and that makes a big deal. So in the early years its important to see how you can maximize your income, and that really brings in a lot of different issues when it comes to social security because there are people out there, and Seth you’ve seen it a zillion times, where they say hey listen, why, I don’t know if its 17 or 18 or 19 on your 1040, but it says hey this is your social security, it’s kind of in the middle of the page, and then to the right if it has a number written in there it’s a percentage of that social security or there's nothing there. And if they're bringing that number all the way over to the right that means it’s getting added back into your income to be taxable. And people say, hey wait wait I wasn’t planning on, I'm in full retirement age, I thought I could make anything I want and you know like all this stuff and it’s just not the case. It’s just not the case

Seth: I mean I feel like my hands are tied here, right, when we just talk about this because it’s like, what am I going to do, I mean as far as, you know, how to adjust my gross income, or you know, gosh, I mean, because that’s not a goal I have, to lower my income. You know what are some of the other things I can do to try to lower my taxes or try to move this number one direction or another

Well, you know some of the factors that people don’t, I mean, don’t realize early on is you know they have the ability to kind of convert where their money is. You can move money from one place to another, and depending on where you're at, and this is much more preferable for a lot of people to be doing this planning work ahead of time, to be able to maybe pay taxes where their at right now and maybe move some money into another direction where it won’t be seen as a taxable, or a line item affecting that social security tax. And what do I mean by that? Well Seth, I'm talking to myself right here folks, what I mean by that is I'm talking about taking, for instance, ordinary income, or what would be considered ordinary income, in your retirement, which would be your IRA money, ok, take that IRA money that you're collecting right now, or that 401k money that you're collecting right now, and try to put it in to a tax advantage retirement account like a Roth IRA. And there's other places to put this as well, it’s just one of them that you know shows up for us, people for the most part we all kind of get that, and some 401k’s have that option within the 401k to move those moneys over to the Roth, so what is that going to do? Well, what that’s going to do for one, it’s going to create some taxability right now in this current year, and paying the taxes right now will then create, well basically that money will go over into the Roth where you won’t have to account for that as income towards your social security

Ben: You know Seth you make a great point about the Roth, because the Roth comes to you as tax free income, and I think that’s really good. People are like, well why is that important, when do I become vulnerable, when is my income issue a problem when it comes to social security? And it’s probably going to shock a lot of people here that are listening because basically your social security starts getting added back in when your gross income, including social security, is at least $25, 000. Now for a lot of people they're easily crossing that number with social security. And then we have this whole mass, so its $25, 000 for couples filing jointly with a 50% calculation of adding social security over, and for merit filing jointly its like 32, 000, but they add 85% of your social security benefits in to be taxable when your individual income is 34, 000 and your gross joint income is over 44, 000. So let me back up that’s a lot of numbers. So basically you're telling me Ben that somewhere between 2000 and 1500 bucks a month of income for me makes my social security benefits taxable? And I'm saying yeah, roughly yes, you need to start having a conversation with your tax person. That’s a 50% level. Now if you're making somewhere between 3000 and almost 4000 dollars a month in income about 85% of your social security benefits are going to be added back in to be taxable. That’s a big deal. Now there's a lot of things that people don’t understand about this, because it’s not just like, hey I work this side job, I'm doing this, I'm doing that, they're adding all sorts of income in. They're even adding in, and I want everyone to listen very carefully, because this is one of the things that is like, I feel like it’s a kick in the teeth, this is that one item, that one nugget that everyone’s like, really? And this is where they add in those muni bonds, you know those things that people say, hey buy these municipal bonds, get some tax free income you know, and whether it’s state or federal, you know whatever, irrelevant, it’s like hey –

Seth: I saw an advertisement for that just the other day

Ben: Yeah I mean people are always advertising these tax free bonds. Well they are tax free, but the income from those municipal bonds is added back in to do the calculation of whether or not they bring your social security in to be taxed. And this is a big big deal because a lot of people will say, oh, I mean I've met financial advisor after financial advisor who have shoved people into large tax free bond options to basically give the client tax free income, and then all of a sudden their social security starts getting added back in and your like, what the? Why aren’t people educated on this? It’s just because they don’t know it. And so if you are, you know have a lot of tax free bonds and that’s part of your primary goal, go check that. I can’t remember if it’s line 17, 18, 19, I’ll have to check that out, but if have a question give us a call, you can bring your tax return in, I can tell you in two minutes first page whether or not you're paying taxes on social security, and a sit down meeting in probably an hour can figure out whether or not you know, we can try to get that number down or reduce your taxes or restructure because there's lots of opportunities, and you know Seth you bring up Roth and I think that’s where planning comes into place. We talk to people all the time and you know they don’t want to pay an advisor to do their work and they don’t want, they’ve been educated that fees and expenses and commissions and all this stuff, they're just bad, they're all bad. Well if you're not getting anything for it I would say you're over paying, I would say it’s not bad. And yeah am I biased, is that how we get compensated? Absolutely, that’s who we are. But if you are paying an advisor to provide you income as much as they possibly can and they don’t know these simple moves to help you, that’s how we pay for our services, we bring value to the table. And so that’s one of the things where I think a lot of people hear, listen if you own muni bonds you need to really be aware of this because that is going to impact your social security and whether it is taxed

Seth: Well said. And with that I will tell you, you can call us at 855-226-8551 or info@yourmoneyontap.com. You're listening to Money on Tap and we’re talking about how social security is getting taxed in retirement and what are some of the options here, right, that’s it, we want to know. I mean some of these things we may or may not choose to do but at least we understand we have some options here. You can reach us at 855-226-8551 or info@yourmoneyontap.com, we’re going to take a quick break and we’ll be back before you know it

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For a number of our listeners they have a lot of questions and you might be one of them. Today we’re just offering what we call Zoominars, webinars over Zoom meeting rooms, where we have top experts, social security, estate planning, and financial planning experts, for you to speak with, do a private consultation that way today. We’re also having webinar based Zoominars where we are going to have multiple groups where you can be a part of that and enjoy that as well. Give us a call at 855-226-8551 or email us at info@yourmoneyontap.com to schedule your Zoominar

Now back to Money on Tap with Ben and Seth

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Seth: Welcome back you're listening to Money on Tap you can reach us at 855-226-8551 or info@yourmoneyontap.com. And we are talking today about your income through social security and what percentage of that income may be taxed, and how does that work, and what are some different things that we can do in planning ahead of time for those distributions in income to lower the tax ability of our social security maybe, that’s a part of it, or maybe we’ve got some things going on right now that we’re just taking income and you know the question is how do we just, what are some different things that we can do to affect that. And a lot of people in retirement use all sorts of things, I mean there's the typical IRA, we talked about Roth IRA and how that’s not taxable income and that doesn’t count towards the taxability of your social security income, and another place that people love to get income and use as a tool for income is an annuity. An annuity doesn’t always work the same way in its income, right, so what do I mean by that? Okay so let’s just say for instance you put $100, 000 in an annuity and you grow that to $200, 000 and you're like hey I want some income from that, so you take that $10, 000 out of that annuity for some income. Now we haven’t annuitized this, we haven’t turned it into you know the 10 year, or lifelong, or whatever the option is that you want to choose, we haven’t annuitized this thing yet, we’re just taking some of this out, well, that $10, 000 is all going to be accounted as ordinary income and all going to be added back into the equation towards the taxability of your social security

Ben: I think that’s really, Seth that’s great and I think the thing is really to emphasize is it’s taxable as income, even though it’s money you gained in the annuity. Annuities’ gain is taxed as ordinary income, which is going to impact, I mean a lot of people just say, oh just send me 10 grand right, I mean and all of a sudden it’s like, it hits your bottom line and it’s like, that’s a lot of money

Seth: Yeah, yeah it is and at the end of the day it could affect that social security and how that’s getting taxed and what I was, I was trying to think of where, where was I going with this, oh yes that’s right, we’re going with the annuitization option of the annuity, which is maybe one of those things if you’ve got a great deal going and you’ve got some growth going on and it’s working for you in the background, maybe your just like try and really hold off on the annuitization of that. Well if you were to annuitize that how would that change this, okay, first of all that’s going to break down that distribution for you and the tax ability of that distribution because it’s going to spread out those gains over the life of the distribution of that annuity for you. And that’s one of the ways that you can, in creating income and retirement that we take a look at, is what do we have available that we can really kind of try to create slices of that principal and then break down that growth or that part that would be considered that ordinary income or all of it being income, and by that we can take that $10, 000 distribution and we can really create a much smaller number that gets added back towards

Ben: You know Seth you had said gain and it is true it does spread the gain out but it also spreads the principal out, I think that’s what you meant to say

Seth: Principal as well

Ben: So I mean that’s really, the exclusion ratio point there is huge and I think the thing is or what a lot of people don’t understand is sometimes it’s just how you manipulate your investments that really make them powerful. Like that piece alone in that illustration like if 50% of that was gain and 50% of that was principal, in the illustration number one, that you just gave $10, 000 would be added to your taxable income, which you know we’re talking about your social security starts getting taxed to $24, 000 of income or $25, 000 of income you know on a single person so, if you're taking $10, 000 out of an annuity and your getting a decent social security you're already irrelevant of your IRAs and everything else or pension or whatever, you know you’ve already got, you're way over, and so if you do something like this and all of a sudden you still get that same $10, 000 distribution and 5000 of its principal and 5000 of its gain, well now you’ve just reduced the amount of reportable income, the money you're writing down on things no longer 10, 000, you're writing down 5000 on your tax form. That’s going to change everything for some people, and so these little tricks, now full disclosure you annuitize an annuity you're probably going in to like a very very low return, but if your tax savings is huge it could offset whatever return sacrifice you're doing because you have to do those calculations to really figure out where your really benefiting the most from, and that’s just, honestly Seth I mean how many people just aren’t doing this work. And that’s a big big question and CPAs always say, oh wow I'm glad you noticed what an exclusion ratio is, oh that’s good that you did that, they never tell us to do it, they never instruct their client to do it, their client never asks them at tax time, hey listen how do I save money and they're like hey well you just got to do things differently. I mean that’s really their response you know, so those are big issues.

I'm glad you brought up the annuity. The other think about an annuity that’s coming to mind as you're saying that Seth, and I didn’t really plan on talking about this, but people generate income from all sorts of different investments. Now sometimes you might be able to find an annuity that can replace, or get you like kind investment options, and maybe, because annuity is, they tax defer just like an IRA would with after tax money, so you might be able to take a brokerage account and move it to a different type of annuity, maybe give up some types of investments, but you get others or similar ones, but you tax defer some of that stuff and maybe that brings your reportable income down a little bit too. I mean it’s all a process, right

Seth: Yeah, so that brings up a good question. What is your process, what is your process, how are you working out your income? Have you gone the route of, well I've got social security and it’s coming in the door, and I've got this IRA over here, and that much money over there I need from that, or I've got this real estate over here and I've got this – you know, what is your process that you are working out these numbers and taking a look at your options? We’re here to help. You can give us a call at 855-226-8551, info@yourmoneyontap.com is how you can get a hold of us and we can take a look at these things with you and start to develop a playbook, we call it a financial plan, alright, and in that we take a look at where are these pieces coming through, how are they getting taxed, what are the outcomes, and what are the different options that you have. At the end of the day you may turn around and say, hey that’s great, wonderful, thank you, my simple playbook, my simple process here that I have is working just great – that’s great. Most of the time what we find out is that there are so many different ways that we can start to enhance, not only possibly your current income, but also, how is that getting taxed, what are you getting to keep. And at the end of the day, Ben talks about that, what do you get to keep, and that’s the bottom line that we’re going to talk about

All right so pen handy, paper handy, 855-226-8551 or info@yourmoneyontap.com, that’s how you can get a hold of us and start the process of taking a look at these numbers, what do they actually mean to you, how do they articulate, and what are some of the outcomes that we can start to look forward to. We’re going to take a quick break and we’ll be right back, you're listening to Money on Tap

[Music]

Seth: Folks it is so much fun for us to bring you Money on Tap. My name is Seth Krussman and I am one of the hosts here at Money on Tap. I am also a financial planner, that’s what Ben and I do and the fun part is we get to have this radio show, we talk about important things that we think you need to listen to and be aware of to help raise the bar as far as your financial literacy. That’s a big part of what we’re trying to do here. The other thing that we’re doing here as well, as financial planners we are welcoming you to come and call us and to join us at Brayshaw Financial Group. Experience what real wealth management looks like. Let’s take a look at all sides of the issue, get a three-dimensional perspective and put a plan around your next step. It’s so critical and so many people just leave this part out and then they find out later, oh if I only would have known. Hey don’t let that be your story. Give us a call at 855-226-8551 or info@yourmoneyontap.com. If you have $250, 000 of investable assets today our plan is free to you, we think it’s important for you to know the facts and have a playbook so you can have a successful retirement. Give us a call at 855-226-8551. Thanks for listening

Now back to Money on Tap with Ben and Seth

[Music]

Seth: Welcome back you're listening to Money on Tap you can reach us at 855-226-8551 or info@yourmoneyontap.com. And we have been talking about you know, taxes, those lovely little things

Ben: Love taxes, love taxes

Seth: How does it work out in your social security and how much tax is getting assessed from your social security or not, and what are some of the different ways that we can really affect and go into it just having, you know if we were to just pull a lever A, B, C over here, what can we do to really try to affect how much is getting taxed on this social security piece. I mentioned you know doing some early planning ahead of time and getting some of those Roth conversions in, or those traditional IRA dollars, pay the taxes that you need to as you convert those into a Roth, but those future distributions from your Roth don’t get counted towards your social security taxes, right

Ben: Yeah, I know I was going to say Seth as you're speaking about that, I think the one thing that’s really like a kick in the pants here is that 13 states actually impose taxes on social security too. There's a lot of things going on around social security that people don’t know, and I think, and this might be the conspiracy side of me and so forth but I mean, knowing that we don’t have the money to pay social security for the next hundred years without hundreds of trillions of dollars of debt, I'm assuming that this strategy work is going to become more and more imperative for you, I mean I can see them either lowering these numbers or if you're income’s a certain level, zero, I mean they're going to cut these numbers. They're going to impact social security more and more to reduce that, you know those future liabilities, it’s just going to happen. I don’t know when, I don’t know where, I don’t know how. Are states going to do this after the pandemic, I'm sure more states are going to sign up for this stuff, that’s where we become vital. I mean you can run around trying to look for somebody who is going to be cheap and this, that, and the other thing, but you know sometimes when you just buy cheap you get cheap. And this kind of planning when you're maximizing the dollars, it does take time, it does take knowledge, it does take effort, and you're not going to get that from and 800 number. Well we have an 800 number but you know my point, so I mean that’s an issue, that’s an issue that you have to really deal with. This is serious stuff and honestly when you come into our office, we’re going to ask you to bring your tax return, we’re going to ask you for a copy of that at some point in time

Seth: its kind of one of those, its always kind of an interesting conversation too because some people are like, oh why would you want to know that?

Ben: What does that have to do with my investing? Exactly, it’s ridiculous. If someone is not asking you for your tax form you shouldn’t be doing business with them

Seth: Right

Ben: That’s straight up if you are sitting down with a financial person right now today and they have not looked at your tax return you need to run and you need to run quickly, because they have no understanding of how this is going to truly impact you and they clearly don’t have enough knowledge because you can’t, I mean I have met people where if I hadn’t looked at their tax return I didn’t know they had a side business even thought they, oh well I just work at such and such job, there's so much information that is detailed if someone understands your financial position, if they look at your tax return they can tell you more about it than any financial investment statement out there in the world. The investment is the last decision, the taxes are what help define those decisions and until people embrace that you are not going to really have a good investment strategy for yourself and that is the bottom line

Seth: Yeah. I love it, I love it. I think we’re getting close to a wrap here and the question is first of all, we get this right out of the gate we probably just haven’t even said it enough is, does your social security income count as income, and the answer is yes, in most cases it does. But you can really minimize the amount you owe by making some of these choices right up front and there's some stuff that we’ve done the work on the backside of this where we’ve paid the taxes in year A to really minimize the outcome over several years down the road where the accumulation of what it is that we’re talking about is the benefit here and really lowering that tax ability. You just don’t know unless you bring the paperwork, bring it in, bring the taxes in, sit down, take a look, and try to understand what are your options, chocolate, vanilla, strawberry folks, I mean we’re talking about some stuff that probably is just like at this point in time, you're just like, geez man I don’t even care I'm done, here take it, whatever. But at the end of the day we really want to build options here for you because that’s important and you having some understanding just of how this is going to work and making those decisions for yourself

Ben: Yeah, well said

Seth: Yeah, you want to go back and talk about some of that Money in the News because I really feel like I'm just kind of –

Ben: I’m still hyped. I'm still hyped on that yeah. You couldn’t hear it in my voice today. Anyways

Seth: It’s been a lot of fun and I can’t wait until the next time. You’ve been listening to Money on Tap you can reach us at 855-226-8551 or info@yourmoneyontap.com. You can also find us at Facebook, we’re at /3Dinvesting. We are also on Twitter at @bfg_llc and as always you can also find us at yourmoneyontap.com. Thanks for listening, thanks for liking our podcast. You guys, make it a great week we can’t wait to talk to you

MOT 169 What Is Your Money Personality?

Welcome to “Money on Tap”

“Money on Tap”, your personal finance headquarters, where we bring out the professionals experienced in some fun, in what we call three-dimensional investing – utilizing insurance, brokerage, and fee-based planning. That’s what we do on this show, we look at all sides of the issues, we bring a fully independent planning perspective to the table.

Seth: Welcome back you’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. My name is Seth Krussman and I am joined here once again with Ben Brayshaw, how you doing today Ben?

Ben: Good Seth, how are you?

Seth: I’m doing fantastic, I’m bringing back fantastic by the way, its been a while since I've thrown that one out there. Speaking of fantastic, Dan Michelon how are you doing today?

Dan: Very good, very excited

Seth: Wonderful

Ben: It’s oozing out of his mic

Seth: Dan is a partner with Brayshaw Financial Group and it’s always a pleasure to have you on the show with us and can’t wait for what nuggets you are going to share with our audience today

Dan: Hoping to find some good ones. Speaking of that I think we got a story to share about a found nugget. That’s going to be exciting

Seth: Ok, I think there's going to be some play on words throughout this episode today folks. Speaking of episodes we have a show for you today, we do. And we can’t wait to get down to some of the personality types. There are several different kinds of personalities when it comes to working in finance. And you might be a –

Ben: We’ve met all of them

Seth: You might be all of them depending on what day it is. But understanding who you are and how you relate with money is what we’re going to be talking about today. Trying to shed a little bit of light on some of these places that we just haven’t looked lately. But, yeah it’s going to be a great show

Ben: I got to tell you Seth that we have met some wonderful people. We’re met some people who have different appetites around money, that’s been interesting too. But money is a super personal, I guess that’s all you need to say, it’s super personal to everyone and it means something and that drives a lot of our underlying kind of God given traits about who we are

Dan: It’s emotional; everyone gets emotional about their money

Ben: Especially with the markets going down

Seth: And there’s also the fact that its one of those things that we all share a relationship with at some point in time. I don’t know that I'm yet to meet the person that doesn’t have a relationship with money of some form. It’s not relationship counseling here today on Money on Tap. We’re going to be talking about you and your relationship with money. But before we get going too far down the road with that it is time for Money in the News

[Music]

Ben: Well first up today we have, Disney adds fewer streaming subscribers than hoped; Revenue falls short. Now this is out of The Wall Street Journal written by Erich Schwartzel and Allison Prang. Now this is really interesting, so Disney comes out of their quarter and they were expected to have 109 million subscribers and they only ended up with 103.6, which is you know, not a huge add, I mean its still, they were the fastest breakout. The article goes into saying how they broke out the subscriber base faster than I think even Netflix and so forth. But they're seeing this significant subsiding that’s concerning the stock, which has it down basically what 20 plus percent since its hire maybe even a bigger drop than that. And people are saying this may not be, now coming out of Covid and the lockdowns easing and all the different things that are happening there, that they’re really, I guess if you lock everyone in the basement subscriptions are going to go up, you know we’re letting people out so you know now they’re going to go down. It’s just interesting to see how that’s affecting the market a little bit on this stock that’s for sure

Dan: Hopefully I think that less viewership online means more tickets sold at the gate I think that’s hopefully a good outcome for them

Ben: Do you have Disney Plus?

Dan: I do

Ben: Seth do you have it?

Seth: Yeah, I do

Ben: Ok so we’re three for three. And they just raised it by a buck a month did you see that?

Dan: I did

Ben: Yeah. Did you think twice about it?

Dan: No

Seth: No

Ben: That’s 103.9 million, 103.6 million dollars more per month that they're getting automatically just by nicking that think up a little bit I mean

Dan: They’ll always have the control to do that. I mean it’s still only roughly half the cost of Netflix

Ben: Yeah, I mean they got a whole other 700 million a month they could raise this thing at the way that I look at it

Dan: If you’ve got young kids it’s a critical service. Don’t know what you’re doing without

Seth: I like one of the things that’s so unique about Disney is just they, I mean Dan you mentioned ticket prices at the door, you know we didn’t even tap their cruise lines, there's just so many faucets of Disney and to me it’s a legacy buy. You're either a Disney family or you're not and we all are and I don’t know you just don’t even bat an eye at it, its like why wouldn’t I have Disney? It’s available. And you know they’ve done a great job during lockdown of still creating that content that nobody else out there really has. And its fresh and it gave us something new and I didn’t spend the $30 for it I waited until it became the free option myself but I'm sure they drove a hack of a lot of money in the door doing that

Dan: The one thing that they have is the advantage that you know really can’t be matched is the content. I mean all of the classic stories that we all grew up with or never even heard of, they own it and no one else can have it and they're going to pull it off of every other platform and you know its theirs to use however they see fit and they sequent and time out the releases

Seth: Yeah so you're not a Marvel fan so you’ve got Pixar right? There's so much to choose from that content, there's Star Wars

Dan: And they haven’t even really tapped the ESPN part so the whole sports viewership is an opportunity for them as well

Ben: I think they are going to lock that down too. I think they are going to lock all these pieces down and you're only going to get it through Disney and its going to be 50 bucks a month

Dan: Yeah, I can easily see it

Ben: Yeah, I could

Seth: So what is that stock market telling us about corporate tax hikes? If you haven’t been watching what’s been trending out of the White House, well that’s one of those things that’s coming down the pipe here. Biden’s going to go ahead and increase some of these corporate tax hikes currently they are saying 21% to 28% and its not something that has happened with a ton of frequency but we do have a little bit of history that we can go back and try to figure out what’s happening, that’s what this article is about from Sam Ro Yahoo Finance and its interesting

Ben: We went back and forth on this article its kind of interesting because I don’t know if I, I mean we’ve watched the industry we know people could manipulate how you interpret numbers, how the market looks around numbers, if you use this, you could almost find any story to tell when you're looking at returns and history and so forth, so I would probably start off with saying hey Sam Ro, I’d like to see all the data myself. But that being said he goes into the fact that during the historical standards you know each year its like – did I understand you correctly that he was saying that the stock market rises basically 10.3% during, its 10.3% during years when the tax rate was 50% or higher and only 10% in which it was below 35%, so he's saying that when the tax rate was over 50% we had a 0.3% higher gain historically, now Biden wants to raise the corporate tax rate from the 21% to the 28%, which is basically bringing it back to where it was when Trump was in office, that’s right?

Dan: It’s even so less than the Obama administration had

Ben: Yeah it was like 32

Dan: It was 34 I think, cut the difference

Ben: Yeah, so he’s taking it back to where it was and honestly I don’t think that that’s going to impact that market as significantly as the concerns and woes of inflation and so forth. I do think that

Dan: It is one of the things he's been talking about since the campaign so I think a lot of that effect has probably been priced in

Ben: I think so. I think on some level it is. I think the initial passing of it we’ll see a shock wave of it. But I think people realize that we’re in for higher taxes, I mean he said we’re going to raise 4 trillion dollars in taxes over what was it four or six years or something. Some crazy number, I just don’t understand how that’s going to happen but this is one way you start getting there, so, its pretty interesting reading this. Now during the five, I'm quoting this here, during the five prior corporate tax rate increases in 1950, 1951, ’52, ’68, ’93, the SMP 500 index posted an average calendar year gain of 12.9% with a positive price return each instance. This gain was well above the 4.6 average returns registered during the nine annual periods where the tax rate was reduced and also higher than 9% return for all calendar years going back to 1945. It’s interesting

Dan: Yeah, I think there's a lot of industries that, you know quite frankly as we’re already experiencing increased inflation, maybe this I another one of those costs that their able to pass through to the consumer

Ben: They will

Dan: They sure will

Ben: They sure will. Next up on our list, now this is interesting, I’m going to let Dan take this because I think this is his golden nugget here

Dan: It is and from the great state of Massachusetts as well, so always a cause of celebration from me

Ben: That’s not the adjective I would have used but go ahead

Dan: So we found an interesting story here about a treasure hunter who had heard of a kind of family war about some lost money within a home and this guy was able to, I guess he’s made a little bit of a career out of this but, he was able to work his way up into the attic and within just under an hour I believe it was he's been able to find this long lost cash and what it was, was you now heck of a day, great find, he found 46, 000 dollars hidden beneath the floor in an attic. And based upon some of the content in the box there they're guessing that it was probably hidden there in 1958, which at that point in time that total, that 46, 000 dollars in cash would have been worth in today’s dollars about 421, 000 dollars, so that’s a heck of a rainy day fund to bury in the floorboards

Ben: Well I was just, and I was just joking around when we were talking about the article before and I was like, that’s probably like a half a million bucks in todays dollars and when we got to the end of the article it was 421, 000 dollars equivalent on the inflationary curve, which is you know just I mean, so you think about it when someone put 46, 000 dollars in their attic they were putting almost half a million dollars in their world in their attic

Dan: It was worth more than the house I'm sure

Ben: Oh yeah, oh easily

Dan: Oh gosh, yeah

Ben: You know I also thought that this was interesting too that this guy Keith, I mean the whole family is it Wiley? I guess I would pronounce it Wiley or Willy, I don’t know one of the other, but the family had been looking for this money for decades and they told him a couple of little things like we think it’s in the attic, I mean if it was in the attic man I would have had someone remove the roof

Dan: Oh yeah

Seth: Well at the end of this one of the things they don’t even get into is what was the cost of trying to recover this money because they did have several people come in and attempt to you know remove floorboards and do all sorts of modifications to the house trying to find this but –

Ben: I mean does he get half or, for his one hour?

Seth: Yeah they don’t really talk about what his finder’s fee was for that but you know one of the things that’s interesting here is that he believes that there is a lot more hidden treasure out there folks, so you can take a look at this and if you know maybe got a story in your family or a house that you bought you know that somebody said there's a cash box somewhere it might be worth your time to get in touch with him and see if you can get it found

Ben: You know it’s interesting I remember when my parents were redoing our barn up in New Hampshire, they had there was some integrity issues with the beams and so forth so they brought in a bunch of guys and they found a box of like, there was some bills in it and some old collectibles and stuff like that, like baseball cards and stuff, but it was probably worth, I think it was worth like 5 or 10, 000 dollars worth of stuff in this box that was in this barn behind these boards that you know it was probably some kid, it was his baseball card collection and a few dollars and you know maybe a couple coins that were all silver and just different stuff like that but it was interesting was valued at between 5 and 10, 000 dollars, and the guys working on the barn I mean they came running out they were so excited to have found like treasure, you know, the honestly was like phenomenal, unless there was 100, 000 in there and they just

[Laughter]

Dan: Here’s your baseball card kid

[Laughter]

Ben: It was really amazing, I don’t remember all the contents of it but I would agree with this guy there is, he has a tag, “you lost something, I find it” Dan can you say that with a Massachusetts accent for us? Just kidding

Dan: I notice his fee isn’t in the tagline though

Ben: Yeah that’s characteristic

Dan: “You lost it, I find it, you get half”

Seth: Well that’s going to do it for us, we’re going to wrap up Money in the News but we’re going to be right back after this break and when we come back we’re going to be talking about personality types. There are different kinds of personality types when it comes to working in or spending or saving money and all those things. Some of them are great; some of them have some drawbacks, and some of them are, you know lots of people are hybrids of these personality types. You're listening to Money on Tap; you can reach us at 855-226-8551 or info@yourmoneyontap.com. Take a quick break we’ll be right back

Ben: If you're listening today and your questions are outside the box of estate planning or financial planning or any number of the pieces that we kind of traditionally talk about, don’t forget that Brayshaw Financial offers auto, home, and business insurance, and we have an entire department that handles all of that for you. Give us a call at 855-226-8551, I’d be happy to take care of those needs for you, or email us at info@yourmoneyontap.com

Now back to Money on Tap with Ben and Seth

[Music]

Seth: Welcome back, you're listening to Money on Tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com. We are talking about personality types. There are several personality types when it comes to working with money and it’s not all bad but it’s one of those things that we find really interesting when kind of working in behavioral finance and trying to understand why do people do with their money, what they do with their money

Ben: Well you know Seth, you say that and just what comes to mind is you know I think about the fact that the behavioral piece of this is something that we have to help people through, like because whether you're a saver or a spender or a worrier or all the different, you know, we have to work with that person because we have to get them to a point where they can get to a healthy point and that you know, and sorry what you were saying with behavioral finance is a great point

Seth: Yeah, so what kind of a personality are you would be, I guess what Ben’s talking about there, and trying to apply that and understand it in our personal journey with finance. We all have a relationship with money and we’re going to have some of these traits that are going to be more prevalent than others

Ben: Yeah that’s for sure and I think, I think the thing that is the most interesting when we meet with clients is the combination of the personality traits when someone comes in, right? You have a husband and a wife and one person thinks one way about money and one person thinks almost completely opposite, its either almost agnostic or completely like, oh he takes too much risk, or you know she doesn’t let me do what I need to do, and you know like well I do all the work I don’t handle any of it, oh they don’t even want to come in and they don’t even talk, they don’t like even thinking about money, its not their thing. I mean I can name a thousand different phrases out there that represent any one of a zillion, I mean we have eight personality types today to talk about and I think you know if you're listening to this show you say, well I kind of know if I'm this or I'm that, but I think the benefit you're going to get out of this is to understand when to combat the natural inclination of the personality type your kind of born with or you’ve learned or you’ve acquired to get yourself to a better balance. I mean we all have inclinations to do one thing or another and finding that median is really important, so, because when you approach money and you approach financial decisions and so forth, it’s like Dan said it’s an emotional decision, everything is emotional around this so if you can understand all the personality types and start challenging yourself to become balanced and make sure that you're not drifting into one verses the other too much

Dan: I think it’s probably most important, and we see it everyday with clients is, you know for you out there as an investor to understand what your personality type is. When the topic of money and investing comes up, you know what’s that initial gut reaction like and just so, the importance and understanding of that is so you don’t create roadblocks for yourself, you're not creating blind spots, that you're able to keep an open mind to the conversation ahead of you, understanding that when certain topics and thoughts come up that you're going to have a natural reaction to it, you know you don’t want to have those things stand in the way of making a right decision and create the best opportunity for yourself down the road. So that little bit of self-awareness and comprehension of what’s just natural for you to react in terms of making big, kind of very important longer term decisions, you know trust the guidance that you get from your advisors is what I guess the bigger point, you know make sure that your own personal inclinations don’t prevent you from hearing what’s being said

Seth: Well said Dan. Before we get too far down the road you can reach us at 855-226-8551 or info@yourmoneyontap.com. And if you are listening to us on the radio today we are a podcast as well so if you miss something and you want to go back and grab that information find us at Money on Tap on any one of the podcast venues and we appreciate you listening. And also we love the call-ins and the activity that you guys are creating out there around the content that we’re trying o deliver here today. So we’ve got, first and foremost, probably one of our favorites to see, is a saver. And how do you know that you're a saver? Well you might put away money endlessly, sometimes without any kind of a real goal in mind, it’s just kind of a compulsion, you have to save. You might also be you know saving money just because it’s what makes you feel secure in life, that’s usually one of the goals or one of the things that’s kind of underlining motivation. If you're a big money saver you're probably also very frugal, you might find that friends will come and ask you for advice on what phone company is cheapest or where the best deal in town you know for a burger this week is

Ben: Yeah, you know Seth I think as we go through the concept of saver, right, it sounds great, like if you're listening to this show and you're saying to yourself, I'm a saver, I'm the responsible party, I'm the person who’s got it under control and I'm putting money away, it’s like that sounds really good but you know as I think about savers, yeah you know we love being savers, but if you're a compulsive saver you can become really overly too cautious to the point where you actually cost yourself money where you're no longer saving. And one of the things we’ve talked about on this show a number of times is the concept of inflation, like this inflationary environment that we’re facing we’re talking about if all you're doing is saving money under the mattress, like we talked about the 46, 000 dollars that that guy found in the attic in Massachusetts, it’s still only worth 46, 000 dollars

Dan: Exactly right. It’s less now, I mean compared to what it was then, it was like half a million

Ben: Yeah. It was almost a half a million and today its worth 46, 000. That person lost money but they were a saver, you know and so when you think about that, that person never pulled the money, somebody who out the money up there half a million, if I put half a million dollars in my attic and I went through the Depression and everything else and at some point in time I never pulled it out I became an unhealthy saver. And I think people have to understand there's both unhealthy and healthy in each one of these categories that we’re going to probably talk about. Now maybe not everyone will have a healthy or unhealthy but people say you know, well I'm a saver and that just well, in a cultural environment that just sounds good like, oh you must be responsible, but that’s not necessarily the case and in this example, it’s just actually like literally the perfect Money in the News article out there, its to say hey saving isn’t all its cracked up to be

Dan: You know I grew up in, like probably all of us, my grandparents survived and went through the Depression, my parents were severely impacted in their growing up by that whole mentality and kind of that experience from the generation before, so saving was critical. I mean my family very much was into, you know if you have an extra dollar you out it in the bank and it was just automatic it was just what was expected and that’s the advice that they’ve gotten through the generations. But later in life you know when I was kind of beginning my career in finance I got this other tidbit that I had heard some place, and I can’t even exactly place it but it was profound and I still live and believe it today, it’s that you can’t save your way to wealth. You can’t do it; you cannot possibly save enough you have to invest

Ben: That’s a great line. You can’t save your way to wealth

Dan: Can’t do it

Seth: Yeah there are several drawbacks to being you know unbalanced in this relationship, you know you might be missing out on hobbies and you might be passing up on time with your family, taking a vacation even, you know if that’s the motivation behind why you're not doing something there's an imbalance there and there I definitely a sacrifice and

Dan: Whoever buried that 46, 000, you know they passed up a chance to take a vacation or buy that car or do whatever it was and they died before they told anyone where the money was

Ben: Yeah

Seth: Number two, well folks not the saver, the spender. You're a spender you probably already know this and you’ve had other people try to talk you out of making some of these decisions, but you know what are the indications that that’s you? Your buying just stuff you don’t need frankly, you’ve got a tendency to probably treat people to a special something just for no particular reason, you know you might be kind of like an emotional buyer as well like if your, you know kind of, spending creates a satiating type of a feeling to alleviate stress for a lot of the more compulsive spenders that we find

Dan: Yeah I think I just identified my first hybrid too. My wife is a bargain shopper for stuff she does not need

Ben: And she's not a subscriber to our podcast

Dan: That’s why I can get away with it

Ben: I think that’s an interesting piece about that right, so there's the spender, we all know a spender and when we use the word spender there's that negative connotation too. Are there good spenders, I mean you have to know when to spend and when not to spend, right? There's a balance of when to save, when not save, and when to spend and when to invest, but if you don’t have kind of guardrails inside each of these things where you're saving appropriately, you're spending appropriately, any one of these, any one of these personality traits can really get out of whack and that’s one of the things that I think is a complicated issue for most of our listeners. I mean there's not a person, any of us, I mean I know both of you well, I've known both of you for well 20, 25 years, and we all know each others pitfalls, I mean well, I mean I know your pitfalls, but we both, we all have that, where we save, where we spend, what our personalities are, and honestly it’s the differences of us as partners and all of us, and how we look at where we spend our money. I mean I love, I mean Dan is much more conservative financially than I am, like that’s just our nature like it doesn’t mean that its good or bad but its interesting because our balance in that conversation is really interesting as well and Seth’s almost a little bit more out there, he's very in tune with where to spend money for a lot of the pieces that we need and so sometimes I look at it and say to myself, I might be middle of the road between the two of you but then sometimes I know I'm not. But its like I can really become I can jump into the spending thing very easily. Dan knows that

Dan: Yes, yes he can

Ben: Dan’s ready to go recycle stuff, so, how can we use this again. But there is a balance and we all know that because we engage that, we engage that in the industry and I think that’s something that you know when you have, when God pairs you with somebody and you talk about your wife, I mean you guys are probably perfectly paired you know between the spending and not spending, so that’s an interesting piece

Dan: Separate checking accounts then, so

[Laughter]

Seth: You know something else to that, I know this comes up for people as well, is hiding purchases. You know if, that’s one of those things that’s happened then probably your gut check there is like, oops, I'm doing it again. So what are the things that we could do to again bring that balance back into the relationship here with money and a lot of the times it’s just a simple budget, and again I would say simple is the key word here because if its not something that allows you to just take a look at what’s the asset test here, really that’s what we’re looking for, to know that we’re staying in line with what we’ve communicated with our partner or ourselves that we’re going to try to do

Dan: Another one of those lessons I learned early is you know this came from my father, he always said pay yourself first. So when you talk about the notion of a budget, the driving principle there was whatever it is that you truly need or want to save for your future, whether its inside an IRA, 401k, or just an after tax investment account, if it has a specific purpose, if it’s a need that you believe in that is long term important to your family, that’s the first item in the budget. So you don’t save what's left, you save first and you spend what's left

Ben: Yeah and that’s the same premise as you know when I was taught about, you know even the concept of tiding, I was always told you know you tide your first, you know God wants your first fruits, that’s what it talks about that in the bible and I think about that and I was challenged by an older gentleman who I respect highly and he said to me, two things, he goes you know when someone looks back at my checkbook they’ll know my walk and my faith from the first check I wrote to the second I payed, and I thought wow what a challenge that someone can see that you wrote your first fruits, because its not the way it was where you know we had a farm and we’re sacrificing lambs and you know we don’t have alters here but what are our first fruits, I just thought that that was an interesting component to the same concept of what you're saying is you know what are you doing first with your money, that’s a really good challenging point for anybody listening, whether you're saving, tiding, however that is, you're managing your assets. What you do with your first dollars is going to define what your priority is in life. That’s really a big deal and I was challenged by that many many years ago, I'm not perfect at it I don’t do it every time but I will tell you it is a practice I try to live by, which is, anyways that’s what it is

Seth: So one other kind of a tip or tick here that we use with clients is, if they're the spender, and this is right in line with I think you're saying Ben –

Ben: Burn their checkbook, shed their credit cards the second they walk in, I'm just kidding

Seth: Well the budget has kind of like that, put everybody on a diet feel to it, you know and if you're not liking what you're doing you're probably not going to continue to do it. It’s just the way that people are. So if you can create a mindset around some saving activities or some spending activity, that’s the transformation for a lot of people that are big spenders, is allowing themselves to see that they're spending money and how they're spending the money and still kind of get that connection for them, that payoff is what they're looking for and so it doesn’t feel like they're just losing money or they're just giving it away

Ben: You know that’s an interesting point, I used to say to people all the time that the easiest way to save money was to stop eating out at restaurants that have waiters or waitresses because that’s 10, or 15, or 20%, however you tip, right, you know maybe you don’t tip I don’t know, but if you tip, like if you go to a place where they’re serving you, you know if you stop doing that and just go to a five guys or you know, I mean you can have as much fun with your family at some of the more casual places than a more official dining place, and then if you're going to get coffee verses a big dinner out, now with Covid that’s changed a lot, right, but that’s still something that you know I challenged my wife and my family with it, we intentionally look for places like, my kids know this too, where like, alright no Dad that’s sit down we’re going to have to pay a tip on that, and it’s not to be cheap it’s just to be responsible, right. So I can choose to pay the tip but I go to places where it’s not a requirement. Now I’ll tip anywhere I have to tip but you know that’s something to watch for, it’s a simple way as we open back up and maybe you're used to not eating out and going to that more expensive restaurant with an expensive waiter, I mean that’s a way you can start curbing because we’ve already changed our habits about how we live our everyday life, start when you exit to create new habits, create a new path to go

Seth: Folks you're listening to Money on Tap you can reach us at 855-226-8551 or info@yourmoneyontap.com. We’re going to take a quick break and we’ll be right back

Folks it is so much fun for us to bring you Money on Tap. My name is Seth Krussman and I am one of the hosts here at Money on Tap. I am also a financial planner, that’s what Ben and I do and the fun part is we get to have this radio show, we talk about important things that we think you need to listen to and be aware of to help raise the bar as far as your financial literacy. That’s a big part of what we’re trying to do here. The other thing that we’re doing here is well, as financial planners we are welcoming you to come and call us and to join us at Brayshaw Financial Group. Experience what real wealth management looks like. Let’s take a look at all sides of the issue, get a three-dimensional perspective and put a plan around your next step. It’s so critical and so many people just leave this part out and then they find out later, oh if I only would have known. Hey don’t let that be your story. Give us a call at 855-226-8551 or info@yourmoneyontap.com. If you have $250, 000 of investable assets today our plan is free to you, we think it’s important for you to know the facts and have a playbook so you can have a successful retirement. Give us a call at 855-226-8551. Thanks for listening

Now back to Money on Tap with Ben and Seth

[Music]

Seth: Welcome back, you're listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. And we’re talking about personality types and the different kinds of personality types that people revolve around when they're connected with money, have a relationship with money. We’ve got the saver, we’ve got the spender, and we also have several others we’re going to try and cover before the end of the show here so we might have to start pushing the needle a little bit Ben, and again Dan is here with us today, Dan Michelon partner with Brayshaw Financial. It’s good to have you on the show again and adding your wisdom and your experience here with us today

Dan: Let’s not go too far Seth, but thanks Dan for just trying to bring it up a notch

Seth: So you're like, oh I’m not a saver, I'm not a compulsive spender, maybe you are a moneymaker, right, maybe this is your obsession that you think making more money is the secret to happiness, you spend a ton of your energy just trying to make as much money as possible and you really get a lot of pleasure out the activity f getting approval and recognition from you know people about your financial success

Ben: You know this is a big issue in our world because we live in a materialistic world, it’s something that you know, and we’re in the business of making money for people so we have that right, I mean there's that, I hate this phrase but, people invest out of need or greed. I mean they say that’s the core elements of everyone’s investment decisions so trying to balance that. If listening to that turns you off a little bit I'm sorry but it’s just a phrase that’s used in the industry. These are the concerns and you have to figure out which one they're looking for. The person who’s looking to, that compulsive, that moneymaker guy is the one who doesn’t accept simple success. We talk about trying to make success, we talked about people, hey listen, we try to do that 7 to 10% return over a five-year period, that’s kind of our goal conversation. Have we beaten that? Yes. Have we had years we were slower than that? Yes. I mean all those things exist, but the thing is when you're not, when you're, like last year we had a very very good year and when that’s not good enough, that’s when I get very concerned about the client. I try to have to explain to them, hey listen these are your expectations, this is where your expectations should be, when we beat that don’t create a new expectation that we never defined as the case. You know and so the compulsive moneymaker, that person is the one who will leave us when the return is not as good as this great year. Like the person who says, well they must have lost their steam. We never promised to do the returns we did last year, I know that, you know so going through that concept, that’s a very dangerous place to be

Dan: Yeah and to that catchphrase there that people invest out of need or greed, what I see to be the case is a lot of people especially when your meeting with investors starting off young or at least young in their financial life, you know they save and we invest and we plan on the basis of need until the need is met. But generally peaking once you’ve gotten there and you think it’s a victory from a planning perspective and is it, but you don’t want to stop there, right, so they want to continue to grow and to shepherd that wealth and continue to add assets so their perspective over time it might look like or whatever the stated goal was, can improve. They have the opportunity to kind of broaden their horizons and to consider the possibility of doing more. Now is that greed? Well I mean you're taking money and your hoping to grow it, but what's the money for I mean there's lots of things we do as planners for clients that are you know tremendously generous and do a lot of gifting and you find you know different people and organizations and groups that you could find a way to support with that additional wealth

Ben: Absolutely. Next up we have the person who is indifferent to money. We get a lot of that. I mean I usually get a lot of that, Dan I don’t know when you sit down with clients in the conference room its, oh my wife didn’t come she doesn’t really do any of this stuff, you know this isn’t what they handle. I get that a lot, it tends to be more of a, you know financials tend to be more male dominated in households I would say on average. Though my mom was the financial, you know crucial piece, she was brilliant financially and when my mom passed away my dad hadn’t written a check in over 40 years of their marriage, and I was like shocked by that. So that tells you, my dad actually got an allowance to be honest. But there are relationships like that and to be indifferent is really, I think, probably one of the worst positions to be in. I really do because being indifferent means you have no impact on the benefit of the gifts you have because if you don’t choose a side, the decisions already been made, one-way or another. Someone else is already making that decision. And I encourage, if a spouse says I don’t want anything to do with it, I don’t do business with them. Like I say listen, you don’t have to be here for every ounce of everything, but you need to understand what we’re doing. There's no excuse for exiting the business. Even with discretionary accounts where we manage assets at full consent and etc, etc, I mean we don’t really have a problem with doing that as long as we know that the client understands and everyone’s aware of what the overall picture is, the understanding of the you know, we’re not looking for someone to handhold ourselves through the trading process, but we do want people engaged and that’s healthy. It’s unhealthy to be completely unengaged

Dan: You have a responsibility to your family to at least maintain awareness, at the very least

Ben: Yeah, and if you're a husband or wife that don’t want anything to do with it that’s ok. I wouldn’t condemn you for it but I would say that you have to be willing to engage. You know I mean you don’t have to do, because the thing is, is each one of you brings something to the table. Each partner is, I mean I look at the three of us, you know we each bring something to the table and over the years we’ve had our you know disagreements, or you know bet this way or that way to make things happen, usually I win, but I mean the thing is, is like, but honestly as I've gotten older I've realized the value God has given me by having you guys as partners because honestly its challenged me to really be more astute and aware of things that I'm not, because I don’t have all the answers. We all think we do right, I mean we all think oh we’re doing it the right way, we live in that naiveness but I think as we get older we become more aware of the gifts that are around us on a daily basis. I mean there's a zillion things, I look at Dan and say, man I'm so glad I didn’t do that but I don’t want to tell him

[Laughter]

Seth: So we haven’t hit it out of the park for you yet well maybe you're a little bit of both of these things. Maybe you are a saver but then occasionally you turn around and you're like, well where did it all go, because you're also a splurger at the same time. And you know this can be a little phonetic for people on the outside just trying to observe the pendulum swinging from one side to the other. But this is certainly one of those personality types that I think Ben might identity a little bit more with

Ben: I would, I would definitely identify with the saver-splurger. I would, I would definitely do that. I'm not, I mean I like nice things but I don’t spend money where I don’t, like if it doesn’t mean anything to me I'm not going to spend the money there, like if its not – I know people that are splurgers and they just, whatever they doing they're spending, but like for me, like my wife would say, man sometimes he's really cheap and then sometimes she’ll say, boy he’ll really just spend money on anything. But I have intent and that’s how I define it. I would definitely do that; I would probably say it’s more on the healthy side of trade, but yes

Dan: Yeah this is an ongoing learning experience in my household too, my stepson is in band and he's very much into it and we’re happy for him he's done a great job, but he’s been working for a couple for summers and we’ve been helping him, give him a little bit of an allowance for work around the house and he’d saved up in a checking account that we opened for him and I was very proud he's up to 900 dollars, I couldn’t believe it, and in one fell swoop, one trip to the music store, comes home with zero dollars and a new trumpet. And I was absolutely shocked that that was the decision he made because we’ve been trying to kind of impart this lesson on him, you know, and early on we’d split the allowance he could have half in cash, half went to the account and you know try to build some disciplines and I really thought we had him there and like I said one trip and gone

Ben: You know Dan I could see it in your eyes right now, I could see, hey you're going to need that trumpet when you're living on the street because that’s the only way you're going to make money

Dan: I hope it came with a hat to collect nickels

Seth: That’s maybe a good way to look at it, he's seeing this as a real investment and something that maybe he can earn income out of but I don’t know might take a minute before that turns into something else. So what is some advice that you would like to give Dan to the you know the saver/splurger when maybe they’ve got a big purchase that’s coming up or they're thinking about that big purchase

Ben: I know exactly what Dan would say

Dan: Think again, don’t do it

Seth: He’d just be like no

Ben: You know but I think the thing is one of the problems a lot of people have is the saver-splurger relationship, right, I think Dan kind of alluded to that, I mean like my wife and I we probably have a saver-splurger relationship on some level, I mean, so, these relationships, I don’t meet many husband and wife saver-savers. But I do see saver-spenders all the time and I do see that kind of offshoot and then I do see people who are both saver-splurger kind of people that are paired together. And then the highest conflict relationship I see is probably what would bring us to the next one, which is the gambler. You know the gambler there's always like one gambler once in a while that they get connected with an ultra-saver and that is a very dangerous, I usually find that that’s where most of you know the rocky road in the financial world actually hits and they usually need a mediator to get through it. They usually need someone to say, hey listen you're both way out on left field, you know one person thinks buying stocks or bonds might be too too risky, like buying an ultra conservative maybe you're buying the US treasury and the person’s like that’s way too risky, you know, but the other person’s like well you know I got four stocks that just went public and they got like I don’t know the SPACs, you know or something and I want to put all our money into it. That’s a real problem and those people usually need some sort of regular balanced person in the middle, that’s usually where we play a big role, I would say for a lot of people to look at that and try to say, just because of how we personally respond, I mean I think about it Dan like, when we do investments, Dan and I are different financially and so is Seth, but when we do investments we usually are all very similar in our track like, we usually are, kind of interesting that way when you think about it. I hadn’t really thought about that before but we don’t really have any conflicts about the investment world, we have our investment committee, we go through it, right, we’re not, yeah ok well, we’re pretty nonchalant about it, so that’s interesting so I think because of that, because we have training, we have education, we have a background, we bring that kind of solidarity to that. Now how I live my own personal life and I spend my own dollars is potentially a different scenario, right

Dan: Yeah and I think that’s, getting back to your point there when we’re looking at the portfolios for our clients’ money and their wealth we are able to make decisions and agreement on that virtually all the time, like you said, and its because I think we’re focused in those moments on our clients’ goals, its got less to do with our personal preferences and maybe some of the decisions we might make with our own money, but when the focus is clear and the outcome is something that we’re all looking towards on behalf of our clients, it’s a little easier path to see

Ben: Well how many times do we go to tell a client, listen you should sell this stock or get rid of this ETF or whatever it is, and they're like, well it could keep going up, but we have such an unemotional connection to it that we’re like, you know I mean just the other day when we were talking about my stock portfolio I brought Dan in and was like, hey take a look at this thing I just need an unbiased opinion because I get, just like anybody else we have emotional connections to different assets or we believe certain things are going to happen, but Dan would be like no that one’s gone, this one’s in, you know. I mean he doesn’t care, but that’s important to have that person in your life, you know and that’s to just kind of work through those different pieces

Dan: For us it’s easy, I mean I can’t tell you how many times I've just fallen in love with a stock for all the wrong reasons and you know you hesitate to sell when its down and when its up you can’t see the forest for the trees when you should make that decision you know what, I've made enough. All right this is it, the goal’s been met, you know, I see it all the time on the financial shows and you know when they're picking on some analyst because he sold too soon. You know one of them has the catch sign it says, you never apologize for taking a game

Ben: Yeah I know I love, yeah I know

Dan: It’s so true

Ben: It is so true. I have a friend of mine who bought Chipotle at like 6 dollars or something like that I don’t know, and he sold half of it when it went to like 40 bucks, he's like, this is ridiculous, I mean you know, he sold the other half I think when it like hit I don’t know it was like 89 or 90 dollars, I think it was just shy of 100, I’ll have to ask him I'm actually going to see him later I'm going to ask him that because I’m just curious, Chipotle is like I don’t know 14 or 1500 dollars a share or something like that you know, he's still kicking himself, I'm like what do you care you went to something else that’s making money you know like move on. But it is funny we all have those stories. I remember I bought Sirius satellite radio accidently in the wrong account and whatever and had to reverse the trade, but I bought it for like I think it was like 6 cents. And then it went to like 8 cents and I was like forget it I lost my gain. So those are things

Seth: Next up we have the worrier, which sometimes might kind of coincide with the super-saver or the really frugal characters, but I think this might have a little bit to do with our Money in the News 50, 000 dollars that was stashed away in an attic, I think the equivalency was around 500, 000 dollars of todays money, if you're putting half a million dollars in your attic you might be worrying a little bit. There might be some concern there. But the worrier, for the worrier it doesn’t really matter how much money they have, they're just constantly worried that they’ll lose it and they're really, you know lack a lot of confidence in their abilities to achieve the financial freedom that they crave. And this obsessive behavior really limits the joy in life for most of our worriers, that’s one of the things that I find more often than not, is that they just, they just don’t have joy when it comes to being able to experience life and financial freedom

Dan: You know I think, and I can relate to this a little bit, my favorite place to see money is on a statement generally speaking I like to see it there, and I think a lot of worriers feel the same way. But I think some people are generally happier in their investing and saving lives when they picture the assets on the page and not as the numbers in a spreadsheet that they may be, but they have the vision of what they hope to achieve, whether its that retirement home, the boat and the car, the kids education, you know so they're taking the assets off of the page from the black and white and making it to them, the vision of a tangible goal, a tangible outcome that just means more to them than the dollars

Ben: Yeah the worrier, we get phone calls from the worrier, right. Worrier comes in, they're trying to overcome the worry, they do some investing, and then we get a lot of phone calls, like hey listen you know market, what's this, what's that, and that’s a complicated person to work with for us at least. And sometimes we can help pull people out of the worry hole I think, and sometimes we can’t and that’s a, that really can be a very dangerous place and that’s where you put your 46, 000 or half a million dollars in the attic and its, it just goes down. I think with inflation too, for our listeners you know with inflation kind of roaring at us, and it’ll be something that mathematically goes through I think the entire market I mean, if you're spending more on something and you're invested in the market, the market’s going to rise from that inflation it was just a, the whole revenue process, the whole way it works generally moves that way. But if you have cash sitting in the bank and you're concerned about crisis, upheaval, the US dollar, one world currency, if you're in any of that conversation, I think the US dollar, cash in your pocket is the absolute worst place to put it. I mean mathematically I can make an argument ten ways to Sunday about how you can put it in almost anything else and you’d be better off to deal with inflation or to address those items. I mean you could do inflationary US government assets, I mean you can do a lot of different pieces but anything’s going to be better than the bank unless your planning on spending this money on various things

Seth: You know last but not least, I think the extreme that we have is the hoarder, people will do that as really an attempt to be so cautious that it just consumes them and they can’t get out of that fear of loss. Most of the time a hoarder is not going not be somebody that is really giving, not going to do any loans, not going to be doing any lending, not going to be giving to any organizations, but kind of ruined by the fear of loss in their life

Folks we hope that you have enjoyed your time with us here at Money on Tap today. You could reach us at 855-226-8551 or info@yourmoneyontap.com. You can also find us at Facebook, we’re at /3Dinvesting. We are also on Twitter at @bfg_llc and as always you can also find us at yourmoneyontap.com. It’s been a lot of fun, thank you Dan Michelon for exploring the different personality types around finances today. And if you are new to Money on Tap you're welcome to give us a call we love sitting down with listeners and just hearing about stories in their lives and sharing our experience and understanding around personal finance and financial planning with you too. Make it a great week, folks

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Money On Tap 167

Todays Money In The News quickly touched on the app from Robin Hood and commented on their style of trading and investing and compared it to gambling. Ben acknowledges the fact that the baby boomers and the Gen Z’ers have figured out how the system works and have manipulated in a way where they are making money and outsmarting the people who have many years’ experience in trading and investing.Hood’s style

Money On Tap had 2 new guests today which included Anthony Scola and Dan Mitchell who is part of the Brayshaw Financial group. Ben, Seth, Anthony and Dan talked about the one subject no one wants to talk about but that is extremely crucial in everyone’s lives - retirement. Adding their personal experience along with their advice and new strategies that have been developed, the guys emphasized the importance of having a good retirement plan set in motion along with the other more complicated details that come along with it.

Seth: Welcome to Money On Tap.

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Seth: Money On Tap - your personal finance headquarters where we bring out the professionals experience and some fun in what we call 3 dimensional investing - utilizing insurance brokerage and fee based planning. That's what we do on this show. We look at all sides of the issues. We bring a fully independent planning perspective to the table.

Seth: Welcome to Money On Tap - your personal finance headquarters. You can reach us at 855-226-8551. I have not said that for awhile, I want to bring it back the personal finance headquarters.

Ben: I know I like that it's been awhile since we've used that one Seth.

Seth: Yeah, but the rest will remain the same as far as like how you can connect with us today. You can reach us at 8552268551 or info@yourmoneyontap.com. Folks, today we have got guests in store for you, we have a topic that's appropriate no matter who or where you are, and that is going to be on an aging America and what this means for you. We want to take a look at investing, how to invest with a massive surge in our population pushing through and what is that going to mean in terms of you know how to get ahead of the curve and how to understand you know how to approach an aging America, because for a lot of this it might be you, it might be your parents, but we're all affected someway somehow. So we're hoping to prep you in that and with us today we've got Dan Mitchell and Ben Brayshaw and new to the show, would you please introduce yourself because I can't do it any better than you can.

Anthony: Thanks a lot Seth. My name is Anthony Scola.

Seth: Wonderful, yeah Tony would you just tell us a little bit about yourself first and foremost. Like where do you come from because I've never met you before.

Ben: It's not a very nice way to introduce horrible.

Anthony: Just go back then and I have gone, gone away back actually Dan as well. I was an independent

Seth: Sorry bout that last part.

Anthony: Yeah that's OK. OK, it's good to have him in person and he's back again. But yeah, started back in the business and early 90s and when I moved to New Hampshire, Ben and I actually worked independent in the same area and did a lot of work together and Dan as well actually was one of my OSJ’s so kind and moved in a different direction throughout my career and spend some time with wirehouse and independent as I mentioned and then got into some bank work and ran some programs for some mutual banks institutions in the area before being enticed to join the Brayshaw group late last year. So yeah, glad to be part of the organization.

Seth: Well, that's not the story that Ben tells me as I've been getting a chance actually getting money.

Ben: Its much better than that.

Seth:  But it's really it. We're really fortunate to have you with us today, Anthony.

Ben: Yeah, no. I want to speak into that a little bit. Take the opportunity here on the radio. No, I'm really excited that Tony's joined us. It's been fantastic. I mean, Tony had been friends for close to where approaching 20 years. So that's it's great to be actually working together in the same office. And he's a great partner to have in every accord so you know, Dan and I, we’re just really happy to have you and Seth is too I think we're just.

Anthony: Appreciate that.  

Seth: I’m such a hard guy to like or like back, it's always been that way so don't worry about it. Yeah, so this is going to be a lot of fun. It's going to be a new voice for us today and I think it's a voice of reason and.

Ben: we need that here.

Seth: Keep us a little grounded. And Dan, you're no longer and a new person to the money On Tap family.

Dan: I'm like a seasoned veteran.

Seth: You are. I gosh. Alright you folks, we're gonna have some fun today as you can tell. But before we get going too far down the road, it is time for Money In The News.

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Seth: You guys, you guys at Robin Hood making trading like candy? Is that what it is? I mean I you're gonna go into some kind of a cartoon land and make training like a like a pop quiz. Jingle jangle thing over here for everybody.

Ben: I think the word Robin Hood is become an everyday dinner table conversation with about just every you know high schooler, you know college kid that I stumbled across meeting with my kids. I mean everyone's like Oh yeah, I got a Robin Hood account I'm trade in stock too. It's kind of an interesting scenario I mean, Bloomberg brings up this article here on April what is this, April 21st. This article I just talks about the entire evolution of Robin Hood this online trading app with Baton Vlad, I mean, I've seen Vlad on TV. I've seen him testify and I've watched all this craziness. But it's just kind of interesting what they've done to make, you know trading stocks, grab the gens Z’ers and get them totally lured in to becoming like, and honestly, I mean what they have done to the conversation about stocks and trading and we're hearing about Reddit and all this craziness with all these GameStop and AMC and all the nuts kind of things that are happening, they have they have contributed to that pretty heavily inside the idea that I mean almost trading is gambling. Now I would agree that it is in some capacity, but I think there's a difference between trading and investing, and the line is whether or not you believe in something you're looking to hold it, you want to be an owner of a company, and gambling is where you think you're going to throw your money in and make a quick buck and you really have no basis for why you own the company or what the reason for it is. And that's super dangerous. Super dangerous.

Seth: Yeah, I completely agree. I think it is fascinating. I think there's part of this that really addresses a need for us as a society as whole as financial education is a huge thing that we're needing. There's a gap here. There's people we need more people investing and we talk about this so often. Hey, if you were just getting out of high school, could you take $50 a month and start to put it over into something as simple as an index fund if we if that's the most simple of possible approach to have since you so much time. What they’ve done here with Robin Hood which is something to really applaud I would say which is is the behavioral informed design and they sum it up in a PowerPoint friendly four step model that shows how the smartest designers were turning products into habits. And that's what they've done with the Robin Hood application is it is created this easy path. It's just flatten it and leveled the playing field for so many people out there to be able to start investing. So bravo! At the same time, investors this is not buying. This is what do you call it? It's not cotton candy at the at the carnival folks. This is real deal.

Ben: Yeah, it's it's. I mean they have. I mean, basically it's like a scratch ticket I think was was used as an example in the article and I don't think they're mocking them, I think they're saying that, hey, listen when you when you launch your app, you actually get to scratch off what your first stock is that they give you for free.

Seth: And balloons fall and confetti happens and.

Ben:  Yeah and then and then you now have a stock that you're watching. It's it's extremely clever to drag people into gambling, ‘cause that's what they are. I mean, I honestly do believe that they're just promoting straight up gambling in that they're not building real investors, though I think that you know you know, to each their own and take as much risk as you want. I mean, we have gambling is legal in a lot of states these days, so you know, I think this is where you know are you know the SCC offender regular all trying to figure out you know where did they where do they step in? What should they be doing with? What should they be doing? But I will tell you that through this whole pandemic the millennials and the gens Z’ers have proven how smart they are because they have literally put out put out apistos hedge fund companies and made them lose billions and billions of dollars. And they have figured out how to manipulate the system. So kudos to them for outsmarting the people who have been in the business for you know, decades upon decades, upon hundreds of years of firms that they have. I think honestly that’s the biggest kick in the teeth and funny from my perspective so.  

Seth: Folks, that's gonna do it for us in Money In The News.

Ben: Already Seth?

Seth: Its that quick, we got that big of a show coming up for you that we can't take anymore time away, but it's going happen quick and its gonna happen now. You’re listening to Money On Tap, you can reach us on 855-226-8551 or info@yourmoneyontap.com  and one other plug here - YouTubers out there. Yeah, we're there to haven't really said that a whole lot but it's one of the places we put together information together for you and hopefully here in the near future we look forward to putting some videos and stuff like that together soon so you know what it gonna be fun and we’re gonna have a load of fun engaging with you guys today. Don't go anywhere you’re listening to Money On Tap.

For a number of our listeners they have a lot of questions and you might be one of them. Today were just offering what we call zoominars, webinars over zoom meeting rooms where we have top experts, social security, estate planning, and financial planning experts for you to speak with, do a private consultation that way today. We’re also having webinar based zoominars where we’re gonna have multiple groups where you can be part of that and enjoy that as well coming up here in the new year. Give us a call at 855-226-8551 or email us at info@yourmoneyontap.com to schedule your zoominar.

Now back to Money On Tap with Ben and Seth

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Seth: Welcome back you’re listening to Money On Tap, you can reach us at 855-226-8551 or email us at info@yourmoneyontap.com.  Folks we are having a great time here today. We've got guests. We've got people that have been around the horn a few times. Ben and I are here and what does that mean? Well, we're going to get a lot of opinions here today. We're going to get a lot of facts. We're also going to get a different perspective on what an aging America means to you. What does that look like pushing through our economy? And what does that look like in terms of investments? And I think there's also a place that we want to kind of have a little bit of heart moment here with you, which is recognizing that we have people in our lives today that are aging. And whether that's you, whether that your parents, or your grandparents, whoever those people are, there are things that you can be preparing for, and you can be thoughtful about in walking through a season of life that that can be very hard to relate with at times that can be really hard to connect with and or even prepared for and I would say for myself, I'm one of those people that I don't want to look at it with moment when I take a look at my parents. It's a hard thing for me to connect that this is my this is my mom and dad in their 80s. Life is different for them. What do I need to be doing as their son? Because it's different as a planner I would say that's one of the things that that's the human part of who we are here today. With you end and I look forward to the stories and Ben would you please take it from there and talk more?

Ben: And sure, yeah, no. I think I think you bring up a lot of really good points. I mean. All of us deal with clients in lots of different positions that are difficult and complicated, and we have you know, it's not just parents its spouses too is all sorts of different issues and concerns. I think the thing is that you know around every difficulty around every concern, everything that you're trying to mitigate inside your investments along with your issue, you know, like the parents and what's going on with that demographic. There's always a buying and selling scenario there. There's always the what should I do with my investments based on this event in life and we talk about this from time to time. We talk about how we have, you know, 320 million Americans in this country and that's a lot of people. I mean, that is a group of people that are all making decisions at different courses and stands in their life at different age brackets that at the time in which they are you know, retiring or entering the workforce or having children. We all have these different kinds of experiences. But how you're investing your money at that time in your life is really one of those things that is dictated by those circumstances, or even whether how much you're investing or how you're allocating those funds. And I think the thing is, is that we talk a lot about aging America and what that is, and what I want to talk about today, and I think the big course of the conversation is really about how to invest around aging America how to make money around aging America. What is aging America doing with their money and how is that going to impact your investments moving forward? I think this is the conversation of a show that you really need to to be having with anybody you're doing you're doing investment work with  because ultimately if yore not having this conversation, you may be missing out or leaving yourself liable or in potentially problematic investment standpoint.

Dan: That's completely true, I mean each phase of life has its own needs and concerns and risks and things that just need to be addressed, and there's no more, or at least as important as any other component of that is how you financially plan for those times and what money gets set aside and what end of purpose it may be. So that's where the advice and counsel of planners like us who had the benefit of seeing many families and individuals go through all these turns and twists in life. You know we can apply that knowledge and experience to your personal situation, and that's really the benefit that we bring and honestly, the joy of the work we do.

Seth: Dan, you actually have some personal experience working with your grandparents in doing in home care with them through a season of their life too so there is that personal aspect that you that you just cannot deny that perspective in what we're bout to talk to talk about too.

Dan: Yeah, nothing, nothing brings you closer to realizing the importance of these things and kind of the delicacy of those times then going through it with a loved one. I mean there was impactful and in every kind of way. And you know when it's when it's your situation it's more than money, it's you know it's real life and it's loved ones you know and for us it's sometimes easier to be a step removed and be dealing really with the kind of facts and figures that matter without having to have that same degree of emotional attachment. I mean, it's it may feel detached or cold, but you know the advice that we're giving comes from experience and is really intended to get you through those experiences in the best possible way.

Seth: Tony, you're, you're new to money on tap today, but not new to investing. Not new to this scenario at these questions. My question for you is first question out of the gate, would you like that to be a softball or a hardball today?

Anthony: Oh yeah, love softball over here.

Seth: OK, I'll give you the softball, I'll tell you what the hardball is first. So and hey, let's talk about making money supply and demand. How do you make money? And then here's the softball. How do you make money on a situation?

Anthony: Well, I mean that's it's a good question. I think Dan made a lot of really good points in terms of the the phase of life type of thing you know, I do definitely have a larger planning background than just the investment portion of it and have spent a lot of time developing strategies for folks because at each stage of life there are different needs and importance’s and one of the things I tend to start with making money in particular is kind of start with an end in mind is if you don't have a goal, you have no way to benchmark your progress. You know people are very familiar with, you know looking at different ways to determine their success in investing, but it's different for each individual. So depending on where you want to end up and what you're planning for, really should determine what you're what you're setting your sights on for investment performance and how to make money you know, and that gets into the risk portion as well, because a lot of people don't want to take, especially as they are aging anymore risk than necessary. But sometimes that's the risk if they don't take enough, then they run the risk of not making enough, especially with life expectancies, continuing to be pushed out later and later, the assets that people have need to be able to last that length of time to protect them, whether it's for their lifestyle or for health or for, you know, a state transfer. If that's what's important to them so. More complicated question in softball.

Ben: That's for sure. That was for sure. You know, I think about, you know, the aging America and I think let's let's just jump into the demographic shift. I think that would be the next best step and it will kind of go through that and how that might be from an investment piece really the next move. When we talk about investments and we're working through the conversation of that with our clients and looking at where the market is moving really, you have to ask yourself kind of how the history of like, for instance, the baby boomers have driven investing for the past 40 years. You know they've been investing since, you know day one putting their money in their 401K's and breaking it up you know, across that kind of generic theme of large, mid and small cap investments, kind of the large companies down to the small companies. And you know that demographic has made money that way. They've made money that way by continuing to put money in and so forth. But I know look at things and how the world's moving in the changes this. There's about 320 million Americans, and if you've heard our show before you've heard us talk about this. But this is the investment story. The investment story is those 320 million Americans - basically, only about 15% of Americans retired. But that's the highest it's ever been. In 2007 we crossed about 5% of America retired for the first time ever, and now we're at 15, and in the next 20 years we're going to go from about 35 million 40 million people retired to a total of 120 million Americans retired.

Seth: You know, I love it Ben, I just pulled up this seniorcare.com aging American website and the number right now I'm watching some of the digits like role by as you're talking is 56 776 000. Just moved to 76 button hit 77. That's incredible.

Ben: Yeah, it's amazing young people in their retiring at such huge rates and when you think about what like Iacocca for instance, and how he transformed the automobile industry by, you know the Mustang, the Pinto, the minivan, like he was moving along with the demands of the baby boomers and what and that's why he was so successful.

Seth: And that was pretty much his generation, right?

Ben: Yeah

Seth: I mean, I think it's more the styles generation.

Ben: Yeah, he was right before that. But he was watching this. He had the perspective of the demand.

Seth: Right. Supply - demand. These are this is these are who were going to be catering to.

Ben: So when you take that into an investment piece and you start looking at what is the supply and demand story around investments and how does that work? Well, the baby boomers are retiring every day and people walk through our door and say I need two things. I need enough income to retire. And I don't want to lose my money. That's just saying I need income and safety.

Seth: Yeah.

Ben; Now in today's marketplace when you start looking at different, there's lots of different ways you can go to safety, but when they look at their 401K and John Hancock had a study and I've talked about this before, I think it's like 86% of Americans never rebalance or reallocate their 401K. They never change it, so that means from day one to the day they retire, they hit, oh, goodness gracious I have all these small caps and midcap, you know I don't need all this risk and. I want to lower that risk and when I lower that risk I want to get income. And we see people moving to like large blue chip companies. And then you know you normally think hey, listen a lot of people would be racing towards bonds, but we all know that bonds yields have just dropped. I mean like a rocket or drop like a rock. I guess it should say not a rocket, right? Right, but you know when you start thinking about that, people don't want the bonds because they know that soon as breaks go up, their bonds are going to drop in value. And if you don't understand that, that's something you should give us a call about, but what we see is people moving to this lower risk higher yield you know income positioned portfolio and if all of a sudden 38% of the current population all of a sudden is doing that as a big group that's a massive tandem swing in our market based on how money is being allocated. Now that doesn't mean that the small cap and the midcap assets are not good companies. They could be totally the greatest company in the world doing wonderful things but the truth is if people don't want to own that company is going force share price down. Do I think this is a massive problem that's going to really heavily impact our stock market? I'm not sure on that level, but I think that over the next 20 years, just even looking at some of the charts we have like the asset allocation diversification for the last 20 years, you can see trends of large cap value just continuing to rise on average over the last 20 year. I mean you could see them moving forward that demands naturally, increasing just by the by the numbers. I think that people can make a lot more money than they were writing about this risk over the next 20 years versus the person getting ready for retirement. This is the danger zone, right? This is the person getting ready to retire thinking about retiring 5 or 10 years saying well I’m going to keep things as is. Meanwhile people are slowly selling those assets that they own in their portfolios, small and Midcap. Like seeing a decline in those. And then them getting to retirement, saying boy, I didn't see as much growth as the market saw. Right when we talk about the SNP 500 we’re talking about large cap companies, we're not talking about small and mid. And people don't realize it. Like oh I own the SNP500, we’re good there. That’s great but is that really get you the large cap value play that seems to have the upper and continuing to move forward? Not entirely. I mean you get exposure to it but if the growth trend fails and the value you get a zero on that. So now that's I think when we talk about aging America in the investing you know that’s really kinda the  first piece, that's the scope of kinda breakdown your investments, but then as we shift we talk about long term care now had passed it over to Dan.

Dan: Yeah, that's what you know. One of the biggest threats to even the best laid financial plan is the medical risk and the immense cost that comes with any type of a nursing home or sits at living experience so that. You know, as planners, that's one of the things that is probably the least fun conversation you could have with a prospect or a client, but one of the most critical, you know, as we spend hours and hours building out that plan and over the course of years of investing with somebody and hundreds of meetings. The biggest threat that truly exists is the unknown of how to fund an absolutely tragic and traumatic and hugely expensive care situation. And we think the couple of decent solutions for that. You know in particular, there's one product offered through a company that we work with called One America that addresses is lot of these needs and you know really to kind of keep it short, but the the biggest thing that they offer that we feel like makes them even get is have a joint lifetime benefit so you'd be able to cover at least to some extent long term care, nursing home type expenses over the entire lives of a couple. With that in home care included as well, which is a big trend now obviously with as the pandemic is affected, nursing homes and medical facilities in general. You know people have always wanted to stay out of there as long as they possibly could and this is only enhanced that story and that home care situation is really something that people you know would choose to go through 1st and try and spend as much time with family at home as they possibly could in these policies are geared up to do that so you know that is one of the ways that we can address that situation. Maybe not entirely, but certainly do a level enough to give a family and give a married couple some choice in a little bit of funding and the ability to kind of dictate how care will be receive you know as the health deteriorates. And again as planners it's not a fun topic, but it's a critical one to address. At least not stand what the risk represents for everybody.

Seth: How many, how many times have you had the conversation with a client and you're taking a look at where they've allocated their money and they've got a significant portion of their assets built up in a 401K or an IRA? And we refer to that as being IRA poor. You've got a lot of money, but it's in a qualified pool of money, the IRA or the 401K. And every time you take a distribution on that, its taxable and there's no way around it or you don't have the ability to really funnel that money along over to a long term care solution So having that conversation how many times have you gotten kind of locked into there just isn't a solution over here in the long term Care World for you because you don't have the assets where we need them to be and how do we get them over there? And I love to help you were talking about them having some real opportunity for people that that are there right now.

Dan :Yeah, this care is expensive and you know one of the things that you know really holds people back from adding it to their plan is the cost of it and how do they most effectively acquire that care? And this product does offer a solution there. They are actually able to take qualified or IRA dollars and use those funds to build a pool of available dollars to be spent in a long term care situation again where that be at home or nursing home assisted living. And they’re truly unique in that they’re really the only company that's able to do that. And that's one of the reasons that we look to them is you know, people hate the notion of this kind of misconception they have of the old nursing home insurance where you pay for it forever, it's exorbitantly expensive and if you don't have that care event, you get no benefit is essentially the insurance company keeping your money. That is absolutely not the case here. You know with this particular product, we recommend whether you use it for care costs, whether you decide to opt out and request back your premium, or if you hold it and end up passing on you when you spouse without ever having that caravan, you're lucky enough to do that then it would pass on to your state to your beneficiaries as you've designated, so you'll never run into that situation where the money was spent and just never came back to you.

Ben: You know, Dan, I you know I've used this product pretty regularly with people who are looking for long term care solutions, and I'll tell you there is just them having a patent on that qualify that retirement funds to put that money in without taking that huge tax hit and being able to move that money very slowly but instantly provide you that full long term care coverage I think is fantastic. It is a solution that has been needed across the board, there just isn’t a lot of conversation around it. People don't know who what America is, you know it's a rating company. They don't understand the quality of the company behind it. And when you realize that you have a really solid program out here that's going to resolve your need because so many people are latent with too much IRA money like that kind of sounds silly, but people say, well, I don't have too much IRA money I just taking what they're taking income from their IRA’s maybe in retirement but they maybe don't take all the income they could take, there’s a portion of it they can sustain their regular income by segmenting a portion out and  then maybe allocating it to a 1 America contract. That is just a huge solution piece.

Seth: Folks you listen and Money On Tap you could reach us at 855-226-8551 or info@yourmoneyontap.com we appreciate joining us here today. If you are grabbing us right now via radio, welcome we enjoy the opportunities to have those conversations with you. If you're grabbing us through a podcast or if you like to listen to us again, or some of the other podcasts that we put out there. Just go to your podcast venue. Any one of them will have us at Money On Tap, and that's a lot of fun for us to hear from you folks too. We're going to take a quick break we’ll  be right back with more an Aging America, and what will this look like for you.

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Seth: Folks we have a lot of fun doing this show Money On Tap and Ben and I have been financial planners for years and years and our goal here with you is to bring you into the room have the conversations that we have. We think these are critical conversations for you, but we understand this is a limited space and what we'd love to do is to open the doors to you with us at Brayshaw Financial Group. So you could experience what it means to have 3 dimensional planning in your life. Lets take a look at all sides of your situation, your scenario and see how we can put together the best plan possible, taking into account your risk, how much can you have in the market? How much do we need to have set aside and doing different things for your life? That's what we do, as planners, how we engage with you and we welcome you to do that with us. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Now if you have $250 000 that are investable assets today our planning is free to you. We want you to have the playbook to have a successful experience in retirement. Give us a call  855-226-8551 or info@yourmoneyontap.com. Ben and I welcome you to Brayshaw Financial for complete wealth management.

Now back to money on tap with Ben and Seth.

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Seth: Welcome back. You're listening to Money On Tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com. It is it's a topic here with you today, believe it or not, it pertains to you, it applies to you and it applies to all of us because we're all here together in America, and we're aging, and we have an aging population that it's increasing every day. We take a look around and there's more and more people over the age of 65 and right now, if you were to take a look at the population it's 25 states that is the population of retired Americans right now. It's huge, over 50 million seniors and one of the greatest needs that we come to as people are looking for our advice as financial planners is lifetime income. And we've had lots of talks about this in it's not the one that everybody grabs off the shelf. It says, hey, let's talk about lifetime income. How do I build a pension for myself is usually what we're talking about at that point, and sometimes people come to us and they have a pension. They have more than one pension and that's wonderful to be able to find those, but more and more the pension or the lifetime income that a pension would have provided is not part of the story. What is the story look like? What does the landscape look like for so many of our seniors today is this. They've had more than five jobs. They have a 401K or maybe multiple 401K’s that they've contributed towards and they really don't know how to create income from the resources they have. They have maybe taken some classes on Social Security or talk to somebody at the Social Security Administration of what they need, what they, what are their options. But they don't necessarily know what the best way for them to even take Social Security is and that Social Security is really a form of lifetime income. So what we want to talk about is this is I want to talk about I want to kind of go into a place and understand that yes, it's not the first thing that we want to talk about. It's not the hot stock, it's not the large cap growth. It's not that's not what we're talking about.

Ben: I want to talk about that.

Seth: I do too. I really that's that makes me more happy. But what happens in this conversation as we started to really put together what I think of as a worst-case scenario like come hell or high water. Whatever happens in the next 5-10, 15, 20 years you know the dollars that are walking through the door. And if we can create some kind of a solution for you, that's the baseline of a lifetime income where you can feel confident and comfortable that you know you're going to be able to live. You might have to trim something over here. It may not be your ideal solution, but if we have something in place there for you. What happens is this - we find that the studies have shown that people a live longer,  well, a lot of the times well into their 90s. They're much happier. They just have this presence about them that is more at peace. And what is the connection there? I don't know. I don't have the answer for you on that, it just is what we experience and I matter fact when I'm having the conversation too and we get to that solution, I feel much better because now we can start to have more fun conversations around the periphery of what can we do for, you know, legacy and grandkids and you know some of these other things that maybe, you know, vacations. That's the fun stuff. That's the joy. Because we've done the kind of that that built that foundational piece, that foundational element, the rest of it can come together. The big picture can come together, and I share this often, and this comes to comes back to building a skyscraper and the image of building a skyscraper, I don't know if you ever.

Ben: I haven't built one yet.

Seth: It's quite a journey on average, thank you Ben, on average… OK, we'll go around the horn here for a second. Do you know how long on average it takes to build a skyscraper? Just a guess.

Ben: Two years, eight months, and three days.

Seth: That is really close, OK? It is 3 years it is 3 years on average and you, I mean, when you think of like build up come take a look at the most beautiful buildings in the world. Most people think of the skyscrapers. They're just incredible architectural masterpieces. Over half of the time, a year and a half is spent building a foundation for that. The rest of that goes up pretty darn quickly in comparison, but that's what we're talking about a lot of the time when we talk about a foundational element or a lifetime income, and how critical that is unless you spend the time going through that process and understanding how this piece is really a critical element for you and your retirement, the rest of it just kind of may not ever happen is the truth about it and it may not I mean you might have a beautiful vision but that just may not be a possibility. If we put this piece together, the rest of those pieces can fall into place much more quickly and be and it's just the journey becomes a lot more fun overall. And that's really what I had to share about that, Tony, I want to ask you a question as far as if some of your experience you shared some stories with us in it, just working with some different demographics, especially with doctors and in some of the some of the feedback and the experiences that you shared there, what are some of the critical elements that you come to when you talk about like preparing  retirement, preparing for state type of scenarios.

Anthony: Thanks Seth. You guys have made some really excellent points and the foundational visual is very important. I mean being primarily planner as I mentioned earlier, it isn't the exciting thing to talk about. It isn't the thing that folks come in and want to kind of dig down into and start, you know, addressing it's more about you know how much I have in assets and how I can make them grow? As I mentioned earlier, without kind of an end in mind where you want to be, it's kind of hard to do that, but another challenge is what you guys have been talking about the health risks, longevity, risks and as Seth just mentioned the foundational portion and a big part of that is something that. You know, for whatever reason, whether it's you know parents and children or even significant others, life partners, spouses, etc., don't necessarily want to talk about because you know they may not want to address it themselves is you know their plans if something doesn't go well. You plan for the worst hope for the best. And if you, if you overlook the planning necessary to take care of yourself and your family when the worst happens, it can be it can be a time bomb for your whole plan it can you know the entire building, the skyscraper can collapse around the foundation if you don't have that strong foundation, and one of those things are the legal documents as Seth mentioned I work a lot with positions in the area, work in the large Medical Center and it's something that I hear constantly is when folks come in, whether, even if it's for a procedure as you age, you know a lot of times folks need to have certain procedures regularly and you know at that time, going into, then have to address if the documents necessary to make certain decisions or for somebody to be able to make decisions on your behalf if first, whatever reason something goes wrong and you're unable to, whether it's personally based on your goals, like do not resuscitate order. A lot of folks I've spoken with in the past haven't had that conversation with each other. If something were to happen what would they want to be done or not done and you know these are conversations that couples need to have with each other and families need to have with their children or at least somebody designated, even if it's a third party that understands what your wishes are and helps you make sure that you have the documents in place to make sure that at that time, especially if it is, you know, a time that's not due to a positive result, you're not focused on something other than taking care of which important to yourself, your family, etc. You don't want to have to be running to court to get you know probate order to release funds if somebody doesn't have durable power of attorney in place. So reviewing your financial, you know your legal documents and not just from an estate planning standpoint but just you know making sure that there is somebody in place that knows your wishes that has the ability to voice those wishes on your behalf to make financial decisions or transactions for you. It's incredibly valuable, and it's one of those things that, again, as we mentioned earlier, it's not it's a hard conversation to have sometimes, but it is something that you know once you do address it and face the reality that that is something that that needs to be looked at and can be very help positive in the long run. It's not really that challenging to take care of.

Seth: You know, Tony. I'm just thinking about. You know, yeah? I mean, a lot of us have loved ones. Go in to the hospital and you know, the doctor presents that kind of one page slip that says sign here for your health care directives. And it's, I mean, you're in this emotional moment. You're figuring out what you want to do, do not resuscitate, resuscitate. You're like I don't know that I'm ready to die today like it's it's not that. It's not really a great emotional time to make those decisions on what you really want at that point, and I think and it was funny is how many doctors don't have the stuff in place? I mean they see this every day and they would say you know you should probably a prep this. Do you have these forms like they don't have the forms either most of the time and that's OK, I mean, but they don't have people holding their hands. We have on staff, you know, legal help here we've got. We've got other attorneys that we work with here locally. We have a number of resources where we can, kind of someone came in, we could just literally, you manage that process for them to get these you know these kind of tasks done in their life and not all of them have to be super expensive or large outlay. We have attorneys that do all different levels of the needed based work and it's priced accordingly which is good and but you know you don't want no one wants to be stuck in that moment. Right before they're going to pull out a knife and cut you open and figure out whether or not you. Who's going to make these decisions for you? Like, oh, I don't know, should I have this cousin, Uncle, nephew you know, brother, sister, you know what do I want to do this? And you know, sitting down with an attorney and kind of discerning who it is, and then if they're not available, who that next person would be and you know making sure that you're in a good place on those decisions. That's the healthy way to do it,so.

Anthony: Right and just from experience that the people that recognize that most as we mentioned earlier within are the folks that have gone through that. If they've had a family member that they've had to do that, and there be happy and the planning wasn't in place ahead of time, they recognize you know what a nightmare it is to have to address those things in the heat of the emotional moment. And they personally don't want to necessarily put their family, their children, their grandchildren, through that themselves and they're very adamant about making sure that that's something that's this taken care of and as Ben mentioned, you know may not be something that you need all of everything, but evaluating which things? Are important to you in your situation and then you know taking care of those things, they're pertinent to you, you know can be very important to save a lot of headaches in the end. And as I mentioned, even if things go well, but they are delayed and somebody ends up having a longer recovery time and they need to access some funds for whatever and it's an account that's in their name only, just being able to access them on their behalf can make a world of difference and it's not as easy as just going in and saying, well, my husband's you know recovering and can make you know this decision on his own. So he's asked me to do it and they're not they're not going to be able to make that transaction for you so there are ways to kind of circumvent that ahead of time.

Seth: Folks, you're listening to Money On Tap. You could reach us at 855-226-8551 or info@yourmoneyontap.com. We have been talking about an aging America. There's all sorts of topics in and around this that we've been discussing today and we’re going to come back here in just a couple more minutes and kind of land the plane here with a couple ideas and we’re going to take this around the table for each of us to kind of grab apart here in this kind of last thoughts, right? What did we learn today? Where we at with this. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’ll be right back.

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Ben: If you're listening today and you know your questions are outside the box of estate planning or financial planning or any number of the pieces that we kind of traditionally talk about, don't forget the Bradshaw Financial offers auto, home and business insurance, and we have an entire department that handles all of that for you. Give us a call at 855. 2268551 and be happy to take care of those these for you or email said info@yourmoneyontap.com.

Now back to money on tap with Ben and Seth.

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Seth: Welcome back you’re listening to Money On Tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com and having a lot of fun here today talking about an aging America and it's a part of our life that touches each and every one of us. Nobody is, nobody is separate from or other than. We all get to be here together and have this conversation and it's one that's really critical. We talked a little bit about investing like what are some ways that you can kind of be investing in the supply and demand around an aging America and other critical components like long term care in that conversation and that need that just need primarily should be addressed in the planning as well as lifetime income and what are some of the documents that we need to be thinking about? How do we prepare advanced directives and in the conversations around those. So it's been a really full conversation for us here and Tony Scola has been joining us here today. Partner and in mostly just a friend and he's part of Brayshaw Financial Group. I don't think your microphones on there Ben I appreciate that you didn't get… (inaudible) just not needed. Not necessary. He's yes, so we were just talking with Tony about kind of his experience in preparing these legal documents and how that's really not the funnest thing to probably have the conversation around, but a greater sense of how we can be. At ease once we've gone through this process and having those conversations ahead of sitting in the doctor's office signing the paper saying what your advanced directory will be at that moment where that's an emotional experience. And if you've been there with a loved one, an experience this yourself. God bless you ‘cause it is not, it is it is a challenge so having the conversation ahead of time. What's important, what's important? Well, you know, we think assembling a team is really critical and we focus with our clients here at Brashaw Financial Group a lot on this, it's the CPA. It's a lot of the time it can even be a relative or a friend that you bring into the conversation and help them to understand what your wishes are.

Ben: I like that and I think you know having that person is going to provide a little bit of guidance. Maybe some third kind of third perspective you know the additional like 'cause you're an emotional state and you know we talk about investments all the time and I mean like I come over and say hey Dan take a look at my portfolio tell me what you think. Do you see something I don't? Having that litmus test of just saying am I blinded by something here, right? Yeah, my blinded by.

Seth: What do I not see?

Ben: Yeah exactly and I mean you know lots of thought around this, not just your own is really valuable and we encourage that. I can't tell you how many people have come into this you know into the into the office and have brought people on the phone to talk with us to kind of go through it. If anyone's not willing to kind of expose or open up that storyline, that would be a concern to me as a consumer, you know so that's I think that's a good point and sorry to interrupt Seth. Go ahead.

Seth: I'm not 'cause I was done.

Ben: Oh, you were?

Seth: That was it.

Ben: I think the team concept, I think is is something that we all practice. I mean, we're always dealing with attorneys and CPA’s and you know, I mean, you name it we’re the financial word financial arm but having somebody, we usually end up kind of leading the pack most of the time.

Seth: Yeah, it becomes that much more from kind of the quarterback position in working through these scenarios and things change is wealth kind of moves up the tiers, right? When we start talking about 5-10, 15, 20 million, it's just kind of a different story at that point more often we're going to be sitting down with a larger group of people that work you know specifically in the context of what they work in and what they work through. But getting that team all together all on board is just a real critical element here because you don't want to do it alone, you don't have to and you don't want to. And having the right people in place and add that takes time because a lot of the time we're needing to learn to communicate with a different culture or a different entity, and in what they do specifically for you and your family, and getting on the same page.

Anthony: I totally agree Seth, actually, that's one of the things that you mentioned being a quarterback, I've used the analogy of an orchestra conductor as well you know, finding a trusted advisor that you feel comfortable disclosing your situation to and having these conversations with can be really important. And it also minimizes your, you know, the work that you need to put in. Most people don't want to spend time doing the research and digging in doing the due diligence on solutions and things like that, but having a team that they trust to be able to, you know, call that that special teams line out to take care of whatever it is that comes up, and knowing who needs to be addressed. Who needs to be included in the conversation and bringing them together on your behalf is one of the things that you know my clients have had voiced is one of the biggest values to them, so it's a very important piece of the puzzle is to be able to construct that team and trust it they’re looking out for your best interest so.

Dan: One of the biggest components, I think that that I've seen and experience about this whole conversation, and it's amazing to witness sometimes, but even before you bring in all of the outside experts and the people you would rely upon to give you specific advice for specific instances you know, make sure you take the time at home to have that conversation. Make sure that you know the goals that you thought you had in common 20-30 years ago when you started a family and bought a house and had the kids, you know they may not be the same today and you know it's a lot easier for the specialists in end all the various fields to put together the plan and try to keep you on that that rail to make sure that your achieve the goals you have. It's important for us to really understand that the goals are what you think they are, and so I definitely welcome people to console with us first. Have that conversation where we can, you know, essentially asking the questions that go home with, and then sit down at home with family with the most concerned loved ones and come back to us once you've really identified what those goals are and make sure that those wishes are in common still and what you thought they were 20 years ago when you had that conversation last.

Seth: Folks have been listening to Money On Tap, and hopefully you've gathered some information here that you could take home and have that coffee table conversation at dinner table conversation with you the people that you love and did you care for and that care about you. Bring that back to Brayshaw Financial Group. We’re all planners and partners here at Brayshaw Financial. Tony, Dan, Ben, I'm Seth, all of us here at Brayshaw Financial, we welcome you were glad to have you and thank you so much for your time today. We look forward to talking with you next week.

You've been listening to Money On Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. You can also find us at Facebook we’re at \3DInvesting, we're also on Twitter at BFG_LLC. And as always you can also find us at yourmoneyontapped.com. Thanks for listening. Thanks for liking our podcast. We appreciate you and we can't wait to make it a great day and a great life with you here at Money On Tap.

DISCLAIMER: The musics pressed are not necessarily the opinion of this radio station and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Investing is subject to risks, including loss of principle invested, no strategy, product material or tool mentioned can assure a profit or protect against loss. Please note that individual situations can vary. Therefore, the information, products, materials or tools mentioned should be relied upon when coordinated with individual professional advice. Past performance is not a guarantee of future results. This show may be subsidized in whole or in part by a product sponsor or issuer. Securities and Advisory services offered through Sagepoint Financial Incorporated member FINRA, SIPC and a registered investment advisor. All other services offered through Brayshaw Financial Group, LLC are independent of Sage Point Financial Sagepoint Financial and Brayshaw Financial Group do not provide tax or legal advice. Main office is located at 116 S River Rd, Bedford, NH 03110 and can be reached at toll free 8552268551.

MOT 165 Episode Summary

On this episode of Money on Tap, hosts Seth Krussman and Ben Brayshaw discuss how to invest during a period of inflation. Joined by Dan Michelon, they dive into what exactly the Covid19 pandemic means for your investing opportunities, covering topics such as, is now the time to buy a home? Is gold a safe investment? And what’s the deal with NFTs? 

MOT 165 Transcription

Welcome to “Money on Tap”

[Music]

Ben: “Money on Tap”, your personal finance headquarters, where we bring out the professionals experienced in some fun, in what we call three-dimensional investing – utilizing insurance, brokerage, and fee-based planning. That’s what we do on this show, we look at all sides of the issues, we bring a fully independent planning perspective to the table.

Seth: You can reach us at 855-226-8551 or info@yourmoneyontap.com. And folks, we’ve got a great show lined up for you today. My names Seth Krussman and I’m joined here once again with Benjamin Brayshaw. How are you Ben?

Ben: Good Seth, how you doing?                                                

Seth: I’m good; I liked your good. That was a good way to just start it off. “Good”

Ben: I want to make it firm and real.

Seth: Yeah, yeah. More exciting than you and me, or you and I, is Dan. Say hi Dan.

Dan: Glad to be here, thank you Seth.

Seth: Good. Dan is also partnered with Brayshaw Financial Group; at Brayshaw Financial we are planners. Well if you tuned in last week you heard us just go on and on and on about this wonderful studio that has been built at the main office in Bedford and so we all get to stand here together around this table and have fun.

Ben: We’re excited this is, this is going to make our technology stuff so much simpler. I’m very excited about this.

Seth: It only took like four years.

Ben: Four plus years, yes it did.

Seth: Well there was the seven year search for the new office and then –

Ben: Well it was great when we were doing it live on the radio. I mean I loved that, that was easy, we walked in, somebody took care of all the audio, everything was fantastic.

Seth: You had to speak, the dead air could not happen. The laughter had to be at a minimum. And we made good friends too. That was a really good experience.

Ben: Yeah that was a good time. Good time.

Seth: Hey, we are going to have a show for you; I promised it was going to be a good one. I have to remember what it is first and foremost because I want to talk about last week but I think what we’re going to talk about this week is we’re going to talk about how do you, how do you invest through inflationary periods. If we’re taking a look at that and taking a look at this possibility that we’re in a, or a soon to be period of inflation here, maybe something that you’ve never experienced in your investing, you’ve never thought of what that could look like and how that could affect your investments. Ok we had plenty of banter around what is inflation and what are the things that cause, and is it real, and how real is it, and what levels, last week, that was last week’s show, but we want to be prepared. And that’s part of what looking at the big picture three-dimensional investing accomplishes. If you have a planner and you’re working with somebody in your finances this should be top of mind for them right now in how to adjust you and your personal finances to be successful through a period of inflation. So that’s what the backbone of this show is going to get to today and it is fun, believe me it is a great topic. And thanks for all the likes and the listens by the way, we do appreciate that.

Ben: We do, we do. Well, without further ado, we have “Money in the News.”

[Music] 

Seth: US home prices rise at the fastest pace in 15 years. S&P CoreLogic Case-Shiller Index increased 11.2% in the year, ended in January, and that is the highest since February 2006. And if that means nothing to you just try to say that phrase, S&P CoreLogic Case-Shiller Index increased 11.2%, five times fast, it’s a good party gig.

Ben: You know Seth, I mean with all the different things that have been happening in the real estate world, it’s kind of been that perfect storm. Rates have dropped, the interest in trying to get out of the cities, the millennials are you know of ripe age to matriculate into their own home and, there’s been that argument that they have never really been interested in buying real estate or homes and so forth, and now with covid it really has pushed people to kind of reconsider that.

Dan: Yeah, I mean obviously with the mortgage rates hitting as low as 3% in July, it was a great incentive for anybody who may be considering it, and with the mass exodus out of cities and apartments and that kind of high rise style of living, you know the real estate market’s been booming.

Seth: Yeah, like there’s places in the continent that we’ve never seen have this kind of boom. Boise is one of them that’s near us. Montana. Arizona.

Ben: Didn’t we do a show, didn’t we have a “Money in the News” thing about the different cities –

Seth: I think it was like the top fastest growing places –

Ben: They were paying people to come.

Seth: Oh that one, yes we did, we did do that.

Ben: Yeah it was like these different cities were literally offering major incentives for people to move there.

Seth: Now we’ve got you know at least three people that are moving to Nashville, or Tennessee.

Ben: I know we know a ton of people that are moving. 

Seth: Yeah, I’ve been there and I love it. I wouldn’t mind.

Ben: You’re moving away from us, Seth. Dan, are you moving?

Dan: Not yet, but I’m considering it now.

Seth: Did we, we talked you into it. Rates are low. They still are and that’s an incredible part of what’s fueled so much of this boom in the real estate. And like you said Dan, the move, the exodus from the city because people I guess realized that being outside and being able to go places was apart of the life that they enjoyed in the city and that being stripped out, wanting a yard, wanting to play, wanting to do more normal things.

I’ve talked to several real estate friends and constantly the conversation revolves around this lack of inventory, like they just can’t get a house on the market and once its on its gone, like multiple offers again.

Dan: You can’t even look at houses in some areas.  

Seth: No, sight unseen you better make sure that you’re throwing a bunch of cash at the thing and certainly some challenge there for the people regardless of the rates being low. First-time homebuyers are having real struggles to get into a market even. But yeah, the supply and demand and that’s what we were talking about last week, is the money supply. If we have a glut of money in the system what happens with those consumer prices? Well this is one of those areas that that in real estate that we have seen rise faster than what that 1.4, 1.6% CPI has been rising at and it is an asset to, real estate is an asset, and we’re going to talk about that coming up, I can’t wait. But before we do, Dan has been some place that I have dreamt of. Why don’t you tell us Dan a little bit about where you’ve been in this world and what happens when you walk into places that you’re, that you weren’t quite dressed correctly.

Dan: Yeah I was lucky enough to get to take a weeklong trip to Monaco and I was also lucky enough to experience getting tossed out of probably the finest establishment of my life. The Grand Casino there is a heck of a take, I’d recommend it to anyone but be sure you’re black tie.

Seth: Oh ok, so it wasn’t your accent?

Dan: No, no they let me in with that. I don’t think I’d spoken a word yet that might have helped after I tried to argue my way to stay, but yeah my finest suit was not enough. Got maybe two rooms in and they escorted me you know, quite quickly out the door.

Ben: Just because you weren’t wearing a black tux?

Dan: Had to have a tuxedo just to step in there and gamble, just to walk around and look, had to be in a tux.

Seth: How much, I mean it just must of been beautiful; the building must have been gorgeous.

Dan: Oh absolutely gorgeous, I mean you see the craps table from the James Bond movies. It really does look exactly like that.

Ben: What’s the a game they always play in James Bond I can’t remember it’s ah, baccarat

Seth: Baccarat

Ben: Baccarat

Dan: Yeah on the way out I took a picture against the finest car I never owned, this beautiful Ferrari right out front, I needed to have a memento since I didn’t really get to take it all in from the inside. I figured I’d get a quick shot on the outside.

Seth: Right I feel like as they tossed you, you were taking a picture.

Dan: That’s right.

Ben: I was hoping it was like a convertible and you like hoped over and slid in the seat and then –

Dan: Well there was a little bit of white snake going on, a little bit of white snake video, you know a little crawling around on the hood but –

Seth: You weren’t wearing the black tie they thought you were the valet

Dan: Well you know they already kicked me out once I figured what’s the worse they can do from here, so.

Seth: They probably could tell you that before that you needed to experience it. You might want to ask next time. So Monaco is in the news and Monaco is one of those places we don’t talk about a whole lot just because you know well, we don’t, well, Ben you own a couple places there don’t you?

Ben: Well you know, whatever. 

Seth: That’s why you know we don’t want to talk about it a whole lot but Monaco reigns now as the world’s priciest area to buy a home again. So, I mean if you thought that home prices here, which they’re reasonable, I would say in comparison, maybe not in comparison to the rest of the US, but, in comparison to Monaco, holy cow. This country held on to the title despite a 39% drop in sales of properties. What is that a ten million euros or more in 2020?

Ben: This is just insane, reading this. I mean, the average price per square meter, the per square meter price is 55, 800 US dollars. I mean I’m going to have to sell one of my two places I mean this is a great price.

Seth: Great time.

Ben: Well, I’ll keep the yachts though.

Seth: Say those numbers again because they didn’t, they didn’t really –

Ben: 55, 000 dollars per square meter

Seth: Ok so put that in perspective to me.

Ben: I don’t know you build a house in the US up here for 250 bucks a square foot. I means that 55, 000 dollars

Seth: 55, 000

Ben: I would say this is probably out of most people’s budget but that is some interesting news to own a place in Monaco at that price. It’s the most expensive place to buy a home in the world.

Seth: I wonder why it dropped so much, like 39% as far as the activity level, 39% drop of purchasing in a pandemic

Ben: Are you trying to allude to the fact that this might be a bargain time to buy?

Seth: I don’t know, when pandemic’s come around, and you know frankly folks I’ve never experienced one but I’m going to, I’m going to speak from a place that I might have. I think there’s a lot of places besides Portland, Oregon that I would prefer to live from this point and I do like Boise, Idaho, I like Montana a lot, you know, mountains are beautiful but id go sunny and warm. I think that’s that Barbados, you know Virgin Island thing that I might try to adapt to

Ben: Not a bad idea

Seth: Or Monaco

Ben: I think the thing is, with all these real estate articles, I think the real point is that there’s a change going on in society. I mean you know because there’s a lot you’re not going to undo from this, people have made life decisions to move and to work remotely or you know just to change an entire lifestyle and there’s probably a ton of people listening that are living that story right now and I mean that’s not going to change so your negotiation as people kind of go back to work, you know the office, people are, I mean, our nephew, my nephew visited us last week just to get out of the city and just have a place to go because he was tired of working, sleeping in his apartment, doing his work in his apartment. And he goes back and forth and just wanted a break from that, he’s like, I can’t wait to go back to the office. I mean and there’s hundreds of millions of people that feel that way. I know that.

Seth: I think a lot of those people that bought in the ‘burbs over the last year, as the cities reopen are going to start to realize, now that I can go down the block and go to my favorite place or you know do the things that I used to do, maybe they will move back. I’d be curious to see what happens in that real estate. I mean that’s to me more of an opportunity right now if you’re to try to take a look at where you might buy.

Ben: Well I mean you hear Fauci talking and all these different people are like, they’re talking about the next pandemic. I mean that’s their conversation. You hear Bill Gates laughing about the next pandemic

Seth: Well it would be good for his income.

Ben: Yeah its just ridiculous so I don’t think people are just going to go run out and sell there, you know –

Seth: He needs to write another book, he needs somewhere else to show up and say something

Dan: And more TV time

Ben: Oh gosh

Seth: I got your pandemic right here Fauci

Ben: But people are not going to just give up that, they bought as the ability to exit, it’s an exit story, it’s an investment in the exodus, it’s an investment in freedom, right? I mean that’s what people are saying, they’re like, I don’t want to be locked down in my apartment in the city again and I don’t ever want to have someone tell me to do that and if they drop the hint of another pandemic, I’m gone.

Seth: I think one of the things that you bring up is investment and we do happen to work in that area a lot, in investments

Ben: From time to time

Seth: But there’s different areas in different places in our lives that we invest and what we focus on a lot is the financial peace. And one of those things that becomes I think a challenge for people to navigate in purchasing a home, if that’s what it is for them verses say purchasing commercial real estate or investment real estate, is understanding what kind of investment happens there. Do I have a problem personally with over paying for my home, lets say that’s what it is or you know I feel really comfortable with my budget right here at this 2000 square foot home in this area or I could go 23, 24, whatever those numbers are, and pay a little more. Think of it in a 10-year time frame because this is where you are going to invest in your family, in life, and it’s a very different kind of investment. Try to, yes its good to get the buy, be able to buy low sell high, investment 101 probably, right? But it’s just a different classification and different kind of an investment and I think that’s one of the things we’re going to bump here in a little bit too.

Ben: Yeah, next on the list here we have an article and CNBC, “Bank stocks rise after hours as Fed sets date to lift buyback, dividend restrictions.” This is by Jesse Pound. Now this is very interesting, this is the kind of news we’ve all been waiting for on our side. I mean we’ve been long financials for what? 8, 9 months? Maybe longer?  And you know when they stopped allowing the dividend buybacks and the, I mean sorry the stock buybacks, that was a big deal. That’s a big deal, that’s actually what lifts a lot of stocks and their value, and I think you know this is one of the things that we’ve been waiting for to see, you know some real time horizon on what that looks like and they get into that, they talk about that throughout the article. On the announcement of this, this is basically the covid restriction they set in place and you know basically the second they announced this JPMorgan rose after hours by 1%. I mean this is a significant announcement and long-term peace to the crisis. When you talk about, I mean they note here in the article that the SPDR S&P Bank ETF is up 20% year to date, that’s almost a full quarter and that’s a ton of return in three months, something that is not to be looked on lightly. But you still look at some of these bank stocks and I mean I still think some of them are still pretty cheap depending, but there’s still a lot of concern to fish out like what’s going to happen. You know a lot of the sales of the bank stocks were a failure to pay on mortgages or rent or any of those things. I think Dan and I, we chat about that from time to time just kind of going through the different investments you hear on the TV, constantly talking about, hey, what’s going to happen to this real estate program or that real estate program and these are big concerns.

Dan: Yeah, I think quite a few of those banks never really recovered from the whole financial crisis of ’08 and have been to some degree undervalued since so I think that this added flexibility with the lifting of that regulation and coupled with interest likely moving up, it creates a ripe environment for the financial industry and for the banking business in particular.

Ben: Yeah, and I think you know there was some reserves that with [?] were put on banks that they had to have extra reserves, they had to hold onto extra funds, and they lifted some of those restrictions that allowed banks to actually spread out some of the cash that they had taken. Banks have basically been hoarding cash for about ten years. I mean that’s really where its been and its been a requirement that they hold a ton of cash because they didn’t want anymore bank failures but the release of some of these restrictions has allowed banks to spread out and potentially make more money. I saw JPMorgan, you know one analyst just raised the target price to like over 180 bucks a share.

I mean, people are pro on banks and I don’t know I’m really curious, caution beware because I wouldn’t just start shoving money into banks because you listen to our episode, but there’s still a lot of things to iron out in the real estate world and what’s going to happen because at the same time JPMorgan themselves were just announcing, I read it in another article, that they were going to downsize the amount of office space they have. You know which means if less people really do want to return to the workforce, though I think they are going to have some push back on that just from the staff, but if less people do want to return to the actual workforce there’s going to be more real estate on the market. And that’s always been the assumption. Which has been the decline of the banks because people felt like they were going to be devolved and that just has not happened. Not nearly at the level that they ever thought.

Seth: Yeah one of the articles that I took a look at was March 23, 2020. That wasn’t all that long ago but that’s where they started to kind of cancel the buybacks for pretty much any of the companies that are out there. And I was taking a look at the charts through that time and it was amazing to me to see the cancellation of buybacks, but then to see that the stock market went from that point forward this last year was incredible, in spite of that, that didn’t hinder a lot of what happened in the market this last year but the headline there is that cancelled stocks buybacks mount, they may not return for years, and here we are not even a year later.

Ben: Well the story could be that we haven’t seen anything yet. Like if you were to say, hey listen we are going to turn on all the buybacks back on with all these companies and it’s going to be permitted again and they haven’t been able to do that yet, we’ve rallied through something where stock buybacks have always been a big support for our market, I mean are we at the fledgling side of a massive bull run. Could that be the case?

Seth: Well the last one was the longest that I’ve ever experienced in spite of living through the nineties and that bull run. But it was the shortest bear market that we’ve ever gone into or been through with just, I want to say, can I say wicked? Since I’m over here in New England.

Ben: You can try its not going to sound good

Seth: It was a wicked run. This last year was a wicked run. It doesn’t sound as good coming from me.

[Laughter]

Seth: I’m so West Coast I can’t help myself

Ben: You know I think there are some really interesting points. I really do think that there’s kind of that unknown domain on the buyback issue, like I don’t think we know exactly what that does. I do think we’re going to have this kind of cusp event, I do think we’re going to hit some sort of max and a pullback, I think that’s going to happen. I think we have some time to go and I’ve basically said, that I really this is a summer, some time in the summer maybe august time period, that we’re going to see something. And I really think that’s going to happen for a couple different reasons, but one specifically is a lot people who kind of reallocated, repositioned, they were doing it many and June. They were saying these things are oversold and I’ve lost money here, I’m going to reposition and they’re going to want that long-term cap gains. You know that’s going to be some intentional stock movement I think.

Seth: And we did see an interesting June and August last year I think, where we had that pull back during that time. People sell in May and then they come back, and they come back and they buy in September, right? That’s the whole thing and a lot of people have followed that advice in their own personal investing.

So you’re listening to “Money on Tap”, you’ve been listening to “Money in the News”, and we are going to be right back. You can reach us at 855-226-8551 or info@yourmoneyontap.com. When we come back we are going to talk about investing through inflation. Folks this is going to be one of the things that you want to understand more as inflation works its way through, and whether that’s a true inflation, however you want to consider that. What you don’t want to do is you don’t want to sell in May and not come back for five years when inflation is down. You want to know to be invested, stay invested, and be long-term. We’re here to help you, listen with Brayshaw Financial Group and Money on Tap.

[Music]

Seth: Folks it is so much fun for us to bring you Money on Tap. My name is Seth Krussman and I am one of the hosts here at Money on Tap. I’m also a financial planner, that’s what we do, that’s what Ben and I do. And the fun part is we get to have this radio show. We talk about important things that we think you need to listen to and be aware of to help raise the bar as far as your financial literacy. It’s a big part of what we are trying to do here. The other thing that we’re doing here is, well, as financial planners we are welcoming you to come and call us and join us at Brayshaw Financial Group, experience what complete wealth management looks like. Lets take a look at all sides of the issue, get a three-dimensional perspective and put a plan around your next step. It’s so critical and so many people just leave this part out and then they find out later and go, “if I only would have known.” Hey, don’t let that be your story. Give us a call at 855-226-8551 or info@yourmoneyontap.com. If you have 250, 000 dollars of investable assets today our plan is free to you. We think it’s important for you to know the facts and have a playbook so you can have a successful retirement. Give us a call at 855-226-8551. Thanks for listening.

Now back to Money on Tap with Ben and Seth

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Seth: Welcome back to Money on Tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com. Folks this is one of those shows that we’re going to have a lot of fun with. And we hope that if you made it through Money in the News you’re here for the long run and you’re going to learn about how to invest through inflation. That may not make sense at first, and what we mean is in and during an inflationary period. What do you want to be doing with your investing that’s different from where we’ve been doing lately?

So, Dan, you came up with some really interesting stuff, which is from one of my favorite people when it comes to investing

Dan: Yeah, so whenever you’re looking to get your arms around a trend or understand what might happen in the future based on what’s happened in the past, there’s few better to go to that Mr. Warren Buffett himself, who for those of us that follow the investment world, is one of those guys up on the Mount Rushmore of investing for sure, if not the very top of it. He’s the guy who has seen virtually all of it and found a way to make money every step of the way. So his advice is generally sage and as I said, when you’re looking at any particular set of conditions a good question to ask is, what would Warren do right now? And luckily he’s well published and there’s a lot of information about what he has done in the past and where he sees all the stuff moving forward. But, in particular, I found an article had him interviewed at a couple different points in time, talking about how he handled the explosive inflation through the late 70s, early 80s, which I was around for but not old enough to remember any of it. But we’ve all heard the stories about the gas lines and all those kinds of things where the consumer index just went right through the roof. And what his advice was is really two points I learned from the article, two major points. There was the focus on companies that generate cash rather than consume it, in other words companies that have already invested enough in their business and their products in development and their market are already established that they don’t need to get out into the marketplace and raise cash to do those things. And secondly, to look for companies that can increase prices and handle the increased business without having spent more money to add to that capacity. If you think of things like utilities, that’s a great example that, you know in an inflationary environment, keep in mind that they are largely funded through bond issues which would have already been secured at a lower rate, so if interest rates are rising they’ve already got the cash on hand to meet operation. And when you think about the product that they offer, things like energy and water and whatever it may be, the necessities, so if they need to raise prices it is very unlikely it would impact the demand whatsoever. So utilities are a great example of that. And there are lots of other industries that we’re taking a look at, that have those same traits. Really, they’re firmly established, their product is developed and marketable and they are able to raise prices without having to have a negative impact on the demand. And as I said a couple different industries we’re taking a look at, a couple investment opportunities, that I know Ben’s got a list queued up here that we can take a look at. But those are really the things that you want to look for when you’re trying to identify an opportunity in a rising interest rate environment.

Ben: You know I think about those statements and there’s some real, I mean just pulling out those pieces, I think what Dan’s done here is fantastic and I appreciate Warren Buffett for sharing that because I think there’s a lot of wisdom in that. I mean just understanding that in an inflating environment and if a company already has a business model essentially that is working, running, producing the information, the product, and you could buy it, you still need it no matter what the scenario is, its not like you have to innovate to get to it, right? And if you have to innovate to get to get to something, those rising rate are going to cost that company more and more money to get there and it may stop them from getting there. I mean that’s really the point I think he’s making, is that hey listen, we’re already at the end of the road, we’re already producing the television, we’re already producing the raw energy you’re consuming at your house, or the food or, we’ve already got the farm, you know those conversations, they’re already shipping it to you, so combating that issue is a great piece of understanding for investors, especially if you’re new to investing and you’re just trying to get into this. You say, hey I think the market is at a real all-time high; maybe something’s going to happen. We hear that conversation constantly, I don’t know that we’re quite there yet; I think we have a good ways to run before we see a pull back but with some of the dividend release we just talked about a few minutes ago there’s some real upside possibilities that could happen. But if you want to run to something early that’s ok too. You can run to value, we see people run to value constantly right now and people are looking for a yield, that’s a big conversation in the story.

Seth: Yeah, I think as Dan you were kind of opening up the conversation round, what did Warren Buffett do and what would he do again. And I think we’ve leaned on a lot of that wisdom and his experience through different corridors of investing. One of the things that struck me this last year is Warren Buffett doing some things that he said he would never do. And you know what did he do. He bought technology and he said he would never do that because he didn’t understand it. That was ten years ago, maybe he had some time and place where he was like, oh I get it now, and now he’s doing it.

Ben: We did a whole show on that. We talked about all the things that Warren Buffett, all the rules he broke.

Seth: Yeah, breaking rule after rule. These were hard and fast for him and I’m just curious enough, I guess in the discussion to say, what are some of the new norms that we’re going to see coming through an inflationary period? What we saw this last pull back, February and March, which was a bear market, some of the traditional trades that we would make that have worked historically, which would be some of those utilities for instance, they were no longer the rules to the investment world. We saw Zoom take off, we saw Amazon, we just saw different places that were now the recessionary trade of today. And I do wonder as we have this conversation, keep in mind that these are things we want to talk about and we want to think of because there are going to be some new places for us to go and consider in this inflationary period.

Ben: I think we need to jump in here though and define, you know I was always taught that how you language something is really important and I think we need to language the fact that there’s the inflationary trade and there’s the recessionary trade, and now I think we have the pandemic trade.

Seth: Ok.

Ben: You know what I mean? Like I honestly think, like breaking down the three items, because you’re right, who knew that Zoom was going to skyrocket and then they’re down like 30 or 40% year to date. I mean they’re making a huge hit. Does that mean that Zoom’s a buy? I’m not sure it is. But is it here to say? Yeah, it’s here to stay. So like that’s a great pandemic trade, I don’t know that it’s a recessionary trade.

Seth: Very true.

Ben: You know what I mean?

Seth: But we were in a recession. There was this recession, but it wasn’t a recession that was brought through the economy. It was outside that affected the economy the way it did so it was a very different place that we’ve gone through and inflation is a place that we haven’t experienced since, what the 80s? I mean we just haven’t experienced that.

Ben: When you have a 20% pull back, that’s when you go into a bear market, right. And so we had that event, we had a forced recession, which is really a pandemic.

Seth: Exogenic was the word I was looking for. Exogenic – from outside

Ben: Yeah I think that’s a great word for it. I think as we break through defining those pieces, it’s really important I think for people as we walk into investing because we do it automatically. We look at the events, we look at the circumstances, we look at the impact and we forecast, we foreshadow, we try to figure out exactly where people are going to move to to meet their needs, to then say, that need’s going to have a higher demand. We want to own those companies, we want to own that sector, we want to own that industry.

Seth: And you do it I would say this too, we do it in a way, and I’m going to bring in Tom Brady –

Ben: Is he coming in here today?

Seth: I’m going to bring him in right now. He’s going to come and talk to us about picking your spot and making the throw and how do you do it so successfully. And he just, it’s a second nature, he knows how to do it, he's done it so many times in the past he can do it blindfolded. And he's just the best at what he does, right. So it’s that muscle memory, it’s the rinse, repeat, when you're doing this all day long and throughout the week over years and years and years, the conversation we have comes to a decision much more quickly and an understanding at least much more quickly, where we’re setting ourselves up for what we’re looking for in the next week, two, three, to a month. Getting ready to pull triggers that might very well take you the next six months to a year to just even get to.

Ben: I mean our whole investment committee we sat down, we talked about if this happens or that happens this is where we see value coming into play. I mean we talked about that; we had this conversation literally two days ago. You know I think about going through those pieces and saying to myself you know, in an inflationary environment that’s really where we’re heading and you're convinced as a listener that’s where you're heading. And we’ve got some ideas for you. I think some people are doing it intrinsically; I look at some of the things that we’ve come up with and I think it’s happening naturally for people, you know inside all of that. Though I think this pandemic event, a forced recessionary event, has driven some of these actions but I think they’re the natural cause and effect scenario that’s playing into that, which is interesting. So, I'm going to break out with number one here, real estate.

Real estate is probably the top number item of almost any recessionary play. I mean it can come in a lot of forms, I think that’s what we detail as we were kind of breaking this out, right, we came up with a number of different pieces, but when it comes to real estate, well what are you talking about real estate? Maybe you’re buying rental property. What happens with real estate, you know, you get that fixed mortgage which outs you in one component that stabilizes the inflationary piece there and then you have a rental income that usually moves with an inflationary event, that continues to rise.

Seth: Yeah, so as inflation happens so does the cost of goods and services, rent being one of them that we talked about on the last episode, is one of those indicators of inflation so as that’s going up and the inflation’s going up and your rate is staying the same, as long as your cash flow is increasing while your hard costs have stayed static.

Ben: Yeah, no totally. What’s great about that is that your income is moving perfectly in the corridor of inflation usually. I mean you might be a little step behind if –

Seth: You got a rent cap out

Ben: You got a rent cap out

[Laughter]

Ben: Yeah, so that’s definitely one of them. But lets say you're not the buyer of rental property, you don’t want to be the landlord, you don’t want the phone call for the hot water tank or there’s a whole in the wall, or you know whatever the story is maybe real estate, real estate investment trust – REITS. The trade of REITS space is very interesting, its high yield, but then again there’s all this speculation about who’s going to rock out and win in this area and who’s the most vulnerable because when you start getting into, you know equities that trade inside this real estate space it could be multi-family, it could hospitality, it could be grocery stores, it could be –

Seth: It could be –

Ben: Malls

Seth: It could be well or mismanaged

Ben: Exactly. So you have that factor, even in a good sector you might get burned on. I mean infrastructure real estate has been an interesting component, I think, for years, I mean there’s a lot of real estate in that area.

Seth: I don’t want to talk about this next one but I'm just going to mention short-term loans secured by real estate.

Ben: The idea of leveraging your real estate to get some money out. I mean I’ve done that. I've looked at the market and I've said hey, at different times, I said hey the market looks low, I don’t feel like I'm getting the yield out of the bank, I’m going to take the money out. I mean rates have dropped. Not something I would recommend, it straight up is a very high-risk area. From a compliant standpoint we’re not even allowed to take money from those types of assets and reinvest

Seth: Absolutely not

Ben: Because they want to discourage that. But that’s an area and a place that people play in. I would not encourage that by any means but that’s definitely on our list. And then fourthly, buy a home, which has been happening and that’s kind of where I think that intrinsic events are just happening

Dan: Yeah, mortgage rates being where they’re at, especially if you were able to strike over the summer and even as inflation potentially sets in here; mortgage rates compared historically remain very low. If you find that opportunity, it’s a great investment

Seth: I love how that one happens without people even having to think about it. So you now if you’ve done that recently pat yourself on the back, you did a good thing for you and your family and, again that’s one of those investments that pays dividends in so many other ways other than the price of that home going up and becoming a different kind of an asset for you.

Segment two here that we are going to step into in a little is commodities. Commodities.

Ben: I like how Dan was knocking on this door, I like how Dan, this is a big Dan area

Seth: Alright Dan

Ben: This is a big Dan area

Dan: Yeah I'm the raw material guy for sure. Commodities are things, kind of leaning back into Warren Buffett’s point; they are essentials in a lot of ways. You know, food, healthcare, shelter, technology, which we can’t live without at this point, you know those are the types of things that in this world that we’re in we just need to have and as those prices increase, its not going to impact necessarily how much of any given one of those that we buy. I mean for one thing we’ve been looking at some home improvement projects and the price of a two by four, its $7 around here, that’s inflation for you right there. So we see that those types of price increases are making their way through these types of investments, you know maybe tis the time to be in on it.

Ben: Yeah, I think the building material thing has hit everyone because I think that’s something that everyone can relate with because we’ve all been at home saying, alright honey we’ll get that project done now, you know, and what happens? You look and the price and your like well you know we were going to do that bathroom for around five grand, twenty grand, whatever. I was talking to somebody out in California and they told me it was going to be 40, 000 dollars to redo two bathrooms. That’s crazy. But you look at that and he’s like the building materials, they are literally charging a flat rate to the people, saying this is whatever the materials cost, we’re doing that at a standard markup. Because they’re moving so fast, we could give you a price and we could put 20%, or whatever they put, on top of it and then next thing you know they are losing money.

Seth: And all that quickly. Folks you’re listening to Money on Tap and you could reach us at 855-226-8551 or info@yourmoneyontap.com. We are talking about how you can invest through an inflationary period. I think we are going to jump back into some commodities when we do come back, I got some questions here looking at the commodities guide, and you can reach us at 855-226-8551. We’ll be right back.

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Ben: Call us today at 855-226-8551 and get your free consultation with Ben Brayshaw or Seth Krussman or any one of our partners and find out what’s going on in your plan, your estate plan, your financial plan, or what your planning at all if nothing. Get it fixed, get it right, get it done today. Give us a call at 855-226-8551

Now back to Money on Tap with Ben and Seth.

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Seth: Welcome back, you're listening to Money on Tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com. I want to take a second here to thank the podcast listeners and radio listeners as well. There’s so many people out there that you could be spending your time with. The fact that you're here with us today, we value that and we want to make it worth your time, worth your while to stay here and come back again and get this information, take it into how you eat, sleep, breathe your personal finances, ok. That’s what we’re all about her at Money on Tap; we’re going to give you some great stuff.

Again, we’re in a segment here where we are talking about investing through inflation or inflationary periods, something that hasn’t really been apart of the conversation. You could go back to that ’08 influx of capital when the Fed came out and started buying, these buying bonds, and how did they do that to create a bunch of equity in the market. That was one of the, feels like that was one of the last conversations we had before we started having these trillion dollar buyouts that have been coming through the market and how does that affect us, as far as inflation, because you have a bunch of money out there that’s been printed that’s going to affect the overall outcome of what the value of that money is in relationship to the goods and the services that we buy. So how do we start to think about what we’re doing today in our investments to kind of counteract that? We talked about real estate, if that’s one of the things that you're interested in or that you're wanting to walk through, we do this a lot with our clients, its one of those places where we just love being apart of, being active or passive investors in this area. And commodities, this is one that doesn’t come up so much, but Dan Michelon here is taking it on the head and he's going to go ahead and grab more of this. And the question I have for you Dan is this, you talked about food, healthcare, energy, building materials, and building materials is one of those, raw materials is one of those places that just that’s what commodities is, but you didn’t talk about pork bellies. And I was wondering when were you going to bring in the darn pork bellies for us to get that in, because how is that a commodity today? And then would you please talk about technology. Tech is not something that people relate to what a commodity is.

Dan: Well I don’t think previously but before we get there I do have a special affinity for bacon so I appreciate you bringing that up. You have to purchase the pig farm but that’s high on the list. But technology I think, it is something new to think of as a commodity simply because we have become to dependent on it and I think the pandemic kind of forced our hand with that. And for anybody that’s doing the homeschooling routine or the work from home, your Internet connection, whether its 5G or whatever the next thing might be, it’s a critical aspect of living life these days, so I think everything that goes into that, the ability to stay connected is essentially a commodity now.

Seth: Yeah, I would totally agree with that, I mean just looking at the concept of not having Internet, I mean in todays world the way things function we have become so dependent on it. How is not having a cable connection an option?

Dan: I got a 15-year-old who was down a cell phone for about twelve hours and that was a crisis. That was a full-blown pandemic level crisis.

Ben: I’ll show them a crisis

Seth: But when’s the last time you walked off and left your cell phone some place and you had to deal without it

Dan: A few minutes of panic and the sweats kick in; you know who can find my phone fast enough. Scary moments

Ben: My 10-year-old daughter, Sadie

Seth: Coming back to one of the original conversations that I do want to have it kind of accepting the new normal and I think technology being apart of the commodities conversation is a new normal. We can take a look at 2000 where, you know, the tech bubble happened, the market just was wiped out and that was a recession that we went through in that period, that was a bubble though the markets. Very different than what we’ve experienced this last year. But is technology still in the place it was in 2020. And we do take a look at things in the market that might cue us up to say well we’re getting darn close because the earnings, the Ford earnings on the market right now are getting pretty darn close to those 2020 levels and that’s one of the conversations people are having out there like, oh this is the next bubble, we’re here. And fear of the market because it’s going to collapse. Those are some of those things that people are looking at and making those statements based off of, but I think it is a very interesting place to consider

Dan: Well I think one of the things that’s different now verses then is that back in the early 2000s everything technology was growth, right. That was that style of investing, that was that style of stock, you know since, technology has become so engrained in all that we do and how business works. There are technology companies that are value companies these days. And those are probably the ones that fit into this inflation inverse or ride through this inflationary period, is companies that fall into that category, the technology companies that provide us the infrastructure for what we do. It isn’t necessarily the software, the new gadget, it’s the components and it’s the things that are critical to build the technology and make sure that everything works between us at home and on the couch and getting that order in to Amazon

Seth: So would Amazon be a, one of those technology companies that you would say would ride through an inflationary period?

Dan: Well you know its not a component builder its, at least in my house it’s a necessary evil

Seth: People proved it, they were like, I’m not about to give that up

Dan: Half way through the pandemic my kids started calling the Amazon guy uncle. He was a regular. He was a regular

Seth: That’s so sweet. Cooking him dinner, have him sitting down. Were you one of those families that were putting out the basket of snack goodies and the thank you message for the delivery drivers as they came by? That was like a Facebook fad I saw there for a little bit

Dan: Yeah we weren’t there we just had the kids waving out the window

Seth: You probably would have had me showing up at your house, “hey thanks”

Dan: Could have been

Ben: Gold and precious metals. This is one of those places that has been historic in terms of recession and if you were to take a look at that ’07, ’08 period, that was really I would say the last big boom that we saw in the gold, precious metals market and that was the devaluation of our market, our dollars, and potential inflation that was coming in through the printing of the money and the money systems. I want to call that something else more technical, but its money systems right now. But that’s what gold just went through the roof and this is one of those places where people, I've had the conversation over and over again, my dad one of them actually that brought it to my attention. This is a high-risk place to be in first and foremost. Commodities can be as well.

Seth: Commodities are high-risk because they are cyclical

Ben: Right

Seth: So if you get in when, hey listen we are at buried in the middle of an inflationary event and commodities have skyrocketed, you know, and you're like oh everyone should own commodities, by the time you hear it as a listener you're probably too late.

Ben: You know I think that’s the thing, right. By the time it gets down to the common person of, hey this is how you should invest; you probably missed the boat, right? Or I think precious metals come into play, we’ve talked to clients about this pretty regularly, and I mean I always get that, hey end of the world conversation. I tend to just tell people, hey listen we’re not really trading the gold space, the silver space, I can’t remember a time that we intentionally put a gold ETF, I don’t know of a time. I don’t know of a time that we took a gold or silver platinum position in any portfolio we manage

Seth: We’ve looked at it and we kind of go, “meh”. We’re ok without you

Ben: Right. And does it mean that it won’t exist and we wont pull the trigger and no one will know about it

Seth: But we can hang onto this position for 10 years plus without it ever moving or doing anything for us

Ben: Right, you could sit there dormant forever. I think what’s interesting about gold and precious metals is, I tell people there’s more of an intrinsic value to owning it. Like if you really have this kind of doomsday personality, you’re saying hey listen I really think there’s a crisis coming, if there is a crisis coming and the whole stock market collapses and all sorts of craziness happens, they’re not going to send you the gold. Ok? They’re not going to send it to you. So if you really think that gold is a bigger story, bigger conversation, then I would say look for maybe a physical asset purchase. That might be something. Invest in a safe. That might be a direction to consider. As for whether or not we are heading to an inflationary event and you want to buy gold, you could do that. I wouldn’t personally put it in our portfolio now; I’m not looking to make that call. If you think inflation is here for a short period of time and gold is going to skyrocket and you're going to make some big money off of it, great. I know people who have made money off gold. They’re usually very advanced traders. They’re playing lots of different positions in gold and silver. It is an inflationary investment but you have to be really certain that that inflation is coming and you have to be really certain its going to spike heavily.

Seth: I feel far more confident going into like the utilities and having more liquidity in an area like that, collecting a dividend in the process, you know there’s the Verizon –

Ben: In an inflationary event

Seth: Yeah

Ben: Absolutely. You made a great point the other day and I was thinking –

Seth: I make then everyday, all day

Ben: Yeah ok, well this particular one happens to stand out to me I guess then. When we were talking about the inflationary world and we were talking about what the government is doing and telling us its 1.68% inflation and kind of going through that and then when we made that comparison about how if we took their standards in 1980 and we took their standard in 1990 and overlaid them on today, we’d be somewhere between 5 and 9% inflation. Using their math, their standards, that were prior to this. But that would ultimately impact every item that they stand by. So I mean if social security is going to get an increase, they are going to get an increase based on what their inflationary levels are, so if they want to reduce their increase to social security to reduce their liabilities all they need to do is say, “let’s make inflation lower”

Dan: Some more of that new math

Ben: Yeah. New math, I know. So that’s a really very interesting piece and I think that, you know gold and precious metals, those are very good conversations for that, but that’s a bigger gamble than I think, in your point Seth or Dan, than energy or even healthcare. I think with the aging demographic and you know, 30% plus of America’s going to be over 65 in the next twenty years. There’s going to be some huge healthcare demands, and that means big money for pharma, that’s a big issue.

I like number four, we’ve chatted a little bit about this. This is kind of funny. I mean investment (?) I don’t even know how to get into this. Its investment (?), it was the fourth item we came up with and what’s interesting about this is that not everyone can go out and buy the Mona Lisa, I mean that’s not something you can do, but now you're looking at these NFTs, stocks, ETFs and everything else, its like these non-fungible tokens, buying a piece into these rare video clips or rare tweets. I mean I don’t know but they’re talking about these things being pieces to offset that, there’s lots of kind of this world of new perceived money that’s kind of becoming this potential inflationary conversation. I don’t know how that pans out. I don’t know how that works, I mean, its hard to go out and say, I'm going to buy this piece of art and someone is going to want to buy it from me later on for more money.

Dan: It’s even harder to fathom wanting to buy a tweet or a highlight from a sporting event. I mean its just really hard stuff to fathom. But there’s a market there

Ben: Dan and I talk all the time about how we used to collect baseball cards. And Dan worked at a baseball card shop and I can really appreciate owning that card and other people can own the same card, but there’s a limited quantity of those cards and there’s a physical, tangible asset you have. It’s hard for me to understand the tangible nature of feeling like you own something when you own a tweet.

Dan: It’s just out there on the Internet for anyone to view. At some point you have to extract value

Ben: I understand why people want the rights to our first show; I mean I would make that an NFT that seems like a good move, right?

Dan: Something for the Smithsonian

Seth: I have one more thing to say about gold and if you wanted to debunk it –

Ben: What a downer, you didn’t even play into it, come on

Seth: I’m so behind the times here, I’m still stuck on this gold thing and just was like I got to it. So if you were to take a look at the value of gold in 1986, 614 an ounce

Ben: How much?

Seth: 614 an ounce. Now 1725 is approximately what this is today. Now if you take a look at that and what is that return over that last forty years, it’s like a 4%, 4.7% return on that. And that right there is, I think, is where you might go into, does this beat the inflation piece, right. But you can also take a look at that in comparison to markets and say it would have been way better off in other places and I think that’s where people have this mystique around gold, that it’s the safe thing and they just need to understand, no its volatile. It goes up, it goes down

Ben: It’s super volatile. It’s super volatile. That’s good, thanks Seth. We have a couple other things here, we are running out of time but you know probably the one thing I think we can end on today, even though its on our entire list, and if you are looking for more information feel free to give us a call we’d be happy to dive in that, but tips. Tips are something that –

Seth: We give them all the time on Money on Tap

Ben: All the time. But treasury inflation protected security. The tips are, those are the bonds you can buy from the US government that basically they’re inflation protective. So you collect your yield, lets say you get 3% and if inflation rises 3 or 4% they are going to mitigate that by inflating the value of your bond which then inflates the distribution you have. It’s a very common purchase item for people who are looking at the bond world and are ultimately saying, I'm really concerned about an inflationary event. You know if you do buy a bond and its not inflation protected that’s a big problem. If you have a bond paying you 3% in a yield but inflation rises 4%, you just lost a 1% return. Your bond is going to be devalued because new bonds will be selling for more money.

Seth: Well, I would say yes but right now if you were to take a look at the yield on your five year, it’s a negative 1.77, you're going to have to get a thirty year to get a 0.1% yield on any of those. So good luck with that one, but traditionally, yeah that would work. And what to avoid, bonds I think are one of those places that we want to just say, stay away. High PE stocks are another place that even now I would say probably, with as crazy as crazy as the market might be in that whole realm, just probably not the safest play to make.

Thank you, you’ve been listening to Money on Tap. You could reach us at 855- 226-8551 or info@yourmoneyontap.com. You can also find us at Facebook, we’re at /3Dinvesting. We are also on Twitter at @bfg_llc and as always you can also find us at yourmoneyontap.com. Thanks for listening, thanks for liking our podcast, we appreciate you and we can’t wait to make it a great day and a great like with you here at Money on Tap.

[Music]

Money On Tap Show 166

Seth: Welcome to money on tap!

*music*

Seth: Money On Tap, your personal finance headquarters where we bring out the professionals experience and some fun in what we call three dimensional investing utilizing insurance, brokerage and fee-based planning. that’s what we do on this show, we look at all sides of the issues and we bring a fully independent planning perspective to the table. You can reach us at 855-226-8551 or info@yourmoneyontap.com, operators are standing by. Ben Brayshaw and Seth Krussman are here today for you, standing by for all of your money questions. Nothing too big, nothing too small right? We love just getting the questions. Everybody is entitled to have their experience in life.

Ben: I love some of the phone calls and conversations we have with people, its really very interesting.

Seth: The best ones I think for me, usually you start out like with that I’m sorry for asking this question or like people feel like they should already have an answer and place for something they’re about to ask.

Ben: That is the standard.

Seth: Yeah.

Ben: That’s the standard in every conversation I have with people walk through the door. They think they’re walking in with some sort of oh I wanna do all this. If you had all the answers, you wouldn’t be walking through the door and that’s totally okay and people don’t and…

Seth: Hey that’s me at Home Depot. You know, trying out…

Ben: That’s me in everything else.

Seth: Stuff.

Ben: That’s me and my children. I mean we just don’t know what we don’t know and that’s okay. And I think the thing is is I love the fact that our disposition is to educate and empower you and so we want you to ask questions because the more empowered you are the better investor you are the better person we can work with. If we have to start from the ground up that’s okay, but we want to get you to the place where you say that makes sense, I want to do that, I think I can do this. Or this is going to fit my need, I want you to be confident in the decisions that you’re moving forward with.  That’s the best kind of investor we can have. Somebody who goes home and doesn’t sleep well or it’s bothering them – that’s not a good fit and that’s okay. It really comes down to really just finding something you’re comfortable with and I think with today’s show, we’re going to talk about IRA’s, we’re going to talk about you know lots of different pieces to it. I mean we were just joking around, tips and tricks or whatever you want to call it, it’s not. But it’s a conversation about retirement and it’s the IRA retirement story. What is the one you’re working around and what are questions you would have and here what you’ve got to watch out for and we have ten of them today and I think were gonna have a great show because I think the conversation around it is so much bigger than ten. But we were talking about it and going through it like oh we’ll just come up with ten.

Seth: Well, it started as twenty.

Ben: Yes, that’s true, it started at twenty, its down to ten and all the other fifty will be buried in some sort of the conversation so if you don’t have all the answer afterwards, that’s okay.

Seth: Before we get into the meat and potatoes of the show, were gonna take a minute to talk about some money in the news.

*music*

Ben: Well, you know, we’ve got a kind of a big deal conversation going on with money in the news today, Seth. The big news is that Bernie Madoff died at 82, he was the mastermind of the giant Ponzi scheme that destroyed millions of lives, his family and other around him. That’s really sad.

Seth: Yeah. It is. You know we’ve done shows on the Ponzi scheme and now people would say it is no longer recognized as the Ponzi scheme it’s a Madoff scheme, you know if you wanna go down that road with it, that’s fine. Either way its a sham and I know when we are having discussions with our clients, people are sitting down with us and they want to ask is our money safe? Basically what they are trying to ask is is this another Bernie Madoff? And I mean we laugh at that because, thank god its not, and what have we done here at Money On Tap and Brayshaw Financial Group is, you know, we’ve got Pershing that we’re working with and Sage Point Financial as our broker dealer. These are all places you could be assured we’re not printing statements on a 1980’s printer and sending them to you.

Ben: I know, what’s really sad about this whole thing was that we’ve created different walls to kind of alleviate who you’re speaking to to remove that question or doubt. Like people don’t make cheques payable to Brayshaw Financial Group, we’ve made it that way intentionally and people made cheques payable to whatever Madoff Securities or whatever he was you know, I mean whatever the name of his company was. But I mean he scammed everybody, he scammed banks, he scammed big movie stars I mean you name it. Gosh.

Seth: Nobel Lauteate, Elie Weisel. One of the people of note, Kevin Bacon, a lot of people. We’re talking about charities, as they dug deeper into the Madoff scheme and it was spanning over 15 different countries, there was a lot of charities that had given money, there was a lot of other funds and hedge funds that had given money into, for him to work with and it was massive. Nothing that has ever been seen before and Bernie was this legend. People forget that, he wasn’t some guy that showed up on wall street and was like started you know churning out a scheme. He was there for so long and he created the NASDAQ, you know. He was one of the innovators in electronic trading.

Ben: Oh I know. Wasn’t he the chairman of the board, I think or something like that or was on the board of that? I mean he understood the rules, built the programs, built the rules around it and how to do it so he knew best on how to innovate fraud in that arena, and I think that’s really a scary thing. I mean sometimes the closer you get to you know you get to that stuff the easier it is to create fraud. I think we you know I have clients that you know have experienced fraud in the industry, who have been part of Ponzi schemes and you know those are those are kind of pick up where you got hurt and move forward kind of scenarios. And even to this day they still are always kind of like that hurt that burn, its sticks with you forever and these people lost billions of dollars, but I think I think they’ve been able to recover basically 14.4 billion of the 19 billion in principle. Which sounds good like hey listen they only missed out on what 4.6 billion dollars of recovery.

Seth: 75% of it has been recovered right?

Ben: Yeah. But people thought they had about 65 total billion in all their accounts

Seth: It’s a close to a chapter and its one that has completely changed so many of the ways that the SCC investigates or goes into and looks into financial doings. You know its really sad how preventable it was because you know what really what it came down to was there was a room under lock and key in his 3 floors that he was taken up in the Manhattan high rise there. This one room where it all happened, billions and billions and billions of dollars and when asked about it he said you know he’s poo poo the investigators the SCC investigators that were coming through kind of doing their typical rounds and the just overlooked it.

Ben: Basically Madoff plead guilty in 2009 to fraud, money laundering, perjury and theft. His son well its his dad sat him down and said to the family the money is gone. Its all been a big lie and that was found in the truth and consequences book that he had written, the autobiography. In this tragedy is horrible, and you know I’ve, you know Seth has an auditor you know doing compliance work myself you know having done all that stuff what I think is probably the most common scenario that people get kicked off I always seem to hear the event beginning with a recessionary period, a drop in the market, that they’re afraid of losing clients and that happened for them and Madoff recounts back in the 1990’s and having seen this stuff actually having worked on a lot of things that involved you know the discovery of that stuff in the past and different areas. Its usually people are just afraid of losing clients, they had a pullback or a loss in the market and they’re not fun conversations to have with people I mean hey the market pulled back on us last year, we were able to recover and those things are good and we went through that process but when you have big things you’re afraid of losing big things and that is the temptation that some of these people are really to deal with and its, its hard, its hard to deal with that stuff. But you know I used to have a lawyer friend of mine that used to say if you have bad news get it out fast and I think that’s the biggest thing is that don’t spread it out, don’t sugarcoat it just get it out and he wasn’t man enough to do that and now you know he died in prison basically without his family I mean one of his sons died of cancer was at 48 years old, another one took his own life I mean they claim his wife cries herself to sleep still for the pain that he’s caused people and she had no idea this was going on. You know sins horrific and it comes out and  its bad when it comes out and it effects a lot of people and that’s a sad day.

Seth: Yeah, hopefully we never see anything like this again and we can just take a look back and say wow what a lesson that has been learned and hopefully the people that were effected have recovered and are okay, right. Our thoughts and prayers are with those who suffered through this this crisis. You guys that’s gonna do it for us on Money in the News, we’re gonna take a quick break, we’re gonna be back with the IRA mistakes that hopefully you never have to make after especially after listening to the show today. Well be right back, you’re listening to Money On Tap.

*music*

Seth: For a number of our listeners they have a lot of questions and you might be one of them. Today were just offering what we call zoominars, webinars over zoom meeting rooms where we have top experts, social security, estate planning, and financial planning experts for you to speak with, do a private consultation that way today. We’re also having webinar based zoominars where we’re gonna have multiple groups where you can be part of that and enjoy that as well coming up here in the new year. Give us a call at 855-226-8551 or email us at info@yourmoneyontap.com to schedule your zoominar.

Now back to Money On Tap with Ben and Seth

*music*

Ben: Welcome back you’re listening to Money On Tap, you can reach us at 855-226-8551 or email us at info@yourmoneyontap.com. Folks this is one of those shows that we’re gonna have a lot of fun with and we hope that if you made it through Money in the News you’re here for the long run. IRA! What are we even talking about? You guys are already not making sense to us. Do I have one or do I not have one? Okay so, money kind of works like this right, there’s are a couple of different buckets that you can have your money in. One called qualified and the other one we call non-qualified and believe it or not you’re already familiar with one of those buckets real well and that’s your savings account, that’s your checking account, that’s your house, that’s taxable, that’s what we’re talking about when we say non-qualified, so there’s that bucket of money over there. This other bucket of money we talk about all the time is qualified money and qualified means 401k, 403b, IRA, Roth IRA. So these are the things were gonna talk about, primarily we’re going to spend our time talking about IRA and a Roth IRA okay. And if you’re wondering well why would you even mention qualified as a 401k because its all qualified money, it all qualifies and that’s under the tax code.

Seth: You know I think the thing is a lot of people use the conversation on pre-tax but not all qualified money is pre-tax and Roth IRA falls underneath that, same as the Roth 401k, those are after tax dollars that grow tax-deferred and tax-free and they come out 100% tax free and that included the growth. So if you put $10,000 $20,000 in your Roth, whether it’s a 401k or an IRA, you’re gonna pay taxes in the current year okay and then as the thing grows, lets say that thing is $100,000 someday or $200,000, well that entire sum is 100% tax-free when you take it out. It’s a phenomenal vehicle, it’s a wonderful planning tool and when accessed correctly and properly, you know, used in certain, there’s times when you wanna be careful when you’re doing Roth or Roth conversions. But we like to talk about those thing because these are strong opportunities that when the time is right, it’s a great opportunity. I’m gonna talk about one client who did one thing that I thought was interesting today and we’ll get to that with Roth conversions but with the IRA’s with the qualified, that’s all those pre-tax dollars, that’s all the money that you put in where you’re either taking, you’re taking pre-tax dollars is taking in or youre taking, to be complicated here after tax dollars and putting it in an IRA and then getting the tax money back when you file your taxes.

Ben: In the form of a deduction.

Seth: Exactly.

Ben: So it turns out to look and smell like pre-tax money, so lets just call it that.

Seth: Or if you’re in the 401k world, if that’s your qualified money bucket you’re contributing to right now, the pre-tax would be the it would be a reduction of your income. It never becomes taxable, its goes straight into the 401k, your income gets reduced and so the difference there is that the IRA, it becomes income and then it goes into the tax code and you deduct it off the backside.

Ben: To make this more complicated

Seth: That’s for all our wonderful listeners out there who are like alright you lost me already.

Ben: Heads spinning.

Seth: That’s okay, but there lots of different types of IRA’s.

Ben: Oh boy

Seth: Oh boy. Your SEP IRA’s and simple IRA’s, which are not simple.

Ben: Which ones the best one?

Seth: Right exactly exactly, so we’re not gonna get into the details of the different types of plans today.

Ben: Well we are gonna talk about that idea of ones better than another right, because hey they should be right, one should be better than another.

Seth: Well one would be more suitable for somebody versus another. But I think the thing is is that you know as we go through these 10 points of the things to consider when it comes to your IRA or your retirement plan and all the different things, we’ll talk about, they’re pretty much gonna go almost directly across the board right and so we have a couple we’re gonna talk about specifically IRA’s only and then Roth IRA’s only so that’s like the traditional IRA or roll over IRA or things like that like all these different things we’re talking about. So if you have questions we understand, give us a call.

Ben: Some of the call we get are hilarious which are great, I love the fact that people are just like engaging us, its great, we have people call in giving us suggestions on articles and show topics, its fantastic.

Seth: Yeah or telling me not to say that or I didn’t like that part and even those are a lot of fun too.

Ben: I have to disguise my voice sometimes Seth when I do that so its hard

Seth: Yeah its fun to hear men from across the office, hey why don’t we get going on this, we’re gonna have a bunch of fun and we’re gonna run out of time if we don’t we’re gonna make some sense through this and if this is a first time listen for you, we’re glad you’re here, hold onto your seat, its gonna make sense and you can go back and listen to it in a podcast, you can come back and grab these bits and pieces. The thing you really wanna focus on at this point is just listen, try to be open, try to listen, try to apply if you can to yourself what some of this means and come back and do it again and come back and find the next episode because we want you to have this empowerment around, again this is your financial journey and the more that you can take ownership of this, the better the experience is gonna be for you, the more positive the outcomes are gonna be, the greater the outcomes are gonna be so no matter where you’re starting, there’s something or if you’re experienced or not, there’s something for you here today. And with that we want to jump into number 1 – waiting till the last minute to make your IRA contribution.

Ben: What? That’s a bad idea, bad idea.

Seth: You could miss the deadline, that’s happened

Ben: I cant tell you how many people sent it to us that day mailing their tax return, we send it up and its I mean and right now with the I mean if you’re counting on the mail to be on time you are gravely mistaken on that. This is not a delay scenario anymore.

Seth: Now one of my jobs ive had in this industry was a prior life in this industry was taking these checks that would come in, you know pick up the mail on a daily basis and basically cashiering these checks and these were not small checks for some of these plans. But you know some of them were just like their annual contribution, but we would have some of these checks coming through a month after. And it was the most it was the craziest thing to have to sit there and watch the mail for darn near 2 months after the deadline which has been April 16^th for quite a while, not this year right, April 15^th April 16^th its moved around there a couple of times but this year we’re gonna look at May 15^th.

Ben: Its May 17^th actually this year, I mean its normally obviously its all, everyone know its normally April 15^th but the fact that they have these the last few years we’ve kind of had this rolling past the weekend scenario so.

Seth: Well the rule I just wanted to say is this is as long as you have that check posted  like get the stamp, the date of whatever the last day is to contribute, it qualifies as it comes in the door so it was just a whole kind of a fiasco and a hassle to try to work out and most of the time there’s no reason for it. People are busy and its not what they’re thinking about and then realize oh my gosh I gotta do this now and you don’t have to, you can make this contribution well you can make it anytime throughout the year.

Ben: Yeah. Waiting the last minute I think the thing that goes to my mind when I’m thinking about that is just simply the inability to make money on it. I mean you’re here you know throwing the money in in April but where was the other three or four months you know I mean were you making the money in the current year for the previous tax year I mean some people that might be the case but don’t let the money sit in the bank get it invested

Seth: I was just glad you didn’t user the example of me waiting until the day before thanksgiving break to turn in my paper to History 401 Latin American civilization course that I stayed up for 3 days finishing. Procrastination folks it was that you don’t have to, you’re gonna be able to get a far better return if you get the money in the market than wait. That time value on money is a huge piece.

Ben: Yeah I think I think the thing is that getting your money in, getting it working for you, moving it forward is really really the key you know and that’s I think the number 1 focus. When I think of number 2 and talking about making Roth IRA contributions even when you make too much money is a conversation or question we have by a lot of people right. Listen I make too much money, id like to do a Roth I don’t qualify for it.

Seth: Oh well that’s an open and shut door. Sounds like it.

Ben: Sounds like it yeah no exactly and I mean I think the thing is is that a lot of people don’t realize is what we call backdoor Roths, there’s you know rolling over other IRA funds you know in doing a conversion. Those are all pieces that you can do and I say backdoor Roth and people say what is that? Well that’s when you just literally make a contribution to your IRA. When you don’t qualify for an IRA contribution you’re not gonna qualify for a Roth contribution so what the government does is they hey listen we’re not gonna let you take that deduction. They let you stick the money in the IRA and it grows tax deferred but you’re gonna have an amount of money that is not deductible. That creates a complication. Now some people wanna do it just to get some people do that with an IRA and I don’t understand why when you really break down the math and I can make a case for it in almost every instance but they put the money into there and say well I’m getting the tax deferral on this piece and im in this really high tax bracket and you know I look at someone whose paying you know 37.6%, maybe some state tax too so lets just say they’re around 40% just round it up there you know. I’m thinking about this and saying to myself if you’re making a non-deductible IRA contribution why wouldn’t you just convert that  right to a Roth.

Seth: So you’re telling me there’s a chance?

Ben: A small chance

Seth: I have a chance. Yeah, it’s a, there’s okay so at a glance right that might make sense what they’re thinking and we it does I mean there is logic there is reason we get it, but there’s so many different ways to work with money that you’re in these IRA’s or even outside of an IRA to accomplish that goal, its just looking at it from a different way. What Ben said is hey go ahead make that non-deductible contribution because mean if you make a contribution at your current tax rate and at your income and everything, its gonna be non-deductible, there’s no way you’re gonna get a deduction on this money but why not flip it into a Roth once you  do it. Which would then grow, still grow tax free, but then come out the other side tax free.

Ben: And you know I’m gonna say this sound very simple and it is very easy I mean we all of us do this all the time for clients. The thing is is there is a very kind of like red flag yellow flag maybe its more of a yellow flag id say it’s a yellow flag conversation where I was reading an article about this and I’ve seen it in a couple of places where the basically the doing the non-deductible IRA contribution and then immediately doing a conversion with the intent to do a Roth contribution when you’re not really supposed to has not been challenged back by the IRS yet. So I say that to buyer beware because that is something that is really concerning because you don’t wanna get caught off guard and find out hey listen the IRS determined that if you made a non-deductible IRA contribution and then converted it to a Roth in a single step then the question would be did you ever really intend to make a non-deductible IRA contribution?

Seth: So what would you do?

Ben: So this is what I would do. What I would do is I would focus more on Roth conversion conversation right, I mean the president is a lot of people have old 401k’s okay, and I would probably not steer someone towards ever doing a non-deductible IRA contribution because there’s so many complexities, there’s issues about you know pro rata conversions if you have multiple IRA’s and some with non-deductible and you just can never get rid of all of it, its really it becomes a pain in the rump you know just to manage it honestly. And so I would highly encourage everyone out there don’t do a non-deductible IRA contribution and leave it in your IRA because it is an absolute nightmare. But, and until you’ve really done it, do you realize what a nightmare it is. So CPA’s will be thanking me for this on this podcast and radio show. What I would tell people to do is to focus on maybe taking an old IRA and doing conversion pieces each year you know and sit down with a financial planner, give us a call, figure out how to do an IRA that might qualify in your income bracket, maybe you’re self employed and you should be opening a SEP or simple IRA or 401k for your business, give us a call, set those pieces up and then maybe look at converting some old IRA funds. That’s they best way because honestly no matter what you do, whether you’re converting or making a non-deductible IRA contribution and trying to do a backdoor Roth – its still gonna be the same tax bite. So if you have that I would look at that as an alternative. That’s really a key for a lot of people to understand that just getting more money into your IRA is not always good. So here’s my case, here’s my example of concern right – so lets say you’re in a 40% tax bracket and you put you know your 40 years old, you put 50 grand in there you know it costs you $20,000 to do it okay that 50 grand is 25 years is worth $250,000 okay. Well if it cost you 20 grand $20,000 of taxes to have $50,000 in Roth funds that are now worth 250 you really only paid $20,000 in taxes on a $250,000 asset. Now that’s somebody that’s in the 40% tax bracket and I’m really surprised that a lot of people don’t look at it this way because age and growth have a lot of factors in this and that’s less than a 10% tax on the overall asset. Now I’m pretty sure considering all the I mean I know im going on a tangent Seth and you’re letting me rock on this but you know I’m pretty sure out tax rates are gonna be a lot higher in 20 years, I think they have to be. I don’t think we can write $7 trillion worth of stimulus and not pay that back in some capacity even if we’re not in a full gusto pay it back but we got a national healthcare system, we got debt and we got all these things coming. We’re gonna see some real expenses in our taxes and that’s a concern for me.

Seth: One other thing I might say on this is if it’s a big enough concern connect with a tax attorney and there may be the possibility of getting a determination letter prior to making any of these things and once you have one of those in place there’s no way they can come to you and say oh we’re gonna you know change the ruling on this piece. And that’s something we don’t really dive into if you need some referrals or a name we can go ahead and try and get you connected.

Ben: You know Seth, I’ve talked to a number of CPA’s about this and I know you and I have chatted about this, there’s a lot of mixed opinions on this and the reason I only say this is because there is no determination by the IRS. You know and I think its all gonna look at intent. I mean if you were to do a massive IRA contribution then slap that thing into a Roth, the IRS is gonna say hey look at me like we told you you cant do this you make too much money like that’s not something I really wanna legally pay for and I think that’s what a lot of listener want too. So I think that if your non-deductible IRA contribution was done in good faith and converted and one of the article I said was converted over a period of time or converted at a later time instead of in like in its immediate form.

Seth: Yeah the window needs to be longer than a couple of days.

Ben: Even the same day you know its like people are doing that like instantaneous moments so that’s where I would just I would flag some caution because I don’t want listeners to think that doing a backdoor Roth is rock solid as it sounds by a lot of people but I would say its not impossible.

Seth: So folks we got caught up on that one a bit. Gifting out of your IRA directly. So that may not be something that is in your vocabulary even is gifting out of your IRA or not gifting out of your IRA and what are we talking about here? Basically when you’re gifting out of your IRA and lets say you have a non-profit that you are wanting to give to okay so there a couple of ways that you can do that. And one way is that you can go ahead and receive those funds yourself and that’s an indirect well you  basically get the income or be reporting income on your IRA as your traditional IRA income ordinary income and then you would be sending it off to your deductible contribution towards whoever you want to benefit there okay they have to of course be qualifies under the tax code that way as able to receive those and able to be a deduction for you. Well you’re gonna pay tax on that. So one of the things that we talk about this a lot with the RMD’s the required minimum distributions to happen at age 72 with an IRA is having a strategy built around that so that you're giving those contributions directly over to have the check it's written straight from the wherever your IRA is at it goes straight from there over to the organization so you never even receive the funds. And what that does for you is it never becomes a part of your income never becomes a part of your tax ability. So it's a far more efficient way for you to be gifting especially gosh we love charitable minded people and how can we help you be more efficient in doing that.

Ben: Yeah and it was with you know the Trump tax cuts that this actually became a much more popular way because of the increase in the you know like married filing jointly went from an automatic $12,000 deduction to 24,000 that you just got for free you don't have to do anything.

Seth: Right and try to get enough deductions written up within your giving to

Ben: Your charities, your heath care, like all this stuff was really really hard to get over 24,000 so  this is a huge issue of just so simple its so easy right? And you just used to save yourself some simple tax dollars. I tell people we could set that up like if you tie the church you can set that up automatically.

Seth: You can

Ben: And just be done with it. You never have to think about it.

Seth: And if you get the gratification out of getting the checkbook out we understand, theres no reason that you cant write the check, just don’t put it in the basket.

Ben: That’s horrible, okay. Number 4 – self directed IRA’s are a good idea. This is one of the areas where I think there’s a misnomer like hey I can buy gold in a self directed IRA, I can buy real estate, I can do all that stuff. You know this is a very dangerous area, this is taking on a level of risk that’s just abnormal for most people and honestly I get I have questions for people who you know if you’re dealing with inflation risk and you want to get real estate, you want to get money out the market like I can see that being a play but you’re taking on a whole nother level of risk in real estate and self directed IRA’s, which s the primary use for those things. But I mean you’re talking about liquidity risk you’re talking about the value risk of real estate, you’re talking I mean there’s just so much beyond that just rental risk, all of those pieces, a whole different piece to do it. But I will tell you that I did have a client come to me who wanted to do a self directed IRA’s for some real estate and when they did the self directed IRA they expected they bought a big piece of land, they were looking to subdivide it, very interesting and I said to him I said listen we think we have some buyers for most of this land right off the bat like we think well make some substantial money and I said well you know what you guys should do when your retired I said why don’t you do a Roth conversion before you buy the land and open up a self directed Roth program and that way when you sell the land the profits will go back into your Roth and they were like wow that’s a great idea. So you know those are things you can do is be clever about how yoyre working through some of these things. Now the bad downside if that is if you did the Roth conversion, paid the taxes on the entire converted amount, which you have to pay out of your own pocket so they have to come up with the money on their own, so that could be 20 , 30, $40,000 on a 100 grand right, so then if the real estate declined in value and you sold it you would have actually lost money because if it was still an IRA you’d only pay taxes on the value of what you. So right you have to really see appreciation in value for the Roth to be a conversion, like I for instance back in March, April and May I was converting certain stock assets that I owned to a Roth because they were so under valued. I was like I’m not selling this company, this company is gonna come back and its gonna be great, but I’m gonna convert my shares to a Roth to take advantage of that and those are types of areas where you can look at that piece but self directed IRA’s are not always a good idea and its super super dangerous but something we have conversation about regularly.

Seth: Not contributing to a retirement plan for your short term issues okay so whatever is going on in your life right now that’s delaying you from starting to make these contributions to your IRA, stop it. Make that a commitment just like you make whatever it is that’s important to you significant to you I don’t care if its Starbucks or your coffee or if its your favorite whatever, you know, I know, we have these places that we just we make concessions okay don’t do that with this money. Make sure it’s part of the like the first part of the year, you have a plan of getting that money out of the bank and into a retirement program okay, that’s gonna help you long-term, you’re gonna be so grateful down the road that you just didn’t delay.

Ben: You know that’s a really good point Seth I mean you know so much of this world is have it now have it now and they’re forgetting about later, that’s a problem, for sure.

Seth: What do you think about triggering a taxable event on an indirect rollover? I get that question a lot because it's just not understood how IRA money or qualified money goes from qualified to qualified and the question is, is this taxable? Is there going to be some kind of a taxable event if I move money from the 401K into the IRA or from one IRA that's here over to the IRA that’s there and that, if you're going direct, which means you're custodian to custodian okay, there's companies out there that are going to send you a check, but on the check it's going to have the new custodians name on it for benefit of you and your IRA, and sometimes will put your new account number on there and that kind of stuff, so there's no way that you could even take that check and go cash it. You know, because the biggest risk you have there is the check just doesn't arrive and they issue a new one that's not a taxable event. What could be a taxable event is if you take receipt of funds from your IRA and you say just go ahead and write me the check for $100,000. Well, they're gonna go ahead if you're under 59 and a half, they're going to go ahead and usually take out about the 10% penalty on that. And then you're going to go ahead and say, well, I'm going to roll this over into my new IRA, but you're going to be responsible for that 10%, right?

Ben: If you don't do it in that 60 day time period and you don't get it in there, you're done. Yeah, you know.

Seth: There's no 61 days.

Ben: No, there’s no 61 days and trust me the 60^th day’s too late. But the other scenario is if you wanna if you did do that like lets say you had a had a roll over and did it indirect, you had them send you the check, you move that money in, lets say its 20,000 and then say hey you know what hey Ben I got another IRA out there and its like 5,000 bucks or 10,000 lets say its $10,000, you say I wanna do that too and you take the cheque in in the same tax year and then you wanna write the check into your IRA. Even within the 60 days that’s a taxable event. You’re only allowed to do one of those in a calendar year, lot of people don’t know that and that’s a big problem.

Seth: Folks you’re listening to Money On Tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com and we are talking about you know some of the tips and some of the tricks around IRA’s. it’s a huge part of most peoples retirement and the retirement conversation. Hopefully you’re getting a ton out of the conversation today, it may not all apply and that’s okay but you’re sticking around, you’re learning and you’re listening and we’re gonna be right back. You’re listening to Money On tap.

*music*

Seth: Folks we have a lot of fun doing this show, Money On Tap and Ben and I have been financial planners for years and years and our goal here with you is to bring you into the room, have the conversations that we have, we think these are critical conversations for you. But we understand this is a limited space and what wed love to do is to open the doors to you with us at Brayshaw Financial Group  so you can experience what it means to have three-dimensional planning in your life. Let's take a look at all sides of your situation, your scenario and see how we can put together the best plan possible, taking into account your risk. How much can you have in the market? How much do we need to have set aside and doing different things for your life? That's what we do, as planners, how we engage with you and we welcome you to do that with us. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Now if you have $250,000 that are investable assets today our planning is free to you. We want you to have the playbook to have a successful experience in retirement. Give us a call 855-226-8551 or info@yourmoneyontap.com. Ben and I welcome you to Brayshaw Financial for complete wealth management.

Narrator: Now back to Money On Tap with Ben and Seth.

Seth: Welcome back, you’re listening to money on tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com. Folks if you're listening to us via podcast, we appreciate you being there with us today and going back through some of these episodes that we've created for you, and having some fun with this on them and the likes and the listens, they'll help us and we appreciate that. If you're listening to us on the radio today thanks for sticking around. You know this is this is an hour of your time that you can spend doing whatever you want and the fact that you're here with Ben and I today, that means a lot to me and I appreciate it. Yeah, so we're going to get rolling on the rest of these things here before we run out of time. We are on number 7 - not properly noting your beneficiaries. And this is this really is one that we see day in day out. Its happened so often that people just don't really understand how the estate works or how beneficiaries work and what the benefit of an IRA having it, having a beneficiary and there is. And I know some people very well that still will not make this change, and that's fine if this is how they want to do it, but a lot of the times people would just say my beneficiary is the estate. Well what that will do is is that will put that money that could have passed probate back in to probate. For basically whoever you have as the executor is what we call over call them in Oregon is executor of the state, the person that's overseeing the estate in those decisions to allocate those money. However, those things have been decided in their will, or it's a judge that will say, OK, this is what the will says. This is how you want it broken up in your will and you know given to your beneficiaries. That way, either way, that gives an opportunity for creditors to come after that money and possibly limit the contribution or the gift of that, a beneficiary could receive after you pass away, and that's what it beneficiary is here, it's listing who you want to receive the money that is leftover in your IRA after you pass away and a lot of the times that looks like a the primary beneficiary and most of the time that is the spouse 100% and then after that there's the contingent beneficiaries that are you know if something has happened to the spouse - who does that money go to next? And then there's even this other level of per stirpes, which so many people just go I don't even know what per stirpes is or just they don't think it's important, but that's that other level of planning where you just want to have or ask the question, what does this even mean? Why is this even important? And it is, it is critical it could save so much money for your beneficiaries and so much time and hassle to try to fix that they don't have to figure out and you don't even have to worry about it because after you're gone or if it as somebody passes on. It's such a sad thing to see families not be able to come together or to have friction in places where they just they don't have to. It's an unnecessary battle folks, and so that's why we would say make sure your beneficiaries are who they are, you know who they are, you know how you want those allocated. Understand what person are based mean. We're not going to get into that, but these are the things you want to be having the conversations around and making sure that you've just checked the box.

Ben: You know Seth that's great advice and something I would definitely say is so underwhelmingly educated in so many ways. Number 8 - don't double up on tax shelters. This is a simple one. This is

Seth: It is but it's one that's so misunderstood.

Ben: Oh, I know, I know it is. It's like municipal bonds that are tax free. Most likely have zero belongings inside a tax deferred event. And I mean if it's already tax deferred, your IRA or your Roth IRA or whatever buying municipal bond, for instance, that's tax rate isn’t gonna do you any good and you're usually getting a lower rate than regular corporate bond in the same risk level. And it's the same difference except for you're getting a lower rate now. I could envision in a warped period of time where maybe, you know government bonds, municipal bonds are more relevant because of a say a pandemic or something you know something crazy where only the government you know the governments the only financially backed scenario and that's what you want to have. I guess I could fathom that, but it's never happened so.

Seth: There's always the get.

Ben: Yeah, I would say at anytime so

Seth: I never want to say never. If Somebody's talking to you about a tax benefit or a tax shelter, and that happens to be money that you have in your IRA that they're talking about using that direction. That's when you have want to ask the question you want to make sure that you get clarification on that.

Ben: Number 9 – don’t forget about your spouse. No, that's not what I meant to say is don't forget about your spousal IRA. You know so for all of us men or women who have a husband or wife at home, who are not working at a job that pays them income, you are eligible to do a spousal IRA with the income limits associated with that, and that would include IRA or Roth. So just because you may not have an income paying job, but you may have the hardest, most thankless job of being a mother or father at home, you still get to do a retirement plan.

Seth: You qualify.

Ben: You qualify if you have to take the income of yeah, for you qualify for the qualified plan, that's for sure so that's something that seems to be overlooked quite a bit. I had a family member who is like oh, you mean I can? I mean, and I'm like you didn't know that you know so that's what brought this to light and you just presume that whoever their filing taxes with them saying, hey listen, you know you should be making another IRA contribution or a Roth.

Seth: Yeah.

Ben: For your wife.

Seth: Oftentimes we would receive one person that's kind of in charge of the finances, that's what that's where they spend time, and I don't think it's intentional piece. Most of the time it's just they just didn't know that they could be doing this, but you occasionally, you might see people that have really only taken care of themselves now. And in an unfortunate way that that could work, it will. Actually, we won't even get into that. That's just there's there could be some side effects there. Some ways that that works out that would not be very good. Healthy finances, healthy, healthy interaction around that. And understanding is what we want to have. Last but not least – I don't like IRA’s, I like Roths is what I like to call this. What should I do? Should I do a Roth or should I do an IRA and it's there's this great debate out there and it's one that's fun to get into for sure. But the question really comes back to what's the right thing for you to be doing are you is it better for you to be doing an IRA or is it better for you to be contributing to an IRA or is it better for you to be contributing to a Roth. And we've done the math on this, of if your tax code is the same today as when you retire, is there a benefit to doing one versus another and the straight answer on that is folks no, the net will be net zero as far as any benefit, as long as the tax code today or your tax code today what you're paying on your ordinary income is going it would be the same.

Ben: Yeah and I think that's the thing, right? I mean, nobody's sitting around saying, hey, we're at some of the lowest tax codes in history, and I expect that to stay about the same after $7 trillion stimulus package, so you know I really just I go back to the example that we talked about earlier and this is what I mean no pain, no gain, right? I mean, so pay the taxes. I think I think Roth has a great opportunity for people I feel like I'm going to get to my retirement years and say why didn't I do more Roth? Why didn't I convert more of these stocks like their high now but you know what where they're going to be in 20-30 years I mean, they're going to be a lot higher probably. Why did I convert those too? You know, I think there's going to be a lot of Roth regret. I really do, I think it's going to be I think people get counseling over it. I think there's going to be some real concern.

Seth:  When we talk about the tax trap with with qualified money, but everybody's just been stacking money in their 401K and not putting anything in the non qualified side or in the Roth side and then they're stuck.

Ben: The younger you are the pretty much no brainer decision it is to do as much Roth as you possibly can.

Seth: Yeah.

Ben: I mean no matter what your taxes are unless you just can't afford to pay the taxes. Like if you can't pay for food, groceries, utilities in the apartment or the house, then that might limit your Roth scenario, but I mean at that point in time I really don't think that you're going to be making that much of an IRA contribution that's going to be offset that much that its going to make a difference. So if you're really that strapped, you're probably not even making an IRA contribution. But if you had 40 or 50 years to  a future distribution on a contribution you're making now, what you're going to pay on taxes on 6000 bucks.

Seth: Yeah.

Ben: You know, even if you're in the even if you're in a 50% tax bracket, you're going to come up with three grand. If that 6000 bucks in 50 years is worth $200,000 I mean you're not going to be crying about the three grand you paid in taxes.

Seth: So can I say the argument on the other side of this?

Ben: Please.

Ben: Okay, a bird in the hand is worth 2 in the bush my friend. And if you know what the code is now and you're going to get the if you're gonna get a discount on that money today, and I can't tell you that you will tomorrow, might as well take it .And that's one and that could be one way that you think about things in terms of. In what we do, I would say go with this idea. OK, we talk about it in so many different places, but there's a there is a model of diversification in what you have in the market. OK, we're not going to be 100% in this one thing here, right? Because that's not diversified. We want to have.

Seth: And put all your money in one stock

Ben: In gold

Seth: In gold

Ben: Robert Kiyosaki. No I did not. I have yet to do that or tell anybody that they should do that. Yeah, put it in the mattress, bury it in the yard.

Seth: You don’t wanna just tell that to somebody as a joke and let them leave the office?  I’m just kidding

Ben: Let me think on that for a minute, we’ll get to that next time. Yeah, so there’s this idea around diversification and I think people seem to understand that when we’re talking about inside of your portfolio. Lets try to be diversified. But there’s other areas of your life and I think one of these is you know time work-life balance, we hear that a lot. That’s a model of diversification, but in tax code we started the show talking about non-qualified and qualified and Roth being one of those places being considered qualified where the distribution where a) the gains and also the distribution of those moneys are tax free. Inside your qualified IRA or your qualified traditional 401K. The benefit is on the front end where you don't pay taxes putting the money in that grows tax free, that's great, but the distribution is taxed as ordinary income. And a non qualified money that's taxable is taxed along the way. Now you buy a stock today, as long as there's no dividend on that stock, it's just you buy the stock alright, you create basis at let's see bite at $100 less a 20 years down the road you sell it at $200. That $200 is now taxable on the sale of it at a long term capital gain tax rate, whatever that is down the road. OK, so we've talked about three different versions of taxes there and that is diversification in the code of your money your tax code of your money. So get diversified, you can do both you can you can make your Roth contribution this year as well as your traditional IRA contributions. Don't think it's one or the other. Don't get locked into that thinking. Stay flexible with us here folks. That's going to do it for us today Money On Tap, we hope you've enjoyed the journey. There's so much to talk about in the world of financial planning and the world of personal finance and we just still can't cover at all at least not today. But yeah, we appreciate you sticking around. Your listen to Money On Tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com. My name is Seth Krussman and once again, Ben Brayshaw. We're here for you as financial planners at Brayshaw Financial. You can also find us at Facebook we’re at \3D investing. We're also on Twitter at BFG_LLC and as always you can also find us at yourmoneyontap.com. Thanks for listening, thanks for liking our podcast. We appreciate you and we can't wait to make it a great day and a great life with you here at Money On Tap.

DISCLAIMER: The views expressed are not necessarily the opinion of this radio station and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Investing is subject to risks, including loss of principle invested, no strategy, product, material or tool mentioned can assure a profit or protect against loss. Please note that individual situations can vary, therefore the information, products, materials, or tools mentioned should be relied upon when coordinated with individual professional advice. Past performance is not a guarantee of future results. This show may be subsidized in whole or in part by a product sponsor or issuer. Securities and Advisory services offered through Sage Point Financial Incorporated, member FINRA, SIPC and a registered investment advisor. All other services offered through Brayshaw Financial Group, LLC are independent of Sage Point Financial. Sagepoint Financial and Rayshon Financial Group do not provide tax or legal advice. Main offices located at 116 S River Rd, Bedford, NH 03110 and can be reached at toll free 855-226-8551.

MOT Show 164

Seth: Welcome to MOT. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. You can reach us at 855-226-8551 or info@yourmoneyontap.com. I’m in New Hampshire right now with Ben Brayshaw, in our new studio.

Ben: I’m super excited, this is the new studio, podcast, we’ve spent so much time and effort in filling this out. I think of companies who helped us here locally. There’s been a lot of people involved in this. This is great. Good job. Thanks Seth, everyone who’s involved.

Seth: Take a look on Facebook. Like us on the podcast venues, love us, because we love you. Pray for me, folks. I really need it right now if I’m going to be here a week with Ben. For both of us. You’re listening to Money on Tap. We are going to be talking about breaking free of mindsets. This is going to be a show for the ages. It’s about inflation. That’s what I come back to, it’s a lot of what we engage in is mindset driven. How do we get out of the mindset that we’re fed this information, buying into it to get out of that mode, take control of your finances, make a difference in you and your family’s life today. It’s time for Money in the News.

Ben: First up today, we have the WSJ coming to you again. Stocks waver as banks warn losses. This is a big deal; it’s been in the background for a little bit. There’s been some headwinds that have driven the market turbulence we had. A lot of our listeners probably aren’t aware of the back end pieces we have going on. What’s interesting is there was a lot of selling going on last week. The turbulence going on was weird. What was going was a complete bending of all of the assets of one major firm, which is Arkagos Capital Management, run by Bill Wangs. They had to sell 30 billion holdings last week. 30 billion. What I found was very interesting about this was that while this was happening, no one’s disclosing this stuff. Viacom was dropping like a rocket ship, and they were a good sized holder of that asset. We’re seeing pushed selling, which is causing—I don’t know what was going on at the time. I was saying what the heck is happening in this market? You and I both remarked at the resilience that existed throughout the entire market cycle. Looking back at that, the massive selling, overleveraged, overweighted, they had some holes in it. Goldman Sachs stepped in and said we need to liquidate these assets, but the stock market held strong. Viacom had a massive hit, but the market was substantially good, considering.

Seth: It’s hard to believe managers are going out of business in the market we’ve seen. It reminds me of my contractor buddy that was building in 2000 and managed to not be successful in that time. I don’t know, it’s just one of those things that it was remarkable to see 30 billion assets get sold. Banks were taking a huge hit in terms of those assets. It brought me the question that so many of our clients have asked: why are we investing in financials? Why are they doing so well? They shouldn’t do this well when people aren’t paying their mortgage, or there’s all this money coming into the market in different ways. It’s a really fascinating thing to look at. Last week, it turned around. The market was great, it broke some previous bias it had shown in the weeks prior to that. It’s a tale that we’re telling right now. Do we think financials and banks are a place where a lot of money’s coming in and doing well?

Ben: I do. We’re holding the financial space. I think there’s more to come. A lot of these companies, Wells Fargo, JP Morgan, some are high, but some are not where they used to be. When you look at the bailout dollars, and what people are paying, people that don’t need the money that are still paying rents, leases, mortgages, those things are coming through pretty strong. We’ve seen phenomenal real estate programs report way stronger numbers than expected. I’m shocked on some of them. In industries and demographics that we would expect them not to be strong. We wouldn’t expect them to be at the levels of reporting. The banks are gonna continue to have strong numbers. This scenario has upended major financial issues in some banks. There’s gonna be hiccups as we go through this. When you have a major catastrophe, there’s always going to be the unwinding of bad programs, assets, management, this is a story of bad management. It happens to be 30 billion dollar bad management. Considering the fact we didn’t have a massive dump in the stock market and we’re hitting all-time highs after the fact.

Seth: We’re talking about how the market is at an all-time high, it’s just a sneeze away from pulling back 10-15% and probably turning around and going the other direction.

Ben: Volatility isn’t going away.

Seth: If you’ve been profitable, go ahead. Do that. That’s what it’s all about, but get the long-term, the big picture. To get to the next turning point, Cathy Wood, she’s done it again. If you don’t know her, you’re gonna. Ark is her ETF that she’s headed up and been the lead on and done really well with, is turning into the private sector for space.

Ben: This is really interesting. This is their 8^th ETF. They’re trying to touch on the space culture. I thought this was interesting because this ETF has 6% of their holdings in another ETF they have. It’s very interesting, it’s the 3D printing ETF.

Seth: I guess that’s how you build in space?

Ben: I’m not sure the entire correlation, but there is some correlation they’re driving. They have the traditional, Virgin Galactic, Boeing, Lockheed Martin. They’re all over the place, yet they’re right on target. I’m curious what the overarching theme is where they’re buying the ETF. I’m wondering about fees, double dipping, I’m not sure what the details are. We have to dig through the launch on this thing and understand.

Seth: Past history is not an indication of future value or performance. When you look at Cathy, what does she do. Innovation is one of her funds. Last year she had 16 billion in inflows to that. She did it in this disruptive technology, and that’s the idea that’s transcending from one idea to another. The SpaceX, the space ETF of the private companies involved in space exploration. Pulling those pieces together, it’s a disruptive technology.

Ben: I like how she’s targeted futuristic sectors. Space is definitely it. Fintech, all those things. They’re always looking at those pieces. Innovation did 150% last year, but it’s down 9% this year. There’s pros and cons, but what I really like about the strategy they focus on—they’re always looking for the big names. Just the pullback of a good company that they believe in.

Seth: It sounds like you’re saying value in a different way.

Ben: I’m speaking about the asset value. I love value, everyone knows I love value.

Seth: In a couple shows, we’re gonna talk about investing when it comes to the 330 million in AG population—where do people go?

Ben: I think there’s gonna be a strong push for that. Here’s a woman who understands value in a couple different dimensions.

Seth: We’re gonna be talking about inflation. So many different things around this piece here. We can’t wait to come back, spend time, and uncover the belly.

Ben: I like the 2-part show we have going here. It’s just gonna be 2 shows: inflation and how to combat inflation in the investment world. I like that. I like giving people solutions.

Seth: You’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com.

Ben: If you’re listening today and your questions are outside the box of state, financial planning, or any of the pieces we’re talking about, don’t forget Brayshaw Financial offers auto, home and business insurance. We have a department that handles all of that for you. Give us a call at 855-226-8551 or email us at info@yourmoneyontap.com.

Seth: Back to Money on Tap with Ben and Seth. Welcome back. You’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. This is a debut for us. A debut in a way that you don’t realize. There’s a brand new studio, and Ben and I are standing within a meter of each other. I hope to sound much better than I typically do. We’ll have some fun in the studio. You know when we have fun on Money on Tap, that usually means, let’s talk about inflation. What can we do to bring this brand new studio to life? If you’re not impressed by turning the dial, just wait. We’ll get there. It’s a tough topic when we take a look at what is inflation? It’s a general increase in prices and you fall in the purchasing value of money.

Ben: I.e., milk costs more.

Seth: Or, if you’re lactose intolerant, almond milk costs more.

Ben: I think everyone knows what inflation is, but how is the stimulus money flying everywhere, how is it going to work?

Seth: We feel inflation every day at the store, and basically, that prices moved up, but my income didn’t.

Ben: That’s one thing that really drives the conversation. If you walked on the road and said we’re taking a poll of what inflation is, how it’s made for you, etc. we’d have some crazy responses, some would be accurate, and others would be way off. But if we said to someone, did you know inflation, the cost of living, continues to increase on you? We’d get a lot of yeses. If we have them that front running line, everyone would understand. I think if we gave them the view of how skewed everything has become, it would show what inflation is in today’s world. I’m kind of excited because we’re talking about inflation and how that’s gonna impact.

Seth: That’s why I come back to the idea; do we know what inflation is? I think there’s the information we’re handed, and there’s the stuff we know already.

Ben: We’re totally fed something that I’m not sure is fair, accurate, honest, clear, concise, maybe even misguided at times. Maybe they are trying to be accurate. I know you’re rolling your eyes. But when you’re really trying to evaluate, are we getting a fair shake at evaluation, and we’ve talked about it on the show report inflation, and they talk about it, saying we’re not gonna include it this year because it had such a rapid increase. They were talking about oil and gas, this was Obama-era. The following year, listening to the same report, and they said we’re still not including oil and gas because it’s too inflated. You can’t pick and choose what you do and don’t include.

Seth: Or if you’re in a pandemic, maybe you should be more careful in picking and choosing.

Ben: Exactly, it’s like they pick and choose when it’s not necessary.

Seth: Anyone who played basketball, who likes cherry picking? Hanging out underneath the hoop? That was you. We’d actually been trying to get to this show for 3 weeks. What took us so long, maybe 4 weeks. You threw out there, let’s do stuff on annuities. To do that, we had to do 3 shows on annuities.

Ben: It was pensions, buyer beware, you’re in some deep doodoo and you need to have conversation with somebody. Then we went into annuities, a long-term pension. Now we’re in inflation because you know what? When you have a fixed income, what’s your biggest fear?

Seth: Inflation. That’s why we’ve got this other topic that we’ve done a few shows on. One of them we called the Black Hole of retirement, which got more listens just because of the title. People were disappointed when they got to that show.

Ben: I’m gonna go with the show was just that good. The show was that strong, that nothing – I thought the title was horrible, and people wouldn’t listen. As we dive into inflation, there’s a lot to this story. When you really break it down, it just comes to your pocketbook. This is a personal conversation and I know the government tries to make it a corporate conversation where they’re looking at the world as a whole, but the truth is, you’re the person, you have to walk into the store to figure out how to pay for groceries.

Seth: That’s the simple conversation that everyone should pay attention to. The larger corporate conversation of everyone, what is the gov’t dong and what are the levers back here getting pulled to accomplish different things? That’s where we hope to get to some of that info. Hopefully, it’s in a way that you can grab it, put it in your pocket and take it to the water cooler this week.

Ben: Before we do that, we’re gonna take a quick trip back in time. Seth, bring us into 1980.

Seth: What was happening with us in 1980? I remember Mt. St. Helen’s blowing. There was a lot going on in the 1980s. people were buying things. Things they were buying were houses, cars, milk, and all of these things we considered essential at that time. Ben mentioned we moved off of those as critical parts of inflation and there’s a reason for that. We’ll get into the dark underbelly of inflation. What was the cost of living? A new house in 1980 was 68,714. The average income was 19,173 a year. A new car was 7,201. The average rent was 300 a month. First of all, if you could get in here, if they were accepting – they’d have to accept everyone to take me, but Harvard was only charging 5,300 a year. A movie ticket was 2.25. gas was 1.19, and believe it or not, in the late 90s, early 2000s, I paid less than that when we were going to school. .69 was the least I paid.

Ben: We were in school in VA. For the NE listener, it was probably 1.10 here.

Seth: I remember feeling robbed at 1.30 in high school. So bad. Then there was the first class postage stamp, which I didn’t realize there was a first, second or third class. 0.15.

Ben: I remember when it went to 0.19 and everyone was like, really? Do you remember that?

Seth: No. You must be so much older than me.

Ben: I was just thinking about Harvard and the new car purchase. If you’re looking at a new car and you’re thinking to yourself I’m gonna buy an SUV, you can buy a suburban for 70-80k, depending on what you’re looking at, it seems like it’s still in line.

Seth: If we were to say the rate of inflation is 3%, the goal isn’t to yell at the feds right now. Let’s say inflation was 3%. You’re going to be looking over the course of 36 years. These calculations are a little rough and a couple years old at this point. We’re looking at 25k. that’s about 3%, does that make sense? The average cost of a car is right around 25k.

Ben: I guess. You can buy cars. I’m trying to figure out, I’m not sure what the average cost of a car would be. Do you count used or not? Brand new?

Seth: It’s brand new. Right now, average cost of cars is 30-35k. that’s more of an average cost. That’s a little over 4%. Wouldn’t that be nice if that were the factor we were using and the factor the gov’t was using, that 2%? This is that part that we know intuitively, we’re getting lied to and we don’t know why, but we know it is.

Ben: No one can really conceptualize. Inflation is at 1.6%. the Fed came out and said we feel like inflation needs to be at 2%. They said that a few different times. With an average of a 1.68, according to their numbers, they have to get it up there. They’re acknowledging they’re gonna push inflation. The question is, how is the printing of all this money, these trillions of dollars of stimulus going to impact that? Is it gonna be that inflation is gonna go to 5 or 6 and they’re gonna be throttling it back, or throttle it up?

Seth: How do they do that, and why?

Ben: This is the thing, right? When you talk about what inflation is, you made a great point. The average cost is 4%, based on the automobile and what it did, all the costs, so forth. What’s really scary to me and really concerning to me is that they have all sorts of inclusions and exclusions. I talked about the oil and gas. They talk about everything under the sun. they’re thinking about what the average cost of an airplane ticket would be, they’re talking about the average cost of various grocery products and certain staples that you need. What I think is really interesting during this pandemic is that they’re still including the average cost of an airplane ticket. I’ll tell you I went to FL, a month or so ago, had a good time. My round trip ticket was Spirit, I’ve never flown Spirit before. It was a $36 round trip ticket. To FL. It was the bag cost and so forth that become problematic.

Seth: You can’t mail a letter to FL for that much.

Ben: You can try to send it FedEx, but it won’t get there. The thing about this is that they’re including the cost of air travel. They’re trying to entice people to travel, and I’m like, how is that correct? When you really think about it, people aren’t spending money on airline tickets and they’re going down. Is that making inflation inappropriately, misleadingly brought down?

Seth: Here’s an example. If you were to say the $300 rent in 1980, if you were to put that number in at the current rate of inflation as an average rate of inflation, the rent should come up to a little under $1k. if you take a look at the rent in Boston for a 1 bedroom, it’s like $2k. Portland, 2 bedroom, $2k. I don’t know if they’re doing rent controls, or if anyone has to pay rent during the pandemic, but that’s one of the ways we can take a look at this. First of all, we’re gonna get frustrated, because I can’t seem to find anything on the list of what we typically buy. I know you gave a great example of an airline, but that’s just not where – that’s a pandemic price.

Ben: But this is what they’re calculating it with. One of the things we need to focus o was that the supply chain was so heavily impacted that when you breakdown what’s going on, there was a loss of consumer expression, because prices were skyrocketing on specific goods, but that’s what people were buying. People weren’t buying tickets; people weren’t buying gas. The oil prices plummeted to -$2 a barrel.

Seth: It made food delivery affordable for anyone who was driving that as a first or second job. How many college kids were employed because of this?

Ben: Now we have this demand. I think of these supply chain spikes. You have massive spikes that ride against the cusps of food, supplies, everything you need, but a big chunk of the core things they use, CPI, inflation—

Seth: What’s CPI? Have we talked about it?

Ben: I was just making the point; all of those pieces have no meaning. They have 0 value in the calculation, and they’re only skewing it to make the number lower. I’m surprised a lot of people aren’t talking about this. I look at 1.6% inflation, I guarantee you I’m paying way more than 1.6% increase in food bills and the items we buy in the grocery store this year vs. last year.

Seth: How many Americans are living on the social security welfare system, and how many are going to be in the next 10-20 years? There might be a reason that some of these numbers are skewed. You’re listening to Money on Tap. That was such a bright and shiny idea we got to talk about there. If you haven’t picked up the phone to call us at 855-226-8551 or reach out at info@yourmoneyontap.com, what we’re looking for at this point if you can figure out a place where you can pay $300 rent, let us know. We’d love to transport back to the 1980s time to pay that rent, $7,500 car, let us know. Ben found the 1980s version of an airplane ticket and he shared it with you. You’re listening to Money on Tap; we’ll be right back. Folks, it is so much fun for us to bring you Money on Tap. My name’s Seth Krussman and I’m one of the hosts, and I’m also a financial planner. That’s what Ben and I do. The fun part is we get to have this radio show and we talk about important things we think you need to listen to, be aware of and raise the bar of your financial literacy. The other thing we’re doing here as well, as financial planners, we’re welcoming you to come call us and join us at Brayshaw Financial Group. Experience what complete wealth management looks like. Let’s look at all sides of the issue and get a plan around your next step. It’s so critical, so many people leave this part out and then say, if only I would’ve known. Don’t let that be your story. Give us a call at 855-226-8551 or info@yourmoneyontap.com.. If you have $250k of investable assets, give us a call. It’s free to you and it is worth your time to pick up that phone and give us a call and discover what complete wealth management looks like. Ben and I are excited about the opportunity to partner with you and give you that financial plan that’s going to make the next step so much better understood and get you where you need to go. Welcome back, you’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Now, I know I said Ben might not be here, he might be answering the phone calls that are online right now, getting back to some emails because you can’t wait to have your questions answered about CPI, right? The Consumer Price Index, and why would we even wanna talk about that in a show on inflation. These things are so critical and so important. We don’t wanna get lost in the jargon. We want to give you tools to understand, there’s so much out there that you can get wrapped around the axel. We’re gonna take a little bit of time after having fun with what inflation is or what it could be.

Ben: Everyone’s having a great time, this is great.

Seth: I think this is amazing, I remember getting told this by grandma and grandpa.

Ben: We haven’t even gotten into the scary stuff yet. When we think about inflation and the consumer price index, and all the different pieces going on here, you have to really understand what’s ahead of you to prepare. This is a preparation conversation. Are you a prepper, Seth?

Seth: I should be. After spending 10 minutes with you, I’m convinced. What am I doing, I need to be filing 5 gallon buckets of rice. I am excited about talking about the outcomes of investing. That’s where it comes back to for us.

Ben: When we get into that show next, that’ll be the driver—we can talk about problems, but people don’t get into solutions. Some of the solutions aren’t going to be compliance friendly. Getting to the conversation of solutions is going to be strong.

Seth: We’re gonna talk about the problem now. CPI, consumer price index, and what is this thing? It’s the basket of goods, this fixing market basket of goods that represents all goods and services that are purchased for consumption. We talked a little bit about how they’ve manipulated that. They took oil and gas out of that. I didn’t fact check that.

Ben: At one point in time and I remember for a fact, early 2010-2000 whatever, they were removing and adding and subtracting and not including all sorts of things, oil and gas was definitely not one of them.

Seth: The gov’t has a few resources at its disposal to manipulate the CPI. Why would they wanna do that? We’ll get to that. The raw data used to calculate the CPI isn’t available to the public. Why? They say so that companies can’t compare prices. I can go on the internet and see what a gallon of milk costs me here and I can see what a gallon of milk costs me there.

Ben: What’s that app, Gas Buddy, where you can go see the different prices of gas is in comparison to your location, there’s no basis. This is a sham, we’re not gonna tell you what we’re actually calculating in this number because we don’t want to scare anyone or defeat competition rules.

Seth: What good does it do for them to manipulate the CPI?

Ben: Careful, you’re getting into conspiracy theories?

Seth: This is the truth, printed it off the internet, folks. There’s 80 million Americans, and where do they come from? Social security benefits, food stamps, military and civil service providers, and children of lunch service programs. That number is used to calculate how much money is received, or do they get an increase in their income? This number is so critical for the population that lives by the law of the CPI. It’s critical in the same token for a government that’s 30 trillion in debt. Balancing a budget, and they’re doing a horrible job of it. They don’t want us to know how bad they’re doing of it, but it’s really one of the main reasons I can see they’re manufacturing a number that keeps poverty in the household. There’s so many different ways to look at this, but that is ultimately one that says to us, we’re not willing to accept what real CPI is, because we don’t wanna have to pay a population of people over here that we promised we would. Your veterans, those in need—

Ben: Just because we came up with a number.

Seth: I hate saying it, but it’s the truth.

Ben: There’s a number of things that we could get into the political economics around this, because that’s what you’re talking about. I think that’s a conversation for another day because there’s so much headwind in that area. I think it was a great point and it’s something that requires some awareness. That’s truly something people need to have front and center on some level.

Seth: Can I say something else? This comes back to our original idea, it’s the truth. You know the truth; we know the truth. How many of us have come to a relationship, to eternity, because we finally came to that understanding of who God is to us? That truth. We’re born, created, with that inside of us, and when we don’t live by that and we see the rest of the world trying to influence and oppress other people, that’s a truth that we live with. I want to bring that into focus and attention and accept it.

Ben: I think there’s a lot of ways we have to address that as a nation, as Christians, as all of those different pieces. As we go through all of the inflationary issues, we know that everybody’s paying more for food. We talked about that to begin with. When you think about inflation, think about what you spend every month. The savings levels have never been higher. The credit score ratings are the highest average in history. People aren’t spending as much on a national average. There’s some good about that. That doesn’t count for the entire country—there’s still 20% of the country suffering deeply. Losing houses, properties, businesses, selling everything they have. It’s very state specific, a lot of the blue states are suffering the greatest with the more measured lockdown. Those are facts. In our society, someone has their facts, and we have our facts, but this is a fact. There’s no rhyme or reason for that on some level, but there’s safety concerns, whatever you believe that to be. That’s really impacting a lot of people. We have this whole thing going on where people are spending more on food, groceries, and some of the basics there’s a supply problem that’s causing those prices to increase. We know we’re paying more than 1.6% on milk that we paid last year. We can say that on almost every item that’s a staple. Some of them are 200-400% more. There’s no educational piece that Powell’s gonna get on the Fed chair and say this is great. They’re literally talking about making inflation higher than 2%. They want the average to be 2%. If their 1.68% means they’re gonna double the cost of milk, I’m not ready for their 3%. You know?

Seth: Is it possible that they could have just done this by a 1.9 trillion number? Which is the influx that they just passed and brought to the table? How does that reach the consumer?

Ben: It’s not gonna reach the consumer, only 10% is gonna reach the consumer.

Seth: Printing money is supply and demand, right?

Ben: Whether it’s going to the people or not, that’s going to cause inflation. I have 5 articles here saying it doesn’t, but I don’t believe them at all.

Seth: They’re smarter than I am because they figured out how not to. Simple me. I couldn’t figure out how more money means inflation. Geez. People.

Ben: There’s not a listener that’s not paying more at the gas pump.

Seth: You skewed the numbers, we’re all out of whack now because of your flight to FL.

Ben: You go to the gas pump, right, you stick the thing in there and you see $2.40, some are paying $3 in some locations. You’re saying how does that impact inflation? Every tube of toothpaste, every toilet paper roll, everything that has to be shipped, it requires gas and oil for the mos part. As those prices go up, the price of shipping goes up, which means they have to charge you more at the store to overcome the additional cost. When we start realizing how much energy is produced by oil, we realize all the stores keeping their lights on, all the Amazon deliveries, it’s driving more cost to the bottom line. Not only are we seeing the demand issues pushing prices up, but we’re also seeing the costs of the delivery services skyrocketing. I remember when Obama was in office, I was paying almost $5 a gallon. I remember saying, I can’t believe I’m paying this to fill up my car. What do you do, you can’t afford to drive at some point. I think what’s also happening with oil and gas, and people don’t really realize it, with Biden having a fight with oil—we’re not gonna build the pipelines, etc. all this green energy that we’re demanding being in existence, everyone of those pieces of plastic to the solar panel, every bolt, wind turbine, whether it’s in the Gulf of Mexico or wherever, all of those take oil to refine. You can’t make steel without oil. You start looking at all these pieces and you say, we have to drive that wind turbine out into the Gulf of Mexico. That’s more oil. We’re gonna have the highest oil demand in the next 4 years that we’ve ever seen. Yet, we’re creating more rigidity in our ability to be self sufficient in oil each and every day. There’s big stuff going on here. If we don’t think prices are gonna be skyrocketing because of the prices of oil, they’re gonna do everything they can to put the brakes on. They’ll claim it’s 3%, but it’ll be more like 9%.

Seth: I’m willing to bite on that one. I’ll say yes, and when we take a look at the calculations we were running at the beginning of the show, these numbers line far greater or more easily with 9% than they do what they’re trying to tell us. You’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’ve talked a lot about CPI and inflation. One of the last things we wanted to touch on was the ‘what-if’. They’ve changed the calculation so much, because for them to disclose their methodology would bring to light what everyone else’s prices are. What if we were to go back and take a look at the calculation of the CPI they were using in the 90s, because we know what that is. If we were to take a look at that in comparison and bring those numbers forward, it’s a lot closer to 6%. It bumps into the 8% in 2008, but right now, we’d be a little under 6% using those numbers. If we were to take a look back to 1980…

Ben: This is just the calculation. You’re saying there’s a 3-4% disparity, it’d be 3-4% higher?

Seth: Right. Right now we’re at 5.8, and 2.6.

Ben: So they’ve changed this to alter the numbers lower.

Seth: We’re ticked off about this, but this is the information you have available to you if you choose. It’s the 1980 calculation. In the 1980s, we were up around 15%. That was the hyper inflation we were in, people were talking about CDs, you could go to the bank and get a CD for 13%. Where do you find that one again? If we were to use that calculation from the 1980s right now, we’d be at just under 10%.

Ben: This is a great illustration of taking a layover of their previous methodologies, but that’s no longer the way you do it. This is where it’s too complicated for people to understand because everyone’s going to the grocery store and spending money on the same things, but they’re telling me it’s not inflating that much. This is the level of how out of touch our government really is. For them not to understand, it should be about us and how inflation is affecting us and our economy. They’re missing the boat, and I take this as not being truthful.

Seth: We wanna land the plane here with you. What can you do? We can’t change the CPI, we can have a better understanding of what inflation is, but what can you do today to make a difference in your personal finances? I wanna say, it’s the same stuff we talk about all the time. You need to be saving money. Bring your own budget, get your own CPI to work. Make more money than you spend, start putting those dollars in some place that’s gonna try to keep pace with what we understand the CPI to be closer to that 6-7%. You need to be actively pursuing your own finances, and if you’re not engaging on that, if you need a little bit of help, get a friend, get a prayer, okay? You’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We want to appreciate you for allowing us to be who we are and have fun with what we do, which is financial planning. We’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We can’t wait to make it a great day and a great life with you here on MOT.

SUMMARY

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

Do you remember when you were younger, and the cost of living was much lower? From movie tickets to gas prices, the rate of inflation keeps going up. In this episode of Money on Tap, Ben and Seth outline exactly what inflation is and the practical ways you can navigate it. When it comes to managing your money, inflation needs to be understood correctly for your money to work for you.

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

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Seth: Welcome to MOT. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. You can reach us at 855-226-8551 or info@yourmoneyontap.com. My name is Seth Krussman and guess who’s joining us today? Ben Brayshaw.

Ben: How you doing, buddy? How’s things this morning?

Seth: Things are good. We’ve had some sunshine, which really helps us in OR, because we go through a couple of months where it’s pretty gray. If you can make it through Feb, you’re golden. The spring is here, sun is out, daylight savings time, good stuff.

Ben: NE is 20 degrees, so you’ve gotta get through the same Feb, March period here.

Seth: Love the seasons, love to see spring here. I have a bounce in my step. That’s what I’ve got going on today. One of the reasons I’m excited today is because of the topic. Occasionally we get into a subject that requires more than one show. We talked about pensions, creating your personal pension. We’ve bumped into an article by Fidelity that we couldn’t pass up; what are the myths? Part 3, what are the myths about annuities? Why is this appropriate and timely for our listeners, and our clients, if you look at the market, right? Where are we at? We’re at all-time highs. If you’re looking to start to protect your future income, pension, it can be a really significant opportunity for you to start taking some of that off the table and doing some different things. Annuities are so versatile; it depends on what kind you’re looking at. It can have a different design and purpose from another annuity over here. We’re gonna talk about those variations.

Ben: One of the things about it is, there’s no good or bad investment, there’s appropriate or inappropriate. What’s great about this article is the myth concept, breaking that down so you can look at it from an unbiased perspective: does this work for me, does it offer value that I never perceived before? With markets at all-time highs, and I talked about this last time too—I’d say listen, this would solve your problem, this would provide you, taking a small portion of your assets, provide a full solution for you. Some would be yes, some would be no. for those who said yes when the market was at an all-time high, 2007-2008, they tell me, that was genius. The people who didn’t, they’re not clients. I wish them the best, but I know what happened over the next couple months. I looked at their portfolio and said, there’s some real danger here. They can’t understand or foreshadow. When you can wrap yourself in a better bubble wrap with a portion of your assets, it takes a lot of question marks out of the future for you. It gives you peace of mind, that’s why people buy them. When you use an architecture structure, it takes the guesswork out of it. I think myths are really important to discuss, because there’s truth in a myth, and we need to break that out and say hey, this is the truth piece, this is the myth piece. That’s what really uncovers when you talk about the myth piece.

Seth: We’re gonna try to shelf those opinions that people have told us about, whoever it is has brought across the religion of annuity, because you might be listening right now and say, this is another annuity show. There’s a lot of podcasts where that’s their pitch. We talk about 3-D investing. This is a tool, something we use on a daily basis, how do you use it, approach it appropriately for yourself and your plan, and it’s one of those places where his clients took his advice, worked with him on the products and loved it…we’re not guaranteeing anything, but it’s a moment in the market where you’ll wanna take a look at the money you’ve been working in the market and putting it in a place where you know there’s something locked for you.

Ben: One of the things as we go through this, when we talk about 3-D investing, for those who have been listening for a while, or those who are new, this is one tool in an arsenal, an entire toolshed or barn. You can grab just one item. Unfortunately, the industry is laden with people who only work in one domain. In the domain they have, they’re trying to put a square peg in a round hole, and you need someone to find all the pegs for all the holes. We’ll be able to add some color to that because there’s some misnomers about annuities. There’s also buyer myths that I want to touch on. Before we get into that, we’ve got Money in the News.

Seth: Lebron James is apparently taking ownership in the Red Sox group. I’m always interested in what James is doing, because the guy has some great mentorship in his life, and he’s done amazing things. What does he do? He’s interested in taking small pieces of ownership in these profitable endeavors. He’s there for an ownership piece, Bono would be one of the other people who have done this really well. Celebrities have turned this business around.

Ben: I think we should have a voting process inside who should own the Red Sox-Fenway program. From a New Englander, it’s like Lebron James, Red Sox, you’re not in the same sport. Stay away from our city. We allow you to come in so we can beat you.

Seth: Buy a piece of the Dodgers.

Ben: I have no interest in the Dodgers. I would only want to own the Red Sox. What’s really interesting about that is they own a little Liverpool Football Club, some NASCAR exposure, and Nessin, which is the Red Sox station out here. I can’t blame the guy from out of state wanting to be apart of a winning program. Next up, we were talking about places to live: NE, the West Coast, Seth loves it out there. I’m glad he does, it’s beautiful out there. We have an article from CNBC, some cities are paying people to move there. If you’re living in the city where people are getting paid to move there, you have to ask yourself what the problem is. This here by JL Jennifer Lu, it cites the fact that dozens of cities are paying up to 16k in cash incentives to move to their town, city, or location—tax credits, goods and services, everything from gym memberships and moving expenses. It’s pretty phenomenal that they’re expanding their population. What I think is really interesting is the development with COVID-19, working from home, and companies are saying we’re not going back to the office for 6 months to a year, some are saying you’re gonna permanently work from home. A lot of people’s productivity numbers are higher based on the data that they collect. I think that’s pretty amazing. People are considering moving to obscure, more remote, out of the city, get a yard…then you’ve got Baltimore, MD, willing to pay 5k towards your home, I’m not sure I’m interested in moving to Baltimore, but NW AL is willing to give you 10k in cash over the course of the year if you’re accepted into the relocation program. All I can hear is a banjo in the back of my head, but it’s probably beautiful. That’s horrible. Then you go to SW MI area, 90 miles outside Chicago…they’re doing a 15k forgivable grant over the course of 3 years, after buying a home in one of their qualifying zip codes. There’s a lot of stuff going on in this country, and we’re in a position to take advantage of this, spread out from the city and build other towns, cities, and locations. There’s so much beauty in America of all sorts, all places, and if that could become your home, what a great opportunity. Make sure one of these offers isn’t so luxurious because it’s built on top of some sort of radioactive material.

Seth: That’s my skeptic in the background, saying what’s wrong with this location, wanting to test the water first and all that…geez, if someone’s paying me 15k to move there, which 90 miles from Chicago, what’s really going on? You’re trying to pull me in with 15k in loan forgiveness. This is something that’s not really all that new. It’s more of a movement now than it has been in the past. The organization Make my Move, which you can take a look at, there’s 37 relocation offers. Some are paid promos, others are free. That’s where you can go and start shopping if you’re interested. I do like the San Juan, Puerto Rico, possibly Las Vegas, there are places that do look interesting. In all fairness, AL is a beautiful state, wonderful people.

Ben: Have you ever been to AL?

Seth: No, but I have looked at the pictures. When we get the top 10 or top 30 places to live in the US, AL always has—

Ben: Someone’s paying for those articles.

Seth: Chattanooga, TN, is offering 10k towards a new home, and 1250 towards moving expenses. That’s a beautiful part of the country, I have been through there. There’s water, rivers, trees, green, it’s a gorgeous place.

Ben: I’m gonna offer you 10k to stay where you’re at so you don’t move to the East Coast, how’s that? I’m just kidding.

Seth: I will say sometimes 3k miles is a gift.

Ben: Next up from Fox Business here, we’ve got home buyers cancelling contracts as home prices soar. Basically, the fact that the cost of materials over the last year have risen 170%, but I’ve heard 200-300%, the cost of 2x4 and pressure treated wood, but they’re stating the cost of building a house has risen so much, that people have said I can’t afford to build it. It’s caused people to cancel their contract entirely.

Seth: A huge part of the home buying demographic is the first time buyer. What was your experience buying your first home? Mine wasn’t brand new, it was a first home. Brand new homes are becoming more common for first time buyers. A lot of those programs have incentives for first home buyers, and if that price point is out of the market for the first time home buyer, I guess they’re gonna have to look for something else. One of the things you talked about was moving out of the cities. People are like, get me out of here, because the city doesn’t attract me anymore, and the suburb looks really nice right now. Millennials have kids, and that changes what people are interested in. I was listening to Colin Koward, and he thinks people are gonna get bored in the burbs and move back to the city. They’re gonna think I had entertainment, a life, everything in reach. That’s a totally different deal when you’re living in the burbs. It was a big deal when we got a skate park or a basketball court, there wasn’t a whole lot to do. We made our own fun. If you’re not getting your fun served up to you on every corner, I guess Xbox in your suburb home is the same in your apartment. You can get a hold of us at 855-226-8551 or info@yourmoneyontap.com. Give us a call, send us an email, you can go to our website and stream our podcast there. Check us out at Brayshaw Financial Group. Hopefully by the end of this show, we’ll get you some information to get to a better place about making decisions for your finances. We’re gonna take a break, we’ll be right back, don’t go anywhere. Folks, we have a lot of fun doing this show. One of the things we love about doing Money on Tap is that our goal for you to have access to have the financial planning world, what do we think, how do we do, what are we talking about? Raising the bar for your financial education, it’s so critical. That’s what we’re doing here. The other side of this is, we’re financial planners. If you’re looking to work with a financial planner, if you want to have that playbook for you to understand the important things right now, how you’re going to get to your goal, how to retire, that’s what we’re doing here. If you have $250k of investable assets, give us a call. It’s free to you and it is worth your time to pick up that phone and give us a call and discover what complete wealth management looks like. Ben and I are excited about the opportunity to partner with you and give you that financial plan that’s going to make the next step so much better understood and get you where you need to go. Welcome back, you’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We have all this audio available for you on our website or any of the podcast venues out there. Have a listen out there, you can get caught up on your leisure. Feel free to give us a call because this is a topic that drives questions. Almost every person we talk to or work within retirement has a strategy that fits inside the annuity conversation. Some are tax strategies, some are estate strategies, it’s creating an income solution for you that’s foundational. We use that term all the time when figuring out how to build or create a retirement that’s successful. The other day I was looking at foundations on skyscrapers. I did research on this, and did you know the average time it takes to build a skyscraper foundation? 1.5 years, and if you’ve ever had a chance to look at skyscrapers, it seems like forever that they’re digging a hole, but they need a foundation that will support the rest of the building. On average, it’s 1.5 years. Here’s the second part of that. The average time for a skyscraper, start to finish, not counting and permitting, the average time to build a skyscraper is 3 years. In context, this isn’t something people go to the water cooler, did you buy this stock, or this NFT, whatever people are wanting to talk about. This isn’t something you take to the water cooler and say, I just got this annuity that’s mind blowing and amazing. Nobody looks at the foundation. It’s a really good rebar, it’s not one of those pieces that people love to talk about and can’t wait to dive into. If you’re gonna build something that lasts, you’re gonna need to spend some time and put the piece in place for the rest of your life.

Ben: I didn’t know that, but it makes the point that building your financial portfolio takes time and planning to work. Once you’re off to the races, building the rest of the 50 floors takes time. Here you have a foundation that takes 1.5 years. As we step into the 5 myths of annuities, which is the end part of our program, I think it’s really important that we kind of dig into why we’re doing this. It’s because there’s so many misnomers. It’s not the cool conversation, but it can be an interesting element. The first myth we have here, listed by Fidelity, and their viewpoints on May 5^th, 2020. The reason we wanted to do this was basically for us to show you when we read these articles. To add the flavor. I’d encourage you to go look at this, read it, because it’ll add some interest. As we deliberate about these 5 myths, you can start seeing more depth to the article that we see, and pieces around it that we don’t cover. The first myth we have here is that annuities are only for retirees. That’s a great example for the start of a conversation, I’m way too young to own an annuity. Annuities are a wonderful avenue for a lot of reasons. One of the scenarios is that annuities are a tax deferred vehicle. If you’re maxing out your 401k, you’re saving money on your taxes, you can buy an investment based annuities that doesn’t have writers and features to expand and create additional costs, higher costs, fees are another conversation around annuities. You can buy no cost or low cost annuities that are designed to create a tax deferral that comes with after tax money. You want to put money away for retirement, but you subscribe to the tax deferral growth and how valuable that is, then this is an amazing opportunity to create tax deferral. This is quasi known, but people run scared from the conversation about annuities and don’t realize I can buy a low fee annuity, have full exposure to the market, uncapped returns, buy a mutual fund sub account, buy an indicy like the S&P 500 and have exposure to those vehicles. I can get the tax deferral, that’s an amazing opportunity that people don’t take advantage of. This article goes into that. The conversation around that is, if you don’t want the market piece of it, you’ve got the CD-like piece, a fixed-rate return. In those fixed annuities, you’re gonna find a fixed side better than a CD offered at a bank, and it’s tax-deferred. Clients say, I have these CDs and I never need the money, and I’m like, why are you paying taxes on them? Why don’t you stick it in an annuity and tax-defer it?

Seth: If you have these set up in a trust, that takes care of what happens after you die. Things we don’t hear a lot about are fixed base annuities, just like an IRA. Is that valuable for you? It passes probate, it’s immediate. There’s no probate that’s gonna come in and say we’re entitled to that money over there. If you don’t have a trust but you have a will, you can bypass probate.

Ben: You don’t have to be retired and die, you can be young and have an accident to have a probate. Make sure you have your wills and trusts in place so you can make the transition smoother for those you love. Otherwise it becomes a nightmare and people say, why didn’t they do this? As #1 runs into #2: annuities cost too much.

Seth: If you’re taking a look at an annuity that has a lot in it, for instance, there’s guarantees, guaranteed income, any of these annuities can offer in their structure, of course there’s going to be a cost to it. Looking at apples to apples, does it cost more than investing in Vanguard? Yeah, it’s not that.

Ben: There’s feeless annuities out there.

Seth: Yes, but it’s not gonna offer all the features.

Ben: I think you can get exposure to the S&P 500 to some annuities in a mirrored return, with an uncapped value and no fees—those opportunities exist. You have to commit to long periods of time, and the liquidity is not there, people go to Vanguard and buy the S&P 500, SPY, IVV…

Seth: Low cost indices.

Ben: I just think when people think fees, it’s a fee race. You’re saying to yourself, irrelevant of yourself, separate of what Vanguard has to offer. What I think about, if you hold apples to apples and said someone wanted to go to S&P 500 over in Vanguard, it’s not you’re buying S&P, but they mirror your returns off of that. You get the actual equated return of that, and you could have lower or no fees than what Vanguard’s offering. People don’t want to consider it, because annuities have such high fees—it’s a total myth that annuities are all high fees.

Seth: They are gonna have a range from .1% to .21%. In comparison, you’re saying let’s have an investment annuity, so we’ll have tax free growth, and let’s use something that’s a low cost annuity, a mirror index fund there, large cap, small cap, whatever. There’s all these options and all these managers you can tuck inside. It’s an option that’s very similar in terms of the fee structure. People get into the comparison that’s not fair or true, where they have guarantees built inside of it, and it’s for a different purpose.

Ben: That’s where they become expensive. Every myth has truth in it. Every lie that you believe, there’s enough truth for you to buy into it. Seth, you’re dead on. When you buy a car, it used to be when I was a kid, we had rollup windows. If someone had electric windows, it was a rich car. They had addons, the tape deck, CD players didn’t exist until I was in high school. When you buy the addons that add the expenses, just like a car, they become more expensive. It’s adding the navigation, adding the seniors, those things add costs. When you start adding these bells and whistles, you’re gonna drive the expenses in a prohibitive manner. You have to be careful about what you’re adding and subtracting, what the purpose is. If the purpose matches, the price will be right.

Seth: We put it into terms, we want to guarantee your ability to retire, that’s the pension idea. It may not be the best income that you can create for yourself if everything goes right, but it’s an income that’s guaranteed, and come hell and high water, you’re not gonna have to worry about it. Last night I was working on other numbers here, and it’s appropriate because we’ve used this image of the car and car insurance to do a comparison here. The average in OR for car insurance is 1,358 a year. That’s a full replacement if you wreck the car, replace it, full insurance. The average, if you’re looking at a 30k vehicle, what’s the expense to insure your vehicle, it’s around 4.5%. If you take a look at that comparisons, when we were talking about .1% to up 3%, what is it—

Ben: That’s 1/10^th of a percent. It’s really interesting.

Seth: If you take a look at the purpose that we just talked about, this is the car that has all the bells and whistles, it serves the purpose of making sure you can retire. You’re insuring your ability to retire, that is a savings in that comparison. Why would you not guarantee your ability to retire for paying a little more, but you’re willing to go ahead and insure your vehicle. No one cares.

Ben: It’s just costs. If you’re talking about the high end, I know annuities that go really high. They’re like, how can you afford to do that?

Seth: Have you ever seen an annuity that’s at 4.5% fees?

Ben: I have. It’s a long story, but I’ve only come across 2 that get that high. You have to say, I’ve gotta make 4.5 before I break even. You have to look at all the different pieces. Sometimes that insurance purpose is exactly what you need. Our world has been convinced that we all need car insurance. I don’t know a state that doesn’t have some sort of car insurance requirement, even if it’s just liability. What I don’t understand is why we don’t have insurance around everyone’s retirement plan, even their 401ks. That’s what I don’t understand. That’s the one thing that’ll make people really vulnerable. When you buy car insurance, you’re buying it to protect the other person. That’s the story here. When you buy insurance on your retirement, and it’s not all your money. This is an experience of dollar amounts to accomplish a retirement security, why wouldn’t we insure that on some level? That’s a real safety net scenario. We’re at all time highs, and you could be the person laughing us out of that room, but I can give you a list of clients who are saying that was well timed, that was a good move. All the statistical information we’re looking at in these markets is all past your lifetime. It’s all past your death. We have this video on sequence of returns. I want to get that up on our website so people can look at it. We’ll get that up on our website and you watch that, you can watch two people retiring at two different times with the same amount of money. One runs out, and one becomes a zillionaire. It’s crazy how timing can change everything. You have one chance to retire successfully, why would you risk it on the stock market? You can have stock market exposure on these annuities, and you can still solve your problem and make sure everyone’s well off.

Seth: Myth #3: There’s no point for buying an annuity for income before retirement, just like there’s no planning for retirement before you retire. That’s what we’re saying.

Ben: It’s funny to do this article off of fidelity. These are their myths, it’s funny because Fidelity is such a large money manager and yet they provide annuities, they understand it, but they know it’s been poorly communicated what they are. Unfortunately, someone sold the wrong thing to the wrong person. That’s happened way too many times, and it’s given them a bad name at times.

Seth: It’s a massive money manager, but at one point in time, they were probably advocating, do not use annuities, it’s interesting for them to come full cycle here. If you’d been there in the driver’s seat with a client that’s retired and experienced a negative sequence of returns that’s preventable, that’s a horrible feeling, I’m sure. I can only imagine what that would be like.

Ben: I would just figure it out. I love that phrase. We’ll just figure it out. That is the wrong answer. It will always be the wrong answer. Please call us. It’s not a good decision to lean on just figuring it out. The thing is, right now, at 60, 65, 70, you’re saying I’ll work part time at Walmart, someone will use me as a consultant, I can manipulate that. You don’t realize it’s a failure between 80-85 and it’s run you ragged, and you can’t go back to work. I am so guilty of this. Every once in a while I think, I could do that, maybe I should try this activity, but nope, that part of my body hurts. No matter what, you don’t really acknowledge them because we’re still living in this past experience.

Seth: In terms of the annuity before retirement piece, a lot of annuities require time. It’s better to plan early than to plan late. #4: I can easily create lifetime income for my retirement accounts. We’ve had clients that we’ve sat down and told them to put the money in the bank. Maybe that’s what you’re talking about, and maybe that’s you. You have more than enough and you’re completely fine. That’s Option A, for sure, but maybe you’re in that situation that we just described, that negative sequence of returns is a reality for you on the timing of your retirement, and you’re just never going to recover. Unless you really plan that through and say, hypothetically the market does this, or if you’re willing to consider the market at an average, whatever you wanna use that as, 7%, 12%, or maybe you wanna use something very conservative like 4%. If you’re willing to consider that as a market average, you have to be willing to consider the downside of that. If the market pullbacks 50%, you’re drawing off that portfolio, the income you require, at the end of a 2 year period of time, which we’ve seen the market pull down to, even close to what it was prior to a pullback, you have to factor that in too. That’s where so many people are not even willing to take a look at the truth here.

Ben: Seth, I think there’s only 3 things, I’m quoting from the article: “besides social security and pensions, only annuity guarantees a stream of income you can’t outlive.” That is true, and if you don’t have a pension, your social security doesn’t look great, and there are people who don’t have great social security numbers, those are the things you need to bolster up. We talked about pensions and buying pensions, you may need to say I’ve got a multiemployer pension and I’m concerned about what you said, evaluating what an annuity would do as an option for you to create income that you should be evaluating. The other side of this is if you have all your money in the market and you’re trying to drive income and you’re gonna take 3-5% out a year, there’s a vulnerability out there too. People say you’ll have a 90% odd chance of never running out of money—we live by those laws. Those are standards we understand. You have the changing demographics on how investing is going to change. The baby boomers are going to change the ongoing returns over the years. You have that thing you have to impale your portfolio with, because it’s gonna change how you invest. If the market drops, taking that 5% out of what it used to be—if it was a million dollars and you’re taking 5k out a year and the portfolio drops to 8k, your advisor’s gonna tell you to pull 40k out. Even though taking 5k out should work. That’s the way it works. You have to be prepared for the fact that you’re gonna have to live on less income, because you’re gonna feel guilty taking that much money out, and when it’s down you’re not gonna wanna take much money out, I can’t tell you how many people say we’ll wait for it to recover. If you’re gonna wait for it to recover, you don’t need me or this investment. If it doesn’t recover, you should’ve already bought this. The market always moves up, but they don’t realize they’re taking dollars out after negative impacts causes a greater compounded loss. That might sound complicated for our listeners, something we can explain if you reach out to us.

Seth: You’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We have the radio show and podcast available for you everywhere. We’ll be right back.

Ben: If you’re listening today and your questions are outside the box of state, financial planning, or any of the pieces we’re talking about, don’t forget Brayshaw Financial offers auto, home and business insurance. We have a department that handles all of that for you. Give us a call at 855-226-8551 or email us at info@yourmoneyontap.com.

Seth: You’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’re talking about a topic we’re passionate about. It supports our clients and goals, and that is annuities. Some of the myths around annuities—there’s a lot more than the 5 we’ve listed here. #5 is the insurance company gets my money when I die. We just talked about in the beginning, one of the benefits of an annuity, if you’re using it outside of an IRA is that an annuity has beneficiaries to it if you designate them. We see some people designate their estate, and then they don’t have an estate plan in place. Ultimately that drops it back in the courts making a decision for you on the annuity. If you’re doing what we recommend, which is putting the beneficiaries into place, it bypasses probate. That’s not the insurance company. I don’t know where this myth comes from, because I’ve never heard, usually we’re talking about most of these myths are embedded in some truth.

Ben: It would be the life only payout on the single premium. Someone says I have 100k, I need the highest payout I can possibly get for my life. I don’t want any guarantee on time period, and someone dies after putting 100k in. maybe they’re 60, and they say give me 100k and they’ll pay you 8k. in 10 years, that’s 80k and I’m 60, if I live to 80 I’m gonna get 160k, and they die at 62. If you choose a guaranteed time period plus life, they may give you a 10 year payout at 7500, say, in 10 years you get 75k and if you died at 62, your family would get the remaining of the guaranteed years, so 8 more years of payments, and the insurance companies would keep the remainders. They have people that live 30 years or 2 years. They have all the contracts and information on what the payout is. A lot of these contracts are becoming—there’s a stat out there if 2 people are over 65, there’s a 25% chance that one of you is going to live to 100. When they’re betting on information, someone who did that 5-10 years ago had no idea they had a chance to live to 100. Some of these annuities could take some burdens on the payouts. If you’re working with an advisor and you understand what you’re buying, you’re gonna understand the risks of what the insurance companies will or won’t get. Most of the people are complaining about how the insurance company got all the money, it’s the beneficiaries, not the buyer. The buyer was saying I need the highest income to survive. I can’t remember, I’m sure we’ve done or two, but I can’t remember having done one specifically, other than for someone who was a single person with no errors. The other scenario where we’ve done this, so I do think we have one out there. The gentleman had a pension company and they offered him a buyout, he wanted to take it. There’s no value to the pension, it was just we’ll give you money to go away and we looked at doing an immediate annuity. I don’t know if we did or didn’t do that, but you’d be transitioning to when you die there’s nothing, which is the better option? I don’t know if we moved forward, but that is a place where you may look at that. They bought it because it beat the pension they currently had. Beneficiaries…unless it’s a spousal payment, they don’t get a pension. As we wrap this show up, I talked about the myth of the buyer’s side…one thing I think that sums up all these myths, the thing that really drives why people reject annuities or the scenario because they can’t see value in it, it all stems from greed. People run away from the conversation about annuities because they think it’s gonna limit them, hold them back, and honestly the core of that thinking is greed. There’s nothing other than greed that stops someone from buying an annuity. If you’re concerned about fees, time period, etc. but if you’re rejecting annuities for all the myths we covered today, it’s a greed problem. It’s not like this is a sin issue, but it’s just you think you can do better elsewhere. That driving motivation of why these things aren’t sexy or appealing is because you theoretically might do better elsewhere and you’re looking to make every penny and you’re not taking proper steps to make a foundational element in your portfolio. If you say I don’t like the annuity because it’s worse than the CDs in my bank, that’s a risk issue. That’s not greed, if you’re going to run rampant in the stock market, that’s greed. I own annuities. I read an article, there was a gross amount of money, he had over 80% of his money in annuities. Those are the types of things that people need to be aware of that savvy investors use regularly but the average world runs away. I’m glad Fidelity has this clearly laid out on their website. If you’re running inside these myths inside yourself personally, give us a call to see if they can be debunked for you. If annuities aren’t the right fit, there’s gotta be a foundational element that works for you.

Seth: How many times do we see the wrong annuity in place? There’s a process, if they’re out of a surrender period, you might take a look at rolling into something else. It is what it is, you’re not opposed but you have the wrong annuity, it’s just not what you need or want.

Ben: When it comes down to working with somebody, they have to be able to articulate your concerns, fears, and woes into the financial world. People, when they don’t understand you, they’re gonna advise you to buy the wrong thing.

Seth: You’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We want to appreciate you for allowing us to be who we are and have fun with what we do, which is financial planning. We’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We can’t wait to make it a great day and a great life with you here on MOT.

SUMMARY

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

There’s always an element of truth to a myth…Ben and Seth break down five common myths people believe when it comes to investing in annuities. Listen into this episode of Money on Tap and figure out the truth behind each myth and why putting your money into annuities may be the best thing you ever did for your retirement.

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

MOT Show 162

Seth: Welcome to MOT. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. You can reach us at 855-226-8551 or info@yourmoneyontap.com. My name is Seth Krussman and…

Ben: Ben Brayshaw here, how’s everyone doing? Seth, how you doing this morning?

Seth: Good, I’m really excited about this show. How about you, Ben?

Ben: I’m excited, this is part 2 of the pension and annuity show. Do you love em or hate em? We talked about employer struggles and the pension reform act of 2014. We talked about pensions getting decreased for some of these organizations, and that’s a big scare for a lot of people, especially in the trades world, where the multi-employer piece has become under attack for pension organizations that can’t support the payouts. That’s a scary thing and understanding guaranteed income is a big thing in retirement, whether it’s social security or annuities. We’re on part 2, and around our show, all these articles start popping out. We’re not alone in the conversation, which is funny I think. I think it’s nice to see, some of the material we have. We want to talk about publicity in the news pieces around pensions, annuities, social security, all at once with stimulus packages. I can’t tell you how much I really think this is going to bring clarity to a lot of the stuff we’re talking about. People listen to us and they say, ‘I don’t know, but they sound like they know what they’re talking about.’ We try to use news sources that we believe to be reputable, or have information that’s sound, different pieces there. That’s important to substantiate in the world around us. That’s why I like the fact that, just talking about this stuff and taking our opinion, but it’s not our own opinion. We have opinions because of sources, right?

Seth: You’re right. We have some unique ways that we use these different tools, and it’s based off of the client, and what is their needs and their situation, and we do it all day long. To have somebody else that’s an external source, reputable—external source, 3^rd party, yes. That’s exactly what this thing is supposed to do and why. It’s not from you and I telling them, you need to do this. This is important.

Ben: You need to watch out, buyer beware, all those different things flying around. Any listener can find annuity shows. This one is gonna be different, because you’re gonna understand a lot more about what’s going on, because we don’t just do annuities. People don’t understand 3D investing, brokerage fee based planning and insurance. The thing is when you’re dealing with insurance and insurance only, you might get captured into an investment or program that’s not meant for you, but the person only works in that domain. We do so much managed money, but that’s only part of the story.

Seth: Managed money meaning what?

Ben: Fee-based investment planning, buying stocks and funds…

Seth: Oh, you mean we’re a fiduciary and we only do this as a fee-based program to enhance you, we put your needs first, that’s the fiduciary standard, Right? People put this out there and say, hey look at us. We’re doing this for you. Other people are only doing things that benefit their wallet.

Ben: This side’s saying this is the way to go, and the other side is saying it’s the way to go. You’ve got that one dude saying that you should only be investing…folks, if you’re working with somebody who’s only licensed in one domain, that is the number 1 buyer beware. You’re only gonna get one perspective, and that’s a real problem. I love the fact that we can unbiasedly—if someone wants to buy managed accounts, we don’t really care. You wanna buy an annuity? We don’t really care. It’s all about planning and what your goals are. When you have your goals lined out, it will all come together. I can’t tell you how many people; once you sit down and understand what you want, it really makes sense once you see the plan, once you see exactly what you can do. The average investor’s not aware of it. I’m excited for this show, that’s a long intro for us.

Seth: We’re gonna do something else right now, it’s called Money in the News. Ben, if I were to come up with a word and call it nonfungible token, would you think that’s a real word?

Ben: This is WSJ, Amanda Louellen and Kaitlyn Ostrap, who did an audio article that Seth sent me that I literally – are you kidding me? This is interesting. It’s called an NFT. I was thinking this was going to be an ETN, this is a new – this is a nonfungible token, NFT. You can buy an electronic event or thing, a video, a tweet, the example was that you could buy Jack Dorsey’s first tweet as the first CEO of twitter and own the rights to it. Anyone can see it…

Seth: And the more people that see it, the more the value goes up. Memes, apparently there’s some very popular memes out there. You could own the very first authenticated of that copy. It could be the NBA, for instance, has a ton of material. Lebron James’ first dunk, that’s their property, but they can sell that very first to you through this nonfungible token. Let’s say you’re the stamp collector. You’re the baseball card collector. There’s probably a lot of different stamps out there, or copies of these that you might have 10 of these stamps, and that makes them more valuable because there’s less of them. There’s only 1 digital copy or first edition of these pieces and you can own this through the nonfungible token.

Ben: They were comparing this to baseball cards, and I was a big baseball card collector. I’ve traded, bought sets, I couldn’t even fathom what this may be worth in the marketplace. Everyone knows there’s rarities out there. There’s nothing out there that has enough value to pay money to own the rights to something that I could personally care less who owns. I’m struggling at the value of it other than you own it. You stick it in your digital wallet. If you own this item and every time someone viewed it, on YouTube, let’s say there’s 40 million views, you own the rights to it, and you got compensated for it, I’d look at it as a real investment.

Seth: It’s so new, only since 2017 that it’s been around, and in 2020 these have taken off. It’s so new that if you created one of these digital properties and you own the rights to it, it could turn into some kind of a way that you’re compensated, you know, not a traditional dividend. We’re gonna get into annuities and it could be a substantial income for a really long time.

Ben: It’d be great if that were the case, but we’ll see. Next up on Money in the News, we’ve got a New Hampshire local, this is something that’s on the tip of a number of people’s mind, and thoughts, and things going on in the tax updates. A lot of people in NH work in MA, and there’s been this ongoing state battle, all over the country. ‘2020 COVID hit, and I had to stay home at work. I work over state lines, I pay taxes to the state, I travel,’ all this traveling stuff has completely changed. All these people aren’t traveling, they’re working at a table, the side of their bedroom. I’ve talked to people who work for a tech company in NYC, and I could hear kids in the background. That’s pretty common right now. They were literally living in a studio. One kid, we could tell it was a complicated scenario. That has been a story for hundreds of millions of Americans. There is now, in NH, fighting, and those who work in MA, they’re demanding that people who work in MA but don’t live there to still pay taxes. They’re working from home, and they’re saying it’s your report to place. It’s interesting because I have clients who works for big major corporation, they’ve got offices in NH and MA, he asked his boss to assign him to the NH office because he’s working from home but having to pay MA taxes.

Seth: How do you know if this is you? If you’re a W2 employee, there’s a tendency that there’s a state tax on your W2 being taken out, or where it should tell you the location you’re paying the tax to. Some states are working well with this. If you live in WA, you don’t pay state income tax, but your company’s based in OR and that’s the way it worked here. One of the things I love about this is I feel like NH is sticking it to the man.

Ben: MA was always called “Taxachusetts”. The other buyer beware in this article by JR Waland and Laura Sanders is working from home, if you’re a W2 employee, you can’t claim that space.

Seth: No home office allowances since 2017, it’s been removed.

Ben: I haven’t heard any rumbling in Congress about it, but I think during the pandemic, there should be some allotment for that.

Seth: The employer can pay or compensate you for that space and write if off on their end, and it doesn’t qualify as income, which is a nice bonus. Talk to your boss. If you can get the bonus and they can write it off on their end.

Ben: Any bonus can be written off on the employer’s end…what I would say is, maybe you can renegotiate your salary and say, ‘There’s a portion of my salary that’s for the infrastructure of this building, but if you downsize, maybe we could change my pay structure.’ Maybe some of it’s a reimbursement.

Seth: That’s the season we’re in. if that happens to be you, get some professional help. You are listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Folks, we’re gonna take a quick break, and when we come back, it’s part 2 of annuities. Do you love them? Or do you hate them? We’re gonna get into some solutions around pensions, talk about this pension crisis that we have, and some hope for pensioners. We’re gonna get into some of this stuff, but it’s gonna be really exciting. Can’t wait. Don’t go anywhere, you’re listening to Money on Tap.

Ben: For a number of our listeners, you might have a lot of questions. We’re offering Zoominars, which are webinars over Zoom where we have top experts: social security, financial and estate planning experts who you can speak with. We’re also having webinar based Zoominars where we’ll have multiple groups, and you can be a part of that and enjoy that coming up in the new year. Reach us at 855-226-8551 or email us at info@yourmoneyontap.com to schedule your Zoominar.

Seth: Welcome back, you’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Just to give a little familiarity to Ben and myself, what do we do? We’re independent financial planners. Ben’s in New England, and I’m in the NW corner of the Greater United States, also known as Portland, OR. We love doing what we’re doing. Part of the purpose today is to educate you on some of the things that we do in our financial planning world that are really important for us. There’s no way we could ever get around trying to solve the retirement equation without having these discussions. If you’re talking to someone that’s a financial planner or retirement consultant, if they’re not talking to you about this, that’s a big red flag. This needs to be a full conversation, full disclosure conversation of pros and cons, to understand, is this something you need to be using in your retirement, and what is that all about? We’re talking about guaranteed income. Where do you get guaranteed income? For one, social security. That is known as guaranteed income. As of today, that’s still what it’s known as. Another place is pensions. That is what we talked about this last week, leading up into this conversation. The pension is what? Guaranteed income. If you have been working for a company out there that says, ‘This is part of our program, we have this pension. Part of your paycheck is gonna be used towards this future guarantee of income.’ This is very popular, the work, design, it’s been around since the Roman times. It has become very much a part of our work fabric, especially in the 20^th century. Today, it’s now fading out. People are much more familiar with the 401K programs. These are defined benefit programs that are farm more popular structure for people to be investing towards their retirement. 2 places so far: social security, pension, and annuities. That’s what’s gonna get us into the beginning of this conversation. We’re gonna pend a little bit of time because it just came out and it’s so appropriate. The article we’re gonna reference here is by Brett Orens, and you can find it on MarketWatch. This isn’t just Ben and Seth talking up their ideas and what they like, okay? We’re very much into this discussion, and you should be having this discussion with whoever you’re working with, and understand why is this important?

Ben: When we talk about the 3 guarantees, that wraps it up. If you think there’s something else out there that’s guaranteed income, you’re mistaken. There are only 3: social security, pensions, and annuities. How they work, clearly, are under question. I think this article brings a lot to the table. This recent pension and bailout, or the stimulus package, the 1.9 trillion dollars, had a very large item in there that’s completely unrelated. It was 86 billion dollars. That’s billion dollars, for bankrupt union pension plans. When you talk about Brett, he notes that, it’s kind of interesting because of the social security deficit being 16.8 trillion dollars, about 50k for every American. There’s nothing in there for social security. They’re bailing out union pensions right now with the 1.9 trillion stimulus package, with 86 billion bailouts. It’s a really good statement to say if they’re gonna bailout pensions, because it’s not a requirement of the government.

Seth: This isn’t a public fund. It’s private.

Ben: This is the pension guarantee corp. people have pensions everywhere. Whether you’re a firefighter, police officer, librarian, teacher, truck driver, electrician, there’s pensions all over: automakers, you name it. None of those are the responsibility of the US taxpayer. By law. They even note, I’m glad you mentioned that because it was in here, too. When the PBGC was put in place, it was never supposed to “be supported by taxpayers” says the 1974 law that created it. “The United States is not liable for any obligation or liability incurred by the corporation.” It’s supposed to be a self-funding program.

Seth: The fee is $31/year per member. That’s a deal. Guess what, folks? If you happen to be privately employed, you are now going to be funding not only social security, which is 16.8 trillion dollars underfunded at this moment, the private companies that have made guarantees to their employees through their pensions, for a guaranteed payout. We talked about this last week, but there’s some wiggle room in there because they’re making applications all the time to change the guarantees and change their plans on obligations. It’s a huge relief if you are a teamster. Huge relief because guess what? That multi-employer union plan, is that right, Ben? That’s what you mentioned before. It’s backed into a corner. It can’t fund it’s obligations. It’s one of the biggest unions out there, called the international brotherhood of teamsters. There’s some history there, too, which it’s been a while, but there’s been some shenanigans around that whole situation, but if you talk to John Murphy, the VP, of this union, he defends the rescue of the multiemployer union plans. He says, “society should be measured by how it treats the sick and elderly”. He flatly denies the plans were in trouble because of mismanagement attributed to the unions. Basically, anyone saying this claim doesn’t know what they’re talking about. At a glance, I could say I don’t, I haven’t taken a look at how this union has been managing their pension, but it seems like it’s a pass the buck. That’s what the statement says, it’s not our fault, we’re doing the right things, and we’re in trouble, and we need help, and we’re more than happy that this 86 billion is going to be going into rescuing these pension programs. It might sound harsh, the tone that I have or the tone that Ben has at this point in time, because it’s a challenging topic for us. We’re in the business of trying to make sure that our retirees are okay. Do we want them to have pensions that work? Absolutely. We’re not an advocate for pensions failing, we want them to work. We want social security to stick around, and we want these things for our retirees. It is a precedent. It is a precedent that’s really hard to negate, that if we’re gonna go ahead and spend these tax dollars towards saving pensions, that 16.8 trillion over there that happens to be never really getting much attention, which is our social security program, there’s no argument anymore to say we’re not going to be funding this. We’re definitely in a situation where there’s a lot of money getting put into the system. Trust me, if we have a huge portion of our population voting that if those public servants are accountable here, for the funding of these benefits, don’t perform, they’re gonna get someone else in there that will. Part of me is a little relieved. I’m like, oh, good, we’re not gonna have to worry about social security going away. Another part of me understands that part of the inflation equation is what is the inventory out there for our money, and we’re gonna have a conversation about what does that look like, the inflation conversation, and how is some of this going to work? There’s a lot of concern around this for us, because we want your dollar to have value.

Ben: I wonder how much of the inflationary piece of this is going to catch people on social security when they’re not doing inflationary increases. They don’t have to do them, they’re usually not as much as inflation is. I wonder if that’s gonna stagnate to allow social security to devalue itself. That’s my thinking. As we jump in here, I wanna go back to this article at the end and chat about some of the closing pieces of it. It’s interesting that here’s an article talking about social security pensions and it alludes to the conversion of the annuities. It’s funny, I’ve worked with managing money and major unions that put money into annuities specifically, purchase annuities with their funds, as a secondary version of a pension. Kind of funny that they do that.

Seth: It’s a smart move.

Ben: It was an interesting thing they’d done. Getting into #1—what we’re gonna do here is we’re gonna cite an article that I wanted to grab the 4 points they had here. They had this article in Kipling. It says, “Annuities just may be the broccoli of planning” and I think it’s great. If you can go and read this article, I’d encourage you. What we wanted to do today is a little different—take an actual article and inserting where they have points and thoughts, a little bit more fluff. Allow you to hear what’s going on in the conversation when we read this article. If you go back and rad the article, you’ll see what you hear, we may be able to add a little more breadth and depth here. The first thing that’s on everyone’s mind: annuities just be the broccoli of retirement. It’s meant to be the vegetable no one really cares about. The first thing is, what is the reluctance around buying an annuity? That’s a great conversation piece, right? There’s so much stuff out there that adds issues around annuities and why you might do it. The first objection we hear is fees. They’re expensive. We’re gonna get into that a little bit, but not all annuities have fees, not all annuities have high fees, and some have very high fees. You need to understand what those fees are, how they work and how they impact you and your account. If you’re buying a pure fixed annuity, which we think of something like a CD, it has a fixed interest rate, 2-3%, and you leave it in there. It’s tax-deferred. It’s a tax-deferred vehicle, just like an IRA, Roth IRA, whereas with a CD, if you put a non IRA money in there, you’re gonna pay tax each year. If you’re in allow tax bracket, people don’t care, it’s like buying a municipal bond, vs. a corporate bond, where it has regular income coming out. Some may not know, but some may know. If you don’t feel free to call. There’s a lot of reluctance around annuities, and some of them aren’t necessarily true, but some of them are. You have to know your positioning. We don’t say there’s good or bad investments, there’s just suitable and unsuitable.

Seth: We used to introduce every show that way. Anyways, we change. We grow. You mentioned call, and people can call at 855-226-8551 or info@yourmoneyontap.com. we’re talking about annuities; this is pt. 2. We got into the pension show last week and getting into why people don’t like annuities. That’s a bad word at the dinner table, and you have to go sit in the thinking chair.

Ben: It’s not the cool investment, right? My financial planner’s got me in this annuity, and everyone’s like oh, that’s wonderful. I think the author brings up a great point: people overestimate their ability to invest money wisely. Let’s say that again. People overestimate their ability to invest money wisely. Considering the last 12 year bull run market we’ve had, going on 13 with another 10 trillion in stimulus, 14-15 years of bull run, we’re gonna have pops down, hard hits, we had a pandemic, I think we’re gonna have another hit this year. We might go up 10% before we pull back here. We’re gonna see some shuddering: are we in another crisis? There’s a piece to this that is totally missing inside the conversation. This is why I said we want to add our depth. When I said that, you have to remember as an investor, you have a limited amount of time to confidently invest your money. It’s a limit, you don’t know when that limit is. 70, 75, 65, 80, I’ve said this story a bunch of times. I have a client who’s in his 90s, a former colonel, and he was interviewing financial planners and landed on me for various reasons. He said I’m not looking for someone to manage my money, I’m looking for someone to manage our future. There’s a point in time where I’m not gonna be able to do this. For someone as strong as he was, he did a phenomenal job. He realized in his own wisdom, that his abilities would be hampered by his inabilities to react, respond, invest, handle this. Now he’s 92 and I think about that and say to myself, I need to apply that humility in life that at times I need people who are gonna carry the torch forward. When you’re in a 13 year bull market, sometimes you might say to yourself, am I overestimating my abilities? Am I professional enough to manage the downside of this? We were doing a plan for a lady on the west coast. We always say, let’s not sell the stock yet, it’s gonna keep going up. You have 1/3 of your net worth of stock in a company you don’t work for.

Seth: It’s funny for us, but we understand the emotional attachment there. In hindsight, it’s been one of those completely traded sideways for the last year when the rest of the portfolios market has been going up. I wish he would just listen and do this—it’s a healthy thing for you to do.

Ben: We understand human nature—we keep moving on with that. That’s a big reluctance issue, I don’t want to give up control. It’s really control.

Seth: It’s not control if we take a look at it as well. It’s having a partnership in what your design looks like, it’s relying on and utilizing the resources that you have to be more successful. We do this in life, too. It’s delegating.

Ben: One thing about annuities, we talked about 3 guarantees: social security, pension, and annuities. One of the concerns people have is I’ll never live long enough to get the worth out of the annuity. That’s just only true if you do the annuity wrong, is the way I’d look at it. When I read that, I say to myself, that’s an interesting scenario, it could happen, but you really have to buy a life-only payment with no protection of your principal on death. You’d have to really go out of your way and make that risk. I can’t think of a client that we intentionally put their life existence, how long they’d live as the full outright benefit of finding the value of the annuity. We put a term to it. I’m gonna take a payment, but it’s gonna be at least 10 years, or as long as I live. The longevity takes over.

Seth: It’s a misunderstanding. Those 2 things exist inside the potential there: they’re only selecting something that’s a max payout in the annuity world. There’s different ways to structure the payout, lots of different ways. It would be a misalignment, but there would need to be some misunderstanding, and the answer to this question is what are the different ways and understanding the challenge, why people are just like it’s more complex than I’d like. Some of these are very complex and it takes time to work through these and it’s many conversations. A lot of the time, once that place is attained, or once you get to that place where it’s like okay, parts of what this is, I don’t understand all the stuff behind this, but I’m able to grab hold of how this is going to benefit what I really, truly need in retirement.

Ben: I’m not a big fan of spending money on ridiculous fees—I’m fairly conservative that way. Some of them have fees, some don’t. when you find the right fit for something, it’s kind of like a car. If you have 5 kids and you’re looking for a car, and you see this corvette up front, yellow or red, hot, and flashy, and you say I’m in love, I love that car. For some people this isn’t gonna resonate. Then you say to yourself I found this minivan, it holds all my kids, it’s perfect. It doesn’t have the hot and flashy, but it works. I can’t tell you, when you find the right program, and if you’re the person who says, I can utilize an annuity to substantiate income needs and drive an estate concern or any of the pieces you might have, it’s gonna feel like the minivan fitting a large family vs. the corvette. Sometimes people go to the stock market and buy the corvette and don’t wanna talk about the minivan.

Seth: That’s what they wanna show up to work and church at, let people know, this is how I roll.

Ben: It’s not flashy, not a sexy vehicle in the investment world, but I can’t tell you how many times—based on your needs or what you’re trying to accomplish to solve this problem. People say, sounds too good to be true. It’s unbelievable, but when you find the right fit for someone, it feels that good. You’re like I see how that works. Most people are so closed off to hearing things, there’s a standard way, there’s a process they’ve learned, taught themselves they have to buy stocks, bonds, mutual funds. If you could go out and buy your own annuity, if you didn’t need a broker to accomplish the find in that scenario, because they’re so complicated they require assistance, they’re foreign to people. They scare people and they become closed to it. That’s sad because my parents always told me, always be a sponge. Always be willing to learn and look for new things. How many training things do we go to? I’m the notebook guy, I look for tax classes, I travel al over the country and we go to these programs. I sit there and people are off hanging out, doing this, whatever, skipping out of these things early—I’m literally the guy standing there talking to the attorney, CPA, DJ. Digging is what I need to do, I need to know as much as I can to help my clients as things change.

Seth: There’s so many different approaches—how do you learn these things in a way that you can transfer that information and knowledge into your book of business or your client’s scenarios. I wanted to say something about too good to be true. I don’t know if this is you, but if you’ve ever bought life insurance, these are life insurance products. Some of the guarantees on them are the pieces that Ben will say ‘too good to be true.’ I’ve had people ask me, there’s no wrong question here, but let’s say you’re buying a million dollar term policy for $50/month and you die within the first year—a million dollars gets passed to the estate holder. That math doesn’t make sense. How could you do that? Insurance companies must be going out of business, because they’ve offered benefits that are too good to be true. The way insurance companies are invested, the way they’re able to provide products and services and stay profitable, it’s very large number equations, and there’s actuaries in the background that are taking care of these pieces. They’re far better at doing what they do than these pensions have, historically. That’s where we go back to the buck trying to get past in the pension piece from some of these actuaries. You can reach us at 855-226-8551. You’re listening to Money on Tap; we’re talking about annuities. We’re gonna come back and get into some good stuff, don’t go anywhere. Ben, how often do we get people coming into the office, saying they don’t have financial planner? How critical is it for us to put the pieces together and make sure that their future, their retirement is a successful experience. We talk about it all the time on money on tap. If that’s you, give us a call at 855-226-8551 or info@yourmoneyontap.com. We have the right planner for you: Ben, me, we’re here for your to get the plan together and make sure that that next step is right. You’re listening to Money on Tap; you can reach us at 855-226-8551 or info@yourmoneyontap.com. we’re gonna try to make some key points here. Ben, you were gonna talk about the PBGC. The pension benefits guarantee corporation.

Ben: PBGC. Seth, thanks for that. I mentioned earlier in the show that we’re gonna talk about the article again, but we’ll bring back some points next week that we talked about today. We’re gonna go through more of these things. I’d encourage you to read the broccoli article. There’s no more worries about running out of money. When you buy the annuity, you have insurance backing the company, reinsurance, and the state insurance pool backing this stuff too, up to a certain dollar amount. In my understanding, though it’s not layman’s, there are significantly more financial support than the PGBC has, except 86 billion dollars have been given, even though the law says we can’t. Seth, we do so much pension maximization conversations, how do you maximize your pension payout? There’s been a lot of conversations about will my pension exist in the future, cut down, diminished, will my pension organization go defunct and PBGC steps in and says we’ll pay you this much vs. the 2-3x more than you were getting? There’s a lot of worries and fears over that. There’s a really healthy conversation for you to have with a financial professional, whether or not your pension is strong. NH is top 10 worst pensions in the country. Those are large concerns, and people need to understand, this is the pension I have, if I did an annuity, this is what I’d get if they offered me a buyout. Pension companies have tried to get pensions off their books, offering people a sum of money to forego their offer. You may want to look at that and see if any annuity will match. I’ve had times where it’s beaten the pension company. I’ve had times where it’s come up lower, but those conversations should exist. You need to know where your best, secure source of income need to be. The 3 sources are social security, pensions, and annuities. If your social security’s in question and the government’s popping money to fund these things and you have pensions in payout, but by half, this is something you need to make sure you line out, because if we have a market crash and all your money is sitting there, that’s like building your house on the sand. If the market crumbles, you house crumbles. If the market crumbles, all the pension companies are investing in the market, and the PBGC is not gonna be enough with the membership fee. Over 30% of America is retiring, and they’re all shooting demand on social security and pensions like it’s never happened before. If you can hear the sucking sound of money in the pension systems, it’s larger than it’s ever been. These are major concerns, and this is where strategies come in, not just being a good investor, but a healthy retirement person. Those are things we need to do. Seth, I think out show next week about the 5 myths about annuities will resolve a lot of question for people.

Seth: I wanna leave you with a couple bright and sunny spots here. This is from the wall street journal, and that is retirees who are surrounded by their family and friends, who have a substantial check are much happier. That’s not us, it’s them saying that. There’s other research out there from a different organization that provides that 75% of retirees that have a pension-like or annuity-like income feel far more comfortable that they’re gonna be able to survive or do well, into their 90s in retirement. It’s that word that’s so critical in trying to get these foundational pieces in your retirement. At least have something—whether it goes up or down, you’re not gonna be subject to the whim of the market.

Ben: In that article, another article we didn’t reference from Kipling, it noted that 73% of retirees who own an annuity believe they’ll be able to live the retirement lifestyle they want, as opposed to 64% of retirees who don’t.

Seth: We talked about non-qualified money outside of your IRA or 401K, that allows for compounding to happen without taxation. It’s not exclusive. These annuities aren’t exclusive to non-qualified money. People take ROTH IRA money and put it into annuities, it’s one of the benefits for non-qualified money, but this isn’t an exclusive program. We use these in so many different ways. That’s one of the cool things about, one of the things we can do, we can use these to try to fund your forever home and still retain an asset that passes on 2 airs, and it’s incredible what we can do with these. If you know what you’re doing, make sure that you have something greater than you ever possibly imagined passing on. It’s not every situation that happens that way, but it is one of those things we see more often than not—these are products that work so well for different places in people’s retirement planning. You’re listening to MOT, we’re so glad we had an opportunity to spend this time with you. We can’t wait to meet up with you next week, where we’re talking about what are 5 myths you know about the annuity world. We hope it’s been helpful for you, take this and apply it to strategies you’re working through right now. If that’s you, give us a call at 855-226-8551 or info@yourmoneyontap.com. we’d love to sit down with you, be a voice of reason, help you know what retirement can look like for you.

SUMMARY

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

After retirement, there are 3 ways to gain guaranteed income to keep you and your family set for whatever may happen. Not sure what those are? Tune into this episode of Money on Tap to learn about annuities, pension and social security income and what that may mean for you in retirement.

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

MOT Show 161 Personal Pensions

Seth: Welcome to MOT. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. My name is Seth Krussman.

Ben: I’m Ben Brayshaw.

Seth: You can reach us at 855-226-8551 or info@yourmoneyontap.com. we’d love to talk to you. We always enjoy the call ins and appreciate you bringing your concerns to us, people that have personal finance going on in their lives and businesses. We’re here to help. Today’s show is built around…

Ben: Personal pensions. This show is one of those things where we’ve done a number of ones around it, it’s a little replay of some of it, but there’s been a lot of development in the conversation around pensions. This can be apart of the conversation about pensions and annuities – some people love em, and some people hate em. We’re gonna go through both of those arenas and discuss that. I think this is a relevant conversation because there’s been so much stuff since 2014 and that multi-employer reform that was initiated, and all the stuff going on, this was part of the election conversation. For a lot of people, this is ‘What does my future look like in my pension, social security, annuity’ because people need income in retirement. It’s gonna be a good listen for people.

Seth: One of the challenges in retirement is having security and understanding what the rest of your life after work looks like. Or you transition from being full time, even if you’re consulting and transitioning being full time out of that, there’s an inevitability that age happens, and we’re not gonna be able to turn on or off an income stream for ourselves. The pension idea has a huge resonance for anybody that’s looking towards this retirement corridor and having security and a sense of ‘we understand how life is going to look for us, and our income is going to be there for us.’ That’s one of the underlying tones we have to understand around this idea of pensions. We’re gonna get to that and what makes sense around that, but before we get too much into this show, we should go into Money in the News. First off, did you know that McDonald’s is in the news again? Making big waves out there with plant based burger options, and a partnership announcement for them.

Ben: I saw this article, and as much as eating McDonald’s doesn’t sound like the healthiest option, eating plant based? I don’t know. I haven’t been a beyond meat fan myself, but it’s okay. I tried it one time.

Seth: I ate McDonald’s yesterday, but it’s not gonna be on my menu every day. It’s on Warren Buffet’s menu every day.

Ben: I love that skit; he says 32 billion burgers sold? Someone’s lying. I love that line.

Seth: For us, it’s the breakfast on the road. We were trying to get out the door and we just couldn’t get our act together in time, so that’s what we did.

Ben: Beyond Meat has been a stock that’s been rolling all over the place, and now McDonald’s is partnering with them. It’s a 3 year global deal, which is huge. That’s a big deal. McDonald’s just launched their chicken sandwich, which is to compete with Chick Fil A.

Seth: We should mention that Yum brands have quite a bit in the works there because they have sausage on their pizzas, you could have Beyond Meat tacos, anyways, Beyond Meat, we talked about them in the news a couple years ago. Wondering, is this a safe alternative for us? People say its delicious, but there’s controversy out there.

Ben: Bill Gates is talking about making fake meat, and printed meat, I don’t know, it sounds so gross and so unhealthy.

Seth: Printed meat.

Ben: Yeah, you print it with the plastic printer. It’s something out of Star Trek. You push the button and meat appears; it’s kinda bizarre. It takes away the sin of McDonald’s. I will say a Big Mac or Quarter Pounder sounds good every day, prior to my heart attack. Next up, we have an article here with Wall Street Journal. It’s by William Boston, and new chauffer hailing service seeks to challenge Uber and Lyft in city rides. This is very interesting; there’s been a lot of craze around auto travel with COVID. People trying to stay out of airplanes, going back and forth. As businesses are going back into play, travel between Boston and New York City. It’s very chauffer like; it’s called Black Lane, and it uses limo-like vehicles, the person will get up, get out of the car, open the door and this is something that helps with the business travel. I like it, it sounds very interesting.

Seth: Look back a year ago. Pandemic hits, Uber was under distress. Now no one’s doing anything like Uber; I’m never getting in a car with a stranger. Then, life starts moving forward, people are looking at their options: do I get on the train, rideshare, do I take a nicer route for myself to get from work to wherever that might be – what are the price point things I thought was interesting is they’re looking around $399 if you’re traveling from New York to Boston. That’s ½ of an Uber or Lyft ride for that same ride. There’s a lot of value with what they’re creating.

Ben: I like the New York to Boston option. It’s appealing. A $400 trip from New York to Boston, that’s not cheap, but for the ease, the computer, phone, all the stuff you can still do, I can see this being a legit cost. The previous $700-800 trip is out of range: that’s each way.

Seth: The next time I fly into Logan, this is how I expect you to get me from Logan.

Ben: Wait on the side of the curb, they’ll be there. If they don’t, there’s a bus.

Seth: You can find which Uber or Lyft experience which you didn’t care for, and that’s who you’re gonna call?

Ben: Yes, everyone has one of those stories. You’re like, I don’t ever wanna be in this car again. My daughter wanted to throw up, it smelled so bad in that car. With that, let’s go to something else that smells bad, the Fed. James Mcintosh wrote this article on February 28^th, 2021. There’s a lot of interesting conversations on what’s going on with the Fed, we’re gonna talk about inflation and dig into that. There are two things here that he talks about-a strong economy is good for stocks, it means higher treasury yields. With the Fed trying to control raids and the manipulation here, having that average 2%, we were thinking about another article. They’re trying to have an average 2% inflation. There’s so much inflationary conversation about history and what it used to be; 2%. Inflation has been in the low 1’s. having that 2% inflation piece, it was higher than what we’re currently experiencing, for them to have a 2% average and to see 3.5% inflation is something we should be expecting to endure.

Seth: That seems to be the goal of the Fed, and the market doesn’t necessarily like it. It was an interesting relationship where the market is picking up and the economy is picking up, stocks are rising and yields are rising, they’re gonna follow each other up, and the market believes there’s been enough of that for them to not start to raise rates at this time doesn’t make sense. The fact is, that inflation number, there seems to be a challenge for them. They have a hard time pushing the economy up, even though they do all they can to help that situation. When the economy is improving and yields have been rising, if they don’t start raising rates, it’s one of those things that says we’re gonna have some trouble here in the future. That’s what the market was saying last week; they didn’t like it.

Ben: When we start having a conversation about the rates—when rates go down, tech continues to go up. It’s cheaper money for them to expand and grow on the tech side. It’s something we’ve experienced and seen, so lower rates were helpful in the technology developments we’ve utilized to maneuver and manipulate the business experiences we’ve worked over the last 12 months. As rates rise, tech is adversely affected. They go into another section here that discusses inflation expectations being buried in the treasury market. There’s a lot of conversation about what’s going to happen in the next 5 years in inflation, and how does that worry play into it? Those are interesting conversations, because you need to know when to go to various value assets that will intrinsically rise when rates go up, when tech is pushed back and pushed down, you have to understand there are other areas that can push up when there’s higher or lower inflation. This is an interesting article, worth the read. It talks about short and long impacts and how it affects the marketplace.

Seth: When the market seems to be savvy about understanding what is going on and one of the things I think the market believes here is that the major of inflation, or their understanding of the relationship of what really is happening with inflation is not clear for them. It’s not understood. We’ll get into that when we get into the inflation story; there’s a lot of components to that that I believe the market has understood and said you’re not using a correct major of inflation to grab hold of the big picture here.

Ben: The article goes: there are 2 new dangers – “first, bond yields might rise further without any further strength in the economy to compensate. Second, the marketplace may have switched from cyclicals to component stocks, a mix of electric vehicles, clean energy, cannabis, bitcoin, that finds its nexus in Tesla. That’s interesting; if speculative interest ends badly, the fall might drag down much of the rest of the market.” That’s worth some major consideration. Where’s the market going, are your cyclicals or speculative going to rise? That’s a big question.

Seth: You heard it here first, or maybe second. You’re listening to money on tap. We have a great couple of shows ahead of you, talking about pensions and it’s a big part of retirement for so many people, not only here in the states, but across the world. We’re gonna get into some really interesting facts and dig into some history and understanding, where does this idea come from, how is it transitioned into today, and hopefully we’re able to wrap your head around what today looks like in this pension idea. We’re going to eventually get into personal pension creation, because having stability in your retirement is so critical. You’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com.

Ben: If you’re listening today and your questions are outside the box of state, financial planning, or any of the pieces we’re talking about, don’t forget Brayshaw Financial offers auto, home and business insurance. We have a department that handles all of that for you. Give us a call at 855-226-8551 or email us at info@yourmoneyontap.com.

Seth: Welcome back, you’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Today, we get an opportunity to talk to you about creating something, I think that’s where we’re going to try to get. Before we get there, we have to back up a couple places and build into that. Something we want to create is an understanding of how to have stability for your retirement dollars. This idea of having stability primarily comes to us early on, before any of us were born, in the form of a pension. That’s where we’re gonna start. We’re gonna talk about pensions, the current state of pensions, we’re gonna talk about where they come from, and what are the challenges right now? Not everything in this world of pensions is gravy. I think that’s one of the biggest challenges people in retirement – so many people have been pouring into whatever their job is. It’s a huge challenge for us, and it’s one we love to try and uncover and walk with you. Hopefully, we’re gonna build an understanding together that will help you create stability for yourself and really be the person that’s in control of your retirement outcome. That’s our hope for you, the best we can do. We’re gonna start off with letting you know you can reach us at 855-226-8551 or info@yourmoneyontap.com. What is this pension thing, first of all? Where does this come to us from? First of all, nobody knows. We’ll say that. Today, our understanding of a pension and what it is: it’s a retirement account that an employer maintains to give you a fixed payout for when you retire. It’s a defined benefit plan. Your payout depends how long you’ve worked for your employer, your salary, and when you retire. You can choose—most of the time you can choose between a lump sum payout or a monthly payout, and that’s called an annuity payment. Where this comes from, I already said no one really knows, but as far as we have any information around this, it’s been around for a long time. Going back to the Romans’ government leaders, from Caesar, early kings to modern kings and parliaments have developed a pension system. The original intention for this was to provide incentives for their soldiers because you’re gonna come and you’re gonna fight for us, and a lot of that relationship was based off of money, you know? These people were coming from wherever they were living, raising cattle, grain, farmer, and foragers to really trying t have an opportunity to improve their lives. They’re gonna put their lives on the line and go into battle.

Ben: This was a big, huge piece to almost every military scenario going back to Caesar. They use this as ‘Go die for your country and we’ll take care of your family.’ That’s a big concern for a lot of people, that’s why people buy life insurance, put away for retirement…it’s overall kind of paternal, I need to provide. That’s what we’re all innately born with. I think it’s really interesting that George Washington used this conversation during the Revolution to curtail a mutiny of the continental troops. He said ‘We’re gonna have a pension and your family’s gonna be cared for.’ This is something that’s been a part of the military world for a very long time.

Seth: You could say the country we live in together, we owe it to the pension, George Washington, and the intervention of that pension, ensuring those pensions to the colonists. Is that what you guys were? We’re in OR and we’re not part of the original 13 colonies.

Ben: Sorry all Oregonians, you guys have been through a lot in the last year.

Seth: We just need prayer, folks. So, that’s the beginning, right? It made a lot of sense. This idea of pensions is today that we don’t necessarily have embedded in military service, although there is that, it’s part of what the military service can offer. That idea was taken over into the public sector. What happened there was pretty much the same thing: you’re gonna come and you’re gonna work for us. How do we help give you some kind of security, some kind of tradeoff here? So that you and your family, all the service you’ve poured not this organization, can continue to live, and survive, and not have to worry about your income for the rest of your life. It’s the rest of your life piece, and your family’s life, that has been so key. It’s one of the things that the social security idea is our public pension system that we have here, that we talk about and we work with often. We’ve got Ken Barren who’s with us on staff at Brayshaw Financial Group that worked for 30+ years for the social security department, helping those folks out there before retiring and coming here with us. It’s a huge conversation we have here, trying to make sure that people are understanding what that is; structuring that in the best way possible for them and their family. That’s the idea and the understanding around, where does that come from? What does it mean? What does it transition to, and where is it at currently in the public arena? Right now in the public area, there’s a huge challenge out there. The biggest challenge of these pensions is that they do not have enough money to cover the obligations and the promise to the participants of those pensions.

Ben: You were right on there. One of the things here folks, and I don’t wanna scare anybody, that’s not our point regarding pensions. There’s a lot of turmoil around pensions, it’s part of the election process, as we mentioned earlier, the pension reform act of 2014, those are types of things that we’ve talked about on the show. Pensions are in question. There’s lots of fear. The concept of pension is thinking you’re gonna have a guarantee of pay to you in the future. It’s a promise to pay in the pension thinking, that’s what annuities are. Annuities are a promise to pay. We’re gonna talk about the similarities and differences the pros and cons. One thing people need is a simple retirement. They don’t wanna worry about when they’re 85 years old where money is going to come from. They want automatic care when it comes to their retirement funds. Should you be concerned about your pension? Are there going to be things that happen? The thing that’s putting so much pressure on the pension world is the number of retirees. There’s 320 million Americans retired, and in the next 20 years, there’s another 80 million Americans going to retire. That’s 120 million of 320 million retired. That’s 1/3+ of the country retired; we’ve never had that before. All those people are going to be looking for their pensions, their social security. That’s why when you get your social security, they say we’re gonna run out of funds in 2034; it’s the demand in pressure.

Seth: It’s not limited to the private sector, in terms of scarcity of funds in those pensions. It’s right there at the social security and that federal level as well. That’s an interesting conversation, probably a whole other show that we’ve had a couple times on that. It’s exactly what you were saying. This isn’t intended to be a scare tactic; hopefully, it’s a conversation that people are willing to have and understand.

Ben: Then you get into, my pension’s guaranteed. They are, it’s by the PBCG. It’s a nonprofit organization, and it guarantees your pension payment by private sector branches. It’s something that’s worth having some legitimacy. It’s an independent federal agency, overseen by the department of labor. There’s a legit backing piece to it. Under the 2014 pension reform act, a multi-employer has to apply to the federal government to make a change to your pension to get the permission to do that. The thing is, there’s so many of these pensions that are so underfunded, poorly managed, missing the mark, you know? If all of them start crashing, the PBGC does not have enough money. There’s not enough backing to do that. We’d have to print money just to make up the promises to do it, which is why the federal government is allowing pensions to be changed. The scary part of this is, a lot of people don’t realize that it’s not like ‘hey, I’m not retired yet, and my projected pension is XYZ, and now it’s gonna be 10% less.’ It’d be wonderful if it were that insignificant, or if the application were a 20-30% reduction request, but these things are 40-60% reduction request. We’re seeing these being approved pretty quickly as the applications go through.

Seth: You talked about the application process, and if you were to go out and google pension cuts, there’s quite a few resources out there to look at; I won’t talk about all of them. It was as of 2019, there had been 12 pensions that had applied, that had been granted approval for those pension cuts; taking a look at 2020, there was 2 more that those applications had been approved. This is composition roofer’s 42 pension plan. There’s the local union 237 pension plan, so there’s resources out there to take a look and see how many have applied. If you look at all the applications, and it’s not as if you want to know the rate of approval, it’s just that there are a lot of pension out there making an application. Even if they’re denied, they’re going back through that process to amend what it was that was not approved, or massage that application to get it through. The fact is, they do not have enough money to meet those obligations.

Ben: This is very scary, there’s people here; I’m looking at this article—pension cuts promised to retirees—this is back in 2017. It talks about a gentleman here; Joe Finley, he’s 63 at the time. He said he worked 12 hours a day and took weekend shifts so he could earn more credits for his pension. He talks about the sacrifice of time with his family and his children. It is the quintessential example of the American worker. His monthly benefit was $3500 and was reduced to $1900 that he was previously receiving. This is a very scary thing; the reduction was actually the equivalent of what his mortgage was on his 3 bedroom home, and now they’re reducing it. This was 2017. I don’t know anything about him today, but he was not alone because if he got the cut, others got the cut too. They talk about some people being slashed up to 60% of their pension benefits. It says benefits will be cut 20% on average, but some are expected to be cut up to 60%. That’s financially devastating, and something that we don’t know how to manage, because this is just the multi-employer pension reform act. They haven’t even discussed the individual pension reform act, and what should you be doing with your current pension, your pension buy out, any of those conversations are regular conversations we have all the time. Hey, I don’t even know how well backed my pension is. If you think about how hard it is for companies to stay in business, and how hard it is for them to keep a pension going, and how volatile the stock market is, it almost seems ridiculous that companies offer pensions. They don’t have the wherewithal to run your future. There’s a lot of push because we’re just on the multi-employer pension reform act; there’s going to be an individual pension reform act, because the demand and pressure on these organizations to pay out those funds—it’s not like they’re paying it out over a long period of time. They’re paying those things, but it’s an instant demand of all these baby boomers saying hey, I need my pension. You’ve got all these people needing their pension – 20k a day, it’s a monstrous number, and they’re all looking for their payouts, they’ve been waiting for this day. The management of those numbers is going to be excessively complicated. If you look at the stock market, you have people talking about bubbles, we’re some people that have concerns about long term longevity and quality of the market, being positioned properly and looking at where growth’s going to be; you don’t think pension companies are? They’re investing in the same market we are. Those are real concerns, trying to make the one piece that you think is the foundational element in your portfolio, which is sacred to you and secure, it just might not be. This is a big concern, because we like pensions, we love the story of income, because it’s all about how much income you need, the expenses you have, and the offset of those. That’s where it all comes together and you say hey, I’m okay. I’ve got the retirement income here, this pension…we meet people all the time with pensions galore, $100 from this company, $500 from this one, I worked at this company for 20 years, and that’s $2500 a month. You’re like, I don’t know if I can say I’m guaranteed it, because I’m not guaranteeing it, that’s what the financial plan’s saying—how much faith do you have in your long term pension is a big question.

Seth: Folks, you are listening to money on tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. If you have a pension, you probably have a question. A lot of times when people call us up and we’re trying to put the pieces together, that is a complicated piece of understanding that you need to try to have before trying to build out other places within your financial plan. That’s what we do at Brayshaw Financial Group. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’d love to help you out. We’re gonna take a quick break and we’ll be right back. Seth Krussman, Brayshaw Financial Group is our company, and we bring to you Money on Tap. We have a lot of fun doing this show. One of the things we love about doing Money on Tap is that our goal for you to have access to have the financial planning world, what do we think, how do we do, what are we talking about? Raising the bar for your financial education, it’s so critical. That’s what we’re doing here. The other side of this is, we’re financial planners. If you’re looking to work with a financial planner, if you want to have that playbook for you to understand the important things right now, how you’re going to get to your goal, how to retire, that’s what we’re doing here. If you have $250k of investable assets, give us a call. It’s free to you and it is worth your time to pick up that phone and give us a call and discover what complete wealth management looks like. Ben and I are excited about the opportunity to partner with you and give you that financial plan that’s going to make the next step so much better understood and get you where you need to go. Back to Money on Tap with Ben and Seth. Welcome back, you’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. My name’s Seth Krussman and I’m joined by Ben Brayshaw. We’re both financial planners at Brayshaw Financial Group. We’re talking about pension plans, annuities, love em or hate em. We’re talking about the challenges throughout the pension history. One of the names out there that hid headlines was GE. They froze their pension. That was a huge headline. We talked about pensions on a couple of shows; at least in money in the news about that, but it froze its pension benefits for more than 20k employees. The goal there was a solution for them to set aside $5 billion to cover funding requirements through 2022. These were to help trim a short fold as much as $8 billion. To understand that, what does that mean, the people who already began receiving pensions were given pensions. They started a lump sum for everybody who hadn’t received pensions of 100k. The lot is 20k people, there’s a very different understanding of what the future’s gonna look like.

Ben: The thing about pensions is that they’re a wonderful hope, and there are very few pensions that are overfunded and running a successful—there’s not many of them. When there’s a deficit in a pension, corporations come up with the deficit. If they say it’s gonna make 5% and it only makes 2%, they need to come up with that difference to keep it on track, on pace. That’s a huge vulnerability.

Seth: I love our governor in the state of OR, it’s Kate Brown. It was a couple of years ago that the Oregonian paper talked about the public pension here, it’s hers. They were talking about the underfunding and underperformance of pension. It was averaging something like 5% or something like that; I don’t remember what the number was. Governor Brown said, ‘All we have to do is earn a better return on the money.’ You’re right. That’s all you have to do. Go do it! So many people try to figure out, how do we do that? Do we change the company we’re using to invest those assets? Whoever’s investing the assets is trying to change them to get the net number the plan needs. It isn’t easy, folks.

Ben: It’s unbelievable. It’s like ‘hey, we’re not gonna come up with more money to fund this thing properly, we’re gonna come up with someone who can invest it better, who can change our tables and say we’re gonna use a higher investment rate, so we don’t have to change it.’ The truth is that these plans have gone underfunded for the most part, for way too long. That’s a big problem. What I’ve found is, looking at these plans and where the market’s going and what people are doing; a lot of people are planning on some sort of reduction in the payout. Some of the problems that have happened is a lot of people do pension maximization payouts. They’ll select the max payout for a single life, and they’ll use the difference between that and a joint life payout. Let’s say your payout is 1000 a month, but the join payout with your spouse is 750. There’s 250 a month difference. People have taken a portion of that 250 difference or savings and bought life insurance to reinsure the value of the pension and the asset to the spouse. Sometimes that’s a net benefit—they get to keep more than the 750; spend 800 and use 200 on insurance. The problem is one of the unknowns is that if you did that and your pension gets cut, can you still afford the insurance? If you take a 40-50% cut, there’s some real risk inside that that hasn’t ever been properly disclosed, considering what’s happened; you couldn’t predict most of this stuff. We’re just on the front lines of predicting. People will say ‘for years you’ve been talking about this stuff.’ I’ve been talking about it for 2 decades now. It’s just in 2014 they created a law where companies should address that. People would tell me ‘my pension’s guaranteed,’ but more ways are gonna come, you’ve got 120 million Americans looking for their pension, social security and so forth. Those are enormous concerns that are getting bigger and bigger. The writing’s on the wall that we’re gonna have more and more things to do. Seth, you mentioned GE. I love the phrase ‘GE is as American as apple pie.’ Thomas Edison founded it, the company’s at the core of our history. Boom, it’s halted. There’s a constant push on this piece. What are people doing? That’s the big conversation here. We talk to people all the time, and we assess the financial astuteness of where people are at about pensions. We try to educate them about pensions. If they wanna rely on their pension, we usually tell them on a planning standpoint, don’t use 20-40% of the income number as something you count on. Consider that the excess. Whatever you need, use some variable of that pension inside there. I don’t necessarily feel the same way about gov’t pensions, like military. It’d be hard pressed for them to bash the military pension. I’d use a lower percentage, but I’d use one. And social security, people walk in the door and say they’re scared; oh, social security’s not gonna be there for me. People intrinsically know there’s some major problems here. If you’re listening and saying, yeah, that’s how I feel. If you’re in the middle group and you’re saying, ‘something’s going to remain; I’m gonna get that going as soon as possible.’ I’ve noticed in all the documentation I’ve read is that it’s kind of that over 80 years old, seems to be the threshold that they don’t institute the same cuts, or no cuts at all. It’s that person so far beyond—they must be some perspective that we’re not gonna touch people in their 80s because they only have a few years left, I have no idea what it is that’s driving that, but it’s interesting. I’m looking at United—pension change after pension change. On the list, there’s some that are denied, but not many of them, there’s a lot going on in the pension world. One of the things we’ve done a lot for people, and it’s more of saying who does investments vs. who doesn’t? The investment world, who handles managing assets, insurance companies who handle annuities, people say ‘I don’t like annuities.’ Annuity is being guaranteed a pay. Whether it’s on death, life, there’s all sorts of variable types of annuities, from fixed to fixed index, to variable annuities, whether you want market or no market. In reality, we’ve talked to a lot of people who say, ‘I need income, and I need as much certainty you can bring to the table.’ Annuities have been a good choice for a lot of people who are being offered buyouts, who are saying ‘I want as much guaranteed income as I possibly can’ a lot of times we’ve used the annuities as much as we can. For the most part, we do investments, assets, we do insurance, we do all those scopes, that’s why we call it 3 dimensional investing. Brokerage, fee based planning. Those things come together naturally, and the balance of different types of assets can empower your financial planning more than it can take away from it. We believe this, but whether you believe it with us as well is that it is the cornerstone of everything we do is to say no one answer solves everything. Insurance is never gonna be your entire solution. You’re not just gonna go buy stocks, bonds and mutual funds and be just fine. We don’t believe that, we believe all these coming together to empower you the most. For the person looking for securitized, pension based income, with the certainty of all that’s going on in the pension world, whether the PGBC can actually back all this is a whole other thing. If every dollar went kaput, there’s not enough money in the FDAC. The US government would have to step in. financial collapse, those are big deals. Insurance companies offer contracts. Banks go out of business; insurance companies get gobbled up by bigger insurance companies. I think my money’s better in that scenario, not in the hands of a pension company, not an annuity company, that’s just my belief. Whether they both go under, the argument can be rattled 15 different ways.

Seth: What’s the solution here? We’ve talked about the solutions behind the veil of a pension. That’s great to understand; what are they doing to mitigate this. People are trying and doing their best to understand that. From our perspective, our most simple solution is to start working with somebody. If it’s us here at money on tap, wonderful. We love that. You can call us at 855-226-8551 or reach out to us at info@yourmoneyontap.com. You can sit down with Ben and I, and we’ll talk about the intricacies of your pension and how that applies to you and your plan. At the end of the day, a plan is something you need to want and have, to understand some of the things we’ve been talking about here, more specifically to you and how it relates to you. Ben’s talking about having a buffer of 20-40% of whatever your pension is. How does that affect the underlying finances and the rest of your assets, whatever those might look like. Ben’s talking about 3 dimensional investing, getting this 30k foot view so that you can see with clarity, all of these pieces coming together to work for you. We believe in the power of planning around your investments. It’s great for us and fun for us to talk about all these separate entities and how do they work, but at the end of the day, we wholeheartedly believe in the planning process, the 3 dimensional investing process we’ve put together for you to know what that next step could be. Should be. For you. We want you to have a better understanding and through better understanding of this process and what it is you have, that will create clarity for you. The understanding is what creates that piece for you. It’s not them telling you guaranteed this, guaranteed that. It’s you understanding what does this mean, how does this work. And having somebody come alongside you and help you with that, it’s so critical. That would really be the step 1 in any kind of solution for you here. It’s getting that understanding. We wholeheartedly believe in the 3D process here because it takes into account all the pieces. We’re not just gonna lean on one piece, we’re gonna bring them all to you. You’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We want to appreciate you for allowing us to be who we are and have fun with what we do, which is financial planning. We’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We can’t wait to make it a great day and a great life with you here on MOT.

SUMMARY

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

On this episode of Money on Tap, Ben and Seth define the meaning of some really important retirement terms, such as ‘annuity’ and ‘pension.’ Curious to know how those affect your retirement plans? Tune into this episode to find out how to make your money work best for you, even in the long run towards retirement.

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

MOT Show 160

Seth: Welcome to MOT. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We're so glad to have you aboard today. My name is Seth Krussman, and I’m here with Ben Brayshaw. This week, we’re gonna have a conversation with you about a solution if we do get into a bear market. We’re gonna talk about a bull market, bear market. Last week we talked about the bubble, and what if things go up, down, or sideways. People want to protect that in a bear market, which is inevitable and part of everybody’s journey through investing. How can we help you? It’s what we’re here for. We’re planners and partners at BFG. As financial planners, we have these conversations and prepare for these periods where the market isn’t doing what we want it to do. We’d love to say the market’s gonna go up all the time, but that’s not the way it works. You can do some things that are different than just sitting there and writing it out. You can sit there and write it out, but something that should be approached from that perspective is what do you do when the market doesn’t go up? We’ve gone through this last year. 2020 was interesting. We’ve had one of the longest bull markets that we’ve ever been able to record. It’s one of the longest ones I’ve ever lived through. Maybe that’s a difference for you, Ben. We also went through a bear market this last year. Maybe you don’t even realize that as you’re doing whatever you’re doing. Getting a mask on your face and your kid’s face, are you gonna have a soccer game or not? we went through a bear market this year, and there are some things that happen in a bear market. You may be investing differently, what do people with wealth do when they get into a bear market…we’re gonna talk about what’s different about a bear market cycle, and what’s different today and from a past perspective. You’re listening to MOT, it’s time for Money in the News.

Ben: First up here for Money in the News, we’ve got Google and Facebook trouble down under will spread. This is a nice WSJ article written by Jackie Wong. It’s interesting what’s going on here. The Australian parliament is now dealing with a negotiation. I like that scenario that they put, the fact that they’re proposing a law here, but it’s a negotiation. Basically, with these algorithm changes that are going on in the world around news, they have to disclose what they’re doing to allow certain things to pop to the top vs. others. This is the crux of – we have a lot of debate in the US about news, what’s relevant, stuff that gets pushed to the side vs. others that to – I’m proud of Australia for implementing something going on here to control the news outputs so that all of a sudden, someone in superpower says we’re gonna turn this off or on, shut this media outlet off or on, those are big deals right now.

Seth: FB and Google are top of the list for pretty much any platform out there for pushing news at you. The algorithm piece is something that they hold pretty closely to. They’re not usually telling everybody out there how this is gonna work. The Australian parliament would like them to be very upfront with this, and also start paying for news. If you have a news link out there, and you create content, basically Google and Facebook, whoever it is, will have to start paying for that content. I don’t feel bad about that at all. I think if you’re a content creator, A) you should be able to understand how things are put at the top, and if they’re using your content at one of those locations to attract more business, which is what they’re about. Why shouldn’t you receive some of what it is—my gosh, look at the market cap on these companies, it’s astronomical how much money they’re making and funneling through. There you go. Maybe this is something that starts in Australia and winds up on our shores soon.

Ben: There’s a lot to learn here. I don’t care what side of the aisle you sit on here. There’s tech that’s really dangerous. We have a scenario here and you’ve got this organization banning this company, you’ve got people that are boycotting that company, there’s a lot of wind around all this stuff, and the control. People are afraid, that’s all this means. They’re afraid of the big tech world because we’re constantly becoming more dependent on it. Rightly so. If information you’re trying to get isn’t available or it’s being shut off or down, that’s a big problem. That is the problem with monopolies, that’s why we have laws against it. Next up, Seth, we have another WSJ article. We have 3 today, folks. These are the headlines. I love going through these different things because some of them are pretty funny; when you think about the sarcastic world we live in. This one is Texas Livestock reels from the storm and outages. This is by Jacob Bungee.

Seth: It’s news, and it’s money. We don’t think about what could be happening in the livestock industry when you have a huge storm moving through the US. I see families playing in the snow with their children. This industry sees power outages, livestock and feeding. They call them feed lots that they can’t process. They can’t get them pushed through the process of—I don’t wanna get into the details. You have a bunch of cattle they’re having to euthanize out of kindness because they’re sitting there not being fed and processed.

Ben: They’ve got orange groves freezing, pipes freezing. I’m gonna go to the end of the article. The article’s quote is the leading energy state has no power. Mr. Miller said, that’s crazy. When you think about Texas, you think about oil. Texas has done a great job of solar panels and renewable energy. The solar panels are freezing, the wind farms are frozen and they’re not operating. The only thing they have to use is fossil fuels. Because they’ve limited the fossil fuels, they’re rotating various sectors. They’re turning power on and off for different areas, so people can have heat for periods of time. They’ve had so many problems that even the time periods they said they’d turn it back on haven’t been able to happen. If anything, the irony of green energy, it’s kind of like when Al Gore was supposed to go to DC and speak on global warming in April and there was a couple inches of snow, which was random, and then they changed it to climate change. No matter what the scenario is, it seems like God might have a little humor here. Knowing the green energy push we have—I was looking at a picture the other day of a fossil fuel helicopter spraying fossil fuels on the wind farm to get it going again. I’m thinking to myself, we’re never gonna be energy independent. That’s the irony in which this all gets resolved in various scenarios. If I did learn anything, going completely fossil fuel 0% isn’t possible. What if we have chaos in our skies, let’s say you have an eruption from a volcano and there’s ash in the skies? Do they work at 50% capacity? I have no idea, but the world has all sorts of things that create problems that can then, if we’re depending on one thing or another—I’m all for clean energy, I just think that we need to be careful that we don’t create ourselves so clean energy that we’re without power and dying, or our military can’t operate our vehicles, for the same reason I felt like we needed to be energy independent from the middle east, when that happened. I’m for energy independence, we can’t be dependent on 1 thing.

Seth: We get to have some perspective, don’t we? There’s always going to be a turn the corner, look at and face and say, we didn’t plan for that. How could we have seen that coming? Again, that was Wall Street Journal. Another article in the WSJ by Alexander Yakobovich, which has to do with online trading. There’s an online trading platform that’s gonna be really civic in March; it’ll let users bet on yes or no questions. I think it’s interesting they put it in terms of betting. For instance, how could this work? If they had existed last year, you could’ve asked users whether a COVID-19 vaccine would be approved by the end of 2020 and bet on that. It seems absolutely incredible to me, that they’re looking to be able to do that with an online trade.

Ben: It’s really just a gambling site, right? When you start adding stuff like that beyond stocks—I would define anything as gambling that doesn’t have a real expectation of a long term investment, a legit investment.

Seth: It is more of a bet, right, because you’re not holding onto something long term, you can’t ride it up or down. You’re holding onto it, it’s a one and done, which seems a lot more like betting. The people that have developed this is interesting. They’re 24 years old, MIT grads and they have some places that I’m familiar with, Bridgewater and Associates is one of them. What’s more interesting is that the name of the platform is Kashi, which is an Arabic word for ‘everything.’ It refers to the breadth of topics it questions and covers. What would not be available for you to place a bet on? You wouldn’t be able to bet on elections, things like war, those are things that they aren’t going to include for the opportunity to do that. The idea of having an all-inclusive betting site, they will be regulated as well. They will have to fall in line with whatever the regulators can or can’t do. It’s an interesting concept.

Ben: I would liken this to, someone would say to me, if I went to a boxing match and placed a bet, that’s gambling. I’d say that’s the case, but you could literally be a sponsor for a boxer, right? You could buy into the company, the organization of that boxer. You could be an owner for that boxer. That’s an investment because you believe in the long term outcome of success. If you go to the match, and you’ve got no stake in it, and you place a wager, that’s gambling. People do that with stocks all the time. They’re not interested in owning the company, the software, owning the rights, collecting revenue…if you say here’s a stock I’m gonna make a quick buck on, that’s gambling in the stock market. I’m sure there’s people listening to this and saying, am I gambling? Because that’s not what I wanna be doing. That’s where an investor comes in. I’m excited about our show because we’re gonna talk about bear markets, how to invest and look at bear markets. This is one of those things; I think it’s an interesting company, KKR is someone we’re very familiar with. They bought out a lot of different companies and financial firms. You could have an investment in a gambling company, or you have an investment in a trading company. I’m not sure how this pans out yet, but it’s gonna be an IPO that comes out. Buyer beware, hardcore. It’s kinda sad, you can’t gamble on whether or not we’re gonna go to war with China.

Seth: You’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmeonyontap.com. we’re gonna talk about bear markets, how do you invest in a bear market? We’ll be right back.

Ben: For a number of our listeners, you might have a lot of questions. We’re offering Zoominars, which are webinars over Zoom where we have top experts: social security, financial and estate planning experts who you can speak with. We’re also having webinar based Zoominars where we’ll have multiple groups, and you can be a part of that and enjoy that coming up in the new year. Reach us at 855-226-8551 or email us at info@yourmoneyontap.com to schedule your Zoominar.

Seth: Welcome back, you’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmeonyontap.com. Today we’re gonna talk about one of the least fun things, depending on your take on it. It can be terrifying, in terms of investing and retirement, which is what most people are doing. We’re talking about a bear market. Why don’t we start by saying what it is? A bear market is a 20% or more drop in stock prices. There’s usually a period of time where that has stayed below. In the very recent history, we just went through a bear market. So many don’t realize we went through a bear market because it was so fast. It was over in a month, two months. Traditionally, when bear markets have happened, which was most recently 2007-2009, it was about 2 years before the market climbed it’s way into the next bull market, where it’s going up. In terms of how long or how much, it’s about 20% is what the measurement is there. It’s traditionally been a few years that it’s taken. Today, we’re in a different place. We’re gonna talk about that, we’re gonna talk about traditional ways that you’d want to invest in a bear market to try to offset some of those losses or take an opportunity to find value and places and spaces in the market that would allow you to call it a hedge, hedging your money and putting It in a different place that would perform or outperform what the rest of the market is doing.

Ben: I think what’s really interesting about this whole bear market conversation that everyone is having, and it’s not because we see it an inevitable fact tomorrow. We see the writing on the wall in some sectors, we’re seeing growth. We talked about this last week, Russel and semi-conducting space, some of them are justified. We’ve gone to a completely technological work from home world, what would we expect other than that? That’s the expectation that we’re gonna see growth in those areas. The Russel-2000 and looking at small cap and so forth, I would expect that too in the tech world, because that’s where technology is coming out, security technologies, there’s a new demand at a volume that is unprecedented in those sectors. I also think you have to look at what’s oversold. A lot of people went to the energy sector because they sold out of technology. The question is, are people coming back, where’s money flowing? That’s where we come into that first point. The sector analysis is absolutely crucial. The number 1 issue is, what sectors are you investing in, and how does that play into your overall goals, or your overall expectations, or your overall thoughts on what the market’s gonna do?

Seth: There are some popular strategies to pay attention to. One of the no brainers here is what a lot of people rely on, which is selling. If I own something and it starts to go down and if I can sell it today and put it into cash and wait for it to come back or look for another opportunity, that’s selling out, or we call it going to cash. Some people like to flight to safety would be another one of those terms, where people go into the bond market as an attempt to still have something that they’re holding onto, giving them a return, but it’s not Apple, which is now down 50% where it was yesterday, or last month. That’s one of those things where when we take a look back on the history of bear markets, it’s not uncommon for the market to lose 50% of what it was last year, or wherever the high was. That makes sense, going to cash. I’d rather hold cash, come back, and play another day. Another technique is going into defensive strategy, and there are companies that have traditionally, and these types of companies that you’d want to own through pullbacks, and some of those might be food, alcohol and tobacco has been a very popular place for people to put their money, but also the staples like toiletries, paper products, these are places – people are gonna buy toothpaste, toilet paper, or these types of things, so why would I go and try to hold onto something like that when it’s something people are gonna like and want, instead of these other growth companies or the tech sector. That’s what Ben was talking about.

Ben: I think one of the things that people need to look at when they look at their sectors, and I look at my spreadsheets constantly, and I’m looking at 50-100 day moving averages. I’m seeing trends, and there’s the investor who’s long term, this company is gonna be huge one day, don’t call me when you’re having a bad month, quarter, year, I’m in. there’s people investing to maximize gain and flow, but when you look at these 50-100 day average, you’re looking at every day’s close for 200 days, you’re looking at the line graph and is it tilting north or south, are you moving below that average? That’s an indicator. You have to understand that everyone out there who’s an actual trader or money manager, they’re watching these trends, because people trade on trends. If a trend is up for a week, they follow it for two. There is a variable trading strategy out there that you can almost pigeon anyone into. They’re all watching technical analysis. They’re looking at the charts, data and hardcore information that people are trying to evaluate does this make sense for the future. You may be the average investor riding this wave since March 23^rd, I can’t tell you how many people ear saying, you won’t believe how much money I made in the stock market this last year or 11 months. Everyone thinks they can trade stocks; I have a 17 year old son who’s learning this, and he’s making money in the stock market. He says, I have friends that think they’re Warren Buffett. When the market’s good, it appears easy, because all the work is when the market goes down, and I think that’s the hard part because they don’t know when it happens, how to do it, or how to prep for it. I look at various recessionary stocks—I was doing research on articles and one of them had 10 assets in it. One of them was Kellogg as an investment. I’m not recommending Kellogg, but it was in the article. I’m looking at the 5 year chart and wow, it’s really down. It’s not as down as it was in 2019, but it’s down. It’s down over the one year too. It’s not as low as it was on March 23^rd. I’m looking at all these moving pieces, and it’s ironic that Kellogg is listed here, it’s an interesting indicator because McDonalds, Walmart, you start talking about these companies and say yeah, Walmart is a real indicator, it’s a safety stock. Are those the only stocks? You made the point about other stocks that have no change from safety stocks.

Seth: Who would’ve thought that when the market pulled back like it did in February or March, that technology was going to be the flight to safety. People came to and started buying technology like they never had before. Zoom is one of those stocks that people bought, but it was a make-sense scenario why they’d want to own that during a pandemic. Because everybody wasn’t flying, people were like get out of the airline and cruise line stocks, we’re gonna get to work and how are we gonna get to work? Technology. There’s gonna be a lot of changes. We couldn’t have told you that. It was incredible to witness what we did, but traditionally, there’s sectors that we pay attention to. That’s one of the ways people can invest, knowing which sectors to invest in, technology was one of those that people invested in. It’s typically one you want to get out of because it changes so much. People would traditionally go with health care stocks. No matter how the economy is doing, people still need to go to the hospital and get taken care of, unless it’s a pandemic and people get all their surgeries cancelled. All those elective surgeries were put on the sideline. It’s been a bizarre year, but we’re here to talk about the possibility of something pulling back, but we’re not predicting, we’re just having fun. Gold, silver, platinum, those have been traditional places where people have gone during a recession. Gold has been a place where people have traditionally gone. When does gold do really well? As a commodity, it does well when the market does a pullback, because that’s one of the places that’s considered a flight to safety. Does it have to do well? No, it doesn’t.

Ben: You make some really strong points on the pullback thing. I think healthcare and precious metals are probably 2 of the most boring investment spaces, but they’re great indicators. I like precious metals, and if I look at the last 12 months, I’m looking at the gold ETF, and we’re sizably down. We’re probably down 10+% from that high. That’s year to date, but over the last year, we’re barely up. There are some pieces here we need to evaluate. I’m not talking about you should go invest in gold and buy that. What I’m saying is, if you’re not using indicators to evaluate your position in the market, you’re going to get caught off guard. You’re gonna be the person who hears about it last. You’re never gonna make the right call. You’re gonna sell and then watch the market go up and be like, why didn’t I stay in longer? You’re human, you’re just like me, I say the same thing. If you don’t understand that we’re fallible, that’s an issue. I also look at the technical indicators, and I owned a stock, and I made a good amount of money on it. I showed my son, I thought, man, I never thought my stock would do this good, and I sold my principal out of it. The stock continues to rise and I’m like holy smokes, he was laughing about it. Forget that, don’t ever invest in anything that’s doing that to your core money. I told the broker, now I’m playing with the bank’s money. You have a random win, pull your capital out. Let the bank’s money and the stock market run for you. What do you do with that money? How do you invest that? Take it back to a core position. When you take the capital out, the story is this: what is the market doing? The healthcare sector? The precious metal sector? If it’s pulling back, it means people are pulling out of precious metals to put into other stocks. You wanna own everything when everyone’s afraid in the precious metal space. You wanna own the healthcare sector when it’s down, not when it’s up. You don’t wanna be following the reverse trend; buying things when they’re high and selling when they’re low. You have to be willing to take profits. Never lose sleep because you took profits. Never lose sleep because you made money on something and you didn’t make the top. When you make your dollars and you’re happy, you move. You should have an idea of what to expect out of that stock before you hit the buy. At that point, you’re an investor. When you don’t know what you expect out of that stock, you’re not an investor, you’re a gambler. Those are the pieces that catch people off guard. If you don’t have an expectation of what you want out of it, you’re stuck in the stock independently, you have no idea when to exit correctly. Know what you want, how you’re gonna get it, and how you’re gonna reallocate. Those are the success markers of a bear market, that’s coming like a lightning bolt.

Seth: You’re listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’re talking about being an investor, investing or remaining an investor in a bear market when it’s going down. How do you do what you need to do as an investor during this time. We’re not there but you said maybe in the next 6 months or so. You really stepped out there and called it; we’ll see. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’ve been talking a lot about what is a bear market, how do you be thinking about your investments in a bear market and understand how not every bear market is the same, but as an investor, traditionally, there’s places you could go to hedge yourself, and still be invested, and if you’re looking for and trying to invest for retirement, these are critical components for you to understand. We’re gonna talk more about that, we’re gonna try to land this ship with how to be successful and how to hedge yourself and still be okay through retirement. Most of the time that’s what we’re talking about here. In terms of where to invest—those have been places where utilities have been one of those sectors. Why would utility stock do well? Because A) you have to keep the lights on, so you’re gonna be paying those bills and they also traditionally have a dividend. Why would that be important? What’s a dividend and why is that important for someone that’s retired.

Ben: That’s the income yield coming off a stock. A lot of people are looking for yield in retirement. We’ve talked about baby boomers, we talked about the movement in flight to safety, we’re talking about recession, these are concerns and issues, we see something gearing up. I don’t know that we have a recessionary period coming up, I don’t see a pullback coming. Recession is a 20% hit. I don’t see that. Do I see a 10-15% pullback, yes, and I think it’s going to be sector-based, and flight based. It depends on how the dominos fall on this things. When you’re talking about the dividend and yield, there’s a lot there. When we talk about baby boomers, 45 million people retired right now, and we have about 85 million more to retire after that, finding equity stocks that have high yield has been a high demand. We’ve seen that trend on a number of charts. MFS has a sheet that says over 20 years you can earn over 20% on stock caps, it’s right on their numbers. Anyone interested in that chart, I’m happy to share that with you. Give us a call, email us. You’ll see a constant rise over the last 15 years or so in demand of those large cap stocks, because they have an indication of the small cap world, though they can be just as volatile or risky as any stock out there, but they have yield. We talk about blue chips, stocks, all that, we’re talking about Exxon, Chevron, we’re talking about big companies, like DJI components for the most part. We’re seeing that interest because a lot of the bond yields are so low. I read an article that junk bonds were starting below 4% in history, it’s crazy. I don’t wanna own a junk bond, that’s not in my story. That’s a crazy scenario because interest rates have dropped so much. That’s why there’s a large flock to high yield equities, because you could own a company that doesn’t sell junk bonds that may pay a better dividend because you’re paying income in retirement. As we deal with all these sectors, oversold, overbought, and trying to evaluate that space, it’s very complicated. We’re going out of an easy trading environment and we’re entering a difficult one. I was talking to a client the other day, he’s like, 5 months ago, you had 30 stocks you like, today you have 10. It’s getting tighter, it’s getting more complicated. Those are real conversations that exist inside this world because that’s the new reality we’re dealing with. I’m not looking at energy stocks that are trading at 20% of their value a year ago, you know? I’m not looking at financials—I love JP Morgan under 100. It’s way over 100 now. Is it time to get out, I don’t know, that’s your decision. These are the pieces we have, and we have to figure out when we start to have value in a stock that can produce value for you long term, intrinsically through a dividend, or it has value because it’s gonna grow, these are things you have to understand. On top of that, you bring that core conversation of where is the market going, because we have so many people who are retiring that’s changing the dynamic of how they invest every day. Every day. You bring in utilities, a real core conversation. I’ve seen utilities pull back, go back up, I’ve seen gold pull back, go back up. People are nervous. The question is, who’s pulling out when? We talked last week, people are taking some profits and just saying, hey, I’m out of here. You have other people who are hanging on and trying to figure this whole thing out. You don’t really know. I tell people, if you’re invested, stay in for the long term. You have to be an investor in solid companies.

Seth: We’re gonna take a quick break, you’re listening to Money on Tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com. Seth Krussman, Brayshaw Financial Group is our company, and we bring to you Money on Tap. We have a lot of fun doing this show. One of the things we love about doing Money on Tap is that our goal for you to have access to have the financial planning world, what do we think, how do we do, what are we talking about? Raising the bar for your financial education, it’s so critical. That’s what we’re doing here. The other side of this is, we’re financial planners. If you’re looking to work with a financial planner, if you want to have that playbook for you to understand the important things right now, how you’re going to get to your goal, how to retire, that’s what we’re doing here. If you have $250k of investable assets, give us a call. It’s free to you and it is worth your time to pick up that phone and give us a call and discover what complete wealth management looks like. Ben and I are excited about the opportunity to partner with you and give you that financial plan that’s going to make the next step so much better understood and get you where you need to go. Welcome back, you’re listening to Money on Tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com. We’re going to be wrapping up this show that has been all about the investing that you may want to consider, or you should be thinking about; how do you stay invested or how do you go through a bear market? We’ve seen a lot of the bull market in the recent 10 years. Since 2009, we went on the longest bull markets, where the market continued to rise until this last year, where we pulled back 33%. We went into a bear market. It was so fast in comparison to bear market’s we’ve experienced. People have forgotten we went through a bear market this year, and still most people in their investments, if they stayed invested, wherever they were at, they’ve pulled through and they’re doing okay. That’s one of the things I wanted to talk about. In a plan, if you are looking to retire in the next 10 years, or 20 years, if you’re 5 years away from your retirement, how do you stay invested? We hear time and time again that people that stay invested pull through and they do okay, where statistically, investors in the market have done around 2-4%, depends on where you’re getting your research from. Does that sound like what the market has given? You were talking about the large cap value sector of stock investing would be somewhere close to 7%?

Ben: that’s just the average, there’s been some really bad years inside of that. If you’re not a long term holder, you’re gonna get burned, because that gets oversold, people sell out of that…

Seth: I think that’s part of the conversation people need to understand, is the flight to safety areas. We’ve talked about precious metals, utilities, we didn’t really talk about bonds. That’s where people traditionally go for the flight to safety. Does that mean it’s going to continually rise and do well over time? Not a whole lot of people know we’ve experienced a round of 30-year bull market in the bond market. It is a sector and investment that will have volatility. It’ll go up and down.

Ben: That’s right on. Even with the bond market being oversold, interest rates being low, that’s still a flight to safety in a recession environment. How many people have money sitting in the bank? If we took a raise of hands, an enormous amount of people have money in the bank and they’re not making money on it. A bond paying anything will be better in a recessionary environment. People are gonna leave stocks and go to bonds. Those are all things that exist. Talking about bonds, safety, all these pieces, it leads me to another conversation I want to talk about. In 2008, I remember talking to people and saying, we had the crash and the .com crash, 2008-9 was a financial crash. People have recovered from 9/11, all those things happened. I did a lot of business during the 2000 years where people laughed me out of the room about buying an annuity to hedge a portion of their investment. I’d be like, we had the .com crash, create a foundational element. We’ve talked about having a house on this show, having foundations. I was telling someone in the office the other day, you’re all in the stock market. Have something in a foundational investment. Those are cash, CDs, different types of annuities, but you can have different types of foundation with the annuities: pension-income annuities, or some sort of fixed rate return, which may be better than the CD. You need foundational elements, and as the market rises, adding to your foundation is important. When I speak that language to a lot of people—how many times do we say I’m going to buy more bonds. That’s more foundational like, but there’s still some major component issues, but it can still affect some of the bonds. Where are the Enron bonds?

Seth: Bonds can go down and having this allusion that a bond isn’t going to have a factor of volatility, or I t can go down is very much like the precious metals or utilities. They’re where people have gone for safety, and the more recent market cycle we’ve been through is these will go up and down. The CD is a guarantee, a hedge. Some annuities can, they can have some guarantees, but the foundational elements need to be able to get you through the market cycles, the up and down of the market cycles. Somehow create or continue to provide an income for you.

Ben: You’re right on there, I think in some annuities, depending on what you’re looking at, you could be buying equity based or variables, there’s all sorts of risks to all these things. You can buy pure fixed annuities that will give you a CD like return, it could be tax deferred even. There’s different things you can do as the market rises. I always say to people, take some of your principle off it. Don’t be afraid to take profit. Profit’s good. I think people are gonna be taking profits just to cycle through the tax return or the taxes that are gonna change for us. People are gonna say as soon as April, May, June hits, I’m gonna cycle my stock. If you don’t understand this, give us a call. They’re gonna cycle their stocks, taxable assets so that they can pay the taxes today under today’s tax code and then move forward with new tax codes as they’re happening with the new administration. This is a problem for our stock market, knowing that capital gains taxes are going to be affected.

Seth: Are you setting us up for next week’s show, because that’s what I feel like, we’re gonna have to come in next week and explain what it is we’re talking about—cycling, selling your nonqualified assets, because we’re in a tax code that’s preferable to what we’re looking at for the next feature. Thank you for being with us here at Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. You can also join us next week, we’re going to be talking about taxes and how things can look for the future with the new administration. That sounds fun, hopefully it’s been a great time with us here. We enjoy and appreciate you being here with us. You can reach us at 855-226-8551 or info@yourmoneyontap.com.

SUMMARY

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

Bear market or bull market? As an investor, it’s important to know and understand these terms so you can make your money work for you. Look no further than this episode of Money on Tap to learn more about the fluctuations of each marketplace. Amateur or pro, you always have something new to learn as an investor!  

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

MOT Show 159

Seth: Welcome to MOT. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We're so glad to have you aboard today. My name is Seth Krussman, and I’m here with Ben Brayshaw.

Ben: Good morning, Seth.

Seth: We’re financial planners. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We are gonna have fun talking about financial planning, and things that are of interest for us and our clients, and hopefully it works out that way for you, too. The topic is essential.

Ben: I’m excited about this topic. We’re gonna talk about reverses vs. pullbacks. What’s the difference, what kind of bubble are we looking at? Is there a bubble? We’re gonna help people make their own decisions and understand the market around us, because with a country that has each state shut down, how could the market be doing so well? Should I be investing? Did I miss the boat? I don’t know.

Seth: That ship has sailed, or not. it’s good to be jumping into this topic, but before we do that, we do this thing called MITN. It’s gonna happen, right around the corner. If you haven’t picked up the phone and given us a call, it’s a great time to do so. As always, I need to get to MITN as quickly as possible, so without further ado, it’s time for MITN. What is new with our RMDs? What in the world is an RMD? It stands for required minimum distribution. If you have an IRA, we call that qualified money, and required distribution is what used to happen at age 70 ½, and you were required to take money out of your IRA. Whether you wanted to or not, that’s what the IRS said was the calculation based off where your account was on December 31^st of last year; this is what’s required for you to take. If you don’t take that distribution, it’s the heaviest fine you can get levied off your taxes, and it’s 50%. Last year, COVID hit, what we were all talking about, guess what they did? They said you don’t have to take your RMD, and they changed the age to 72 before you had to take the RMD.

Ben: Changing from 70 ½ to 72, that’s a big change. The article at MarketWatch goes into the fac that there’s a lot of bipartisan support for the idea to move the RMD to 75, and that would delay the required minimum distribution of your IRA funds off a little longer, allowing people to work longer; it opens up some more avenues. They’re trying to expand the idea that people can work longer. People are living longer, which is proven scientifically, but also recognized by the IRS with their new tax stables for 2022, which says everyone is living longer, so the spread of your retirement funds could be longer, which has reduced the RMD percentage down to 6.5% less than what it normally would be. That’s kind of interesting; it doesn’t sound like a lot, but if you don’t wanna take out your RMDs, which a lot of people don’t wanna be forced to do that. That’s not everyone’s scenario. We don’t wanna sound cavalier about that. There are times where taking out your RMD because of other scenarios that may happen: maybe you have a consulting role, you got some money that’s gonna be taxed as ordinary income through an annuity, which happens all the time, all of a sudden you don’t wanna take out that income to get taxed into a higher bracket.

Seth: a 90-year old, this is Vice.com, North Hollywood resident, Aaron Epstein, has been with ATT&T since the 1960s. he’s been with them so long that he watched the breakup with Blue Bell, he watched as the telecom giant reconstituted itself, but he still has a pacific bell email address, despite the brand being discontinued in 2002. Why would we bring this up? He was so frustrated by ATT&T’s failure to upgrade his internet from 3 MEGs, that he took out a quarter page ad in the WSJ just to tell ATT&T what he was thinking about that.

Ben: He even addressed it to the CEO, John Stansky, listen you guys, you missed a portion of Hollywood in your internet coverage. This isn’t like he’s living on a farm in the middle of nowhere WI, ID, he’s like I’m in North Hollywood and I can’t get more than 3 MBs, let’s pick up the pace here. If he’s had this many frustrations, there’s no pride in keeping them and remaining their customer; dump them. When we don’t like somebody or some company or what they’re doing, my wife and I stop doing business with them. Enough people do that, that’s a real story. Anyways, he’s got a long history with them. Who knows, that’s the first phone call he ever made, all sorts of stuff behind it. ATT&T, you gotta get your act together, cause that’s embarrassing.

Seth: He was sitting there with the old modem that was doing the ring and the scratch to try and connect, that’s hilarious. I love it.

Ben: North Hollywood, that’s special. Real special. This next article gets my goat. I might get on a tangent here, but Dallas Mavericks have stopped playing National Anthem at home games at Mark Cuban’s direction. I don’t know if this made the show, but they were talking about how Mark Cuban would run for president, but he’s saying we’re done with the National Anthem. This was something that really got my goat, because 3 years ago, he was talking about how we need to stand and he covers his heart, and now he’s saying that due to the changes in awareness, we need to do this together. He’s mitigated the situation by saying he would kneel or do whatever the organization would do as a whole and join in, which I find severely disappointing. Having family in military, respecting the military, I think our flag and what it stands for has nothing to do with the argument, the protests that people have. Those are 2 separate items and the fact that they’ve drawn them together is disgusting. If you want to kneel for our flag, you can leave. Other countries don’t provide that freedom. That’s where I stand on this. What’s interesting and absolutely crazy that people don’t know is that the NBA’s rulebook requires players to stand during the national anthem. That’s a requirement in the NBA rulebook. Not playing the national anthem is also breaking the rulebook. These people need to be kicked out of the NBA, and I’m glad I haven’t watched 1 game this year, and I’m part of the hundreds of millions of people who haven’t. if they haven’t figured this out, as any customer, I choose to do business with whom I do business with. I haven’t watched one football game this year, until the Super Bowl. I’m not gonna deprive them of that one thing, but I’m not gonna give them my business. This is the first time in a decade I haven’t done fantasy football either. You’re not alone, because there are millions of people doing this. I think Mark Cuban, this is an insult to most Americans. Maybe it’s his way of saying let’s take this whole thing out so we don’t have the debate, but now they won’t even film what the players are doing. They don’t even take a picture of the players kneeling. I don’t know, Seth; that’s my thoughts.

Seth: The Blazers are the biggest deal in Portland, and I have watched some of the games, I know it’s been a discussion at our house, what we’ve been seeing is the players protesting, making different statements…this has been one I never thought would be a conversation, that we would not respect the country we’re in, that’s given us so much opportunity, to the level that we’re clearly stepping over a line that I can’t, I don’t know what to say.

Ben: It doesn’t make sense. It’s required by the NBA itself. If one of my employees decided to step out of line of the rules of the SCC or FINRA, you’d be terminated instantly, and liable. The NBA rules don’t apply, so when you travel, the NBA rules, they don’t always apply. When are rules optional? Anyone who tries to tie these 2 things together, that’s the most asinine connection. The American flag grants freedom and the things we enjoy don’t correlate all the things they’re claiming this is. It won’t be this rebellion piece that’s going on, or this protest, it’ll be another protest they’re leaning for. There’s a platform for anything, don’t offend millions of people of all race for various reasons, over one item. You’re gonna build more awareness doing it in a way that doesn’t bring offence to something people have died for. That’s where I think the misgivings are here.

Seth: I’m gonna second all of that. Not to shift gears too much, but if you’ve been paying attention to the Celtics, which I grew up being a Celtics fan because my grandfather as a huge Larry Bird fan, so we grew up watching a lot of the Celtics and rooting for them throughout those LA battles in the 80s, but one of your Celtics that’s been lighting it up this year is Peyton Pritchard, who’s a former University of Oregon Duck, and I was so happy to see him go to the Celtics, and I love watching that guy play ball, because he brings the Larry Bird, blue collar work ethic and hustle and humility into the game. A baller, and wants to play so hard, heart and soul. I love it, and you’re welcome. We’re happy for you and I’m tuning back into watching the Celtics when I get a chance.

Ben: That’s gonna do it for MITN, and our political rants. I wanna hank everyone who’s fought, died, and come home for this country. Thank you so much for what you do.

Seth: We’re gonna be talking about bubbles. Is it a reversal, is it a bubble, what’s going on? It’s really fun and it’s gonna be a critical conversation for you to have. You’re gonna love it, you’re gonna have fun. We’ll be right back; you’re listening to MOT.

Ben: Call us today at 855-226-8551, and get your free consultation with Ben, Seth, or any of our partners. Find out what’s going on in your plan, your estate plan, financial plan, or what you’re planning at all, if nothing. Get it fixed, get it right, get it done today. Give us a call at 855-226-8551.

Seth: Welcome back, you’re listening to MOT. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We're so glad to have you aboard today. My name is Seth Krussman, and I’m here with Ben Brayshaw. Today we’re gonna talk about bubbles.

Ben: We’re not talking about the beach bubbles; we’re referencing the stock market. There’s a lot of talk around if we’re in a bubble, in conversation, some of the foremost names out there in concerns of a bubble. Before we started doing this show, you brough up Jim Cramer who back in 2013 declared a bubble?

Seth: Look back anytime we’ve hit a new high in the market. This is gonna be the conversation everyone’s having on the TV, we’re having it, there’s concerns every time you hit a high because it could not stay there. Does it stay there or pullback, and what sectors pullback? What is going to be the thing that makes the market afraid? Research Jim Cramer anytime we hit a high. What does Jim say? He talks a lot.

Ben: He’s a little crazy. He does a good job with the interviews, and he asks the right questions most of the time. That’s important, and as we do—you’re so right, people are looking at their own portfolio, we’re evaluating ours on a daily basis—trends, shifts, gains, what’s moving…I hear the news, the tech sector is skyrocketing. When is the tech sector gonna burst? When are we gonna have that next pullback? I think the whole conversation around the bubble, in our stock market, it’s not gonna implode and lose all your money. You’re gonna lose a significant amount of money that you’re gonna have to wait to get it back. The concept, if you’re a long term investor, you’re thinking, I’m gonna ride these waves, and people think they’re gonna be standing up on the board. They always think there’s the end of the wave that you’re gonna settle into. Can you get out of the bubble near the top of the wave? No one wants to miss the entire wave. There’s the greed factor that’s so dangerous. This is a good conversation to have because the market is at an all-time high. Today it’s this, today it’s that, these 2 hit today. It’s a constant conversation. We’re coming out of a pandemic. Some of these numbers, some of these things, it’s hard to find justification for some of them and why they’re doing it. It’s a little crazy. It’s a weird time. We put together the 5 core stages that involve a bubble. You’re gonna see some of these or feel some of these are alive and well in today’s marketplace. The question is your feeling of a degree isn’t as high as the bubble. The bubble could be bigger than other bubbles and could last longer than other bubbles. We’ve looked through a few bubbles already, and I don’t know when the next one is coming. The first one we have here today is displacement. Displacement is innovation inside something. Our world today, it’s the batter-powered car. It’s the innovation today.

Seth: Look across the board. Tesla, Neo, is another one. It’s been 1500% return on Neo over the last 6 months. If you look at the underlying fundamentals which should support why people put their money into a stock. This is going old school, this is Buffet, this is why you buy things that are of a value stock, something that’s been discounted unfairly in terms of price you can buy it at. Underneath that is an asset that’s doing well. Neo is not, it’s been propped up by the Chinese govt, 1500% return on it, it doesn’t make sense. It’s an industry, let’s take a look at Tesla. Fifth largest in the S&P 500 is where they’re at right now.

Ben: Elon’s the wealthiest guy in the world right now.

Seth: By market capitalization, which means how much money they have in the market surrounding it, it should be the biggest car manufacturer that we’ve ever seen in the history of the automotive industry. But no.

Ben: There’s a whole story of innovation behind it, which is the conversation of, the battery creation they have. I’ve listened to analyst after analyst say, I heard Tesla’s stock was $1200, hard to believe? I don’t know. I have no idea what Tesla—they’re predicting what the stocks go to based on various analysis. His number 1 thing he kept saying was, we’re not giving, it’s not a car company. Everyone’s like, what do you mean it’s not a car company. They look at this as vehicle and battery innovation. Power innovation is what Tesla’s wrapped up into.

Seth: The car happens to be what they’re creating for the marketplace. Behind it, it’s this whole innovation that’s taking place.

Ben: Exactly. Complete conversation of future development, they keep wrapping little pieces of this car. He wants to have people living in space. Sounds interesting for a while—

Seth: You said he’s the richest man on earth? This has been a couple of months now that this has been posted. Congrats, that’s cool, but why?

Ben: Because the stock is worth so much. This is one of those things that displacement’s really hard to understand. Displacement and innovation could just be driving the car in a different direction. It could take our market to a different world. I think that’s happening, because people are talking about lithium, talking about all sorts of different components that are exploding other places. Now people are making money in other parts of the market they didn’t make money in before. That innovation has continued to develop that. I find it interesting because some of the old assets drive, we were talking about oil and gas, it helps manufacture everything in our country, from plastic to steel. You can build all the electric cars you want, it’s still gonna spend a ton on oil and gas.

Seth: I love the Tesla story; it’s a great example for us for possible bubble. I would lean more towards Neo, because you have govt aid happening there with an automobile that hasn’t brought a whole lot to the market. As we’re talking about this, it reminds me of a portfolio manager that I used to work for years ago. One of the things I brought to him was Amazon at $112. He pulls me aside and says, son, let me explain something to you. This is what we call a Wall street darling. The rest of it sounded like Charlie Brown’s teacher, because I went, you don’t get it and you’re not willing to take a look or think about what it could be. They’re not profitable. They weren’t. they hadn’t turned a dollar of profit at that point, but I look at Amazon now and I’m like, love Jeff Bezos or don’t. I’m looking at it from a profit perspective: what you could’ve done or owned for your clients, but you were stuck in a way of thinking. It worked for the 1980s, 1990s, and I gotta tell you, this is not that market. I think that’s one of the things we’re eventually gonna come back to you. We talked about displacement. Did we clear the table, Ben?

Ben: We’ve got innovation. I think people understand innovation, how it can re-steer the marketplace, Tesla’s the obvious example, and how everything else can be apart of that. It’s dragging companies. It’s got all thee ropes to other companies, lithium, plastic, everything—you talked about Neo, but there’s all these different car companies, Nicola, and all these others out there.  

Seth: That’s your bubble right there. That one got drug into the mainstream and should never had hit wall street.

Ben: Then you’ve got the boom, right? This is where everyone hears, and it gains momentum. Everyone says, 5 years ago, 3 years ago, 2 years ago, hey, Tesla’s interesting, I’ll buy a few shares. I remember I was auditing trades on Tesla, and the guy was saying, Tesla’s up and down; it’s so volatile. It was very speculative at that time, but it was gaining momentum. I think the thing about momentum is that this is the time that you really wanna be in the stock. You don’t wanna sit around and wait for momentum to rise up, there’s other things that have better investment opportunities. 10 years ago, I didn’t own Tesla, today I own Tesla. There’s momentum, and I’m part of it. I’m not sure whether the Tesla momentum is in or out, but I’ve traded it, sold it, bought it. Do I think electric cars are here to stay? Yeah, some version, and Tesla’s gonna be the leader for a while. Being part of this boom phase is really important because this is the wave. Seth’s a surfer. I’d love to say I can surf, but it’s an embarrassing experience. I did officially get up once, but not quite my thing. Anyways, riding that wave in the momentum phase is great. Then we get where, Seth?

Seth: I wanna talk a little bit about momentum. I’m looking for opportunities, I’m looking for momentum. There are some things I wanna see before I put money into it for my clients or myself. Momentum is one of those. I wanna see profitability, that’s a key thing for me. Almost more so today, I wanna see that the market has started to come into this idea and put money towards it. When you see big money do things, you pay attention. Usually, that’s apart of what we see as momentum. The chart is going higher. It might be volatile, it might be up and down, but overall, you see a lot of money come into this. Getting things early is what it’s all about. Catching that momentum as quickly as you possibly can and being able to understand what your parameters are around trading that, if it goes down 20%, you probably have some rule that says we’re not gonna take 20% down. This is a threshold that you need to already have in mind, is trade rules apply to understand that that is going to take place, ups and downs are gonna take place, but what you wanna see is that momentum. We’re talking about bubbles, because how long does a good thing last? Euphoria is the next thing we notice about these trades. This is the phase that everybody says I don’t care if it’s profitable, I don’t know what it is, I’m gonna put money on this, make some money, and who cares, I’m gonna be great, and the next thing you know, everybody’s in. it doesn’t matter where prices go, there’s gonna be a market of buyers who always want more. That’s what you call a greed bubble, it’s part of this process. Here’s an example: Japanese real estate in 1999. Everyone knows what happened, but if you don’t, we’re gonna talk about it. If you don’t, you can have that conversation with whoever’s at your water cooler. Land in Tokyo sold for $139 per square foot. Figure out whatever you’re living in right now and go ahead and multiply that by $139k to figure out what that really means. This was 350x the value of Manhattan property. Similarly, at the height of the internet bubble, which was March of 2000. The combined value of technology stocks in the NASDAQ was higher than the GDP of most countries. Does that mean that everything is gonna fall out of the sky? It may not, but it’s what we’re trying to show you is that people had lost their mind, so to speak. That’s euphoria.

Ben: That’s really well said. The thing about Euphoria, is that it’s a drug. It’s the thing that makes you keep going. It’s the, I’m up, I’m up. It’s not investing. This is where I would say the emotions get the better of investors. This is where you’re not analyzing assets, you’re not doing anything, it’s not going over that. You have to look at these different pieces. As we go through the euphoria stage, there’s subsets of evaluation that I would intrinsically take perspective of. I’d look at whether or not there’s 2 things going on: the first is I would look to see if the assets you own are historically expensive. Historically I would say, how does this look over 1 year, 5 years? In today’s world, that’s really easy to do, because we had a pandemic. If we’re in recovery, the simple answer is, are we close to its 1 year equivalent, 13 month equivalent. We’re getting to that point where it’s past 1 year. If the company hasn’t recovered, holder beware. The 2^nd thing I’d look at is are the companies continuing to buyback their own stock? If you’re not seeing share buybacks, the company is saying we thin our stock is overpriced, it’s not cheap anymore.

Seth: Good stuff. This plate in front of me that we’re working our way through and digesting is incredible. I cannot wait to jump back in here with we’re gonna talk about the phases of the bubble, but we’re gonna get into what are people saying? What do we think? We’re gonna try to apply some logic to what we’re doing today. You’re listening to MOT; you can reach us at 855-226-8551 or info@yourmoneyontap.com. that information could be the difference between you and a successful return. That’s what we talk about here, 3D investing, that’s what we’re doing on MOT. We’re gonna take a quick break, don’t go anywhere. We have a lot of fun doing MOT, and Ben and I have been financial planners for years, and our goal is to bring you into the room, have the conversations we have; we think these are critical conversations for you, but we understand this is a limited space. What we’d love to do is open the doors to you at BFG so you can experience what it means to have 3D planning in your life. Let’s take a look at all sides of your situation, your scenario and see how we can put together the best plan possible, taking into account your risk, how much can you have in the market, how much do we need to have set aside and doing different things for your life? That’s what we do as planners, how we engage with you. you can reach us at 855-226-8551 or info@yourmoneyontap.com. If you have 250k in investable assets today, our planning is free to you. We want you to have the playbook to have a successful experience in retirement. Give us a call; 855-226-8551 or info@yourmoneyontap.com. Ben and I welcome you to BFG for complete wealth management. Now back to MOT with Ben and Seth. Aren’t you glad you’re listening to MOT, because we’re talking about bubbles. you can reach us at 855-226-8551 or info@yourmoneyontap.com. Bubbles.

Ben: We talked about 3 different things. The concept of the stock bubble, the idea of innovation, the concept of momentum and the boom phase, we talked about the emotional euphoric experience of the top of this wave and looking out over the horizon and you’re above the water. Either you’re gonna crash and burn at the end of the bubble, or you’re gonna take some profits. That’s one of the things people don’t take a concept on. I think this year is gonna be an interesting profit taking year for a lot of reasons. I think somewhere around May, April, maybe June, there’s gonna be a lot of interesting shifts in the market. I think we have 3-6 months before we see anything, I think. I’m not predicting anything here before we see something tragic. The reason I say that is because a lot of people did reallocations in April and May. Even in June and July, people were taking shifts trying to mitigate shifts, lower volatility, address the time horizon they thought things were gonna fall under, did it meet all the investment requirements? People are moving all over the place for all the compliance reasons that exist out there. We do those naturally. People don’t wanna take profits usually before that one year end. 12 months later, long-term gain on most of these nonqualified assets. If it’s an IRA, Roth IRA, people are selling all the time and not worrying about it. People in the non-qualified stats, you open your own brokerage account, you wanna hold it for a year so that you’re paying the long term capital gains tax, which is lower for most people. I think that’s a big deal. Honestly, that sends us on the trajectory of this summer being an interesting pullback period. Someone would say to me in rebuttal, why wouldn’t they just hold it for another year? Why would they sell it when a year’s up? I’d tell you that they could—they could hold it for years. They may hold it till the end of this year; I could be wrong in that the summer could have some shift in the doldrums. We might have some new tax codes coming. We’re gonna have new capital gains rates that are gonna be higher, much higher. I think people are gonna wanna cycle some of their tax dollars in the short and long term cap gains. They’re not gonna care, they’re gonna wanna cycle it through. Why? Because I want to. I’m gonna cycle all of my assets this year. I don’t wanna have to subject those assets to a new tax code next year that has a different capital gains rate that I’m gonna be subjected to. My cap gains rate’s not going down. That I’m pretty sure of.

Seth: Taking profit is what we’re talking about. Ben, you brought in several different reasons that, for personal reasons, you’re gonna be taking profits. Currently, it’s the tax rate you can take the profits at, right now. In other areas, or other pieces that are important for people to grab hold of here, is where we’ve seen a lot of gains in certain stocks or sectors, or the whole market that people are saying. These are seasoned veterans of the industry that are managing a significant amount of money that are saying we’re gonna go ahead and take a breath. That’s what happens a lot of the time when the market hits these new highs, and what are people doing? They’re taking profits. Some of that happens as innocently as a portfolio rebalance. That’s one of the things we wanna make sure you’re doing is taking a look at your 401K. whatever your small cap holding is tremendously this last year, is it the percentage your originally intended that to be, and your rebalance? That’s shown us it’s an ineffective way to have a better solution down the road. How many people we talk to that don’t like portfolio rebounds, or however you hold those, yeah, you can. At least a minimum yearly basis, you wanna take a look at that; just try. Do the best you can to rebalance the portfolio. Some of these will happen from time to time. It’s not necessarily gonna be the investor saying I’m up 1000% in whatever stock and I need to dump it. That’s what this is talking about; people looking at the market from a perspective that it’s done and accomplished what it’s set out to do. It’s given them a 10, 15, 20% return. Let’s take the profit, we’re gonna go into something else, just even hold it into cash for a period of time, that’s what we’re talking about here. What about panic? That’s the final place that people get to, is after investors have been taking profit, there is panic. What I wanna say about this is, this is one of the easiest things for us to come to and say, clearly we have a bubble, and panic was this last year February, March, that’s panic in the markets, folks. The market doesn’t understand what in the world is happening. It doesn’t know how to react. The market does when it doesn’t understand something, is we’re out. Let’s get this money out and protect it. We’ve gone through that this last year. The question we need to look at right now is, are we in some similar circumstances right here, we could see some taking profits. I don’t know that anybody right now would – maybe people would’ve panicked about the presidential elections, that might’ve been something people panicked about and took a bunch of money out of the market. It looks to me as if people are closer to a boom euphoria phase than taking profit or panic. It looks to me like more of a front end. I know it’s not something I’m gonna try to quantify here. I’m trying to take a look at what’s going on right now, what money is flowing, what would I do with that?

Ben: One of the things—you’re making great points about panic and concern, what’s going on. I was looking at core numbers, but I was looking at the 50 day moving average. I was just thinking, when I think about the stock market, I think about the technology base being so vibrant and having done so well this year. I’m thinking about all the different opportunities there. I was looking at the QQQ, which is a great tracker. Over the last 52 weeks, it’s up over 100%. That’s really great. That’s a great return. Then I start realizing that’s on the generic things I’m looking at down on the list. I’m looking at the semi-conductor space, up 157% for the last 52 weeks. I’m looking at the Russel 2000, that’s up 136%, and it’s up over 40% in the last 100 days. It’s at an all-time high. These are real things that are all outperforming the NASDAQ. I’ve gotta tell ya, this is a big deal. You have things at all-time highs, that’s one of our things. Is it something where the euphoria is too big? Then you start looking at things like the energy sector. I’m thinking about, what does that look like compared to the NASDAQ. The energy sector is up 94% over the last 52 weeks. The NASDAQ’s up 100%. All-time highs. Energy? Not all-time highs. I’m starting to look at different areas. We look at consumer discretionary. Where’s that compared to all-time highs? These are real conversations you need to have over the portfolio. One year has done great. Consumer discretionary? All-time highs. These are things that you wanna get help evaluating, looking at. If you want us to help you look at it, we’re happy to. Sit down with a professional so you don’t get stuck in euphoria, panic, or the loss.

Seth: You’re listening to MOT; you can reach us at 855-226-8551 or info@yourmoneyontap.com. this has been one of those shows that we’ve loved. We’ve done a ton of work in this area, and we’re very excited for you to be able to grab a hold of what it is we’re talking about, and how we’re using this today to make progress. At the end of the day, it’s about what you can keep. Have you done what you’ve done in order to have a successful experience in retirement? We hope so. Part of that process is understanding how to protect yourself and at what levels you are comfortable taking risks or taking profit. That’s kind of where we were at, we’re talking about taking profit. As the 5 stages of a bubble move their way through, we want you to be on the profit taking side. We don’t want you to be on this fear side of the equation, that you’re taking a ton of losses that everyone else has decided to flee the market. If we can help you out, we’d love to. You can reach us at 855-226-8551. We’re gonna see what we can do in terms of your portfolio, and how do you retire successfully?

Ben: It’s interesting with taking profits, people get scared, they think it’s an all or nothing story. My son loves to trade, he’s enjoying it, I give a lot of supervision. It’s been an awesome experience to engage my son because we talk for a long time about something I love doing, and he’s really interested in it. What I talk to him about all the time is how I trade and how I take profits all the time. He’ll go that stock is still moving, it’s still going up. I’m never gonna be at the top or buy at the perfect bottom, if that happens it’ll be luck. It’s top volume that hits massive tops or bottoms, big buys, or big sells. Those things are what create those peaks and valleys. Not Ben Brayshaw. You won’t either. As a listener, you need to realize that knocking off profits works from time to time, even if you love the stock. I sold a quarter of my stock and my son’s like that’s a really good performing stock, why would you sell it? I made a lot of money on it, and I wanna trim. What you consider a lot is how you do it. I have friends that say if I make 20% in 30 days, I sell all of it. Never turn around because you made a profit. Never look back and say I could’ve made more. You have to have the core perspective.

Ben: If you have a portfolio and you’re in the marketplace, you’re gonna have gains, winners, and losers. If you have something that’s taking a dive, are you gonna keep holding it in the expectation that somewhere down the road it’s gonna be the story of a lifetime and be a 1000% return? Probably not, get off of it and move your position to something you can see the things you really wanna hold and own. That can also be an asset to you because gains and losses. You’ve been listening to MOT. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We can’t wait to make it a great day and a great life with you here on MOT.

SUMMARY

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

Any investor, amateur or pro, knows the highs and lows of the stock market. On today’s episode of Money on Tap, Ben and Seth talk about ‘stock market bubbles,’ what they are, how to define them, and how to overcome them. This is a must-listen for anyone looking to invest or anyone who already has their foot in the door when it comes to investing.

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

MOT Show 158 15 Steps to Help You Prepare for a Better Retirement

Seth: Welcome to MOT. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. My name is Seth Krussman.

Ben: I’m Ben Brayshaw.

Seth: You can reach us at 855-226-8551 or info@yourmoneyontap.com. This is gonna be a great show for us today.

B3n: We’re gonna be a little energized. We just had 2 hours of technical difficulties behind the anxiety that’s gonna come out of this show. I sent that out to the compliance world listening to this show. Have fun.

Seth: We get a lot of questions about this and that, right? You guys send us questions about different topics and things we’ve covered, and we took a step back and got a 30k foot view on what it is we’re doing here. We’re getting you prepared and educated to have a successful retirement. We talk a lot about that in our practice and with our clients. Is retirement a successful experience? You only get one shot to do it right the first time. We’re gonna cover 15 steps, the things we talk about on an ongoing basis. This is the show to check the box, create the list…we’ve got 15 in a row that we’re gonna make it through.

Ben: This is 15 steps to prepare for retirement. This isn’t about the person who’s retired. This is about the person who’s stepping into this, what do I do, what am I not doing? We could’ve come up with 50 steps, but we narrowed it down to 50. We’re geared to go.

Seth: Before we step into that, we’re gonna go ahead and kick it off with MITN. Robinhood raises another $2.4 billion from shareholders. If you haven’t watched the news in the last couple of weeks, we’re uncovering some of these crazy trades going on. Reddit, subscribers to different feeds were charging the market with a few different stocks, GameStop being one of them. It created a whole other scenario in the market that we’ve never seen from a brokerage house perspective.

Ben: I think it’s tremendously interesting that Robinhood is the name of the company that I think has robbed millions upon million of average investors all day long. There’s a number of advisors out there that would disagree, but I’ve gotta be honest with you. I think it’s amazing that they’ve tempered it to, you can only buy 10 shares of the movie company, and you can only buy x number of shares…it was down to 10 shares of AMC. That thing was trading between $8-15, so you could invest $80-115 in this company. Here you have all these hedge fund guys that are shorting this stock. Then you have TD, Ameritrade, doing the same thing, all the limitations across the board. All they’re doing is playing into the hands of those shorting the companies by limiting the amount of buys. If you have more buys, the price goes up, if you have less buys, the price goes down. So if you limit the number of buys, you’re limiting the growth on these assets. I think it’s amazing that this is sellout to the hedge fund companies. These Gen Z’s, we all deserve this. We sent all of Gen Z home in college and high school and said you have to stay home. They figured out how to overthrow the hedge funds. My hat’s off to the Gen Z’s. I’ve been joking around with my son about this. We help him trade his stocks, and we’ve had some great laughs, he’s learned a ton of stuff. He’s watching all these social media pieces, and I’ve gotta tell you. This is such a double standard in so many ways. I’m looking at—there’s these hedge fund companies, and they’ve put hundreds of thousands of companies out of business by shorting their stock. Putting millions of people out of business, job losses across the board. There’s probably like 6 guys smoking a cigar, drinking scotch, and they decide, we’re gonna short one company, push the stock down, and make a ton of money – I heard this illustration on CNN. These people lose everything, and the guys drive away in their Lamborghini. Now Gen Z decides to do this in the open public, in front of everyone, the open public is having an open forum. They’re just saying, if we go and buy this stock, like AMC, we saved 14,000 popcorn jobs. AMC could get loans and sell stock, there was so much benefit for AMC, I’m shocked they’re not launching a massive lawsuit. If you’re not AMC, get better legal advice, because they’re forcing your stock down by limiting the number of buys. This is complete treachery. This is wrong. They’re talking about leverage and margin, that’s fine, make everyone buy it in cash, but make the hedge funds do it too. You’re worried about a 60% margin ratio, but the hedge funds even need 10% down. What makes it right for them, but you can’t. it has to be an even, fair playing field. You’ve got Robinhood, who’s named after the guy giving everything away, and they’re taking everything away. I’m listening to all these people; they’re after Robinhood. To double down on this, they raised $2.4 billion from the shareholders, but guess what? They postponed their IPO going public, because they know that there are all these guys that are gonna bury this company with short sells. I think it’s funny, and I’m not sure about the financial, how much backing they need to have for different assets. When they went out last Thursday and got the 3.4 billion they need for backing this, if that’s what they needed, they should’ve released all those limits. If they got the backing, they should be fine. If anything, they started restricting further. Now they’ve got another 2.4 million—we’re talking 6 million that you didn’t have, and you still can’t back more than 10 shares of AMC, 5 shares of GS, or any number of these things. It’s wrong.

Seth: It’s interesting that this is the preferred clearinghouse for Gen Z that is really been driving a lot of the numbers between GS and the shorts on the hedge funds. It’s the one that shut it down. I wonder what that’s gonna do for their business, are they gonna move over to one of the clearinghouses, is it a lawsuit? Where does this wind up?

Ben: They had the most accounts open on Friday in any on day, but I’m thinking all the Gen Z’s who probably opened up 80 accounts to buy 80 shares, you know? I think that’s a – what you’re gonna find is a ton of fraudulent accounts. Everyone’s using RH because they don’t charge you fees to trade. They make their money by the large volume of trades, between the buy and sell. There’s a difference between the numbers. If you’re selling for $10 and I’m buying for $10, there’s people in between. You might sell for $9.9 and I buy it for $10.1.

Seth: The reason was a liquidity issue, they had to make up for losses that their clearinghouse had. That’s where they needed the additional liquidity. The fact that they didn’t come back into unrestricted trade? This has just never happened before. We’ve never seen the clearinghouse restricting access and trading.

Ben: Why would you wanna slow your trading down when you get money on each trade? They should’ve just shut down margin and said cash only trades here on out, whatever they needed to do to protect the financials, and slowly open up margin again. Forget the craziness of limiting; it’s wrong, it’s silly, it’s the sold out to the big boys. I was reading another article and was listening to something about how all these other firms put automatic stop losses on hedge funds, so they were selling it to each other and walking the price of the stock down until they hit the stock bottom to stall sales. They figured out another way to take advantage of – these companies are protecting us. There’s all these stories about people making a bunch of money who aren’t hedge funds. Free and fair market, that’s what it needs to be. The fact that they’re doing it in the open is tough. Hedge funds, you’re in a new normal and you need to learn how to do it that way. SEC, there’s gonna be a zillion complaints. All the businesses are gonna get sued, and they’re gonna defend it. All they’ve done is protect themselves. We’ve got another good soapbox that will really get some people moving.

Seth: Did you hit record? I wanna double check.

Ben: Up next, who wants to talk COVID? COVID vaccines. STAT news—

Seth: It’s interesting we don’t call it the Wuhan virus. China didn’t appreciate people calling it the Wuhan virus.

Ben: Did you hear they destroyed a ton of material and they hired someone to prove it wasn’t from Wuhan? Anyways, from STAT news, we have comparing the COVID-19 vaccines. J&J’s vaccine haven’t been approved yet. A lot of people don’t understand this, but the article does a good job of explaining differences here. You need to listen to this here today. Modena and Pfizer have come out with an MRNA shot. It’s not a vaccine. There’s no vaccine to it. It never will be, it is a gene therapy,

Seth: It’s experimental.

Ben: You need to talk into these things knowing that. If you disagree, tough luck, cause that’s the facts. They don’t know, they’ve never altered MRNA in humans, intentionally. Usually when MRNA gets altered, it’s from a response to a traditional vaccine, which your body creates an autoimmune response and starts attacking something in your body. I receive vaccines, and I got transverse myelitis in college. I was paralyzed from the neck down for 2 weeks of my life. This is something that’s very near and dear to me because I will never stick another needle in my arm. When you can’t move, can’t feel your hands and feet, you’ll live shorter and not take that risk again. When reading the articles, these MRNA vaccine shots, as much as they’re saying that they’re all good and fine, there are a number of immune responses, transverse myelitis being one of them, I think you told me that, Seth. That’s a scary thing because having had it, it’s not a joke. I’m very fortunate and I thank God every day I have those movements back. I thank the good Lord that he healed me. What’s interesting about this is that even though I wouldn’t take any of these, I would say the Pfizer vaccine is one that—I meant Johnson and Johnson. That’s interesting. That’s exposing yourself to the virus, giving it there, trying to work through building the antibodies and all those things. That’s something that I’m more open to, from that perspective. If I were looking at these things, I’m gonna take the experiment off the table and I’m gonna look at who has the largest number of testing out there, even though it’s not approved. That would be the best of the 3 worst.

Seth: It’s something we know vs. something we have 0 experience releasing into a population. These are experimental. We don’t have human, long-term study trials, they didn’t roll this out and try them on animals, which is traditionally what they’ve done. The challenges with this vaccination or biological experiment, at this point, is they have tried to create a vaccine or MRNA, or therapy. They’ve tried it with this virus, which is 78% identical to SARS-2 virus. When they released the animals back into the wild to get an exposure, or re-exposure to that virus, they died.

Ben: There’s a lot of people that aren’t giving credence—I’ve seen the suppressed videos that FB has taken down. Hank Aaron had the shot 18 days before he died, Larry King had it 2 days before he died. A doctor had a platelet issue and his wife said it was from his second shot. There’s a lot of stuff out there that I’m not sure, so I can’t speak to that. What I would say is that it’s a 99.9% survival rate. That’s better than the flu, that’s better than almost anything out there. The more and more people that get it, the lower that death toll goes. We could be at 99.5% soon, with the number of people contracting this. That’s not disputing numbers, the number of people who died were tabulated this way. There’s all sorts of conversations around this that tragically died around this time period, some weren’t COVID. Let’s say some were COVID, there’s still a 99% survival rate. I’m not too psyched about slapping an experimental shot in my arm. Some are okay with that, so thank you for stepping into the void, I guess.

Seth: You have a motive here, absolutely. We appreciate it. There’s gonna be a lot that’s gonna be learned down the road. The effect on the placenta. When people contract COVID, there’s a chance of losing the pregnancy. With the MRNA it’s going to take on an ongoing presence of COVID. I saw the FDA said hydroxychloroquine. It’s okay now, after 60 years. Everyone’s okay to take it again; it’s amazing. Apparently it’s effective in treating the early onset of COVID.

Ben: I heard a lot of things help; Vitamin D is an essential item in your health. A doctor friend of mine said the second you walk into the hospital they’re overdosing you on vitamin D. that’s interesting and I think if you have thoughts and questions, which I’m sure every listener does, feel free to reach out to us at info@yourmoneyontap.com. You’re welcome to look up this article on stat.com. Last but not least, Jeff Bezos is going to step down as the Amazon CEO, and Andy Jazzy is going to take over in Q3 this year.

Seth: Unbelievable what Jeff has created and built in Amazon. What started in 1991, selling books online, turned into the retailer we know today, that’s what most people identify as Amazon. They buy the thing; it shows up the next day. The aid of the US that they host so much, the cloud-based servers that they host, so many people, or don’t host anymore, on some people’s…

Ben: I’m on round 3 here. We have totally stopped buying off of Amazon. 100%. I don’t know if that’s forever, but we went from massive Amazon users to almost 100 overnight.

Seth: What did you substitute?

Ben: We’d research those buyers on Amazon and buy from them directly.

Seth: Good job. You didn’t just make a total switch over to Walmart?

Ben: We’re going directly to the retailers, then they don’t have to pay a fee to amazon.

Seth: You’re listening to MOT, Ben Brayshaw, and his soapbox this morning. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’ve got 15 things that you want to start—what do you need to do to prepare for retirement?

Ben: If you’re listening today, and you’re wondering about the pieces we usually talk about, don’t forget that BFG offers auto, home and life insurance. We offer all of that for you. Call us at 855-226-8551 or email us at info@yourmoneyontap.com.

Seth: Now back to MIT with Ben and Seth. Welcome back, you’re listening to MOT. I’m here with Ben Brayshaw, and we’re both planners at BFG. We’re going to be talking with you about how to prepare for retirement. We have a list of 15 things we think are critical for you to write down and put priority around. Without taking up too much time, we’re gonna jump in. #1, what do you have?

Ben: For #1 we have: put down your fear. We have to start somewhere, and the 1 thing we were chatting about is that most people don’t ever engage retirement because they have a baseline fear. I don’t know what to do, how to get started, they don’t wanna engage the fear, so they put it aside. Unfortunately, it’s a paralyzing thing in this world.

Seth: If you’ve made it this far into our show, you’re doing good. So many people will say, oh no, it’s a financial show, so it’s too scary for me to tackle these topics. Folks, this is it. You’ve gotta put that down and forge ahead. God didn’t give you a spirit of fear, but of power, love, and a sound mind. #2: rip the band aid off and get going.

Ben: This is simple. Our call to action is just 50-25 a month. Start doing something into anything, for retirement. I don’t care what it is, but it’s just, get going.

Seth: Absolutely. Activity and action is one of the greatest things that you can do to actually put down the financial fear. If you sit there, contemplating that fear, what do I do to get out of that fear, doing something is gonna get you out of it as quickly as anything else. That’s where we go. #3: If you have debt, grab one of those and start to pay it off.

Ben: it’s one of those things. I know we’re probably not mainstream, financial 101 guys, Dave Ramsey, pay off all your debt, whatever. I think you should get going on some sort of retirement piece. There’s something about how much time behind your investment is where gains come from. Doing some debt, focusing on 1 piece of debt is a helpful item to look at. A lot of people would say pay off your debt and we’ll deal with the rest. I’d say do $25 a quarter for a retirement plan. Just so you get used to it.

Seth: I think we talked about this the other day, which was people that have 200k of school debt, college debt or whatever that number is, it’s quite large, more proportionally now than it has been. Saying you have to pay that off before savings for retirement, it’s just not the way 2020 or 2021 works anymore. You’re gonna have to recognize, that’s gonna be there for a while until you get to a place where your earning can start to pay that down significantly. Paying that down and allowing for those returns to happen, and compound interest to work in your benefit is really critical here. #4: Contribute to the 401k plan. If you don’t have a 401k plan at your employer, start your IRA. These are qualified retirement accounts that are gonna reduce your taxability or your income, something that’s deductible at the end of the year. It’s going to allow for compounding to happen without it being taxed. It’s gonna start to put things out of sight, out of mind for you. We want a long term goal that we’re not dipping into or going over here to buy the car.

Ben: #5: your employers match. If they have a match in the 401k, you need to be contributing. Figure out how to cut, do that, it’s free money, you need to do this. I don’t care what it is, get the entire match; it’s absolutely imperative you get the match. Cut Netflix, Hulu, Amazon prime, whatever it takes to get the match, you do.

Seth: Make a cut on the coffee budget, we all have that stuff we like to do and buy, but if we can cut back, we can go this direction with it. There’s an order of operations with us. The first thing is what’s free money for us out there, and that’s gonna be the 401k sponsored plan. The next thing we take a look at is the future, and you might have inside of that 401k, a Roth option for you to contribute to. If you don’t, there’s possibly a Roth IRA that you can open up. We’re gonna take a look and see what those look like for you. #7: Challenge yourself. As if this isn’t part of what we’ve been doing all along. Challenge yourself to increase your contribution towards your 401k, IRA, Roth IRA, we’re gonna challenge you to start to increase that contribution. If you do have a 401k, and this might be an employee sponsored plan, like a simple or something like that. There might be an option that’s called an auto-escalate. That’s something you can select. It’s present at 1% a year for you to increase the contribution. You can always go and change the contribution levels for yourself. What we find is if we have built into our contribution something like this, we don’t notice it and it happens automatically. We live life, and you can set yourself up for greater success, rather than trying to go make those decisions every month or year. #8: set goals and dreams. Things you are going to be looking for in retirement. Let’s talk about 3 things you want, get it on paper, put it on that dream board next to your desk at home so it’s right in front of you. You can have that perspective of what is it you’re looking forward to in retirement. What are some goals you have in retirement?

Ben: This is what it’s all about, this is the fun part. I usually tell people go out and have dinner and focus on what it is you guys want. In a situation where you might have some general conversations, my wife and I will chat about stuff. We’re probably more aware because of the industry I’m in. it’s amazing when people go out and talk about what retirement looks like for them. Give each person 15-20 minutes to talk about retirement. It’s amazing to me how much you will enjoy getting to hear your spouse communicate that, figuring out what you have in common. One person’s thinking about traveling in Europe, the other is thinking about a trailer in Florida with my boat. I’m gonna fish all day every day, and the wife’s like I’m gonna be in Europe, I’m gonna be in Paris, drink coffee under the Eiffel tower. Eventually they bring that together; what does that look like. This is what we build all the steps for, between start and finish, to get there. That’s the success we’re trying to find. You can build a retirement, any retirement I want for somebody, but if it’s not what they want, it’s completely useless. This is a massive project to do. I’d take notes about your spouse, enjoy this moment, and appreciate why they have those dreams.

Seth: #9: Consider working longer. Even just an extra 5 years is what we talk about first; let’s take a look and see what that could look like for you. How would that change your retirement, as far as your income, some of the opportunities, goals, and dreams that you put out there? Give us a little extra cushion. Just think about it.

Ben: This is one of those things, a lot of people take a consulting role. That’s been a good out for some people; they don’t have a long-term commitment, but the company needs them. #10: consider an abbreviated job in retirement. Consider that step. The side-hustle. I have friends who are in retirement and one works for the golf course because he loves golfing. Saves on the membership fees, does a little in the morning, 3 days a week, he can golf whenever he wants.

Seth: I had a buddy who retired, and he was a bailiff for 4 years. He had a beverage company that he sold, and he went to work at the county as a bailiff, said it was fascinating.

Ben: It’s definitely an option to do. I think when we talk about doing some sort of work after retirement, a lot of people turn their head and say I’m gonna be done. There’s not a lot of people that feel that way once they’re done. They’re usually like I have all this time. I was talking to 1 gentleman who got a buyout, he was like I don’t need to go back to work. 2 months later he was like I wanna go back to work, and my wife wants me back at work. We all think this is great, and he had all these plans, and he said I really wanna be back at work. He was already applying for jobs within 45 days of being out, when he thought he was going to be taking 6 months to a year off. It wasn’t that fun. He said I was home more days than I wanted to be. The people I’m friends with, they’re working, so I can’t do as much with them. It’s complicated. We referenced this article a few shows ago; I can’t recall where it was from, but it was under or over ½ of Americans have less than 100k ready for retirement.

Seth: You could say that either way, right? 50% of Americans have under and 50% have over.

Ben: 100k is not nearly enough to retire. That’s a problem. This group of people who are all set, and there’s a group of people on track, and there’s a large group of people who aren’t prepared at all. That’s one of the reasons why we cave into this and say, how do we engage the people on those things that you need to be doing or having a conversation about in order to make the whole piece come together. If you have under 100k and you’re not saving, it’s a random pension that liquidated, those are all starts, but we need to keep it moving forward. If you feel like you’re behind the 8 ball, there’s no time better than to start now.

Seth: #10: consider creating a social security account. Does that mean you have to figure out how much to pay in addition to social security? I don’t know, but what you need to do is create your account and take a look to see what are your benefits, what are you scheduled to be able to claim at the age of 62, 63, 64, 70—start to build a plan around that. If you need help, we have on staff here, Ken, who retired from SSA and is a tremendous asset to understanding what are the ins and outs of social security? That’s the first step, create the account, take a look, see what you got.

Ben: He’s got all the info you could ever want. Give us a call, if you’ve got specific questions and we can’t answer them, he’s the #1 on that.

Seth: We just got rolling there. It’s time for us to take a quick break. We’ll be right back; you’re listening to MOT. One of the things we love about MOT is our goal for you to have access to the financial planning world. Raising the bar of your financial education, it’s so critical. If you’re looking to work with a financial planner, if you want the playbook to understand important things right now and how you’re going to get to your goals to retire successfully, that’s what we’re doing. If you have 250k of valuable assets, give us a call, it’s free to you. It is worth your time to pick up that phone and give us a call, discover what complete wealth management looks like. Ben and I are excited about the opportunity to partner with you and give you that financial plan that’s going to make the next step so much better understood to get you where you need to go. Welcome back, you’re listening to MOT, you can reach us at 855-226-8551 or info@yourmoneyontap.com. if you’re joining us late, welcome, we’re glad you’re here. Ben and I are financial planners at BFG, and we love educating you about retirement planning, finance. What’s our topic today? How to prepare fore retirement and we’re on number 12: educate yourself.

Ben: You’re doing it perfectly. I love that. Our podcast, I’m biased, I think there’s a lot of strong content in here, all our archives have lots of different topics. I’m encouraging people to pick up a financial magazine once in a while. Listening to our show or other types of financial medians will help you do that too. Sometimes a book on something intentional where you’re saying that’s something they’re talking about, I really want to understand more about that, creating that awareness of the jargon that exists, building more depth will allow you to have a deeper conversation. One of the reasons we found value in this show is that we’ll encourage clients not to hesitate to go to the podcast to listen. When you have a question specifically in that, come to us. Maybe your question gets stronger, deeper, more direct, more intentional, more crafted to accomplish the real concern of all the other things going on in the background.

Seth: Some of the concepts are gonna take time. The first time we have a conversation with you, it might be the very first time you’ve been introduced to life insurance as more than life insurance; be your own bank concept; there’s a wealth of information. We’d love to direct you to our resources to educate yourself. Either way, lifelong learning, it’s really A) proven to extend and make retirement a richer time of your life and that’s what this is about. We’d love the opportunity to be apart of that. We’re gonna say listen to MOT podcast. While you’re on a walk, run, in the car, continue to dive into what this list is all about, because this is what we do all the time; we’re talking about this list of 15 in different ways, aspects, in more detail in other shows. The next is #13: set up a will or trust. We’ve had several different attorneys on here with us in the past; we’ll have them come here because things are changing in the estate planning world. What’s important in COVID, during shutdowns, the lockdowns was that the courthouses weren’t open. People were passing away and they weren’t getting people appointed to oversee the will. One of the ways people were getting through this was getting a trust set up, so those assets could have direction, regardless of not having an appointment over those wills. These are critical as a part of you putting together a retirement plan as to give some direction for what happens after you pass away. That’s what that piece is all about.

Ben: The wills and trusts are overlooked completely by most. For wills, Uncle Joe is gonna take care of them and now they’re 22, 25, and your entire financial situation is changed. You don’t have beneficiaries named, you wrote it when you had 1 kid and now you have 3, there’s all these different questions. All the laws change all the time. Power attorneys, maybe you’re on the outs with Uncle Joey and you don’ want him handling your money for your kids. I thin the biggest black hole piece is that you’ve gotta keep that moving forward regularly. That’s part of the good stewardship piece that has to happen. There’s 1000 bad stories, a zillion bad stores on the estate world.

Seth: We’re not gonna break into those. With administration changing, in that trust piece especially, you wanna take a look at that. Those of you who have set up those trusts, go and look what’s coming down the pipe. #14: make planning a regular conversation. I think this’ll really help you because Ben was talking about going out for dinner. Don’t make it the gut wrenching, arguing, everything we possibly can, money, let’s try to make something really enjoyable. Go out and have dinner, whatever it is you guys like to do, go for a walk, I like that one a lot. Get some endorphins going, that’s gonna help and benefit, your mind is gonna be thinking differently. You might come up with completely different ideas. At least get those out there and have conversations regularly.

Ben: #15: talk to people who are retired. Engage people who are already living with the pros and cons, successes, and failures of all they’ve worked for. There’s a lot of things I learned from so many people. Wisdom from others is invaluable, and in this space—I met people who say I bought a house in Tennessee or Florida, and they decide Florida is the place they need to be. There’s a zillion questions as to why people like and don’t like. I get it if you don’t want the advice. I wish I bought a place earlier and enjoyed it with my husband. I regret it; that’s something someone said to me once. Those are conversations you can’t lost from. They’re gonna enjoy company; everyone loves company. A friend of mine, he didn’t wanna be home anymore. That was part of it.

Seth: that’s the thing if you’re engaging retirees, change it. If you only know your aunt and uncle, mom, or dad, seek out other people as well. It’s awesome, it’s a great opportunity to build a relationship. You’d be surprised at how many people would be open and receptive to having conversations about this. There are some principles that are very common. The stories are different but there are some underlying principles that you could start to tie together and create your own story of what you want retirement to be. I can’t wait to hear your stories of what you’ve put together for retirement. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’ve enjoyed the show today, been grateful for you for joining us. We thank you for calling us and giving us an opportunity to speak into your life and trusting us. We want to appreciate you for that. Thank you so much, and we want to appreciate you for allowing us to be who we are and have fun with what we do on a daily basis. We’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We can’t wait to make it a great day and a great life with you here on MOT.

SUMMARY

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer to your retirement goals. Hosted by Ben Brayshaw and Seth Krussman, this podcast is full of vital information for managing your money, being smart with finances, getting an inside look to what professional stock traders and financial planning is all about.

This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

Most people have wild and elaborate dreams about what retirement looks like. Planning is an essential part of those dreams, so Ben and Seth took the time to write up 15 essential rules to follow when planning for retirement. This episode will make you feel less intimidated by the mountain you may have to climb when it comes to your future. As always, Brayshaw Financial group is just a phone call or email away.

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

MOT Show 157 22506430

Seth: Welcome to MOT. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. My name is Seth Krussman.

Ben: I’m Ben Brayshaw.

Seth: We’re glad to have you aboard today. It’s going to be an interesting show, to say the least. I get excited about the content we have an opportunity to share with you, because we work in it all the time, it’s the main reason we do this. We want to help educate and get the information to you so you can live the best life possible, right? Have loads to look forward to in retirement. We’re gonna have fun along the way, too. Ben? You told me the name of the show, I started to write it down; would you do us the justice of introducing us?

Ben: I’m gonna keep us in line, it’s a burden I must carry. Retirement perception. Today’s going to be a good one. We have so many people out there who have a perception on what retirement is, what they need, and how they’re gonna get it done. We’re gonna talk a lot about the points around that, and what people are having conversations on, and what that means to them, both now and in the future. It’s been a crazy day, there’s a lot of people talking out there—the market’s crazy, we’ve got crazy stuff going on. People are reading the articles about Reddit and what’s happening there. We’ll be doing a story on that in the future, I’m sure. I’m curious what’s going to come out in that. That’s a MITN story, but I’m excited to see how the SCC looks at this piece, and the organized trading philosophies of everyday people manipulating the market. I don’t know that it’s illegal.

Seth: We don’t. We’re in unprecedented times, and we can’t wait to get into it with you. We’re gonna go into MITN.

Ben: The first article up is GameStop is a bubble in it’s purest form. If you were to ask me 6-12 months ago, I’d tell you that GameStop, its company, and stock are a dying business because of the download market. Xbox, kids download games, all that stuff. I would’ve told you that GameStop is dead, but it’s up again. It’s up 140% right now from when this article took place. It’s a company that basically short traders have been trapped in. they shorted the stock, and a collective group of people have moved forward and said ‘we’re gonna buy the stock, and we’re gonna move stuff to Street name and force the stock up, and make the short sellers cover their position.’ They have to buy their stock back, and it’s very interesting as we go through this article, there’s a number of stocks that are being manipulated this way. GameStop, Blackberry, Nokia…this is a crazy inflated bubble that’s being created.

Seth: When I took a look at GameStop years ago, it was one of those things that I’d drop in with Spencer because he wanted to get some discount games. It had a great retail business, but it always seemed to feel like Blockbuster to me. I remember the transition from BB to Netflix, and Netflix didn’t have an online platform, it didn’t have a streaming service. You put in a subscription and you get the DVDs or the Blu-ray. BB did the same thing, but they got left in the dust. GS had Ryan Coen built up and sold the online pet food retailer, Chewy, and now it’s a 13% stakeholder with RC Adventures, GS took a 13% hold in it last year and told him ‘Step up this internet thing.’ There’s been several others who have jumped into this pool, but this Reddit, these cheerleaders on Reddit who have been driving this thing through the roof. It’s incredible because it’s not a stock that makes sense. It’s so far over its skis that it’s a mania that has driven this thing over 70 times higher since August, and anyone who held this stock for 10 days made gains of more than 10 times their money.

Ben: This is not the kind of trading we recommend or even do for our clients. This is one of the most dangerous sides of investing that I would highly encourage you never to consider doing. People shorting companies, it’s an unlimited amount of risk. When you do that kind of thing, I think the people who do short stock are seeing that maybe this isn’t a play to make anymore. A collective group of people can force us out. I think with our world and the marketplace, and how it has become something that—10, 20, 30 years ago you couldn’t move as a collective. We have so much communication, so much ability to organize, this is an impactful kind of targeted piece. It’s a phenomenal thing that has happened here. It’s the birth of a collective movement in the stock trading world that a lot of people are not giving, or don’t even know that this is the infantile stage of this.

Seth: Yeah. We talk about the water cooler a lot, right? You used to go to the water cooler to get your trades or talk about what the broker’s doing. Everyone wants to go hang out with people at work and tell them what their winners were. The sowing mentality is the other way to look at it. People had all these conversations about things, and it’s so much larger and faster and coordinated than it ever could’ve possibly been before. Even just going back into the Facebook IPO days, where people knew about Facebook, there wasn’t this platform out there that people were building this community around. I’m curious to see what the activist—this is activist trading is what I would call this. Their intention, from what we’ve read, seems to be to really put out of business some of these investment firms that have been out there buying and selling these short positions on these, and making significant losses on these things. To think of what could possibly happen is where groups of people go into these ideas and manipulate, is really what it is. It’s coordinated efforts to manipulate on an unprecedented levels, publicly. This is the Wolf of Wall Street stuff, the pump and dump, we’ve made the movies and how bad these people are. I agree, because it was a coordinated effort to buy up a stock, and someone else was saying ‘Okay great, go ahead and see,’ and they’d split the profits, a back door deal. What is the SCC gonna say?

Ben: This is gonna be really interesting, because when we say the word manipulate, the SCC gets really scared. I don’t know if it’s gonna fall under manipulation. It’s like me calling you, Seth and saying, ‘I think we should buy XYZ,’ and you decide to, that’s a free choice. They’re intentionally – who’s to say that not everyone on the radio is gonna say, ‘Let’s go buy it because they told me to do that.’ It’s a recommendation, we wouldn’t do that on the radio, but if we did and everyone followed us, we wouldn’t be manipulating, we’d be saying it’s a good buy.

Seth: I don’t know if coordinated events – if they’re gonna take a look at people like ourselves who are licensed and say, ‘Were you one of the contributors to this,’ as a licensed person, this could be something very…

Ben: You’re gonna be scrutinized hardcore. They’re gonna go after those people first to figure out if it’s legal, and then they’re gonna go after the average joe if it is.

Seth: I wonder if there’s any master stuff going on out there. 200 lemons, 30 bananas, online shoppers accidentally buy too much. Novices who overbuy get creative with their cooking. I salted them, sugared them, juiced them, and maybe this is you who just went bananas, buying online on accident. It’s so easy to do. You’re not gonna pick up 200 lemons at the grocery store and say, ‘give me all that, let’s get it home, I can’t wait to start stewing lemons.’ This is what’s been happening, someone puts another 0 back there and gets 200 lemons on their front porch.

Ben: There isn’t anyone listening who hasn’t made some major mistake on online ordering. We ordered vitamins and got a couple boxes instead of…

Seth: Did you order $200 worth of Vitamin E?

Ben: Every time you open a box and you’re like, ‘Is it their mistake or mine?’ You want to find out before you share with your spouse, ‘That was me…’ This one guy got so many bananas that he was making banana bread and giving it to friends and family. He thought he ordered 5 bananas and got 5 bushels. This article here is very interesting and relevant to today’s world. This is from Bloomberg. It’s the 5 cities ready to build with remote workers in mind. This is late January, January 26^th. There’s 5 cities where the tech world has a lot of interest in having very simplified living. They don’t wanna worry about mowing the lawn, they work random hours, they’ll work 20 hours in a row, and they want a place to get coffee. They compare it to retirement living.

Seth: It is, it’s totally like a retirement home that’s been turned over into these tech nomad facilities that they’ve got these coworking/co-living spaces. Your laundry’s done, bed’s made, you have privacy and your own showers, your own little home. You’re also together with all these people in this community. They’re going out, doing stuff, they’re doing whatever’s in the place to experience. What’s interesting about these remote work hubs, they went out and said, ‘We wanna put out this prize and award these cities to produce these remote work hubs.’ The cities rewarded was New Orleans, but it doesn’t have a large tech industry, Bentonville, AS, Ogden, UT, Rocky Mount, NC, and Rochester, NY. The focus is we want to bring a diversity of workers into this community. The nice thing is the cost of living was the thing that really helped drive the thing for those wanting to move to those areas.

Ben: There’s not a lot of disparity between the workers. It’s expanding diversity, which is the focus.

Seth: It sounds really cool. You’re listening to MOT; you can reach us at 855-226-8551 or info@yourmoneyontap.com. We’ll be right back.

Ben: For a number of our listeners, you might have a lot of questions. We’re offering Zoominars, which are webinars over Zoom where we have top experts: social security, financial and estate planning experts who you can speak with. We’re also having webinar based Zoominars where we’ll have multiple groups, and you can be a part of that in the new year. Reach us at 855-226-8551 or info@yourmoneyontap.com to schedule your Zoominar.

Seth: Welcome back. You’re listening to MOT. My name’s Seth Krussman and I’m here with Ben Brayshaw. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’re both financial planners at Brayshaw Financial Group. This is going to be one of those topics that we work through with our clients on a regular basis. It’s retirement perception. It means a lot of different things, for one. There’s so many ideas that we all come to the table with. We’ve seen grandma, grandpa, mom, dad in a retirement place, and we probably think they’re not working. That’s one thing, our perception around retirement, but there’s a lot of other things that come alongside of that. We’ve seen dad have a career, for instance, my dad was a dentist, and he had a great dental practice, and when he sold that dental practice, one of the things he’d done for himself was that he had another hobby that he was interested in, besides playing golf. That’s one of those that a lot of people think for men, you’re just gonna sail off into the sunset and go golfing. My dad took painting classes, so maybe your perception is, I’ve gotta get something else in my life to enhance my life, because I’ve gotta do something. There’s all these things we think about. What we find is those are some quality of life things that we definitely wanna discuss and have conversations around, but at then end of the day, there’s a financial picture that allows for these different activities and locations that you might live. Different friends you might have, different places you might wanna go. The first question that usually comes up is, how much do I need in retirement? Some of that might be quality of life, but a lot of that comes into the pile of money theory, the quantity of cash that you’ve got to accumulate, we talk about the “ing” commercial of what’s your number all the time, because we’ve got that engrained in our minds. People walking around the town with this number over their head that’s going to equal this quality of life they want to have in retirement.

Ben: I think how we articulate retirement to ourselves, whether you’re the person who says I have to have 1-2 million dollars when I’m 65-70, or maybe you’re the person that says I need 500k and I’m gonna spend it over the years. People define what they need in many different ways.

Seth: The “ing” commercial worked really well because we still talk about it.

Ben: It’s the greatest thing they’ve done in a long time. It’s all about accumulating assets. We talk to people all the time and say there’s 2 phases in life: there’s the accumulation phase, which most of our listeners are in. There’s the distribution page, which is post-retirement. A lot of people have light switch mentality where they say I’ll go see a financial planner when I retire, and I’ll make it work. You can do it that way because people do it all the time that way. Is that the best way? I think that’s what we’re gonna get into today. What do I need, how do I do this, what’s the best way? How much do I need for retirement, there’s so many different pieces. I think using that million dollar number is a good conversation piece for people. If I have a million dollars and took 5% out, that will give me 50k a year. You forget there’s usually taxes, most plans are 401k, or an IRA, and you get hit hard. There was a study done that says fewer than half of American baby boomers have more than 100k in retirement funds, even though one estimate puts healthcare costs in retirement for an average couple, 280k. Maryland reported that, and they suggest 1 in 15 Americans don’t know how much money they’ll need in retirement. Most under save by nearly 20%. This is a major problem. We have not considered the amount of people who are unprepared for retirement.

Seth: The numbers are saying one thing here, which is, there’s a significant gap in retirement prep, as far as getting enough cash in those coffers to be able to create that income later on that will last the rest of your life. What’s interesting about that is, this perception piece, is that almost 2/3 of US baby boomers are confident that they can retire with a comfortable lifestyle even though just over 1/3 believe they’re saving enough money. 2/3 are saying ‘I think I can retire comfortably.’ Of those 2/3, you have to believe that there’s 1/3 of them that believe they’re saving enough money. That’s a totally different story. How can you think you’re gonna be comfortable? There’s 2/3 that think they’re gonna be comfortable, but there’s only 1/3 of those that really get it, that they’re not saving enough money. This is not gonna work. That’s optimistic, and we love optimism, we need that, because it can fuel so many different things in our ability to compensate if that doesn’t work out.

Ben: If you have less than half of America under 100k, somewhere between 40-50% have over 100k to retire, that means more than 50% of people have less than 100k. Baby boomers, specifically. In your point, 1/3 of those people understand that they don’t have enough money, right? Let’s say it’s 45% of Americans don’t have enough, okay? 45% of Americans have less than 100k, 1/3 of them know it. You’ve got 10-15% of people that don’t know it. That’s a good 10-20 million people that have no clue that they’re not prepared for retirement.

Seth: It’s a problem, right?

Ben: They’re naively not aware. They’re just people that say, ‘I don’t have enough money to retire.’ I don’t know if in this study they take into account inheritance, a lot of things. A lot of baby boomers are getting ready to inherit money big time. Just because they don’t have it saved doesn’t mean they don’t have it coming through. You’re right, Seth, this is a massive issue, and that’s why we’re doing this show. There’s this unaware crowd, or even the aware crowd that don’t have enough. Every day, they go to work, diligently, wholeheartedly, trying to make a living, doing the best they can, in the middle of a pandemic, and I think we’re gonna try and help set the record straight and give people real opportunity to move forward.

Seth: Ben and I are problem solvers. That’s what we do, and we love doing this. That’s what we’re gonna focus on the majority of the rest of our time on, getting into solution mode. You may not perceive yourself as a problem solver, but you are. You’re here today, you’re listening, and you want to make it better. #2. We’re gonna work on getting a correct perception. If you’ve been digesting the bits and pieces there, there’s a disparity between the way we perceive things, and the way things are. One of the things that’s an accepted rule out there is that if you save 15% of your yearly salary, that’s a good thing, you’re on that track. ½ of Americans save less than this, or nothing at all.

Ben: 15% is a lot of money, okay? In the Bible, it talks about giving 10%, and give to Caesar what’s Caesar’s. It talks about giving to Caesar first, and then 10%. In New England, people tithe 1-2%, as opposed to the 10% in the Bible. You’ve got people that don’t tithe at all, and you’ve got people who do the full 10%, and then everyone else in the middle. 15% is a tall order, right? I’ve gotta pay taxes, and you’re supposed to tithe, save 15%? You’re talking ½ your money is gone. This is one of the conundrums that people are fighting.

Seth: It is a significant challenge, we work in 401ks a lot of the time, and that’s one of the most popular savings tools today. It can be one of the easiest things to utilize. How do we use the tools around us to get into a mode. It’s a reduction of your income because there’s less taxability. If we were to say first steps, if you have something like this in front of you, start small, and you can increase. If the frog jumps into boiling water, it jumps right out. If you start off, and you’re saying, ‘I’m saving nothing, but now I’m gonna get 15% save it.’ If you don’t fluctuate your lifestyle and you’re not okay with that, it’s gonna be a tough deal. We’re just gonna outline, this is a place to start. Most Americans aren’t doing it, so we’re gonna get on that side of the coin, it’s gonna start putting something else into practice here. If you’re younger, this will be easier for you. The perception is, I’ll do it later in life, but that is not the way you want to approach this. We’re gonna talk more about that. The way compound interest works, it works overtime. You can’t change that, the more time, the greater that compound interest and the accumulation is going to work for you. This idea over here is that I can make it up later when I make more. Guess what’s gonna happen in that? You’re gonna spend more if you don’t make the change now. Guarantee ya.

Ben: Well said. Our number 3 here is, there’s no pot of gold, even a pot of cash won’t last. This is really interesting. A lot of people say I want to die with 1 penny in my bank account. Some will save their money to hit a certain period of a number of years to try and accomplish their retirement needs. I need 50k a year, if I put a million dollars away, that’s 20 years of income no matter what. They had this cash piece. It’s a concerning thought and issue because people don’t trust the market. In the UK, people aged 55 and older can lump sum out their pension and choose to invest it or keep it in cash. Their pension age is 65, but at 55 they can pull it out. They’re finding people are doing this—the vast majority. It’s a problem for their pension system because people that are 55 are pulling it out and sticking it in the bank. They’re pulling the cash out as they need the income and staring that down from a tunnel of years. I don’t wanna have to worry about the pension system and not having the income. I tell people all the time, owning cash, even in the USD—this is the UK, it’s not UK only. My pension at XYZ hospital or manufacturing is offering me this large sum of money to leave and forfeit a pension option, and we need to do an evaluation on whether that makes sense or not. you say to yourself, why is that pension company offering those dollars? They’re offering the dollars because they don’t want the liability of paying you income for the rest of your life. You have to understand where that tradeoff is. If you have questions about the security of your pensions, we’ve had shows about concerns about your pensions, shows about the PCBG, go back into our archives, listen to those. If you don’t wanna take those risks on, that’s a big deal. We’ve actually uncovered and discovered that…

Seth: These pensions are guaranteed, it’s possibly fallible, and we understand why. We understand why some people in the UK would say yeah, I’m gonna take that lump sum. The misunderstanding here is what the real value of that cash is, and how to use that. So many of them don’t know how to save money for a budget or fixed income. They rarely understand how to invest wisely. We’re gonna talk about that—what’s the next thing in this? #4: what you need to do. You need to get in front. I don’t care if it’s Zoom, in person, but you need to get in front of the right advisor to help you and get you educated now. This is not a tomorrow. This is your life, this is the significance of your future and understanding and changing perceptions, getting educated, getting the right info is going to be a conversation that isn’t gonna happen with mom or dad, uncle, or aunt, whoever the person in your life that’s speaking into your life. Allow somebody like your doctor to have that opportunity to work with you. Whatever level you’re at; we have so many people that come to us and think ‘I’m not there yet.’ Let’s talk about “there yet.” This is one of the reasons that we, Ben, and I, are here today at MOT. It would be great to do some kind of a financial radio show and have that turn into a windfall for Ben and I. Maybe that’s your perception, to represent BFG. That’s a part of it. We wanna work with the right people here. Inside of Ben and I, after working with so many of our clients, and Ben doing so many seminars and working in these public arenas, we’re trying to help people grasp and work through some of the challenges that they’re facing right now, and they haven’t discovered what’s yet to come. We wanna help people. We wanna educate you. That has to be something that is there with that person that you are talking with. That’s what this is about at MOT.

Ben: I think you bring up a good point. We believe in education. I’ve always believed in education. If you empower people, they’ll be better clients and more profitable. I believe my clients have strong, valuable opinions. When I present something to somebody as an idea, if something seems broken or off in the presentation, and they’re aware enough to look at the strategy and say, ‘I don’t think this works,’ when that happens, there’s a disconnect between me understanding the concerns of the client and what they’ve communicated. They may have told me I’m concerned about XYZ, and we’ve created a plan that supports that, but they may have forgotten one small detail. Usually it’s a communication issue. If we don’t empower, educate, if we don’t give them all the pieces to give them valuable decisions, they can’t communicate back. Even with this radio show, Seth, this has become an educational piece for us. We’ve been able to give so many more people empowered knowledge that we have. I always tell people, don’t go work with your nephew that just got in the business. Find a reputable company that can do this. Growth isn’t what it’s about, it’s about meeting your needs. One of the things with this radio show specifically, we never planned on doing a radio show.

Seth: You called me up and were like, ‘Do you want to,’ and I was like, ‘not really.’

Ben: We were working with another financial planner and he wanted to do a radio show. We helped organize it and get everything in line. Once we had everything set up and commitments to the radio station, he didn’t wanna do it anymore. He got cold feet. We’re doing this today, because of that cold feet and the obligation to do it.

Seth: What’s the best name you can come up with in 3 days? Ummm…

Ben: I remember talking to my brother and telling him I’m doing a radio show. He’s an HR exec, and we spent 3 hours on the phone, playing with word phrases…boom! MOT came up. It’s been 4 years now, and we’ve had so many people who have thanked us and appreciated the information. We know there’s more people out there, and we’re glad this is here. Our point is that education is what you need to do. I’m glad you’re listening to the show today because that’s what you’re doing.

Seth: This is a good spot to take a break. We’ll connect more on our story. You are taking these pieces, you wanna know what long term care is, great, we’ve got a show. You can do it on your walk, your jog, wherever you’re at. We’re gonna take a break. Ben, how often do we have someone come into the office and they don’t have a financial plan? And how critical is it for us to put the pieces together and make sure that their future, their retirement is a successful experience? Whether you’re an investor or not, you can reach us at 855-226-8551 or info@yourmoneyontap.com. If you have 100k, 250k, 5 million, we have the right planner for you. Ben, I, Seth Krussman, we’re here for you to get the plan together and make sure that that next step is right. Back to MOT with Ben and Seth. Welcome back. You’re listening to MOT. My name’s Seth Krussman and I’m here with Ben Brayshaw. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Today we’ve been diving into retirement perception, or misperception is what a lot of it can be, and how do we correct some of those things that we’ve had misunderstandings around? We discover all those things when we sit down and have conversations with you. #5: seek help often and early. We can’t even describe how awesome it is to have younger people, a lot of the time couples, younger people coming in and saying hey, this is what I’m thinking about doing, and here’s my life, here’s what it looks like on a piece of paper, or on a spreadsheet, or in general. These are my ideas. I can’t tell you how many people I have that come through, we have conversations with that – I love the one that corners me at the holiday gathering and they say can I ask you a question? The fact is, in dealing with all these things, how much value is your time? That’s the question I come back to. How can we shortcut the process or path to get you where you need to go, or want to go? That doesn’t happen. If you want the shortcut, I’m not a mechanic, right? Ben’s done a ton of building things, but if I want to get into electrical stuff, it’s gonna take me some time to go onto YouTube and figure this all out.

Ben: It’s just getting help and doing it early. A lot of people do it late, and it’s not that it’s too late, it’s just late. They’re steps away from retirement, they retired 2 weeks ago. I’d rather someone come to us early. How many people come to us and say I don’t have enough money to manage, my accounts are way too small to manage. The reason we don’t have a minimum is that we try to find clients that are good fits. We can help you get to your goals quicker. If you need a certain amount of money to retire, but you’re shooting for a number on the ceiling of how much you wanna have in your retirement plan, if we can help that number be lower, that might sound silly. That means you may get to retirement quicker because you weren’t working so much longer to make the income you need for retirement.

Seth: My dad was a dentist, right? I grew up with going to the dentist all the time. Actually it was only once a year, but today it’s every 6 months you go to the dentist. What if you postponed that for 20 years? How painful is knowing you wouldn’t have had to experience all the pain? Take care of yourself, take care of your finances.

Ben: That’s a good one. We want you to contact us soon. We want you to reach out to us. Go to someone that you trust, and we’ve met people who we knew we could help, but the connection wasn’t there. Trust, engagement, camaraderie, that’s all part of it. It’s a relationship that you’re working with someone to help facilitate the success. You know what I tell people all the time? The reason I say don’t go to your cousin or nephew, it’s because if they haven’t had—they may be a proven person. You have one chance to retire successfully. You have one chance to do this right. This isn’t buying a backpack that’s wearing out and going somewhere to buy another one. If they lose your money or fail, it’s over. That’s serious.

Seth: That’s interesting. #6: where are you taking risk? That’s a risk you’re taking when you’re talking or reaching out to someone. That’s a risk, right? So often we find people early on in the accumulation phase. These people aren’t taking risk. They’re got the cash in the mattress mentality, and that puts them so far behind where they need to be. The risk is that they’re not taking risks. Even though everything inside of them tells them they can’t stand the thought of being volatile, there are so many things they can put into place that can help them get the right kind of risk for them. In accumulation, you have to do that as much as possible. We talk about that in other shows as well. We also have the late bloomer, or someone coming towards retirement who says I haven’t done the accumulation. In order for me to get where we need to go, I have to take on all this, and they go to the opposite side of the spectrum there. Understanding that part, of how do you do this, and when do you take this risk on is so critical.

Ben: One thing I always tell people is that the market is intuitively risky. Understanding your risk is the first thing. We did a whole show on how to build the house, foundational elements, etc. and that’s really something if you don’t understand that concept, listen to that show, but give us a call. I can explain to you the foundational concepts, the financial structure that you can live in, just like a house. The last thing you wanna be doing is working with an options broker and losing a ton of money potentially. Or Robinhood, any of these crazy things, or the GS we talked about. There are so few people getting rich on that stuff, compared to all the people that are losing a ton of money. You just need to step back and shoot for success. You want a successful experience, and if you’re looking to make a zillion dollars, you’re gonna get burned. I teach my kids about that. We trade inside their accounts, and that’s something we talk about. We talk about understanding investing compared to gambling, and how that’s different.

Seth: #7: Everything comes back to income. At the end of the day, it’s all about my liabilities and my income. One of the things we find is that it’s really hard to create income. You’re doing it in a job, or a career, but in a transition from that accumulation, do you know how to do that and do it effectively? At the end of the day, if you don’t know how to make that pile of money create another pile of money that you continue to live through, it’s an epic fail. There are so many different ways to generate and create income. Do that throughout your life, the rest of your life, that’s what it’s all about.

Ben: That’s great. I think no matter how many people may argue, it’s about income, but I really need to have this much $ in retirement, I need to put this much $ away in my 401k—those are all questions around the element that needs solving. If you’re listening today and you’re not sure what we mean by income, income, income…you’re gonna have expenses in retirement, and the only thing offsetting those expenses is the income, and everyone knows that. It’s all about how you translate how much income you need off of what your assets are. It’s all about how much income you need in the future, and how that’s projecting that success. If you focus on developing a strong story around how to build that income in all the different ways that have to do with, how much are you gonna pay on taxes, how much are you building that may be tax free, all of those different things that might come into play. It’s all about coming to the income number. If you’re never solving the income number of what you need, you’re never gonna know what number you need to get to. Where am I planning on retiring?

Seth: I love it. That’s it. You’re listening to MOT. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’ve enjoyed the show today, been grateful for you for joining us. We thank you for calling us and giving us an opportunity to speak into your life and trusting us. We want to appreciate you for that. Thank you so much, and we want to appreciate you for allowing us to be who we are and have fun with what we do on a daily basis. We’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We can’t wait to make it a great day and a great life with you here on MOT.

SUMMARY

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

In this episode of Money on Tap, Seth and Ben break down seven different ways that retirement can be perceived. For many people, retirement contains visions of living somewhere where it’s always sunny and a cool 70 degrees, but the reality is a retirement in that form takes a lot of hard work and financial planning. Brayshaw Financial Group is here to help so that your dreams of a successful retirement can actually become reality.

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

MOT Show 156  22399477   Hindsight is 2021

Seth: Welcome to Money on Tap. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. My name is Seth Krussman.

Ben: And I'm Ben Brayshaw.

Seth: So, if you didn’t know, this is 2021. I think we’ve bounced off the bottom, I think this is as bad as anyone will ever experience in our lifetime. Hindsight is 2021, and we have a whole new set of money rules in 2021. That’s it.

Ben: This is gonna be an interesting show. We’re throwing out the baby with the bathwater on this one. The world has been preaching standard hard and fast rules of how much money you should have on hand, how you should use credit cards, but we have a whole new set of rules to live by, and the world is experiencing that.

Seth: Hopefully, you enjoyed the last few weeks. We took a break. Taking a break meant that there was a lot more work on the front end. If you’ve ever taken a vacation, you have to have yourself all prepped up. It was a ton work getting those nuts and bolts shows put together for you. Hopefully, you enjoyed the best of 2020. It’s hard to believe there was a best of 2020, but there was a ton of shows that we did that were way out of—it gave us an opportunity to introduce different concepts, different ways of working through money, hardships, you name it. It came through, rose to the surface in 2020. I think we’re gonna say having fun in ’21. We’re looking forward and we’re optimistic. I think we have to be in this industry. I don’t know how you can be a pessimist working in finance and towards retirement goals. You have to put on that—even though you’re prepared with 2020. We’re gonna talk about the new rules of 2021. We have an optimistic perspective here. We’re hopeful, we have faith. We come back to trusting God as our source in all of these matters, and that’s the filter that Ben and I operate from, and we’re grateful for that. We’re grateful for you to be here with us today. Hopefully, this time we get to spend together is fruitful. It’s time for MITN. Vanguard Group said it has liquidated it’s holdings of US-sanctioned Chinese companies. I can’t tell you how grateful I am to hear. This is a Bloomberg from Bloomberg News as of Jan 12^th. Basically, the investment advisors sold off its stakes of the affected firms, as of Jan 8^th. What else? These are the companies that have been sanctioned and we have been told get out of China Mobile, China Telecom, China Unicom, Hong Kong. They’re doing it.

Ben: It’s about time that as a country, we make a stand for certain things. No matter what political stand you’re on, there’s something with the Chinese piece that needs to be addressed. I’m glad to see them following this executive order and getting out of them. There’s been a lot of fraud, I don’t think a lot of people know that. I’m thinking of Lucking Coffee, the coffee manufacturer in China. There was a huge amount of fraud inside it. People were psyched about the rise and got taken hard. I think some of the things we trust and believe are being followed in other countries, we can’t take for granted that the US has a very rigid set of investment rules that protect you as an investor. Other countries don’t adhere to that stuff. When you buy inside other countries, they can get away with things you couldn’t get away with in the US, and cause fraud. I’m glad to see these companies taking a big step and doing that.

Seth: Is this unprecedented? I don’t ever remember anything like this happening.

Ben: I don’t either. I guess I wouldn’t know to say it was unprecedented, because I know there are other countries we don’t do—ADR receipts aren’t available to us. I believe there are limitations, but for China, this is a huge step. I think it’s the right direction, I think it’s appropriate because we need to protect investors in the US. China, who have billions of people, they need to adhere to things so that we know when we’re investing, what we’re getting into. They need to adhere to various agreements. Onto our next article, Seth. GM shares hit a record high as auto makers reveal electric fan, and they delve into flying cars. The pictures of the vehicles are interesting, but GM is rolling out an electric van at the end of this year. The Detroit automakers stock was up 8.8% as of Tuesday morning, leading to a 70 billion market cap. It’s previous high was 46. This is interesting, the EVC-600 electric is set to go on sale this year, and it’s called Bright Drop. The division is planning a full portfolio of electric products, including a delivery palette that was unveiled Tuesday. This is a big deal because GM was trying to get involved with Nicolai, and other vehicle manufacturers, and they’re moving forward one way or another.

Seth: I’m excited to see this. The movie iRobot, it was about future world stuff, right? Everybody’s got these robots that take care of everything for them, and there’s this army of robots rolling out. I won’t get into it. I’m totally off the subject, but I love how there’s the futuristic piece, and they’re going for it. It’s something that I’ve never seen before. It’s amazing and I’m really excited that it’s us. What a great pivot for them. The Nicolai motors really took a dive this year, one of the worst investments ever. More will be revealed, but we’re talking about electric vans that do it all. They’re autonomous and they say 2040, and I think it’s probably going to be in the next 5 years. We’re gonna see a rollout of these kinds of vehicles for us. We’ve got Tesla with self-driving cars. I was watching some of my friends drive down to CA and fool the sensors with some clips. They were hands off the steering wheel and letting it go down I-5.

Ben: Morgan Stanley predicted the market to be worth 1.5 trillion by 2040. The flying vehicles can transport people between rooftops and other urban destinations. GM has designed models of both autonomous concepts, but computer renderings were created during the simulations. This is a big deal. This all has to do with 5G. They need the speed of 5G to make this plausible, and they’re trying to push back 5G. Even if it can take a passenger, their goal isn’t to have a passenger. When we talk about technology speeds and the control of this stuff—1.5 trillion could be low, for all I know.

Seth: The term is EVTOL. These are the autonomous, vertical launch aircraft going from top of building and carrying single passengers. We’re gonna hear so much more about this, and pretty exciting to see where this is out. There’s JOEY, Boeing, and Hyundai Motor. I love Hyundai.

Ben: Next on our list, last for MITN here. This is a NYT article, and it’s a topic of conversation these days, and it’s interesting in a lost of ways. The title is lost password lock millionaires out of their big coin fortunes. This is crazy. Nathaniel Pauper comes out with this article talking about all these people who got into Bitcoin a decade ago. One guy said he got paid $7k bitcoin as a joke for some technology he did.

Seth: What’s the value of that? It depends on the day, right? Bitcoin is so volatile. It was valued at an all-time high at $20,000 per Bitcoin, bringing the total of that wallet of—

Ben: $220 million.

Seth: $220 million of that buyout of $7k Bitcoin?

Ben: Yeah. It’s one of those things where this guy lost the password, which is known as the Iron Key. I don’t know much about Bitcoin, I don’t wanna touch it. He can’t access his money at all. Did I have a dollar sign before or after the T? Did I use a number at the end?

Seth: It was actually written on a piece of paper that got lost. He tried all his normal passwords. There’s a period until you can’t access it at all. He’s two attempts away from that happening. The article says that there’s an existing $18.5 billion Bitcoin. $140 billion are lost. These are corporations, and there’s people out there that are dedicated to doing the password recovery as well. That’s a secondary industry that’s been born out of this. It went on to talk about other people who have lost—I think this was the $25 million. His roommate reformatted his laptop that had passwords on it, and that was the $25 million. I think he was doing some mining and now he’s been able to buy his own private island. He bought 100 acres in Barbados. Both of these gentleman that are in these articles have done well because at the end of the day, they continued to get paid for this and operate through these channels. It’s interesting, their solution is to air lock their backup data and put it away. It was ruining them to think abut how much money was there and they couldn’t access it.

Ben: Bitcoin is the largest mover of illegal activity in the world. They were sending people with bank problems to Bitcoin because they didn’t want the bank to go defunct. Bitcoin didn’t require ID, didn’t have anyone else access it, it became the black-market world of stuff. PayPal are involved with it, but they were talking about in Barbados, you couldn’t open a PayPal account. If you don’t use bitcoin for something, it’s just the attraction of bitcoin that makes it go up. It has to have a value, a reason or purpose, it’s not an everyday spending item. I’m still confused long term where this has its play. There’s gonna be something because people have all this money. It’s one of these things where it’s become – you can open a wallet that you can hide money, and nobody knows where it is. People have keys, lose them, and their wealth is gone.

Seth: One of them had to say, one of the lessons learned was that you’re managing your own banking if you’re doing Crypto. You’re on the hook, and you’re responsible for your own banking. Taking that liability yourself, that’s one of the reasons you use the bank, because you want them to have the responsibility of securing, maintaining, and knowing you will have access to that. That’s one of the things we’re blessed with here in the states. Other countries can roll up to the bank, seize assets, do whatever they want.

Ben: That’s gonna do it for us with MITN. We have hindsight is 2021: New Money Rules for you moving forward. Nothing hard and fast.

Seth: You’re listening to MOT; you can reach us at 855-226-8551 or info@yourmoneyontap.com. We’ll be right back.

Ben: For a number of our listeners, you might have a lot of questions. We’re offering Zoominars, which are webinars over Zoom where we have top experts: social security, financial and estate planning experts who you can speak with. We’re also having webinar based Zoominars where we’ll have multiple groups, and you can be apart of that in the new year. Reach us at 855-226-8551 or info@yourmoneyontap.com to schedule your Zoominar.

Seth: Welcome back. You’re listening to MOT. My name’s Seth Krussman and I’m here with Ben Brayshaw. You can reach us at 855-226-8551 or info@yourmoneyontap.com. It’s 2021 and we are taking a look at hindsight is 2021, and new money rules in 2021. This is gonna be fun, because I think we’re gonna take a look at this last year and we’re gonna apply some of what we’ve learned from a season of pandemic, and how can you roll into 2021 having some keys at your disposal? What’s changed, and what’s new, and how are we looking at personal finance differently? Hopefully, it’s helpful. First off, we’re gonna talk about your emergency fund, folks. This is one of those things that we’ve in the past—was 3 months. You wanna have 3 months in the bank in case that rainy day fund, you don’t know what’s gonna happen, makes sense, right? You wanna stay liquid as much as 3 months is possible, but in a pandemic that potentially is a complete change in your industry. Let’s say you own a gym or a restaurant. 2 off the top of my head that are industries that have been significantly affected. Commercial real estate, retail, there’s a lot of industries that have been affected. Maybe you’re part of a company that says we don’t need an outside salesperson anymore, and you don’t have a job today. And you’ve gone without a job for 6 months, 9 months, whatever the time period is, it’s been longer than you anticipated. That 3-month liquid in the bank didn’t cut it. Do we say 6 months now? Do we say if you’re a businessowner and you’re trying to keep that restaurant or gym afloat, maybe we’re looking at closer to 9 months.

Ben: This is a big question. There’s a variety with what’s going on in this world. Who you’re employed, how, what, etc. This isn’t a normal piece. This is I wanna work and the govt won’t let me. This is out of their control. There’s hard working Americans that need help. I’ll drive by and see someone on the side of the road. Sometimes we’ll do something, most of the times I don’t. I sometimes think, why aren’t they working, and why are they taking advantage of me? I don’t know where I got that kind of innate feeling, but now I look at people and they’re like, I can’t work, govt shut down. It’s a real issue. There’s gotta be an organizational way to manage helping people like this. I’ve seen report after report, and I don’t wanna get on a tangent here, but I’ve watched people pleading with the govt open up, demanding it, it’s their freedom, and I agree with all those pieces. I know people are scared and fearful, but if someone wants to be open so they can feed their family and take the risk, we have to let that happen now. That’s the camp I’m in. that gives you perspective of the control our govt has, and all these potential new virus versions aren’t as lethal, supposedly, but catchier. It tells you that your emergency fund 3-month story probably isn’t the right one, even if you’re a stay-at-home IT consultant. If you’re an IT consultant for a car sales company, they’re gonna lay you off because they don’t need people in the car. We just don’t know. People think they have those jobs that will always be necessary, and the truth is, that’s not necessarily the case anymore. How much time is enough? That’s a conversation.

Seth: You work for Intel? That’s at Intel’s discretion, and they’re making moves, they’re making all sorts of changes to stay ahead, because that’s what technology has to do. Nike—those are the 2 big employers here, where we see time and time again, these aren’t recession proof, they’re not pandemic proof. It’s a challenge, I will say it. I get it, it’s a challenge to get to a point where you have 6 months in reserves, or 9 months in reserves. We get it, but that’s a really important factor that we’ve learned this last year and seen so many people challenged through.

Ben: It carries us right to the story.

Seth: #2: Pay with cash whenever possible. I didn’t say that right, did I? Yes I did. It’s always a good idea to avoid accumulating debt. This goes without saying. It’s wise. However, credit cards can offer a ton of benefits, including fraud protection, purchase price protection, and with more people shopping online, credit cards are really the best way to save money and protect purchases. That goes against so much of what we’ve been taught, but this is the way things are today.

Ben: People are like, cash, cash, cash, and that’s been the story of every major financial budgeting guide in the world. With all that’s happening, buying with cash might be that you pay it off quickly on a credit card, that might be the scenario you go with. There’s people who have been scammed financially over this. You can’t see the person, you can’t go to the store, you’re buying on Amazon with a 3^rd party retailer, you got all these different things. You’ve gotta be careful.

Seth: Even just going to the brick and mortars, how many different hacks have there been? Target was one of them in the last year. The nice thing about that is if you’re using that credit card and you’re paying it off, there might be other benefits in there as well. The challenge becomes where that’s the mode people live through and we talk about the pain of handing over that cash, that transaction. There’s the tactile part of that that we respond, the biomechanics of it. It’s a new, learned discipline is what it is. It can protect you.

Ben: This is the next piece. If you’re in a financial hardship, #3 is never having a balance on your credit card. We’re not in a traditional world, and responsible Americans are facing survival, in some circumstances. I would love to think that we could potentially live without a credit card balance, but if that’s what’s keeping a roof on your head, if that’s what’s feeding your children, getting you through this time to survive, you’ve gotta do what you’ve gotta do. The world knows that, and there’s a lot to be said for that, hoping to get past this. There’s people out there that are fighting this emotional, I’ve been taught this, and they’re getting down. The depression and suicide rates are at all-time highs, horrific things happening all over the place. There’s kids in my kids’ classes that have taken their own life. It’s horrible, but that doesn’t even account for the number of adults that have done this. Some of it has to do with feeling like a failure, like I’ve broken something someone told me to do, I can’t do it any other way without being a success. There’s millions of people that lived in poverty and came to success. If that means having a balance on your credit card, through that rule out the door. Don’t feel ashamed or bad about that.

Seth: I’d take that 1 step further where that balance on that credit card has gotten to whatever limit. It’s gotten cut off and you haven’t been able to – let’s say you have a limited resource of whatever income that looks like because life has changed. Making the decision to A) pay that credit card or B) keep the lights on and food on the table? Folks, let it go. Your credit can be recovered. You will have – this is not gonna be permanent, it’s temporary, as all things are. Letting go of that identity that you have perfect credit, and that’s who you are, or that’s what’s important – it hurts, it’s not fun, but it’s what’s important for you to keep yourself and your family and what’s important intact. The credit card companies are gonna be fine. You’ll have a chance to come back at whatever level, whatever time, and be made whole, but that’s a critical mode to go to. This is a survival mode. That’s what we’re talking about, folks. Do what you need to do to survive.

Ben: #4: real estate is always a good investment. This is interesting because there’s a lot of moving parts. We’ve got a number of these things. We’re gonna boogie through these, but is real estate always a good investment? There’s one piece that has to do with life and the quality of life. There’s a lot of people moving out of NYC and moving up to the New England states so they can have a yard and not be trapped in skyscrapers. As for investments, there’s 100-year cycle between 1890 and 1990 that the inflation on US housing was just about 0. Real estate isn’t always a great investment. There’s people who make money in real estate, and there’s people who lose money in real estate. There’s no one in the middle. Owning your own house, your own place to stay, that’s a wonderful thing to have, but you’ve gotta be aware of those scenarios.

Seth: I’d add reference Kira, Kira’s my wife who we’ve had on the show before. We don’t look at the house we live in as an investment. Not in the traditional sense, the investment that we make is in our community, our neighbors, our relationship, the quality of life that we have here, that’s what we’re investing in. We’re investing in memories, time together. If that’s not possible, if that house has you wrung out financially, that’s not a quality of life you wanna have.

Ben: #5, we’ve talked to people about retirement plans, and this would tier for each person very directly to what their needs are. If you have a specific question on this, feel free to give us a call: 855-226-8551. With this pandemic, maxing out your retirement plan, and if you’re trying to make things happen, stop the pressure, stop everything that’s making you feel like you have to do that. For some people, I’d say if you haven’t dropped it down, or you’re thinking about doing that, I’d drop it down to the match, if your company provides that. If you’re struggling to pay your bills, you shouldn’t be worried about your retirement plan. We’ll figure this out another day. Get through this, survive, keep things well enough as is. Some people may be dipping into their retirement plans to address that. We’re not gonna address it today, but if that’s the case, there’s loan privileges, things you can do to mitigate taxes in that scenario. Give us a call on that. We’d be happy to talk with you.

Seth: #6: cash or credit cards. Are these your only payment options? A lot of people are making the mistake of overextending and relying on credit cards to pay for everyday things they need. That happened to a lot of us in 2020. There are some other programs to consider, other than these cash credit. That’s a buy now, pay later option. This has been around for a while, I think. It’s the layaway plan. You buy it, but you have 0 payments for 12 months.

Ben: It’s exactly that, it’s 12, 24, 36 months, maybe 5 years. You get it now and you pay for it later, but this is interesting because there’s 0% interest on a lot of these things. We’ll get you this because you need it, you just have to pay us in 2, 3, 4 years. Buyer beware. I did this with Home Depot, it was 24 months interest free. At the end of 24 months if I hadn’t paid it off in full, not that I hadn’t started paying it. If I hadn’t paid it off in full, it was a backtrack of interest for the entire—

Seth: They charge you a 22% rate for the 24 months.

Ben: Yeah, it was crazy. It wouldn’t charge you from the date you paid it off, but everything before that was atrocious. It’s astronomical how horrible that is. You’ve gotta be aware of that and make sure you don’t get caught.

Seth: You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’re gonna take a quick break. We have a lot of fun doing this show. Ben and I have been financial planners for years. Our goal is to bring you into the room, have these conversations. We think they’re critical for you. We understand this is a limited space. What we’d love to do is open the doors to us so you can experience what it means to have 3D planning in your life. Let’s take a look at all sides of your situation, your scenario, to see how we can put together the best plan for you, taking account your risk. How much do we have to have in the market? How much do we have to set aside for life? That’s what we do as planners, we welcome you to do that with us. You can reach us at 855-226-8551 or info@yourmoneyontap.com. if you have $250k that are investable assets today, our planning is free to you. We want you to have the playbook to have a successful experience in retirement. Give us a call: at 855-226-8551 or info@yourmoneyontap.com. Ben and I welcome you to Brayshaw Financial for complete wealth management. Back to MOT with Ben and Seth. Welcome back, you’re listening to MOT. You can reach us at: at 855-226-8551 or info@yourmoneyontap.com. we are talking about hindsight is 2021. Money rules in 2021. My name’s Seth Krussman and I’m here with Ben Brayshaw. We’re gonna run out of room on this show, of course. Let’s get going on housing costs compared with your budget. How has this changed?

Ben: There’s a statistic that 30% of your budget should be real estate. That’s kind of moved the dial a lot on that recently. People are saying, I spend all my time at the house, I need a place to work, I’m working out of the house, so I need an office. I’m looking for a home where I can get away from my spouse and my kids, in a quiet space, so I need a bigger home. That’s pushed the envelope on that 30% rule. Whether or not you can afford that, I can’t afford not to have that mentally. There’s that piece that’s driving that.

Seth: If you’re self-employed, you’ve gone from the brick and mortar, putting it in your house is another way to look at this. Creating a full budget where you back into the number, you’ve got all of the piece that you’re needing to have your goals met, maybe there’s some retirement planning that you’ve put as a priority in your budget to make sure you’re putting X amount of dollars per month to reach those goals. You’ve got all the other expenses that you know you have. If that works, a reverse engineering of that number, that’s what we’re talking about. Maybe there’s another combo in there, but maybe getting a fuller picture before you say, hey, 30%.

Ben: #8, this is an interesting one. This one here is all about what’s my number? We always talk about the ING commercial, the guy at the bank is asking and the dial is going 2 million, 3 million, 4 million…in one scenario, savings has massively increased in America, Canada is at it’s highest at all time. The credit scores in America have been at an all-time average. There’s people that are saving, saving, saving, they’re not going anywhere, not traveling, not eating out. Their biggest expense is Netflix, cable, and lights. People are saving money, but for the other set of people, you’re not increasing that wealth. One of the things they said to focus on was looking at your general net worth and making sure you’re hitting net worth increases, based on your general assets rather than focusing on your 401k, having a certain amount of dollars at a certain age, forget that. Continue focusing on increasing your wealth if you can. Don’t worry so much that you can’t max out your 401k.

Seth: This one is interesting to me. You don’t invest until you’re debt free. I can’t tell you how many times we sit down and hear that. With the way things are currently, we’ve talked a lot about different kinds of debt, but we haven’t talked about that school debt. How many people are saddled with hundreds of thousands of school debt, or more? It’s like getting out of whatever education you’ve received, that could be north of 100k, you’re talking 20 years of paying that off with 50-60k a year, that’s gonna put you so far behind the curve, in terms of getting your savings and your retirement on track, that doesn’t make sense, folks. There’s debt where we’d say you wanna knock that out before you’re putting money in a different direction. You need to have an investment mindset and understand that this is a different landscape than our parents or older siblings grew up with.

Ben: There’s a lot of people carrying debt that invested during the market drop and saw a lot of growth. We’re not encouraging it, but we’re saying buyer beware. On a less popular side, about the ROTH bailout, number 10. Don’t ever touch your ROTH IRA, let it grow. The ROTH can take out expenses for unreimbursed medical expenses. There’s a lot of people that may have that, especially after this year. It seems to be a hot button for some people. Your ROTH might be a way to garner some funds to offset those medical expenses when you don’t have income, and you don’t wanna pay taxes.

Seth: You can reach us 855-226-8551, or info@yourmoneyontap.com. you’re listening to MOT, and we’re gonna push on to #11. In retirement, be conservative as an investor, right? In retirement, you have to go to bonds, because that’s the way that it’s been done. When bonds actually had interest, they actually paid you to hold bonds today. In this low interest environment, come on! You’ve gotta stay ahead of inflation, number 1. There’s this balance of volatility, and taking an income off of the assets, dropped down is not what you wanna do. Bonds are moving up and down, people don’t realize that. The old rule as you get closer to retirement, shift more towards equities and bonds. It’s been the 80-20 portfolio, is what you should be in your 30s and 40s, and etc. as you get closer to retirement. That’s what the funds have been doing for people. If you’re thinking that fund is setting you up for success, think again. It’s probably not gonna get you as much as you need in terms of returns to stay on track, and not outlive, I think all that’s going into the investment world right now, and what people have thought is the norm, is not anymore. Get some advice, get some help, figure out how that works, because interest rates are all over the place, that’s what we’re here for. #12 as we wrap up our show today is the theme of everything we’ve talked about inside the first 11. You need to be flexible from this point forward. You need to be able to really know what you can do, get some help to figure out where you need to have bandwidth to address concerns, fears. I tell people that all the planning we do is all about fears, concerns, hopes, and wishes. Its’ not about the facts, it’s not about what you know has to happen. You’re concerned you’re gonna lose your job, not get a raise. You need to be flexible. There’s no hard and fast rules. After what the govt’s done, and I would be as aggressive to say overreaching arches of some govt officials in some area. We don’t know what we don’t know is the next piece. This last year has really shown us that, Seth. We need to be more aware of—it may not be peaches and cream from here on out. We may have another massive pandemic, more shutdowns, Biden said we’re gonna have 100 days. Those are things that—if that’s 100 days, what are you gonna do for 100 days if you’re not gonna work? Those are things we have to prep for? I know someone who lost their job and started sewing masks to pay for food. We’re the most ingenious, capable, we are the greatest country on this planet, and God has blessed us. And I’ll tell you that everyone who sees this podcast has the ability to work something out. We can work together for that. If you have ideas for ways people can garner a living in this time period, share the with us. We’d be happy to share them.

Seth: I don’t know what else to say to that. We’re here to help, and in general, we’re all to help. We all wanna see each other succeed, the neighbor to the left or right, that you may not know. Inside of them, they have a desire to see you do well. Reach out for resources, have conversations. Don’t let fear keep you in this box, or shame in this box. Share your experience with others, because it can make a difference in the person that you don’t know. You don’t know what they need to hear today to get them through. We’ve learned so much, and we’ve helped so many people this year that it’s been a blessing for us where we can help you. We appreciate you so much. Don’t be afraid, reach out, have a conversation. Take all of these things and be flexible and understand that you’re an individual, your circumstance is unique, and there’s a way through. You’ve been listening to MOT. We hope and pray you’re finding success in 2021, that you have lessons you can share with us and others in 2021. Make 2021 fun. We look forward to spending more time with you on MOT, BFG. You can reach us at 855-226-8551 or info@yourmoneyontap.com. we’ve enjoyed the show today, been grateful for you for joining us. We thank you for calling us and giving us an opportunity to speak into your life and trusting us. We want to appreciate you for that. Thank you so much, and we want to appreciate you for allowing us to be who we are and have fun with what we do on a daily basis. We’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We can’t wait to make it a great day and a great life with you here on MOT.

SUMMARY

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

I think we can all agree on the fact that 2020 threw us one of the biggest curveballs. Through all the uncertainties, it is easy to lose hope. Ben and Seth outline twelve money rules to keep in 2020, and a few tips on new rules for 2021. This episode of Money on Tap provides clear answers to the questions you may be having about money, especially in what ways to use it.

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

00:00:00 Welcome to money on tap

00:00:15 money on tap your personal finance

00:00:17 headquarters, where we bring out the professionals experience. So fine in what we call three dimensional investing utilizing insurance brokerage and Seabased planning

00:00:26 that's what we do on this show. We look at all sides of the issues. We bring a fully independent planning perspective to the table

00:00:36 Welcome back, you are listening to money on tap. My name's Seth crust. Man and a bit Rasia glad to have you aboard with us today. If you

00:00:45 are wanting to get a hold of us directly. You can reach us at 8 5 5 2 to 6 8 5 5 1 or info at your money. On tap

00:00:54 dot

00:00:56 com and today,

00:00:58 friends, it is going to be part two friends Patriots and countrymen set. Oh, yes, all of those wherever you're at.

00:01:08 However, however, you're listening to us today through the magic of radio or via podcast.

00:01:15 Gosh, it is gonna be a great show and we can't wait to jump in it's gonna be part two of our estate planning show and we have put together 10

00:01:26 we think really some of the most critical pieces

00:01:30 that you want to have available just a conversation about or at least access to understand a little bit more

00:01:38 about what a state planning can do for you and help you along in your financial journey and

00:01:44 ultimately your family as well that's a good thing that's a good thing that we're gonna do that today.

00:01:50 Great, this is a great show. We've already had people. Even ask us about it, which is interesting. We don't get that much feedback that quick, so that's

00:02:00 Yeah

00:02:01 there's definitely a lot of pieces to a state planning and we're not going to be able to cover them all. But I think

00:02:05 we've got 10 points here. We've done five we're going to kind of recap on that. And we'll knock out the next five. But before we get their set we've

00:02:14 got money in the news.

00:02:24 First up

00:02:26 today it's Christmas time right South it's Christmas time. And

00:02:31 everyone is feeling very Christmassy, so much so. That in the Wall Street Journal is an article here by Lucy Kramer, who says that

00:02:40 Christmas trees are going

00:02:42 for more than 2,000 dollars on an eight foot tree. I don't know that I've ever heard of a tree going for that

00:02:49 much, but that's a whole lot of Christmas spirit is what I got to say.

00:02:54 Yeah, no doubt this is amazing. And I don't really do much Christmas shopping in Hong Kong, but apparently you can pay as much as

00:03:05 2,167 dollars for a noble fur in Hong Kong that's an eight foot Noble for

00:03:14 I'd. Be curious to find where they get their trees from, because that's a long way from here. But we grow a lot of noble. First here

00:03:25 I'll sell one. I got a couple I feel so privileged to just live where we do and have access to what we just. The beautiful,

00:03:37 beautiful Northwest loads of trees never have to really worry about it, but, yeah,

00:03:43 where else was there? There was people scrambling to get Christmas trees in North Dakota. Lots were just completely sold out. And

00:03:52 and everybody is

00:03:54 home for the holidays.

00:03:56 The people people are celebrating and they want to be home. They want to have a Christmas tree and they want to pretend covet didn't exist, I mean I'm all there I'm there.

00:04:06 Yeah, you know what's going to be interesting to see it next year. This time.

00:04:11 All of these lots are gonna be just overstocked because everybody's not home for the holidays. Everybody's in Mexico and Bermuda or some place where

00:04:24 they can forget about 20 20 that's going to be the 20 21 session. Oh, I know you're so right set you're so, right? I mean, nobody wants to be home

00:04:34 anymore everybody's like looking for

00:04:38 put anything on our face to go anywhere to do anything other than be at our house. I mean, even my kids, we were talking about it. So we're supposed to get some snow

00:04:47 and we were talking about the fact that they used to love snow days, they used to long for snow days. Right it's just another day at school to

00:05:00 zoom in on this

00:05:02 day, I will say that I feel bad for the kids because

00:05:07 this whole pandemic has ruined probably snow days forever. Because they're just going to slap on zoom and they're going to say, hey, listen we're still having class.

00:05:15 Yeah, it runs nodes forever. I mean, if anyone has a right to be bad.

00:05:21 I

00:05:22 think the kids really have to revolt on this one item because you know what you can't take the snow day away. You can't do that that's

00:05:31 wrong? Yeah, what you're not feeling well today,

00:05:35 okay? Why don't you go ahead and log in on your iPad. You can watch the class instead of watching a movie, you can watch the class

00:05:45 when we were growing up. Gosh that's what we do now is we talk about ourselves as kids and through the snow, barefoot five miles each way up hill.

00:05:55 Yeah, we didn't have cable. We didn't we didn't have

00:06:00 electronics and devices and stuff like that. If you were home sick?

00:06:04 Gosh, Perry Mason. That was what we

00:06:07 ate very

00:06:10 dated horrible old reruns stuff that

00:06:14 daytime TV. That was that was enough to just motivate you to get back to school very

00:06:22 about. Hey, you know what? So my head is like Colombo Paribas in might be before my time. Well, hey, next up here on money in the news we've

00:06:31 got what Yahoo Finance is calling by Ethan Wolf.

00:06:37 Man the worst company of the year. And that is Seth.

00:06:42 No,

00:06:47 not that one no,

00:06:51 no. The Cola Motor company is the worst company of the year. According to Yahoo Finance, I quote who chose the company in a poll.

00:07:00 They receive five times more votes than the second place

00:07:06 company, this company has been ridden with accusations of

00:07:13 fraud. I mean, the CEO has stepped down. I mean there's just one thing after another that has pulled out the whole partnership with them and

00:07:24 what a train wreck. They don't even know if they have anything that they're going to

00:07:28 sell, I mean they've been subpoenaed now. I mean there's all sorts of things going on. They claim they claim

00:07:37 fervently that they are working on

00:07:42 batteries and self sustaining trucks and all sorts of crazy, wonderful ideas,

00:07:50 but it might just be that it might just be an idea. And that's what the big fear is so that's interesting. So I don't know, I don't really know how to do it.

00:08:01 You got a number of these companies out there they're all

00:08:05 they're all claiming

00:08:07 amazing opportunity and what they're going to do and they want to be the next Tesla and they want to be in the S AMP P 500 and everyone's chasing hoping they find it.

00:08:17 The truth is we don't even know what they've got or don't have. And

00:08:21 I don't know I have read so much on the opposite side of this too. In the concern of just the amount of pollution that the batteries from these vehicles are going to

00:08:33 cause I'm really scared about that

00:08:38 there's some really significant evidence that that's a problem

00:08:42 it's not all greener on the other side, even though. Wow, that was a really good in there. That was great, that is great we're going to tag that stuff. Yeah,

00:08:52 hey it's yours it's for fun and for free as a friend of mine.

00:08:59 So this is a thing, I mean, I mean, chasing some of these kind of wild recap

00:09:05 companies that are going to hopefully spike and do tremendously well. I mean that's a dangerous place to be and I think

00:09:12 that kind of segues pretty nicely into our next article, which is from the Wall Street Journal.

00:09:19 Yeah,

00:09:22 we talked about IPOs last week or kind of shed. A little light

00:09:29 on one of the IPOs of last week. I was so last week. I can't even believe a

00:09:36 week since Airbnb and

00:09:39 DoorDash took flight, but there's been a frenzy in the market for

00:09:44 these new stocks. And what was a door dash shot up

00:09:50 86% there was

00:09:53 Airbnb

00:09:56 doubled and what that's caused is actually a couple of

00:10:00 these IPOs that were scheduled to go out this next week, which was what was a video game company. Rob locks Corp and also the

00:10:10 technology company. Affirm holdings they're moving their listings into

00:10:16 January. Part of what they're citing here is they just don't really understand. What's going on in the market right now it's

00:10:25 been wild to at least to see these IPOs just launched like that they're really trying to avoid that kind of

00:10:36 reaction. In the market when they do release their IPO. So it's the opposite of what I would think really would be if I were launching an IPO, I think I'd be

00:10:48 super excited about it. Doubling and shooting up 86% or something like that. But that's not the case for these guys. Yeah

00:10:57 let's look at some simple facts here and I think this is important for our listeners and understanding IPOs and buyer beware is really where I'm leading here because

00:11:09 door

00:11:12 is valued at

00:11:15 56,000,000,000 dollars

00:11:18 that's just shy of General Motors. Okay? I'm saying to myself, DoorDash delivering food,

00:11:27 big as G and that's in my mind, massively

00:11:34 crazy. Now,

00:11:36 Airbnb, which was evaluated be worth about 83,000,000,000 now that's pulled back

00:11:42 since, but

00:11:43 that's more than FedEx who's flying packages all over the world. Now, to me, Airbnb has a more

00:11:52 substantial argument and I would even say that probably has a more substantial argument as

00:11:57 being worth more with covet because people may not want to be in hotels. They might want to have a separate that's been cleaned it's just them. They don't need to worry

00:12:06 about it wearing masks and go to the pool. And

00:12:10 I can see Airbnb being a bigger place in our community worth as much as FedEx.

00:12:16 Maybe not just yet. So there's a lot of speculation in that. But then you get to companies like

00:12:23 snowflake and it's worth over a hundred billion dollars.

00:12:27 I mean, a hundred billion is an enormous number

00:12:32 that's, actually more than Goldman Sachs I

00:12:36 mean, the article goes through this. And, I mean, this comparison is phenomenal it's great for people to realize that

00:12:43 these IPO numbers are not are nothing more than what someone's willing to pay today now,

00:12:50 is this a tech bubble? Boom, gonna bust. I don't know, I mean that's a that's a big potential deal that

00:13:00 I'm honestly concerned of. I think about 20 years ago and the tech bubble bursting and people losing their zillions of dollars that's a big deal.

00:13:11 But at the same time

00:13:13 I listen to see NBC and Fox business and all of these different things. I mean they're talking about tech being the next

00:13:21 development of everything is tech and I don't disagree with that set. I don't disagree that that's a play in it. But I mean, the dot com

00:13:32 bubble maybe back. Maybe that I mean,

00:13:36 listen, the technology companies can continue creating continue building and continue selling. But we may have a

00:13:43 real awareness that it's just not worth a hundred billion dollars. With Snowflake and people might say, I'm not willing to pay that anymore

00:13:51 because their revenues are not going to be there. At the end of the day. Cash flow revenues and profit

00:13:56 is what a company is all about, right? And so if you're not looking at those financials

00:14:02 and you're just buying to buy on that I don't have a problem with people taking some risks. But if you bury all of it into the risk you're gonna get burned

00:14:09 you're gonna get burnt

00:14:11 a

00:14:13 that right there is the

00:14:16 gambling of the investment wheel. That is out there for people that

00:14:22 the Robin Hood investors that are out there. Just like

00:14:27 a day at the casino with this. Right they're just like the next thing I'm just going to throw it at it. And what do you know? It went up and

00:14:37 that I think there's a misunderstanding that you describe very well.

00:14:42 And at the end of the day,

00:14:45 what has to happen in order for a company to

00:14:48 survive and the reality is that those stocks go up and they go down. And if you are

00:14:57 buying somewhere in there, you either make or lose money that's just the way it goes. And so you

00:15:04 do not ever just go

00:15:07 to the mad dash

00:15:08 and

00:15:09 call together what little savings you have and think, you're gonna

00:15:13 win the house wins, right? If you keep doing that. And so there's been a lot of stories out there around investors

00:15:20 that they've just they've lost a lot. This year

00:15:24 anyway it's an unfortunate thing. And I'm glad to see that people

00:15:28 are being cautious,

00:15:31 cautiously, optimistic, right, well you're right. And I think

00:15:36 we have had IPOs in the recent past that have not done as

00:15:41 well. But I think a lot of the things that people aren't spending their money as much. I

00:15:46 think Christmas retail sales will be huge. I mean it'd be online it'll be

00:15:50 heavy because people are home and they want things to do so they're throwing stuff under the Christmas tree, so I think that's be an interesting thing. But like Uber

00:15:59 was a really disappointing launch.

00:16:03 Uber had launched today. It would have skyrocketed would double the triple so, I mean it's over back last year, just

00:16:11 didn't hit the didn't. Really cut the mustard, I guess. And then you look at you. Look at Airbnb and said the article goes into the fact that Airbnbs launch. Okay,

00:16:25 put evaluation of it being worth more

00:16:29 than Marriott Hilton and

00:16:32 hit their market cap. All combined I mean, I got to tell you there's no way

00:16:39 that first of all, it's worth as much as Mario it's no way it's worth as much as Maria Hilton and high at all

00:16:45 combined. I mean it's just you think about all the Marie

00:16:48 hotels and how beautiful they are. And all the stuff is going on I mean, I know a lot of people are Airbnbin but that what are the assets really

00:16:57 it's it's just revenue share. Yeah, so there's not a lot of expenses, I mean, the truth is is they don't have a lot of expenses except for

00:17:07 technological infrastructure in some level. Right? Right it's just a platform and revenue

00:17:13 from a cash flow, I M Mary. It actually has to take care of the properties and everything else. I

00:17:17 mean, all that stuff is burdened on the owner. Of the property that they're putting on IV. So they do have an advantage there.

00:17:23 But market cap of the three of them. I think we're a long way off from that,

00:17:30 but do I think it has a major play long term? Yeah, absolutely sure. Well, one

00:17:37 that was money in the news. That was a lot of fun and you actually you touched on something which was the

00:17:44 retail sales. I did see that November was the first month to pull back in the retail sales world it'll be interesting to see what happens in

00:17:51 December and people just go online. I know what we've been trying to focus on a lot here is

00:17:58 supporting the local business is getting out and doing the shopping that we were trying to do with

00:18:06 those businesses that we want to continue to see survive. And hopefully

00:18:11 that's something that everybody else is thinking and taking into consideration as well as much as Amazon is a wonderful convenience

00:18:17 factor there for us.

00:18:19 But it'll be interesting to see what those numbers look like. You

00:18:22 guys. This has been money in the news you're listening to money on tap. You can reach us at 8 5 5 2 to six. A 5 5 1 or info at your money on tap.

00:18:32 Com, we do take short breaks now and then and we're about to roll into one of those. But before we do

00:18:40 you're not going to want to go anywhere because we have got the final five. The final five of our SD planning show for you

00:18:49 we're going to talk through some of these with you and explain where we're coming from from a planning

00:18:56 perspective with the estate planning world don't go anywhere folks will be right back to listen on my on top.

00:19:02 If you're listening today. And your questions are outside the box of estate planning. Or financial

00:19:08 planning or any number of the pieces that we kind of traditionally talk about don't forget the Brasil financial offers

00:19:14 auto home and business

00:19:16 insurance. And we have an entire department that handles all of that for

00:19:20 you. Give us a call at 8 5 5 2 2 6 8 5 5 1 and be happy. To take care of those needs for you or email us at info at your money on tap.

00:19:30 Com more money on tap. In just a moment. Folks

00:19:35 have a lot of fun doing this

00:19:37 show money on tap and Ben and I have been financial planners for years and years. And our goal here with you is to bring you into the room have the

00:19:48 conversations that we have. We think these are critical conversations for you, but we understand this is a limited

00:19:55 and what we'd love to do is to open the doors to you with us at Bracha Financial Group. So you could

00:20:02 experience what it means to have three dimensional planning in your life

00:20:07 let's take a look at all sides of your situation, your scenario. And see how we can put together the best plan

00:20:16 possible taking into account your

00:20:19 risk, how much can you have in the market? How much do we need to have set aside and doing different things for your

00:20:26 life that's what we do as planners how we engage with you. And we welcome you to do that with us. You can reach us at 8 5 5 to 6 5 5 1 or info at your money on tap.

00:20:38 Com now, if you have 250,000 dollars that are investable assets today, our planning is free to you. We want to to have the PlayBook to have a successful experience in

00:20:53 retirement. Give us a call 8 5 5 2 to six. A 5 5 1 or info at your money on tap. Com Ben and I

00:21:01 welcome you to Barasha financial for complete wealth management. Now back to money on tap with Ben and

00:21:18 welcome back you're listening to money on tap, you can reach us at eight to 6 8 5 5 1 or info at your money on task. Com

00:21:31 we are going to review first of all what we talked about last week, because if you

00:21:38 didn't join us last week, you can go online

00:21:42 and grab us in a podcast and

00:21:45 review with us there, if you want to get a little deeper dive on what the first five of his estate planning Tour looked like.

00:21:52 I gotta work or set that sounds like that sounds like we're going on a trip. I like that are a little journey here. Very estate planning relevant there.

00:22:03 I got the grass is greener on the other side for the Nikola battery story. There being the worst company of 20 20 that was a good one. That was good, that was good

00:22:15 Yeah, you, dude. You were knocking it out today, so I'm gonna. Jump into this review so we can get our show

00:22:23 rolling. We have 10 estate planning items and the first five we covered last week. And I think that

00:22:28 if there's something in this that tickles your interest a little bit. I would sit back and take a listen to that

00:22:35 show and there's a lot of good information. So, even if you're not sure I would probably do that.

00:22:40 But we had a little bit about conversation number one was about rethinking your IRAs and understanding how IRAs work in your estate. And

00:22:51 and we push through conversations about how distributions work and a 10 year rule that has now been put in place, which means you have

00:22:58 to distribute your IRAs over 10 years to your beneficiaries that are not your spouse and we also talked a lot about Roth conversions and how that may or may not play

00:23:09 into an option.

00:23:11 So that's something that

00:23:13 we need to look at I need to consider because there have been rule changes around that

00:23:19 number two. So if you want to take that, yeah, sure, yeah, so basically gift gifting today,

00:23:27 several strategies around this. And so we just wanted to highlight that. There is a gift exemption here and

00:23:36 you can basically gift forward. What you were planning to gift after you pass

00:23:42 away and a couple of the exceptions, there was the 15,000 annually per

00:23:48 person. And what was at the 75,000 to the 5 29 kind of a five year front gifting strategy

00:23:57 there. And the 150 married basically to one

00:24:04 beneficiary. That was that clear what I was saying there. I think so I think so I have questions. Give us a call. Give us a call at five to 6 8 5 5

00:24:15 1 give tax exemption. We talked a little bit about that and right now you can do 11.5 8,000,000 each and husband and wife such over 23,000,000 dollars.

00:24:27 That is something that I think we are kind of an agreement there's a lot of people out there that I agree with that. That will be lowered. How much

00:24:34 lower I've heard everything from five to 7,000,000

00:24:38 well, back to the 2.3 or five that used to be.

00:24:43 So that changes a lot depending on how you're doing your planning. And

00:24:47 then number four

00:24:50 was we talked a lot about irrevocable trust. Which are the trust you can

00:24:55 undo? And we spent quite a bit of time working on that.

00:24:59 And that's really, really important. And anything that's part of the show you want to go back to listen to. Because we talked about Slat trust

00:25:07 sat and we talked about protecting assets from

00:25:11 creditors, which is always a big deal. And that includes

00:25:14 if you're doing Medicaid planning looking at your vocal trust and how that may or may not be

00:25:19 a spot for you, we would highly encourage you to speak with an attorney about that as Seth and I are not

00:25:25 attorneys. But that is definitely a huge piece of the practice that we work with attorneys on

00:25:32 number five, yeah, the unused deceased spouse exemption carry forward.

00:25:40 That

00:25:43 was basically the bypass.

00:25:46 The need for a portable exemption is what we brought that back into and you might be

00:25:52 better off preserving assets for errors with a bypass trust similar to the slot. Except it's

00:25:58 funded at the spaces first step. And the second spouse retains limited access to the funds inside the

00:26:04 trust with expenses for health, education, maintenance and support. Generally as approved

00:26:11 that was that

00:26:12 very good, very good. So let's knock out number six here. So

00:26:20 we talked about a lot of trust and we're going to go into what we call an asset protection trust and this

00:26:26 is a different kind of trust

00:26:30 it's new

00:26:31 it's irrevocable it's one where you're going to put your assets into the trust

00:26:37 primarily safeguard from creditors. Both now and in the future. Now, New Hampshire is a very well known asset protection trust state

00:26:46 it's. Actually, one of the reasons why we have so many attorneys in the state and all of the pieces that it

00:26:52 does what's interesting about an asset protection trust is that you can put your assets in there and have someone else

00:26:59 manage those assets for you. Pay your bills, etc, etc. And as long as you open this trust and there's all sorts

00:27:08 of issues around this. But as long as you open this trust in good faith and you don't expect that someone's coming after you for something. Or you haven't done

00:27:15 anything prior that you would have

00:27:18 known. That would have caused problems. I mean, you can put your money in assets in there and they can't literally the next day, sue, you for

00:27:24 anything. If you truly went into that in all good

00:27:27 faith, it does have a five year waiting period as well, generally, so if you didn't know you did something wrong or you didn't know you were going to get

00:27:36 sued you'd have to get past the five year period on that asset protection trust and those are things that we have a number of attorneys who work in this area that

00:27:45 that you could talk to. If you want to get deeper dive in that.

00:27:49 So if you are fortunate enough to live in a state where

00:27:55 these trusts are basically funded and created and

00:27:59 funded that's great. But you don't have to that's one of the things that people just need to understand around trust as you can live anywhere and have a trust created

00:28:09 any state by

00:28:11 attorney, that does that. So you're not limited by where you live. But one of the things that you can do with the irrevocable self subtle

00:28:20 trust. You can be the beneficiary of that trust as well. So it's an interesting

00:28:26 it's a really interesting dynamic that you kind of are giving away

00:28:32 to this irrevocable trust

00:28:35 something that you once had more fluid control over with some constraints.

00:28:41 But the method works

00:28:45 that's one of the ways to protect the

00:28:47 assets. This is basically as close as you get to put money in the Cayman Islands,

00:28:53 this is as close as you can get without going there. So it's a pretty aggressive

00:29:00 scenario. A lot of people put

00:29:01 paid off assets. Like if you paid your house off, you might slide it over there. You basically would make contribution. You can still

00:29:10 pay various expenses and stuff. And I usually go through the trust. But you know, again, talk to you.

00:29:16 Attorneys are this is a very intricate process. And actually in honestly, a very popular that's used all over the place. So

00:29:25 we're on to the revocable trust. Because we've certainly spend a fair amount of time talking about the irrevocable trust, why wouldn't we talk about the revocable

00:29:35 trust. And it is kind of an

00:29:40 interesting note that there's more of the revocable trusts that are sold. Then

00:29:48 bought and some people might even think of that kind of like an annuity.

00:29:53 They have been a blanket strategy for avoiding probate and cutting taxes.

00:29:59 But the revocable piece really renders them ineligible for a lot of the state tax strategies that we've been talking about. But it

00:30:12 can't accomplish the goal first and foremost of bypassing

00:30:18 probate and depending on what state you're in probate looks very different from state to state.

00:30:26 It can be one of the simple ways to just especially with Covin

00:30:31 people not getting appointed to the

00:30:33 estates through the

00:30:34 process or getting powers of attorney. Just the courts have been backed up. This has been one of those

00:30:40 places where the attorneys that we've been talking to have been using them to just really help families manage the

00:30:48 assets. Yeah,

00:30:52 unless the biggest issue here is just avoiding probate I mean that's the number one reason why people do revocable trust. The second piece of this is that it

00:31:03 does give you the ability to say

00:31:06 Johnny and, Susie, you get at this. And this is how it works. And I'm going to spread this out over your lifetime.

00:31:11 Or I mean, you create all sorts of things but you can also do that in a will. And you can actually the will. You can actually invoke that a trust happens

00:31:20 on your death. Now, once you do die, that revocable trust does turn to become

00:31:27 irrevocable it can't be

00:31:28 changed. So it's only revocable and changeable. While you're alive and that's important to understand, because if you do put something in place and all of a sudden

00:31:37 you're gone. And then you didn't realize that hey, listen, I didn't understand that this is not going to be changeable

00:31:43 and Johnny's got to take this money out over the next X number of years of his life

00:31:48 and there's only a thousand dollars in the account that's gonna be a burden. Something because you're going to have

00:31:55 all sorts of trust, filing stuff and so forth. So you

00:31:59 can get yourself and your family into a pickle, too. So you need to really get some good legal advice on how that revocable becomes your vocal. Because I've seen

00:32:10 people do things in the best intentions. And then they talk to their attorney up I've got it all set up. This is what we're doing. And all of a sudden at the end of the

00:32:19 day they got to figure out how to deal with that either go to the

00:32:23 go to a judge and say, hey, listen, this is well intended, but there's no money in this thing, very little.

00:32:32 No it's a financial burden to keep it open. This work that they have to do to deal with that stuff and that's a burden in its own right to

00:32:39 so you don't want to leave people with a trust to have to file taxes on every year

00:32:45 trust have really bad tax rates,

00:32:49 really bad tax rates.

00:32:51 They do I like this idea here too

00:32:57 around. How do they help

00:33:00 that manage the assets if there's health issues because it's a lot

00:33:05 easier for you to have a success or trust take charge of the assets than it is to have an agent under power of attorney and a lot can save a lot

00:33:14 a money that way as well. But having a separate tax identification number can help avoid scams on

00:33:23 seniors and that is one of the big things that we just have coming through our office

00:33:29 I'm trying to think of how many phone calls have I have I just not taken because I immediately recognize that it's some kind of a scam out there that people are

00:33:39 getting quite good at and talking with our clients. On a regular basis just to make sure that they are aware of what some of these scams

00:33:49 are and not answering the phone or not. Giving out information

00:33:53 in anyways, yeah, protecting protecting our loved ones that's what this is all about,

00:33:58 you know, the camping is crazy. I honestly had somebody who was scammed twice in a row

00:34:04 poor guy. I

00:34:06 I don't know. I don't know how he got hacked twice, but they got literally within a month. They ended up getting hit twice

00:34:16 it's out there it's painful and it's a real issue. So I always tell people if you get

00:34:23 something at all that you think maybe might be real, but you have a question, Mark. It all in your mind.

00:34:31 Give us a call that's what? I tell my clients all the time. Like, just give me a call. It's not worth clicking on it

00:34:36 because someone says you owe me money and I am and I'm going to sue you because you didn't pay me

00:34:42 it's like okay, well, let them see you, okay?

00:34:46 Because if you owe them the money, we would just get a paid and they would walk away. The lawsuit would be over and you wouldn't even need an

00:34:53 attorney there's no reason for you to worry about those emails. And

00:34:58 it is like, how do I miss something? Something happened in that natural inclination is a good person to want to act on that

00:35:07 don't don't act on it. Make him send a sheriff to your door with a

00:35:11 subpoena okay, saying you owe me money. That that's much more worth it. And a lot less costly, actually for you, then

00:35:20 dealing with all the aftermath of it. So, if you're listening today someone's demanding you pay them this out of the other thing. Make them come, get you folks.

00:35:31 That was beautiful, I love it. You

00:35:34 don't have to push the button. You don't have to do anything today, but it would be

00:35:38 wonderful. If you just pick up the phone and give us quality five to 6 5 1 or info at your money on tap. Com

00:35:45 we want to make sure that you're taking care of and that's your

00:35:48 you're protected in those ways we're gonna take a quick break

00:35:53 we're going to come back. And we have three

00:35:56 more of our estate

00:35:58 planning keys on the tour of estate planning. With us here in money on depth, you can reach a five to 6 8 5 5 1 or info at your money on tap. Com we'll be right back

00:36:12 for a number of our listeners. They have a lot of questions and you might be one of them today we're just offering

00:36:18 what we call Zuma. ARS webinars over zoom meeting rooms where we

00:36:23 have top experts, social security, estate planning and financial planning experts for you to speak with. Do a private

00:36:33 consultation that way

00:36:34 today we're also having webinar based seminars where we're going to have multiple groups where you can be part of that and enjoy that as

00:36:40 well. Coming up here in the new year, give us a call at 8 5 5 to 6 8 5 5 1 or email us at info at your money on tap. Com to schedule your

00:36:53 seminar more money on tap in just a moment.

00:36:56 Then how often do we have? Somebody come in to the office and they don't have a financial plan and how critical is it for us to put the pieces together

00:37:06 and make sure that their future their

00:37:10 retirement is a successful experience. We talk about it all the time here are money on tap. If that's

00:37:15 you give us a call at 8 5 5 2 to 6 8 5 5 1 or info at your money on tap. Com whether you have a hundred thousand 500,000 5,000,000

00:37:26 look, folks, we have the right planner for you whether it's been or myself South Crossman we're here for you to get the plan together. And make sure that that next step

00:37:38 right now back to money on tap with Ben and sat.

00:37:45 Welcome back you're listening to money on tap, you can reach a diet 6 8 5 5 1 or info at your money on tap. Com,

00:37:54 we have been taking a tour of estate

00:37:57 planning. These are the things that we've felt are really important for you to be considering. Then thinking about so many different ways to

00:38:08 have your wishes taken care of avoid taxes

00:38:13 avoid, really a lot of different techniques to take control of the assets and make sure that

00:38:20 a lot of the time we're just talking about making sure the taxes are not

00:38:25 coming in and creditors aren't coming in and taking over your assets that you've worked so hard for. And the next the next piece

00:38:35 that

00:38:36 probably is the least fun of any of them for us to talk

00:38:41 about. But so critical for especially if we're talking about someone dying here, how much worse could I get? Oh, I

00:38:50 forget. I forget that happens and we do talk about that. This is a

00:38:57 Medicaid trust.

00:38:59 A special needs trust is what we've got a long term care event happening and draining the assets.

00:39:08 The other survivor

00:39:11 and basically impoverishing a family through the process of long term care and how to plan

00:39:19 through an event. This is this is what you want to take. Pay attention to folks. Yeah, you know,

00:39:25 this is a big conversation in a lot of ways and involves a lot of detail way outside of just the one point of the 10 that this

00:39:34 is. And I want to say that because I think people need to know that if you want to do Medicaid

00:39:39 planning, it is a very detailed, very strategic and very intentional thing to do

00:39:46 but creating creating trust creating irrevocable trust and special needs trust. And all of that or important plays for people who don't have enough money to self insure

00:39:59 they don't have enough money to buy long term character,

00:40:05 but they have a real intention to try to leave whatever they can to their family or their children. Or

00:40:11 a child who really needs it. And one of the things

00:40:15 that I've been involved with was doing a Medicaid trust. Because the family didn't have very much

00:40:22 and they really had one child who was special needs as

00:40:26 well that they wanted to make sure that there was something in that trust for when they passed on that is a big deal. And that is a big concern

00:40:34 for many more families that we articulate in our communities. I mean there's a lot of people who have

00:40:41 children or grandchildren who have special needs? And some of them may not be

00:40:45 really that apparent set. I mean, I think about people

00:40:48 who have children you wouldn't even know how special needs but they do and they have trouble maintaining a job or whatever because of various

00:40:56 scenarios or even a financial position. That would help them meet there financial need. Should that family ever pass and that's a big

00:41:05 deal. So there's kind of a two prong approach. You get Medicaid planning you've got special needs planning. But you also might have special needs planning

00:41:14 inside your spouse. Your spouse might have a special

00:41:17 need and you need to make sure that there's enough money for them to survive after you pass away. If something happens to you first.

00:41:25 Man these are some big questions and I think this is an area that requires a whole lot of delicacy both emotionally

00:41:35 in time. And with an attorney to work through this in a financial planner that will help

00:41:42 mitigate and manage the financial assets in a way that can articulate that. Because there's some assets. You can't put into a trust. And

00:41:50 that causes a problem without creating maybe even taxes and that specifically speaking is IRAs that's a hard thing to deal with.

00:42:00 But Medicaid planning and building a trust is really just the five year look back, I mean it's building in your vocal trust that you can't

00:42:07 change and surviving for five years.

00:42:11 In a way that you don't have to ask the state for funds

00:42:16 and then after five years you could apply in whatever asset you have depending on the state rules there's a certain amount

00:42:22 of money that the husband can have there's a certain amount of money that

00:42:26 the wife can have and depending on who's ill that's a

00:42:29 different number. So, like, for instance, in some states, it might be a hundred thousand that the healthy spouse can have in only two or 3 or four or

00:42:35 5,000 dollars. Is that the unhealthy spouse can have and then sometimes

00:42:41 there's a life estate on living in the primary residence for one of the

00:42:45 spouses. Some states will put a lien. Some states won't put a lean on that house. They usually allow you to keep one vehicle and

00:42:53 they will evaluate how much money is coming in from Social

00:42:56 Security in the various pensions and whatever you have and they'll tell you how much you get to keep as a healthy spouse to pay your bills.

00:43:04 Those are some very restrictive scenarios

00:43:07 and you

00:43:08 create a Medicaid trust to get as much

00:43:11 much assets in there and protect as much as you can. And know what the other reciprocating laws are that you can actually survive a lot of

00:43:19 stuff next. This is actually one of my favorites

00:43:23 let's clean it up, folks. Now, once you've gotten your planning right? And everything's good and

00:43:31 that event happens. I think this is where the pieces is like how's that next step happen. I did this Medicaid trust. I survived the five years me or my wife,

00:43:40 my husband or whatever the scenario is one of us gets sick.

00:43:45 Then what you do is you go through the Medicaid process. And the Medicaid process is contacting the

00:43:50 state getting the application for

00:43:52 Medicaid. Now they're going to tell you these are the exact numbers. This is what you can have

00:43:57 the rules and the laws may have changed by the date and time in which you're making the application? So let's say at the time you were able to have

00:44:06 10,000 dollars

00:44:07 in the bank or your IRA is the healthy spouse. And now they've

00:44:11 lowered it to a hundred thousand. Well they're going to tell you you're going to need to spend that 10,000 dollars and

00:44:17 you're going

00:44:19 to spend that down and that's going to be part of your application process and you're going to have to keep a record of how you spent that

00:44:24 money they're going to look at bank statements they're going to go back into the past. I got to look at the different

00:44:28 pieces of how you've spent your money and they're going to go back as long as five years. And they won't be able to

00:44:34 see that you move that money to a Medicaid trust, but you're going to have to do that I

00:44:39 process now you can hire an attorney to do that and I do highly recommend

00:44:43 that and I would probably recommend that you hire the attorney. You did the Medicaid

00:44:47 trust through because they they're going to stand by their planning they're going to fill it out the way they planned everything to do

00:44:54 and that's the piece that you're really going to want to make sure is done

00:44:59 seamlessly that you bring it all together that way. I would say that just because you feel like you've been impoverished

00:45:05 don't be too cheap here. This is where

00:45:08 you've done all this

00:45:10 planning? Now,

00:45:10 this is the stage you're going to perform on. And you want to make sure the attorney is doing this work and that's what I highly encourage it? Because some people

00:45:17 say, well, I don't have any money theoretically, so I'm good. I'm just going to fill this stuff out. It's only a few pages of information, etc, etc, and it's like,

00:45:25 no don't make any mistakes

00:45:27 don't screw something up here and it's hard to. But it's worth getting it done, right, and there might be things that they're doing planning wise.

00:45:35 Some have used annuities or different types of investment vehicles to hide assets to so you want to make sure

00:45:41 that you're not filling out something wrong and creating problems for refiling.

00:45:46 So I think that's where I leave. All of that at St. That was really critical information, Ben. And I appreciate you really taking the time to go through that

00:45:54 process and understand it as well as you do.

00:45:59 If you have a question about any of that. Give us a call at 8 5 5 2 2 6 8 5 5 1 or info at your money on tap.

00:46:11 Com and get your questions answered. Because there's a lot more to

00:46:18 everything that we're talking about today and it's important to have the correct information for you. And that changes from person to person. So this is a great

00:46:31 introduction let's have a bigger conversation about that. And we that's what we're here for you can reach us at 5 2 to 6 8 5 5 1 or info at your money on tap.

00:46:42 Com this next one. This is one that I love because I just get so many stories around this and it's the consolidation of your assets. Okay

00:46:52 let's just clean it up, folks. You know we've got the brokerage account over here. That you had with fidelity you've got your

00:47:02 stock account over there because you had a broker in the

00:47:06 19 that you bought some

00:47:09 stock from. And, you know, what you've just got these things all over the place? And I love seeing the

00:47:17 the paper bag. Come in with just statements from everywhere. And so many times when we're sitting down and we're just cleaning things up and

00:47:28 consolidating there's going to be a lot of benefits to this you're going to be able to get organized you're going to list your assets

00:47:35 out we're going to pull everything together and we're gonna get the big

00:47:39 picture and where all these pieces fit together. Now, one of the other benefits of this is too. Is

00:47:45 that when you consolidate because the relationship grows because there's everything in one

00:47:53 place. You get discounts folks

00:47:56 that's the way it works is the bill gets less and less on the cost of the management of those pieces because the size of the relationship at one location is

00:48:08 it's larger. Same thing happens whenever you are at the bank. Right

00:48:13 you get a better interest rate for the more money you

00:48:16 have in that savings account. Usually anyways that's one of the benefits here too. And we've got so many really unique and nice tools here with us

00:48:27 on our clients.

00:48:29 Supported through this process. To be able to have a digital

00:48:33 file on hand at any time for your advance

00:48:38 directives. Any of any of these estate plans and wills that you

00:48:43 have there's the safe deposit box that maybe there's a couple of paper copies of some stock that you were

00:48:54 we've seen it

00:48:56 all for us. The paper stock certificate I want to jump off of.

00:49:01 I have people who man. If you have paper stock certificates, get them in a regular brokerage

00:49:07 account. Get him out of your name and what we call street form in a brokerage account. Because if you so with paper stock

00:49:14 certificates, I got to tell you I did. I did a state case

00:49:18 10 15 years

00:49:21 ago. I mean, this person. I mean, it was like I had almost three inches thick of

00:49:28 paperwork for moving stock certificates. And if we're talking millions of dollars that it turned out to be. But the person had refused.

00:49:35 The client had to go through. Honestly, a horrible experience of getting

00:49:40 appointed as trustee that documents had to be within a certain days old. It couldn't be more than 20 days old appointed for the

00:49:47 court. It was we had a FedEx is stuff all over the place. It was a nightmare. And that poor guy, I felt I felt bad for him. I mean, yeah, he was inheriting a lot money,

00:49:56 but it was so stress left or losing his mother. That was it was something he just didn't want to deal with it. And I'll tell you don't be that scenario,

00:50:04 please? Yeah, no we're going to try to avoid that. So when we get organized, one of the things that we're going to have is we're going to have a digital copy of the assets.

00:50:15 Okay? And you're gonna get this on a computer and you're going to back it up. OK, so that's a redundancy is what we call that

00:50:26 it's taking that next step because we don't

00:50:30 necessarily trust that the computer is going to last. I don't know till tomorrow. It seems like they did

00:50:37 don't so if you can actually get an external hard drive and back all of that information

00:50:42 up and that's what you want to go ahead and put into that safe deposit box. Not the paper copy of the stocks.

00:50:50 With our online system, we have

00:50:54 an

00:50:55 encrypted vault. We call it where you put your information and we have that for our clients that they can use as well and that's also very helpful for that.

00:51:03 Well let's wrap this thing up with number 10 and this is probably the easiest

00:51:07 I always recommend set people hire professionals to service of trustee. If they can afford

00:51:13 it

00:51:15 it's just a huge, it just saves so much time and energy from the family it's just a good choice.

00:51:23 Yeah, I

00:51:24 kind of cringe when people say that they haven't and they could

00:51:30 it's an emotional it just kills the emotional scenarios that are involved in a state issue it's an amazing

00:51:36 scenario. I actually had a call today. A client had asked me about being an

00:51:41 for their family because he was struggling. Choosing a child I said. Well, I really am honored by your

00:51:47 trust in me. But unfortunately, legally, I can't serve as that. And

00:51:52 he was just like I don't know what to do. I've got kids and I don't know which one to do my best recommendation and it wasn't a

00:51:59 scenario. We talked about attorney and this that and the other thing.

00:52:04 But it was the size enough that would justify it what he was trying to accomplish and what he's doing

00:52:11 and my advice to him and I'm going to give this advice out there was

00:52:15 I don't believe you choose the oldest. I don't believe you choose the youngest. No, I don't believe you choose the person with the best financial smart or the person

00:52:21 who is the best book keeper or

00:52:25 intellectual. I truly believe you choose the person with the best heart

00:52:29 and that's what I said to him I said I would go with a person that has the biggest

00:52:34 heart of all your family who doesn't have the concerns necessarily one way or another? And that will

00:52:40 carry out your wishes. As best you possibly can. And even if you have an issue with them today or they're not the person you're talking to. But if you know that

00:52:49 someone told me one time when the hearts right, it

00:52:52 works. People make mistakes all the time. But when the heart's really right there, you can coach and you can teach and you can work through that stuff

00:53:01 if the heart's not right, it doesn't matter how much coaching your teaching you. You do it doesn't work. And so that's my advice to people who if you're looking at

00:53:10 a family member that because if the heart right is going to be less conflict. If the hearts right the money in the assets are going to move

00:53:17 correctly. If the heart's right, it will get done the way you wanted it to. Yeah, I think it's

00:53:21 also important to have those conversations ahead of time. So people understand well,

00:53:28 your wishes and why

00:53:31 and the more the more clear. And the more clarity there is the better things work that I think that's just a fact of life, no matter

00:53:43 what challenges we face. So you guys.

00:53:47 And do you have anything else? Is that it no that's it. So this is a good show. I hope everyone got as much out of it as even refreshing. My

00:53:56 learning on a few of these things I had to update on, which is

00:54:00 great. Hey, I always remembered reminded that we had a couple of shows within 20

00:54:06 we've had some of the tunes

00:54:08 jump on air with us and they do great work and we also appreciate them for

00:54:13 their input on the show here with us. We appreciate you guys. So much for jumping in here with us and tackle. Tough subjects like

00:54:21 this, you can reach us at 8 5 5 2 2 6 8 5 5 1 or info at your money on tap. Com

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00:54:38 investing and Twitter at

00:54:41 CFG underscore

00:54:43 LLC. We appreciate you joining us here

00:54:45 today and we hope you make it a great day and great life. Thanks for joining us with money on

00:54:51 top. The views expressed are not necessarily the opinion of this radio station and should not be construed directly or

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00:55:56 well,

00:55:58 bye.

00:00:00 Welcome to money on tap

00:00:15 money on tap your personal finance

00:00:17 headquarters, where we bring out the professionals experience. Some fine in what we call three dimensional investing utilizing insurance brokerage and Seabased planning

00:00:26 that's what we do on this show. We look at all sides of the issues. We bring a fully independent planning perspective to the table

00:00:36 Welcome back, you are listening to money on tap. My name's Seth Crossman. I be

00:00:41 Bracha you can reach us 8 5 5 to 6 5 5 1 or info at your money on

00:00:49 tap. Com and we are getting close to a wrap on 20 20

00:00:58 and it has been

00:01:00 what a year I got to tell you that if I had 20 20 on this year, I just would have taken a coma pills.

00:01:10 I don't know how many people have had that year where they've just taken that extra long winter's nap and kind of sailed it right on through and the

00:01:20 one or wish they could have. Is that what you're referring too

00:01:24 bad I'm just saying that this is nothing short of horrendous. So my 20 20 on this year is don't do it again. I am ended that

00:01:34 me to completely

00:01:37 appreciate where you're coming from and

00:01:39 it's a joy to be with you today, though. And it's a pleasure to be it's. A joy to be with you today, so you too. And that's what you mean that wasn't directed at me?

00:01:48 I don't

00:01:49 appreciate the fact that you weren't enjoying being with me and I actually reiterated that I thought I was responding to your statement.

00:01:55 I'm kind of heart here I'm speechless and

00:01:59 I give you. I give you the show of a lifetime today, so so

00:02:06 about I'm about to push another. This is going into my 20 20 calculator right now. And I just

00:02:14 sat back that we get back, you know, you probably had some great plans out there for 20 20

00:02:22 and here's. One of the things that a lessons that we learn is that plans

00:02:28 change they are moving targets and they are a lot of fun to put together. But

00:02:35 you just can't depend on those things right. Who knows that better than a couple planners sitting here on this radio here and

00:02:42 knocking out all the different variables that you have to do in life. I mean, when it comes to 20 20 you think about. I remember the new year

00:02:51 thinking to myself, 20 time is going to be a great year. A great number great year. I just remember, having all sorts of positive thoughts about 20 20

00:03:01 I don't have those thoughts

00:03:03 anymore. Those are all wiped away quickly sometime around April. Preceded by all the following months afterwards, and now I have a little PTSD when I think a 20 20

00:03:16 you know, I'm kind of hoping that 20 21 might be

00:03:19 better. But it's not gonna be hard. Like, I don't have any big

00:03:22 aspirations. But I pretty much figure. We should be able to be better than what 20 20 was which is sad, but as

00:03:29 planners, we have to be prepared for variables like pandemics.

00:03:33 And I was going to say I actually had a direction of where I was going to go with that. But that was I appreciate

00:03:39 what you were saying there, Ben and I'm with you. So the plans change, but the planning work is indispensable

00:03:47 to come back to. Because if you had a plan coming into 20 20

00:03:51 if you done ahead of time,

00:03:54 even though you probably didn't have pandemic on your list of things to account for the work that you did ahead of time. Prepared you to

00:04:06 have a course correction. If you needed it and be able to make that first of all, if you had pandemic on your list or any money going into the

00:04:14 air. You might, though. You would have been incorrect might need to look at the optimistic pill.

00:04:21 Yeah, very good, very good. You reminded me of something that was

00:04:27 Memes of 20 20 and I'm sure everybody's got one out there, I think my favorite one was 20 20 where we learned that

00:04:36 the baby Shark

00:04:37 song that at least our kids. I don't know if you have young kids or not, but we've got little ones. And

00:04:42 that was one of their favorite songs coming into 20 20 was this baby Shark went on Alexa regularly and

00:04:51 I opened up a open up a portal to a parallel universe of disaster

00:04:58 that we haven't heard Baby Shark for a long time. And thank you Jesus for that

00:05:06 don't do it, folks that's what I got to say. We do have a fun show.

00:05:13 No

00:05:15 it's not going to be what it's not going to be the show on the

00:05:18 market it's not going to be the tax show we've already done those. We could do another market. So we've got some fun things to bring in about

00:05:25 that. But this is going to be the show for you.

00:05:30 That covers estate planning. This is some stuff like

00:05:35 that. Like, do we just do clever to be clever now. But we do make

00:05:42 really appropriate moves when it comes to a state planning and there's some different things that you can be thinking about through your planning in your estate

00:05:50 planning to take into consideration. And what are some of the top ones that bed and I have put together here for you

00:05:56 today. It likely is going to be a couple of shows because it is a deeper dive.

00:06:03 This Twopart series is going to be. I think a solid base to ask the right questions I'm actually I'm actually happy we're doing this. I think it's an appropriate time.

00:06:11 Because with the end of 20 20 right in your face, you might need to make some estate planning moves and some of these might trigger some ideas and thoughts.

00:06:19 And I think we were going to try to do it in one show, it just way too much information. And honestly, we even cut some stuff out. Just was too much, but, yeah, we

00:06:30 have 10 estate planning opportunities for you today? Five of which we're going to go through?

00:06:35 Up next, though, before we jump into the estate planning stuff, we have money in the news

00:06:49 first off folks. The Christmas star will be the closest visible

00:06:56 conjunction of Jupiter and Saturn in

00:06:59 800 years. Now that doesn't sound a whole lot like money in the news for us but we couldn't we couldn't miss this

00:07:07 event and it is the season, right? We used to throw it out there I

00:07:11 lost the best. This one here, folks. This is no money to do is but Seth wanted to do it. So I gave I gave. So what is it it's winter as December 20 first and 20 20

00:07:23 and it's. Actually a couple of days

00:07:25 that we're going to have this conjunction of 20 and it will be the two giants of Jupiter and Saturn they're going to converge as far as what we can see

00:07:39 it's known by some astronomers as the Christmas Star. Because this belief that the biblical tale of the star of

00:07:46 Bethlehem could have been a planetary conjunction.

00:07:50 Although 2,000 years ago in Venus and

00:07:52 Jupiter were the closest and not Jupiter and Saturn, as is the case of the Christmas star of

00:07:59 20 so to break it down, this could not have been the Christmas Star. But they could

00:08:05 not have, but we're going to call it that this year because it's 20 20 and guess what? Unless you're going to stick around for another 800

00:08:12 years you might want to take a look if you're looking for your

00:08:16 astrological information. Contact set at 8 5 5 2 2 6 8 5 5 1 we're gonna leave it at that.

00:08:22 Yeah, because this is gonna be about as the extent of my knowledge or information moving forward. Other than you know, I'll point you in the direction,

00:08:29 so this is a good article. I mean, it is interesting it's supposed to be brighter during this time of year because of this. So

00:08:35 that's positive I guess, but they said this will be the first time in what 800 years? A planetary system will be

00:08:44 visible by the naked eye which is interesting. I mean that is pretty cool, so we'll see we'll see what happens probably will probably be overcast

00:08:53 and that's my 20 20 thinking. Sorry, go ahead. So what I didn't do is I didn't talk to you about the comet this last summer.

00:09:01 So but you wanted to? And I remember you wanted to. So I wanted to go check it out. And I never got there and is likely the case with this because

00:09:11 it's a little bit of a glimpse you got to look in the western sky and in the Portland Oregon

00:09:16 area that Western sky might be a little bit of cloud cover during those days that be

00:09:21 18 through the 20 first, ish and it's like, right after dusk, I think is when you got that window. So a door door in the news. If you didn't know

00:09:34 this is a Wall Street Journal article. That is about how door pulled ahead in the food delivery war. And I didn't know there was a

00:09:44 war. I didn't either I thought we pulled all our troops out.

00:09:49 Yeah, yeah, no. Thank you all for doing that, though. By the way Trump's been pulling out troops everywhere. Did you see that I was pretty

00:09:55 impressed, I think so,

00:09:56 I don't know it was like four different places. He was getting troops out.

00:09:59 So but I didn't know about this war keep going, oh, oh, gosh, drink a coffee. I thought you were gonna take the mic for more than more than that. Second there

00:10:07 delivery, cover company or

00:10:10 is that to go

00:10:13 public valued it more than 30,000,000,000 and here's. A look into the San Francisco based startup leapfrog the rivals to become the dominant

00:10:21 player in a competitive market and I did not even know that there was so many people in this market I've used GrubHub hub in the past and sold it

00:10:32 anyways. DoorDash is the one that's moving in here, folks. And it was an interesting look

00:10:39 into what the numbers show as far as how they really have taken over this market and

00:10:44 primarily well. Everybody else was focused on the cities. They said hey we're going to go ahead and get into the

00:10:49 suburbs. This is a good move, I mean, this is a very strategic, very

00:10:55 placed move. That really sent

00:10:58 them skyrocketing in the space. I mean, they went from a third to 50% of the delivery system, which is phenomenal that's just an amazing. An amazing overcome right there.

00:11:10 Yeah, yes, it is. I have you heard. Have you heard of Postmates is that something you're familiar with because that was one of their

00:11:16 competition there's Uber Eats Grub. Hubs Postmates and DoorDash is the the main competitors. I have not heard of Postmates that I'm aware of it looks like

00:11:27 it's certainly more popular in the

00:11:30 California Los Angeles market. I guess I'm not really or Miami. Maybe not really a part of those. But good for them. Yeah, this is interesting. And I

00:11:39 know it's going public here.

00:11:42 And by the time

00:11:43 some people actually hear this, I will have gone public. But

00:11:47 I don't know. I don't know if I'm a buyer. I know you and I were chatting about this. I don't know if I'm a buyer, I guess I'd have to see how the stock

00:11:53 moves. You know, when Facebook went public, I think when public around 50 or 60 dollars a share and it rose all the way up to, like, 70 or 80

00:11:59 I thought it was 30 and it bounced down to like 18 I think it sounds below anything because I bought it it. And I said, yeah, you know 18 that's cheap I'll buy it

00:12:11 I'm just wondering that's a door a scenario that

00:12:14 it's very common Yeah, a lot of these. Now, this is a billion dollar IPO which qualifies it as a unicorn that's the term out there for these IPOs. And

00:12:26 gosh, it was 20 19 cheese. That was a great year. 20 remember 20 19

00:12:32 been I? I didn't think it was a great year. But I think

00:12:36 now right now, I want 20 19 old days of 20

00:12:42 19 Yeah, there was just a whole bunch of IPOs. And there was a fair amount of him in 20 20 but it did slow down a bit. But this

00:12:52 is a big one. I'm trying to remember what some of the bigger ones out there were for

00:12:57 Twentynineteen off the top of my head. Anyway, some of the statistics out there were that the 20 18 IPOs performed far worse

00:13:05 18 it was just kind of like that first year getting off the blocks and so many of them just aren't even profitable, which is the case

00:13:11 here with DoorDash as well. So the cautionary tale here is that they really haven't even posted a full year of

00:13:18 profit. But the trend was that the first year out of the gate. They really don't do that well, but that second was one that they were

00:13:27 showing better gains as far as the market returns. Maybe not necessarily profitability. I don't know see I'm looking at this say

00:13:34 that people have been locked up,

00:13:36 kept

00:13:37 up scared to go out told not to go out for so long that I think DoorDash is going public perfectly at the right time for them. But

00:13:44 I think as soon as things kind of really left, I think. Are gonna be done ordering out and brought to their house. I mean,

00:13:53 my family wants to get out of the house. So I don't know that I

00:13:59 literally think they're going public at the premiere time and they're going to get top value for it. And I think

00:14:05 that's a concern for me, not being not being

00:14:08 profitable. Yet I'm always skeptical and companies. That aren't

00:14:12 profitable, I like profitable companies that's kind of where I'm at. So you Warren

00:14:17 Buffett, a lot of other people out there included. So possibly just an interesting story it really is a pandemic story and possibly a short

00:14:26 term option for the traders out there that are looking for what's the ticket. And I do like the strategy of just kind of keeping an eyeball on it.

00:14:34 Possibly bounce the bottom and

00:14:37 quick trade in and out. Yeah, I agree. Next up, folks, we have Elon Musk, Elon Musk he's not going to be speaking live here today but he is moving to

00:14:49 Texas. I think he's just done with Silicon Valley. I mean, they were going

00:14:54 to. I mean, he had to reopen his plant and they threatened to arrest him and he got his legal team all up,

00:15:03 up in their stuff and said, we're not

00:15:05 and come and get me if you need to. And they decided to back down. But I think, he's just sick of all of the craziness that Governor news com and I do call him new.

00:15:17 Com has done because I think he is just on a

00:15:19 horrendously bad job with California and he should be ashamed and embarrassed, honestly, and I feel bad for all the people in

00:15:27 California it's horrible. They got lawsuits everywhere in that state

00:15:30 over trying to deal with things but people are leaving left and right and it's becoming something of

00:15:36 a little bit of it's cool to move out of California and that's bad for them he was quoted. The governor was quoted saying that he really wanted

00:15:45 Tesla and though there was a place for them here and so forth. But the plant in Texas is going to be opening up this coming year

00:15:53 and Elon Musk seems quite happy with that. In a matter of fact Palantir Technologies actually at a company I

00:16:02 actually purchased. I just happen to be in the headlights too. They had moved. They were in the Bay area in

00:16:09 California, but they just moved to Denver, Colorado this

00:16:12 year. So it's becoming kind of popular to get out of

00:16:15 California. And the thing is is California is like, I mean, they are financially falling apart, they have the highest personal state income tax

00:16:26 in the country of

00:16:28 13.3% for people who make over a million bucks. So if you're making over a million dollars, you pay well over 50% in

00:16:34 taxes. I mean they're getting hit on every side and it's really pretty crazy. But to lose Elon Musk is a big hit for California in general

00:16:42 because they're bigger their market caps now bigger than

00:16:45 GM and Ford. And so that's a big hit to a state like that yeah, oh, was it? Also, a Packard they've moved their operations out of Silicon

00:16:55 Valley. A couple other prominent conservative venture capital is Peter teal. Maybe you've heard of or Keith rabbi have cited that basically Silicon Valley's liberal

00:17:04 politics as a reason for them to relocate. We should. We should rename it silly Valley because it's ridiculous silly Valley,

00:17:14 I don't know that

00:17:16 Los Angeles is necessarily conservative. If you're in politics, not

00:17:23 just this stuff is ridiculous. I mean, the stuff going on. There is just it's a nightmare. I mean, they

00:17:30 think, I mean, honestly, to get a little political or a lot political. I mean, they think they're doing a great job. In California, you got hair as you

00:17:37 Pelosi, you got news. Com and the

00:17:40 loss nephew, by the way, if you didn't know that they think they're doing a great job and they want to roll that out

00:17:44 nationwide and that's a scary scary thought because they really have no

00:17:48 clue. And honestly, if they're running it they're going to shut us all down. Just like they're doing in California we'll be fighting everything in court for

00:17:54 every Nick and cranny of rights that we have. I mean it's scary. I mean, even in the conservative States, I mean, the rights left and right. I mean,

00:18:05 most churches are closed it's like every church probably has some attorneys there sign them up

00:18:10 and launch your lawsuit and let's get our first amendment rights back.

00:18:13 Sorry, I should have said that. But that's really how I feel so there's a lot more meat on the bone there, folks and certainly

00:18:19 been. I agree that's going to be a wrap for this one. Oh, yeah, hot biscuit we have got some estate

00:18:29 planning coming up for you. It's money on tap and you can reach us at 5 5 2 2 6 8 5 5 1 or info at your money on tap. Com,

00:18:41 folks, stick around you're gonna want to listen up to estate planning. And what is a conversation? You should be having at your dinner table right now

00:18:49 about your estate plan. Thanks for sticking around we'll be right back

00:18:58 for a number of our listeners. They have a lot of questions and you might be one of them today we're just

00:19:04 offering what we call seminars webinars over zoom meeting rooms where we have

00:19:10 top experts. Social security estate, planning and financial planning experts for you to speak with do a private

00:19:19 consultation. That way

00:19:20 today we're also having webinar based seminars where we're going to have multiple groups where you can be part of that and enjoy that as

00:19:26 well. Coming up here in the new year, give us a call at 8 5 5 to 6 8 5 5 1 or email us at info at your money on tap. Com to schedule your

00:19:39 seminar more money on tap in just a moment. Folks, it is so much

00:19:44 fun for us to bring you money on tap. My name is Seth Crossman

00:19:47 and I am one of the hosts here at money on tap I'm also a financial planner that's what? We do that's what Ben and I

00:19:55 do. And the fun part is is we get to have this radio show we talk about important things that we think you need to listen to

00:20:02 and be aware of to help raise the bar. As far as your financial it's a big part of what we're trying to do here. The other thing that we're doing here as

00:20:13 well as financial planners. We are welcoming you to come and call us and to join us. A brash Financial Group experience. What complete wealth management looks

00:20:24 like let's take a look at all sides of the issue. Get a three dimension perspective and put a plan

00:20:30 around your next step it's so

00:20:33 critical. And so many people just leave this part out. And then they find out later if I only would have

00:20:40 known, hey don't let that be your story. Give us a call at 8 5 5 2 2 6 8 5 5 1 or info at your money on tap. Com if you have

00:20:51 250,000 dollars of investable assets today, our plan is free to you. We think it's important for you to know the facts and have a

00:21:01 playbook. So you can have a successful retirement. Give us a call at 8 5 5 2 to 6 8 5 5 1 thanks for

00:21:10 listening on this clip notes edition of money on tap. We take a look back to a previous program where Ben and South offered some insights into some great places to

00:21:20 retire. Here is a highlight from that show. That focuses on a pretty good international deal.

00:21:26 Seth we've done a lot of shows on places to retire throughout the world. And

00:21:30 in the United States we've done all sorts of different things. People have called us about. Hey, where should I be retiring or what state is it Florida or

00:21:38 Arizona? And what are the pros and cons to that? We've done stuff on that we've talked to people about that. But this is kind of a different slant of an article and

00:21:46 not necessarily worthy of a show but probably worthy of a conversation for someone who's in this area.

00:21:52 But yeah, I mean, Italy has said, we're just going to do a flat tax for anybody who wants to come live here. Essentially it's a hundred thousand

00:22:03 of their currency, which I don't know what the actual currency exchange is on that. But currently, Italy tax rates

00:22:12 43% so if

00:22:14 you're making half a million bucks a year or you own a business a million dollars a year. You don't want to give away

00:22:21 43% of your money. But now you just got a clear

00:22:24 hundred thousand Yeah, so that's the income tax on all income generated outside of the country. So if you have your income domicile outside of Italy it's a flat tax 100

00:22:36 100 it is still a thousand because it's a Euro. It doesn't matter it a hundred thousand doesn't change

00:22:40 necessarily because it's a dollar, a Euro it's still hundred thousand right in the same currency exchange, right, right? Yeah, so, anyways that hundred thousand is

00:22:49 capped. So that could be a huge play.

00:22:53 If you have income outside of Italy

00:22:57 right now, the income inside of Italy is that 43% that's pretty notable

00:23:03 and high. But the great thing

00:23:07 about this solution is you can figure out a way to

00:23:11 create your income outside of Italy and cap, that tax rate which could become

00:23:17 incredibly low compared to what you're doing right now. Yeah, I mean, basically, I mean, I kind of did some rough math, but you're looking at

00:23:25 about depending on the state. You live in whether you have state income tax or not in New Hampshire organ happened to be two states that don't so that's kind of unique.

00:23:37 But if you live in some of these other states, like Taxachusetts or the other one that we

00:23:44 do that's where you kind of get hit? But somewhere between 200 and 75,000 and 300,000 dollars of income you're breaking, even with a move to Italy. What was that again?

00:23:57 275 to 300,000 dollars of income you're breaking, even with moving to Italy, almost somewhere. Yeah. So if you want to love it

00:24:04 it's a dream come true for some for some right now. Not necessarily I'm already. Like, the last scene of

00:24:13 Gladiator floating through the fields.

00:24:16 Italy with my hands across the week. Thanks for joining us for this cliff notes edition of money on tap with great tips from the pros in Threedimensional.

00:24:26 Investing utilizing insurance brokerage and fee based planning now here's more money on tap with set. And Ben,

00:24:42 welcome back you're listening to money on tap. My name is Seth crust and I'm here with Ben

00:24:47 rasa you can reach a

00:24:50 5 8 or info at your money on tap.

00:24:54 Com, we have a packed show for you today. This is an estate planning show and we're probably going. I have to take it

00:25:04 into two shows 2 steps because

00:25:07 the there's just so much information that we need to try to cover and and so much good information for

00:25:14 you and it's. The stuff that I'm sure that you're going to take to the water cooler. And as people are gonna be swapping their Airbnb ideas or whatever the IPO is this

00:25:26 week. You're going to get a chance to step and say I got some real knowledge here for you, folks

00:25:33 that's what we're gonna have some fun with. So we talk about a state planning regularly it's a part of what we do as planners at Bracha Financial Group it's essential

00:25:43 to a plan as we work with our clients. And so what's important for our clients. We think it's important for you.

00:25:51 And so that's what we're going to talk about today? So, what is it? This is state plan. Right?

00:25:58 How can these things come together? And how has this changed in the

00:26:05 landscape. Well we're going to get into that. We have some new IRA rules.

00:26:10 Right that's the first thing actually that we're going to be talking about here is you want to start to rethink

00:26:16 what the IRA setup is. So, before the retirement enhancement act in 2,010 upended this IRA stretch IRA provision

00:26:28 that would allow beneficiaries that would be.

00:26:32 That would be, of course, the spouse that would also be children or

00:26:37 grandchildren to be able to stretch out the distribution of an inherited IRA over their own lifetime.

00:26:43 Now you have this 10 year rule that's in place for those children or grandchildren or other beneficiaries. As long as it's not a spouse

00:26:54 that you need to consider that.

00:26:57 Okay, so this is what's happened is this is actually changed or kind of flopped. Some of the advice that we would have given

00:27:06 previously where beneficiaries that are not the siblings of the partners

00:27:12 and

00:27:13 not more than 10 years younger than the account owner.

00:27:17 Okay, basically don't have that lifetime to be able to take the distribution. Okay,

00:27:26 yeah, I was just going to say

00:27:29 the whole concept of stretching out your IRA was a phenomenal opportunity for people. I mean,

00:27:35 the government's come crashing down and said no 10 years that's the longest that's all you

00:27:40 get and you got to take it all out over those 10 years. And like you would set set if it's a sibling that's less than 10 years younger or a partner

00:27:51 that's an acceptable scenario. And

00:27:54 there's a lot going on inside the strategy of rethinking your IRAs. And I would actually encourage people and we've talked a lot about Roth

00:28:02 conversions this year. We've talked about it a couple different. I mean, probably what six times I don't know. It comes up pretty regularly.

00:28:09 But as long as you're under full retirement age, you can start converting those.

00:28:17 No RMDs start converting those rows and they just move the RMD age up from 70 and a half to 72 so

00:28:24 if you're not taking your RDS yet. I mean, start doing it. This is a good opportunity for you to take care of that. The other thing is is

00:28:35 I would say target gift your IRAs,

00:28:39 knowing these rules and knowing that you have a 10 year distribution. Maybe you do have a sibling or somebody that you want to have

00:28:47 receive things and we're going to talk a little bit about this too. But maybe you have a charity in mind in your estate. Maybe you just give them, the

00:28:56 IRA and take advantage of I'm. Not having to pay the taxes. And then gift other assets to your family. So there's a number of different ways to talk about your

00:29:07 IRAs and kind of break down your assets. And one thing we do is we really break down individual spousal assets. So we break it down by husband's assets. Wife's

00:29:16 assets joint assets. If you have a trust, we break down the trust assets and we don't do that haphazardly. I mean, we have

00:29:25 we have this kind of detailed orientation of what your assets are and how they're owned. So we can look at it from an estate planning view and make those educated decisions

00:29:38 if you haven't passed away and you're listening to the show, which would be the only way you could be listening to the show

00:29:44 that we we know

00:29:47 you can still make changes. So if you have planned on giving the IRA to the kids and then we're going to stretch it out over their lifetime and now you

00:29:56 can swing this stuff all around and

00:29:59 there's still time. But man it's going to cost you legal fees and expenses and stuff to do that, but, man, you can save your family

00:30:05 a lot of money. Knowing what you can do today.

00:30:09 Yeah, right out of the gate, though. Those IRA beneficiary forms that pretty much a readily available piece of paper that just gets changed and submitted that's it

00:30:21 I

00:30:22 act also change the required minimum distributions from that seven and a half to 72 I think you mentioned that Ben, but if you're younger than the RMD,

00:30:29 which is that required minimum distribution,

00:30:32 you can take a voluntary distribution and convert it to a Roth and I think that's where you were going with. That is really taken advantage of some of those

00:30:40 conversions. Number two today. We have for you on the estate planning side gifting assets.

00:30:47 Now,

00:30:48 one of the things some people say, well, I don't I give my money away

00:30:51 today. But there's a lot of things that people sometimes when they actually think about what they want to do and what they want to accomplish.

00:31:00 Sometimes it ends up making more sense than you think. I mean, you can give 15,000 dollars a way to to anybody without it

00:31:08 exercising. Your gift tax exemption. So husband in

00:31:12 30,000 per couple Yeah 30,000 for couple to a child beneficiary. So if you have three kids it's 30,000 each if you're married

00:31:21 that's a good amount of money that's 90 grand you can get out of your state now. Another thing is you can upfront

00:31:26 give on 5 29 plans and a lot of people don't know this. But you can give a grandchild five years all at once

00:31:35 into a 5 29 plan. A 15,000 bucks that's 75 grand and married. You can give 150,000

00:31:43 per

00:31:44 beneficiary. So the usual gift tax exclusion is the first

00:31:48 thing with this gifting strategy because it has no impact on the estate tax exemption. So you're basically saving 40% on those

00:31:57 gifts, if you're going to be subject to the estate tax. So

00:32:00 that's that first piece where the gifting strategy really has a benefit in that gifting

00:32:07 early idea right on the downside of the 5 29 you can't spread the

00:32:11 deduction over multiple years. And so if that's one of the things that's part of your 5 29 gifting strategy. You need to be aware of.

00:32:19 So you're not going to get that deduction on those taxes. But

00:32:23 and you also can't make additional gift to the same person during the five years

00:32:28 and there's more. If you die during

00:32:31 five years while you're spreading the

00:32:33 exclusion. Only a prorated amount applies to your estate, so those are a couple of the keys to kind of take away from that strategy. So don't

00:32:40 gift five years lying on your deathbed. That would be bad Yeah, yeah, yeah, a

00:32:47 why did that make me laugh? I don't know that's dark that's dark. Okay, number three number

00:32:56 3 this is a big deal. Okay, this is a big, big deal because we're kind of in this sick. Is Biden going to be President

00:33:03 Trump to have some sort of election over to who knows what's going to happen here. But gift tax exemption it's a huge opportunity to give assets away and it's a huge

00:33:15 it's enormous it's 11.5 8,000,000 as I just mentioned,

00:33:20 and I think what everyone's really concerned about is that this is going down.

00:33:25 This is going to be lowered and that's a big, big concern. So for people with large states, this is wonderful it's this

00:33:32 high. And I remember, I think it was 2,010 I think they give tax.

00:33:37 The gift tax went away for one year and that's when Steinbrenner I think that died that year and his whole hundred and

00:33:47 58,000,000 I don't know, however, the Yankees. I remember you're talking about that it's been a while. Yeah, that went away that passed totally state tax

00:33:57 free. But it's at 11.5 8,000,000 right now and that's a big deal. And a lot of people are very concerned

00:34:03 that this is going to be going down and one of the things I told told people long before we

00:34:10 did spousal deduction trust and all sorts of different things in the

00:34:13 past long before the rates got this high. But I still encourage people to take advantage of

00:34:18 those types of trust inside this. Because if this thing drops back down to 2,000,000 1,000,000 where it used to be only a short while ago.

00:34:28 I guess if you're quite lucky enough to die and whatever

00:34:32 this is a big deal and it's something that's going to be something you need to watch and be careful. But talking to a financial planner or a

00:34:40 state attorney is going to be. Somebody is going to help you kind of mitigate the pull back on that.

00:34:46 Yeah, so the IRS has given us guidance that indicates you will not be

00:34:51 penalized for using your exemption while you're a life. But if you hold on to an appreciated asset when you

00:34:57 die when the exemption is lower. Your estate will be higher because more of the estate will be taxable.

00:35:05 So what happens is you use up the

00:35:07 exclusion and then Congress doesn't lower the lifetime exemption amount. They'll still benefit because there's less of a state that can be taxed when you die

00:35:17 there's the trade off okay, the cost basis of the gifted asset carries over to the person

00:35:22 receiving the gift. So if you're going to end up being below the estate tax exemption in either

00:35:29 scenario might be better off holding on to the asset until death so that they can benefit from that cost basis or that step up in cost

00:35:36 basis and the other thing would be possibly that you might want to prioritize

00:35:40 your economic security. Okay, so that's another option to consider in this strategy as

00:35:46 well. Well that's a good point. So because you're talking about step up in cost basis. So that's like, if you bought

00:35:52 something or if you bought a stock for 10,000 dollars and now it's worth a hundred thousand dollars. And your kids inherit it

00:35:59 worth a hundred thousand dollars. Their cost is now considered a hundred thousand. So they're not paying capital gains on

00:36:06 that, where your cost was 10,000 it's a step up period that occurs,

00:36:11 but that's another thing that we talked about. I think it was last week we even talked about or the week before about how a Biden administration wants to

00:36:20 get rid of the step of cost basis rule. Because they think that that is unfair to the other taxpayers.

00:36:28 I do, I think it's unfair, I

00:36:31 think it, I think it's great. I think it's existed. And if we're going to start considering things fair and unfair that would be at first. I

00:36:39 think let's go do a lot of that in our government. But

00:36:45 that is something to be aware of. Because if you are doing some step

00:36:49 up cost basis planning, what I mean let's say, that's part of your plan today because the step of cost basis is

00:36:56 here, but then it goes away. So then you sell all your assets because, you know, you're not. And then reallocate. And

00:37:01 we move it around and then what happens if it comes back?

00:37:05 Right, because you have both sides fighting this issue. I mean,

00:37:09 hopefully we go from one term to another we're bouncing back and forth and maybe we get the step of cost basis back in 10 years. If

00:37:16 Biden pushes it away, I don't know, but those are

00:37:18 things that require you to constantly monitor your estate planning because it's not a one and done scenario, which is why the show

00:37:27 we'll exist in our show. Next year in the year after in the year after that. And the year after that cause changes constantly happen,

00:37:33 folks, we are we're money on tap you're listening to us, you can reach a dive two to 6 8 5 5 1 or info at your money on tap.

00:37:44 Com, we are talking about estate planning. Now, this is bringing us out of the

00:37:49 21 some of the things that we've been working through it

00:37:53 with our clients and our offices and just getting

00:37:56 prepared, getting prepared for for that next step, you listen to money on top we're gonna take a quick break we'll be back with more estate planning. Thanks for listening

00:38:13 if you're listening today and your questions are outside the box of estate planning or financial

00:38:19 planning or any number of the pieces that we kind of traditionally talk about don't forget that breakout financial offers

00:38:25 auto home and business

00:38:27 insurance and we have an entire department that handles all of that for

00:38:30 you. Give us a call at 8 5 5 2 to 6 8 5 5 1 and be happy to take care of those needs for you or email us at info at your money on tap com

00:38:41 more money on tap in just a moment. So

00:38:45 folks it is a lot of fun to do what we do here at money on tap and we get a lot of calls and a lot of inquiries

00:38:50 about what next and if you didn't know, we have seminars available for you. What the ZoomIn are

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00:39:07 about Social Security techniques. Like, what does it

00:39:12 really look

00:39:13 like learn

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00:39:18 topic and there's several that we talk about on the Uber. So if this is something that's of interest to you? Give us a call at 5 5 2 to 6 8 5 5 1 it's totally

00:39:28 free. You jump onto a zoom you learn from us. You have fun and you get to walk away with something that

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00:39:53 or info at your money on tap. Com and I for your zoom in, see what's coming next. Now back to money on tap with Ben and

00:40:11 welcome back you're listened to money on tap on Ben rasa you're here with Seth. Crust bin today we're talking about estate

00:40:17 planning. We are on part one of a two part series, you can reach us at 8 5 5 to 6 8 5 5 1 you can also email us at info at your money. On tap

00:40:30 com and if you have questions about a state planning, this is a great place to push it out. If you're looking for information on a specific topic we cover here or next

00:40:39 week. Give us a bus. Reach out to number four. What we're going to talk a little bit about is your vocal trust

00:40:47 space and building an irrevocable trust for your spouse in a couple of different ways and a couple different benefits around that.

00:40:55 Now, just real quick. I mean we've talked about revocable Seth and irrevocable trust and people get these confused all the time.

00:41:02 And a revocable trust is something that once you do it, you cannot undo it

00:41:09 okay, this is a signed sealed and delivered you're done.

00:41:15 One of the things that people are doing is what we call slats or spousal lifetime access

00:41:22 trust her name, people have all sorts of names to the trust. It really doesn't matter what the name is.

00:41:28 But sometimes they try to put a name that makes more sense to it. But you put the money away. You can't touch the

00:41:33 principal and usually creates access to income or income feature to it, which allows the surviving spouse to have an asset sitting out

00:41:41 there. Now we've talked about

00:41:44 look back periods and all sorts of things on our vocal trust for health concerns

00:41:48 and we'll get a little bit into that. But in your vocal trust, you put this away. And then

00:41:53 ultimately, you can. Your spouse can get

00:41:57 money. And then I can go on to the kids or however you want it to be pushed out later on and that's a very good way of getting money out of your

00:42:06 state and

00:42:07 protected from

00:42:08 all sorts of things, including creditors. I think that's probably one of the biggest issues is whether it's a government creditor or a regular credit or

00:42:16 it's a big deal to keep that money there

00:42:21 what's the number one issue with this. The problem is, is because you can't undo it. When you build your vocal trust like this. You really have to make

00:42:29 sure that you're not having

00:42:32 a need for money. Like you're not putting too much of your money into this flat and just be coming over to overly dependent on that. And then I have

00:42:41 my goodness, gracious. I

00:42:43 mean,

00:42:44 everyone wants to protect everything. But at the end of the day, you can't make yourself poor. I mean, the whole point of putting the money away was to live off of.

00:42:51 So this is not a one only scenario this is really to benefit that healthy spouse.

00:42:57 Yeah, one of the things. If you're creating these slats for each

00:43:02 other. Some key things that you can't make them identical to each other.

00:43:08 And honestly, I don't even have a reason why I usually like to try to dig too deep into that question. Like why if we can understand that we understand more,

00:43:16 but you just can't do that.

00:43:20 And also there's longevity here that you have to consider. So really putting these things in a place and having

00:43:25 them set aside for a while creates the legitimacy here to the technique of what's going on because there's

00:43:34 certainly as somebody out there that's trying to challenge what the estate planning world is going to be doing.

00:43:40 So another piece here hiring an independent trustee to oversee the distributions. Okay, this is just one of those things that you really just need to put into

00:43:50 place and also there's again. The cautionary note about dumping

00:43:54 your estate brings basically your retirement wealth into them or a big portion of your retirement wealth into them.

00:44:01 So what is the acid test here, really? You shouldn't fund the slat to an

00:44:06 extent that your asset base is reduced below what's necessary to maintain your lifestyle. So that's really how you kind of gauge this here.

00:44:14 And the other thing is just to remember, these are irrevocable. Alright, the revocable irrevocable thing

00:44:20 there.

00:44:22 If there's anything going on like a great divorce, then really steer clear of this as a

00:44:29 strategy, I I didn't understand what the term gray divorce was. I had to look it

00:44:33 up. I had read that in one of the articles that we found and putting all this up together and

00:44:39 that's a business type divorce and people over the age of 50 I guess it's a very right

00:44:46 scenario. So it's a surprise it is really one of those things that I've

00:44:51 you hear about you're like, wow. That doesn't make sense. Now. I did have a

00:44:57 lovely a friend of ours here, locally. That was in that situation and they got remarried. That

00:45:02 was a nice thing to see. Yeah, always reconciliation, right? Lord, willing Lord willing. So number five, this will be the last one we cover today. But

00:45:14 number

00:45:15 five is

00:45:17 carrying

00:45:19 forward. Your spouse's exemption

00:45:22 Postdeath so one of the things that happens is that we have this 11.5

00:45:27 8,000,000 dollar state tax exemption. And when one spouse

00:45:31 passes away, they may not exercise the entire amount. So upon death, they can carry that

00:45:37 forward and that's a big, big deal. I know when we talk about 11.5 8,000,000 Seth I'm sure a lot of listeners. Just instantly tune out like I'm just not

00:45:48 there and that's completely okay. Because we're really not to talking about the number we're talking about the

00:45:54 technique because they will bring this 11.5 8,000,000 down and it used to be as low as

00:46:00 650,000 and so in today's world, you own a house in a 4 1 K and boom you're over 6 50 and it's not

00:46:10 that's not a really high number, but that's where it started off before it's huge skyrocketing rise that has pushed it to the

00:46:16 11.5

00:46:17 million. And

00:46:19 this is something that you have to be careful of that? You don't get caught. Not thinking about this because it's

00:46:24 11.5 8,000,000 and saying, hey, how do I do this because if they drop it to a million dollars and and your spouse

00:46:32 you're worth a million five,

00:46:35 you could push a half a million or three quarters of a million dollars into they carry for bypass exemption trust. Okay, another trust method and

00:46:45 utilize the exemption and try to Max that out. If it drops below so these are really kind of things to be thinking about. And that's the spousal deduction,

00:46:55 trust credit, shelter trust there's lots of different names for

00:46:58 it doing that and creating that, because just because someone died and didn't do the trust you can do that up right after the

00:47:06 and take advantage of that tax benefit. The other thing here is that

00:47:14 when the second spouse does pass

00:47:16 away, I think one of the things that

00:47:18 is strong here is that just the air.

00:47:21 We just take control of the

00:47:23 trust. And then they just distribute it

00:47:26 out and that's completely outside the second spouse is passing. And I think that's probably the number

00:47:30 one thing that people ask is is how the second round happens. I don't know if we've covered that well enough, but it is a complicated scenario. But

00:47:37 it's actually a lot simpler, it sounds.

00:47:40 And this is one of those strategies that we see a lot more with the blended families.

00:47:45 They use the trust to provide for a surviving spouse and then eventually for the children from a previous marriage

00:47:52 and that's one of those ways that those blended families really work. These things out now the tax savings happen when the second spouse dies.

00:48:00 So this is the funds in the

00:48:03 bypass trust go directly to the children, avoiding the estate tax. So that's really,

00:48:08 that and those assets in that bypass trust can grow indefinitely they're never going to be taxed on the state level at all.

00:48:14 Yeah, but they don't get that stepped up basis that we talked about previously right with those assets. But even the

00:48:25 top marginal gains

00:48:27 rate is lower than the federal estate tax rate. There

00:48:30 that's the benefit and there's a lot of considerations here with how to structure this. There really is no rubber stamp when it comes to doing this kind of work

00:48:42 because you are

00:48:45 unique there's what we have is the laws that are provided or the code that is provided and the methods that are available. But

00:48:57 understanding yourself and your goals and

00:48:59 the context of your family and how you are really pulled together. And your assets are pulled together and seeing all of those pieces

00:49:07 this is certainly a lot larger conversation. Then we can have right now, right, Ben.

00:49:14 Well, yes,

00:49:17 but I think the thing is is

00:49:19 one of the things

00:49:21 about I think a show like this. I would listen to podcasts and listen to different things. And for people who are

00:49:27 listening it's the one or 2 tidbits where you say you know what I need to know more about that? I need that that's something we're dealing

00:49:33 that's something I'm concerned about. And I think when we start touching on different topics and you want to dive

00:49:39 deeper that's what a phone call really comes into play or drop an email to us. We can get you in touch with an attorney. If you need

00:49:46 somebody. If you need CPA, whatever you need. Give us a buzz. We can try to hook you up with somebody that can solve that problem for you understand that

00:49:54 issue. If we can't help you ourselves and that's 8 5 5 2 2 6 8 5 5 1 to email is just info

00:50:03 at your money on tap. Com thanks a lot folks. This has been a lot of fun. I can't wait to actually get into part

00:50:10 two of this and we'll be there with you this next week. So more from money on tap more from beneath that step.

00:50:19 So

00:50:20 looking forward to it. Thanks a lot, I have a great week, everyone.

00:50:23 Thanks for joining us today. You've been listening to money on tap. You can reach us at 8 5 5 2 to 6 5 5 1 or info at your money on tap.

00:50:32 Com also we're in a

00:50:34 podcast you can find us at any of the podcast venues. Out there, we appreciate the likes and the listens we're also at Facebook at back three investing on Twitter at

00:50:45 BFG underscore LLC. We appreciate you joining us here today and we hope you make it a great day and a great life. Thanks for joining us with money on

00:50:56 top. There are a lot of pieces to helping our aging parents in the final chapters of their

00:51:01 lives on this clip notes tradition of money on tap set. And and look at the importance of addressing our parents

00:51:08 finances, something that needs to be handled with a certain amount of

00:51:12 urgency. Financial conversations can be one of those bridges. It just takes more time than maybe some of the others to really cross. So whether

00:51:21 there's medical needs or immediate right now or in the

00:51:24 future, really. Just being aware of the finances here is what we're trying to talk about is trying to just think

00:51:30 about what it is that your parents are doing and how they are engaging in their finances. Is a checkbook, are they online? Are they using credit cards? How many do they

00:51:41 have? How they operate around their finances is even just a conversation. But possibly that can introduce

00:51:49 and help. That conversation move forward. Absolutely, and I think

00:51:56 interesting story too. I had in that that

00:51:59 scenario just an example. There was a health change in

00:52:03 event, people said hey, we want to come in. We want you to meet with our son and or and or daughter and everything was

00:52:09 a little bit of heart concern there. Some kind of stuff had popped up and everyone was

00:52:14 where now things have kind of settled down and things are a little better not perfect, but better

00:52:18 and they're like, OK we're going to try to do this stuff over the next six to 9

00:52:22 months. So, what happened to we want to meet with you next week, I turn it nine months and I'm talking to them I'm like,

00:52:27 listen. This is not an overnight decision. These are not overnight. Issues to address, they take months to address. So nine months from now, we sit

00:52:36 down it's not going to be like, flicking a light switch from often to

00:52:41 on there's a process and there's a lot of work behind that. And I said

00:52:45 you still want to move with urgency. And some of the stuff they want to do, they want to put into a trust and it's complicated. And they

00:52:52 want to protect some assets. And they need a clock to start to start and I said, listen, if you're going to do that

00:52:58 trust, you have a five year o'clock this is what they needed to do.

00:53:01 And I said if you wait nine months now, you have a five year 9 month clock. You still haven't even had any time to get with the

00:53:08 attorney and write the trust and make sure that's correct, so that might be so now you've got a six year

00:53:13 clock. You need to get that clock moving as soon as possible and try to explain urgency around making these decisions is really important because financials

00:53:22 are usually the number one thing. I find that people do not want to let go

00:53:27 of. They do not want to hand that over to the kids. They don't want their kids telling them what they can spend or

00:53:32 do

00:53:33 they think, that's all about what this is it's not a making sure that you're documenting what's going on there I've seen a lot of people kind of create a worksheet or

00:53:43 just kind of like an inventory, really of all the different things that are going on Medicare long term care policies. All these different policies. Life,

00:53:50 you have a list, have a list for who your accounting, your attorney or say in one

00:53:57 Finewhat we do is we provide a listing provide online access. We provide

00:54:03 documentation for a complete list of assets depending on the person's scenario, but we've done that for attorneys for

00:54:10 accountants for people's kids. We encourage people to bring their kids into our office. We want them for two reasons 1 we want them to know what their parents

00:54:18 own. Why they own it, okay? And what the purpose of it is because

00:54:23 after

00:54:24 after plans been put in place, having kids come in to evaluate a plan and figure out whether they think, it's good better and

00:54:30 different makes things much more messy than trying to understand why they went into

00:54:35 this initially. And I really always encourage that. And I know set does too.

00:54:39 Thanks for joining us for this cliff notes edition of money on tap with great tips from the pros in Threedimensional investing utilizing insurance brokerage and fee based

00:54:52 planning. The views expressed are not necessarily the opinion of this radio station and should not be construed directly or

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00:55:11 situations can vary, therefore, the

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00:55:58 well, bye.

00:00:00 Welcome to money on tap

00:00:15 money on tap your personal finance

00:00:17 headquarters, where we bring out the professionals experience. So fine in what we call free dimensional, investing utilizing insurance brokerage and debased planning

00:00:26 that's what we do on this show. We look at all sides of the issues. We bring a fully independent planning perspective to the table

00:00:36 hey, welcome back. You are listening to money on tap. My name is Seth Crossman and I'm Ben Bracha folks. If you are joining us by podcast today

00:00:45 we want to thank you. Or if you're joining us via the magic of radio, we want to thank you we're grateful to have you aboard. As we step into another week

00:00:57 of some incredible news that we're going to have a chance to cover here shortly with you. But we're going to focus today

00:01:06 on you and what you can do to wrap up your 20 20 and take advantage of some tax breaks. How can to lower your taxes and 20 20 ultimately

00:01:19 as financial planners that's what we do at Bracha Financial Group as we look out for you

00:01:25 and we try to see how can we create a better situation for you? And your taxes, those flow through in your

00:01:33 taxes or in your investment options. And all sorts of all sorts of things that we love to look at at the universe investing, but everything

00:01:40 believe it or not does have to go through this tax filter. Right, so what can you

00:01:47 do? You know th I mean I'm really excited about doing this when we talk about taxes all the time. And we talk about different ways

00:01:54 to help mitigate taxes and address taxes and

00:01:59 it's nice that we got a year end show we're going to cry. Some of these things up bring back some point we've already made. Maybe some new points for people that

00:02:08 haven't caught us before or consolidate a little bit here and help people because there's some stuff happening. I mean

00:02:16 there's a lot of stuff happening in our world between election fraud. Question marks and videos I've watched which are a little scary. And then we've got a potential.

00:02:25 Biden

00:02:26 presidency and what that might and how that's going to affect taxes. So we get a lot of moving parts here. And I

00:02:31 think we're going to try to Criss cross some of the stuff today so I'm excited about that?

00:02:37 Yeah, do we need to disclose that we're not like CPAs and all that kind of jazz just so people aren't you look like one, though,

00:02:45 I am in my CPA uniform

00:02:48 today, but no we're not we're financial planners. But

00:02:52 this is what we do. And this is the landscape that we're all living in right now

00:02:57 and we're here to help and we're going to have some fun. So before we go down that road too much further, it is time for money in the news.

00:03:14 First up today, Seth we've got an article here in the Wall Street

00:03:18 Journal and this is about water brothers

00:03:21 pretty interesting. So they're getting ready to release all the 2,021 films on HBO, Max and in the theaters at the exact same time. Pretty

00:03:33 interesting, pretty interesting. I don't know if this is a gamble or this is just a response to the pandemic or with all the streaming. And

00:03:41 I have no idea. I mean, kind of the traditional

00:03:46 I don't know, you know, the movie comes out in the theaters. And then a few months later, it shows up on a

00:03:50 streaming service and you can buy it and then a few months later it's free on some

00:03:56 premium channel subscription. I mean that's kind of the standard, right?

00:03:58 Right that's what we're used to sing and we've actually had money in the news with at AMP T, who owns

00:04:06 Time Warner or Warner Brothers

00:04:10 has been a conversation that we've had in the past as far as them getting into this subscription service like Netflix

00:04:18 or

00:04:19 Amazon there's Apple. TV there's all these different subscription services now that are coming out. And

00:04:25 before it was what were they doing to try to get your subscriptions? Disney plus

00:04:31 in the content that they were buying in

00:04:33 office was the office was? I think the most

00:04:36 popular watch show. No, it was friends.

00:04:38 I don't know it was kind of back and forth between both was, like these older shows that they were purchasing rights to to get your

00:04:45 subscriptions. But now

00:04:47 they're really trying to thread this meal with the pandemic and saying, we're going to just bypass the eaters

00:04:52 because nobody's going to the theaters, but we're going to use this to get your subscriptions and HBO. Max hasn't really pulled together the

00:05:01 content that some of the other streaming franchises have but I'll tell you when I took a look at this and I saw done.

00:05:09 I went

00:05:11 Oh, my gosh I'm probably gonna have to get HBO back now because that's one of my favorite all time movies. Remember that as a kid is just

00:05:23 incredibly visually

00:05:26 amazing. Anyway that's just my bent on this but there was a lot more to the article in some of the state of affairs with these services and how they're going to be

00:05:37 bringing content to us. And if you're looking at an investment standpoint I'm just wondering how many people out there are looking at these home studio or

00:05:48 your electronics I'm trying to think of who's creating the best TV today or whatever and some of the options that you have to invest in some of these

00:05:58 behind. The scenes moving pieces to

00:06:02 possibly a future move. I mean, we know it right now, but there's a future move. And really, this home feed or kind of stand out. Yeah, you know, I think this is

00:06:10 interesting there's a lot of people that no matter what the scenario

00:06:14 is they're not going to be wanting to pack into a theater. But I have noticed that over the years that theaters have reduced the

00:06:22 the theater spacing by the little tiny seats to putting in these elaborate

00:06:27 reclining in. I mean, a a luxury and get your Nachos delivered to your

00:06:34 seed. Yeah, no, I definitely think that that's something

00:06:37 that has changed in its own, right. So the number of people sitting in the seat is less so that

00:06:42 probably on some level. But, I mean, the movie theater just seems like for people who are concerned about this pandemic at heightened levels.

00:06:50 Not the number one location they're going this Christmas holiday season.

00:06:53 Yeah, I think it's going to be a bounce back story as well. I'm hoping in the next year. We have a conversation around

00:07:00 how people are flooding back to life.

00:07:02 And this is one of those things that I think we all can say we've gone we've done. We've had a great time. We love going to the movies it's an

00:07:10 experience that whether it's

00:07:12 your date. You

00:07:14 take the family out to watch the new Disney movie. You just can't replace that in your home. The best that we could try still. I don't think it's going to

00:07:24 ever replace the theater. Maybe that's just me. Maybe that's a ways down the road, but that's my wishful thinking at the end of the day,

00:07:31 I think there's some truth to that. I think there's some truth. But I think that on some level, I mean, with Disney having released

00:07:39 Milan, I don't know if you remember that but lo was released and then they said

00:07:44 here, obviously people are going to the theater. So we're going to release it at the same time. And I

00:07:49 think I think these companies are saying we can release in the theater. But the truth is is that we're going to get a lot more sales

00:07:55 right off the bat, if we just released it at home in the meantime that now I wonder how that plays out long in its long business perspective.

00:08:05 Well, you tell

00:08:06 us, what are you guys doing?

00:08:08 We want to hear from you. You can reach us at five to 6 5 1 or info at your money on tap com what's important to you, folks that's what we're going to be talking

00:08:20 about? And the money in the news is just a part of that.

00:08:25 Now, this headline this headline really snapped my head because a it talks about the Trump Administration and B they're suing and see it's Facebook.

00:08:40 Yeah, this article really made me

00:08:44 angry. I got to tell you set that may be really irritated me I'm not really becoming a Facebook

00:08:53 dislike

00:08:54 I'm not on Facebook. But I do not like this story here,

00:09:00 but basically what the Trump Administration is suing them about is that they have only been advertising jobs for HB one

00:09:10 workers which are basically green card. Visa workers and not providing them to

00:09:18 us people here in the United States and it's become apparently

00:09:24 obvious during the pandemic. This article comes to us from the Wall Street Journal by Michelle Hackman and Sadie, German and deep as

00:09:34 them. And we just thank them for bringing this to us. Because given what we know from the article and that's really all we have to go off of it

00:09:44 was a it was really sad thing to take a look at where Facebook

00:09:51 is ultimately giving away what could be a US based

00:09:57 job?

00:09:58 This is beyond. This is

00:10:01 unpatriotic is how I almost even interacted. This says in a 17 page complaint filed Thursday I quote the Justice Department civil rights division said Facebook

00:10:10 inadequately advertised at least 2,600 positions

00:10:16 were filled by foreign professionals on H. B one visas when the company was looking to sponsor them for permanent

00:10:23 residency permits known as green cards. I mean, they were literally trying to get people to be able to

00:10:28 become permanent residents of the United States through this process while a discrimination. A discrimination based off of

00:10:36 being a US citizen is what this boils back into a

00:10:41 you're right? It gets we started up, but I literally livid about this because they weren't even taking online applications for these jobs. They were

00:10:53 doing mail in

00:10:54 only and one of the advertisements they had out of all the advertisements at one point they had one US applicant that was able to figure out. These are jobs now.

00:11:04 So there's two types of positions you got to fill right there's the Super high tech.

00:11:11 I maybe it's a security

00:11:15 professional engineer person who's a brilliant genius out of XYZ country, who needs to come and work here to fill a Facebook? Need

00:11:26 that's one person. There may be one or 2 or a handful in the world. That you want that person and you need them here. I get that and I have no problem with

00:11:35 that they're talking about positions that required only a bachelor degree and two years worth of experience for general art.

00:11:47 I mean, these are not a curator.

00:11:51 These are not like high tech. Complicated

00:11:54 positions and there's thousands of them were in the middle of a pandemic and we're dealing with unemployment issues and they're still fighting this.

00:12:01 Yeah, really upsetting.

00:12:04 A matter of fact. That makes me go back into some other articles that we've taken a look

00:12:11 basically Facebook's coming under a lot of scrutiny and

00:12:15 understandable they're

00:12:17 massive in what they do and how much money they consume and how much control they have. And I think it's just one more iron or

00:12:27 arrow in the quiver here for people really looking to either disband or take down a lot of what Facebook's

00:12:34 influences. And if it's something that's currently in your holdings and

00:12:39 considering think about it, I don't know that's one way that you can certainly have a vote and that's one of the things that we

00:12:46 consider there's lots of ways for you to be an investor out there and to participate. Just think about it,

00:12:53 folks. What are you doing? And who are you supporting? That's what I would

00:12:58 say? Well, next on the list here, the we've got an article that a lot of people are probably keeping some perspective on and

00:13:06 that's being Boeing on its first big 7 37 Max order since grounding ended

00:13:15 basically an Irish airline.

00:13:18 Such a deal for 75 Max Jets. Man this is coming after all sorts of cancellations of these and all sorts of different I mean, we have had two major 7 37 can

00:13:32 problems. I mean it's bad and

00:13:35 that's been. I just saw the first one. Take off the other day. With passengers

00:13:41 on the news, it was a big deal.

00:13:44 Yeah, this is so nice to hear. Good news coming back for

00:13:51 Boeing. I love it's an American company we

00:13:58 used to be one of the biggest in the Dow. And

00:14:01 gosh, over a year ago before we started to have the whole 7 37 Max conversation of what's going on with this airline or this not airline, but

00:14:11 the airplane that was having these issues and Boeing struggling over this last year.

00:14:18 It's one of those stories that I

00:14:21 continue to

00:14:24 be a big part of our economy. Be a big part of what we are. I think as Americans in many different places across America and so I love

00:14:34 seeing this happen. I love seeing them. Do what they needed to do admit with where they were

00:14:39 wrong. The FAA being very thorough and everything that they were going through and what we talked about in the past was the getting back on track.

00:14:50 And so anyways, yeah, really great to see that this is happening in its. I think Ryan Air probably got a really good deal for

00:15:01 starter, but there's several other people that are out there that are receiving orders of these planes as well. And it's nice to know that it's going to be a

00:15:09 a good story going forward. Yeah, I mean, after 346 lives

00:15:15 we're lost or the two crashes that

00:15:18 this is a big deal. They don't take this lightly in the FAA world that's for sure. But it looks like United Airlines is gonna be the first company to actually get

00:15:28 the new Max since the regulators ended. The grounding

00:15:33 and British Airways had signed an intent letter for 200 planes so

00:15:38 there's some very popular things going on around getting these orders back up and going. Which which speaks a lot to what you know. What the airline industry sees inside

00:15:47 of whatever potential orders future orders air traffic needs and so forth it's a big deal to be buying

00:15:55 by new planes right after a pandemic so that's a good sign for us.

00:16:02 Well,

00:16:03 folks, you heard it here. Maybe not first, but

00:16:09 it's a lot of fun to talk about these things here at

00:16:12 Rice Financial Group and money on tap. You even listen in the money on the news. You can reach us at 8 5 5 to 6 5 5 1 or info at your money on tap. Com

00:16:25 what we're gonna be diving in today? Okay, so here we are at the end of 20 20 and I'm sure there's a lot of things that are on your plate

00:16:35 with everything. That's going on around us. A lot of news out there. But these are some timely moves for you, how can you take care of yourself

00:16:45 and taking into consideration the tax year that we're in there's probably

00:16:52 one or 2 things that you're going to want to listen to that applies to

00:16:56 you. No matter what your situation and that you can take advantage of to try to lower your taxes and 20 20

00:17:02 and just improve your financial situation. And your awareness we're going to be talking about that

00:17:07 next and we're glad you're here with us today. Thanks again for the like the lessons we'll be right back. You listen to money on past

00:17:18 folks. We have a lot of fun doing this

00:17:22 show money on tap and Ben and I have been financial planners for years and years and our goal here with you is to bring you into the

00:17:32 room. Have the conversations that we have. We think these are critical conversations for.

00:17:37 But we understand this is a limited space. And what we'd love to do is to open the doors to you with us. At Bracha Financial Group. So you could

00:17:47 experience what it means to have three dimensional planning in your life

00:17:52 let's take a look at all sides of your situation. Your scenario and see how we can put together the best plan

00:18:01 possible taking into account your

00:18:03 risk. How much can you have in the market? How much do we need to have set aside and doing different things for your

00:18:10 life that's what we do as planners. How we engage with you. And we welcome you to do that with us. You can reach us at 8 5 5 to 6 8 5 5 1 or info at your money on tap.

00:18:22 Com now, if you have 250

00:18:25 that are investable assets today. Our planning is free to you. We want you to have the PlayBook to have a successful experience in

00:18:37 retirement. Give us a call 8 5 5 2 to 6 5 5 1 or info at your money on tap. Com Ben and I

00:18:46 welcome you to Bracha financial for complete wealth management now back to money on tap with Ben and

00:19:01 welcome back you're listening to money on tap. This has been Bryan Seth trust. We are diving into

00:19:08 taxes and our end taxes today

00:19:12 I'm pretty excited about the show. So I wanted me to do the intro on this one.

00:19:15 So I'm signing up. You can reach us at 8 5 to 6 8 5 5 1 or you can email us at info at your money on tap.

00:19:26 Com

00:19:26 and today we're gonna start talking we've got eight different earn tax items. And I

00:19:32 think I want to reference this set with the fact that we have talked about a number of these over the past few

00:19:38 months, even done shows on individual items here. So I would encourage anybody who hears something specific. Just go back through our

00:19:47 library. You can find us any major PODCAST venue out there. I heard Stitcher SoundCloud iTunes. You name

00:19:55 it and dig through it. If you have a specific topic, you

00:19:58 want to run, but we got eight of them here today. And as we go through these eight topics, I think what I really want to encourage everyone to do is that

00:20:06 there are not just eight, right? I mean, everyone's situation is so uniquely different and we

00:20:13 do tax incentive investing every day. That is our specialty. This is what we focus on.

00:20:19 And if you have a

00:20:20 scenario where you feel like you're paying too much in taxes, you feel like something's not quite right. Or something's wrong

00:20:25 or could I make this better? Give us a call that's really where it starts to sit down with us. We can figure out if we've got some scenarios and options that we can

00:20:34 do outside of this, that might meet those needs.

00:20:38 So as we dive into this today, probably one of the most interesting

00:20:46 easy scenarios for people to do is if you

00:20:50 are able to itemize and that means you're able to do individual deductions on your taxes and so forth. Or if you run a business or on a

00:21:00 business. The number one thing to do is to pay some of your 2,021 bills today. Buy that extra laptop.

00:21:10 See if you

00:21:11 see if you have anything coming up in January that you can pay. And the other thing is too is maybe you have some income coming in

00:21:17 from a various source or something like that. Maybe that's something that gets delayed. I don't know maybe you discuss with a person

00:21:26 that getting paid in the beginning of January and reduce that income stream

00:21:31 20 20 has been a tough year for some people. But for other companies and other

00:21:35 organizations it's kind of like there's a polar opposite it, Seth. I mean, some companies are

00:21:39 doing unbelievably well. And then other companies are truly suffering and it is

00:21:45 really a clarity that I have not seen before in our world. What are your thoughts? What are you seeing over there? Yeah

00:21:54 there's gosh it's hard to even dive into that piece

00:21:59 without creating another show between the haves and the have nots. Er, because there's such a division of clearly who's

00:22:07 capable in a pandemic and geared for a pandemic. And who is not

00:22:12 and it's really not a decision of the business. A lot of the time it's a decision of the governor of that state.

00:22:20 The legislators that are going to step in and say you get to bank it or doubt

00:22:26 God, we grieve for our friends and families that are in these situations today as well. But

00:22:33 on the pay, the bills. Now,

00:22:36 one of those things that comes across the decision making of what are the things that are out there that we can take advantage of in trying

00:22:47 to front, run some of these expenses. And if this is again, the itemized deduction if you are or not. And so

00:22:55 some of these out layers there, it might be a review of your medical bills. If you've had a significant medical situation out

00:23:01 there that you want to take a look at that if you are paying tuition, you can possibly do some prepay on tuition

00:23:11 and that's. Not one of those that a whole lot of people even

00:23:16 consider there's also, the contributing to college savings plans

00:23:21 there's a few of them out there that you might want to take a look at in some state deductions there. You can take a look at as well.

00:23:30 And another one that doesn't really show up all that often. But is available to some is the able account and that's if you have a

00:23:41 family has a special needs, you can contribute up to

00:23:45 15,000 this year to that able account which allows

00:23:49 people with qualifying disabilities to save money without jeopardizing the government benefits right in a pair can give to that account.

00:23:55 And if if you have a state where you have income tax, you'll get a state income tax deduction there's no federal on that.

00:24:05 But one that's one scenario where you can get that

00:24:09 another scenario is in the 5 29

00:24:12 world. If you have an income tax piece. You can get a deduction. If you use an in state program there as well.

00:24:18 Or maybe if you're doing some college planning and so

00:24:21 forth that's something you're probably going to want to sit down with the planner on and regarding that. But for the tax side that might actually work well,

00:24:29 the other thing that

00:24:31 as you're looking at your bills and you're looking at this and trying to structure

00:24:36 income. If you've had a tough year and

00:24:40 you have a you have a customer who's having a great year but might be buying for you next year. They may be looking for a way to create a bill to you and that's

00:24:52 great income to you. Have you create a bill to them? And that's what I'm trying to say and they may want to pay a bill out

00:24:57 this year. Well, you can receive it at a lower tax bracket because maybe you haven't had an underperforming year and those might be opportunities where you can work with

00:25:07 various customers and vendor relationships and try to build that that's something that I think can be strategized well and worked out

00:25:15 well, even with contracts even if it's going to be a delivery of contract period, you can have attorneys draft some of that stuff

00:25:21 up. So those are things that I would probably say really drive a lot of kind of

00:25:27 you. Got a few weeks here you're coming down to the wire. You know exactly what's going on. This is where some creative thought

00:25:35 is really relevant and I would sit down with an attorney, a CPA financial plan or somebody to help

00:25:41 strategize around. Some of this stuff with different questions, well,

00:25:44 then, what about some of these losses that we've got in the portfolio this last year? Gosh there's been such a disruption in the

00:25:54 market. Is really, this is going out to Warren Buffet, who lost a ton of money on

00:25:59 airlines. This is my advice to him. Yes,

00:26:04 hey, did you know that the tax code allows you to sell investments that have fallen below your purchase price that's a loss to you

00:26:12 and you can actually offset capital gains in taxable accounts.

00:26:19 So this is one of those nice little perks there and it's called tax loss harvesting. If you haven't taken a look at this, we believe it or not

00:26:27 we have a show on tax loss

00:26:30 harvesting. You can listen

00:26:32 to to really kind of get some of the nuances here because we do run out of time a lot of the time when we start getting into our shows and trying to make our way through

00:26:40 a lot of these topics. And the highlights reel

00:26:43 but, yeah, this is the time of year. And this is an interesting debate that Ben we're having this last year. What do we think the

00:26:49 end of year what do we think the market is going to do? And

00:26:53 Ben, why don't you go ahead and step into that one I'll set you up there. But thank you, Seth, thank you, thank you.

00:27:01 Well, no, I mean we've talked about this and he made great points about this too. And I really felt like there might be a sell off this month

00:27:09 because of tax loss harvesting. I really felt like this is one year where people had some losses in the beginning of the year

00:27:16 through the pandemic. And I think maybe some people reallocate it and took advantage of maybe oversold Airlines or

00:27:23 oversold energy or oversold hotels or whatever it has some substantial gains and it's a great time to sell and maybe offset some of those prior year losses.

00:27:34 Even that's going to be more for the equity player the person is trading stocks in that kind of

00:27:39 after tax

00:27:41 account

00:27:43 and

00:27:43 that's an

00:27:44 opportunity that you can take advantage of. If you did have some losses at the beginning of the year that

00:27:48 you can sell some gains and kind of try to wash some of that out and kind of reset your cost basis, which is great considering

00:27:57 potential tax changes that could be coming down the road and we're going to talk a little bit more about that in a little bit.

00:28:03 But selling stocks and what's going to happen in the market.

00:28:06 I mean, I think we got a good 6 9 months here. I think the market is going to be strong, generally for six to 9 months. I think there's going to be some peaks and

00:28:15 valleys. But I think overall the pandemic.

00:28:19 One of the things that I think is really pushing the market up is the amount of cash that people are saving by not

00:28:24 traveling. Not going out to eat. All the lockdowns have really created more cash flow, more

00:28:30 savings, less spending in a lot of different ways. And that has created opportunity for people to invest money. And so I think honestly there's going to be

00:28:41 there's going to be something. And if it's not a sell off in December is probably going to be a quick sell off in January and off we go again for another 6 9

00:28:48 months, how the year ends up next year? I don't know, I think it's generally positive. I don't have any reason to think it's

00:28:56 completely off the charts. But I think I

00:28:58 think if we have an overthrow with a Trump victory, I think we're going to have a little bit bigger of a Valley. And then a better of a mountain climb.

00:29:07 But I think there's more concerned long term in a Biden

00:29:10 presidency. So that's definitely, I mean th I don't know about you. And I hate

00:29:14 to throw out all these what? Ifs but I got to tell you, I saw some election fraud, video stuff that I just can't believe that's going on. So I never really, I mean, gosh,

00:29:25 that was a parent fraud to me

00:29:28 and it's 36 to 50,000 votes just in one little county in one little spot where they were counting. That is really concerning how organized that was

00:29:37 not to create too much.

00:29:39 People among our listeners, but that was a scary thing. So those kind of unknown create a lot of

00:29:46 anything could happen moving forward. So I would say managing tax plays and then taking on long term

00:29:53 equity holds for long term positions with companies. You feel are strong. No matter what happens. Good, bad or ugly in between is really the play.

00:30:01 I love how you

00:30:03 covered both sides of the coin there because there was the discussion that we've had on

00:30:07 this and we've kind of got around and around and you just mean you took over what I was going to say for me very nicely. I

00:30:14 won't rehash this point with you, Ben. But I will move on to another that I hear hear. I want to hear your thoughts on

00:30:22 later later we'll see how it all plays out, then I'll say then I'll say told you. So

00:30:28 maybe this year you want to max out your retirement plan, right? I think if you have a four O 1 K out there, if you have a retirement plan set

00:30:39 up. This is your last kind of push that you have to be able to do that. Now, if you're in that IRA

00:30:47 conversation, you do have some time left on the clock. Basically,

00:30:52 until well, usually it's April 15 that have to take a look at the counter because it did,

00:30:56 I think this last year. But, yeah, so if you have that April 15 date ahead of you that's fine. But if you're in that for a one world of

00:31:04 your retirement plan right now you've got a little bit of time to possibly push

00:31:09 through if you can. If you can kind of

00:31:11 move over and have some savings because you haven't been traveling and you haven't been eating out like Ben was talking about. Maybe use a little bit of that

00:31:19 and push off a little bit of that income into your retirement account, so 19 and a half thousand

00:31:27 6,500 dollar catchup is currently where that sits for the 4 1 K world

00:31:32 and if you didn't catch the HSA show that we did, I love this we're just getting so many references back to our podcast and old shows that we not even that old. I mean,

00:31:42 the current. But yeah there's an HSA. If you have an HSA, that is one of our favorite

00:31:51 triple threats in the tax world to take advantage of, yeah, that is something that is just not

00:31:56 given the road that it needs to be on. Honestly, it was a great reminder for me. It was a good show it's kind of something that loses a lot of

00:32:05 it's. Just not sticking forefront in a lot of people's minds. But that is such an amazing program. You can do 7,100 dollars or 8,100 dollars this year. If you're over

00:32:17 55 now normally it's over 50 but in the HSA world's 55 Yeah. Go back to that show. If you haven't listened to that

00:32:22 show, that would definitely be a number one winner for you guys to

00:32:26 reference and like you said, so that's kind of fun that we're going over the shows. But, you know, when it comes to

00:32:31 when it comes to maxing out your retirement plan we've also had shows that you can go back to about

00:32:38 whether a 4 1 K even makes sense and how much you should be putting into a four and and what might be relevant for you.

00:32:43 And it has to do with your tax brackets and your tax levels. And all the different things going on and that would be another show to reference inside of this

00:32:52 and kind of realizing that Hey you never want to miss out on the free money in the 4 1 K. If your employer is

00:32:59 matching your retirement

00:33:00 plan, you better get every penny into there for that match. There is no, if ands or buts you do it if it's a struggle. If it's a stretch. You figure out how to make it

00:33:08 work. That's free money and you'd be silly to miss out. On that, anything above that it's going to be a conversation for you with a

00:33:15 CPA or a financial planner to really if that makes sense both near term and long term for you

00:33:23 folks. This is a good time for us to tell you that you can reach us at five to 6 5 5 1 or info at your money on tap.

00:33:34 Com we're gonna take a quick break. And when we come back we're going to wrap up with a

00:33:41 point. Well

00:33:42 we're going to get there

00:33:43 we're going to be able to get to all the points today we're going to

00:33:46 try. But yeah you're listening on the money on TAB we're going to take a quick break and we're going to talk more about what you can do to wrap up to 20 20

00:33:53 with some successful tax planning. Thank you we'll be right back.

00:34:05 Hi, my name is Ben Bresha one of the cohorts. Some money on

00:34:08 tab. If you have questions when it comes to your retirement and they're, looking for a personalized solution, contact us a great shot Financial Group

00:34:14 in today's volatile stock market. We can help you plan to find your successful retirement solution am I saving enough? Am I saving into the right? I

00:34:22 do my investments match my appetite for risk. Do I have a tax strategy that is going to help me keep more of what I earn, how can I maximize my Social Security

00:34:31 income? If you are like most people, you are getting closer and closer to your retirement and may be wondering if you're taking the right

00:34:37 steps. If you're in retirement, you may be wondering. Am I maximizing my income? While I state and caring for my family.

00:34:44 We talk about all things financial in what we call three dimensional.

00:34:47 Investing putting a plan around your financial future. If you feel that now is the time to start getting the answers to some of these questions for your own

00:34:54 situation. Give us a call up ratio financial 8 5 2 to 6 8 5 5

00:34:59 1 headquartered in pet for New Hampshire. We have offices throughout New England and across the

00:35:04 country. I would love the opportunity to show you how we can help there's absolutely no cost or obligation just to meet with us. And we welcome you to our

00:35:11 office. Call us at 5 2 2 6 8 5 5 1 now back to money on tap with Ben and

00:35:24 welcome back. You listen to the money on

00:35:26 tap. My name is screen I'm here with Ben brace shot and you can reach us at 5 5 to 6 5 5

00:35:33 1 first of all I want to thank you for listening today. Second of all Thank you for calling. We appreciate the feedback we love working with

00:35:40 you. And if you are looking for some direction right now in your

00:35:44 finances and your planning that's what Ben and I do we're financial planners. Bracha Financial Group is the name of our company and we're really

00:35:53 happy and

00:35:54 honored that you give us the opportunity to give some insight to have a

00:35:58 look to see what the lay of the land is here and help you take that next step forward. Giving you the confidence to move

00:36:06 forward is really what the planning world provides in so many ways today we're talking about 20 22 in a wrap on what are some of

00:36:16 the tax opportunities or opportunity to lower

00:36:20 your taxes. The first way I said that might sound like we're gonna try to spend more taxes this

00:36:26 year. And we will get there because maybe maybe that's the right choice,

00:36:30 right? It really depends on what is the landscape what's the big picture for you. But some of these things that we're discussing and going to be coming to

00:36:40 we've had shows about in past

00:36:42 and you can go back and reference some of our money on tap on podcast we're out there in every venue possible. So take a look at whatever works well for you.

00:36:51 And you can find us at money on tap and we've done a lot of shows.

00:36:56 What we're just highlighting

00:36:58 today and we dove into those. We want to really give you

00:37:02 some of the more fine details of how these different pieces work and if they possibly could be working for you. So next up we have

00:37:13 Selfemployed solo for a

00:37:15 taking advantage of that opportunity if that is you or what you have is a solopreneur that you can take advantage of right now.

00:37:25 Yeah,

00:37:26 th th. A Selfemployed side as being self employed ourselves, I mean, this is something that we

00:37:32 are obviously directly engaged in on a daily basis to solo for

00:37:37 ink, though, is something that is only for someone who owns a business by themselves or with their spouse or with the partners. You can't have employees in

00:37:48 this, but it maxes out a for one. Can away you haven't seen before it uses the defined contribution or the fork contribution piece that you can do. But it also has that

00:38:00 tension to find benefit piece that you can also add to it which allows you to get as much as

00:38:06 57,000 dollars in the plan during the year. And if you're over 50 years, old you can get

00:38:14 63,500 I mean, this could be a

00:38:16 massive deduction piece for somebody. Who's had a breakout year and you're by yourself. Or you have your spouse working for,

00:38:23 you know, family members or you just have partners. This is a big item. We do this from time to time for. People are like wait we need to open up a solo for

00:38:31 and make a

00:38:33 contribution that's a quick phone call to us to get that done.

00:38:37 Now being self employed. We talked a little bit about paying bills. Now, number one and so forth but it comes

00:38:43 to business expenses. This is the number one play where you can

00:38:47 tear. What you see potentially in the horizon versus what you see in the past. If you don't have a lot of

00:38:53 income, pushing expenses into this year may not really be a great move. But if you had a breakout here,

00:39:01 we buy our computers at the end of the year. We look for the Black Friday deals. We look for all of

00:39:07 that. But that's where we really stage. A lot of our expenses is trying to figure out which year we should buy them in. And when you get to the end of the year,

00:39:14 you know you've got two abilities to choose which year it is is you get to that end of the December and even right after Christmas there's huge, huge

00:39:22 sales. Huge technology sales things that didn't sell next on our list. We have donor advised funds here now we've done a show on this too.

00:39:33 We show on this recently as well. But you know, Seth, probably out of any year ever to do a donor. Advised fund it would be this

00:39:43 year. This would be the year of all years to consider doing a donor advised fund for a couple reasons and I'm really just going to jump

00:39:53 into potentially a Biden

00:39:56 presidency. And what could happen here in the fact that

00:40:01 he's going to change a lot of the charitable stuff where if you're making over

00:40:05 400,000 dollars. And that sounds like an astronomical amount of money. But when you come in a self employed person

00:40:10 and companies and this that the other thing I could really hit you hard. Normally you

00:40:18 get to itemize your deductions to

00:40:22 37% to 30% of your income over 400,000 Biden was to reduce that to

00:40:29 28% now that is a very large, large hit. So what that would do is if you were going to give a hundred thousand dollars to children's hospital for

00:40:38 instance, normally you get 37,000 dollar

00:40:42 savings

00:40:44 that's a pretty good

00:40:46 benefit. But now I would only be

00:40:47 28,000 that just gives you kind of a real hit on giving the same amount in a year over year. Now, when it comes to donor advised funds and the fact that you can

00:40:56 it's like a hundred thousand dollars well, if you could wrap up a bunch of your charitable contributions all in this year and then break them

00:41:05 out with the donor advised fund. If you go back to our show. You can literally say Hey I'm on. I want to give

00:41:12 33,333 dollars and 33

00:41:13 cents every year. For the next here here's my Hunter

00:41:16 grand and he put it in this year. You get the deduction this year and then the donor advised fund will actually send it out over the next three

00:41:24 years, so it says if giving for three straight years, which is fine, but you've accomplished a much potentially higher deduction. Now that you would have had.

00:41:33 If you do it over the next few years that's a big hit for a lot of

00:41:38 people, especially people who give regularly to charities or churches and so forth and we work with a lot of people that given those in those worlds and

00:41:47 that's a big deal and don't vise funds our way to wrap that up in a very nice bow and allow you to get

00:41:55 that can do your itemized deductions mostly and get better credits across the board. So give us a call. If that's an issue for you or concern?

00:42:04 Yeah, need I say more. We're gonna reference the giving show which was three shows go now where we cover a few of these specific giving strategies because we

00:42:14 love the opportunity at this season to be charitable minded. And if that's you give us a call at five to 6 5 5 info at your money on tap.

00:42:25 Com there's just a much larger conversation there. And one of the things that we talked about here before as well. In his honor list, today

00:42:35 is giving your IRA money to charities. So this has to do with

00:42:42 RMDs don't you love the lingo I'm going to actually tell you what that means to it's called a required minimum distribution. And if you have qualified

00:42:50 money that IRA out there and you hit 72 used to be seven and a half now it's

00:42:56 72 the IRA rules

00:42:59 require you to start taking income off of those to start taking

00:43:04 distributions and that's. Ordinary income is how that comes out of an IRA.

00:43:09 So you're required to take this money. Maybe you don't need that money. But it's going to show up

00:43:14 it's going to show up at the end of the

00:43:16 year for you on that tax, Bill is ordinary income. Well, what you can do is instead of taking that are only taking part of that, if that's

00:43:23 what works well for you? You can take that and you can gift it directly to the charity. So it never shows up as ordinary income in your taxes and it's it's a

00:43:36 wonderful to pass through in a more efficient way for you to be

00:43:42 gifting those money to charities. And in the way that works out on your taxes. Please

00:43:47 connect with your CPA and have them run a couple of different scenarios there for you which

00:43:51 they will do to take a look and see what's the benefit there and it's one of those things that

00:43:57 surprisingly, it just takes a little bit of thought. Takes a little bit of doing now, the key is that that money cannot come to you. It does have to go directly to the

00:44:05 charity. So that's one of those

00:44:08 ABCs that we talk about all the time at this time of year. You know, I think the thing about that is that when you can't get that itemized deduction on the

00:44:17 gift that basically creates the same outcome is that and I think that's probably the easiest way I've heard it

00:44:23 explained. So if you're looking to give to charities and you can't itemize giving through your plans directly to the charities creates the same outcome for you as itemizing

00:44:34 number seven is

00:44:36 considering a Roth conversion. Now, we have talked about this we've done multiple shows on this. And you know,

00:44:43 if you've had a year where it hasn't been fantastic and you're kind of blow your normal income you can take on a little bit of income without feeling too

00:44:54 burdened. Converting your IRA to a Roth is a wonderful

00:44:59 opportunity in the idea. That it will now grow tax free

00:45:04 tax deferred and come out tax free. I mean, once you make this tax payment it's all over you don't have any more taxes on this money as long as you live under the current

00:45:13 loss.

00:45:15 So this is something that's really, really important for people. But one of the big pitfalls, we talk about this in the show

00:45:24 is that you got to pay the taxes

00:45:26 yourself? So it can't come out of the conversion dollars. Like, if you convert 10,000 out of your

00:45:31 IRA. You got to put 10,000 into the Roth.

00:45:34 Now, if you're in a 20% tax bracket you're going to have to come up with 2,000 dollars on your own to pay those taxes, totally separate. So

00:45:42 that's a new financial burden for you.

00:45:44 And we talked about the safety taxes that you and, well we're going to save your taxes long term on this story. So maybe this was the one topic.

00:45:51 But this is something worth considering before your especially if you've had kind of a weird year you've got some savings. You

00:45:58 haven't been spending as much but you're not making as much you might be able to afford that and if we do have a Biden presidency and

00:46:07 they take the Senate and there's all sorts of stuff there that the tax laws change all over the

00:46:12 place taxes are going to go up. They want to repeal the tax, the Trump tax code and that's going to cause everyone's taxes to rise it doesn't matter what

00:46:20 income bracket you're in your taxes are going up all the deductions. All the write offs. All the automatic

00:46:29 things that happen

00:46:31 it's just across the board. Everyone's taxes are going

00:46:33 up.

00:46:34 So a Roth conversion might really be the very best thing for you to do this year. Even if you've had a large gain recently, even if you had a large run

00:46:41 up, I know personally we've talked about doing a Roth conversion

00:46:44 for 6 8 months here. Set with this market being pulled back it's like, hey, listen, this is a great time. I did some Roth

00:46:50 converting two or 3 different times this year. So it's something worth considering

00:46:55 especially especially assets in your IRA that are underwater. Like if you're at a loss for the year.

00:47:01 If you're down let's say you

00:47:02 bought let's say you bought Boeing at 300 dollars and it's trading at low 200 it's still probably a great convertible asset that's something worth considering.

00:47:11 Yeah, the other thing about this is is this can be something that you can do over time as well. I know we took

00:47:19 parts back in March and April had partial conversions at those times. Just taking a look at what that tax code or where we could. But up into that next tax bracket

00:47:31 in having the capital available to go ahead and pay the taxes in this year as

00:47:35 well, but it's not an all or nothing. Folks there's a lot a lot of times it's just one of those things that you want to grab a piece in a part and you move it on over.

00:47:44 But you make sure that you're not putting yourself into a situation. Where

00:47:48 you can't pay those taxes like Ben was talking

00:47:51 about that. You do understand what it is that you are doing here because there's been a lot of people that have just made it a big mistake and had huge

00:47:59 taxable years. So be aware of those things. Okay, I think we're still gonna butt up against topic here.

00:48:06 That is going to be the rap for us on this show today that we've also talked about back in.

00:48:13 Gosh, a couple of months ago. I talked about a Biden versus Trump scenario. And some of the concerns that are out there and trying to

00:48:21 forecast. What changes could possibly come down the road here

00:48:26 with the potential to be a Biden presidency or

00:48:30 a Democratic majority in the Senate, we don't know still that's kind of where everything is at in. Taking a look at

00:48:38 those implications is where we're at on number three capital gains tax. Yeah, oh,

00:48:46 this is bad news. This is bad news. After all that appreciation stuff, I hate to drop the show on some bad news. Bad over here when it comes to capital gains tax

00:48:57 it's 2,020 were one

00:49:01 where basically what happens or what Biden wants to have happen if he's president is to move to your income tax bracket, essentially

00:49:10 specifically and very directly for people over a million dollars of income. Now, that probably excludes a large volume of our

00:49:18 listeners, but it's not just that. He wants to change the capital gains rate all over the place.

00:49:23 But very specifically, he has said that it was over a million bucks. He wanted to go 20% capital gains rate to

00:49:30 39.6 that's almost doubling on capital gains. Let me tell you why that's a bad hit? Why that's bad for our stock

00:49:37 market. What that does is that potentially

00:49:40 creates a lot of concern about where you invest your money. And looking for longer holding assets to kind of outweigh the gains tax rate.

00:49:49 People may not own things other than just

00:49:52 pure blue chip value stocks that sit there

00:49:55 and do what they do. So that might make those stocks rise because there's more holding. But more people afraid to buy and sell and

00:50:02 transact higher capital gains rate is problematic.

00:50:05 Usually, this is a big issue and it's going cause a lot of different strategies around how people invest. If this actually gets through and I would tell you that

00:50:15 looking at your 20 20 year, you may want to kind of assure yourself

00:50:21 of your 15 or

00:50:23 20% capital gain and sell some of those long term assets and lock in a cost basis. So that now, if you bought a stock for say, 10,000

00:50:33 dollars and let's say it's worth 20,000 dollars, if you sell that today you're going to pay maybe you're at the 10

00:50:40 tax rate of the gain of the 10,000 bucks. So you spend 2,000 dollars but moving forward, your stock is

00:50:49 now locked in your values. Locked in at its current tax rate, you have a new cost basis. And now you

00:50:54 have net 18,000 dollars that will never get taxed again. And now maybe you move forward with that and say, well,

00:51:00 I was able to lock in that tax rate and the rest of it's going to be taxed on whatever tax rate. Moving

00:51:05 forward and that's one of the reasons why I think we might even see a pull back at the end of this year. So right at the end of the month.

00:51:12 Is this particular reason

00:51:15 alone? Yeah that's definitely one of the things that we take a look at right now and understanding those market pieces. But what about some of these other assets that

00:51:24 people accumulate just through business and transitioning businesses and that's one of the parts that

00:51:33 we're seeing as well. Like, for instance let's just say that you have a daughter and you're going to sell your car dealership to her and

00:51:43 March eighteenth is her birthday and that's when you were planning on making that transition,

00:51:48 you might consider moving that up to this year. If it all possible or if you happen to be

00:51:54 CPA and have a

00:51:56 schedule to retire. May you might want to put that buy out to the partners to

00:52:03 this time of year and this is something that is hopefully been in the works and planned. And all the numbers are there and understood,

00:52:10 because that's how planning works and it's a big decision. And those are big

00:52:14 numbers to be pushing through. But those are the kind of considerations folks that we're talking about right now.

00:52:20 But there's just an unknown. What we don't know is we don't know the one and the two, but that's one of the things

00:52:26 that taking a look at the big picture and going through this planning process really helps accomplish for

00:52:30 you. And so if you're not having the conversation. Or if you haven't hopefully we're getting this to you in

00:52:36 time. Hey, we want to make sure that you have a little bit of time to pull the lever here and make sure that you go through the

00:52:42 process it's a busy time of year for Ben and I. So give us a call at

00:52:47 6 5 5 1 or info at your money on tap com we're here to help you the best way we possibly can, but

00:52:55 yeah that's what it is. This is the 20 20 last minute tax moves. That you guys can be taken advantage of Ben. What else do you

00:53:01 have that's it if everyone have a wonderful day and we'll talk to you next week.

00:53:06 Thank you you've been listening to money on tap. You can reach us at 5 5 2 to 6 8 5 5 1 or info at your money on tap

00:53:14 com we've enjoyed the show today we've been grateful for you for joining

00:53:20 us. We thank you for calling us and giving us an opportunity to speak into your life and be trusted. Advisors with you that's something we hold really sacred

00:53:31 and we want to appreciate you for that. So thank you so much. And we just

00:53:35 also want to appreciate you for allowing us to be who we are and have fun. What we do on a daily basis which is financial

00:53:44 planning. You can also find us at Facebook we're at a three D

00:53:50 investing. We are also on Twitter at BFG underscore LLC

00:53:56 and as always, you can also find this at your money on tap.

00:54:01 Com, thanks for listening. Thanks for liking our podcast. We appreciate you and we can't wait to make it a great day and a great life with you here at money on

00:54:12 tap. The views expressed are not necessarily the opinion of this radio state and should not be construed directly or

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00:54:24 invested. No strategy product, material or tool mentioned in a sure of profit or protect against loss. Please note that individual situations can vary. Therefore. The

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00:55:18 well, bye.

00:00:00 Welcome to money on tap

00:00:15 money on tap your personal finance

00:00:17 headquarters where we bring out the professional experience. So fine, what we call three dimensional investing utilizing insurance brokerage and Seabased planning

00:00:26 that's what we do on this show. We look at all sides of the issues. We bring a fully independent planning perspective to the table.

00:00:36 Welcome to money on tap. My name is South Crossman in bed Bracha glad to have you aboard today, folks it's a big

00:00:42 one. This is the show that we've been talking about for. Well, the last four years. Pretty much if you're

00:00:51 wondering what is this all been leading up to? Well, it is today it's here and now you can reach us at 8 5 5 2 2 6 8 5 5 1 or info at your money on top.

00:01:01 Com why why would I say today is the day for this show. Well,

00:01:06 it on your phone. Get on your laptop, your bad whatever. And just take a look at the news because the do hit

00:01:15 30,000 the Dow 30 folks hit 30,000

00:01:19 we're going to talk about that more coming up beyond that real

00:01:25 estate, right? Real estate has been hit so it's been hit hard as a sector in the investment world.

00:01:35 That's just been one of the pandemic stories that we've been watching and following. But today we want to ask you? The question we're going to bring on an

00:01:44 expert, somebody I know pretty well. Then this pretty well, you know her much better than I do Seth

00:01:50 and yeah we're bringing on SES wife Kira Crossman, who is a CCI. She is a certified commercial investment

00:01:59 member which is basically

00:02:02 she is an

00:02:03 expert in commercial investment, real

00:02:05 estate and I'm pretty excited. I mean that's got a pretty key connection here and it's kind of fun to have her coming on a little bit later,

00:02:12 but yeah we're going to talk a little bit about real estate. I mean, the do is hit 30,000 and everybody's like stock stock stock. But real estate has been just

00:02:21 rushed through this pandemic. And the question

00:02:24 is are you taking notice?

00:02:26 Are you evaluating opportunities that might be staring you right in the face and just ignoring them because you might be afraid of going back to work. So

00:02:35 what's next, pretty loaded question there. But it's a good lead in for us because now it's time for money in the news.

00:02:51 So the do has hit 30,000

00:02:54 November 10 or 20 20

00:02:56 the Dow hits

00:02:57 it. We called it here on the show, a while back. It was four or 5 months ago. We talked about how we felt that that was going to hit what

00:03:03 30,000 before the end of this year, beginning of

00:03:06 next. Yeah,

00:03:07 I got to jump in right

00:03:09 there. That was actually back in June June 20 fifth that we released that show real estate, your number one hard asset. Pretty funny that we're doing a real estate show

00:03:15 today. And we were talking about the Dow 30 hey, Roger, can you please grab that and have a listen to this,

00:03:23 Ben. And I guess what we called. Oh, I don't know we're going on eight months ago. Maybe. I think we call the Dow at 30

00:03:30 Yeah,

00:03:31 no, no. I think I think the do if we get past the corona virus here, I think the Dow hits

00:03:37 30,000 end of this year, beginning of next. I still think we have because the thing is, is that the Fed has poured and the government supports so much

00:03:44 money. Into our economy, probably more than I don't even know if it's more it's just so much money to that offsets. Everything we're not spending not

00:03:53 doing. So does the do it remember? The Dow is only the 30 largest companies in the US. So, I mean it's not like we're talking about the S AMP P 500 and the 500 large

00:04:02 caps we're talking about 30 companies. So we based progress on such a small

00:04:09 point in the marketplace as a whole. But when you talk about except just to even compound on that. Campbell

00:04:15 Harvey he's a professor of finance at the focus school at Duke University. He predicted a recession for early 20 20 early 21 he's got

00:04:25 basically a perfect record for calling recessions and his betting. This one will be over by the end of 20 20 I like this

00:04:33 guy we've been talking about this because, honestly, it could not hit

00:04:38 30,000 because ultimately with all the money and all the stimulus and all the stuff. I mean, the GDP and the economy was

00:04:44 skyrocketing. We were heading there to begin with. And then we had this crushing pandemic on our

00:04:49 economy. And when the is

00:04:52 it we knew that just the rebound off of that alone had to send it in that direction. It just had to be there and that is something that we have been calculating

00:05:03 inside our story for a long time. But what is the do? We did the Dow 30 show. We talked about it. It's 30 companies it's 30 stocks

00:05:12 companies move in and out. Exxon was kicked out this

00:05:17 year. Who else was kicked out? Somebody else was kicked out. So

00:05:22 they're rotating camera

00:05:26 on radio

00:05:29 and we have

00:05:32 go through this experience of always figuring out that the

00:05:35 do if it's up the markets doing. Great problem is is the Dow was only 30 stocks and we talk about that all the time it's only 30 companies it's only 30 stocks and

00:05:46 it's chosen the SMP board as well as

00:05:50 the Wall Street Journal editors, which that goes back to the creation of the DOL, which was

00:05:57 which brought originally the 12

00:06:01 smokestack stocks. And it was the Wall Street Journal's editor that created this Indice to really try to

00:06:08 describe what's going on in the market. And then it grew to 30 and it's remained at 30

00:06:14 or pretty much the life of the index. The majority of the but the names have changed

00:06:22 and some of the methodology around it has changed because it's a price weighted

00:06:27 Indicee not a market weighted into see. So, for instance, Apple is the largest stock that's in

00:06:33 the

00:06:35 biggest company. Biggest company, yeah. But when they did a four to 1 split it changed. How the do was priced because they lowered the price of the stock.

00:06:48 So, anyway, so you have

00:06:50 a really kind of interesting methodology. So is it really gives us a

00:06:56 huge bellwether to what's going on in the economy

00:07:00 because that would probably be more likely. The SMP 500 but it's a lot of fun and it's historic and it's does tell us some interesting things here. Because why

00:07:13 is technology a defensive stock when the and

00:07:18 how does that

00:07:20 happen? No, that's a great

00:07:21 point. And, you know, the thing is is the weird thing about the DOS. It doesn't include utilities or real estate. So I'm really excited to have one of those

00:07:28 sectors participating in today's show the real estate piece, but it's the it's

00:07:35 30 large US companies that's how it's described it's not the largest

00:07:40 even and so it's kind of interesting because Exxon was kicked out.

00:07:44 So they have the exclusive right to just say, you're gone. And it doesn't really have a waiting on that, but what is interesting is how

00:07:53 when sense was saying it's a price weighted versus a market value. What they're saying is is the price of the

00:08:00 stock of each individual stock, no matter how big the company is is how they figure it out. So basically, the largest price

00:08:08 stock gets more attention when figuring out how the down moves

00:08:13 where in the S AMP P 500 the value of the company becomes more relevant. And so they're totally different and what's interesting is

00:08:23 they have developed the Dow Devisor which is basically this thing that looks like

00:08:29 Pi and it's like

00:08:32 7 5 6 5 3 3 I think they're off by one millionth of a decimal on this, but I'm not sure

00:08:41 because I just plugged that in. And I came up. I didn't come up with 30,000 Yeah, I didn't either and so

00:08:47 but the thing is is they have this it's designed to absorb stock split and deal with all of those types of things in the Divisor

00:08:56 and when they rotate these companies, like when Apple did it split. It went from the largest price stock

00:09:03 to on the bottom of the

00:09:05 ladder and instantly, if Apple doesn't climb,

00:09:08 you know it doesn't mean anything anymore. But before as Apple was shooting up, it was carrying the do all the way up to the top various times was Boeing.

00:09:18 But for instance that's a story that we know pretty well with a 7 37 Max and

00:09:25 crash. I burned there. Yeah, but just right before that

00:09:32 right before that, it was on a terror. And it was, it was really pushing that the numbers be the Dow. And that was part of the story of the do,

00:09:43 here we are. How long did it take us to get from 20,000 because we did a show on the do 20,000

00:09:54 where were we at 20 16 when we were talking about those numbers. And in the context of four years,

00:10:01 we've climbed another 10,000

00:10:06 and how long did it take for that previous thousand or 10,000 at the 10 10 to 20,000 level, which was a doubling of the doubt, it was 18 years.

00:10:17 The relationship. The correlation is not well, it isn't precise. Because a doubling doesn't equal a third

00:10:27 right after. So anyway it's been moving really, really fast and it's an exceptional thing to take a look at,

00:10:35 yeah that's the thing. Are we talking about a 40,000 set? Is that where we're going now?

00:10:43 I don't know we'll see we're in the middle of the lock down again.

00:10:48 Yeah, how long will it take for these companies to again

00:10:54 push? Well, another 10,000 is less than the 10 times of previously.

00:11:01 So she would be talking about a 60,000 because that's

00:11:08 that's only a couple couple decades away,

00:11:13 right? Well that's a tough one to call. But it's gonna be a fun show to,

00:11:18 yeah. I think ultimately what our point is here today is that we've hit a historic monumental event. And this is something that

00:11:26 everyone will remember it is a day that will not go

00:11:33 Unremembered it has been focused on is something bigger than do. 20 has been one of these things that people have been talking about is 40 coming around the

00:11:41 corner we're not ready to call that. But I do think that we have a lot to really iron out our economy and all the things that are going on

00:11:50 and how this pandemic kind of shifts out. I mean there's still election

00:11:54 questions and all sorts of different pieces. That are happening in our world around us. And I think we need to get to a better

00:12:00 place before we can really do that. And, you know, when you hit all time highs everyone's excited and that's what I usually say. Sometimes you sell the news.

00:12:13 And that's when you really want to start looking

00:12:17 at how do I be

00:12:19 patient? Take

00:12:20 profits, maybe enjoy. What I've made and pull back a little bit? Not necessarily a bad conservative story after we've come out of a pandemic and made some real

00:12:29 real huge numbers this year. Yeah, if you were to take a look at

00:12:35 what is precious to us about this. Now is the 18 96 to 10

00:12:41 we just don't have any

00:12:44 other it is he out there that takes us so far back if we were to take a look at what has the do come through it's the Great Depression. It's World War

00:12:55 two, the cold war. Com Spanish blue 9 11

00:13:01 2,008 a cove.

00:13:04 And it really is an exceptional story to be where we are today. Post

00:13:11 hopefully on the back side of a

00:13:14 pandemic with all the news that we're seeing

00:13:17 currently with the virus news and there's a lot of hope out there there's just a ton of hope out there and it's a great story for us to be able to talk about

00:13:26 today and have some fun with as well. Yeah, and there's a lot of people listening to the show saying, hey, I kind of wish I was living somewhere else right now

00:13:37 I found this article of blue Berg. And as we as we experience, the holidays

00:13:46 are thankful for Thanksgiving. And all the things that has brought to us, a lot of people are probably saying to themselves. I wish I was living somewhere else.

00:13:53 I wish I was in a different state. A different country, which I wasn't dealing with

00:13:58 this. And so we have an article here quickly we're just going to spend two minutes on it

00:14:03 and sometimes perspective is really good, but right

00:14:06 now, if you were living in New Zealand, it is considered the number one place to live in relation to covet. Not bad number one on the list now, this list shows

00:14:19 53 countries here and the United States is number

00:14:23 18 so it could be worse. And I mean, things places that I would think would be good. Our way below the list. I mean, you've got Ireland at 20 and you got UK at 28 you

00:14:32 got Austria at 36 and you got France at 45

00:14:37 but

00:14:39 honestly I'm looking at this list set. And the Bloomberg article from Rachel Chang Ginsen hung and Kevin

00:14:48 barley it's a little bit biased because

00:14:51 Singapore has a zero test positive rate I'm not sure I'm not sure that they're reporting correctly. What do you think? Yeah, I saw that.

00:14:59 That was an interesting find, I think I came across my desk

00:15:04 yesterday. I was thinking about New Zealand. Always being a great place to go. Of course, of course, I don't care what time of year you're talking about

00:15:13 everybody that I've

00:15:14 that I've ever talked to said he this is a bucket, less place. You have to put it on and

00:15:20 don't even think that two weeks is going to cut it like you go there and you need to figure out a way to stay a year.

00:15:27 Yeah, of course. But I'm actually shocked

00:15:32 that Hong Kong and Singapore which are considered better the US have. I mean, Hong Kong says it's point 1%

00:15:40 test positive rate, I mean that's crazy that's actually pretty

00:15:45 phenomenal, but they're not really high on the list New Zealand here. I mean there's a zero. But the resilient score is higher,

00:15:52 but you could be in Hong Kong right now or Singapore. Not not connecting with any covet. I think they're lying to us.

00:16:03 I'm gonna go back and talk about the do

00:16:08 you guys. This

00:16:09 is a fun part of our show. We hope you enjoy it it's money in the news. We are going to come back after we take a quick break. You can reach us at 8 5 5 to

00:16:17 6 8 5 5 1 or info at your money on tap com when we come back, ladies and gentlemen, it is a crust man CCI

00:16:29 and that is my better half and we're gonna just we're going to hand the mic over to her and we're going to talk about real estate as an asset

00:16:39 as an asset class right now we're going to have a gonna. Have a lot of fun, definitely. Stick around,

00:16:49 hi. My name is Ben Bresha one of the cool. Some money on

00:16:52 tab. If you have questions when it comes to your retirement and they're looking for a personalized

00:16:56 solution. Contact us a Grashof Financial Group

00:16:58 in today's fallen stock market. We can help you plan to find your successful retirement solution am I saving enough? Am I saving into the right

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00:18:00 now back to money on tap with Ben and sat.

00:18:05 Welcome back you're listening money on tap. You can reach us at 8 5 5 to 2 6 8 5 5 1 or info at your money on tap.

00:18:16 Com folks, it has been a rollercoaster out there. We've talked about the Dow 30 hitting

00:18:23 30,000 and

00:18:25 to keep it fair and balanced there's a sector that's missing from the Dow that's real estate. And in order to represent that today, I'm so

00:18:34 excited to be able to introduce you to

00:18:38 the lovely. The incredible, the amazing cure, a Crossman CCI and I happen to have the honor of being her husband

00:18:48 and without further ado we're going to talk about real estate. Okay, hard that's a hard asset

00:18:56 dirt. You got

00:18:58 buildings you've got construction you've got so many different places that you can really go with this

00:19:03 and it's really fun to have you with us today. Kara, thank you. Thank you for having me I'm excited to be in here. Well, this is, as I said earlier, a better hole

00:19:13 people that better half. But I think it's better hole. So we're gonna go with that

00:19:17 and I get to ask her a lot of questions today I'm going to take a little bit of a lead here. Take the bias that assess approach

00:19:24 here

00:19:25 but let's first start off. Tell us a little bit about yourself. We know

00:19:29 you're a

00:19:30 scam. We know you're an expert in commercial real

00:19:32 estate tells little bit

00:19:34 about

00:19:34 how you got into real estate. Just to give people a little bit of

00:19:37 background on how long you've been in this and a little bit about your company? Well, I kind of tease that I've been real estate, my whole life because my dad is a

00:19:45 incredibly talented and well known planning

00:19:49 consultant and he started his own consulting business in the early eighties during the recession. When the engineer he was working for Reich laid

00:19:57 off. Nothing was

00:19:58 happening

00:19:59 and he blew it up, I mean, he was just amazing. He would go out and stop by people's property and just say hey, you

00:20:05 know I've got this developer that I think would really like the project like this. Do you have any interest in selling?

00:20:11 So, of course, it was any time I was in the car with him. He, oh, I gotta stop and talk to this person. Real quick

00:20:17 and I loved it. I watched him put together land

00:20:20 deals so many times in people's living

00:20:23 room as a little girl. And of course, all growing up. So

00:20:26 eventually, as a family business for a while and we all help my sister type, I would clean the office, I filed and I got

00:20:34 around the land development. I mean, he started an engineering for basically it's good from a consulting

00:20:40 business. And so we were all involved and I just heard the language for years and years. And so it's just been around it forever

00:20:48 and in high school, I worked as a

00:20:51 surveyor on his surveying crew and then taught myself AutoCAD so I really

00:20:57 learned things kind of backwards or from the ground up. Literally the engineering and the planning and the

00:21:03 surveying, I read maps in new construction from a very young.

00:21:07 And eventually I went to college and went back to work for him. And that's a project manager, so they called me a plat pusher. So when they would

00:21:18 design subdivisions there's a partition or subdivision plot map. And I would get it through entitlement process and approved.

00:21:29 So that was my start

00:21:32 eventually. She sounds like there should be some child labor laws involved here.

00:21:37 Well, I was. I just loved it. I mean I loved watching the excavation Cruise. I got to work. Sometimes they would let me get up there. Play with

00:21:46 the track and dig and it was just awesome, I loved it. So I got my license. I did very well.

00:21:54 Knew exactly what to do. Watch from after watching my dad all these years. So I just would go, I'm just gonna get listings and I would just go get that's

00:22:03 approved. And then I would end up selling the homes or

00:22:07 anything that was built on it and

00:22:10 it was kind of a rural area where I was at Redmond Oregon. So Bob Mayfield was the managing broker and he taught

00:22:17 me that I had to learn how to do everything if I was going to survive in that area. So I learned how to do everything it was

00:22:24 from mobile homes on rural property to partial buildings,

00:22:29 managing properties leasing everything, new construction

00:22:33 sales. And so I did really well there for a while. And

00:22:36 then I ended up needing to take care of my grandpa and in Sacramento. So I moved there and I got into commercial real estate there. I was at

00:22:43 it and that was great I did a lot of tint rep, and it was kind of sink or swim there wasn't

00:22:50 training.

00:22:51 I did end up going to LA after that. I worked at a small boutique investment, real estate firm and sold

00:22:59 multifamily and I would do a lot of exchanges in to single tenant triple net and so learned all about that and was there for a few years. And then I came back home

00:23:10 to the Portland area and immediately ran into set he immediately proposed.

00:23:18 So I was here to

00:23:21 stay and he did come from the wire house. So what can I say?

00:23:28 We were married seven months after a first date to the day coffee is coffees for closers folks

00:23:37 and

00:23:38 I didn't really want to go work at the corporate type

00:23:43 style

00:23:44 firms.

00:23:45 Because there you have to be there. Six or 7 a M to seven P M to get any respect, especially if you're not established in that

00:23:53 area. Regardless if you have experience or not.

00:23:56 And so I actually went to work at the little local residential firm because the owner sold us our house when we got married and he's a great guy.

00:24:08 So from there

00:24:10 I just

00:24:11 I just don't want the pressure because I had a live one. And so it worked out really well because I just started putting LAN deals together.

00:24:17 Again and doing commercial and the residential people would refer the business to me. And to this day, the owner, a lot of those people still even

00:24:24 though I started my own company. Eventually they still refer to all their commercial to me. So four years ago, I started for Multi group with a partner

00:24:34 and I ended up buying them out a couple years later and just

00:24:38 got a coach and been building a team. And one of the goals was always for years. Just never got it done, I wanted to get my CCM

00:24:47 designation. And so last year, I decided I was going to do it and I got it done in five

00:24:53 months, which is unheard

00:24:56 of. I mean, I heard one. I

00:24:58 know one lady in San Antonio. That did it in six

00:25:02 months. But I got it all done. In five months in in my portfolio and then coat hit. So I couldn't take my exam that I did end up getting to take it in August

00:25:10 and it's been a but it's been amazing. It was such a good experience for me. And for those of you, that don't know what CCM is. It's a certified commercial investment

00:25:20 member it's been established in 19 69 by the National Association of Realtors. Because there isn't two

00:25:29 licenses there isn't a residential in a commercial license and the real estate licenses are typically

00:25:35 more geared toward residential when you're learning the education. So they establish this as kind of the global standard for the

00:25:45 the base for practicing commercial real estate and it's just a phenomenal program. Yeah, that is

00:25:52 a good story. And you know what? This is why we have you on here. Is because we want to talk about

00:25:58 commercial investment real estate and it sounds like we've got somebody with me. Many many years of great

00:26:05 looking at listening to having grown up in a family business, I can appreciate a lot of

00:26:10 the nuances of learning things at a much younger age than probably most people. Have you probably had your CC Im in

00:26:16 theory long before you took the class, which is why you did it so quickly.

00:26:21 I had a lot of parts to it. But it's kind of funny when I look back. Okay, so I got licensed in 99

00:26:29 so it's been 22 years that I've been actually in real estate as a

00:26:33 broker, but I remember

00:26:35 I'm looking back when I was dialing for dollars at the investment firm. Trying to figure out how to get one of these listings pitch for my finger broker

00:26:44 and not really knowing what I'm talking about with you. I understood development so well. And I understood a little bit about 10 at rat but I

00:26:51 still didn't understand cash flow analysis. I still didn't understand time value of money. It just didn't make all that much

00:26:57 sense. And so I would just kind of fake it. They knew I was faking it. But I was really trying hard.

00:27:03 Basically you're a bird Docker you're gonna go try to find them deal here, this one. God here's this one

00:27:08 and that's not really a

00:27:11 consultant. But a lot of brokers have to start that way to learn. And so it was actually the clients that taught me things it's really interesting. They would just say

00:27:18 okay I'm sitting down to try to be their broker and they're showing me Oh, how do I analyze property?

00:27:25 So it was interesting. I I picked up a lot of it. And I think it's probably why I was able to get through the curriculum in five months

00:27:34 because I'm pretty familiar with all of these things. It just was great to learn how to actually calculate it. And how many times I tried to create a

00:27:41 spreadsheet that was just so inferior compared to what a spreadsheets are so

00:27:49 today, what we really want to try to grasp and there's a lot of people that ask us this question and I have people come in on a regular basis that say hey,

00:27:59 what do you think

00:28:00 about real estate investments and we have lots of securities based real estate investments that we talked to people about.

00:28:05 And we present for people that want kind of a hands

00:28:09 off approach to a real estate transaction.

00:28:12 But there's a lot of people out there that say I have a friend that owns a multi family or an

00:28:17 office or something like that. And they seem to be doing really, really well. And I wonder if I'm that person

00:28:23 tell us, what are you seeing? First of all, in the commercial real estate with the pandemic.

00:28:29 And

00:28:31 is this a good time to be looking at real estate to purchase? And if so,

00:28:36 which demographic of real estate, is there some to watch out for? What are people looking at these days it's

00:28:41 interesting there's so much going on and things. A lot of the data isn't necessarily in that would be reliable because of the time. So

00:28:51 in residential and multifamily investment. I mean, I consider both of those sort of residential because of the

00:28:58 user I know in the Portland area we're they're still receiving it. And I don't know if it's because of the stimulus. Or if

00:29:05 there's not that many people that are losing their jobs because they are essentially services, but

00:29:11 they're not doing badly. And that's a great point. I mean that's something that I had

00:29:16 it is really hard to figure out especially. I think in the retail space where people may not even be shopping, that they've got

00:29:23 loans and ID on you. Just don't know where the money's coming from? That's a great point. Yeah, so I think

00:29:31 that there is a good

00:29:33 possibility that there's going to be. And actually our retail vacancy according to costar,

00:29:38 which I rely a lot on that data because they do. I mean that's my research department,

00:29:43 basically that in just talking to owners and talking to tenants and understanding what's going on in my local area. But

00:29:51 the vacancy rates in retail are actually not that high. Right now in the Portland area anyway, a nationwide I'm not really sure what's going on in every market, but

00:30:01 it's what I'm watching and I'm thinking this is kind of funny they're still occupying they're not leaving I've done a lot of least assignments this

00:30:09 year, but there seems to be other businesses wanting to move in.

00:30:13 I don't know it's really hard to tell,

00:30:16 but the thing that I always tell clients when they were wanting to get

00:30:20 into trying to figure out what to do. So as their consultant I say I asked them lots of questions to find out. What are your goals? Because if you

00:30:29 if you are okay, with like, let's say that you're on the West Coast and most of these markets have pretty high rent control it's restrictive on

00:30:39 in the landlord tenant laws for residential properties it's not in the landlords.

00:30:45 Saver so if you're willing to purchase in another location, then multifamily or single family investments could be great

00:30:54 PLEXes but if you're over here,

00:30:55 oftentimes say if you don't want to be hands on or be dealing with the property manager and issues all the time. It's a very management intensive to on residential

00:31:06 properties. So, yeah, it's their primary residence. So they're most likely to pay first.

00:31:11 It's also a lot of headaches and

00:31:14 costs. So what are your goals if you want something less management intensive and you want something more

00:31:20 stable then

00:31:22 I'm usually suggesting that you take a look at industrial influx or maybe maybe office. What do you mean by what do you be by flex flex is a combination office in

00:31:33 warehouse. Okay, so

00:31:35 most industrial is flex most unless it's very heavy because they need some kind of office space typically to run unless they're just storing things and

00:31:43 distributing. But

00:31:45 technically flex would be oftentimes more of a smaller space. And then usually about a 25% office or

00:31:53 showroom to the warehouse. And then you have your truck doors or great doors in the back.

00:31:58 So that's actually a very good place to put your money right now for a stable investment because

00:32:05 ecommerce. And just still a lot of small businesses starting up all the time. And they need some place to make things and the

00:32:12 research and development is big in tech industry

00:32:16 and

00:32:17 medical. So that's all driving that right now. I for that kind of space. And if you're looking for opportunities. Then a good way to go could be in the next year or

00:32:30 so more value. Add like retail

00:32:34 hospitality,

00:32:35 possibly multifamily as well. Once the stimulus goes away. There could

00:32:40 be owners. Not able to pay their mortgages. It could just be that. They just want to dump it because it's just

00:32:46 it's just too much work to manage these properties. So to get those at a lower price is possibly a good investment. And then you can get them stabilized by

00:32:59 repurposing so, for instance, once we open back up hospitality, that is struggling. Maybe doing some capital improvements to it and

00:33:08 turning into student or assisted living student housing or assisted living could be an

00:33:14 option. I see

00:33:16 retail a lot of the retail that it's not working. Like the big box retail malls and things like that that you see or vacant and were vacant before the

00:33:25 pandemic turning that into ecommerce distribution

00:33:29 or athletic facilities. Things like that

00:33:32 schools there's so many different options. So you do adaptive

00:33:37 repurposing. So another option for retail is making it more of like an office use that can easily turn into an office use medical

00:33:48 there's. Lots of ways to just adapt and repurpose and create value with destabilized assets.

00:33:56 And I mean there's just all kinds of things. Mobile home parks or a great investment they're super easy to develop they're easy to manage. They are just cash cows.

00:34:08 The opportunities are endless and you can get into commercial real estate. Pretty easily by buying there's

00:34:16 condominium office and flex space that's great. I mean, those are really easy to rent out there

00:34:24 they're just great assets and they're not that expensive. You don't have to go buy multimillion dollar property in order to get into what I need.

00:34:32 So there's a lot of interesting stuff there.

00:34:35 That leads me to about 30 different questions, but I'm going to try to go down to one or 2 here real

00:34:41 quick. The first thing I'm thinking about is some of our listeners

00:34:44 who may own a single family house that they inherited? And they started renting it and then they realize? Hey, I can make some money this way.

00:34:50 And then they look at a multifamily and they kind of they kind of grow and grow

00:34:55 grow. But then there's the listener who says, I'm not able to take a lot of risk and I'm really looking for something that

00:35:04 a starter thing. So you're saying that kind of the Flex space

00:35:08 warehouse, like individual tenant condo kind of piece is a potentially a good area to be looking at that. Is that kind of how I'm hearing it?

00:35:16 Absolutely, I would say something small

00:35:20 and just learn how to manage it and then you can start to grow from there.

00:35:27 But another option too is to get into fractionalized real estate. So you can do there's crowd funding you can do

00:35:38 syndication there's investment clubs. You can get together with your friends in your community and purchase

00:35:45 property and just kind of practice together and then you're pulling funds.

00:35:49 Yeah, so the the fractional ownership of whether it's an investment club or getting involved with a group of people to buy something let's talk a little bit about that

00:36:00 let's start with the Pro is that you can get into real estate without having this

00:36:05 overwhelming burden of owning it yourself by

00:36:08 yourself. But what are the cons let's talk a little bit

00:36:10 about the problematic items here because I'm sure that there's some good ones. And I know they're out there so I'm gonna, let you take that one. That will be

00:36:18 fun. Well, kind of like I had a mentor tell me in time that having a partner is not

00:36:26 efficient, it can be very effective, but it isn't

00:36:29 efficient. So marriages can be very effective. But they're not necessarily efficient

00:36:35 because you have to agree on things or one person is the boss. And the other one always feels like they're following along. So if you have 10 of

00:36:45 those that can get a little tricky so, really making sure that there's

00:36:49 I would say a managing member who is most

00:36:53 experienced who pretty much just runs the show and they just follow along. It would probably be the most efficient way to do things.

00:37:01 There's just probably gonna be personalities that you have to deal with. And then there's others where you very hands off, you get

00:37:09 probably lower returns, but it's very stable. And then you really have nothing to do with it. You just receive your tech

00:37:17 and they give you the results with the perspective. And you just say, okay, great, choose to stay in it or you can exchange back out.

00:37:28 Got ya and N. So if I were

00:37:33 you talk about hospitality and I got to be honest with you. When I hear about hospitality or retail, those are the sectors that I think

00:37:40 if I'm a gambling man right now. I'm looking at buying because,

00:37:44 right, so I look at those as much higher risk in the real estate space. Let's talk a little bit more about the ones that you feel that

00:37:53 a much lower risk if you're really willing to take the risk of real estate on

00:37:59 yourself. So if we have somebody who's listening here and says I want to buy a piece of real estate I'm literally working with a

00:38:05 broker or I'm. Looking for a broker they can call you and you can reach us at 8 5 5 2 to 6 8 5 5 1 we can get your cars information,

00:38:14 but we are you directing people and say I really want to get into real estate I'm looking for a start out piece. I want to do it myself. I've

00:38:21 got X hundreds of thousands of dollars to buy real estate or I qualified for a loan on this much. Where are you hearing people? How are you helping them? Find

00:38:30 that piece what's your best recommendation there right now. Well, again, I always go back to what the long term goals are. So, whenever

00:38:36 I bring on a client I typically if they're brand new, I go over long term goals and then I kind of create a plan for a 10 year plan. Probably similar to what you guys

00:38:48 do so creating a plan I'm going to

00:38:50 take scenarios. Possibly three different options for them that would fit their needs, their management expectations and capabilities and then

00:39:02 also their financial goals. And so I'm going to do a comparison of each of those and do a 10 year projection I'll show them what their returns are going to be and

00:39:13 so I'm going to

00:39:15 take what they want on all their needs and then going to apply it to properties that I know

00:39:19 of so depending on what they want is going to be the type of property that I recommend. But if it's me right now I'm looking at flex small flex and

00:39:32 large

00:39:33 warehouse, large

00:39:35 industrial are going to be probably the most stable assets for somebody that's just looking for stability.

00:39:41 Like I said, Valueadd properties are going to be some great great options in retail and multi polling in possibly multifamily but definitely

00:39:49 hospitality folks. We are talking with Kira a. You can reach us at 8 5 5 2 to 6 8 5 5 1 to connect with her

00:40:00 or connect with Ben and myself you're listening to money on top and we're talking about real estate investing in real estate. This is one of those asset

00:40:10 classes that has gone through a tremendous amount of

00:40:16 turmoil since the

00:40:17 pandemic and it's a lot of the times it's just not really understood. And so here is walking us through some

00:40:24 ABCs and helping us out here today. Thank you so much for joining us we're gonna take a quick break and we're gonna talk more real estate when we get back.

00:40:40 Hi, my name is Seth Crossman partner with free Financial Group and one of the CO hosts of money on tap.

00:40:46 One of the biggest concerns and largest expenses people face today is

00:40:50 taxes without thoughtful planning. Taxes can

00:40:53 destroy future retirement dollars eliminating the possibility of a timely retirement or dreams of what you want retirement to look

00:41:00 like. If you're like most people you're getting closer and closer to retirement and you may be wondering if you're taking the right stuff.

00:41:07 Will my income be enough? Well, rising taxes forced me to give up my

00:41:12 dreams. How does inflation factor into all of this? These are real concerns and you're not

00:41:17 alone. Putting a plan around your financial future is what we

00:41:20 do. If you have questions when it comes to your financial

00:41:24 security. And if you're looking for a personalized solution, contact a ratio Financial Group, 8 5 5 2 to 6 8 5 5 1 it's time for you to start getting answers to your

00:41:35 questions headquarters in bed for New Hampshire reshot financial has offices across the

00:41:40 country. We love the opportunity to show you how we can help there's absolutely no cost or obligation to meet with us. Call it

00:41:47 to 5 5 5 5 to 8 5 5 1

00:41:55 now back to money on tap with Ben. And so

00:42:06 welcome back. You listen to the money on top. You can reach us at 8 5 5 2 2 6 8 5 5 1 or info at your money on tap. Com joining us here today is Curers man C C, I

00:42:20 M we discussed a little bit about that. And what an awesome opportunity is to have you with us here today. It's only taken us for years

00:42:30 to get you

00:42:33 here and we're so grateful to have you. And I will continue to just say all sorts of wonderful things about her. Because guess what we're married and that's the way it

00:42:42 is so Ben is kind of grabbing the rains here and lead in the show. But we were talking about real estate is one of those asset classes that is so often

00:42:51 misunderstood. And we love an

00:42:54 opportunity to pierce through the veil here and talk about real estate and investing in real estate today. Yeah, thanks,

00:43:00 thanks. Here for being on the show. And I want to do on the show every day since the first day we had the show and it's just been a push to get set to pull it out. So

00:43:10 it gets a little jealous. Sometimes

00:43:13 he's a little competitive. Yeah, there you go.

00:43:17 So we were talking about some of the investment real estate with

00:43:21 multi family we're talking about some industrial and stuff like that, I was wondering if you take the classes that you're talking about that might

00:43:27 be kind of like better entry level areas and talk a little bit about the pros and cons of

00:43:32 each in comparison to each other. So that someone who's who's looking at this and I'm

00:43:37 thinking and I'm thinking in such broad generic terms of thinking, like if I own a multi family property and someone doesn't have hot water at two o'clock in the

00:43:45 morning. My phone is probably going to ring

00:43:48 that kind of that

00:43:49 that scenario.

00:43:51 And we all kind of know that that stuff exists. But maybe you could bring a personal touch to the pros and cons of all of them and Criss crossing and

00:43:59 where because some people can absorb

00:44:01 some demands on their life. Well, other ones, they can't Yeah, absolutely. If you have a high tolerance for pain

00:44:12 and lack of sleep at night, when the phone rings then

00:44:17 definitely residential is the easiest one to get into. For sure, the lending programs.

00:44:23 The level of

00:44:25 understanding that you need to have is just it's so much easier to get into because people can relate. I mean, most people and they think of real estate. They think of

00:44:32 residential right? Because

00:44:34 that's all you know, you just think about houses and you don't realize. Oh, look at all the other buildings around here in the land. And they

00:44:40 don't think about commercial so

00:44:42 it's just a lot easier. A really great book that I would recommend if you want to get into

00:44:49 investments

00:44:51 is the millionaire real estate

00:44:53 investor. And it was written by Gary Keller quite some time ago and it's just a great

00:44:59 path to get into it now it's really set up more for investing in the Midwest or in South where it's less expensive. A lot of those numbers don't make sense when you're

00:45:09 in more expensive areas. Like the West Coast on the East Coast

00:45:14 it's difficult, but you can start by living in let's say a duplex. And then you run out the other side it's a very

00:45:22 favorable down payment and lending programs for you to get into that. And then you can build from there and learn how to be an owner or a

00:45:31 landlord and manage properties. So that's a great way to get in. If you have the tolerance for the management intensive properties,

00:45:39 eventually you end up buying multifamily apartment buildings, which is great. I personally have had that experience

00:45:46 and it's not fun. In fact I started a property management company at the same time. I started my company and that was a complete lighter,

00:45:55 because I'm a broker. I am not detailed oriented. I

00:45:59 hunt in a kill and eat Donuts

00:46:02 it's really painful for me to run that property management company and I couldn't ever seem to find the right people to run it for me. So I ended up giving it up. I go,

00:46:13 but I could totally I understand how things work now. It was a great experience and I don't want to ever touch that again.

00:46:21 So

00:46:23 that's a great Avenue. I would really highly recommend that book

00:46:26 if you are more inclined to want something more hands off. So the great thing about commercial properties, especially

00:46:33 industrial and some types of office in retail is that they are triple net.

00:46:37 And what that means is that the

00:46:40 tenant pays not only for their interior maintenance and their system. So even if they have a on the roof of the they're. Still responsible for that

00:46:50 repair. But they also pay for their proportionate share. If it's a multi tenant

00:46:56 building

00:46:57 footage and that ratio of the common area

00:47:00 they reimburse or pass through the taxes insurance and common Arya

00:47:06 maintenance. And so if you have a property manager collecting all those you literally just get a check it's net to the

00:47:16 owner. So those are way less management intensive. You still probably want to have a property

00:47:21 manager to just do the accounting aspect of it and do a little bit of the coordination if there's any kind of Colonary maintenance, but it's a pretty simple thing to

00:47:30 own

00:47:33 probably the least management intensive would be a free standing or single tenant troll

00:47:39 net. Then you do nothing. You just got a check. They handle all of everything that's great,

00:47:45 so real quick

00:47:46 explain, triple debt. I mean, we understand it. But explain to our listeners a little bit about what that means in a growth, please or full service grows Lee, which is

00:47:55 common in multifamily residential and then also office. More like more like class

00:48:02 Highrise type offices will do full service growth and what that means is that the owner

00:48:08 has to pay for. They collect the rent and then they have to pay for the

00:48:13 maintenance. They have to pay for the taxes they have to pay for their insurance capital expenses. All of that comes out of there when you are

00:48:22 there in between as well like modified growth for instance, my lease where I were my offices. I have to pay for my proportionate share of Super water.

00:48:31 But other than that it's a growth leave industrial flex retail or to let. And that means that they pay not only for the handle. The interior

00:48:47 expenses of any kind of

00:48:49 maintenance and repair any kind of build out typically unless they negotiate some type of build out with landlord when they move in. But all that interior space is their

00:48:59 responsibility. But they also pay for their proportionate share of their taxes, the real estate property

00:49:07 taxes, the property insurance and the property common are a maintenance on top of that

00:49:13 there's different types of rentable, usable and gross square footage

00:49:19 they're going to not only occupy their usable square footage, which is their interior wall and in. But they also

00:49:27 we'll pay for rent on the common area or proportionate share of the common area. So you really maximize your property in a triple net type of building

00:49:40 center. So it's a really much easier way of owning in my opinion.

00:49:48 Like I said, it's called a path through a reimbursement

00:49:52 they're going to pay for all of the expenses which means if things go up, they pay for it

00:49:57 too it's kind of like, it's kind of like a natural escalator that you don't have to worry about or piece of

00:50:02 and they're built in escalations are usually built into the leases. So we do a lot of times like a 3% escalation every year on the

00:50:10 net and also on the rent. So it's just built in

00:50:15 in multifamily and residential. A lot of times. You are limited on how much you can raise the rent and in certain period, right?

00:50:26 Interesting that's an interesting piece here as

00:50:28 we start to come to a wrap up here on our show. We got a couple minutes left and I'm thinking about some of the kind of watch out your a new buyer

00:50:38 concerns one of them is red control

00:50:42 in the world of and you buy a multifamily. And then you find out. Hey I'm in a red control

00:50:48 district. And you ever paid for it. That could be something that could be really catastrophic. So what are some buyer beware questions to be

00:50:57 asking kind of things off the top of your head that you could share with our listeners as we kind of wrap up to I

00:51:01 would suggest not buying in states or cities where there's rent control because you essentially in some cases, just to have no power over your own

00:51:11 property. And you could end up with tenants that don't pay or they're destructive. And you can

00:51:17 them there's no eviction laws right now in the Portland area or an organ.

00:51:23 Even if they're not paying you're not allowed to kick them out it's a good thing. Most of them are paying for. We

00:51:28 understand, but not only that. But if you choose to go sell your property,

00:51:33 you have to give them money. And in the city of Portland it's three times 3 months of rent and in the rest of the state.

00:51:41 It's a month and a half. So you have to pay them to leave. And that sometimes cuts into your profits quite a bit. If you are tight. If you don't have a lot

00:51:53 of equity in your property,

00:51:56 not only that, but you can't do it in you can't do a no cause eviction. If they're there more than a year.

00:52:02 So there's just things that you need to have. A really good property manager that is experienced that understands the laws because if you try to do it

00:52:11 yourself and you don't understand the laws you could get in a lot of trouble. There's all kinds of notices and methods in the process is

00:52:18 strict. So most of the courts are going to favor in the tenant

00:52:23 position. So just to understand your local lie or get a very good property manager to help you with it because that would. I mean, it really could end up

00:52:33 being an asset. That doesn't perform very well. And just a headache, frankly. Yeah, no, no. That's good. I mean that's actually great

00:52:41 stuff. And I think, that's really why someone needs to deal with commercial expert. Like yourself is just

00:52:46 really making sure even when they don't know the questions to ask that that person's already asking them for you and knows where to steer you that's really

00:52:55 important I've been a lot of fun. I really just had enjoyed listening to both of you guys. Pass it back and forth,

00:53:01 I just am so fortunate to be in the room with both of you guys today. Folks, if you're listening today

00:53:07 you've been listening to Ben Bresha and Kira

00:53:10 Crossman

00:53:11 and just having a lot of fun, you guys. And if you're listening

00:53:15 today, you can reach us at 5 5 2 2 6 8 1 or info at your money on tap. Com you can also reach out to Kara Crossman app, platform Realty group that's her company

00:53:28 and certainly there's a whole lot more to the topic here, we could probably bring you back next week and the week after and just keep going after that. But

00:53:38 well let's not make it a four year gap again

00:53:42 we do. We will do that you've been listening to money on tap. You can reach us at 8 5 5 to 6 8 5 5 1 or info at your money on tap.

00:53:51 Com you can also find this at Facebook we're at fact SLA freed

00:53:57 investing. We are also on Twitter at BFG underscore and

00:54:03 as always, you can also find this at your money on tap.

00:54:08 Com, thanks for listening. Thanks for liking, our podcast. We appreciate you, we can't wait to make it a great day and a great life with you here at money on tap.

00:54:32 The views expressed are not necessarily the opinion of this radio station and should not be construed directly or

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00:54:42 Vesting is substitute

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00:55:38 well,

00:55:39 bye.

Money on Tap 148 The Giving Show

00:00:01 Welcome to money on tap

00:00:15 money on tap your personal finance

00:00:17 headquarters, where we bring out the professionals experience. So fine in what we call Threedimensional investing utilizing insurance brokerage and debased planning

00:00:26 that's what we do on this show. We look at all sides of the issues. We bring a fully independent planning perspective to the table.

00:00:36 Welcome back you're listening to money on tap. My name is Seth Crossman and I'm Ben Bracha. So glad to have you aboard

00:00:42 today. We have quite the show as a matter of fact, I am really excited about this show because it

00:00:49 the giving

00:00:52 show we do it. Usually once a year, at least once a year I like the fact that set this show seems to end and you giving me

00:00:59 something for the holidays. I appreciate that I wish I could say the same but maybe maybe in the future that'll happen to be

00:01:09 we're so glad you're here with us today. Grab your cup of

00:01:14 coffee. If you're driving with us today, and you're catching this on the

00:01:19 radio. So grateful don't stop right now or at least stop. If you need to to write down this number is 8 5 5 2 2 6 8 5 5 1 or info at your money on tap. Com because

00:01:34 you're going to either have to come back and listen to this show by podcast to get the information that you need.

00:01:42 Take some notes or just call us and talk to us about what your specific situation is. Because we are going to get into the weeds

00:01:50 it's going to

00:01:52 happen and you're going to want to know how to become the best give or

00:01:56 possible. I agree set I like making people good givers, good givers. We got options for you guys to give to us too if you

00:02:03 want. But in all seriousness I'm excited about the show to set. I mean, we say that a lot. But this show is one where we get a lot of

00:02:10 questions on. Because there's a lot of detail to it, we talk about different things. We kind of add and subtract each year

00:02:15 because pros and cons and tax code

00:02:17 change and all sorts of stuff but if you have questions on the show and I know a lot of people are going to you give us a call at 5 2 to

00:02:24 6 8 5 5 1 you're happy to go through this stuff. Because each person's potential benefit of giving. And the giving heart that they

00:02:32 have can be maximized across the board in different ways. So I'm excited about that. But before we get into giving Seth we've got money in the news

00:02:52 five,

00:02:54 I G. I

00:02:57 where it's at and we've got everything you need to know about five G. And guess what this is no surprise. Getting a lot of this information

00:03:07 from the Wall Street Journal today and so that's a great article. You can reference by Dre Fitzgerald and Timothy Martin and stew

00:03:15 there's three people involved in this because it really it's a great job of

00:03:20 outlining what's going on with the five G in the conversations. We have a lot of questions about it. Of course there's the questions for us a lot of the time

00:03:27 come back into.

00:03:28 How do we take advantage of this for you?

00:03:31 And how do we position you? If this is a portfolio decision or if this is some kind of an investment, what how can you take this opportunity to be involved or

00:03:42 not?

00:03:43 This five G piece and how to invest there's so many different companies that are really at the center hub of this

00:03:50 thing. There's also some issues around five G that whether you're on kind of the conspiracy theory side of this where there's a lot of concern about

00:04:01 basically the technology of five G and the speed and whatever I don't know

00:04:05 the frequencies and so forth and how that can physically affect you. That may be a concern. And I know that is a real concern in this

00:04:12 world. The other side of it is just what is the technology? What does it do? I was reading this article and

00:04:19 we've read a lot of stuff on five set. You and

00:04:22 and the companies that are involved and so forth, but what's really interesting to me was. And I was just looking for briefly in the article here. Was that China is

00:04:34 basically it's Ah,

00:04:38 technologies company we Huawei Huawei is basically the leader.

00:04:45 I don't speak any. So you probably have the pronunciation

00:04:49 better. But that being said I'm closer than yourself, it just works out that way, but I've got these other two companies down. I think it's Ericsson and

00:04:58 Nokia I've got those

00:05:00 down they're big in the supply side of this. But I already, but what's really scary is the US House Committee in 2,012 labeled the company Huawei or

00:05:11 whatever a national security threat arguing that its alleged state ties could allow Chinese government to use equipment to spy on global networks. And

00:05:20 this has created a whole lot of

00:05:24 issue. Now, this company

00:05:28 has basically you give you an idea. So China is so far ahead in this. They have

00:05:35 690,005 base stations

00:05:38 that last five G signals.

00:05:42 Yes, did you see how many of the US has it's only

00:05:47 50,000 that's what I was gonna say it's like, 50,000 in

00:05:52 comparison. Yeah, they are so far ahead of us here if you were to take a look. Just the percentages or China has around

00:06:00 7.1% of cellular connections or five G. We are maybe 2% maybe South Korea has 14.4 a little bit of a bright side there and we're all familiar with T Mobile

00:06:15 Verizon at AMP T. No longer Sprint around anymore.

00:06:20 The

00:06:22 transition that they're going through from the org to the five and that whole thing to give it a bit of a back

00:06:30 drop. And how long that could take or how long your org is going to be? Actually something that's usable? Well, it wasn't until

00:06:39 2,017 that the two G network went away for at AMP T and that's hard to believe I don't ever. I don't even remember to T

00:06:47 T to go to G. Yeah, I as a consumer, right? This may not even be something that necessarily makes a difference for

00:06:55 me. I looked at my phone this last week after I had an update and I was like, oh, hey, look at that, it says five, but I've had the phone for a while now.

00:07:04 And Apple hasn't even released anything until this last month. That has five G capabilities so, is it that big of a deal?

00:07:13 And is that something that we need to take a look at is like, wow, this is going to be a major push in terms

00:07:20 of the direction that you're portfolio might go.

00:07:24 You may not see it yet, but there's a build out there's an infrastructure. And those are some of the places that

00:07:28 are kind of in the forefront of the conversation that people need to be paying attention to

00:07:34 for how they're investing around this there's a lot of users that are already that are using five G we're just not even really familiar or understanding at the

00:07:42 what kind of a difference does that make and I like one of the things here that

00:07:47 takes this technology on the road because some people are saying hey instead of having.

00:07:54 Oh, gosh, a copper connection for my WiFi or trying to use cable for that we'll be able to cover that. And so

00:08:05 I'm trying to remember her name. She takes her

00:08:09 Sprinter van and she goes on the road and she basically

00:08:13 solely uses the five G connections for virtual reality systems and gaming systems.

00:08:17 And in the connection, there was that you're not going to really experience a whole lot through your phone as far as a difference download speeds. Yes.

00:08:23 Because the games that you play in your phone don't require that

00:08:27 stuff, really, but

00:08:30 what's crazy is is for our listeners.

00:08:32 Probably the majority of our listeners are not probably worried about gaming. I would say but some of them probably are interested, but let's talk about real time

00:08:43 issues. Now, obviously five G. I mean, everyone understands five G is faster than for G. That's kind of the common understanding. But how fast a phone

00:08:53 downloading a movie? A full length movie, okay, on forge would take roughly six minutes.

00:09:01 Okay,

00:09:03 obviously with whatever glitches maybe your phone might have inside any scenario and so forth. But a five G can download a full length movie in 15

00:09:15 seconds. Six minutes compared to 15 seconds, yeah, I gotta say that I've got

00:09:22 I've got a pretty wide open network that I've got in my house. I think it's like a 500 download or something like that that's pretty darn fast or pretty

00:09:30 wide. Certainly never seems to be enough.

00:09:35 But

00:09:37 I download a lot of audio books and stuff like that and I would kind of wait to hit my WiFi network to do that before. And

00:09:45 it's like, instantaneous. Now on my phone I'm just wherever I'm at him like audio book, go and it seriously. It is maybe a 2 3 second download for

00:09:54 I don't know 12 hours of audio. No you're right, the thing is

00:09:58 that I think it's 200,000,000 devices have been sold that have five G capability. So, Seth you're one of 200,000,000 people,

00:10:05 which when you think about 7,000,000,000 people

00:10:09 no you're kind of part of the special. Yeah you're kind of part of the minority there, but

00:10:14 is five

00:10:16 and is not this article goes deep set. I mean when I was pretty impressed at the end, resist talks about six G right that they expect sometime in 2,030

00:10:28 okay, and we just talked about the movie like being 15 seconds on five G versus six minutes.

00:10:36 They said that six G is expected to be a hundred gigabits per second or 10 times faster than five

00:10:45 that's incredible and it's hard to believe that we're talking about something like 20 30 here in 20 20

00:10:52 and it'll be here before. We know that's the reality what's going to happen that's not a personal level. How about I just? What are some of the ways that this is going

00:11:00 to help

00:11:02 support different industries?

00:11:04 Like oil drilling, I think of these rigs. I read an article the other day on remote oil drilling and how they're actually taking these deep huge

00:11:16 oil platforms and they're starting to test like

00:11:21 remote operations on these type of platforms. But what's needed to do. That is a significant infrastructure that works

00:11:32 at the speed of

00:11:34 now, to be able to make all those things work together. So the

00:11:38 using this five G and kind of like this build out these mobile buildouts that people can

00:11:45 take with them to these different locations and create the five G network wherever they're at. That was pretty amazing to take a look at.

00:11:53 I like the conspiracy theory because I always think that's an interesting thing in the backdrop.

00:11:59 But I did like that. Also the FAA has a guy. Or the SEC says that there's really a guideline here. They are not going over the

00:12:08 established scientific evidence that has any link between the Ray radiation and cancer and other illnesses. So

00:12:15 I'm not going to necessarily put that the better, but that's a rest.

00:12:18 But at the moment that's that's a bit of a relief.

00:12:22 Well, I think the one piece that's really driving a lot of this is that they're going to have to canvas

00:12:28 because of that point, Seth, in the radiation and the concern. And if you're just listening to us or just jumping in here. You're listening to money on

00:12:36 tap. You can reach a city 5 5 to 6 8 5 5 1 and we are talking about

00:12:42 wireless and as we're kind of going through this process here in understanding, five G the canvassing of these antennas,

00:12:50 Seth is phenomenal. They have to put these things because of the low level

00:12:54 frequency, they have to put more antennas all over the place. And they're talking about telephone poles they're talking about

00:13:00 street lamps are talking about all that and they're

00:13:04 saying that companies like and I'm not sure if it's Comcast or Verizon or whoever but they're talking about different companies who are providing home

00:13:12 Internet to totally get rid of the fiber optics and go entirely wireless off of your off of your local Bible. I mean, that is that's going to be your Internet and

00:13:25 your excessive device? I mean, so those are things to really think about the WiFi in your house. Unless you're Super remote, it may be gone

00:13:32 at some point in time. It may just be outside. Wow, well, I know

00:13:37 hills row is actually gone to, which is where I live is gone to like a city wide Wi Fi, which is pretty

00:13:46 cool it's kind of a nice little little. Roll out there that they've done. So did you actually did you actually talk about how Huawei creates the

00:13:56 devices and the 5 4 5 G they're the largest

00:13:59 manufacturer. Basically of the five G devices. I mean that's what China has made this a huge initiative. They were way behind on

00:14:05 40 now, five GS. Their big thing that they've really made a push for Huawei is the company that has created the

00:14:11 majority of these towers that are out there being used for five. So the concern there is one that's

00:14:18 legitimate which is what does China have a backdoor into five G. And so one of the things that I think was really great was that that was recognized that there's this

00:14:27 potential and we are in a place where cyber threat is very

00:14:31 real from Iran, Russia, China. These are the major players in this area but if there's a control over our network. What could they possibly do? So creating that

00:14:42 line in the sand is one of the things that the administration is focused

00:14:46 on and then I think a really good job. And maybe that's part of the case for us, not quite being at the level that China is

00:14:53 today. Do you think we as a country as a nation are going to stand by and necessarily wait for things to roll out. I don't think so. I think, we're really

00:15:01 an innovative crunch country that's going to go ahead and push that initiative forward and that's what? Everything

00:15:07 behind the scenes looks like

00:15:09 currently well you're right. And that's definitely gonna be an issue around five G. Is that we don't ever like to be second fiddle? But I think there's

00:15:15 been some intentional delay on the idea that there is a potential radiation

00:15:20 and frequency stuff going on and we've kind of taken. The approach of it's better to do more towers and lower frequency to meet the

00:15:29 FCC standards and I think that's probably the heart of it. Yeah, one of the challenges with that happens to be the forge network. All were

00:15:37 having a bit of an interference with that five as well.

00:15:40 Yeah, I was going to say to set it's interesting about

00:15:44 how they feel it's probably the last piece because five is define an investable scenario and there's lots of ways to get involved in

00:15:53 this that's something that we have aggressively done ourselves in our company.

00:15:59 But they're talking a virtual reality. And some of the AR applications who have had to rely

00:16:05 heavily on the internal technology to run some of the pieces and virtual reality and all of those pieces of even running the oil drilling systems and even

00:16:17 running cars and all of that kind of stuff. They definitely be five G. Can get us there, a doctor could be doing surgery remotely

00:16:26 all of that is a reality in five G is basically what it looks like.

00:16:33 But they said that because I G is so fast they're going to have to depend less on

00:16:40 infrastructure locally. So like when you play games and you do things like you have to have hard drives that run software like you're always doing big

00:16:48 downloads. I see my kids. They download a game they download. It takes 10 15 minutes. I mean it really does

00:16:54 it's a

00:16:55 process with five G. They will have to download less they'll be less. It will be less a man than the components

00:17:02 locally which then makes gaming remotely. I think a potential investment scenario as well. I don't know

00:17:09 so many opportunities to discuss and take a look at further it's a great article and thank you so much for all three. Coming together to do a little bit

00:17:19 of a deeper dive and take a look at

00:17:22 some of the scenarios and more of the coverage because we get a lot of these things kind of trickling in

00:17:27 and there's this piece in that piece. But this really puts it together nicely, so thank you so

00:17:31 much. You know what you're listening to money on tap? You can reach us at a 5 5 2 to 6 8 5 5 1 and this is the giving show.

00:17:41 The best part about today is that we're going to be talking about what you can do in very, very small ways everybody can be a

00:17:51 giver in

00:17:53 philanthropic and then we're going to take that to we're going to take it into the weeds folks. And so you're going to want to grab a pen and

00:17:59 paper. You want to make sure that you write down the phone number 8 5 to 6 5 5 1 give us a call about your scenario so that you can start to plan

00:18:08 towards the ultimate path for you in giving. Listen in money on top we're gonna take a quick break we'll be right back.

00:18:19 Hi, my name is Ben rasa one of the cool on

00:18:22 tab. If you have questions when it comes to your retirement they're looking for a personalized

00:18:26 solution? Contact us a Grashof Financial Group in today's volatile. Stock market we can help you plan to find your successful retirement

00:18:33 solution. Am I saving enough am I saving into the right

00:18:36 places? Do my investments match my appetite for risk. Do I have a tax strategy that is going to help keep more of what I earn. How can I maximize my Social Security

00:18:46 income? If you are like most people, you are getting closer and closer to your retirement. And may be wondering if you're taking the right

00:18:52 steps. If you're in retirement, you may be wondering. Am I maximizing my income while preserving my estate and carry for my

00:18:58 family, we talk about all things financial in what we call three dimensional.

00:19:02 Putting a plan around your financial future, if you feel that now is the time to start getting the answers to some of these questions for your own

00:19:09 situation. Give us a call operational financial, eight by 5 2 2 6 8 5 5

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00:19:18 country and would love the opportunity to show you how we can help there's absolutely no cost or obligation just to meet with us. We welcome you to our

00:19:25 office. Call us at five to 6 8 5 5

00:19:30 1 more money on tap in just a

00:19:34 moment on this cliff notes edition of money on tap. We take a look back to a previous program where Ben and South offered some it into some great places to

00:19:44 retire. Here is a highlight from that show. That focuses on a pretty good

00:19:49 international deal. Oh we've done a lot of shows on places to retire throughout the world.

00:19:54 And in the United States we've done all sorts of different things. People have called us about. Hey, where should I be retiring or what state is it Florida or

00:20:02 Arizona? And what are the pros and cons to that? We've done stuff on that we've talked to people about that, but this is kind of a different slant of an article

00:20:10 not necessarily worthy of a show. But probably worthy of a conversation for someone who's in this area,

00:20:16 but, yeah, I mean, Italy has said, we're just going to do a flat tax for anybody who wants to come live here. Essentially it's a hundred thousand

00:20:27 of their currency, which I don't know what the actual currency exchange is on that. But currently, Italy tax rates

00:20:36 43% so if

00:20:38 you're making half a million bucks a year or you own a business. A million dollars a year. You don't want to give away

00:20:44 43% of your money. But now you just got a clear

00:20:48 hundred thousand,

00:20:49 yeah, so that's the income tax on all income generated outside of the country. So if you have your income domiciled outside of Italy it's a flat tax 100

00:20:59 100 it is still a thousand because it's a Euro. It doesn't matter. It a hundred thousand doesn't change necessarily because it's a dollar, a Euro it's still a hundred

00:21:06 thousand right in the same currency exchange right right. So anyways that hundred thousand is capped. So that could be a huge play.

00:21:17 If you have income outside of Italy. Now, the income inside of Italy is that 43% that's pretty notable and high.

00:21:26 But the great thing about this solution is you can figure out a way to get to create your income outside of Italy and cap. That tax rate which could become

00:21:36 incredibly low compared to what you're doing, right? Now, yeah, I mean, basically, I mean, I kind of did some rough math, but you're looking at

00:21:45 about depending on the state. You live in whether you have state income tax or not in New Hampshire Oregon happened to be two states that don't so that's kind of

00:21:52 unique. But if you live in some of these other states like tax or any other one that we

00:22:00 do that's where you kind of get hit. But somewhere between 200 and

00:22:06 75,000 and 300,000 dollars of income you're breaking even with a move to Italy. What was out again?

00:22:12 275 to 300,000 dollars of income you're breaking even with moving to Italy, almost somewhere. So if you want to love it

00:22:20 it's a dream come true for some for some right now. Not necessarily I'm already. Like, the last scene of

00:22:29 Gladiator floating through the fields Italy with my hands across the week. Well let's jump at that let's do

00:22:37 let's jump past Gladiator here. But the UK is interesting because they actually had a lot of people moving

00:22:44 from the United Kingdom to Italy because with that scenario, Italy tax is basically almost half as

00:22:54 well on income. So people have been moving to Italy because that has really become a tax haven. Plus I'd rather live in Italy than England.

00:23:00 Anyways. I don't know I'm not sure that I would agree with that, you don't think so.

00:23:04 I've been to England and I loved it. But you love pizza too.

00:23:09 Sometimes.

00:23:11 The articles kind of interesting though, set I really did find it interesting that I jumped into

00:23:16 12 other countries that have a 0% tax rate, including

00:23:20 Monaco. They talked about St kits Nevis. They went through all these different things what's interesting about saying kids was that

00:23:26 all you have to do is have a minimum investment with them of 100 and

00:23:31 15,000 or that amazing, yeah, then at that point in time, you become a citizen or citizenship of some

00:23:37 sort. And then you get access to 156 other countries. I mean that's not necessarily opposed to that. But it's a little a little close to

00:23:45 some concerning off the shore of South America. But it seems to be safe enough.

00:23:52 Definitely an

00:23:53 option, thanks for joining us for this cliff notes edition of money on tap with great tips from the pros in three dimensional.

00:24:01 Investing utilizing insurance brokerage and fee, based planning now here's more money on tap with Seth and Ben.

00:24:11 Welcome back you're listening to money on tap. You can reach us 8 5 5 to 2 6 8 5 5 1 or info at your money on tap. Com today we are talking about the giving show

00:24:29 don't turn us off. Just because you heard giving we're gonna make this fun we're going to make this something that maybe even make some people some money.

00:24:37 So Ben has already solicited you and solicited me for extra giving

00:24:45 love that about you, Ben. Never gonna miss an opportunity.

00:24:50 So

00:24:51 what's kind of interesting to me is

00:24:55 there's there's this idea of giving there's this philanthropic idea, but there's so many different ways to do it,

00:25:02 okay? And there's so many other benefits that people don't even really count when they start going down this road of charitable, mind and Des or you're dead on

00:25:14 the philanthropic. I ask people all time. Are you philanthropic and they're like, well

00:25:20 I'm not sure that I mean, I do things and so forth. And then I do meet people that are

00:25:27 their intense givers. I mean

00:25:30 they've got it all down. And then you have the person who's kind of mainstream who would be. I give to my church. I give to the food

00:25:37 pantry. I cover those bases and they really see, so there's kind of like I would say three categories like

00:25:44 you're all in it's a hundred percent. You've got the person who's kind of going down the middle

00:25:49 they're

00:25:50 Super engaged. You had the person who

00:25:51 says? Well, I give what I hear there's a real issue or there's a need

00:25:55 and so forth. But it's not a primary focus. And those are all okay. Standards there's no judge here in that

00:26:01 piece. But the thing about giving that people don't understand is

00:26:05 that it's one of the things that creates the most wealth for some people out there. I mean, you look at these. You look at Bill Gates. You look at these different philanthropic

00:26:18 Gates in Melinda

00:26:20 Foundation. All these things, these are ways. These people create wealth.

00:26:25 Well, the wealth is

00:26:27 obtained and created through giving because there's all sorts of benefits on the tax side that help people a lot. And I'm excited to go through that.

00:26:34 Because even if you're not necessarily driven by some

00:26:37 philanthropic scenario

00:26:39 it's okay, because we know there's things you probably give to if you felt like you had the

00:26:43 ability to do it. And it benefited at you as well. And that's what I'm excited that's the portion of the show that I'm really excited for.

00:26:50 So let's dive in before we get into all the tax

00:26:54 incentive mindset things that you need to be paying attention

00:26:57 to or want to participate in. What are some of the things like right here? Right now that you may not even realize if you are a giver that you're

00:27:05 getting out of this. And one of those is is that

00:27:09 it is your body.

00:27:11 And your stress level is one of the things that they found gets reduced through giving you live longer. I

00:27:19 mean, that was Queensland University of technology that brought that to us. This is all

00:27:24 cited stuff that you can take a look at for yourself. American Journal of public health. You can boost your mood in a 2,007

00:27:33 study. They used brain imaging

00:27:36 technology on 19 women to see how certain regions were activated by

00:27:41 whether they kept a hundred dollars. I gave it to the food bank. So the there's a lower your blood pressure. All sorts of these things that happen within you as you

00:27:51 become a giver. And that's really cool, right? You wouldn't have

00:27:55 thought, yeah, now

00:27:57 there's a ton of health benefits. We did show that a long time ago. I remember years and years ago that we talked about all the many health benefits that drive

00:28:05 well being. And the longevity in life was phenomenal. I can't remember what the details on that. But that is so many benefits to giving. And being

00:28:15 terribly

00:28:17 minded, so what are some fun ways to give? Because with people, we

00:28:22 understand you can have a really, really tight budget. And this may not be something that you're listening to the show think there's anything that you can do and

00:28:30 get you might feel bad. It might be some kind of guilt in the background, I really wish I could.

00:28:38 If only I had whatever the dollar amount is that you have in your mind that you're thinking that you need to be a

00:28:45 giver, frankly. You don't even need that necessarily for

00:28:49 one stay in within having a healthy body and doing what's good for you

00:28:55 there's an app called charity miles and I use

00:28:57 this

00:28:58 regularly when I'm going out for a walk or you can do when you're shopping. Whatever if you're out and you're walking, you can go ahead and click on this charity. Miles

00:29:08 hit start and it will

00:29:11 donate to

00:29:13 because of your physical activity to a charity

00:29:16 and not every charities on there.

00:29:19 But there's a lot of really great charities. There and partnerships there for you to go ahead and take a look at there's. Amazon shop anybody that is

00:29:29 shopping on Amazon, you go to smile, Amazon. And you can select several charities to be giving to

00:29:37 so there's not a whole lot that you necessarily have to do to change your current behavior as a matter of fact, you can encourage and

00:29:47 strengthen

00:29:48 some of the activity that you want to participate in, like running or biking. Or some good, healthy activity that's a great way to even encourage you to do more of

00:29:58 that. So as you're kind of setting some of these goals for yourself in this

00:30:02 next year. Think about those things. So as we dive

00:30:05 into the pieces here on giving there's a couple things that have really moved the dial for how people do giving one of the first things is that we have capped

00:30:17 the automatic deduction, so there's always been a cap on them. They were 6,000

00:30:22 individual for deductions on your tax returns. So if you didn't have anything to itemize and you were an individual

00:30:28 person, 6,000 bucks as an automatic deduction, you got unless you went over that 6,000

00:30:33 like seven or 8,000 dollars in deductions. Did you actually get to deduct any more than six? So 6 was

00:30:38 free and it was 12 for married filing jointly under the Trump tax code. He actually doubled both of those deductions which for a lot of

00:30:47 families in the middle class

00:30:48 and people who rented apartments and things like that. This was a huge tax saving because they not a lot of deductions. People didn't have

00:30:55 mortgage and interest deductions and all that stuff,

00:30:59 but that has doubled. It went 12,000 individual. And then it went to 24,000 for married. Finally jointly

00:31:06 so to simplify this. If you're married filing jointly, which is probably the majority of listeners on some level.

00:31:14 You get an automatic 24,000 dollar deduction on your tax return in order to get more deductions than 20

00:31:21 and you have to have deductions all the way up to 24,000 plus more than that.

00:31:26 So, for a lot of people, they don't even go over that yeah that's a lot of change. How many middle class families do you think of

00:31:36 hitting that 20,000 deduction level?

00:31:40 Yeah it's not a lot of people matter of fact the entire I think it was

00:31:47 like 17 or 21% I can't Re. What the number was. He used to itemize all their taxes. And by this

00:31:55 standard in this new standard, I think I was 21% of people itemized it dropped in less than 7% of people itemized. Once they did this

00:32:06 that's crazy. That is and the

00:32:10 we've been challenged in this idea to

00:32:14 where maybe the incentive isn't there to be charitable minded. Because

00:32:21 why itemize why why go and donate or why be actively pursuing ways to

00:32:29 find deductions to lower your taxes. If it's already given to you, right? So

00:32:35 to add, what I think might be some more clarity. For people is that

00:32:38 let's say let's say the government you're married filing jointly you get a 24,000 dollar deduction and let's say you looked at your actual deductions.

00:32:45 Between mortgage interest and all the different things that you're deducting and you can let's say you get 5,000 dollars to church.

00:32:52 And you gave a thousand or charity and you're like, I don't know 15,000 dollars of total deductions between health and everything

00:32:59 you're not a 24

00:33:01 yet. So in order for you to actually get any more deductions than 24 the

00:33:05 15,000 you've

00:33:05 gotten the government says. Hey we're still going to give you 9,000 dollars more in deduction. So unless you have more than

00:33:11 9,000 don't itemize because it's not worth it.

00:33:14 Save yourself the time, right? And so for a lot of people and a lot of cherries are very nervous about this because they felt like

00:33:21 this would not encourage people to give. This was a major concern of the charitable

00:33:27 world. So let's go through

00:33:30 the idea of giving and what options exist for you here? Because when you give out of

00:33:36 the goodness of your heart it's also, you want to get the credit for it right? I mean that's kind of the piece here that everyone's looking for.

00:33:43 So I'm going to talk about two ways that people can give naturally

00:33:51 inside their life today. While alive while just everyday giving and get at least the additional or the same credit or

00:33:59 better. As we get into it, you can reach us at 8 5 5 2 to 6 8 5 5 1 again that's 8 5 5 2 2 6 8 5 5 1 now,

00:34:10 the first scenario in giving okay. And saying, hey, listen, I got these deductions and I want to try to get over is if you're retired,

00:34:19 the number one way to give is to give directly out of your IRA.

00:34:24 That means and this is to be very clear.

00:34:28 Give your RMDs give whatever you don't want to. Like if you want to write a

00:34:32 church a check for 500 dollars it's better to call your financial advisor and have them give the 500 dollars directly from your

00:34:42 IRA as a retired person over 59 a half directly to the church. And the reason for that is

00:34:48 if you take in the income of 500 bucks and then write the church. A check you're not going to get the deduction for the 500 dollars. But you will have to pay tax on the

00:34:59 income. Because the deduction would be in that scenario. Still underneath that 24,000 dollar limit. If you give it directly out of your IRA as an RMD or whatever

00:35:11 qualified charitable distribution is what it's called a

00:35:14 QCD you can

00:35:15 then not have to declare that income, which is the

00:35:18 equivalent of getting the

00:35:19 deduction it's just the reverse of it it's like I'm not declaring the income I'm not going to get the deduction. Now you're not going to declare the

00:35:25 so you don't have the tax on that. So you're going to give why not get the credit

00:35:31 right now. If you're not at that point in time where

00:35:37 you're taking money out of your IRA for retirement. Okay that's that's a given that's not going to be your scenario here. But

00:35:46 that's a beautiful way. Now, it does add maybe a step in the process. Some thoughtfulness, which is also really good for you to do

00:35:56 there's the other way that we've talked about really structuring that giving

00:36:01 is the donor advised fund, right? So donor advised funds. These are fantastic ways for people to give and

00:36:12 they have a lot of, I guess, with as far as what they can do. You can take an asset that you have that's

00:36:19 appreciated and so often

00:36:21 there are these assets that you'll have and there's some kind of a stock. It can be real estate. It can be all these different places that

00:36:27 you've accumulated assets and it really has appreciated and you can go ahead and gift that into a donor

00:36:35 fun. Okay, now, the donor advised fund will go ahead and continue to gift

00:36:40 on an annual basis. Just like you were planning to do all along every year you've got your charities that you want to go ahead and give to?

00:36:50 But what you get to do in this scenario is you get to take that deduction

00:36:56 all this

00:36:58 year. So you can kind of lump, sum and front run. All of those deductions that you've been hoping to grab a year over year. And so what that does is it creates this

00:37:10 ability for you to get over that hurdle of that 24,000 dollars or whatever. Your current tax hurdle is to get the deductions and take advantage of the code to

00:37:21 to lower your taxes. Does that make sense? Yeah,

00:37:24 I think this is one of those

00:37:25 complicated scenarios. And I don't know if this is going to make any more sense to our listeners and I would encourage people to call us if you

00:37:31 haven't ever heard of a donor advised fund. But this is the way it works, you get a 24,000 dollar automatic deduction and let's say you're at

00:37:41 15,000 dollars. And every year you give to charities another 15,000 so normally

00:37:47 in 15 plus 15 puts you at 30 and you get 24 so you're going to get an extra 6,000 dollar deduction on that charitable contribution of 15 grand. So we'll carry you over.

00:37:57 But what you could do is if you know you're going to give to a specific charity or

00:38:02 charities over the next three to 5 years you could then say, I'm going to give. And I have cash I'm going to give 45,000 dollars to a donor advice fund

00:38:12 this

00:38:13 year and I'm going to have 15,000 each year go to those charities over the next three years. And here we get the money correspondingly. Instead of you, having

00:38:23 just a

00:38:25 15,000 dollar charitable contribution this year on top of your standard 15 that you would normally have to get you to 30 you be actually adding another

00:38:33 30,000 so you'd be adding that 45,000 dollars a giving this year all at one putting you way over the 24

00:38:39 so now you got huge deductions and you're getting every penny of the deductions that you'd have in the next couple of years this

00:38:46 year and then the following

00:38:48 years you don't actually give anything to charities. Even though the donor advised fund is doing it for you you're getting that full 24,000 dollar deduction for free

00:38:57 it's great it's a phenomenal way of giving. And for people who have the funds and now they're going to do it it's a wonderful way. Even if you don't give that much

00:39:06 sometimes for some people, it only puts them over a thousand or 2,000 dollars and they have the ability to do this on that automatic deduction inside their taxes.

00:39:16 It might be an extra few thousand bucks.

00:39:20 You guys are listening to money on tap. You can reach us at 8 5 5 2 2 6 8 5 5 1 or info at your money on tap com hey, right before we go need to let you know

00:39:32 that you're listening to the giving show. Okay,

00:39:37 our best within an hour job that we can possibly bring to you some of the some of the techniques and some of the opportunities that you have to be a

00:39:46 significant

00:39:48 impactful giver.

00:39:50 But some of the things that you also want to make sure of is that where you're

00:39:54 giving is using the money wisely. And so many people are getting calls today from all sorts of charity organizations because it's that time of

00:40:02 year. And they don't know that they have a resource out here. Charity Navigator org charity, watch

00:40:09 or GiveWell

00:40:11 org will help you make sure that not only where you're giving does have the

00:40:16 qualified charity status of a five. Oh 1 C three a nonprofit status. But it will tell you how and rank them and tell you how well they're actually using those

00:40:28 monies. So, with that we're gonna take a quick break. You listen in the money on tap we'll be right back.

00:40:39 Hi, my name is Seth Crossman partner with Bresha Financial Group. And one of the CO hosts of money on

00:40:46 tap one of the biggest concerns and largest expenses people face today is

00:40:50 taxes without thoughtful planning. Taxes can

00:40:53 destroy future retirement dollars eliminating the possibility of a timely retirement or dreams of what you want retirement to look

00:41:00 like. If you're like most people you're getting closer and closer to retirement. And you maybe wondering if you're taking the right

00:41:07 steps, will my income be enough? Will rising taxes forced me to give up my

00:41:12 dreams? How does inflation factor into all of this? These are real concerns. And you're not alone. Putting a plan around your financial future is what we

00:41:20 do if you have questions when it comes to your financial

00:41:23 security. And if you're looking for a personalized solution? Contact a separation Financial Group 8 5 5 2 2 6 8 5 5 1 it's. Time for you to start getting answers to your

00:41:35 questions headquartered in bed for New Hampshire ratio, financial has offices across the

00:41:39 country we'd love the opportunity to show you how we can help there's absolutely no cost or obligation to meet with us. Call us at 8 5 5 2 2 6 8 5 5 5

00:41:52 Oh 5 5 1

00:41:55 now, back to money on tap with Ben and

00:42:00 welcome back you're listening to money on tap. You can reach us at 8 5 5 2 2 6 8 5 5 1 or info at your money on tap.

00:42:09 Com, you are listening to the giving show and we've had a lot of fun so far. Talking about

00:42:16 different benefits of give thing and being charitably minded. And maybe some things that you just weren't aware of and there's so many different ways to give out

00:42:25 there and we're touching on a few of

00:42:28 in

00:42:29 some of the tools of the trade as financial planners that

00:42:33 we probably have a whole lot more conversation than you will around the dinner table. And we want to bring to you a couple of places where people really have

00:42:45 significant impact. And not only gifting in philanthropy

00:42:50 and

00:42:51 also influencing their taxes that's a huge part of what it is that we focus on here is how do we help you change your taxes

00:43:00 and pay less tax and it's a plan it's a part of

00:43:05 an initiative that starts with you and a desire to a help or lower your taxes and that's the conversation we're having here. So without too much further ado

00:43:14 there's going to be a couple of other things that we're going to cover out there as well as just

00:43:18 current rates of gifting and some other strategies as well. But the two that we really wanted to spend a little bit more time here. One is

00:43:26 the charitable remainder trust

00:43:30 charitable remainder trust and

00:43:33 charitable lead trust. Ben, just quick. Can you give us a couple of like the overview on those two?

00:43:40 Yeah, these are extremely complicated. The charitable remainder trust is really commonly used or has been commonly used for many, many

00:43:48 years. And the idea is that you give money to a charity.

00:43:52 But you don't want to go in their hands today because you know, you need the money to retire off of or something along those lines. And

00:43:59 so it's called the remainder goes to the charity so after you've collected your income

00:44:04 that remainder would go to the charity after you're passing. Now, that has become recently less

00:44:12 popular. Not because people don't like, the idea of it it's just that because this is a complicated thing called the AFR rate and a

00:44:21 and that's the applicable federal

00:44:24 rate. The FR rate is very, very low. And the lower that AFR rate

00:44:28 is the lower the percentage of the deduction you get on your taxes. When you do a charitable remainder trust so a lot of charitable

00:44:37 organizations are not doing

00:44:38 that. The AFR rate is like it's like point four. It's point for it's crazy low. I mean it's ridiculously low, honestly I've never seen it this low before.

00:44:49 Yes, point for. And so

00:44:53 that's a little nuts.

00:44:55 And so your deduction on something like that would be probably in the

00:44:59 10% range or something like that for somebody 5 10 15 it's going to be really, really low. If you gave a million bucks you're not going to get a lot to write off

00:45:08 the lead. Trust is something where you're giving to the charity first that's where you're saying, I'm going to put this money in this trust and I

00:45:17 want the annuity portion and don't get scared by the word annuity because that's just being a guaranteed to pay

00:45:23 out of this trust to the charity for 10 or 15 or 20 years and then is up. Whatever time period you chose.

00:45:31 Whatever remains in

00:45:34 that trust would go back to you as the

00:45:37 giver. So I

00:45:39 tell people sometimes it's kind of, like lending your money to a charity it's like hey. I put a million dollars in here.

00:45:44 Charity, take your income for the next 20 years and this is what it's going to be 5% or 6% or something like that. 50 grand a year.

00:45:51 What it said do whatever that million dollars is worth. I get back now. Currently today, if you were to do a

00:46:00 5%

00:46:01 donation to charity at a charitable lead trust I have this number right in front of

00:46:04 me and you did it for 20 years. And then I said after 20 years, whatever there is mine, you get a 96% deduction.

00:46:13 Wow, so you put a million dollars in there we're talking about

00:46:16 960,000 dollar ordinary income tax deduction that's an enormous deal. But you're also giving the money away for 20 years. And if you put a million dollars in there

00:46:23 and the trust only does 5% or 6% net or something like that. You're going to basically get your million bucks back 20

00:46:31 years now. You've gone backwards in value. But what did that deduction mean to you today? How much did that save to you today there's

00:46:38 other pieces to this trust that a lot of people don't understand. Which is the income that goes to the charity. Would be pushed out to you as

00:46:44 income during the next 20 years. So you'd be taking on that income. Slowly yourself to pay the taxes. But at the end of 20 years, whatever that trust is your tax free

00:46:55 it's not a bad

00:46:56 deal. And we do these pretty often for people who get buyouts and private

00:47:00 equity and there's a lot of different pieces there. And people who are charitably minded. Love, this stuff. I mean you're just watching a lot of taxes out.

00:47:07 So what does that

00:47:09 mean if you do half the number of years you're looking at about half that deduction that's a 50% deduction on ordinary income tax

00:47:16 that could put you in a totally different tax bracket that can do a lot of things for you. Are we going to go

00:47:22 into the charitable remainder trust? You briefly covered it and really it's not necessarily

00:47:27 because of the AFR rate. It doesn't really hold a lot of value in the structure. Right now, just a couple of things. I think that are important to talk about, though.

00:47:36 So there really is a couple a couple of types of Carole war, mater trusts. So there's the charitable remainder annuity trust or a crap.

00:47:46 Right that's a distributor fixed annuity each year. And then there's a charitable remainder unit trust or the rut that distribute a fixed annual

00:47:55 percentage and that's based off of the trust assets rats

00:47:59 don't allow for additional contributions, right? But the creds do. Okay, so those are some considerations as well. And these are really

00:48:09 revocable is one of the things to understand. Like you just don't go up and start modifying these things after you've put it into place. Okay it's there it's

00:48:20 done and so there's some permanence there that you need to really understand around this giving strategy.

00:48:28 And even though we might have this preference today, what

00:48:31 the landscape looks like as we take a look back at some of the shows we've done on this in the past it's amazing to me to see how it has also

00:48:40 changed. So from year to year, this is something that we also want to take a look at with you and see. Hey, what is the

00:48:46 currently, what is the best option for you? What works for you in your mindset is a big part of that as well? So there's one other thing out there

00:48:57 too and you and I were chatting about this the other day for a client. Is that legacy trust program that we've done and the legacy trust program

00:49:06 it kind of is a charitable remainder trust in its own way it's a completely different program and you give the money away and it does give you income but it's a

00:49:17 multigenerational program

00:49:19 that's like lock, stock and barrel one program. You put your money in and it will pay income to you. Your wife, your kids your grandkids, whatever you

00:49:27 choose and based on ages and time periods it'll pay for a very long time. And it does give you an upfront deduction. And then the remainder would go to the

00:49:37 charities. But that legacy trust piece where you create a very

00:49:42 simplified version for somebody for somebody who's not looking to do a lot of money doesn't want a lot of trust

00:49:46 work. The legacy trust program is it's kind of like, it's kind of like buying the app on your phone. It's already ready to go. You install it and boom it's done

00:49:55 you don't have to write your own trust the crap in the crotch. You really got

00:49:59 you're hiring an attorney, the terrible trust, the chairman or trust you're hiring your own attorney. You are doing

00:50:07 this you're doing this yourself you're very detailed and so forth the legacy trust is kind of a

00:50:14 you're buying it off the shelf and it's set up for Multi generational. People love that and they can keep doing

00:50:21 them you can buy them on the open market there's a lot of different pieces there that you can do it if that's a question for you. Looking for something

00:50:27 simplified we have that scenario to

00:50:29 in

00:50:30 summation and conclusion. We have a couple of other things that we want to just. These are some ABC pieces here. Take a

00:50:37 look at your company that you're working with. And over here it's Intel they've got a lot

00:50:43 of matching donations that they'll do see if you have some matching dollars available for you and

00:50:49 there's other places to look. If you

00:50:52 don't currently work for a company that's doing that as well. There are other

00:50:55 organizations that are looking for people that are givers and want to match those donations in the direction. So maybe take a look at the landscape. There

00:51:03 have some more

00:51:05 impact so non cash donations. This might be

00:51:08 your car situation that you've got an old car that you just want to give

00:51:13 away a couple of things there. You may want to go ahead and just sell that for cash. Because the cash value made and then give the

00:51:19 cache because the cash value may be higher than what they're giving you in the donation world? That's been something we've seen in that as well.

00:51:29 A life insurance unneeded life insurance last show. We were talking about your jalopy of a life insurance. And a 10 35

00:51:35 maybe it's just a life insurance policy that you're like, I don't even need this thing anymore.

00:51:41 Well, you can go ahead and give that life insurance and there's a couple of ways to do that. So give us a call and we're here to help you with those things,

00:51:50 so what else is there? Well, a lot of grandparents and parents like to give to generations

00:51:59 and there used to be a 14,000 dollar a year.

00:52:04 Ability for you to

00:52:06 gift cash to as many individuals as you

00:52:09 desired. But that's gone up to

00:52:11 15,000 so that's nice. That that's changed matter of fact, Seth. And I are available for this if gifting is in your heart and it's not to your kids or grandkids as

00:52:19 more. Vlog or it is a plug. But

00:52:24 really, but I think Seth, you right? I mean it's one of those things

00:52:28 where if you want a gift it's not just limited to your kids and your grandkids, you can get 15,000 bucks. Anybody you want and mom and dad can both give

00:52:38 15,000 to sun a

00:52:40 or daughter B. So they can give 30 hell. That's not your name.

00:52:43 That's not my name without creating a deduction of your estate tax gifting rules, which is great, correct that's one of those things that you can start to do

00:52:54 today to really start to set up your family moving forward there's a lot of

00:52:58 variations of that. And reasons for and how to around that as well, so give us a call 8 5 5 2 2 6 8 5 5

00:53:05 1 love to help you out

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MOT Show 147 Trade in the Jalopy it’s time for the 1035 exchange 21978394

Seth: Welcome to Money on Tap. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. My name is Seth Krussman.

Ben: And I'm Ben Brayshaw.

Seth: You can reach us at 855-226-8551 or info@yourmoneyontap.com. It is gonna be some fun here today, folks. If you’re new, welcome. If you’ve been around the block a couple times with Ben and I, we’re so glad to have you back and we appreciate you and the calls that you bring in, the connections and communication. So much fun communicating and connecting with you guys. That’s why we do this.

Ben: We like it. It’s fun. People come into the office and it’s great, we meet people and we’ve helped a lot of people a lot of different ways. That’s where I find the joy. That’s the most fun. I think this show keeps us on our toes a little bit. I’m excited for this show.

Seth: We’re gonna be talking about that old, beat up piece of life insurance that you have out there. It’s a program that’s been around for the last 5, 10, 20 years, however long you could make that thing work.

Ben: They usually start with a story about an evening at your home with a life insurance salesman. It usually turns out to be a memory that no one seems to forget. You remember your child’s birth and then you remember the life insurance sale.

Seth: I so wish we could go ahead an attach some kind of volatility index to people’s blood pressure as we say those words or think about those memories.

Ben: We’re gonna give you guys some hope today. That’s what I’m excited for. Before we get moving into that, Seth, we have MITN.

Seth: I love that intro. We get the music, timing, fun. We’re gonna do a deep dive on some money topics. For starters, GM plans to hire 3000 new workers, but that’s not the everyday story where GM comes out and says we’re gonna hire 3k more workers. It’s even better than that. These workers are gonna be bolstering. It’s engineering and software development for the EV car. Is EV everybody vehicle?

Ben: No, it’s electric.

Seth: This is beautiful to see. If you’re a fan of American steel, American cars, this is really great to see. I love GM, Ford, all these vehicles and manufacturers out there. One of the things that’s really hot right now is the electric vehicle, or the self-driving vehicle. It’s put them in a place where they’ve gotta figure it out. Their solution of opening up this platform to bring in new talent—this is from GM’s VP—they’ve figured out how to quickly adjust and make this happen and move faster. One of the things they’re doing is opening it up, they’re gonna bring talent in from all across the world. I’m not a fan of GM, but…

Ben: I’m a fan. I drive a Chevy truck. I’m all-American. I’ve got 2 Chevy vehicles.

Seth: One is Chevy and the other’s another. It’s another thing. If you were to be given the option to call GM right now and ask someone if they wanted the opportunity and I said, do you want to go to Detroit?

Ben: No. Not in the cards, but neither was it in the article. What’s interesting is all the remote work they’re hiring. They’re literally competing against everyone across the globe. This isn’t in the article, but GM took a stake in Nicola, which is an electric vehicle company. They took a huge stake in it, which had all sorts of crazy, wild, who knows what’s going on with them right now. The CEO had to step down, but anyways, they’re really aggressively going after the electric vehicle location. They wanna be a player in this space, they wanna launch a number of cars. They just reported $4 billion of profit. They’ve got people ready to move.

Seth: I wonder how much of this is going to come back to 2 different platforms, let’s say. You’ve got the Microsoft platform, the Apple platform, and that’s what it was in terms of owning the road. I wonder if there’s a part of them that are going to be vying for this piece of industry for the next 50 years.

Ben: I think about all the phones and everything going on, Seth. I think it’s a matter of time before we’re dropping our phone into a tray and it is the car computer. It’s your car, a piece of your car. The technology is driven off of that phone. I see that becoming a major component piece, and I think the tech they’re looking to drive, I can only imagine it’s a very radical, deep – the technology piece, Microsoft, whoever, it’s gonna be parasitic in its connection, I think, with our lives and our world.

Seth: You heard it here, folks. The very first time. We’ve got a few of those things out there, as a matter of fact. We’ve gotta start timestamping these things, because we’ve gotta tell people all about what we talked about on MOT.

Ben: This is a big one here, folks. This is right out of WSJ, and this is from Richard Reuben. The article’s titled, Some business owners can avoid cap on deductions for state and local taxes, treasury says. That’s the salt tax that was capped at 10k in 2017. It says that the forthcoming rules would sanction state laws that let partnerships, other businesses, deduct all their state taxes. There’s been some workarounds on this that have been successful, especially this ECORP area. The average W2 employee person has not been able to manage that. Some of the flow through has been a problem as well. They’re looking at this, and promising Steve Muchin, who’s the treasury secretary, has promised that they’re going to fix this problem, or alleviate the problem at a small level. For a lot of people, the salt taxes are very aggressive. Trump administration scenario, it was seen as something where if you were in a state of high taxes, you couldn’t deduct your state and local taxes. If your property taxes or any of the state and local taxes, you paid could only get deducted up to 10 grand. This was seen as a very aggressive, against the Democratic party, play by the Republicans. The states that this tax change affected the most were the highest tax states out there, which was CA, NY, NJ, CT, MA, it hit the Blue states the hardest. It was almost a very aggressively seen play. There’s some hope inside of the world of taxes where the salt tax cap would be lifted or alleviated in some capacity. There’s some promise of that happening, potentially. It remains to be seen as they figure out this vote scenario deal. Half the world thinks it’s okay, half the world thinks it’s not. if you ask me, I don’t care who the final person is, as long as we have integrity in our elections. That’s the most important thing out of this. This alleviation piece is really interesting for a lot of people. For those business owners, there’s a lot of workarounds coming here if you didn’t have one to begin with. We’ve gotta wait to see, but you heard it here first: be on the lookout for this. If there is some pullback on the tightening in this rule, it can be a huge tax savings for you, if you’re focused on this.

Seth: You got into the meat of that, and I don’t have a whole lot to add. Number 3: the iPhone.

Ben: I’m excited for this, because there’s the fact that there’s so many people who need help in this area and they’re not getting it. Sorry.

Seth: It’s great because it’s so much more important than the iPhone, and how many models of the iPhone are out there. Apple creating many, many more options for us, and it’s fun to see trends where, what has it been for the last 5-6 years, it’s been the phone has become larger and larger. The cameras have become better and better, and it’s really incredible what they’re doing on it now. Filming major feature-length movies on iPhones. The smallest one of the group, which is the next trend, let’s see how small we can get it. To take you back when we first had our cellphones. Do you remember the ones that fit in the palm of your hand?

Ben: I still like those. I don’t still use it, but there is something lost in the convenience of something smaller, for sure. I’m excited for the mini phone, although I’m not jumping to get one.

Seth: You’re not standing in line for the new iPhone when they release them?

Ben: No, I’m still concerned about the 5G thing. Maybe I’m falling more into the conspiracy side of the world. I want to tread lightly in the question mark world. Do I think 5G is something we’re all gonna have to accept? I do, I just don’t know if there’s a point in time with the amount of speed we’re trying to push through the atmosphere here.

Seth: One of the articles we took a pass on was a 5G dip, and who’s doing better in the 5G race? Saying iPhone and Apple a bunch of times on this podcast is probably gonna get more people to like us in the long run.

Ben: The article’s interesting, because it says it’s not much bigger than the iPhone 5, although it seems like it is. It’s tiny for what you’re—I look at people using the pro max things, and I may as well just carry around an iPad around. I’m looking for smaller phones, and this is interesting.

Seth: You can go to a previous episode of MOT, and I probably said that. I’m confident that I did. My hand is a decent sized hand, but I have a hard time texting on these phones because they’re so big.

Ben: I was thinking about how versatile I’ve become, and I have large hands. I was thinking about how versatile I’ve come, by allowing my phone to slide down my hand and somehow work it back up my hand without a second hand.

Seth: I’ve seen you doing that, driving down the highway, eating Five Guys. I don’t know how you do that, Ben. That’s incredible. I’m gonna bring us back down a minute because you can’t have it all. You get to with us, of course, because that’s what we do with 3-D investing, with MOT at BF, you get it all. Apparently in an iPhone’s world, you can’t have it all. With the smaller version, you’re gonna suffer when it comes to your battery. I know that’s been an issue for Apple products in the past, so stay consistent with that.

Ben: Price is good, though. This thing is $699, compared to over 1k with the pro max. That’s a sizeable savings. Most people carry around an extra battery, so I think this is no big deal. It’s got a shorter battery, but if you’re looking for a more compatible phone and you’re sitting at your desk, boom. Charge the thing. Just to wrap this up, the iPhone mini lasts about 12.5 hours, whereas the iPhone max lasts 14 hours.

Seth: That’s it, folks. I’m glad you brought us back to something that’s important. That’s gonna do it for MITN. Don’t go anywhere, we’ll be talking about trading in that old insurance policy you’ve got, sitting around, not doing anything good anymore. We’ll be right back; you can reach us at 855-226-8551 or info@yourmoneyontap.com. Hi, my name is Seth Krussman, partner with Brayshaw Financial Group, and one of the cohosts of Money on Tap. One of the biggest concerns and largest expenses people face today is taxes. Without thoughtful planning, taxes can destroy future retirement dollars, eliminating the possibility of a timely retirement, or dreams of what you want retirement to look like. If you’re like most people, you’re maybe wondering if you’re taking the right steps. Will my income be enough? Will my rising taxes force me to give up my dreams? How does inflation factor into all of this? These are real concerns, and you’re not alone. Putting a plan around your financial future is what we do. If you have questions when it comes to your financial security, and if you’re looking for a personalized solution, contact us at Brayshaw Financial Group. 855-226-8551. It’s time for you to start getting answers to your questions. Headquartered in Bedford, New Hampshire, Brayshaw Financial has offices across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation to meet with us. Call us at 855-226-8551. Now back to Money on Tap, with Ben and Seth. Welcome back, you are listening to Money on Tap. You can reach us at 855-226-8551, or info@yourmoneyontap.com. We’re wondering, is it time for you to trade in your old jalopy annuity or life insurance policy? Is that what you’re driving around in? Do you have this annuity and you’ve been contributing to this thing for years and you’ve never given it a second thought, the wheels may be ready to come off of that. It may have served a purpose at that time, and it was working in the moment, but did you know that you can possibly trade that in?

Ben: It’s funny because there’s so many people that own these life insurance policies. People come in a say, I have this life insurance policy, it’s got a bunch of cash in it, but I don’t know what do with it. I bought this annuity from someone and I’m not sure what it does, it’s so complicated and I don’t understand. The number 1 question people have is how will it affect me tax-wise? If I do something with it, is there tax implications, how will that come into play? Fees, there’s a zillion different questions people have on these things. Most of these contracts, especially the annuity side, have an unlimited number of variables where if you don’t have the background to know what to look for, you’re not able to write—sometimes I ask people, what’s one question I haven’t asked that I should ask? I think that’s the way with the annuities. When you contact some of the insurance companies, you don’t know what the annuities can do or they’re capable of because there are so many distant avenues of things that you can do with them to compare. I’m excited to get into the show because there’s a lot of people that have questions.

Seth: First off, I want to make clear some things. You’re listening to MOT. You can reach us 855-226-8551 or info@yourmoneyontap.com. Why would you want to give us a call or send us an email? Ben and I are financial planners, that’s what we do. The name of our company is BFG, that happens to be Ben’s last name. coincidence? I think not. the fact is this is what we work in all the time. We’re not here trying to sell insurance products; we don’t have a bent on what it is we do in the financial planning world. We focus on 3D investing, insurance and annuities are apart of that solution, or what can be a solution for your financial plan. They might be something that serves a purpose for a point in time, but you do need to understand does this work for me today for what I want to do going forward? In that transition Ben and I get an opportunity to not just wear this hat or that hat, we put them all together to make sure that we’re putting in the best place possible. Ben described an interesting circumstance that we see all the time. I just had a flyer on my desk, which was an invitation to go out to eat and listen to a presentation. When I took a look at that, the person that was presenting, all they did was life insurance. That’s all that organization does. Can you guess what you’re gonna get when you walk out the door of that presentation?

Ben: That’s pretty common. There’s people that just do 1 side or another. We call it 3D investing. Insurance is definitely a piece of the stool that is a big issue. There’s crossover. People don’t realize sometimes you have to be security and insurance licensed because they have a security component to them. The money and fiduciary piece starts wrapping into the 3-legged stool. It’s kind of hard to really have an unbiased perspective without really being able to provide all the options to a client. I’m really excited to talk about this 1 leg of the stool today. I think what people have is they don’t know what they have. They don’t know what kind of insurance product they own. There’s life insurance, annuities, and variables inside all those items. Whole life, term insurance, index universal life, universal life, variable universal life, it’s like a litany of…

Seth: Lots of lives in there.

Ben: Then you’ve got the annuity world: fixed annuities, equity index annuities, oh gosh. There’s just a lot of this stuff that people don’t understand. What our first offer is, if you find yourself buried now and after this conversation, give us a call. We’re happy to talk to you about what you own and see if we can give you some guidance and understanding. The first thing we want to cover is the concept that you have an old life insurance policy, an old annuity, and they don’t fit you as far as you can tell. You’re thinking about trading in that old jalopy. Seth, what’s the one thing about trading in this old jalopy?

Seth: There’s the simple part, where I think I wanna focus and try to come back to, what are some takeaways. The simple part is that you can trade that in, that’s possible. Especially when we’re talking about some kind of cash value in that—if it’s an annuity there might be a few components to that. There’s the true cash value, or if you’re talking about life insurance, it’s gonna have a cash value to that life insurance. What do you mean trade it in, Seth? Why would I do that? The process, if you want to capture this tax code that’s called 1035, would be called a 1035 exchange.

Ben: That’s good. One of the things about this is the ability to get rid of an annuity and maybe get into an annuity that’s more suited for you, whether it’s an income, death benefit feature, all these annuities have different buyers out there. That 1035 exchange allows you to do this without paying any taxes. It allows you to move to point A to point B without any taxes.

Seth: What would be taxable? Why would there be a portion of this that would be taxable if I just decided I wanna take the cash value and go buy a car?

Ben: Great question. The first option could be you put 100k in an annuity. It’s a post-tax annuity, something you’ve done with savings. Now it’s worth 150k and you decide to liquidate that.

Seth: I’ve paid taxes already on 100k and then there’s this 50k that’s accumulated there. Is that the gains or growth?

Ben: Yeah, but it’s not taxed as gain. Taking age out of the equation here, because if you liquidate an annuity before 59 ½, you’re gonna have penalties. If you take the money out, it’s gonna be taxed as ordinary income. You’re gonna have a 50k gain that’s gonna be taxed as income, which means that’s gonna add an income level to you. If you’re already making a decent living, 80-90k a year, if you’re making 50k extra, that’s gonna be taxed at 22%, not counting penalties. You’re looking at some pretty heavy tax burden there, pushing yourself all the way into another tax bracket.

Seth: Woah, put on the brakes. I don’t wanna do that, right?

Ben: Exactly.

Seth: But I like that I’ve got this money over here that I’ve accumulated. Maybe what I’m getting off of that is something around 3%, if it’s a fixed product, whatever it is, let’s say it’s a return scenario. I’m not excited about the return I’ve been getting off of this. Lots of fees. There’s something about it that doesn’t make sense to me. So I’ve got this path of 1035 that would allow that exchange, or that cash value, the original 100 plus the 50k that’s there to go ahead and relocate from where it’s been warehoused into—what are the options?

Ben: Yeah, I think the thing is with most people, and the reason we’re talking around the curve of everyone does a 1035, for people that own life insurance, they know there’s something complicated about the liquidation. They’re not sure what it is, they know there’s surrender fees, potentially penalties, taxes, they know there’s all these different pieces and they’re not sure how to handle it. The govt has given us this ability to say you can swap from one item to another. We’ll get into this a little more in a bit. You can go from life insurance to an annuity. You can go from an annuity contract to another annuity contract. You can’t take your cash value from an annuity and go to a life insurance contract tax free. You can’t go backwards.

Seth: Even though I don’t like that, I still can’t do it? I thought that’s how it worked, if I don’t like something the rules need to change for me.

Ben: That’s a political stance, Seth. We’re not doing that today.

Seth: There seems to be a lot of rhetoric like that today, right?

Ben: People know there’s a complication around annuities. There’s no such thing as a good or bad investment. There’s only suitable or unsuitable. If you bought something and you think it’s bad, it’s probably it was just unsuitable for you, and you need to sit down with someone and find out how to get into a more suitable scenario. How many times do we have people who walk through the door and say I bought this thing and it seemed to meet my goals and objectives, but it no longer does. That doesn’t happen every day, but frequent enough that it’s an issue.

Seth: That’s one of the first things we highlight here when assessing a 1035 exchange. You want to look at what are your goals. First and foremost, the fees and the process, the next greatest thing that’s crossed your path as far as intriguing or getting your interest, those are not the factors that you need to look at first. Goals, goals, goals, folks. Before considering, take a look, what were your goals then, and that’s good clarity for you to look back and take a look at what are they currently and potentially we want to pull this into perspective, 5-20 years down the road. After that, I would say, our 2^nd piece is, what are your fees or what are the limitations? Ben just described the tax ability where you can’t go from the annuity into an exchange to a life insurance product, without it being a taxable event. What are the paths, those limitations, but more often than not, let’s say this is an annuity or a life insurance policy, they had surrender fees associated with them, or some kind of a schedule like that. They don’t typically last forever, they usually have this reducing fee year after year, a 10-year surrender fee. Year 1-2 that you’ve had this—

Ben: That’s a cost I have to pay to get out of the investment?

Seth: Right. That’s usually one of those things on the front side of these, that in the past they weren’t necessarily—there’s a conversation around whether or not those were fully disclosed sometimes. There needs to be full disclosure around what are the costs to do anything you’re going to be doing? If there isn’t a full disclosure, I would advise people to run.

Ben: That’s a great point. I think the thing that our industry does well is we explain the benefits of a lot of things. If you go into this, here are the benefits, but you have to look backwards. What are the costs, the fees, even with life insurance companies, you might own a life insurance policy that has a really low insurance cost, where the amount you pay to be insured by that company is lower than the potential average cost of what you’re going into. You have to take that into account. Even though this thing may have a new bag of tricks, it could sound great, and it really could be the right thing for you. Sometimes paying more is the right thing. Every time you have more kids, you need a bigger vehicle, that’s the right thing sometimes. Costs do go up because you have new needs or goals. That’s a great point.

Seth: One of the other things with the surrender fees or schedules is a lot of times there’s a fee hurdle, before the product will start accomplishing what was outline originally by the features and benefits. The way that the contracts typically work is that the fees are frontloaded in those. Taking a look at what the fee situation is: is it gonna cost to get out, and what the new opportunity or the next contract looks like, because there’s gonna be potentially a whole new set of fees or hurdles involved with that as well. Be very clear with those things.

Ben: As we go into evaluating what you did own, evaluating what you’re considering purchasing is something that takes a lot of expertise. I’m gonna go backwards a little bit. When it comes to evaluating a new investment, one of the things is understanding the strength of the company you have and the company you’re going into. Those are important things people look at. The other thing is that – I’m speaking more specifically to annuities because they have many variables of writers: income writers, withdrawal feature, a long-term care benefit kind of play, or a death benefit feature – there’s a bunch of different – they create access to your funds for people who have specific concerns. That’s something that could be of value, but you also have to understand what you do own. There’s a lot of different ways to get money out of annuities: withdrawal annuities, annuitization in an old annuity, and you could have income writers in an old annuity. You could go from one annuity that has a better income writer and a worse annuitization feature, and those are different ways to take money out. One is a guaranteed feature in one capacity, one is a guaranteed feature in another capacity. You might give up one benefit you would actually need, and not be accomplishing that with a new program. You might not be understanding all the ways to access your income. Being able to compare that takes 2-3 phone calls. We have staff who will call into companies. They’ll call into get info about writers, and they don’t understand everything we know. I’ll say did you ask about this writer; she’ll call back and the person won’t even know about the writer. It’s crazy. These companies aren’t even aware of their internal staff sometimes. They don’t know all the features of all the different products they’ve created. It’s nuts. This is a very complicated area. I don’t wanna get too deep into it—I wanted to create enough awareness that there’s a big black hole that buyer beware, you need to understand, there’s always more than one way to get income out of your program. You’re gonna wanna be able to compare that properly.

Seth: Before we take a break, there’s the question of, are there fees purely for a 1035 exchange? The answer to that is no. Within 1035 exchange code, there’s not something that designates some kind of a fee in that code to go through this process. It really is the policy on one side and the policy on the other that really truly dictates what are those fees for transition. That’s exciting. We have so much more that we can’t wait to get to, it really is a thrilling opportunity as we take a look at what are these opportunities people have in the future, and it’s a really nice place if you’re there to take a look. Give us a call at MOT: 855-226-8551 or info@yourmoneyontap.com. We’re gonna be right back.

Ben: Hi, my name is Ben Brayshaw, one of the co-hosts of Money on Tap. If you have questions when it comes to your retirement, and you’re looking for a personalized solution, contact us at Brayshaw Financial Group. In today’s volatile stock market, we can help you plan to find your successful retirement solution. Am I saving enough? Am I saving into the right places? Do my investments match my appetite for risk? Do I have a tax strategy that’s going to help me keep more of what I earn? How can I maximize my SSI? If you’re like most people, you are getting closer and closer to your retirement, and maybe wondering if you’re taking the right steps. If you’re in retirement, you may be wondering, am I maximizing my income while preserving my estate and caring for my family? We talk about all things financial, and what we call 3-dimensional investing, putting a plan around your financial future. If you feel that now is the time to start getting answers to some of these questions for your own situation, give us a call at Brayshaw Financial, at 855-226-8551. Headquartered in Bedford, NH, we have offices throughout New England, and across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation just to meet with us. We welcome you to our office. Call us at 855-226-8551.

Seth: Welcome back, you’re listening to MOT. You can reach us at 855-226-8551 or info@yourmoneyontap.com. My name is Seth Krussman and sitting across from me is Ben Brayshaw. We’ve been talking about 1035 exchanges. That’s something in the insurance world that allows for a tax-free exchange to happen from 1 policy to another. We’ve been disclosing the ins and outs of fees, what those can look like, what are some of the hang ups? We haven’t talked abut the benefits, other than that this is a process that allows for money flow from one place to another without taxing it in that process. That can ultimately be a great way for somebody to trade in that old life insurance policy, that old annuity policy that was great at the time, but maybe there’s too many other things that it’s not doing right now, that something on the other side could accomplish. We focus on the goals, ask ourselves what do I need this for, and we start to take the conversation from there. We didn’t miss, we just didn’t have time. We wanted to talk about partial annuity exchanges.

Ben: The fact is, there’s a lot of ways the exchange can occur. Some people say I’ve got a huge annuity. You can move part of your annuity out to another annuity. That’s something to look at. With life insurance you can move part of your cash value out and move part of your death benefit to make it plausibly functional and move that cash to something for people who need, they say, I need money to retire. That’s a common scenario. We have 5 things that we want to give you to look for. I’m going to rattle these off. The first one is that a lot of people buy fixed annuities that look and smell like CDs. It’s a fixed rate, tax deferred, but with a fixed annuity you might have a rate of 2-5%. You’ve gotta make sure you’re going into an annuity with a better rate. One thing that people don’t take into account is this piece when you’re looking at a new annuity. That’s the surrender fee to get out, you’re signing up for a whole new schedule. It could be something that might be longer in which you need the money. If you need liquidity, there’s annuities that have income writers that don’t actually start until after a number of years. There’s features around those, or maybe the benefit you’re looking for isn’t until 10 years out. There’s a lot of issues you need to make sure of. If you buy a product you have to wait 10 years you’re counting on and you have a health change, that could be financially devastating to you. The 3^rd one is, check the writers you have. Check the writers you’re looking to buy and see if the guarantee on them is in the range of where you need to be. That’s a big issue.

Seth: It is. Writers. This is one of those terms that we’re so familiar with, and able to change around the conversation we’re having with you. Writers are these—we’re gonna go back to the jalopy example. You’ve got this old life insurance policy, this old annuity, and at that time, it was great. It had all the bells and whistles, right? That’s 10-20 years ago. If you’re looking at a vehicle today, how many of those features come standard with what you’re looking at? How many of these new things are we’ve got this nav over here, we’ve got this camera behind me that can see everything, all these safeguards, and it’s a self-driving car. Those are just the features around the package or tax code of that annuity or life insurance. Lining those up and seeing, are we going to be taking a step down? Because you could. After 10 years there might be some really great writers out there that may no longer be available. The writers could be guaranteed death benefits off those. Whatever the highest value of the account, or a guaranteed income, some kind of floor on the rate of return, opportunities for more market for income value, as those writers stop in and lock in some of these gains on those income values, those are kind of some different ways that these products can work, but if you take a look at that, if you exchange out of that, you can be walking away from something that you’ve built up that may or may not have a way to offset the writer’s side.

Ben: Those are great points. You’ve gotta be super careful and we’re talking a lot of generalities here, and that’s because there’s so many different pieces of these annuities that have so many benefits and features that they’re designed for. People don’t realize what they own could be great. They’re not the old jalopy you thought you had, you hear something great and new, and it’s just a different bag of tricks. You’ve gotta be careful that you’re not giving up something you paid for. The big issue is you’re paying fees for these annuities. If you don’t realize you’re paying for a service and you’re buying something from them. If you get rid of that, all that stuff you bought was money lost. All you get was what you put in + intrinsic gain. That’s something you have to evaluate. Was it worth paying all that insurance? When it comes to life insurance, you hope you wasted your money on life insurance and that you lived a long time. Sometimes paying a fee for feeling insured is good. The other thing is checking that time horizon. Making sure your income is in play. You had brought up earlier, Seth, is your insurability. I have had people who have done life insurance tests, discover that they’re very ill, thinking they were quite healthy. I’ve also had people, one woman, a very good friend of mine, who had an insurance contract with a large cash value in it. I was able to find a new insurance product that gave her more death benefits. That’s the only thing she wanted to do, was leave money to the family. It was a higher death benefit, sacrificing the cash value. Usually with cash value you get the benefit or the value, not both. This was her goal, and less than 2 years later she passed away. It was a very sad time for me, but she didn’t discover it from that. She got insured, but health changes happen suddenly and unexpectedly. That’s the way they come. It’s something to be aware of.

Seth: Before we get going here, folks, I know there’s some that can’t wait to get the checklist. I’ve got it here for you. Here’s some steps for the 1035 process: #1 decide if it makes sense for a 1035 of your existing policy. #2 choose a policy to 1035 into. #3 contact the insurer that holds your existing policy so you can understand their paperwork policy. #4 fill out and submit the application for the new annuity, including 1035 transfer request form, and then there’s #5 the issue of that new contract. So, information that you’re gonna want to grab to send over to Ben and I so we can take a look at this with you: name of the insurance product and company. Then there’s the surrender fee schedule we talked about; help us determine if this makes sense. There’s a cash value. Any annuity writers or contractors in the policy numbers, any recent statements. That’s a good start, folks. It’s what we’re here to do. Give us a call at MOT at 855-226-8551 and talk to Ben or myself. We’ll help you understand the landscape around the decision that’s so important for you to make.

Ben: This is a great piece to one of the legs of the stool, which is so apart of everyone’s life, no one wants to talk about it. Thanks, Seth.

Seth: You’ve been listening to MOT. You can reach us at 855-226-8551 or info@yourmoneyontap.com. In addition to the podcast—you can find us at any of the podcast venues out there—we appreciate the likes and we’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We appreciate you joining us here today and we hope you make it a great day and a great life. Thanks for joining us for money on tap.

SUMMARY

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

Life insurance, annuities, jalopy, what do these words mean? Ben and Seth give listeners a clearer picture of what life insurance is and the pros and cons that come with it. If you feel like your policy may not be working for you, or that it could be time for an updated plan, look no further for advice! This episode of Money on Tap gives the audience five pragmatic steps to make your money work better, not harder, for you and your loved ones.

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

MOT Show 146 Gregory Levinson, Small Family and Business Estate Planning 21889217 

Seth: Welcome to Money on Tap. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. My name is Seth Krussman.

Ben: And I'm Ben Brayshaw.

Seth: Folks, today we have got a special guest with us. Greg Levinson of Levinson Law. Greg is a 20-year veteran to law; he’s been practicing in the Portland area for the last 20 years. His practice is unique in this. He focuses on small business. Small and emerging businesses, transition, buy-sell agreements, contract law, that’s the focus he started out with. That transitioned into estate planning for small families and businesses. He has a wealth of knowledge. He’s also an adjunct professor at Lewis and Clark Law College in Portland. Hold onto your seats, folks, because you’re going to get so much information that’s critical for you if you’re in any of these categories. It’s a pleasure for us to bring you a topic that’s really near and dear to our practices and hearts, and the families we serve. It’s gonna be a lot of fun because Greg is fun. He’s a bundle of energy. Folks, before we get too far down the road, we’re gonna introduce you to Mr. Gregory Levinson.

Greg: I appreciate the invite and I look forward to the conversation. I think this is so early for me, I’m confused on who I’m talking with and to. When you said 20-year veteran, this brings me back to my 6 years in the navy, when I had to get up this early. It’s been quite some time since I’ve had to do that. If you start yelling at me and telling me I’m worthless, I’m gonna stop right there.

Ben: We won’t do that. You’re the star of the show today.

Seth: Greg, I’ve had a lot of fun getting to know you, your background, your experience…if you could, take us through a little bit of what connects you to that business, first and foremost? What are the things a business owner in that smaller, emerging market would need to show up for them, and to be able to say, I need to call Greg? Or, I need to be taking a look at small business planning.

Greg: I have 3 main focuses to my small and emerging business practice. The first one is business formation. If someone’s thinking, I want to start my own business. In this economy, there could be a downsizing and they got a nice package from their corporation or business, and they thought, I’ve always wanted to start my own business. That’s one of the packages I offer: business formation packages. They’d contact me and we can talk about what that means. The first questions is, what type of entity would you want to be? Do you want to be an LLC, a corporation? Are you thinking you want to be a partnership? You may want to start a nonprofit. We’d start the conversation with that entity formation, business formation type question. From there, we start talking about, once this business is up and running, what kind of contracts might you need? Contracts with vendors, hiring employees, hiring independent contractors? We start talking about contracts for the business that protect it. The 3^rd part is branding. Intellectual property. We start talking about trademarks, copyrights. I don’t do patents; those are what we call the uber-nerds. Patent attorneys have to have some kind of engineering or science bachelor’s degree, then they go to law school. That’s a whole separate field. I do trademarks and copyrights. We have this conversation about formation, contracts that will protect the business, trademarks for branding protection, and it goes from there.

Seth: As you’re laying out that foundation, I see lots of opportunity for someone that’s got the idea – how many people right now are going through a job transition and are looking at their options. I just had a conversation with a lovely individual yesterday, in a similar place. She’s trying to figure out what are the local governances to the business of importing things she’d like to bring to a local consumer. It’s a simple idea but can have lots of ramifications: making sure you’re in compliance with local. I see so many opportunities for someone in that position to go out to the zoom community, the legal zoom community, or whoever’s out there offering discount law.

Greg: That’s the name that shall not be named, right?

Ben: That’s like saying I want to go to Luger’s vs. McDonald’s.

Seth: Drive-thru McDonald’s and say, I’d like a T-bone.

Greg: It’s the legal one that shall not be named.

Ben: It’s probably the risk equivalent of saying you want your burger medium rare at McDonald’s instead of well-done.

Seth: I was thinking there’s so many places where people can misstep and have these things in hindsight they say, I should’ve called Greg.

Greg: I fix quite a few of those—when people go to the place that shall not be named, and then they come to me, it’s like, I look at the—for an LLC, they’re not complicated, but there are steps that need to be done. An LLC is comprised of only 3 pieces. It’s filing the articles of organization through secretary of state, it’s getting a Tax ID number, and it’s drafting an operating agreement, which for a single member LLC is like bylaws of a corporation. If there’s 2+ members in an LLC, it’s akin to a partnership agreement. If they went somewhere else, if they went online and downloaded a template from somewhere, they can really—it won’t necessarily happen right away, nothing truly happens within the first couple of months and then all of a sudden, there’s an issue, whether it’s one of the other members, or they wanna get some financing through a bank and the bank says the operating agreement isn’t worth the paper it’s written on, and now they’re in a lurch, so they come to me. I have to fix that paperwork.

Seth: Greg the fixer Levinson, joining us here today on MOT. It’s fun to have you, because this is one of those topics that I think a lot of people step away from in some way, shape or form, because of the unknowns. It can be intimidating. I really appreciate you bringing it down to earth and doing the work you do. What’s up next?

Ben: My question for you, Greg, and I think a lot of businessowners probably ask themselves this with the tax laws changing, when is it the right time to be—I’m talking in general matters, so we’re not giving anyone specific advice—so LLC vs. SCORP vs. CCORP, that’s the #1 businessowner question. Anyone tuning into this show is saying hey, should I change my SCORP to my CCORP, because tax rates have dropped 21%? If Biden gets into office and he changes the tax rates like he said he was going to, is that something I should worry about? Those are the questions people have. Could you add some flavor to that?

Greg: Absolutely. Giving that 10k fed overview, one of the nice things about an LLC, is that it can choose how it wants to be taxed. If you’re a single member LLC, you have 2 options: you can either keep it as what’s called a disregarded entity, so for a single member LLC, the IRS allows you to choose to be taxed as disregarded entity, which means all you do is file your taxes on your own 1040 and you attach what’s called a Schedule C. There’s no tax advantages, per say, but it’s a very easy tax prep. Even if you’re a single member LLC, the LLC can choose to be taxed either as a CCORP or an SCORP. It maintains the LLC legal structure, but it can be taxed as a CCORP or an SCORP. I’ll get into why someone would want to do that or not. For 2 or more member LLC, the default tax election is partnership tax return. Basically, the LLC would file—I’m blanking on the name for the tax return. The members get a K1 from the LLC, and they file that on their own tax return. The LLC itself has to file its own partnership tax return. I wanna say it’s—I apologize. I’m blanking on the number.

Seth: That’s alright, you’re giving us a great idea for our next guest, and our first question.

Greg: Your first question is the IRS auditor, and he’ll be auditing Levinson Law. The 2+ member, the default is a partnership, but it can also choose to be treated as a CCORP or an SCORP. Why would a single member choose to be taxed as an SCORP or a CCORP. Using a 10k foot level, I’m not a CPA or a tax attorney. I have resources for that—1065. Thanks, Ben. That was gonna irritate me, so. Thanks for scratching that. So why would a single member or a multimember LLC choose to be taxed as an SCORP? What the SCORP allows you to do, there’s 2 things that electing an SCORP allows members to do: 1) it now makes the LLC a corporation for IRS purposes, which means that member can be an employee of that LLC. If you’re default as a disregarded entity or a 2+ membership is a partnership, you can’t be an employee. You can’t get W2 wages, you can’t get draws. Some people want SS benefits, all those things. By electing C or SCORP, you now can become an employee of your LLC. The main reason why someone would want to elect an SCORP is that there’s a significant tax advantage. When you are a single-member disregarded entity, or a 2+ member LLC, default partnership, and you make—we’ll go with the single-member because it’s easier for analysis. Let’s say the single-member makes 200k a year, net. They’re financial planners and they’re selling lots of insurance. They’re making bank. They’re making 200k. You have to take out the self-employment tax on that, which is around 16%, 15.8%, somewhere around there. You’re paying 32k on self-employment taxes on that 200k. By electing an SCORP, what that member can now do, because you can be an employee and take wages, you can pay yourself 120k in wages, and you’re gonna pay that self-employment taxes on that. The 80k, you can take as a distribution and you don’t have to pay the 16% on that 80k. There’s some significant tax savings, why someone would want to become an SCORP, when you start making—the general rule is you should probably be making above 75k net, for an SCORP to make sense. The reason why I say that is, the IRS doesn’t allow you say I made 75k, I’m gonna take 75k in distributions, and not pay any self-employment tax. The IRS requires you to have a 60-40 split between wages and distributions. If you make 80k, 60% of that is 80k, and you can take 32k as a distribution. 16% of 32k is about 5 grand a year, 6 grand a year, but now that you’ve elected to be an SCORP, you get to file all the SCORP tax returns: quarterly, annual, 1120S, which means you’re gonna have to hire a CPA to do this. A CPA is gonna charge you 5-6k a year to do these quarterly and annual tax returns. You’re breaking even or losing money because you didn’t make enough. It starts to make more sense when you make that 100k or more, because you’re still gonna pay the CPA, but you’re gonna get higher tax savings. The reason someone would elect to be a CCORP is because the CCORP allows the owners to have all the cafeteria-type plans that the corporation can pay medical reimbursement, health insurance, things like that. If you’re an SCORP, 2% or more owner, it doesn’t allow the owners to take advantage of cafeteria plans. When I have these conversations pretty much every single time, I usually bring in a CPA. They don’t need a tax attorney, usually a CPA is sufficient. We go through; here’s the benefit of the SCORP, does it make sense to get 1% savings on the self-employment tax, or do you have a family and you want medical and health plans, all the different things, and would it be more advantageous to be a CCORP?

Seth: We’re talking to Greg Levinson, 20-year veteran to small business law. You can reach him at 503-223-9057, or you can also find him at lev-law.com. Greg, thank you so much for shedding some light on the fundamentals of that question, which got into some good details. I appreciated the numbers you were pulling there. Ben, was there anything else on your question?

Ben: I was just kind of – the numbers are helpful, but the question I have is if you’re crossing over the 100k range, that’s when you need to figure out if an SCORP or CCORP is worth it?

Greg: That’s the nutshell. I’d say 75-80k, but somewhere up in that division. 100k is a good number. 80k could make sense, depending on what the situation is. 100k—if you’re netting 100k, you really need to start having that conversation of, is this the right tax election? Honestly, unless you’re gonna be a public company, a publicly traded company, even LLCs can be a publicly traded company. The whole traditional corporation entity is kind of an outdated entity. Very few people actually incorporate as a traditional CCORP, or as a traditional SCORP. The reason is the LLC only has 3 components. It can have more, but for legal requirements, it has the articles for organization, the tax ID number, and the operating agreement. The corporation has a lot more of incorporation that has the tax ID number, it has bylaws, but then you have to have stock subscription agreements, organizational minutes, and then every year, by law, the holders have to have a meeting. You’d be surprised that every single shareholder or two shareholder corporations, they don’t have those annual meetings. Why do we have to have a meeting with myself, especially if they’re a single shareholder corporation? I’m the president, the director, why do I have to have a meeting with myself every year? The courts say so. If you don’t, you’re putting the legal structure of the corporation in jeopardy. The traditional corporation as an entity is an outdated model. Before 1991, in OR, I think OR established the LLC around 1991, corporations and partnerships were the 2 viable entity choices for someone to start. Since the LLCs have come into existence, and since LLCs can be elected to be treated as a C or SCORP, there’s no reason for them to be treated as a traditional corporation. The only reason is if they wanna go public and they have this fear of LLCs being a publicly traded company. Some people say, I wanna issue stock to my employees and they won’t understand fractional interest, they only understand stock. I try and educate them on that there’s other ways through an LLC that you can issue ownership, but some people are more traditional. As an entity choice, the LLC is the most viable option. We just decide whether you’re gonna be the default or choose a C or SCORP.

Ben: There’s so many people who start off doing a small business, and they’ve never had the idea. I know someone who makes soap. Now they have an enormous business, and people don’t realize that they start out small, they’re selling at a farmer’s market, and then it becomes a real company. They’re overwhelmed by this, and the concept of growth is not necessarily a common phrase outside a professional basis. Net would be the amount of money you get to keep, gross being the total amount of revenue before your expenses. It’s good to make that clarification, if you’re making 75-100k net after all your expenses, it’s a great time to start engaging proper legal efforts to figure out how to maximize the money you get to keep moving forward.

Greg: There’s a significant distinction, right? My gross is different than my net. Gross is the joke—gross is gross, right? You know that that’s rent, payroll, significant issues, advertising, all the expenses that the company pays, the debts of the company, come out and whatever’s left is the net. Especially in-service industries or manufacturing—those can be $10 million a year. Net could be 200k, right? You’re paying for manufacturing, employees on the line, intellectual property, trademarks, patents, copyrights, all those things go into the gross expenditures which whittle down that net.

Ben: Before we take a break, Greg, I’d like to get into the idea of protecting yourself and your company moving forward. I know that looking at LLCs, S and CCORPS, which one’s gonna protect me and my family, and my assets. I’d like to move into that after the break.

Seth: You’re listening to MOT. Joining us today is Greg Levinson, 20-year veteran to small business and estate planning as well. We may or may not have time for that, but we are gonna take a quick break. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Don’t go anywhere.

Ben: Hi, my name is Ben Brayshaw, one of the co-hosts of Money on Tap. If you have questions when it comes to your retirement, and you’re looking for a personalized solution, contact us at Brayshaw Financial Group. In today’s volatile stock market, we can help you plan to find your successful retirement solution. Am I saving enough? Am I saving into the right places? Do my investments match my appetite for risk? Do I have a tax strategy that’s going to help me keep more of what I earn? How can I maximize my SSI? If you’re like most people, you are getting closer and closer to your retirement, and maybe wondering if you’re taking the right steps. If you’re in retirement, you may be wondering, am I maximizing my income while preserving my estate and caring for my family? We talk about all things financial, and what we call 3-dimensional investing, putting a plan around your financial future. If you feel that now is the time to start getting answers to some of these questions for your own situation, give us a call at Brayshaw Financial, at 855-226-8551. Headquartered in Bedford, NH, we have offices throughout New England, and across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation just to meet with us. We welcome you to our office. Call us at 855-226-8551.

Seth: Welcome back, you’re listening to MOT. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Joining us today is Greg Levinson of Levinson Law. You can reach Greg at 503-223-9057, or you can also find him at lev-law.com. Greg, you also bring some experience in the education arena. You’re a professor, I understand.

Greg: I’m an adjunct professor. I teach a course called Contract Drafting, so when you go to law school, traditionally it’s a 3-year program. Your 1^st year of law school, you take an entire year of contracts, which is all theory. The theory of Contracts, formation of contracts, whether you can defend against something that’s breached. They don’t actually teach you—when I went to law school, there was no course where they teach you how to draft a contract. The course was set up prior to me by a professor before me, back in 2010. I took over around 2013. I teach 2^nd and 3^rd year law students how to draft contracts.

Seth: It’s funny to hear you say back in 2010.

Ben: That sounds very interesting, Greg. I want to hear more and to take that class.

Greg: I’m told I’m a tough professor. I don’t know if we’d be able to maintain any cordial relationship. I hope it’s not where it’s not the dentist that has bad teeth. I hope I can draw some good contracts.

Ben: So I was asking you briefly about something that we ran through. A lot of people have questions about protecting their companies, multi-layer LLCs, maybe this is a deeper concept, but would you mind covering it briefly?

Greg: We’d have to flesh out a little bit about what you mean by multi-level LLCs, but the argument or discussion of, should I be an LLC or a corporation, that has been mostly resolved in that LLCs offer the same level of legal protection as a corporation and I would say even more so. As I mentioned before, if you’re a corporation and you’re not abiding by the corporate formalities, it’s not that that’s an automatic, I’m gonna be personally liable—there’s a theory called piercing the corporate veil. If a corporation gets sued and the corp doesn’t have the assets to fulfill a judgement, the plaintiff can file what’s called piercing the corp veil, which means it pierces that legal shield tries to get to the shareholders personally. If you don’t have the corporate paperwork, or you’re not doing the annual meetings, that’s not an absolute, we’re gonna be liable, but it’s a chink in the armor. There’s a reason why they call lawyers sharks. If they can find a chink in the armor, they’re gonna continue the circle and keep pressing into that. An LLC doesn’t have the legal requirement. It only has 3 pieces of documents vs. the multi-level of documents a corp needs. It doesn’t have the legal requirement of annual meeting minutes. I’d argue that an LLC has more of a shield there than a corp because you don’t have all the formalities that you have to follow. The statute, which is the statute for LLCs, or a 6D, which is the OR revised statute for corps, it has very similar language as far as protection for the members of LLCs, or members of a corp.

Ben: I talked to someone one time and they’d set up a multi-level LLC in fear of the piercing of an LLC.

Greg: That’s the thing. If you are a single member, parent LLC, and then the parent LLC is the owner of a subsidiary LLC, if they pierce the subsidiary, that means it goes to the parent. That parent is a single member and they’re gonna be able to pierce the parent. If the parent is the sole owner, the only reason multi levels work, where large corps have subsidiaries that have protection—let’s say you have a large corp, 20 board members. We want to spin off a subsidiary. What they’ll do is they’ll take 1 board member, and they’ll make the board member a director on the subsidiary. The board member will have 9 more members with no affiliation with the parent one. They make sure the ownership doesn’t have the same levels. That’s how it works. If you’re a single member or a 2 member LLC, and that’s the parent, and then they do a subsidiary LLC and it’s solely owned by the parent and it’s still the 2 members, there’s no legal protection there.

Ben: I’m sure there’s people listening saying I have a question about that, so that’s great.

Seth: If you have a question about anything we’re talking about here today with Greg, you can reach us at 855-226-8551 and we’d be happy to put you in touch with him. Or you can reach him directly at 503-222-9057 or www.lev-law.com. Greg assured me that if you google him, you can find him that way, too.

Greg: I started my own firm, I branched out in 2008. Luckily, one of my clients that I had was a web developer and an SEO expert. They helped me and gave me some tips to get my website noticed. I was able to generate some good google love, I guess. If you google ‘Portland small business attorney,’ or something like that, I tend to come up in the rankings.

Seth: The next topic we really wanted to grab some time with you is the estate planning piece. I don’t know if this is a natural fit, anyone that’s working in your vertical of small business succession and planning and all that, just naturally trafficked towards estate planning. You really do focus, and I think the ABCs of somebody that’s looking to get into or needs an estate plan, or a small family plan, walk us through your thought process of who that person is and why they need to get in touch with you.

Greg: The impetus of how I got into estate planning was a small business client. They called me up and said hey, this is going great, thanks so much, you helped me out. Do you have a referral to an estate planning attorney? I said, I do estate planning. They’re like, oh, we’ll use you then. I started doing estate planning for small business owners and that transitioned into families as well. People who weren’t necessarily business owners, but families who need it. That’s the core. When you talk about the estate planning, there’s basic building structures. There’s 2 types of plans that we’ll be looking at. Having a will that will govern your estate or having a revocable living trust. You can get into much more complicated estate plans. The ABCs of it, for most small business owners, as long as they’re not multi-millionaires who need advanced estate planning, or families with kids, generally the will and/or the trust is a good estate planning vehicle. The reason someone would want a will is two basic reasons: 1) they have real estate: a home, an investment property…real estate do not have direct beneficiaries—your consumers would know what a direct beneficiary is. You have insurance or a mutual fund, some kind of investment, and that financial almost always asks them, if you were to die, who do you want to get this money? It’s a direct beneficiary. Whatever it is, real estate, by its very nature, doesn’t have a direct beneficiary. If you were to die and you have a house or a real estate investment, there’s no way that the court would say, it goes to this person. You have to have a will or some document that says upon my passing, I want this document to go to this person. If you’re married, traditionally, your spouse is on title with you. If one of you dies, nothing happens. You don’t necessarily need a will if one of you dies. If both of you passes, and I apologize, not the funnest topic of conversation. If both of you pass, whoever you want that property to go to, whether it’s one person or multiple people, no one knows. That’s where you get into these probate situations. Probate is basically the court administered process to distribute the assets of your estate. It’s mostly your house. If you have a will or if you die without a will, which is called intestate, the court has to figure out what to do with this house or what to do with your assets. With the will, it gives the court direction. Okay, we want this house – in your will you’re gonna designate a personal representative. On the east coast I think it’s called an executor, but here it’s called a personal representative. What happens is, if you have a will, you’re gonna name a personal representative that’s gonna be in charge of your estate. If you’re married, nothing needs to happen because your spouse is gonna be titled in it as well. If both of you were to pass, or if you’re single, the personal representative is gonna submit the will to the court for probate. The court is gonna give them a letter of administration that says okay, this person has the authority to administer this estate. They’re gonna take that letter and go to the real estate agent and say we’re gonna sell this house, just like anyone else. They sell the house for 100k, there was a 100k mortgage on it, there’s 300k left over, and the will says we want to give it to our nieces and nephews evenly. There’s 3, so the personal representative deposits the 300k into an estate account. They get a check, or they can wire the funds, and each of the nieces and nephews will get 100k. if you have real estate, you need a will. If you don’t have a will with real estate, whether it’s your home or investment property, whoever your beneficiary is, it’s gonna be a difficult process through probate.

Seth: We’re gonna run out of time here in a minute. Before we do, we wanna bring it back to the trust piece, and what it is that you do, and how you’d recommend or use this in estate planning. You can reach us at 855-226-8551. You’re listening to MOT, don’t go anywhere. Greg Levinson is joining us, doing a great job in taking us through the ABCs and small family planning. We’ll get right back. Hi, my name is Seth Krussman, partner with Brayshaw Financial Group, and one of the cohosts of Money on Tap. One of the biggest concerns and largest expenses people face today is taxes. Without thoughtful planning, taxes can destroy future retirement dollars, eliminating the possibility of a timely retirement, or dreams of what you want retirement to look like. If you’re like most people, you’re maybe wondering if you’re taking the right steps. Will my income be enough? Will my rising taxes force me to give up my dreams? How does inflation factor into all of this? These are real concerns, and you’re not alone. Putting a plan around your financial future is what we do. If you have questions when it comes to your financial security, and if you’re looking for a personalized solution, contact us at Brayshaw Financial Group. 855-226-8551. It’s time for you to start getting answers to your questions. Headquartered in Bedford, New Hampshire, Brayshaw Financial has offices across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation to meet with us. Call us at 855-226-8551. Now back to Money on Tap, with Ben and Seth. Welcome back, you are listening to Money on Tap. You can reach us at 855-226-8551, or info@yourmoneyontap.com. Today we have the pleasure of speaking with Greg Levinson of Levinson Law. You can reach him at 503-223-9057, or you can also find him at www.lev-law.com. We’ve been talking about small business, the entities of small businesses and getting those pieces set correctly, depending on what it is you’d like to do or need to do. We’ve transitioned into small family and estate plans. The first piece of that is being a will. Why would someone need a will, and the importance of that. You’re doing a great job, Greg. We appreciate you laying out all of these pieces in succession. Would you take us down this next rabbit trail of trusts and how does that help the small family.

Greg: I do need to backtrack. I mentioned there was 2 reasons why someone would want a will. The second one is if they have kids. This is important because if you have kids, the will allows you to designate a guardian. It also allows you to set up what’s called a testamentary trust for your kids. If you and your spouse were both to pass, the will allows you to designate a guardian, someone to take care of your kids. If you don’t have a will and you tell someone verbally, it could be a sister or a parent, when we die, we want you to take care of the kids. Something tragic happens, both parents die, a sister of one of the spouses says hey, they said I was gonna do it. All of a sudden, a brother of the spouse says I thought I was gonna do it. Not only are the kids devasted by the parent’s death, there’s also this legal guardian battle. They didn’t have a will and it wasn’t designated who the guardian would be. It’s really important when you have kids because it designates who the guardian is. You can set up a testamentary trust, which means a trust for your kids would be set up upon your passing. Let’s use the house analogy. If the house is 300k, or 400k, what the personal rep will do is they’ll take the money and will transfer it into a trust, and then you’ll also designate a trustee; someone who will be a financial rep for the trust, for the benefit of the kids. There’s a significant reason for this. If you give your sister 400k, 1) there’s gonna be some tax implications, because all of a sudden, the sister got 400k, and 2) if the sister’s married and it’s not set up into a trust, that money could be considered a marital asset. If the sister ends up getting divorced, the ex-spouse may be able to lay a claim to that 400k and say hey, that was a marital asset, even though it was for the benefit of the kids. When you set up a testamentary trust, upon both of your passing, it will be in a separate trust for the kids. The guardians will get a monthly check on the interest of that trust, and whenever the kids reach a certain age, usually 25-30, the trust is disbanded, and the kids get the corpus of that trust. That’s another reason why you’d want a will if you have kids. You can set up guardianship, and you can set up a trust for your kids. Real quick, why set up a revocable living trust? It’s different than a testamentary trust. That’s one you set up within your will, but it doesn’t come active until both people die, or the person dies. A revocable living trust is one you set up now. It’s called interlife—during your life. What you do is you put your home into that trust now. What that does—if you have a will or if you don’t, if you have a house it has to go through probate. There has to be some way to administer that house to the person you want it to go to. A revocable living trust allows you to transfer that house into a will now, and upon your passing, it doesn’t have to go to probate. The trust owns it, there already is an existing vehicle for that house. You can do the same thing, you can say you want your kids to get it, but your trustee no longer has to go through probate. It’s a great probate avoidance state planning vehicle.

Seth: Well done. Folks, you’ve been listening to MOT, joining us today, Greg Levinson of Levinson Law. You can reach him at www.lev-law.com. you can also reach him at 503-222-9057 and right there, you had it. You got it, in a nutshell. Everything you really need to understand right out of the gate around small business, small business entities and contract. Greg, I don’t know what else to say other than thank you so much for being with us here today, and for doing an amazing job.

Greg: Absolutely, I appreciate the opportunity to come onto the show and provide some input.

Ben: Thanks, Greg, that was awesome.

Seth: If you have a loved one, a family, children, and you’ve been listening to Greg today, please take note. It’s really important to get those pieces in place to protect yourself, your children, your business. You should take a look at Greg, get ahold of him, he’d be happy to answer any of your questions. Greg, can you tell us what someone would find out what would happen if they gave you a call?

Greg: I have a unique structure. I do charge for the initial consultation. I charge my hourly fee, but what I do is if they decide to hire me, whether it’s for business or estate planning, I credit up to 1 hour of that time towards the future fee. They’re not double dipping. They’ll pay me for my time, because I provide some good value during that consultation time. If they walk away and they hire someone else, or they go to the place that shall not be named, that’s fine, they paid me for their time. If they come back to me, I credit up to 1 hour of that consultation time for that future fee.

Seth: Thanks for joining us today, you've been listening to money on tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. In addition to the podcast—you can find us at any of the podcast venues out there—we appreciate the likes and we’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We appreciate you joining us here today and we hope you make it a great day and a great life. Thanks for joining us for money on tap.

SUMMARY

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and getting all investment options into perspective. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

Joined by special guest Greg Levinson of Levinson Law, Ben and Seth break down the ins and outs of contract law, especially pertaining to family planning and small businesses. By having a contract expert with them on this episode, you are sure to find some nuggets of wisdom to apply to your situation, whatever that may look like. Tune in to hear exactly how you can plan for your future.

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

MOT Show 145 2020-10-07 (Six Most Overlooked Tax Deductions) 21816185

Seth: Welcome to Money on Tap. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. My name is Seth Krussman.

Ben: And I'm Ben Brayshaw.

Seth: So, folks. Here we are. Election season. That’s not—

Ben: What did you say? Election what?

Seth: I said election year. It’s election season. You can run, you can hide, or you can stand here. Whichever your choice is, it’s all around us, but it’s not we’re going to talk about today on Money on Tap, is it?

Ben: No, because that would turn the dial for some, I’m sure.

Seth: Yeah, it’s a lot of fun, but it’s not the one today. That’s not our show. There’s no right enough, no left enough, and that’s not our show.

Ben: It’s not the one today.

Seth: Now, so, Money on Tap. That’s a lot of fun for us. We are financial planners, but that’s what Ben and I deal with at BFG. If there’s an into for us to make here, it’s basically this: this is our side gig, this is our side hustle. We paid attention. We told our kids to go get a side hustle, and they have been. Then, Ben and I looked at each other like, what are we doing? We did a side hustle. We did have some fun with this.

Ben: If anyone really knew how this radio show came about; it’s pretty funny. We love doing this, we love you. Next week we’re gonna hang onto and look forward to having Eric on the show. He said he wants to be back on more often, a bunch of planners, insurance agents, Sarah…everyone wants to partake, but this week it’s just Seth and I. We love having the mic without them sometimes.

Seth: Yeah, we have no problem filling the air space with just us, our kids know that very well. Gosh, you know, I was just sitting down with Spencer the other day. I had to realize—how long have we been sitting here talking, and how much of the space have I been filling trying to help my 15-year-old grasp something that just isn’t quite there yet for him? Less is more with that some days.

Ben: A lot less seems to be like a lot more, but I’m really excited about the show today, Seth. We have some of the most overlooked tax deductions ready to come your way right after Money on the News. I’m pretty excited to go through these because as we approach the end of the year, it’s still time to do stuff. A lot of people don’t do that. I was talking to people: when was the last time you talked to your tax advisor? And they’re like, well it was April 1^st. We were going through some stuff, and I was like, oh, he was crazy busy and didn’t have time for you? And they’re like, yeah. I said, when you want to talk to them is after October 15^th, when they’ve filed all their extensions, and they’ve got basically a few months of dead air. They wanna meet with people, they wanna talk to people, they’re very friendly.

Seth: Extensions. October 15^th, are there are there more extensions for October 15th that I'm not aware of?

Ben: No, that is the extension period the end of the extensions. There are more extensions, but this is the time when you can literally step out, call your CPA, and they'll probably pick up the phone and be happy to take your call. It's one of those times, and this is a great time to cross that Rd with them. We're going to come up with that right after we have money in the news , but if you have questions, you can reach us at 855-226-8551 and you can email us your questions to info@yourmoneyontap.com.

Seth: “Companies give up cash cushions to buy back debt” by Anna Hartenstein. We love the Wall Street Journal because they give us so much great information that we get to bring to you, and highlight, and discuss. It's not much of a discussion when you're reading the article, but that's what we're going to do. What is going on with company debt buybacks?

Ben: This is a great article and it's funny when you mentioned that Wall Street Journal. I'm a little old school. I still get the Wall Street Journal in my office every day, physical paper. Every day I see that Wall Street Journal. It's a great piece. I don't agree with every political slant they have, either way, but it has a lot of very interesting articles about the financial world, which is why it's the Wall Street Journal. This article particularly popped out to me, with all the stuff going on in our economy, in the world, all these companies have been selling bonds. We hear about it. They are selling their various instruments to create as much cash as they possibly can, and this article goes into the fact that a lot of these companies our realizing we don't need this debt, six or eight months later.

Seth: Or it's too expensive, or the mechanics of it, and the payments on the coupons are just too much in comparison to having the liquidity, right?

Ben: Yeah, some of the companies that are sitting here, like AT&T, Anheuser-Busch, BP, the big oil giant- there's lots of different things and it's exciting. There is much more visibility due to the whole coronavirus thing period we don't need this cash right now, and on top of it, which is something I didn't really process. Interest rates are really low, so they're borrowing this money at exceptionally low rates. They are storing the cash in banks that have potentially negative yields. In Europe, some of these banks, which are paying less money - if you bought it, and you put your money in for 10 years, you are going to have less money. You are paying money to store this money, so not only are they paying out their dividend yields, or whatever coupon they have associated with any item here, but they are also paying a fee to the banks to store this cash. It's a double whammy that I hadn't really processed. In the US, that's not happening as much, or at all, but in Europe it's really happening in these companies. I have realized that this is just not relevant anymore for them.

Seth: One of the things that pops off the page to me as we read off the names of the companies in the article, and this is a question for you. There is a T&T, there's BP, there is AB in beverage, that's beauty. There's British American tobacco. And cyclically, if we took a look at What happens when you go into recession, and what are the places where people generally go towards the cycle of investing? These are all names that are included with those types of investment styles.

Ben: Yeah, very recessionary thinking, for the most part. Not entirely, but yeah.

Seth: Yeah, so those would be the actual companies that would benefit from a pullback in the market. Those are the ones going out and raising cash.

Ben: Other than BP- ironically because Corona virus shut everything down, we are not using oil. Good point, Seth, I think we are not really evaluating how much we have mentioned. These companies did not take a few 100-million-dollar bond offerings here. British American Tobacco took a 9-billion-dollar debt offering. BP raised $20,000,000. AB in Bev raised 11 billion dollars. This is not small numbers, folks. These are huge dollars, and they weren't hesitating on it. This is crazy. I think what really comes into play, at the end of this, is that these companies- if things get worse, an one of the things that was stated by one of the people quoted in the article was that it is generically correct that the interest rates have been set by the Federal Reserve, here in the US. All the different global fed managers have all said they are going to keep rates low, or even lower them further, so the idea of being able to, if they could, raised 20 billion today, that they could potentially raise that in a year or two if they really needed it. That's a big deal. That's kind of, yeah, we know we can do this, and we don't need the money now, and we can probably do it later for the same rate and save ourselves kind of the hit. This is a good opportunity for us to get rid of it, and I think it makes a lot of sense, and it shows great strength on behalf of these companies.

Seth: I'm curious to see how it expressed itself in the markets, like bond markets, corporate bond markets, as well as our typical markets that we look at in S&P’s, and the stock market. All of your favorite household names today, which have been dwindled down to four R: Amazon, Facebook, Google, and Apple. They are in the process of being disclosed, or uncovered, as monopolies.

Ben: Yeah, the government has given them a subpoena, telling them that they want to start talking.

Seth: This is an article by Ryan Tracy, Wall Street Journal again, folks. A democratic-led report concludes after a 16-month probe that Amazon, Facebook, Google, and Apple stifle competition. Facebook and Google are basically monopoly powers, according to the report. Apple and Amazon have significant and durable market power and it seems like they are splitting hairs in the difference of differentiation here. I will do my best to try and break it down, but if you take a look at the history of monopolies, and the antitrust laws that we have in the US, when railroads were a monopoly. To add a point in time, when the telephone companies were monopolies, and what they had to do in the process of creating competition in fairness, was to break them up. That's where you got all the southern Bell, an all these different phone companies that happened. It has been a consideration recently, when you have seen some of the cell phone companies coming together, like T-Mobile and Sprint. A merger is what they're basically creating, a size and scale that eliminates competition, and creates an environment where they can set the price and control profits. They can basically squash the ability of another company to operate or do business in that same space.

Ben: It's really interesting. It is very much just the opinion, essentially, of the government on what is a monopoly. When it occurs, like if we only had three cell phone providers in the country, they could theoretically gang up against all Americans and charge something within range. Is there enough companies that someone is biting for more business, and therefore, is going to become competitive? It is not just that we need two or three period it's whether or not it creates enough rigidity in the market, that one company is fighting for someone else’s business.

Seth: Yeah, the quick differentiation here is interesting, and we're not exactly sure how much this brings to bear, in terms of what they're trying to legislate here. It said that the market power, and what is added 2, basically refers to a company's ability to manipulate the price of an item in the marketplace. Manipulating the level of supply and demand, or both, and that's where Amazon is. That's where Apple is. They are saying these companies have the ability to create their own profits, to eliminate the ability for other companies to, or other manufacturers, to enter into this market space, because they control that.

Ben: Market power is significantly greater, and much more problematics. We’re already past the monopoly, and that’s how I see it. It’s probably not the official definition that they’re pushing off here, but there could be a monopoly there. They are the power, they set the price, no matter what. If they decide the iPhone is X or Y, even though you have androids and all the other options, if you want an apple watch, there’s only one company that makes an apple watch. Whatever they decide they want to sell it for—if they want $5000 for it, they’re going to charge $5000. There’s nothing you can do about it. The market power is very scary, and I think as technology becomes more symbiotic in its relationship with other technology, maybe that wears off. Maybe Android works with the apple watch and that creates some opportunity, and vice versa. The fact is there’s this very incestuous relationship between technology. You go in this branch, or that branch, and that’s—no one is going to give up connecting on some level. That’s problematic, and I don’t know what to solve here, but there definitely is an issue and I think it’s the government’s right to step in and say, hey, we see there’s something here. I think the general population of America sees it too.

Seth: So, the article states that this was a democratic-lead report, but it is of note that there really is a republican response happening as well. Endorsing the enforcement of anti-trust targeting companies, but it didn’t necessarily endorse a lot of the democratic policy prescriptions here. Nothing terribly new there, but both parties are really in line. They’re saying, hey, this is an issue, it’s significant. When you take a look at the underlying numbers here, of how profitable these companies are, we have never seen anything like it. The profit and scales are so astronomical, and I think that’s the influence they have over us. That’s kind of a separate issue, that’s the moral issue here. How much control did they actually have over us in turning our attention in directions they dictate?

Ben: Yeah, you can’t put the phone down for a day without someone saying, you weren’t getting back to me, and being upset. If you have an apple watch, it’s going to send the text messages through the watch; it’s impossible that you could have ignored me. There’s pure speculation over not noticing. There’s so much connection here, and that life control is a little overwhelming, you could say, I took my watch off for the day, or for the week.

Seth: I’m putting my watch back right now as we speak [laughter].

Ben: That’s one of those things—it’s so connected at the core, but it’s just a little bit scary. I’m going to take us out of here. You’re listening to MOT, you can reach us at 855-226-8551 or email us at info@yourmoneyontap.com. That does it for money on the news, we’ll be right back. We have a great show here to finish out with: some of the most overlooked tax deductions as you walk into the end of October and get ready for next year. Stay with us; we’ll be right back.

Seth: Hi, my name is Seth Krussman, partner with Brayshaw Financial Group, and one of the cohosts of Money on Tap. One of the biggest concerns and largest expenses people face today is taxes. Without thoughtful planning, taxes can destroy future retirement dollars, eliminating the possibility of a timely retirement, or dreams of what you want retirement to look like. If you’re like most people, you’re maybe wondering if you’re taking the right steps. Will my income be enough? Will my rising taxes force me to give up my dreams? How does inflation factor into all of this? These are real concerns, and you’re not alone. Putting a plan around your financial future is what we do. If you have questions when it comes to your financial security, and if you’re looking for a personalized solution, contact us at Brayshaw Financial Group. 855-226-8551. It’s time for you to start getting answers to your questions. Headquartered in Bedford, New Hampshire, Brayshaw Financial has offices across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation to meet with us. Call us at 855-226-8551. Now back to Money on Tap, with Ben and Seth. Welcome back, you are listening to Money on Tap. You can reach us at 855-226-8551, or info@yourmoneyontap.com. Welcome back, you’re listening to MOT, and we’re going to get into the heart of the show today, folks. We thank you for joining us. You can reach us at 855-226-8551, or info@yourmoneyontap.com. One of the questions we get from you is, we love the show, and we wish you would spend more time talking about the topic. You guys give us feedback; that’s great. Sometimes we have such great MITN things to talk about and we get so focused on our topic on the front end of it that we don’t have time to get through what we intend to get through all the time. Sometimes it’s because I’m doing this stuff, as we speak. I want to thank you guys for being here with us today. We’re going to get into some tax deductions because it’s that time of year. There’s possibly some last-minute maneuvering that you can do. There’s quite a few that people consistently forget about, or just don’t even know about. We want you to know what you can bring to the table to try and save yourself some serious dollars this season.

Ben: Hopefully, we’re not bringing this too late. October 15^th, we’re right there, and we may have missed you on some of these items, but like I said earlier in the show, this is the time to go see your CPA, right? They’re dead, they’ve got nothing to do, really.

Seth: After the 15^th, they pretty much are. You might want to give them a week to recover if you can.

Ben: Yeah, well, they had the summer [laughter]. You can usually reach them well into June or July. They’re pretty much dead in June and July they’re pretty much dead for the most part. Right after October 15^th they’ve got nothing going on, literally. They have the time for you to pick up the phone. They’d love to talk to you, but right now, they’re just finishing up that last round. We went through this, but we have six that we’re probably going to cover today. I’ll just start off, and the first one is reinvested dividends. This is probably one of the most overlooked issues we find out there. People that buy stock have mutual funds, they’re reinvesting dividends and they have all sorts of thing sin there, getting tax on these dividends every year. What people usually do is end up getting double taxed. The reason I say that is because when you reinvest dividends, you’re going to get taxed on those dividends in the current year. If you don’t add those dividends of what you reinvested to your cost basis for when you sell that mutual fund or stock later on—if you put $100 into an asset and you’re getting $1 a year for 10 years, okay? And you’re paying taxes on that dollar every year for 10 years. When you go to sell the asset, and if it’s $120, the cost is not $100 anymore, because you paid taxes on that dollar every year for 10 years. Your cost is now $110, and you sold it for $140. Your real gain is $20. A lot of people do this, and it happens all the time. They say, I only paid $100 for that asset, and now it’s $120. I made 20%. They end up getting double taxed and I don’t know how many times that happens to people on a regular basis. I’ve had people call in and say hey, I need me dividend re-investment report, so we’ll provide stuff like that, and we know people are catching it. A lot of times people don’t, and in some of the older brokerage accounts, some of the smaller counts didn’t ever keep copying to keep track of the cost basis. Some of these really old mutual fund and stock assets, that dividend reinvestment could be 50 years old, literally.

Seth: Bring forensic account on too; that can take a little bit of time and it’s interesting to talk to the companies and ask for some of these reports. So many of them can’t even provide the info anymore. They will give you something, but boy is it ever a fun job to dive back into the history of a fund and try to understand where those buys happened.

Ben: I’m gonna one up on that story, because I had a gentleman, he was in his 90s, great guy. He started putting $25 away in some mutual fund company that basically commingled—became another company—I think Evergreen was in that mix too. It was part of his holdings. I went to another company and it was 4 different companies. We went back and they have no records at all. None. He’s got mutual funds worth hundreds of thousands of dollars from having done that. If you can learn anything from this, putting $25 away a month, it can add up quickly with growth and reinvestments. He’s actually tax trapped because he doesn’t have a cost basis. What you’d have to declare is whatever you knew for certain, which would be just that $25 a month. Now he’s got hundreds of thousands of dollars in those mutual funds, and the gain would be enormous, so he literally has to pass that onto his family when he dies, because he doesn’t have a cost basis. We’ve talked about that in the past, where you die and pass it onto your children, and your cost basis becomes the current value of the day of your death. With his couple hundred thousands, his cost basis could be 50k or 20k, but when he dies, it’s going to be a couple hundred thousand that it’s worth. Reinvested dividends is a significantly major overlooked, especially when the double taxation happens. When you go and sell the asset, that’s something you really needs to be heads up about. The reason we’re bringing this up is because in 2020, the stock market went down because people were selling. The stock market went down to 18k on the DJI because people were selling investments. That means you’re going to have sales inside your portfolios that you need to know, especially if you’re reinvesting those dividends or not.

Seth: There you go. #2—job hunting costs. This is a tough job market. You’re looking all over the place for employment. You might be zooming more than ever, but you could be looking at all sorts of costs that are included in transportation, food, lodging, personal car use, printing—all these things can be considered tax deductible expenses, so providing that the search is not your first job—it’s interesting…

Ben: This would never have been on a top 10 list for me to do on the show. People don’t know about this, it’s an issue that people don’t have any clue exists. I would say most CPAs don’t even ask this question when you’re talking to them, right? Hey, were you looking for a new job this year? Well, 40 million Americans were at one point. There’s real potential issues inside, like, I’ve lost my job, what do I need to do now, and that’s something a lot of people aren’t really aware of. I’m unemployed, and what’s it going to cost me to get a new job, and how is that going to impact me? Honestly, when you have deductions like this and you have a low income tax year, it might be worth doing a ROTH conversion for a little bit of money, because I have all these write-offs from finding a new job, and I never knew i could deduct those before. It’s a great little tidbit item for people, because getting the next job can cost you a lot of money.

Seth: One of the things that might be overlooked is that you may be working with an executive coach. That’s somebody that’s an adviser to you about how to position yourself into a new marketplace. Maybe you’re going through a bit of a reinvention process, or you might be trying to headhunt into some very specific verticals. Those are some of the people you might usually be utilizing in your process more so than travel at this point. That’s one of the expenses that gets overlooked as well.

Ben: That’s a great point. Okay, #3—out of pocket charity. The other thing that we bring up here is that people have become inventive in the charitable giving world, because sometimes you don’t have the money to give, but you have an asset. It’s not just the cash donations that deductible. If you donate certain assets, whether it’s a car, or stock. It’s different types of things that people are donating vs. just a straight check out of their checkbook. I had one client call me and make a charitable donation of some stock. When you donate this stuff, you never have to worry about cap gains there. That’s a great opportunity. We’ve had people who have taken cars and donated them to their favorite charity for various reasons. They’re like, hey, I can get a better tax deduction, and then I can probably figure out the hassle in selling this thing vs. writing a check. That’s a really important area.

Seth: I’m wondering how many people in this season have been trying to donate their significant others’ golf clubs. That would be my sister. Helen is not very happy. He’s done a great job of collecting multiple sets of golf clubs, and I’ve received the benefit of that and I’m very happy. You can get really creative in this, too. The fact that there’s time involved so that people can really consider time a factor of investment, and donating, but there needs to be accountability for that. Sometimes it can be a challenge. I know that we’ve come across the charitable organization sometimes being really effective, and serving the community, or that they are dedicated towards. Having the other side set up to give you a record of our donation can be a bit of a challenge, too, so be aware of that be giving enough time to do that.

Ben: That’s a very true statement. Getting record of the donation that you did is really important. Te CPA is going to need that and they’re going to—if you did a car, which is a pretty common item these days—if you do a car, you have to have an approximate value of that vehicle that’s documented. You’ve got to have the VIN number for your CPA, and there’s some work behind it. Trying to get the true value it a lot less hassle and it’s significantly more appreciated sometimes.

Seth: #4—state taxes. Did you owe state taxes when you filed your previous year’s tax returns? If you did, don’t forget to include the payment as a tax deduction on your current year’s tax return, and some changes that have happened since 2017 is that there’s a $10k cap on the state and local tax deduction.

Ben: That salt tax, man, that’s painful for a lot of states out there, you know? NY, CA, some of the higher income tax rate states have really gotten hammered. CT, you know, the joke is that the salt tax cut in 2017 that Trump instituted was basically an attack on the blue states, you know? It really hit them hard and its very true that those are the states that have the highest state and local taxes, and that has really hammered them. It’s not just limited to them; it’s across the country. That was one area where people pay a little more taxes and making sure you account for that the following year is very crucial. It’s something that gets overlooked from time to time, even in some of the most seasoned tax professionals. People say, well, here’s one area where it’s cut, I mean, there’s a lot of other opportunities that were granted, which is the automatic deduction piece. If you’re married filing jointly, it went from 12k to 24k before you started itemizing anything. We used to have to itemize if you’re married filing jointly at 12k roughly, and 6k if you’re single. Now if you’re single, you start itemizing over 12k, so you don’t even have to have any bills or receipts. They just give you a 12k deduction automatically, which was increased. There’s some balancing out here that has really helped. If you rent an apartment or a house, the tax benefits of that 12 to 24, married filing jointly, that automatic deduction in 24k, because you didn’t have any of the mortgage deductions. This has been a huge increase that has helped a lot of people who don’t make a lot of money because they had these huge rent bills, and they needed more deductions. They just had nothing to deduct now. If you’re highly charitable, that become significantly problematic because unless all your deductions and charitable giving goes over $24k, whether you give or not, you’re sill getting the 24k deduction. Now, you know, we’re not CPAs, we’re not tax advisors, but these are things you need to have on the forefront of your conversation with your CPA. We’ve had people roll up their charitable contributions all into one year. You can do that, and then give them out over 3-5 years. You could say, hey, I want to push myself over that $24k, but if you said hey, I normally give $10k a year to a charity. If you have $30k in cash, give it now--$10k each for the next 3 years—you instantly go over the $24k this year, plus your other deductions. In the following years, you’ll have the 24k for free and you get that deduction automatically. There’s ways of manipulating this stuff inside these state taxes to really understand it.

Seth: Well said, Ben. It does all tie together, and if you’re really wanting to be winning at the tax game, it’s going to take several considerations. It’s how do you eat an elephant, right? It’s bite-sized pieces, and that’s really how you win at the tax game.

Ben: Hi, my name is Ben Brayshaw, one of the co-hosts of Money on Tap. If you have questions when it comes to your retirement, and you’re looking for a personalized solution, contact us at Brayshaw Financial Group. In today’s volatile stock market, we can help you plan to find your successful retirement solution. Am I saving enough? Am I saving into the right places? Do my investments match my appetite for risk? Do I have a tax strategy that’s going to help me keep more of what I earn? How can I maximize my SSI? If you’re like most people, you are getting closer and closer to your retirement, and maybe wondering if you’re taking the right steps. If you’re in retirement, you may be wondering, am I maximizing my income while preserving my estate and caring for my family? We talk about all things financial, and what we call 3-dimensional investing, putting a plan around your financial future. If you feel that now is the time to start getting answers to some of these questions for your own situation, give us a call at Brayshaw Financial, at 855-226-8551. Headquartered in Bedford, NH, we have offices throughout New England, and across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation just to meet with us. We welcome you to our office. Call us at 855-226-8551.

Seth: Welcome back, you’re listening to MOT. You can reach us at 855-226-8551 or info@yourmoneyontap.com. If you want to write us an email there, we really enjoy the feedback and your support. Whether you’re catching us in a podcast or listening to us via radio, it is always a pleasure to connect with you personally. We thank you for the calls, emails, and some of our best conversation that we have here is because you come to us, and you’ve asked us some questions. It may be a topic that we’ve presented in the past and it’s given us a different perspective or a different insight of what’s important to you, and how we can get this information to you. That’s one of the gifts that we enjoy giving here—how do you get into the brain of a financial planner and take advantage of that? What are some of the things we look at on a regular basis to help our clients? You are an extension of that to us and we want to make sure that you’re getting something that’s very valuable and timely for you to take forward into your personal finance journey. We have been spending most of our time today talking about 6 of the most overlooked tax deductions, because there is a whole bunch of them out there to look at. If you’re hunting for a job, if you have out of pocket charity, or if you have reinvested dividends, if you have state taxes that you owe when you filed previous last years’ return, those are the 4 that we’ve just spent some time discussing. The final 2 that we come to are our Medicare premiums. This isn’t clearly something that doesn’t apply to every part of the demographic that we’re speaking to today, but if you happen to be eligible for Medicare, or participating in Medicare, and you’re self-employed and not covered by an employer plan, or your spouse’s plan, you could be eligible to deduct premiums paid for parts B and D Medigap insurance. The Medicare Advantage plan is available, regardless of whether or not you itemize deductions. That is key.

Ben: yeah, and what we talked about right before the break, the itemization and how that works, this is completely outside of that. This is a big deal. This is something you don’t want to miss. You say, oh well, I don’t need to worry about itemizing because I get the $24k exclusion as I joined, or the $12k as a single automatic deduction program. This is completely above and beyond that. This is a big one, and if you’re 65 and you’re eligible for Medicare, and you have the part B or D, you’re not covered by an employer plan, or your spouse is. This is a free deduction. This is something you have to get, no matter what, and it’s something you want to make sure you don’t want to miss. A lot of unseasoned tax professionals will just basically say no to married filing jointly $24k and move right on. They don’t even inquire about this—it’s just a silly little thing, but it’s still a major tax benefit for you. It’s funny, Seth, you were just mentioning something that I really wanted to touch on, because it’s when people contact us, some of the greatest experiences we have is because we get so much great feedback, even when they’re not trying to give feedback. We get good, we get bad, we get all sorts of stuff. I wish you spent more time on this topic, it’s like, we’re never going to make everyone perfectly happy, I think we figured that out just in this election season. But reach out, let us know where we can continue, we love hearing that, I love when people come back and say, you really changed the way I thought about finances. Or you really helped me, and I never thought about this this way. We don’t care whether you do business with us or not, just the feedback is great. Feel free to reach out, drop us an email, anything. I’m going to jump into the last one here; #6—we’re getting to the end of the show, so this is an interesting one. If someone dies—people inherit retirement plans all the time due to death. When you get that income, it’s important to know one really specific detail now. When estate taxes are paid during an estate, they add in every asset under the sun, including the value of your IRA, your ROTH IRA, everything. If there are state taxes paid by the family by that estate, you, as the inheritor of that IRA, when you take money from that, we take the withdrawal from the IRA, you can potentially deduct  some of those estate taxes that were paid against the taxes you’re going to APY on that IRA because it’s already been taxed federally, and it’s only allowed on the federal side now. This is something that is missed. If this isn’t the number one clincher as to why you listen to our show, when you inherit today, or just did, or will in the future, and your family has a state tax issue, now the estate tax exclusion obviously is very high, in the tens of millions right now. I am of the belief, as are many attorneys, that state tax exclusion is going to drop significantly in the future to deal with taxes. It’s something that’s been challenged, and it’s just never been made permanent enough to solve that. I think we went from 600k to 11 million, and it’s just crazy that it’s not going to stay that high. I just don’t believe it. When your family does pay estate taxes, it’s important when you’re dealing with that IRA and you’re taking your distributions out over 5-10 years that you’re allowed to—you need to know what those taxes are. This gets complicated because there’s one person who’s usually running the estate, and there’s lots of information needed, and figuring it all out, getting that info can be complicated because of family dynamics. If you’re inheriting an IRA and you’re dealing with this problem, this is something to give us a call for, because there’s a lot in navigating these waters. It can be tricky, so this is an area that we’re probably giving you a huge tax savings idea right now.

Seth: Thanks for joining us today, you've been listening to money on tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. In addition to the podcast—you can find us at any of the podcast venues out there—we appreciate the likes and we’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We appreciate you joining us here today and we hope you make it a great day and a great life. Thanks for joining us for money on tap.

SUMMARY

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

In this episode of Money on Tap, Ben and Seth discuss six very much overlooked tax deductions. This is an important topic because filing taxes is something that a lot of people are confused about, but Money on Tap has got it on lock! Be sure to figure out how you can save the most money when filing taxes, all while taking the stress out of it with this episode of Money on Tap.

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

MOT Show 144 Property and Casualty Insurance 21769565

Seth: Welcome to Money on Tap. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance, brokerage, and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. My name is Seth Krussman.

Ben: And I'm Ben Brayshaw.

Eric: And I’m Eric Morton.

Seth: Yes, that’s correct. You are Eric Morton. Welcome back, Eric, how are you?

Eric: Doing well. Thanks for having me and not kicking me to the curb with being gone so long.

Seth: We’re all about accepting you for you are. That’s what Ben says every day.

Ben: Did you have COVID? Where were you?

Eric: I didn’t. I did have COVID activity in the office, being so busy with helping business owners, answering questions. It’s a good reason, but I’ve missed you guys. Glad I’m back.

Seth: Those of you who don’t know Eric, it’s wonderful to have an opportunity to introduce you to him. He’s the principal of our property and casualty branch here at BFG. Making sure that you are covered when it comes to your property and casualty insurance needs. With that, I think it’s a great time to tell people what we’re gonna be talking about, how they can get a hold of us. Especially if they need to get a hold of you and Sarah, Eric. We’re gonna be talking about some extraordinary events here in the NW, which has been the latest fires. If you’re in Portland, OR, you’re very familiar with this topic. Those of you in NE, it doesn’t happen as often there, but it’s still really critical information for you to make sure you understand how to be covered properly.

Ben: Is it too political to say that you’d be familiar with it if you’re part of ANTIFA, or I don’t know if we should go there.

Seth: What’s ANTIFA? Is that an idea?

Eric: That might be slightly political.

Ben: I’m just kidding.

Seth: You probably think we’re all ANTIFA out here, don’t you? Yeah, those Portlanders, those ANTIFAs. Way off track, folks. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Ben personally is going to be fielding all of those calls pouring in right now about whether or not we are ANTIFA or not. I cannot wait to get into this show. Before we do, it’s time for MITN.

Ben: Our first article, Seth, is an interesting one. Value stocks are outperforming growth, at least for now. It’s a WSJ article that was shared a few days ago by Kaitlyn McCabe. There’s been a lot of conversation about the value space, and a lot of information about whether or not value and growth, what that means. For our average listener, when people speak generically about value and growth stocks, they’re talking about stocks that are focused on a growth stock. A value stock is some sort of income and dividend positioning. Something like Apple would be considered more of a growth stock, even though they have a dividend, because their dividend is so low. But it is technically a growth stock. Value stocks would be things like chemical or Exxon, Chevron, any of the big companies that have large dividend yields comparative to the growth space. There’s been a lot of conversation about that, and the reason people talk about value vs. growth is when they get more concerned about the different investment places, they tend to think if I own a value stock, at least I’m collecting potential yield, and I can hold onto it. It’s been a big conversation inside the investment world. The one thing that’s really going on here is a lot of people are talking about the election and what that looks like. People tend to flock towards value stocks when they have a little more concern, and they wanna have exposure to the equity market. In the article they talk about “the S&P fell 3.9% for the month in its deepest September loss since 2011. The index was dragged down in recent pullback in tech companies, such as Amazon, high-flying momentum stocks, like Tesla, also pulled back. Shares of those companies lost 8.8 and 14%, respectively.” They’re talking about the fear of the market going down and how that’s pushing interest into the value space.

Seth: It’s interesting to talk about growth in terms of 10 years, even. It’s a space that has not performed in the most recent historical segment of our economy and our market, which is out of turn for the value space. Value has been one of those places when the economy takes a turn, that’s where money starts to go because it starts to see things at a discount, or at a better price, and will ultimately be markers that pull us through economic downturns, so with the most recent pullback that we’ve seen for value to have underperformed as much as it has, it’s not been typical, right? When we see a pullback like we saw with COVID come through, you’d most likely see the turn of value, and that would be one of the expressions of the market. That’s not the case, we’ve seen Amazon and Tesla and some of these other names really pushing the market so much higher than previously. Right now, what a lot of the fund managers out there are pulled by Bank of America are saying in the next 12 months, they expect to see value take its turn in our market.

Ben: I think to add to that, a lot of people look to the growth stocks for real opportunity to rise and continue with the market. The problem is, we’ve already seen that. The value index for the Russell is still down 13% in 2020. There’s a belief that the value is still underweighted, it’s been oversold, there’s opportunity there. We’ve watched and climbed out of this pullback in the market based on the growth stocks. When you look at the S&P 500, most of the S&P is struggling. A few big companies, the big S&P players are the ones who have carried the S&P 500 out of that.

Eric: So value stocks, if I were to just think of it in real estate terms, would be a fixer-upper, or a used vehicle. How would you explain that to folks that are trying to get a real handle on that term in the investment world?

Ben: That’s a good idea. I would say that a value stock would be like some major building in NYC that’s beautiful and been built. It’s 15-20 years old. It’s rental, it’s creating income, and it’s like that mega building. That’s your value asset. It’s got that large cap value. I’d say something like if you were looking at an office development or you say, we’re building this office development outside the city, it’s a nice area, nothing’s rented yet. We’ve got one building built, it’s rented, we’ll see what we can do. We’re gonna continue this process and go forward, and we’re gonna produce this super valuable asset, that’s the growth concept. That’s how you’re growing into it. The growth asset could be something like a massive corporation who’s building another development that they have a proven track record.

Eric: Rolling the dice on the growth is—

Seth: It’s like the summertime. Everyone’s in. Jump on that and everyone’s gonna be your tractor trailer, making sure your goods and services are getting to point A to Z. Not everyone’s looking at that as what they want to purchase or buy, it’s not really capturing their attention, but it’s really what’s allowing the rest of the economy to transact. The price to book there is one of the things we talk about or look at. Value is ultimately, it’s like you were talking about real estate. It’s not bright and shiny, but comparatively speaking, it’s at a discount to what the rest of the market is.

Ben: If you use the real estate comparison and you say there’s growth and value, large, mid, and small cap assets, the large cap asset’s gonna be a massive office building in Manhattan, and a mid-cap asset is gonna be in Boston. A smaller city. That would be large-cap value or growth, depending on the type of asset is. When you get into a duplex, a 2-family house, if it’s a fixer-upper and it doesn’t have a tenant, now you’re talking growth. If you have a tenant and it’s in good shape, it’s been rented for years, that’s gonna be more of a value asset.

Seth: We’re talking about renewable energy can live with Trump or Biden, alright? The last 4 years have proven that the industry is past its formative years. This article is brought to us by Gin Ju Lee. I’m bringing the real news to the market today. The renewable energy stocks right now have been flying high. This is a run-up till election day that isn’t a reflection of Biden’s perceived edge here. The last 4 years have shown that the renewable energy industry is resilient, has tailwinds from declining technology costs and from years of federal tax credits as well, which have received bipartisan support, have been too strong. There’s a lot that’s gone into this area of energy that has allowed the alternative energies to get a foothold, get a real consolidated foothold here.

Ben: We were talking about this article offline earlier, about the unsubsidized comparison of coal, wind, natural gas, and solar. It was an interesting thing about how the cost of coal and the cost of energy has continued to increase over time. That probably has to do with the cost of general labor and so forth. There’s so many things that are automated once you get wind up and going. Wind is more expensive but declines over time. Solar has declined significantly, becoming the cheapest energy. Looking at the numbers, natural gas is just a little more expensive than solar, and we have an astronomical amount of natural gas in this country.

Seth: It’s also been declining as far as the cost.

Ben: Yes, that’s crazy. That’s why they talk about creating cars that run off of that and different pieces of that, which is an amazing scenario. I think one of the things about this renewable energy piece, it’s attracted a lot of interest, due to the green energy plan that Kamala Harris has co-sponsored. I understand it to be that Biden is also in favor of it, although the debate a little while ago, he claimed differently. The article also says Biden could usher even better times for cleaner energy, though he’d need a Democratic senate in order to push his goals through. He has proposed a 2 trillion-dollar plan achieving 0 emissions from the grid in 2035. The WSJ is also claiming that this is a Biden stand. There’s a lot of questions around the economic validity that would drive, whether or not this would help or hurt our economy. The amount of stimulus that might be needed to get there, taxes and so forth, those tax incentives directly come from our pocket. Every time there’s a tax incentive, the government is paying for it, so there’s an interesting—some people are gonna benefit, some are gonna struggle. I think ultimately, I’m generally very pro-renewable energy, but I think we need to figure out how it makes itself become an advantage, and it is doing that, looking at these charts.

Seth: Headways, or speed bumps, it’s really difficult to invade the action solely through the federal level, is what it talks about the bulk of the generation, sources of electricity that can run on command – it’s important to note that its not all blue skies and everything here for renewable energy. The bright spot is that there’s been time for these technologies to come to the market, get the sponsorship they need, to work out the kinks that have made them cost prohibitive in the process, and to get a foothold in here. If I take a look at that, it sounds like it’s trying to say that the reliability of it, the grid, has to be somehow accommodating for these new technologies to come to the market, or to consumers on a consistent level.

Ben: I think the green energy initiatives—some of the other articles we looked at was CA’s initiative to roll out electric cars from 2035, and that’s the way they’re gonna go, honestly. Those cars have to be powered by some electricity. That’s really a problem. We can’t just have—hey, green energy everything right now. It’s too much of a demand on our society. I’ve read articles opposing that, which says, we can do more by basically forcing China and India to clean up 10% of the pollution vs. the micro specks that that kind of pressure on our economy would improve the overall—yeah, exactly. We need to do more work globally than we need to focus on our home right now.

Seth: That’s a different take than what you said earlier, pushing CA off into the ocean. That was the problem solver originally, right?

Ben: That was, but I’m rethinking that.

Seth: That’s gonna do it for us with MITN. You can reach us at 855-226-8551 or info@yourmoneyontap.com. When we come back, we’re gonna be talking more specifically to Eric Morton, who is our head of the P&C division at BFG, and that stands for property and casualty insurance. We’re gonna specifically be talking about what’s happening in Portland with fires, and how property casualty has been a huge part of the story around people’s lives and protecting them. We wanna know more. We wanna understand how to protect you and ourselves, and what are some of the intricacies here that we haven’t considered when taking a look at property casualty insurance. Eric is gonna walk us through that. We can’t wait to get into that with him. Before we get there, we’re gonna take a break. You’re listening to MOT, don’t go anywhere.

Ben: Hi, my name is Ben Brayshaw, one of the co-hosts of Money on Tap. If you have questions when it comes to your retirement, and you’re looking for a personalized solution, contact us at Brayshaw Financial Group. In today’s volatile stock market, we can help you plan to find your successful retirement solution. Am I saving enough? Am I saving into the right places? Do my investments match my appetite for risk? Do I have a tax strategy that’s going to help me keep more of what I earn? How can I maximize my SSI? If you’re like most people, you are getting closer and closer to your retirement, and maybe wondering if you’re taking the right steps. If you’re in retirement, you may be wondering, am I maximizing my income while preserving my estate and caring for my family? We talk about all things financial, and what we call 3-dimensional investing, putting a plan around your financial future. If you feel that now is the time to start getting answers to some of these questions for your own situation, give us a call at Brayshaw Financial, at 855-226-8551. Headquartered in Bedford, NH, we have offices throughout New England, and across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation just to meet with us. We welcome you to our office. Call us at 855-226-8551.

Seth: Welcome back, you’re listening to MOT. You can reach us at 855-226-8551 or info@yourmoneyontap.com. With us today, Eric Morton, head of our P&C division at BFG. Also, we’ve got some great people in place to help support your business, to help support you personally, to protect you and your business and that’s Eric. Eric’s gonna talk to us a little bit today about Property casualty insurance, and what’s gone on in Portland, OR, and Vancouver, WA, where Eric’s at, and the fires that have taken place, and how people’s lives have been radically changed by those events, and how you can be protected.

Eric: I appreciate you having me back. Hopefully, we’ll get this a little more regular. I will say that part of the reason why I’ve been gone is because of how busy we’ve been, which has been great. To help people in a time of need, starting with COVID months ago, but most recently with the fires in the area, our phones have been blowing up. The phones have been blowing up for multiple reasons. One was some folks that had forgotten to start their policies, and they were now in a level 1 evacuation. These terms are new for a lot of folks, and they start getting messages and alerts that tell them they’re at a level 1. What’s level 2, level 3 mean? In the insurance world, those are important to know. When you get to a level 3, mandatory evacuation zone, that’s when your insurance policy could or couldn’t trigger some coverage for you to get out of town and live for a little while. This is the number 1 and the biggest thing I ask people to take a look at their policies, talk to their agents, what’s in the specific details in their policies? Under coverage on loss of use, you may see it on your declarations page. You see that term loss of use, and you’ll see that, sometimes it’s a 12- or 24-month limit, sometimes a dollar amount limit. What that does in the need of a forced evacuation, level 3, is how we classify it out here. You get to live for up to 2 weeks on the insurance company. That is something you can either make sure you have on your policy, number 1, and take your receipts, keep them handy, turn them into your agents for reimbursement. A lot of folks were wanting to stay. You’re torn between wanting to stay and protect your property; you’ve got people potentially coming in and stealing things from you. There’s a lot going on, a lot of stressful situations. Take that stress out of your mind and take a look at your policies. Make sure what you have there is adequate. Have you guys looked at your policies recently?

Ben: That’s a tough question.

Seth: Yeah, we did. We took a real good look at our policies and specifically in WA, where the fire’s about 6 miles away. That’s closer than you would like to be. Level 1 was where we were at, down the road was level 2. We took a look at those and we upped the coverage on a few things, because it wasn’t front of mind. It was in place when we needed it and that was adequate enough. Things change, the property values change, and you different or better coverage sometimes. The cost of that is so nominal. Yes, definitely, it forced our hand.

Eric: You mentioned that you were able to make changes. That rolls into my next point which is a lot of folks did call when it was already past time. What that means is when an insurance company has binding restrictions that they’re not allowing to make in certain zip codes because the threat is imminent, I used to live in FL for many years, and when a hurricane was in the gulf, a certain amount of days away, the path was trajectory to hit central FL, you’d see all the zip codes go in lockdown, where you can’t purchase a new policy, you can’t make a change to add coverage at that time. It was interesting to see a similar situation out here play out for fires, and they were actually in some cases, where the level 1 was only a mile away, they were able to determine that the fire was going away from these zip codes, so you’re still able to make changes and bind policies. There were some folks calling to try and get something done ahead of time. It’s a good reminder to make sure that you’re looking at that and planning ahead to get something done.

Ben: Can you elaborate on real estate, binding coverage, etc. Can you elaborate on that? I remember Keys got flooded years ago, and people didn’t have flood insurance.

Eric: Great point. Flooding insurance—each policy has a different criteria. For floods, you have a 30-day waiting period if you have a policy in place, if you own a home currently and you’re not buying a new home, you can buy coverage for a flood, but you have to wait 30 days before it’s active. If you hear the forecast a week out, if there’s flood warnings, you can’t buy coverage at that time. There’s some caveats, there’s some ways to make sure you get it immediately. That’s a new home purchase. There’s also some flood zones where it’s required to carry. When you take that mortgage out, you’re forced into having a flood policy.

Seth: Right now, we’re heading into our rainy season. The season’s changing. Is that something you’d put on the horizon for people? What do they need to be paying attention to? What can they look at right now in terms of protecting themselves? An earthquake could strike at any time, right? That’s something we live with here. Seasonally, there could be some things to try and put into place.

Eric: Yes. There’s a combo, because when you have these massive fires, it really does a number on the land and everything surrounding your home. If you’re up on a slope, now that the heavy rains come after fires and the trees aren’t there to keep that in place, now you’re starting to talk about earth movement, earth movement’s covered under an earthquake policy. Earthquake and flood aren’t standard on a home policy, unless you’ve specifically talked about earthquake, it’s most likely not on there. Flood policy is definitely not on there. You have to get that through the national insurance program, or a private flood insurance company. Both of those things, you’re thinking earthquake, how likely is that? Out here it is. We’ve had a couple, recently up near Olympia. All the fires, it’s like, what else can happen. Think about that earth movement, landslides, things of that nature. A good friend of mine had one happen last year and it’s just a terrifying experience for him and his family. The whole side of the mountain crashed down. They were fine, but it’s something you’d never think about for the most part. Sit down with your agent, review it by phone, do a zoom call, Skype or whatever and just take the time to set it up early so that you’re not hoping you have it.

Seth: We’re talking with Eric Morton, head of our P&C branch of BFG. We’ve had recent fires in Oregon, which has really brought to bear a lot of the questions we’re covering today. If you’re just jumping in with us, we’re gonna take a quick break and then talk more about what is the process in walking people through this. We’re gonna ask Eric, what’s it like for somebody who’s come into this situation where they’re in the path of a fire, they go through 1-3, and maybe the loss of a home, or any of their property for that matter. What does the rest of the process look like for them? We understand putting coverage into place prior to this happening is ideal, but even if they’ve now had that coverage vs. not having that coverage, if you could give us a little idea what those scenarios play out like, that’s what we’re gonna talk about next. I also wanna introduce Sara Bazani. If you’re in the NE area, you’ll be wanting to talk to her about P&C insurance, and how you can get in touch with her, get your questions answered, proper coverage in place, things that are going on in NE, it’s different for those of us in the West Coast, and we understand that. We’re gonna take a quick break, we’ll be right back. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Hi, my name is Seth Krussman, partner with Brayshaw Financial Group, and one of the cohosts of Money on Tap. One of the biggest concerns and largest expenses people face today is taxes. Without thoughtful planning, taxes can destroy future retirement dollars, eliminating the possibility of a timely retirement, or dreams of what you want retirement to look like. If you’re like most people, you’re maybe wondering if you’re taking the right steps. Will my income be enough? Will my rising taxes force me to give up my dreams? How does inflation factor into all of this? These are real concerns, and you’re not alone. Putting a plan around your financial future is what we do. If you have questions when it comes to your financial security, and if you’re looking for a personalized solution, contact us at Brayshaw Financial Group. 855-226-8551. It’s time for you to start getting answers to your questions. Headquartered in Bedford, New Hampshire, Brayshaw Financial has offices across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation to meet with us. Call us at 855-226-8551. Now back to Money on Tap, with Ben and Seth. Welcome back, you are listening to Money on Tap. You can reach us at 855-226-8551, or info@yourmoneyontap.com. Now back to MOT with Ben and Seth. Welcome back, you’re listening to MOT. You can reach us at 855-226-8551, or info@yourmoneyontap.com. We’re speaking with Eric Morton, who’s the head of BFG’s P&C division. We’ve been talking about fires in the West Coast, and how has that changed the conversation around it? We provide P&C insurance for our clients. Before we go down this road about the experience our clients go through, I want to ask Eric to tell us a little more about you and P&C insurance, and what that looks like under the hood.

Eric: Yeah, this really goes in line with everything you guys are talking about. We’re independent agents, we’re an independent agency, some would say brokers. We’re finding the best coverage for you with multiple companies. Some folks get confused; they think we’re not agents. We’re licensed agents, we’re appointed with companies to write business through them, but we’re not beholden to one. The advantage is when you see those instances or see a claim situation you weren’t happy with, we’re advocates for you, we’re advisers, agents, all of those things. When I say we, it’s myself and a team of 6, and we’re scattered across the country. We’ve got representation in NE with Sarah, Bedford and Keyes, representation in AZ, out here in the West Coast, Portland/Vancouver area, even in AL. I jokingly say to folks on the East coast, when you’re up at night worried and stressed, we’re still in the office and we’ve got some help in AL. During the summer at least, they don’t go to sleep because of the 24-hour sun situation. That’s a rundown of who we are and the team you have backing you up when you talk to us. I wanted to mention before how we go through how the claim’s handled and the process of what would happen if you don’t have the right coverage and you need to move forward with some things—even if you’re with a different company—I always mention this. I absolutely will take the same amount of time I’d take if you were with us to talk about a claim situation: something that doesn’t sound right, absolutely would love to walk through what’s going on, give some advice. Obviously, I can’t represent different companies to help you with that, but it’s just an advice type of situation if you’re running into a roadblock.

Ben: I think that’s really good for everyone to hear. Ultimately, when it comes to handling your home, auto and business insurance, you need to have people available to take care of you. You don’t want to worry about 9-5, that’s the only time I can get ahold of people. The exposure we have coast to coast—Eric and the team he’s built is fantastic. Super happy to have him apart of our team. He’s an extreme wealth of knowledge. Eric, thanks for that and for all the hard work you’ve done. I’ve got a couple questions about the fires. These are oddball questions. One of the questions is, how and when does arson and all of those different issues play into insurance? Is it just self-arson that isn’t covered? How does that all happen? What’s going on with those claims?

Eric: I’ll back up a bit, too because I got a large amount of calls the week that the fires were impending, were moving here on us. People didn’t know that they even had coverage for fire, which to me is pretty surprising because I know that insurance originally began as fire insurance. That’s why they started the whole thing many years ago. There’s even some companies that currently talk about the insurance home policies, it’s not even home insurance, it’s fire insurance. They call it that. Any type of fire that’s not self-made by the owner of the home is covered on the policy. Arson, if it’s because of the utilities, something happening there with the city or government, any of those things that happen that you’re not at fault for, you’re covered. There are some pieces covered even if you’re not at fault but is an accident. Folks that used to smoke in their homes, things like that, that’d still be covered as well. Doing it on purpose? Yeah, that’s frowned upon.

Seth: Walk us through what the process has been for people that have been in the path of the fires here or experienced a loss. That kind of a-z, what does this work out like for somebody that has or has had coverage or did not.

Eric: Good question. One of the first steps is when you’re in that zone 1 or that level 1, having to evacuate from your home, you’re starting to think about, where would I go if I was forced out? Some people would stay, and some lost their lives because of it. Luckily, we didn’t have any clients lose their homes on this round of fires, but that first step is where would you go? If everybody’s looking to stay in a hotel in a safe place, those hotels are gonna be booked up pretty quick, so you’ve gotta have a plan to make that happen. You’ve gotta have that emergency fund that you talk about all the time to take care of those expenses up front. The coverage that may trigger from your policies won’t happen while you’re staying there, it’ll be reimbursement. You’ve gotta have the cash on hand, in your savings or emergency fund to take care of those expense. If something does happen, you can’t go back into your home, you’ve had a loss incur, mainly the whole city of Detroit, OR, my heart goes out to those folks, the city was basically wiped out. Now you’re triggering that loss of use that was gonna cover you for 2 weeks. Now that triggers into the complete amount of coverage you have to rebuild the home. Now you’re gonna have your living expenses taken care of until your home is built in a similar fashion. It could take 12 months, 2 years depending on what the availability is for contractors. It’s important to look at that clause because there’s some companies that only gives you about $15k on that.

Ben: $15k and that’s all you’ve got to live off of for the next 1-2 years. What if you say, it’s horrible to hear about that town. That’s incredible. What do you do if you say I’ve gotta get a job, the company I work for is burned down, I have to move to CO or UT, wherever, and that’s where the world’s taking me. What do you do then?

Eric: I haven’t come across that scenario myself, but there’s going to be some coverage still in place. The best companies are the ones that are looking for ways to cover you in your time of need. The worst that you hear about are those that are looking for ways to not give you coverage. That’s why it’s tough because folks who haven’t been through a claim, they don’t now how the company’s gonna handle it. Even if the company is pretty large, that doesn’t necessarily mean they’re not taking care of their customers. That might mean maybe they are in their time of need, and people refer those companies out. The specifics of moving to a different state or city, I don’t know the details of how that claim would be handled, but I do know that there’s gonna be coverage, there’s gonna be ways that that company’s gonna step up if you’ve got the right coverage in place. It’s important to try not to piece these policies together online only. Especially home policies. Those are much more important, that’s what you’ve saved your whole life to get, and just relying on, that rate looks good, let me buy that, without any interaction with a pro is not a good idea.

Ben: If that’s not clear over the last few months on the West Coast, I’m sure people are realizing big mistakes there. I’d encourage any of our listeners on the East Coast, we’re not without danger and fear. I remember as a kid some of the ice storms we used to have were just—totally destroyed homes because power was lost, and everything froze. Whole houses were destroyed because of it.

Eric: The hurricanes don’t come up as frequently, but when they do, it’s terrifying. Any of those things that could happen that happen infrequently, it’s just a good idea to get ahead of those items.

Ben: Eric, what would be the number 1 encouragement for people to check on? Sarah’s awesome, you’re great, can’t ask for 2 better people to be working with us. There’s probably a lot of people out there listening saying, I don’t know where to start. I don’t know what I have or don’t have, I don’t know what my homeowner’s insurance coverage is. What could they look for that may be overlooked?

Eric: It’s the coverage called loss of use. It’s a big one. There’s another one that some folks don’t know they had or have as an option. What that is called extended replacement value. It’s a bucket of money that’s a percentage of that top number that you see on your insurance policy. It’s always confusing because you look at your policy and say, my home’s worth way more than this. That number, that rebuild cost, that replacement cost number is just for the structure to be rebuilt. It has nothing to do with land, market value, etc. that number can be lower because it’s based off of square footage and contractor’s cost. There’s a subset coverage called extended replacement loss. 25% is standard, you can go up to 40-150%, and what it does is it adds that percentage of that number, the top number on top of it, just in case, as a buffe. If that’s not enough to rebuild the home, we’ve got 25% of that number on top of it. There’s policies that you buy online that wouldn’t have that. There’s different percentages that are standard. You may buy from a major carrier that’s number 1 in the country, for instance. 25% comes standard. That’s a good policy. You can bump it up. There’s some companies that allow for 40-100%. Loss of use, #1, based on our fire conversation. #2 is that extended replacement cost. It’s just a good idea to sit down with your agent.

Ben: The extended replacement cost is probably more relevant than other. The cost of materials to build a house are up more than 2x the cost it was a year ago. A pressure-treated board, or some plywood is 3x the price that it used to be. If you had to replace your house, probably what it is insured for last year, it would cost way more to build that same home.

Eric: Yep. There’s a couple coverages that would help you there. Extended replacement is a bucket of money. There’s also building ordinance or law, there’s a 10% for that. If you’re rebuilding that home and there’s different requirements than there was when it was built, there’s an extra cost. You’ve got another bucket of money for that. Some people don’t know they have an inflation guard on their policy that increases that replacement cost automatically by 3%. Some people say hey, you’re raising my rates, why? That’s actually an inflation guard that you have on your policy and here’s why we put that on your policy originally. You’ve got some failsafe’s there. It’s not as bad as most people might think. I don’t trust that this policy is gonna work. They’re gonna look for ways to not give me coverage. If you’re with a reputable company that’s been around for a while, they want to help cover you. Those buckets of money exist, you may not even know it.

Seth: I have a question on the more intrinsic things inside your home that may not be the structural things you’re replacing. Maybe some art, and I know you can insure those independently. Are there different kinds of coverages to make sure those pieces are taken care of as well?

Eric: Absolutely. Rule of thumb for what I advise is if you have anything that’s a single item or collection that’s over 5k, have a conversation with your agent to see if the company you’re with allows to have that unscheduled. If you need to schedule something, if you need to make that stated value of that art collection, that’s 150k that I’m sure you have, Seth, in your garage, sitting there. It’s not gonna be covered after that fire. You say hey, remember that 150k art collection and no one had notes on it? It’s not gonna be covered. You’ve gotta schedule it, get appraisals. That rule of thumb, I usually say 5k or more, think about that. You’ve got special limits on your policy for firearms will only cover up to $2500. Back in the day there was more goldware, silverware, there’s special limits there. These collections and items, you want to pick up the phone, give a call, say hey, what’s on my policy. I forgot to tell you I bought a bearskin rug for 80k this week. I jokingly talk about the bearskin rug, but that’s a conversation I had. It’s a good idea to open that conversation up, make sure you’re covered properly. If you’ve got receipts and appraisals, and you didn’t call, that doesn’t mean you’re not covered. If it’s reasonable and provable, those good companies are gonna make the exception in the gray area rather than not make the exception.

Ben: That’s gonna do it for us on MOT. You can reach us at 855-226-8551, or info@yourmoneyontap.com. If you have questions for Eric and Sarah, give us a call. I like the extended replacement, building ordinance and insurance, those are things I need to look into myself. I’m learning with you.

Seth: Thanks for joining us today, you've been listening to money on tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. In addition to the podcast—you can find us at any of the podcast venues out there—we appreciate the likes and the listens, and we’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We appreciate you joining us here today and we hope you make it a great day and a great life. Thanks for joining us for money on tap.

SUMMARY

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

What do you do when life’s great disasters strike, and you may not be prepared? Tune into this episode of Money on Tap to make sure that never happens to you. Ben and Seth, along with a special guest, Erik Morton, to outline exactly what you need to go over in your homeowner’s insurance plan to be fully covered should anything catch you off guard. Who knows, you could find that you’re eligible for buckets of money you may have not even known before!

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

MOT Show 143 (The Early Retirement Show)21741417

Seth: Welcome to Money on Tap. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. My name is Seth Krussman.

Ben: And I'm Ben Brayshaw.

Seth: So glad to have you aboard with us today.

Ben: Good to see you again, Seth?

Seth: Is it? The first time you said it, I felt so good.

Ben: Just jumping back. A week later, happy to be back on the show. We’re gonna rock it out today; I’m excited.

Seth: You have seen me since then, and you’ll see me again.

Ben: I see you every day.

Seth: Today is special because it’s MOT. We get to have some fun with what do all the time in our office, and that’s help our clients figure out and make retirement a reality. We talk about that so often, sometimes we forget to bring that to our show.

Ben: This is where we get to jump out of our skins of a planner and have some fun. I’m excited to do that today’s show because it is so relevant for so many Americans.

Seth: With that, do we have anything else that we want to chitchat about before we get going?

Ben: No, I think you should tell them what the show is.

Seth: Alright, there you go. You wanna retire early, your employer is offering you some kind of incenvit to retire early. Whichever one of those that it is, we’re gonna fiture out how to make it happen. This is your retire early show on MOT and go. MITN. First off, Italy is back on the front lines, or the headlines, for us today. Not the frontlines, because frontlines are the coronavirus, and this is not that. This is entirely different. It’s about Italy is a tax haven. The question is, is it the next tax haven? Arthur [inaudible] brought us a lovely article. It’s attempting to hash out this idea with us. It seems that maybe this is what you should be considering.

Ben: Seth, we’ve done a lot of shows on places to retire in the world, in the US, we’ve done all sorts of different things. People call us, hey, where should I be retiring? Is it Florida or Arizona? We’ve done stuff on that; we’ve talked to people about that. This is a different slant in this article, not worthy of a show, but worthy of a conversation. Italy has said, we’re gonna do a flat tax for anyone who wants to come live here. It’s $100k of their currency. I don’t know what the actual currency is on that. Currently, Italy’s tax rate is 43%. If you’re making half a million a year, if you own a business, you don’t want to give away 43% of your money, but now you’ve gotta clear $100k.

Seth: That’s the income generated outside of the country, right? If you have your income outside of Italy, it’s a flat $100k. 100 is still 1k, because it’s a Euro. 100k doesn’t change because it’s a dollar or euro, it’s still 100k. anyways, that 100k is capped. That could be a huge play if you have income outside of Italy, the income inside of Italy is the 43%. That’s pretty notable and high, but the great thing about this solution is, you can figure out a way to create your income outside of Italy and cap that tax rate, which could become incredibly low, compared to what you’re doing right now.

Ben: I kind of did some rough math, but you’re looking at – depending on what state you live in, if you have income tax or not, NH and OR are two states that don’t, which is kind of unique. If you live in these other states, like Taxachusetts, or any other, that’s kind of where you get hit. Somewhere between 275k or 300k, you’re breaking even.

Seth: What was that?

Ben: 275-300k of income, you’re breaking even to moving to Italy, almost.

Seth: I love it. It’s a dream come true.

Ben: For some. Right now, not necessarily.

Seth: I’m already like the last scene of Gladiator, floating through the fields of Italy with my hands across the wheat. Except I’m not dead.

Ben: Let’s jump past Gladiator here. The UK is interesting. They’ve had a lot of people moving from the UK to Italy, because with that scenario, Italy’s tax is basically almost half as well. People have been moving to Italy because that has become a tax haven.

Seth: I’d rather live in Italy than England, anyways.

Ben: I’m not sure I’d agree with that. I’ve been to England and I loved it.

Seth: But you love pizza too.

Ben: Yeah, sometimes. The article’s kind of interesting. It jumped into 12 other countries that have a 0% tax rate, including Monaco, St. Kitt’s, Nevice, they went to all these different things. What’s interesting about St. Kitt’s is all you have to do is have a minimum investment of 115k. Then you become a citizen, and you get access to 156 other countries. I’m not opposed to that, but it’s a little close to concerning countries off the shore of south America, but it seems to be safe enough. It’s definitely an option.

Seth: You’re not forced into going to these 156 countries. It’s not like they send you on a tour once you give them their deposit.

Ben: Then they talk about the United Emirates, Qatar, Oman. Some places, maybe, Kuwait. Not sure I want to live there, but it’s a 0% tax rate with no investment. It’s an interesting article, so if you’re looking for something like this—on September 14, 2020, they issued this article. Enjoy.

Seth: Well, folks, you probably haven’t heard this headline. Americans’ net worth grew in Q2 2020. Yes. In spite of coronavirus, in spite of a separation there. I’m trying to remember what the numbers were as far as employment. There was a lot of news that doesn’t in our minds say that the Q2 number should have grown. That’s exactly what happened. Samuel Steinburg brought us this info. It’s a tale of 2 Americans, the net worth rose nearly 7% of 2020 to 119 trillion.

Ben: That’s a trillion. 119 trillion. That’s crazy.

Seth: Yeah, it is.

Ben: That’s the increase. In the middle of a pandemic, the world is falling apart, people are screaming and dying, everyone doesn’t know what to do, and everyone’s net worth is growing 7% in 1 quarter.

Seth: Yes. In the same period, the amount of money in checking accounts grew by 33% to 1.8 trillion. Savings accounts grew from 1% to 11.2 trillion.

Ben: If you add those 2 numbers together, that’s half of our deficit. That’s how big that is. It tells you how much people have cut spending, and what you can do running a household. This is a financial planner’s dream. This is music to our ears when we hear this. You’re saving a ton of money, this is great. You don’t need anymore income.

Seth: We told you that you could do it!

Ben: That’s interesting and exciting for a lot of people. It also is hats off to a lot of scenarios. It went through the fact that there’s been a huge amount of cutting in the spending. Various nationalities had cut spending by 50-70% across the country in fear of job losses or because of job losses. Stimulus packages helped a lot of those and that was very interesting information. To be able to cut your expenses by 70%--that’s amazing. We did some cutting.

Seth: Congratulations, America. You tightened that belt. They said it couldn’t be done. Everybody out there said no way are Americans going to tighten the belt. It’s like cat’s out of the bag because we’re a nation of consumerism. You proved me, you proved them wrong. I didn’t think that was possible.

Ben: the stock portfolios during that same time period, April-June, grew to 5.7 trillion, according to the report. Values grew by 500 billion. These are astronomical numbers, and it’s pretty impressive about what’s gone on here, and we’ve done a lot of advice inside of how to save. We’ve done a lot of shows on that. It tells you what people can really do, and if you’re not in this group, know that it can be done, and that is something that with some work and fort, people can do with a lot less than people feel like we need, or told that we need.

Seth: That’s gonna do it for MITN. You’re listening to MOT. You can reach us at 855-226-8551 or info@yiurmoneyontap.com. When we come back, we’re going to be talking about how to retire early. Yeah. It’s the show you’ve been waiting for and asking us for. We do this all day with our clients, helping them get to this place where retirement is a reality. It’s what’s on MOT today. We’ll be right back.

Ben: Hi, my name is Ben Brayshaw, one of the co-hosts of Money on Tap. If you have questions when it comes to your retirement, and you’re looking for a personalized solution, contact us at Brayshaw Financial Group. In today’s volatile stock market, we can help you plan to find your successful retirement solution. Am I saving enough? Am I saving into the right places? Do my investments match my appetite for risk? Do I have a tax strategy that’s going to help me keep more of what I earn? How can I maximize my SSI? If you’re like most people, you are getting closer and closer to your retirement, and maybe wondering if you’re taking the right steps. If you’re in retirement, you may be wondering, am I maximizing my income while preserving my estate and caring for my family? We talk about all things financial, and what we call 3-dimensional investing, putting a plan around your financial future. If you feel that now is the time to start getting answers to some of these questions for your own situation, give us a call at Brayshaw Financial, at 855-226-8551. Headquartered in Bedford, NH, we have offices throughout New England, and across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation just to meet with us. We welcome you to our office. Call us at 855-226-8551.

Seth: Welcome back, you’re listening to MOT. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Today we are excited to be able to bring to you a show that is fun for us, because it’s an outside of the box approach. Retirement could be something pushed up in the timeline. Normally, when people bring us finances and start asking us to start solving for retirement, at some point in time, we have to establish what that age could be, potentially. A lot of the time, people wanna correlate that when SS kicks in, or is pretty close in that corridor. Usually we’re talking 60-70. 60s, usually, the front end. 59 ½ would be about the earliest that people start putting that in the timeline. We call it 60, right? 59 ½ is because of qualified distributions and the rules around that. It’s a retirement corridor. We start solving for income at this time. Today we’re talking about moving that timeline forward. That could be as early as 50. I think that’s about the earliest that we typically start having this conversation, or seeing people have this conversation with us. What if, or could I? That’s what we’re gonna be talking about today. If that’s you, or if that’s close in your horizon, you want to pay attention, mostly to what Ben’s gonna say. He brings the meat of the show. There’s gonna be nuances here that you haven’t considered. Considering the factors in here, accounting for them is one of the important pieces to being successful at this. You don’t wanna jump on a vacation to—for you, Ben, it’s Bermuda. That’s the spot. For us on the west coast, we’re going to Hawaii. Someplace warm. You don’t wanna jump into that and realize you didn’t bring your suitcase. You didn’t plan at all.

Ben: I think early retirement has definitely gotten more of a tap in the shoulder recently than most of the time in the past. We meet people constantly who say, I wanna retire at 50-55. I don’t get a lot in the 40s, but once in a while I do. We start to craft and so forth. Some of those are big buyouts from tech companies and whatnot. More recently with the pandemic scenario, there’s been a lot of offers by corporations for some sort of early retirement incentive. That’s going to people who are under the 59 ½ age, as Seth mentioned. Traditionally, people are looking at 60 as an early retirement because they want to avoid the 10% tax penalty for taking money out of their retirement funds before they’re 59 ½, which is the tax law. When you have an IRA, you have tax distributions, but when you’re 59 ½, you have to pay a 10% penalty. There’s a few things we’ve talked about in the past on this show, doing a 72T, a 72Q. these have to do with early distributions prior to 59 ½, and that’s for qualified and nonqualified assets. 79T, which is qualified assets, you can take money out of your account prior to 59 ½ and not pay a tax penalty, has been pretty much the mainstay for a lot of people. That’s because you have to tax income. You take income over equal payments. What that means is there’s a calculation that the IRS does, or you have done, that the IRS has given us. Your CPA usually does this, and they’ll calculate an equal payment system from the age you are to the infinity of spending the money. You have to keep that payment equal until you turn 59 1/2. You have to choose to take this payment. That’s what everyone’s done planning around, and 72Q has very similar rules, but it’s for nonqualified assets, or assets that you invested after you were taxed on it. You took that money, put it into a savings account, and put it into a nuity. You can do the 72Q with that. You have to do the exact same thing to avoid the 10% penalty that the IRS has on those funds. That’s been what we’ve done, but recently, with the CARES act, we’ve had a bunch of changes.

Seth: What was the CARES act? How do you qualify? CARES act was passed in order to allow hardships right now that we could be experiencing to grant access to qualified money, that 401k money, that IRA money. If you’re to take that out, prior to 59 ½, if you’re not using the 72 tier Q method, it would get you a 10% penalty, right out of the gate. What they’re saying is, they’re gonna do away with that. We’re gonna allow you access to your 401K, up to 100k for you to go and grab that, in the event that you have something that qualifies you to do this. Right now, you’ve got a stable job, let’s say. That doesn’t qualify you, but if you did happen to test positive or have a health incident, that would get you into this qualification to take up to 100k out of your 401K. There’s some guidance and some other pieces that you have to be paying attention to with this. Is it 100k to go do whatever you want with? Is it tax-free? All these other considerations here. The answers to these are A) no, it’s not tax-free. However, you can break that 100k up, or whatever it is you take, you can break that taxability into 3 years. It’s still, depending on where you’re at in your circumstance, it could still put you into a taxable scenario that doesn’t look favorable for you. That’s one of the first considerations that you want to understand there. We’re not gonna get into all of the qualifiers, here. There’s a list of what you could qualify, or what could get you into the qualification corridor. The point that’s of most importance here is that you’re not gonna get the 10% penalty for an early withdrawal there.

Ben: Seth, I read these qualification exemptions, and it’s pretty broad. It’s not like you had to lose your job, it’s like a job offer was rescinded, you were furloughed, you lost income…it’d be hard for you to not qualify. I think everyone has had a business interruption here from COVID. I can’t imagine you can’t say you haven’t. You’d be hard pressed to say COVID didn’t impact your business. We lost productivity because we couldn’t get employees to the office, and our income dropped 3%. There’s still an impact there. There’s a lot of opportunity to create that. I read those rules as having huge breadth of opportunity for people. I was thinking about this and saying, husband and wife, married, wife doesn’t have a retirement plan, husband does, they’ve had financial impact, we can take out 100k from his retirement pan. If she loses her job, it’s an opportunity to take money out. It’s 100k per person, which is interesting as well.

Seth: So you could have 200k in hand this year. It’s your money, out of your 401k, waiting to access. You could get up to 200k per household, basically. Does that make sense for you? That’s the thing you have to consider. What is it that you need, are you trying to access cash because you can? You want a vacation? Or you want a new car? You potentially can do that, right?

Ben: There’s no requirement on how to spend the money. If you’re impacted by COVID, you can buy a Lexus or BMW, have fun. A lot of people are doing that, by the way.

Seth: The point is, we’re talking about an early retirement. That might look like retirement for you. That might be your first call, buying that car, getting to the place you’ve always been dreaming of. Great, we now have freed up capital that would’ve had some penalties prior, so we know that we’ve got this new pool of money that’s available for us to try to create income. Question for you, Ben. Let’s say that you’re not in an early retirement scenario, and you lost your job for a week, whatever the situation is. Would you say that this is a place where someone could go and maybe pay off their mortgage, if they were wanting to do something like that?

Ben: That’s a deep question, Seth. You’re trying to put me out there, dangle off the edge of a tree, of a cliff. The thing is, with all the different moving parts here, we can never say, yeah, go do this. What’s interesting about this 100k is it’s automatically taxed over the next 3 years, which is very interesting. You can spread out this tax bunny. The problem is, in 2020, if you’re just getting a furlough notice today, if you’re an airline pilot and they say, we still don’t have any flights and we have to furlough you because we’re not getting any money from the govt. That’s a real problem, and they may say, you may wanna push that to 2021, because if you’re not working in 2021, maybe that’s a great time to keep your taxes down. If you’re married filing jointly and you’re under that 80k threshold, you’ll only be in the 12% income tax bracket. Once you go over the 80k, that’s a 22% tax bracket. It’s a huge jump. Something to be cognizant of in that area, breaking it out over 3 years, if you can keep yourself under that 80k threshold, married filing jointly, spreading the tax out, might actually be a great move. It’s also a good move If you think you’re going to be in a higher tax bracket than 12% and you can muster some out. A lot of people say, I have money in savings, and I’ll spend that. If that’s gonna provide for your short-term income, and you’ve got space between what you’ve earned, and 80k on that joint side, it’s good to pull a little money out and pay that 12%. That might be something to talk to your CPA about. Something I’d consider, because 12% is a low tax bracket. Pay your house off, Seth? Not a lot of people owe 100k on their house, so that might not be enough to get you there. Was that a good non-answer for you?

Seth: It was perfect, yeah. That looks like a smart money move for a lot of people. That’s a goal, right, let’s get that mortgage paid off. That’s one of the things that people—they say, hey, I wanna retire early, that’s one of the conversations we have: is that what you’re gonna do with that money? The question and answer is it depends. You look and try to figure out, what’s the risk, what’s the opportunity and how do you manage it? With that, we’re gonna come back. You’re listening to MOT. You can reach us at 855-226-8551 or info@yourmoneyontap.com. We really just wanted to cover the CARES act and money that you didn’t have available prior to this year, now they are, so they’re part of the consideration of this question of how can I retire early? Do I retire early? There’s gonna be a lot more coming your way. We’ll be right back. You’re listening to MOT. Hi, my name is Seth Krussman, partner with Brayshaw Financial Group, and one of the cohosts of Money on Tap. One of the biggest concerns and largest expenses people face today is taxes. Without thoughtful planning, taxes can destroy future retirement dollars, eliminating the possibility of a timely retirement, or dreams of what you want retirement to look like. If you’re like most people, you’re maybe wondering if you’re taking the right steps. Will my income be enough? Will my rising taxes force me to give up my dreams? How does inflation factor into all of this? These are real concerns, and you’re not alone. Putting a plan around your financial future is what we do. If you have questions when it comes to your financial security, and if you’re looking for a personalized solution, contact us at Brayshaw Financial Group. 855-226-8551. It’s time for you to start getting answers to your questions. Headquartered in Bedford, New Hampshire, Brayshaw Financial has offices across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation to meet with us. Call us at 855-226-8551. Now back to Money on Tap, with Ben and Seth. Welcome back, you are listening to Money on Tap. You can reach us at 855-226-8551, or info@yourmoneyontap.com. Now back to MOT with Ben and Seth. Welcome back, you’re listening to MOT. You can reach us at 855-226-8551, or info@yourmoneyontap.com. We are talking about early retirement today. We kind of dove off into this CARES act in the last segment because it’s a factor out there that so many people are bringing to the table today, and asking us, is this something I should do? It's pretty much the opportunity for anybody to take advantage of that is pretty wide. They’re giving a wide birth of that CARES act to you, to access up to 100k, and waiving the 20% holdback that would typically be there in your 401K.

Ben: People don’t realize when they’re taking a distribution from their 401k that it’s early and it’s going to be penalized. There’s a 10% IRS penalty, there’s a 20% tax withholding, and you’ve gotta pay income tax on that. You’re not seeing more than half of that money at the very best. If you take 100k out, you’re gonna see 50k at the highest, usually. That’s complicated. One of the things that I wanted to tie together, between the CARES act and the concept of the 72T that we talked about earlier…kind of a couple of moving parts with taxes…the longer you wait to start your 72T, the higher your income is going to be. That’s something you need to understand first. If you start your 72T now, you’re gonna shoot yourself in the foot if you can take 100k out and start over in a year or two. We’re not talking significant dollar difference, but when you’re talking year over year, this one time opportunity, and you can spread the tax bite over 3 years, it could delay you in a year or 2, which might get you to a better retirement number, and allow the rest of the money to grow. You’re obviously taking 100k out of it, so that’s gonna pull it back. The other thing is, if you’re married filing jointly and you and your spouse lost your jobs, and you’ve got 60k of income, we talked about 80k being the max bracket area…you could take 60k out of your retirement plan, and spread that 20k out in the next 2 years. That would take your 60k to 80k. you’d have 20k, 1/3 of that. Doing this smart could be an option for you, just to reduce the amount of money. Maybe you could live on 60k and that works for you guys. Getting money out of your retirement plan and not knowing what next year looks like, could be a good deal. You’re also taking the chance, what does next year look like, or the year after. If you both land new jobs and things are looking good, you could pay this money back. That’s pretty cool. You could say, I can pay some of this back. That’s a really good opportunity to consider. A 3-year decision that’s gonna affect your taxes is a pretty serious choice. I think there’s a couple moving parts there. I know we’re getting in the weeds here. Give us a call, this is what we do, we can help you through this.

Seth: Walking through the mind of a financial planner is the order of operations. I’m going yeah, checking boxes. I feel for you right now, if you’re listening to us and going oh my gosh, what are these guys doing? It’s a safe place. We’re just trying to mitigate some options, and don’t worry if you don’t get this right out of the gate. That’s what we’re here for. We’re here to help, but these are some of the considerations that you need to pay attention to.

Ben: You’re so right. If you hear this 3 or 4 times, it’s gonna take time to understand what we’re talking about. Getting 1 round is a good thing, calling us is round 2. For some people, the biggest issue here is that there’s a couple of unknowns. You might be employed, need some assistance in this, but your employer might not be allowing COVID-related distribution options. The CARES act could be existing, but you could still be employed, and their retirement plan is not allowing that. One thing we’ve talked to people about is that you could jump into the other hardship categories and see if you can’t pay your mortgage, or if it’s impacting those things, you could make a claim against that. Some of those things that are hardships can be mustered together if you have a hardship going on. That’s something I would throw out there.

Seth: Anything else with the CARES act?

Ben: Keep going. I think there’s a lot here. We’re not gonna get through all of it.

Seth: We’re gonna run out of time, as normal. We’re gonna bring another show to you. Back into this is more facts and figures. The fun stuff, right? What is this gonna do? How could this work for you? First of all, we’re gonna run the numbers. First step in deciding whether to take early retirement is to see. Do you have enough assets under the hood? Can you support your lifestyle? Figure that out. What do you want? Life expectancies, that’s something we’ve gotta calculate for. We talked about this corridor of retirement. We’re moving that forward, so we possibly have another gap of time that we’re having to account for supporting you. We’ve gotta figure out, how much can we access early on? That’s the CARES act, that’s 72 possibly, for getting some of that on the table. The rest of this mix is based early on for nonqualified assets. How have you structured your life in a way to allow this to happen? What do we have under the hood? Another factor that you might have here is your current employer, or possibly, soon to be, ex employer, might be offering you a buyout. Hey, you’re employed here today, but here’s something we want you to consider: a lump sum of cash, okay? With some other incentives here. We might carry your health insurance that you have here with us for the next year, 2 years, whatever those factors are. There’s a package that they’re willing to offer you to move on, okay? That’s amazing if you have that, because that could look like some – not free money because there’s a tax bite that’s gonna happen – but there might be ways to parse that out, spread that out, that might be part of the offer. We’re gonna consider those packages when they come in. whether or not you love your job, you probably need to think about this, because that may not be there the next time. There’s no reason for them—they’re not forced into a situation to give you some kind of a package for letting you go.

Ben: This is a wonderful thing to be offered by an employer and it’s something to be considered seriously. For a lot of people they say, if I get this package, how long can I pay my mortgage, I have savings, I’ve got 8 months of money to survive, and what do I do if I can’t find a job? The other question is do I just stay where I’m at, milk this for as long as I can…the real fear is that there may not be a second offer, and you could be laid off in a shorter time period, the incentive might carry you out. One client of mine had 2 weeks for every year he had worked, and it was up to 1 year of money. He had a year of incentive. He was like, I could stay here, but I could be laid off in 3 months. It’s a big deal. It’s funny, in reading up on this, we’ve been researching, putting this together, I was reading one spot—people have taken these incentive plans and within a few weeks they had another job. It’s a massive bonus for them, coming and going. The other thing is that people are taking jobs and starting up careers that they’ve only dreamed of, or – I have some people that are brilliant tech clients. Brilliant. So smart they don’t even realize they’re smart, they just know they’re different. They’re like, this is just what I do. They’re just straight-up brilliant. One guy is just like, I’ve been grinding this, it’s taxing me mentally. He’s just burnt out, and he’s like, I wanna get a job at Starbucks. He has all the money to do that, you could retire doing that, go have fun.

Seth: Next to Disneyland, it’s the happiest place on earth.

Ben: That type of opportunity, but there’s a lot of people doing consulting, starting their own businesses…they don’t need to make the same amount of money they used to make. This pandemic has made a lot of people come down to earth and say, I don’t need a lot of the stuff I had.

Seth: I’ve seen a lot of people with the intel crowd over here in Hillsborough, this is something they roll out regularly. We’ve had clients take a pass on the first time that they were ever in the corridor that they were offered this. They were young in their career, still. The next round that came around was 3-4 years down the road, now this is something that made a lot of sense. They didn’t know. 3-4 more years of intel may not pan out the way they’re hoping, or they’re just done. They get the offer, they take a 6-month break, and they’re retired, we figured that out for them. They get a call, or several calls, saying, hey, we got this team over here, and they really could use some help, and we’re not gonna bring you back on the intel hub, you’re gonna be a consultant. Those consultants make far more than what they were previously employed at. That’s what’s happened 50% of the time, if not more. That’s a safe number.

Ben: Sure, why not. Most stats are made up. You’re right, and they don’t have to worry about incentives to get people out of there, they don’t have to worry about unemployment, taxes. There’s a lot of reasons why they do that. This is interesting because we have a number of people that are looking at early retirement. I mentioned one person who wants to take a step back. It’s an intentional step back. I had one guy tell me, I’m gonna have a new job. I’m getting this incentive package, I’m taking it. It’s like 15k jobs out there for my specific skill set. I could have a job with a phone call, so I’m not worried about that. People are taking intentional breaks. Some people, I’m thinking of one woman, that is just driven, capable, super brilliant, she’s gonna take a break, and she’s gonna have another job. She’s just like, there’ll be another one right around the corner. Those types of things are awesome, and there’s a lot to this and this type of event. It’s more so, the point of this show is that there’s more of that going on because of all that’s happening. We know this information is available.

Seth: You’re listening to MOT, you can reach us at 855-226-8551 or info@yourmoneyontap.com. we’re gonna be heading down, landing the plane on your early retirement show. One of the things we haven’t talked about—we’ve talked about CARES act, 72T, we’ve been compiling this info that’s out there and accessible for us to consider—how are we going to retire early? All of those things built around income. That’s the solve that we have to drive towards. Taking into account all of the factors: lifestyle, expenses, you’ve got the hard and soft costs, you’ve got all these other questions. At the end of the day, we’re gonna replace that paycheck and we’re gonna create something that was not going to go away before the end of your life. You might have another opportunity in the job environment. You might not—even though you have those opportunities, you may not be interested in addressing that, or considering that. Whatever it is for you, we’ve got solve for income. Regardless, we’re gonna help figure that out, and we wanna do that with as much info as possible. Do you have any pensions? These are places we’re gonna look for more solves for us. Severance payments? They’re great, that’s a good start, but that may not get us there. We might have a gap. The pre-retirement plans, such as your 401K and your IRA, these might be places that we can take a look at that CARES act and distribution. The 72T, or the 72Q, something to consider, what is that?

Ben: We talked about taking that equal and subsequent payment, we talked about delaying it if you’re gonna take a distribution, the CARES act opportunity here and so forth, but the one thing that’s like the buyer beware concept, the thing you should really be careful of here is once you start the 72T, you can’t stop it. If you did find a new job and you started the 72T, you’d be stuck taking that income throughout all the remaining years on top of your current income. That could pop you into another tax bracket, all different concerns here. This isn’t something to go into lightheartedly. You need to have a good handle on budgeting your finances when you do something like this. We’ve managed through this with clients, pros, and cons, we’ve looked at making alternate contributions to create deductions in their taxes and whatnot, if all of a sudden, a great job comes along. You’re gonna be negotiating this fact, I’m already retired, I’ve set up things, and it’s gonna cost me to come out of retirement. If you’re someone somebody’s looking for, it can become a negotiation factor. 72T is something you can’t stop. Going into this, this sis something you need a planner behind you with, because it’s a very specific number, it needs to be controlled, and there needs to be a lot of offset behind you to deal with a lot of issues. You can’t say hey, I took my 72T and you know what? All my money’s in my retirement and I need 25k because my boiler just went. I’ve gotta fix the roof on my house, you can’t do it. It doesn’t work that way. This is a real serious issue.

Seth: Ideally, you don’t have everything that you own locked up in a couple places. Those 2 places that we want to safeguard are A) your home, and a lot of people consider the home an asset. They look at the value of that home, what the level of the mortgage is at, they wanna pay off that mortgage. We understand that’s a cash flow scenario, and it’s also a security scenario. No matter what, they’re gonna have this as an asset. That’s an asset that’s locked up. You don’t have access, there’s no fluidity to that asset in solving for income. There’s a couple ideas that we bring to the table. We want to consider; do you have a home equity line of credit. Not an ideal solution, but it’s something that offers a back of some access to that asset if you need it. It’s a precaution. The other place we talked about is into those retirement plans. The IRAs, the 401ks, and we already described that. Outside of those 2 places, what are other options you have in creating income? I’m gonna go back to that real estate solution. If you have rentals or other properties prior to this position—this isn’t just a jump in, start creating income off of real estate. At this point in time, you should have planned through that, you understand that resource and how to use it, and how that flows through in your taxes. The other place is in your nonqualified assets. Nonqualified assets are those outside of the 401k, the IRA, do you have cash value life insurance? Is that some place where you’ve got some liquidity and tax free lendability? There’s the beer on bank concept. We can use that life insurance to subsidize, or possibly, you’ve got options to go ahead and turn on a stream of income on those, depending on cash value and life insurance that you have, that might be a solution.

Ben: One thing about real estate, people have been paying down the real estate income and not getting any other income, even though it’s a little bit, to slap on the mortgage. Now they’ve stopped doing that and they’re taking in a few hundred bucks a month, and it’s not a huge cash flow. I’ve seen people refinance those properties to lower their payments, which is interesting, to create more cash flow inside the property. They’re still paying it down and they’ve refinanced what their current debt is. It drags it out, but it’s a clever way of offsetting that issue.

Seth: Another unqualified asset is do you own any stocks or have any brokerage accounts? Do you own anything in the market that can have some tax preferential treatment in the liquidation process? Can we take a look at long term capital gains, or take a look at some losses? Do we have any levers out there available for us to work through, especially as we get from 2020 into that 2021 corridor. That transition of income into sustaining yourself into retirement accounts, real estate, any cash flow vehicles that we have access to.

Ben: Yeah, it’s a long laundry list of opportunities. What I’ve always found is that the majority of the time, when we build plans and we work with people, they say, I never saw it that way. That makes more sense. Those are common phrases that we hear with people when they realize how to manipulate the money to work for them, even in distributions, like the 72T concept. Refinancing the piece of real estate, or we’ve talked to people about it, we’ve have shows about it. Annuitizing an annuity to an unqualified side to create principle to come out, so it’s not all entirely taxable. People don’t realize because it’s not about how much you take out; it’s how much you get to keep. When you get your hands on that, that’s where planning changes and that’s where the competition’s totally different. That’s how you manipulate money to work for you.

Seth: Thanks for joining us today, you've been listening to money on tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. In addition to the podcast—you can find us at any of the podcast venues out there—we appreciate the likes and the listens, and we’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We appreciate you joining us here today and we hope you make it a great day and a great life. Thanks for joining us for money on tap.

SUMMARY

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

Ever thought about retiring early? Ben and Seth break it down for any early birds out there, wondering just how feasible it may be for you to have the retirement of your dreams. That could include working at a dream job, looking out at the beach every day, or even investing in real estate! Whatever your dreams and goals for retirement are, you could potentially reach them early just by harvesting a few tips and tricks from this episode of Money on Tap.

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

MOT Show 142 2020-09-15 21685632 Ten Steps to Creating a Better Budget

Seth: Welcome to Money on Tap. Money on Tap, your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-dimensional investing, utilizing insurance brokerage and fee-based planning, that's what we do on this show. We look at all sides of the issues and we bring a fully independent planning perspective to the table. Welcome to Money on Tap. We're so glad to have you aboard today. My name is Seth Krussman.

Ben: And I'm Ben Brayshaw.

Seth: Welcome it is one of those shows—

Ben: We're going to probably tick some people off—

Seth: Yes and that's the goal, alright? We're gonna agitate you and frustrate you, and you're gonna learn something today, by golly! If you live in Portland here where I do, or just outside of—your world is burning down around you.

Ben: You mean that communist country on the West coast?

Seth: Yes, the one right next to Idaho, you're right! Who knew you could have two polar opposites close to each other and Oregonians say it's hilarious. My friends over in Baker City are talking about seceding from Oregon and trying to carve off that whole section of Oregon and go join Idaho, I'm there with you.

Ben: There you go. Hey, you know what? I just feel bad that they're so upset out there. It’s just going to burn everything down on us.

Seth: I haven't heard anything in the news about protests for a while, have you?

Ben: Is that what we call them now, protests?

Seth: Riots. I meant riots.

Ben: I thought we called it arson.

Seth: Felonies are free. Just go ahead and rack ‘em up, no one cares.

Ben: I'm on the East Coast and I'm very thankful to my good Lord for that every day.

Seth: The right coast. Ben, it always reminds me of us because you love finance. If you want to make a dent in your finance, if you’re looking to make some right moves, we’re going to talk about that. We’re going to get there, but you can reach us at 855-226-8551 or info@yourmoneyontap.com. We’ll say that a few more times.

Ben: Today, one of the topics we have are the 10 steps to creating a budget, okay? It’s not going to make everyone super happy, but we have some topics around there that will probably bring some riling into the world around you, but up next, we have Money in the News.

Seth: Yes, I couldn’t have said that better myself, Ben. It’s a very good topic, but before we get there, Jim Cramer says, what if we get a stimulus package and you're out of the market? You will feel awful. Stay put if there is a stimulus package, is what Jim Cramer is saying. He feels that the package will be very hard to get but if we do get it, you can’t be out of the market.

Ben: He’s dead on, I mean, I don’t say that often, but he’s dead on for a number of different reasons. We’ve seen the market rise, he talked about this week after week after week. We’ve seen the market rise a lot, and that is money moving out of the bond market into the equity space, buying stocks each and every day, which has forced these number which is why we've seen all-time highs again in a number of indexes. Yeah, we’re in a slump coming out of September but he’s right, the stimulus package is driving a lot of things. They were talking about the savings that’s going on with people not traveling in Canada and the US, the amount of money that’s pouring into people’s pockets that they’re not spending. That’s creating opportunity for investments. The bond market is moving to the equity space and looking for yield. We have foreign assets coming into the US bond market because they have negative yields outside the US. He’s right—if we get a stimulus package, this is just adding gasoline to the fire. I think it flames hard. How many times have we said we think the DJI hits $30,000 fourth quarter, or first quarter next year? We’ve been talking about that since before the pandemic. It’s been set up. Rates have been dropping all along, feds have been tampering with is and now they’ve sent them all the way south. It’s going to force people to find returns. He’s right on.

Seth: So does it matter if it's 1.5 trillion or 2 trillion?

Ben: It's just a rounding error in my head—

Seth: Sounds like let's just call it 3 and call it a day, folks. And why not, what’s another trillion in there?

Ben: What’s another increase of our entire higher debt by 10% in another month?

Seth: That’s gonna happen eventually anyways. I’m just gonna go ahead and fold on this hand, but I agree with what you’re saying. There’s too much money coming into the market here already, really, it does look like there’s another swath of change coming our way.

Ben: Well, this is an article that lights a little fire under me—the NFL. I don’t know how many people are watching the NFL, but I can tell you I know exactly how many people are not watching the NFL, that’s what’s interesting. Is it Yahoo Sports? I had to do this because there’s so much money around Yahoo. You hear about the Penn gaming stocks, the draft kings and all the gambling stocks out there that people are buying into. That whole realm around what the sports industry is doing—man, does the sports industry get hammered with how many people aren’t watching. It’s crazy to me because you think all these other gaming stocks are where everyone is saying the money’s going to go, but there’s literally massive returns of people not watching. Last week there was the Brady-New Orleans playoff, which are the largest watch games in history since 2016. I think that’s just because Brady moved for the Patriots. It’s a big deal, there’s lots of things going on but it’s all about Sunday Night Football, folks. The real issues hit the fan because this last Sunday night, the Cowboys played the Rams. Two of the largest teams with the largest followings in the NFL on a Sunday Night. Year after year, they saw over a 30% decline in viewership. It’s like 33%.

Seth: It’s hard to put your finger on it. What are we saying? What are the factors in here that are turning us away? I will say us because I have been one of those people that just can’t stand watching. One of my favorite things in the world to do is to just take an hour or two, not much out of the week, it’s just an hour or two, to watch football. There’s something about it that I just love. I’m a fan! But I cannot stand watching the kneeling, the names on the jerseys, or the logos on the jerseys. It’s just too much for me to just stand by and say, yeah, that’s okay.

Ben: What about the article about the one basketball player that stood against his entire team because his dad was in the military? He refused to kneel, and they sold more of his jerseys than anyone else’s jersey. It was some sort of statistic it was ridiculous how many jerseys they sold. This is a real issue for the NFL. Honestly, I’ve been playing fantasy football, watching NFL games constantly. I follow this stuff. This year my entire fantasy football league didn’t do it. That’s like 12 people out. Gone, not playing fantasy football. I did watch a little of the Pats vs. Bucks game with Tom Brady. My son turned it on, and we were curious at what it looked like, but we didn’t watch that much because I don’t really care, I have no interest in watching any other football. I have no plan to watch football because I just find it so absurd that they’re that naïve, it’s a massive spit in the face to Americans across the country and I’m proud of Americans who aren’t watching and boycotting this.

Seth: Amen. You’re bringing out both of my hands, they’re up and waving, singing a song about it. That’s all really, I mean, what else do you have to say? This is money in the news, we’re talking, we’re getting there and that’s a big factor as to what it breaks out, in terms of finances of these programs, finances of the TV networks, and it’ll be interesting to see what kind of money moves the dial here.

Ben: Well the NFL will be taken indeed but the name will be begging us to come back. That’s really what it’s going to be because it’s ridiculous what these people make.

Seth: Yes, it is, and I think that’s gonna bring us into the one article there. I just shake my head; I really don’t know where to go with it because it’s such a huge factor for so many people and there’s underlying conversations on topics. There’s a whole show here, but we’ll try to do it justice. This is from Wall Street Journal: the factory workers stay home to watch their children. Right now absentee rates for many US factories remain elevated as COVID drags on, and you can’t leave a 6-year old at home alone.

Ben: Yeah this is really close to home for us, right? We’ve talked about this on the show and what’s going on and so forth, but we were mandated to remain open. It was interesting because we have a number of employees and they have children, and they were sent home and we ended basically having our employees bring their children to work and rotate teaching in the conference rooms. We had a whole schedule and we figured out how to make it work. It was great. I was talking to somebody the other day about how I got to know some of my employee’s children really well. We were buying DQ on Friday afternoons and having a good time. The kids are hilarious and now I know more about my employees and their families than I ever know. You ask about soccer games and how they’re doing and what’s going on, and it’s a real interest. I really know their children now which is kind of neat. What these factories are doing is exactly that, but on a much higher level, which is really amazing. They’re actually hiring teachers to come in and either care for the children in daycare, or teach the children their classes, so they’re bringing the school to the factory. They’re bringing the daycare to the factories because the daycares are being limited based on the number of kids they can have. Factories are saying, bring them here, we need you to work. This is crazy.

Seth: These are considered essential services. And that's what we're talking about, what is deemed essential, what is deemed nonessential, and apparently the what seems to be that the currently—this is where I get wrapped around the axle, no doubt. Our country's kids and their education is not essential.

Ben: yeah, this is wrong, I mean, this is straight up wrong. I'm sure it has more to do with the teachers union then it has to do with the teachers, but somebody needs to step up and help these families. It's not about is the education of our children essential? Yeah, long term it is, and I think there's a hybrid here on some level, probably, that could work. The truth is, what about the single mom who is at home with a 6-year-old and has to provide for them and can't go to work? They have no one to help, where is that person really cared for? There's a real problem here, and I think our teachers need to boycott the teachers union and go to work. There's a number of them I've talked to who have said, yeah, I'm willing to be essential. I've been essential, I haven't been any different. People have been bagging groceries for six to eight months here, and they've been essential, willing to lose their life. Why would the teacher be any different? That's a real problem in our society, or people who are suffering, and there are teachers out there willing to work, and they are working via zoom. You know, the unions are mostly holding them, most of the private schools- my children, two of them, are in private school. They are going back five days a week. There's no problems. If you want to do remote, They set up cameras in the room so you can zoom right into the room too, if you want to do that, or if you get sick it's very fluid. My son goes to public school. What he does, he is remote. We've got 7 cases in the entire city, OK? None of them are in the hospital, and we don't even have a hybrid model. It's just pathetic, I'm just shocked by it, because the rest of the schools in the state are hybrid at least. It's really impacting people dramatically. They can't even go back to work for a couple days.

Seth: Yeah, you don't hear enough about these stories out there right now. I think that it's unfortunate, because I think that there is a real voice that needs to be brought to the table. That is the person that was making their life work today. It was in the greatest economy we've known, and they had it taken away from them, and I don't want to go out there and point fingers. That's not the point. We are not trying to say there's any group, any person, or any politician.

Ben: The teachers union. Yeah, I would, because they are the ones making the decisions and the unions have to follow suit. But the teachers could boycott the union and literally pick up the slack from some of these families by fighting back. The union is not always right.

Seth: True, they are such a powerful mover in terms of how the system works.

Ben: Right, but you know what, people don't get into teaching because they don't care, they get into teaching because they care too much. If they knew what was going on with some families in real life , in some situations, they are talking about child abuse and then all this stuff going on at home that isn't caught because teachers are the ones that catch that stuff , because they are so awesome. They need to step up and say, we are the protection mechanism for the family, in some ways. We need to get back in the classroom with these kids to influence our lives, because that's where they do it best. Not on zoom. People need help. That's when we need to jump out, we need to help out people.

Seth: That's going to do it for money in the news. We are going to come back with your budget show. We have 10 budgeting rules. I mean, we could go all day long on how to make a budget.

Ben: This is going to be a good budget show. This is the kind of budget show that you actually walk away, and you have real things to write down. If you get a piece of paper and listen to the podcast afterwards, you know this has real value.

Seth: Have we ever done a bad budget show? Or does that mean there's just not one out there yet? It's not going to happen today; it's not going to happen. You can reach us at 855-226-8551 or info@yourmoneyontap.com. you're listening to money on tap, we will be right back.

Ben: Hi, my name is Ben Brayshaw, one of the co-hosts of Money on Tap. If you have questions when it comes to your retirement, and you’re looking for a personalized solution, contact us at Brayshaw Financial Group. In today’s volatile stock market, we can help you plan to find your successful retirement solution. Am I saving enough? Am I saving into the right places? Do my investments match my appetite for risk? Do I have a tax strategy that’s going to help me keep more of what I earn? How can I maximize my SSI? If you’re like most people, you are getting closer and closer to your retirement, and maybe wondering if you’re taking the right steps. If you’re in retirement, you may be wondering, am I maximizing my income while preserving my estate and caring for my family? We talk about all things financial, and what we call 3-dimensional investing, putting a plan around your financial future. If you feel that now is the time to start getting answers to some of these questions for your own situation, give us a call at Brayshaw Financial, at 855-226-8551. Headquartered in Bedford, NH, we have offices throughout New England, and across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation just to meet with us. We welcome you to our office. Call us at 855-226-8551.

Seth: We're gonna jump right in, right here, right now. We are in the budget show, and everybody's got one, Whether you like to admit it or not.

Ben: Most people don't have a budget set; I'm just going to say.

Seth: Hey, you've got 1! You just don't realize it. Your budget is, I don't care, and that's your budget period or, your budget is super granular, and you know the price of cornflakes at the store across the way, and that's where you go to get your cornflakes.

Ben: If you splurge for corn flakes.

Seth: Yeah, not that Kellogg's brand-named cornflakes. No way, not in my house.

Ben: So here, we got 10. We got 10 steps to creating a budget and we want you to grab a piece of paper. We want you to re listen to this podcast. We want you to do this, we want you to do it right. We want you to do it well and budgets are for everyone, OK? Now, even if you don't assess correctly, even if you think you don't have a budget, or you're joking around, I have found that everyone has a budget, they just don't know that they have it. They know ballpark how much they should spend at the store. They know when they spend too much. They feel kind of guilty, those types of things are your mental numbers that are running through your head that everyone knows, and everyone knows when they're spending over their budget period, they may not have the exact dollar figure, but they know they have a number. That's the thing.

Seth: Yeah, we want you to have a budget. Also, we wouldn't even bring this to the table if it were not a noteworthy topic, but it is something that is essential for everybody in finance to have if you want to have a healthy, good relationship with your money. That's where it's going and that is what is happening. This is such a great show for you to get on track, grab it, make it your own, and I was going to just jump in with the first part of this. Let's set and understand your goals.

Ben: Number one, that's right. This is one of the things that people are either jumping into a budget , because of some major necessity, or something is going on in their life, or you're hearing this right now, today, saying you know what, he is right, I should do this to maximize something. We have four goals that we've pinpointed. We look at a lot of different information out there, and we usually say how we like this. A lot of people list out all sorts of goals. I think there are four, I have come up with the first one period you want to save more then you are spending. If you are saying, hey, I need a certain dollar amount for something that I need, it could be a new car, it could be a vacation, it could be anything. The second item is debt.

Seth: I like the last one: vacation.

Ben: The second was debt period whether it's your personal debt, you have an IRS issue, usually, someone says, I need to do a budget because I have this debt I have to deal with. that's pretty popular. It seems to be a number one item most of the time.

Seth: Yeah, a lot of people have conversations around this third one, Which is your cash flow. Without even understanding it, there's all sorts of areas that this really encompasses. There is a lot of stress, especially for couples coming together and trying to figure out how this works. There's cash flow stress. And my other favorite is retirement.

Ben: This would fall under savings, but it really is a separate category because of how many different ways there are to retire.

Seth: It would definitely fall under savings because I rarely see people retire without savings.

Ben: Well, it could be that they are doing real estate, or they are doing- it could be a retirement plan. It could be outside of their normal thing, because when we get to #2, which is not really my plan right this second, but #2 is to calculate and establish your net income. If you are putting away money for a retirement plan, you may look at your net income. That is what comes through the paycheck, an if you're putting money away directly into your form, that would not be part of your net income. That is after they take out all your taxes, that's the net. That's one of those things where retirement could be like, hey, you know what? I need to figure out how to save for retirement and not save for a specific current event.

Seth: Yeah, let's talk about that real quick. There's a gross in the net and people are really running off a gross number when trying to develop a budget. That is, hands down, one of the biggest mistakes people make. You're going to end up having a big shortfall, because you haven't factored some of those things that are mandatory expenses coming through, immediately off the top. That's where we talk about you need to have an income, and then after your income if you have a 401K, 403 B, that's coming off of the side of that, As well as your taxes. Security, there's all those other factors when you take a look at your paycheck. Your paycheck will tell you all of those things that have happened, and the number at the end of the day. That's the one you put into the bank account right now. Businesses are different because--you can run a business and you can take a paycheck from your business. I won't say that, but typically those are all other factors that you are aware of, and you're considering at the end of the day. You really have to do a little bit more due diligence around that net number, but if that's a struggle, We highly recommend that you have bookkeeping in place for that, Or a CPA, or a tax advisor that is really getting you some of those net numbers put together, so that you can take a look at the balance sheet, and how everything is working in your finances.

Ben: Yeah, I think when it comes to net income, calculating is not for a lot of people. It's just, hey, this is my paycheck that comes through, and a lot of people forget that there are five paychecks, basically, every quarter period there is one month that has five paychecks, if you are paid weekly. Understanding how that extra money comes through and managing it- I always encourage people to base everything off of a four-week income in your net income.

Seth: That's a great idea. It's kind of like you've got this windfall of a fifth week somehow.

Ben: I love that story for people. It's always a thing you never prepared for, that extra week seems to cover a lot of things.

Seth: #3, your expenses. all these are the core expenses, and the mandatory expenses that you are going to have period you are going to want to spend a fair amount of time on this. Does that mean you are going to research a little bit of this? You are going to realize as you go through this that maybe things have changed. Maybe what you thought was there before wasn't, so this is a great exercise on a regular basis, right? Take a look at that, so you're going to have your core expenses-

Ben: yeah, when it comes to the core in the mandatory plan, this is like food, clothing, shelter. this is not Netflix. When it comes to expenses, it's not Disney plus. These are core expenses to run your house, and this is a very important exercise. I would let someone include Internet, I probably wouldn't have 5 or 10 years ago, but now, yes.

Seth: Yeah, let's talk about that a little bit because there is some flexibility in some of these items. It is not your house you should change.

Ben: Your housing, your electric, your water, your sewer, right? Your food, your clothing- now, clothing, I'm talking, you need to buy underwear. We are not talking about, hey, listen, let's go to Marshalls or TJ Maxx, and buy a bunch of stuff on sale and save all this money. That is a horrendous way to manage this. This is core expenses, and the reason this is important, and the reason I'd consider Internet is because of all the education issues, you cannot do things without the Internet. I know here, locally, the Internet companies are allowing people to get Internet for free, for education purposes. If you don't have any, that has been offered to a lot of refugees, and so forth, that have been brought to our area. I think that's great. I think that's wonderful. They are doing that, but mandatory expenses are really important, because it will basically identify two things. The first thing is, if you take your net income and you subtract your absolute core mandatory expenses, you are going to have one of two things happen. You are either going to have enough money to pay your bills, more than enough, or you're not going to have enough. This is what we were talking about earlier period this defines a lot for people, and sadly, in a divorce , or separation, we have seen where everything is in excess, and all of a sudden, somebody's gone period now, the housing expenses, the food, the everything, it's gone. There is no access. You've got to have mandatory expenses, and at that point in time, that's where having a conversation with your friend, your family, someone like us, a financial planner, or somebody to evaluate what you have to do now to get yourself to the point where there is no shortage . That is when you calculate mandatory expenses against what your net income is.

Seth: One of the things that I was going to say is, there are great programs that a lot of churches offer. a lot of them offer programs for getting out of debt, the components that we are talking about are there, but I am not necessarily advocating that you go do the Dave Ramsey show program. What I want to talk about is outside of that and I know some great people that plug in at their churches, to be there to help, to run questions by, to work through these scenarios, and I can't tell you how many wonderful people there are connected with our church that do just that, out of their heart. They want to help people figure out how to operate a budget and get into some of these factors that are questionable, or the points inside of the core expenses and what does it look like to work through a budget, so for what it's worth-

Ben: I think our issue here is if you look, you have a shortage. That is when you need someone to really help you, and that's probably the time you just need to be humble and vulnerable, and just say, listen, this is what's happened. I need - would you give me a little bit of time to help me get some perspective on this? Do you know anybody? I need a new place to live, it's too expensive where I'm at period I don't have a second income to support that. That's usually what I see happen, from time to time period I also see where a husband makes a lot of money, that person leaves, and this spouses left without making a lot of money, with children. They don't have the income to support anything near the food they need. It's a very difficult scenario to deal with, but once you get to that access space where your net income in your pure core expenses to live, you're in a positive moment. This is the third, moving into the 4th step. This is when you start setting your financial goals. The reason you started the budget to begin with happened when you said hey, this is what we want to accomplish.

Seth: That is the crux of it, I would say. We’re getting back into this idea of the goal, right? How to create a goal, how to make that stick, and before we get there, we’re going to take a quick break. You’re listening to Money on Tap. You can reach us at 855-226-8551. And if you’re smart, you will stick around for the next part on goals. Thanks for listening to Money on Tap, we’ll be right back. Hi, my name is Seth Krussman, partner with Brayshaw Financial Group, and one of the cohosts of Money on Tap. One of the biggest concerns and largest expenses people face today is taxes. Without thoughtful planning, taxes can destroy future retirement dollars, eliminating the possibility of a timely retirement, or dreams of what you want retirement to look like. If you’re like most people, you’re maybe wondering if you’re taking the right steps. Will my income be enough? Will my rising taxes force me to give up my dreams? How does inflation factor into all of this? These are real concerns, and you’re not alone. Putting a plan around your financial future is what we do. If you have questions when it comes to your financial security, and if you’re looking for a personalized solution, contact us at Brayshaw Financial Group. 855-226-8551. It’s time for you to start getting answers to your questions. Headquartered in Bedford, New Hampshire, Brayshaw Financial has offices across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation to meet with us. Call us at 855-226-8551. Now back to Money on Tap, with Ben and Seth. Welcome back, you are listening to Money on Tap. You can reach us at 855-226-8551, or info@yourmoneyontap.com. We’re talking about building a budget. 10 steps that you’ve gotta have; you’ve gotta do it, and you want to do it because you’re going to have goals. That’s why you want to budget. It really helps you to get to your goals. If you don’t have a goal, that’s your goal, right? That’s one version, but for the majority of us out there, we want to go in that direction, we have something in our heart telling us that we can do this, it’s within reach, I just need to work over here to allow this to happen for you.

Ben: The goals can be super exciting, and they’re usually thrilling. I think about the things people say when they come in; they say, this is what I want to accomplish—I want to get a new house, or we’re having a baby, I want to save for college. We have debt and we need to address that. We need to get out of debt, it’s burdensome to our goals and what we’re talking about. Goals can really backfire for people. It’s kind of like losing weight. You say, I want to lose the weight, I want to lose 20-30 pounds. And you get to that number, and all of a sudden, what do you do? I can’t wait to have that ice cream; I earned that ice cream. And boom, 5-6 months later, you’re back to where you’re at. I find financial goals have that cyclical feeling, too. I find that people will sometimes get out of debt, it’s a great goal, they work for it and then they slowly get back into debt and they are back to where they were at. Goals can be dangerous because you have to keep revamping those. Once you’ve hit one, you need to know where your next step is, and I think that would be the only thing about the SMART conversation—

Seth: Yeah, SMART goals. If you’ve ever developed goals in an organization, this is the template throughout any place that you look at goals and how to be successful in developing goals. SMART stands for specific, measurable, achievable, realistic, and time-based, okay? So if you are in this, you are getting specific about what it is that your goal is. Start measuring that, paying attention to it, right? It has to be achievable; that’s important, alright? We talk about goals in different ways. Usually we talk about them in the short term, midterm, and long term. It’s important not to put the long-term goal into your short-term timeframe because that’s just not achievable. We take these bite-sized pieces, we measure, and we make that realistic. For time-based, there has to be some kind of a time element there. We talk about that time being short, medium, or long-term. There’s a wonderful book out there: “Atomic Habits” if you’re wanting to understand more about how to become successful in setting goals for yourself. It really gets into the psychology, which is a whole study in and of itself on how to do this. There are some great ways to help yourself become successful in setting SMART goals as well.

Ben: There’s so much inside of that, and I’m really glad you brought that up. The achievable piece is really important, and there’s a timestamp to achievable. It’s like, hey, I want to save for a house. That’s not going to happen tomorrow, but you put that timestamp of what you’re trying to do and how that’s trying to happen. That’s important because setting your financial goals with somebody who can validate this for you—these goals are achievable. That’s important. That’s realizing that you’re not completely out of your wheelhouse. It’s completely reasonable, it’s something that seems plausible for you. There’s another piece to life here, and I think when you were talking about this, I see something that’s missed from almost every budget conversation. No one talks about enjoying your life in a budget. Budget sounds so nasty and dirty, it’s just no fun, I can’t do anything I want to do. It’s not what you want, how do I enjoy my life with a budget?

Seth: Well, I’m gonna go back to the cornflakes. Just eat cornflakes every day, right? That’s what the feeling is when we save for a budget.

Ben: if you're splurging—if you're going to splurge—

Seth: I really am because it's not deep. So how do I enjoy my life, and I think one of the things in building these smart goals is that you get an opportunity to really tap into how you are created. You are created beautifully and amazingly around success and there's going to be failure through that process, right? That's the only way you're going to find that, but you can check the boxes and maybe if you’ve ever made that list where you check the box, and how does that feel, right? That makes your brain do something for you, right? When you get those things out there that you want and you start putting these goals together, and you start achieving, and you start measuring, and you start doing these steps, and you start highlighting and marking the X on your calendar, and you start seeing the daily progress with the weekly progress that you have there, you feed an incredible part inside of you of how God created you to be successful here, and the more you start to develop these habits around successful finance and getting what it is that you want.

Ben: Yeah, #5 is enjoy your life, okay? The reason that’s on there is because it’s not all work and no play. Play is the rest; I think you have to pick and choose. What I end up finding is that people eat out every night, or they’re going on super expensive vacations they can’t afford, or they’re doing both of those. Then they’re buying expensive Christmas presents. We were talking about being made in the image of God—this is going to sound a little silly but for some people—I have funds that I put into an investment fund for mission trips with my boys. It’s hard to add to it, but I do my best. It was costly, but we intentionally saved for it. It doesn’t need to be the beach; it could just be a camping experience. I’ll tell you when we first started out, we were running money, being financial planners. I’m not always the perfect financial planner on my own. It’s like the electrician who doesn’t put the plates on his own outlets—you know where to go. I always used to save a little bit each month for us to go do something. Every month I’d automatically put some in, whether it was $25 or $50, I just put something in it, just to do something. I would always have money so that I never felt guilty about spending it.

Seth: That makes the other process of doing the work so much more gratifying, doesn’t it?

Ben: Yeah, I wasn’t stretching to make something happen. It was a wonderful experience, and I encourage people: enjoy life. You have to label. If you’re married, you sit down and say hey, what are the things that make us tick? What are things that make us excited? What do we look forward to most? Is it going to dinner every Friday night? If that’s not a yes, then that’s not it. Is it when we go on a camping trip, or we go skiing, or is it just date nights on a Tuesday? What is it that really brings joy to your life because joy is really important. God brought joy into this world. He is joy, and He wants us to have that. There’s things that amplify joy. Finding what amplifies your joy is really important.

Seth: What kind of budget do you want to have, alright? #6—yes, there are different kinds of budgets. There’s different flavors. We love chocolate, we love ice cream, vanilla, strawberry…you can have a zero budget. This approach is the Dave Ramsey approach, and it involves making the income minus the outflow equal to zero. With a zero-sum budget, every dollar you have is assigned to a job, with some of these dollars going into savings; the rest assigned to different spending categories. This type of budget is not right for everyone, and I’ll leave it at that.

Ben: Yeah, the concept is good. Listen, you don’t need to save anymore, you’re going to spend every penny you possibly can on debt—that’s where that’s going. It’s not really the right way in my opinion, but if it works for you, it’s just a lot of risk on the table. Sometimes people take Dave Ramsey too literally, though. I don’t think he’s as literal as he potentially comes across. There’s the 50-30-20 budget, which is an approach that Elizabeth Warren, a Democrat from Massachusetts, helped create. It’s the concept that 50% of the income is allocated towards need, such as rent, food, and so forth. The minimum payment of debt is 30%, and 20% goes towards savings.

Seth: The key here is that you’ve gotta like that deduction coming out of your check that goes into the tax bucket—the IRS bucket, the 403B, 401K bucket; it’s already for you. You can do this with an automated system that can take 20% right off the bat.

Ben: This is simpler than this—let’s call it the Ben Brayshaw bucket. With this budget scenario, put the numbers together and if you have access after that, we can talk. We can figure out what the next best thing for you to do that you’re happening to miss because you have a massive excess of cash. I’m sure the majority of people listening to the show aren’t struggling trying to find where to put their savings.

Seth: Everybody here is imagining you sending them to Guatemala. Ben’s plan is to go to Guatemala.

Ben: Well, #7, we’re getting close to time here. #7 is budgeting software. A lot of people are used to the pen and paper. In today’s world there’s just so much opportunity in the technology space. People are familiar with Mint.com, Google Sheets, EveryDollar, Truebill, there’s a bunch of them out there. I fooled around with Mint.com because I was curious about it. I don’t have any idea about the quality of them, their ability, the security, so we give you no recommendations on any particular one, but I would encourage you to find something you can do due diligence on, and also has a great phone app you can use.

Seth: That’s definitely the free version. If you’re looking for a personalized version, we have one here at BFG that we use for clients. It’s part of the software that we bring to the table when working with you. We love our clients, and that’s one of the things that makes it great to work with us. We are at the end, my friend. The final 3 of our budgeting show. Hopefully you’ve been taking notes, and if not, you can find us at www.yourmoneyontap.com and have another listen to the show. Make it your own because that’s what it has to be. These are our suggestions; this is how we find success working through budgets with our clients, ourselves, our friends, and family. To take us to the homestretch, we’re gonna get to #8: weekly meeting, joint effort of you and your spouse. You’ve gotta do it together. If you’re not communicating right now, guess what? Step up. We probably should have put that at the beginning here, right? Get ready because you’re going to have some conversation. The thing with this is key, you have to make this an experience that you can both sign on for. That usually means something fun: make it a date night, make it a happy event, start out with some things that you have dreamt about, some things you’d love to accomplish. Some of these goals we talked about in #5, you have these deep inside of you. Make it apart of your life that you enjoy, and you look forward to on a weekly basis. The consistency is going to drive far more than the intensity.

Ben: I tell people, these weekly meetings should be fun, they should be interesting. They should be your catch up; they should be the piece to make sure you know the bills. This is not a great Sunday night thing, by the way. You’re getting ready for the week and now you have to do work. It’s a much better Saturday morning, Saturday night, or afternoon. It’s better not to be doing it at the end of your weekend. I will say, Monday evenings are also a good time to do that. Personal experience is what I’ve found. You are both going into the software, linking this stuff, pulling out your receipts, making sure you’ve got it. I’ll tell you, in the financial world, there’s almost always somebody hiding something in a marriage, financially. They feel embarrassed or whatever, and that’s something you guys have to figure out how to deal with and get some help. I’ve helped people with that stuff, we’ve dealt with it a number of times: tears, struggles, problems, all that. If you’re single, this is something you know is a weekly appointment for yourself to make sure you’re understanding those finances. #9 is evaluating your progress.

Seth: I want to say, celebrate your success. There’s definitely a tendency to always get on what we don’t accomplish. Believe it or not, you’re not going to get it all; it will not happen.

Ben: Yeah, but I wouldn’t title it celebrate success. If you’re failing miserably and you realize your budget you set up was not true to yourself, evaluate the progress. If you’re being successful, congrats. I usually tell people if you’re saving more money than you thought, take 20% of that and put it away in something you’re going to have fun with.

Seth: Like I said, celebrate success. It’s a successful day.

Ben: I wouldn’t lose hope if you haven’t been successful.

Seth: Can I stay there on #9 for a second more? Don’t lose hope, right? I think that’s the thing. You can find success in just being a part of the process, right? If you’re here at #9, You are being successful, because you are doing this, and that's what I go back to.

Ben: Not if you're losing your house, though, Seth.

Seth: Number 10- accountability. Ben loves to be accountable at all times when we come to the table with this. Again, this doesn't have to be the person that is necessarily always looking over your shoulder, or anything like that. The process can really help you get to this place where you will recognize , if you get here, there is somebody here, and usually it's your spouse that you're having this conversation with period there can also be that third party banner: myself , I can be a part of that, and I have so many times. The weekly, monthly, quarterly meetings that we have to be a part of, out of gratitude for our clients. They are just saying, how would Seth or Ben respond to that question? Have we done the work to get to that goal yet?

Ben: Yeah, that's a great point. I would say that financial planners staff is the best accountability option, because it offers the least personal issues. If you have a friend who is not judgmental, who is financially savvy, and understands this stuff, it's not going to be an issue. That's a great second choice. I don't necessarily find parents to be a good option, because it usually tends to be a breakdown of the peer to peer relationship that you get as you become an adult. I think that is really important for self-esteem, but there is always somebody in your life that you could talk to and say, listen, would you mind just chatting with me every once in a while? It might be 3 months, it might be six months, maybe just once a year, just make sure the time is there. It could be personal goals, or it could be personal and financial goals.

Seth: Thanks for joining us today, you've been listening to money on tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. In addition to the podcast—you can find us at any of the podcast venues out there—we appreciate the likes and we’re also on Facebook at /3Dinvesting and Twitter at BFG_LLC. We appreciate you joining us here today and we hope you make it a great day and a great life. Thanks for joining us for money on tap.

SUMMARY

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

In this episode of Money on Tap, listeners can find out ten helpful steps when it comes to budgeting. A lot of people may not know exactly how to handle their finances and may not even have a clue about where to start with a budget! Ben and Seth outline ten easy ways to begin dabbling in budgeting, and their recommendation is to take notes on this episode of Money on Tap so you can go back and really implement some of their best tips.

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

MOT Show 141 2020 7 Deadly Signs You Need A Financial Planner

Seth: Welcome to Money on Tap. Your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-D investing, utilizing insurance, brokerage, and fee-based planning, that’s what we do on this show. We look at all sides of the issues, we bring a fully independent planning perspective to the table. Welcome to Money on Tap. My name’s Seth Krussman.

Ben: And I’m Ben Brayshaw.

Seth: You can reach us at 855-226-8551, or info@yourmoneyontap.com. We’ve got a show lined up for you today. It even includes some pretty threatening language in the title.

Ben: Goodness gracious, Seth.

Seth: It’s pretty hardcore. We’ve got the 7 deadly signs you need a financial advisor. I’ve gotta state that with a little caveat, that’s what Ben and I do. We’re financial planners. If you’re new to this show, you’re like who are these guys? That’s what we’re talking about, we’re financial planners with Brayshaw Financial Company. Money on Tap is our podcast and radio show. We’re gonna tackle some things that you, our listeners, and our clients, bring to us. It’s the common stuff and the not so common stuff that people never even think about when having this idea of retirement, or how do I be successful with my finances?

Ben: I’m sure some listen and say, of course, you’re financial advisors so you’re gonna give spots to yourselves. We have a lot of shows, if you’re new to our show today, we talk about the market, current events, what’s going on, ups and downs, and we’re gonna break into money in the news here. Once in a while, we have to talk about this. You don’t need to call us; we recommend you call anybody in these worlds with what’s going on. I’m really excited, because here’s some real signs that people need to hear, like, hey should I be doing something different? I think it’s going to be valuable for some people listening today.

Seth: Wonderful. Without any further ado, here we go you guys. It’s time for money in the news. Ben, why? Why are factories so strong in a pandemic? An article coming to us from the Wall Street Journal. A question that many people are scratching their heads with, if they’re paying attention to what’s going on in industry. It’s a big thing in our economy, and they did a great job of outlining what they think is the reality behind the numbers in this area of our economy, it’s been doing incredibly well.

Ben: The institutes for supply management, this article was written by Justin LaHart. Its index of manufacturing rose to 56 in August, from its high in July of 54.2. for people who are hearing these numbers and saying what does this all mean? Anything over 50 represents an expansion in our economy. That’s probably surprising when you say there’s been a global pandemic going on, all this stuff is going on, there’s just so much stuff going on in these factories. They’re rocking and rolling. We had a slight hiccup in the middle of this, but I think the demand—I’ve read a number of articles in this area, and I think the demand was so high before the pandemic that a lot of it is still passing through. People have obligation to finish building contracts. Factories are making up for a little bit of dead time. He also mentions in here, that part of the stimulus package that was set out was – there was a number of people making more money off the stimulus if they would be making at a regular job, and there’s more coming. The various purchases of shopping that is driving some of this factory growth and factory expansion, what do you think, Seth?

Seth: You mentioned driving, and I think that’s of note. People are buying cars. They’re making plans to buy, but since the COVID hit, they’ve gone back on track and said, we still want that car, guess what the auto dealers are offering some pretty good incentives out there. I read a Dave Ramsey article the other day that even if they’re offering you 0% down, buying a new car isn’t a good idea. The consumer says no, we think it’s a great idea, we’re gonna buy cars.

Ben: It’s funny you say that, because there was some stat, but it was a ridiculous number of people from NYC were buying vehicles just to travel, because they didn’t want to fly. Trains and public transport were a no now. Getting a car for the first time, because they relied on public transport, it was a big deal. I thin that’s very interesting, the driving force. Sorry for the bad pun. Number 2, let’s move onto Number 2. Here’s something that’s really gonna be of interest for a lot of people. Amazon is a household name to almost everybody, and it is stock that has skyrocketed this year. Walmart, which is a very well-known competitor to Amazon, is now getting into the delivery space once again. Walmart has created Walmart plus, and its gonna be $98/year for the membership, for delivery. It’s gonna be an at-home delivery. They’re taking on Amazon headfirst. This is a pretty big deal. Walmart has probably got the largest capacity to do this, probably the most likely to have success. They’ve tried this once before, and they’ve been unsuccessful.

Seth: Tell me more because that’s not something I had in my quiver. They did this once before, and it didn’t work?

Ben: Yeah, they had a test round in the past, and they did this, and they did a $35 fee, and it turned out to be a complete bust. The only thing they kept from the test round was anything over $35 in cost would be delivered for free. Then they used regular delivery on that from an online shopping piece. That was kind of interesting, it must’ve been an article I read in accordance with this. This is a big deal. Walmart’s stock is expected to move from this, I’ve heard analysts peak about this publicly. They’re very optimistic across the board that this is gonna make a move. How that actually plays out, I don’t know. They’ve failed once before, but Walmart probably has the biggest strength to manipulate sellers to help buyers afford things to help cover delivery costs, but the shipping cost is fairly expensive for them. I think one thing, inside this Amazon world, is that Walmart, and all these big chain stores, they have this massive infrastructure overhead that’s super costly. These box stores, popular locations, shopping areas. Amazon is buying rundown warehouses for dirt cheap in low tax areas that are near the outskirts of an area. They’re fixing them up, storing items in there and traveling around. The infrastructure cost is significantly different. I think that’s a major piece to how Amazon creates affordability around this, whereas these big box stores have massive overhead, which Amazon doesn’t. That brings me to an article that we talked about maybe a week before, about Simon Property Group. Did we talk about that? Amazon looking to take on a box store location as an anchor piece and having pickup locations, but with the amount of mall locations that are kind of dying around the country, they’re getting that for cheap as well, and Simon knows that’s gonna be an attraction for people.

Seth: Walmart has done incredibly well over the last year. It’s picked up 97% from a year ago, and its ecommerce. One of the things I noticed is anytime I’m shopping for something is put in google this, google that, and right there at the top, you’re gonna see something from Walmart, usually trying to vie for that space. They have the distribution, they’ve got the warehouse, they’ve got the capacity to make this thing work nationally far more than anyone else out there. Something that’s interesting to me, is the positioning, we’re your neighborhood stop and shop place. Where you get your gas and your stuff, we’re the good guys. Go back a year ago, they’re the ones gobbling up all the neighborhood stores, grocery, and retailers out there, and they’re the bad guys. It’s amazon that’s bad, and we’re good, and we’re gonna come and give you goods.

Ben: It’s really funny how they’ve repositioned this, and it’s true, they’ve done a really good job of it. They’re the small dog compared to amazon, amazon’s the big bad guy now. You know what’s interesting, I never saw anything in this article about a video subscription provided.

Seth: We’re gonna get there. We’re getting close because next up on our—

Ben: Woah wait. I’m just wondering if Walmart+ is gonna be like Apple+ or Disney+, is there a connection in there that’s gonna be linked here, in the very near future that you’re gonna get.

Seth: It goes without saying. They’ve already got the pharmacies and everything, but to be in this space where they’re competing, they have to be. One of the places they’re in talks with is TikTok. So TikTok deal, right? If you’re a fan of social media or not, I’ve had conversations with people who haven’t even heard of TikTok. It’s the fastest growing social media platform out there. It’s from China. If you’ve been watching or paying attention to anything Trump says or is out there in the news, it’s out there that yeah, TikTok will no longer be doing business in the US unless they’re US owned. There’s kind of a threat of our national security or what does TikTok have access to? Who are the people coming to the table with a couple dollars in their pockets to buy TikTok? I think it’s $30 billion to buy TikTok, and who are the players? It has been Oracle, it has been Microsoft, and it has also been none other than Walmart. Walmart looks like it has been the strongest of the contenders, teaming up with Microsoft. The problem here seems to be that not only is it the name and platform, but there’s an algorithm that is proprietary to TikTok that really sets it apart from what a lot of other social medias are doing. Anytime you go on Facebook it’s advertising you, and that’s what it’s about, sucking you in.

Ben: This is amazing. I was reading about this, and basically, this Chinese company, Byte Dance, has figured out how to link these things together so that the more you watch and you like, I don’t even know, I’ve never used TikTok, I know my kids have. They’ll watch it for an hour, like a TV show. It’s crazy. It’s got everything—they don’t even care. I hear my daughter, she’s 19, laughing hysterically over the videos she’s watching. My kids are like coming over, dad, you’ve gotta see this thing. It has some sort of algorithm, some way it knows, you don’t like this, you like that, and they know how to stream repetitively for stuff, information, to keep you attached to it. If it were boring, you’d be like, this is stupid, but they’ve got it down. People are saying that this algorithm is worth—is the deal, that’s what everyone wants. How did they read into the human mind differently than every other algorithm out there? How many times do you go to—I don’t even have a Facebook account, but my wife goes to Facebook and it’s like hey, this is an ad that she’s interested in. They’ve found out—how many times have you gone to your Instagram account, I have an Instagram account, how many times you open something up and you say, I was just talking about this 20 minutes ago. Everyone who’s listening knows that that’s true, because you’re like, this is eerie, it’s listening to me or something. That could be true, but there’s also some sort of connection around there. There’s some cleverness, but this stuff, this algorithm that TikTok has created is out of this world. It’s superior technology.

Seth: Well said, and also said by other people in the industry, Mr. Way, who has worked the Facebook’s oculus, and Amazon, says, when you gaze into TikTok, TikTok gazes into you. That’s one of the things that you said that hour is gone before you know it, because they have really captured your attention and done it so well.

Ben: I’m hearing the Twilight Zone sound bite clipping through the back of my head when you said that.

Seth: One of the conversations with our 4-year old, Julian, went like this last week. Whether or not Alexa is a real person or not, and I have to guard myself when I say the A word, Alexa, when I’m around, we have a dog over here and something else, and next thing I know, she’s talking back. He pointed out that we know someone named Alexa, so he said she’s a real person.

Ben: That’s gonna do it for money in the news. We’re gonna be back with the 7 deadly signs that you need a financial advisor. It’ll be helpful for a lot of people to know when the right time is to engage somebody. If you wanna reach us, we’re at 955-226-8551, or info@moneyontap.com.

Seth: Hi, my name is Seth Krussman, partner with Brayshaw Financial Group, and one of the cohosts of Money on Tap. One of the biggest concerns and largest expenses people face today is taxes. Without thoughtful planning, taxes can destroy future retirement dollars, eliminating the possibility of a timely retirement, or dreams of what you want retirement to look like. If you’re like most people, you’re maybe wondering if you’re taking the right steps. Will my income be enough? Will my rising taxes force me to give up my dreams? How does inflation factor into all of this? These are real concerns, and you’re not alone. Putting a plan around your financial future is what we do. If you have questions when it comes to your financial security, and if you’re looking for a personalized solution, contact us at Brayshaw Financial Group. 855-226-8551. It’s time for you to start getting answers to your questions. Headquartered in Bedford, New Hampshire, Brayshaw Financial has offices across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation to meet with us. Call us at 855-226-8551. Now back to Money on Tap, with Ben and Seth. Welcome back, you are listening to Money on Tap. You can reach us at 855-226-8551, or info@yourmoneyontap.com. We’re gonna jump right into the main topic today, which is 7 deadly signs you need a financial advisor. Full disclosure: Ben and I are financial planners, and we’re fiduciaries, and that’s what our practice is based around: always maintaining that fiduciary relationship with our clients. The info we’re gonna cover is—we could probably come up with a list of 20—

Ben: I just really like the title, Seth. I think it’s a clever title.

Seth: That was all you, so you keep patting yourself on the back.

Ben: I like this, I like it a lot. I’m really excited. I told you, I had a number of people come, we’ve had people come in off the radio, referrals, we’ve had a lot happen during this pandemic. When we were working on this show, I felt like it was so timely, because there’s so—almost every person had one—they had 3-4 of these things, but it was kind of like every one of them was hit on regularly on some level, and I’m pretty excited about these things. It’s gonna speak to the average listener about when to make that first step.

Seth: Are you gonna dance around the topic, or are we gonna jump in?

Ben: I’m gonna go for it whenever you want, Seth. This is something I hear almost every time. I would say a good 80-90% of the time, someone say to me along the lines of, my gut’s been telling me I need to talk to somebody. I need to take some action. I keep putting this off. This is like the number 1 thing: people know, intuitively, they’re there. They have this kind of – hear people say I listen to your show, I should’ve called you last year. Someone gave me your name a few years ago, and I know I should’ve done something then. I always tell people, you can’t walk in with regret, we have to pick it up and move forward. Number 1 is you have this underlying feeling that something’s not right.

Seth: Sometimes that takes time to get to the point that you’re recognizing that. In hindsight, it’s always so much easier to take a look and say yes, that’s where I was at a year ago, 2 years ago. We’ve all done this. You don’t have to wait until January or December 31 to make the decision to understand more about what your options are, because that is really—kind of to put it into a nutshell, if you’re gonna take a look at a first layer of working with a financial planner, it’s understanding where you’re at. Everything has to come from that point, and so many people are in a guessing game around their current financial situation. How are you going to take the time to build the model that articulates, ultimately, what you’re doing today, and what that looks like down the road. Maybe making subtle changes here or there could look like. That’s a very 1^st layer, I would say. Your gut is probably telling you no. You’re not. Get on board, sit down with somebody that A) is a fiduciary, has your best interest at heart. It will communicate with you in a way that you can start to understand where you’re at right now.

Ben: You know, Seth, I think 1 of the things I’d reverse on the statement is: what is the thing holding you back when your gut says I need to do something? I would say the few things I think are kind of the reverb, background of that conversation is finding someone you trust. You don’t know who to go to, maybe. Even if you have a couple of ideas you want to go to, there’s that feeling of pride or creating this moment of humility where you kind of—I need help and there’s nothing else you can do, hoping it worked itself out. For some people this is a pride issue, I don’t know why. It’s kind of like here’s—this is all of your finances but how many times do we walk up to the guy and ask him about TVs because we don’t know everything about TVs, but he just got out of high school. That’s not a pride issue for us, so why are finances? It’s almost presumed in some mindsets that you should just know and be completely competent in this when our schools don’t teach any of this stuff for the most part. There’s always this background conversation that’s holding you back. I think identifying what those items are, when that gut is telling you, you need to do something, is probably the best way to figure out what it is that’s concerning you the most.

Seth: I love it. Get unstuck. Quit beating yourself and looking back and saying what I could have if I could’ve, should’ve, would’ve. Take that first step. The initial step doesn’t have to be perfect; it’s about taking the action. If you can get there, you’re doing it. We encourage you to be grateful that you are. Number 2: you are a high-income earner, and you are in or near the top tax bracket.

Ben: I think this is a key one. I think the thing is, a lot of people think hey, I’m not in that top tax bracket. What people don’t realize, those marginal rates continue to climb as you make more money. You could have a smaller portion hitting that higher tax bracket, and that’s a big issue.

Seth: There are so many strategies that open up as you start climbing through levels of income that really nobody but a financial planner or financial advisor can really bring to the table, in a lot of circumstances, for you. If you don’t have access, if you’re not working in this areas to try to mitigate some taxes, and work through these situations on a daily basis, how would you know? You’re probably not gonna Google it and find the advice that’s really gonna make sense for you, or be able to take the time to model—you’d be able to, but it’d take you quite a bit of time to model the numbers in different scenarios. At least you can begin to grasp what the decisions are and get options to the table that you can look at and start to understand what some of these options are to play out.

Ben: A large focus of ours is taxes instead of planning. We’re evaluating, building, and creating things to mitigate taxes, working with your CPAs in that area. This is one of our top-tier things we do, that’s probably our specialty. If you’re that person, we would probably be a good company to call, people to work with. This is something if you are that person, whoever you work with, has that understanding, not just finding someone who-financial advisors and financial planners—they’re 2 different realms. If you’re getting into working with a fiduciary, that’s an important piece. You’re gonna find almost every time, somebody works in 1 domain or another, argeky. They’re working in a domain that’s not a good fit for you. It’s ever gonna be successful if they don’t understand how to solve your problem.

Seth: Number 3. You and your spouse can’t get on the same page. You’re not connecting. I was just having a really great conversation with a friend of mine yesterday about what a challenge it is to get on the same page of parenting. That’s something we’re working in 24/7. We’re each coming to the table with our experiences, our pre-decisions, some of these decisions are made for us: how are we gonna relate to finances because of how we’re brought into the nature of finances, it’s similar to our children. You’re probably trying to work on solutions with your children 24/7 because they’re there all the time, needing something, and you’re trying to figure it out, and you’re trying everything in your experience to get everything in place. With your finances, it’s not like that. You get to a place where you have a problem, and you can be a logger heads real quick without having somebody in there to understand where each person is coming from and how they’re making the decision they’re making, and they’re doing it from the best place they have possible to try to make that decision. That’s a real challenge.

Ben: I would take that to another direction too. You’re kind of alluding to the everyday conversation—husband and wife, what are we doing, how do we want, how are we gonna make this bill work or that expense work or save for this? Those are 1 piece. One of the other sides of this story is getting people on the same page about retirement. It’s amazing how many people know each other wants to go to Paris, or somebody wants to, you know, go to Tahiti or something, and a couple trips, and so forth. It’s amazing to me how many people don’t have a real conversation about what retirement looks like and the difference between dreams and reality. I can’t tell you how many people I’ve assigned going out to dinner and spend the entire dinner talking about retirement and what you want your retirement to be like. Where do you wanna be? Where do you want live? Are you gonna move to your kids? Is one gonna travel or not? Is one unable to travel frequently or not often via plane? There are so many pieces that are significantly detailed during retirement. We talk about saving for retirement, there’s this huge financial crisis that’s in the background that people wanna work with and talk about make happen in their life. It’s this dream, this beautiful thing we envision having in our lives together, and yet very few people know what each other want. That’s an important issue we have to address, and we encourage people to connect. Connecting in finances is not just, there’s these bills, retirement, it’s all the steps along the way. Sometimes what I find myself doing with clients is working through the struggles of understanding pros and cons where a husband and wife might be in complete disagreement and neither are wrong. Having a conversation with myself and them has helped a lot to mitigate unforeseen perspectives, pros and cons, and having that forward thinking. Being in this business 20 years now and working with thousands of people and conversations, it’s interesting to me how many people are not connecting—neither is right or wrong. Sometimes one is right, and one is wrong in certain circumstances. Usually there’s a middle ground to be found.

Seth: So much of the conversations that happen are where people get disconnected in this is that they’re in that tactical place with each other. They’re trying to address the elephant in the room in the moment and doing their best to tackle that. One of the ways that we can really try to change that dynamic is get that bigger picture and get strategic about it, and I think that’s what I’m picking up from you, Ben. Getting those big goals in place, those things out there in mind, and setting up the other pieces to be able to address and accomplish those goals. A lot of the time, what will happen is the current elephant in the room gets addressed in the process in a way that wasn’t possible 5 minutes ago.

Ben: People say to me, you’re a financial planner and you know the answers in this stuff. I’d say my wife and I don’t agree on everything financial. She has her perspective. She grew up with a certain set of rights and wrongs to do with money, and I grew up with a different set, and I trained with a different set. There’s things we don’t agree on, but respecting other’s opinions, and stuff like that. We invest in the market every day, and I understand those risks in a way that she doesn’t. my wife would be fine sticking it in a CD if she felt like that solved her financial needs, but those are just different perspectives. She’s super conservative. Balancing that in my household, it’s still something you have to mitigate. A person’s opinion and perspective is completely valid. It’s something that needs to be worked through, trying to find that balance. We do that every day, which is something that we work through for people all the time. That’s a real thing that – if this is going on in your household, this is something you definitely need to trust and understand and get advice from.

Seth: Folks, we’re gonna take a quick break. You can reach us at 855-226-8551 or info@yourmoneyontap.com. When we come back, we’ll get to the final 4 of 7 deadly signs of you need a financial advisor.

Ben: Hi, my name is Ben Brayshaw, one of the co-hosts of Money on Tap. If you have questions when it comes to your retirement, and you’re looking for a personalized solution, contact us at Brayshaw Financial Group. In today’s volatile stock market, we can help you plan to find your successful retirement solution. Am I saving enough? Am I saving into the right places? Do my investments match my appetite for risk? Do I have a tax strategy that’s going to help me keep more of what I earn? How can I maximize my SSI? If you’re like most people, you are getting closer and closer to your retirement, and maybe wondering if you’re taking the right steps. If you’re in retirement, you may be wondering, am I maximizing my income while preserving my estate and caring for my family? We talk about all things financial, and what we call 3-dimensional investing, putting a plan around your financial future. If you feel that now is the time to start getting answers to some of these questions for your own situation, give us a call at Brayshaw Financial, at 855-226-8551. Headquartered in Bedford, NH, we have offices throughout New England, and across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation just to meet with us. We welcome you to our office. Call us at 855-226-8551.

Now back to Money on Tap, with Ben and Seth. Welcome back, you’re listening to Money on Tap. You can reach us at You can reach us at 855-226-8551 or info@yourmoneyontap.com. So we are talking about 7 deadly signs you need a financial advisor. With full disclosure, Ben and I are fiduciaries and financial planners. In all our free time, we bring you this, Money on Tap, which is fun for us. It’s work, but it’s work we love doing, because we love helping people who are wanting to gain an understanding around their personal finances and make that next step, make that next level in their financial planning and understanding. What we talk about is what we see coming across our desk and our offices all the time. These are cues for you to pay attention to, if you have any of these scenarios going on, it’s time. Time to reach out to the person you can listen to, trust, the person who is a fiduciary as well, to put things in perspective and take that next step. With that, we’re gonna jump into #4: you owe the IRS back taxes, and I think everybody just turned this off.   

Ben: It just went silent on us. IRS back taxes, they’re nasty things, and usually they occur by someone either not paying their taxes, but they can occur without people knowing it, where you’ve had a good year, and it happens to self-employed people fairly regularly. It’s like, hey, they had a good year, there’s some non-deductible income, more meals than they expected, you can only write off half your meal expense, and something pops up. Your quarterlies didn’t quite cover it, or we just went through a pandemic and business is tight, the money saved for taxes is something you needed to use to live. These are realities we can help you work through. These are things we can help you manage. This is something that when you start having IRS back taxes, whenever you have them, that’s a sign you need to get in front of a financial planner immediately. This is not something, let me think about it, I’m only paying $500, $250, or $1,000 a month, whatever. Who’s the #1 tax financial planner I can find in my area immediately, so I can start working on this, addressing this, dealing with this, so I can get out of it and get past the next year. Usually this creates a cycle scenario that people may get out of it one year, and struggle through it the next year, they’re out and they’re back in. It’s a constant ebb and flow. How many times do we find this is constantly in someone’s life and they can’t get out of it. It’s a troublesome thing.

Seth: #5: When, how and if you can retire. One of the biggest questions I think we get is people really just having this question mark of is retirement having a possibility, what level, what time, what kind of income can I start to look or plan towards? If there’s a goal there, an idea there, what do I need to do to put myself in this scenario to be able to accomplish this, to be successful? That’s exactly right, that’s exactly right. That’s what we wanna—that’s the track we want to be going down to accomplish these goals. In the process of this, answering these questions, there’s all these other conversations. We were talking about this earlier: spouses need to have conversations; what about the time of our life do we want to start to retire? What do we want to enjoy in retirement? There’s income that’s required for that, and what level do you feel comfortable in retirement? Is there a hedge for inflation? Do you have long term care goals or planning that needs to happen? Do you have trust work that needs to happen, or estate planning that needs to happen? This is what I’d say where we would – probably around 75% of the time that we’d spend with our clients in an initial consultation and working through a plan with them.

Ben: I think that is – most people do come in saying I’m trying to figure out retirement. That’s pretty much the brass tax on what most people have is their #1 question. Unless they’re younger and dealing with tax issues, this is probably the highest majority of people that come in is, I really want tot retire, I’m trying to figure out how to retire, I don’t think I have enough money to retire, I had a health issue change, I need to figure out what I get to retire, and I need someone to help me put it all together. This, I would say, this is number 1, the top number piece coming through the door, and I get it. The sooner you start on this, the better off you’re gonna be. If you’re 62, start, if you’re 65, 55, 45, just get started. To work with an advisor and try to get yourself to a point where you’re moving forward, you’ve got a plan, you understand what the needs are, what the goals are, those issues are taxes and inflation. Those things are gonna come on like a roaring lion. It’s gonna devour a lot of people in the next 20-30 years. That’s what all the stimulus is gonna cause. A lot of people aren’t evaluating that, and thinking hey, sitting out of the market right now is potentially a bad thing. We’re gonna talk about the market and how that can be a bonus and a negative. If you’re wondering whether retirement is a reality for you or you say, I guess I’m working till I die. There may not be a choice for you, you may be forced into retirement, that happens to people all the time, even though they think they’re just gonna keep working.

Seth: Right now, you’re wondering how in the world can I get a hold of Ben and Seth? You can reach us at 855-226-8551, or info@yourmoneyontap.com. We’re talking about the 7 deadly signs you need a financial advisor. We’ve got 6 and 7 coming up next, but we probably touched on those for you throughout 1-5. Without further pause for station identification, we’re gonna jump right into 6. There is little or no interest or time to handle your finances. I think one of the things jumping back into the couple that is trying to figure out their finances, there’s one that’s more interested and has a better grasp on this, and then the other is like, I want nothing to do with it! Honestly, if you can take care of that, I’ll try to manage this other part of our life right here. If we have a couple people that it does happen occasionally, there’s a need for some financial education, or there’s some need for trying to understand some of the concepts that are gonna ultimately bear huge results in a retirement phase of life, those are the conversations that we’re prepared to have, and have in a way – in portions that are manageable for you, right? If we were to sit you down, and sometimes there are conversations like this, that are sitting you down in a gallon of oatmeal, is what it looks like, and how are you gonna eat all that, is the question. I gotta tell you Ben, you live in NH, do you grab some of your lovely NH syrup and coat it in that and make it all palatable, or what do you do?

Ben: You’re right. This is a very common thing that we hear from people all the time, is I don’t wanna deal with my finances, I don’t have time for it, this isn’t me, this isn’t what I do. We get this regularly, and if this is – if one of you is saying this and the other person is feeling burdened by the ultimate responsibility of being checked out, that bring us to #3, where you and your spouse aren’t connecting in finances. This is kind of an offshoot, but sometimes both the husband and wife, partners want nothing to do with financial issues at all, they just want to make their money, be told what to save, have it drawn out automatically, and spend the rest. They want to live like, hey we’ve got someone controlling this piece for us, we’re gonna trust them and move forward. That’s very common. Finances is something not a lot of people want to deal with, so 2 people together not wanting to deal with it is very normal.

Seth: You’re listening to Money on Tap. You can reach us at You can reach us at 855-226-8551 or info@yourmoneyontap.com. we have the 7^th and final deadly sign that you need a financial advisor. Believe it or not, it’s probably one that’s there and a lot of people don’t even know it. They’re not even paying that close of attention and not realizing that the market is at all-time highs. Why would that make a difference for you in whether or not you’re working with a financial advisor? Go ahead, Ben.

Ben: We’re in September of 2020 right now, and we’re looking at a year to date return of over 9% on the S&P 500. We went through a pandemic, it’s horrible, people lost money, but if you invested in the S&P 500, you’d be up by 9%. We never encourage people to own the S&P 500, that is a large cap investment play. We’ve done shows on the risk around the S&P 500, but I meet people all the time that own the ETF perspective of the S&P 500. If you’re at 9%, what about checking out the rest of the year? People are talking about being content with the 6, 7, 8%, we’re there. Why not just – if you didn’t sell and just hang on, maybe you wait during this election period and then move on? What about the NASDAQ? The NASDAQ’s up composite 33% this year to date. Crazy numbers. If you had 2 of those. Now, the DJI Jones. We talked about the DJI Jones previously and unfortunately, the DJI Jones is only up ½ a percent this year. Considering all that’s happened, the pandemic and all, looking at where we’re at, the fac that all the indices have hit all time highs is nuts. It’s completely unforeseen. Why do we consider this the 7^th deadly sign? Right now, there’s a lot of market commentary about what’s gonna happen. September is not traditionally a month that doesn’t perform. We’re coming upon a lot of question marks. People are buying what the market’s supposed to be in 2021. There’s this commentary of pullback, Warren Buffett’s moved money out of the country because of inflation. I could find so many articles about taking cash off the table, but the average investor is not. We’re finding a lot of larger firms are. That doesn’t mean they’re getting out entirely, but even some of our managed portfolios, I think they’re about 7% in cash and cash equivalent type holdings. Maybe even 8 in some level, and I think if there’s a pullback, we’re looking for that opportunity to get back in in a lower dollar figure. Any thoughts, Seth?

Seth: Timeline is the biggest concern for someone in the pre-retirement stage. How close are you to retirement? Are you gonna need those retirement dollars for a source of income, and what are your options to truly create stability for yourself through that retirement corridor? The early retirement phase are some of the most crucial. Looking at the market where it’s at – if you’re in this situation where you’ve got plenty of assets under management to see you through, a pullback in the market, maybe this isn’t a concern. Maybe you’re a manager and you wanna take some of that risk off the table and pour it into a cash-cash equivalent for a rainy day. You stepped into the market in March and you took advantage of the pullback and the market surging ahead quickly and that was a strategy you were using. Most retailers are not in the same boat there, and that’s the question: what is the best step forward? If you’re risk averse, this could be one of those times where you start to take some of those gains off the table and look for the next opportunity to look at your portfolio. There’s different ways to do that, though. There are many different ways to do that. The traditional one is you go to cash and you put that in your money market. The second one is you go into some type of bonds. That’s used to diversify the risk in your portfolio or divest risk in your portfolio. A third one would be you’re looking to annuities, right? Annuities or different life insurance platforms have some of those built in places structured for some guarantees, something in those lines. Then there’s your CDs, which is the bank version of a guaranteed type of product. Those are historically what most people are going to do.

Ben: Seth, I’ve recently seen a number of chatters are using no-fee, life insurance contracts with fixed interest rates that people can get out of just to get reasonable rates, better than the bank. That’s been an interesting, pretty hot topic nowadays because there are a couple different companies engaging in that protection piece. You’d have to be insurable, but that’s become hot because it’s outside of the banks. A little bit of a different protection style, but a lot of people are looking for interest rates, unusual not everyday pieces. It’s not that these things haven’t been used for that in the past, but people are starting to consider some alternative investing other than the stock market. Looking at fixed annuities that look and smell like CDs have been of bigger interest recently as well, because people are saying to themselves the market is recovering, this is may be my time to get out. I miss that whole horrible experience, and if this vaccine doesn’t come out, COVID-19 mutates, whatever the story is that you’re fearful might happen, this is kind of a lot of people’s 2^nd chance, and I think that’s gonna be a reality for a lot of people getting out of the market. I see it generally a lot, but the average joe isn’t right now. Some of the bigger firms are looking for opportunity for pullbacks. Folks, it has been a pleasure. Again, these are the 7 deadly signs you need a financial advisor. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Again, Ben and I are both fiduciaries, Brayshaw Financial is our firm, and we love the opportunity to work with you. Hopefully, you enjoyed the ride today, and what we talk about is hitting home for you some way or somehow. If not you, someone you love, and we hope it’s a great conversation, a great way for you to go and share information with them. You can go ahead and share the podcast, or you can tune in on the radio. Thanks for joining us today, you’ve been listening to Money on Tap. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Also, we’re in a podcast. You can find us on any of the podcast streaming platforms, we’re also at Facebook at /3Dinvesting or twitter at dgl_llc. We hope you make it a great day and a great life. Thanks for joining us at Money on Tap.

SUMMARY

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

In this episode of Money on Tap, Ben and Seth break down signs that you may need a financial advisor. If you’re in the market for one, look no further! They are both fiduciaries committed to helping you handle your money well. If you’re not ready to make the jump yet, just listen to this episode—it will give you an inside look on how much a financial could help you out.

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

MOT Show 140 2020 (Trump vs. Biden - What does the Market Look Like) 2157742

Seth: Welcome to Money on Tap. Your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-D investing, utilizing insurance, brokerage, and fee-based planning, that’s what we do on this show. We look at all sides of the issues, we bring a fully independent planning perspective to the table. Welcome to Money on Tap. My name’s Seth Krussman.

Ben: And I’m Ben Brayshaw.

Dan: And I’m Dan Michelon.

Seth: Who is that guy? You say to yourself. Dan Michelon, he’s a partner with us at Brayshaw Financial Group, and Dan, it is so good to have you with us today.

Dan: Good to be here, thanks Seth.

Ben: I like having Dan on the show, Seth, I’m sorry. I like it. Are you leaving? Are you heading out?

Seth: Did I just hear you apologize for Dan for being on the show? Dan, forgive him.

Ben: I’m not apologizing for him. I’m glad he’s back.

Dan: I’m hoping to be the regular 3^rd wheel here. [Laughter]

Seth: That’s what we’re gonna put on your desk: Hoping to be the 3^rd wheel.

Ben: It’s my calling, I wanna be a 3^rd wheel.

Seth: Folks, you are no 3^rd wheel to us, we want you to be assured of that. You can call us at 855-226-8551 or info@yourmoneyontap.com. Folks, we have a doozy here for you today. We can’t wait to jump into it. Of course, we’re gonna do some Money in the News. This is going to be a Trump vs. Biden show. That’s not polarizing at all [laughter] but we’re gonna grab this info and take an info, mark a performance in election years. What does the data tell us? And what are the platforms being proposed, what are the potential outcomes coming out the pike? This is a Trump vs. Biden show, for anybody out there interested, worth your time to stick around. Before we get down that road, we’re gonna jump into Money in the News.

Ben: The first article we have today, which we just did a show on the DJI, the 30 DJI, the styling, the stocks of the DJI, and now we’ve got some big shakeups in the DJI.

Seth: You say just, but it was February.

Ben: Was it February?

Seth: Yeah. We do.

Ben: Time flies, so what can I say? The DJI is the 30 largest US stocks, essentially. They dump some big boys out of it. They took 3 companies out of the DJI. If you look back, we did a show on how GE was removed from the DJI, after a century of being in it. Exxon, which has been in the DJI for over a century was just removed, Pfizer and Raytheon. And then replaced with 3 well-known companies: Salesforce, Aengen, and Honeywell.

Dan: That’s interesting they kind of dubbed it, out with the old, in with the new. It’s reshaping the DJI with more modern companies that represent a more modern economy.

Ben: I noticed Seth, and Dan too, an article that said that it has all to do with Apple deciding to split it’s stock, which is a crazy thing of how they move everything around.

Dan: Tremendous effect that this company has, right?

Seth: We talked about that in Money in the News last week or the week before. It was news, it was Apple’s 4-1 stock split, and it wasn’t like they’d never done this before, but the landscape of how that changes the weighting, and the effect of an index like the DJI, it has an effect and a significance. When taking a look at the companies and how they balance the DJI, this is the solution they’re coming up with. Exxon, which go back, what, 20 years, largest company in the world at that time?

Ben: It’s lost, what was it, the largest market cap, just lost 40% of its value this year.

Seth: Yeah. The question is, is it a short-term solution to a bigger equation, or do we see Exxon come back at some point? Is this what we get to look forward to moving forward? I would argue that tech is completely changing the landscape of everything moving forward as we see things in our economy. At the moment, tech is booming, and is it a bubble or not? I don’t see how tech can be considered a bubble again when it is such a massive driver with everything we’re doing.

Dan: It’ll be hard to see that change, considering just a few of those companies make up 25% of the S&P 500.

Ben: That’s dead on. The other piece of this is that with Exxon out, Chevron, CVX is gonna be the only energy play in the DJI, which is kind of surprising. It’s a big deal, but Salesforce is a huge player in the cloud computing company. I think the thing about the pandemic and the thing that this move does define, is the DJI is attempting to say, hey, this is an index that we respect as what America looks like. What does the market look like for America? That kind of thinking, with this pandemic, we do go back to a new version of normal, and I hate to say that, because there’s such a social being that yeah, we’re gonna go out to dinner, we’re gonna do the things we used to do, but I do think companies have a more remote, general infrastructure than they’ve ever had before, continuing on. Even after post-COVID, post-vaccine, and everyone’s fine and COVID will never affect you – I think we’ll have a lot of people coming back to work, come back to an office, but I think there’s going to be a lot of people who just still work remotely, whether it’s 2 or 3 days a week, because it’s more effective for them and the company. The company is able to downsize the amount of office space they have, I think overall, the tech is not gonna completely just subside and go away, or back to what it was at, it’s gonna be enhanced.

Seth: So the 3 companies that are coming out, Exxon, Pfizer, and Raytheon. Pfizer pharmaceuticals, and what does Raytheon do again?

Dan: The Aerospace defense.

Ben: Honeywell is their replacement, they’re an aerospace manufacturer. Raytheon is a great name.

Dan: What’s interesting is for years, the best peg we had was the DJI drones that made up of 30 companies. We’ve moved forward to the S&P 500, which had a logic look, and then the NASDAW came out. When we look back at the DJI and understand where the economy is, we’re back in the spot where this entire economy has been driven by 6 or 7 companies.

Ben: Almost every version of every index is being driven on some level by these companies, and how they impact smaller companies that provide, whether it’s the chips for them, something along those lines.

Seth: Pfizer getting replaced with a pharmaceuticals company, and Raytheon getting replaced by pretty much the same sector, right/ the big story there with Exxon coming out, which is the energy sector, being replaced by technology. That’s one of the reasons we focused on that.

Ben: I’m sure Angen’s loving it right now.

Seth: So, Warren Buffett, can we do a Money in the News without that name in here? It’s hard to keep him on the sidelines. He’s here again, and he’s telling us, possibly, one of what the article states is, one of the most important notes in history of how money now works. This is an article by Tim Denning. We’re just gonna briefly touch that Buffett is saying the value of money you have is changing, and debt, and what it means, is fundamentally changing. Why would Buffett be changing his perspective on debt today?

Dan: What’s been puzzling to him is that regardless of how deeper and deeper into debt we get for the first time in history, we just resolve that issue by printing more money, and that brings into play questions around inflation, value of the dollar, purchasing power, moving forward. We’ve seen him take a different tactic in his investment portfolio, moving forward into more secure things, like T Bills and Gold, for the first time.

Ben: I think where I’m a little surprised by this, is that – I was saying this – is this somebody who’s just getting older and literally putting their money under the mattress and saying, I’ve made my money in the airlines, and just kind of bouncing back down?

Seth: Warren has gone against his traditional grain over the last several years. Like you said, what is it about Warren at this point in time in his life that he’s changing the cards that he has held so consistently? It’s hard to say, we could speculate on Warren, and has he just run out of steam, is he trying to take things off the table that were traditionally long term, because he doesn’t see himself having that timeline? He’s a human being, that’s who he is, and that happens over time, the closer you get to exit, it’s hard to say, but he’s definitely doing a lot of things that he has traditionally said, don’t do that.

Ben: He makes one good point that no one can deny, which is inflation. Inflation is that hidden tax on your money. That’s something he’s pointing out for the average investor. We’re not really quantifying today, because as you see your portfolio rise with this market, and things might be coming back for you financially in your 401k, wherever you’re investing, as a listener, we don’t know how that spending power is going to change 20-30 years from now. That’s kind of the thing we don’t understand, how the impact is so heavy on our investments.

Seth: Moving on. I have a love-hate relationship with some of the things we talk about on Money in the News. I have to say that before we get to this article.

Ben: There’s a part of me that’s maybe jealous, but the other part says totally wrong.

Seth: What are we talking about Ben?

Ben: This gentleman, I think he’s called David Hine. He’s being accused of buying a Lamborghini with his company’s COVID-19 relief money. The guy owns a moving company with 70 employees. It looks like he bought a beautiful red Lamborghini. How much did he get? $7 million, or something like that?

Dan: I think it was $4 million. $315k car, that’s one way to stimulate the economy, I’d say.

Ben: Not the US economy though. [Laughter]

Seth: What is that work like? When you walk into a Lamborghini and you say yeah, that’s the one I want. Is that a commissionable sale, or are they a salary employee, what’s the margin on one of those?

Ben: I don’t know, Seth. [Laughter] I haven’t sold a Lamborghini, nor have I been able to buy one.

Seth: No comment.

Ben: This is totally wrong. Come on, this isn’t the only thing he spent his money on, but they’re saying he gave $15k to his mom, $7k trip here, $4k trip here, and all these things are out of financial character on some level for what his company has actually done.

Dan: It was a moving company, right? So he’s the proud new owner of diamonds and jewelry and a shopping spree at Sak’s, and a new Lamborghini.

Ben: Maybe he’ll admit having stolen those, and that he didn’t use the government’s money.

Dan: He can feel free to move that my way, I’ll take every little bit of that.

Seth: All of these things were supposedly bought with the PPP funds that came out. It’s interesting that this is an individual that we’re potentially seeing going out and buying something for themselves personally and get called out for it. Do you remember right when the PPP was rolled out, and the stimulus was rolled out, how many of these corporations and sports enterprises, what was it, the Lakers were given millions upon millions of dollars in PPP stimulus. People were up in arms, like, really, the Lakers need that money?! The Lakers?

Ben: They’re not the only people. There have been a bunch of companies that paid it back, because they got so much flack for taking it. This was not the spirit of why this money was given. Maybe he’d bought it long before and was waiting for delivery. If you’re getting a Lamborghini that you already purchased, or buying one after the fact, you probably didn’t need the money. Who knows?

Dan: Maybe this is the stuff Buffett can’t get his head around. Free Lamborghini’s from the government.

Seth: We are going to talk about 2 candidates, their platforms, the potential outcomes, and what has the market told us in the past? We’ve got a ton of data that supports your understanding. What the outcomes, can look like, it’s the Trump vs. Biden show. Don’t go anywhere, stick around, we’ll be back. You can reach us at 855-226-8551 or info@yourmoneyontap.com. Hi, my name is Seth Krussman, partner with Brayshaw Financial Group, and one of the cohosts of Money on Tap. One of the biggest concerns and largest expenses people face today is taxes. Without thoughtful planning, taxes can destroy future retirement dollars, eliminating the possibility of a timely retirement, or dreams of what you want retirement to look like. If you’re like most people, you’re maybe wondering if you’re taking the right steps. Will my income be enough? Will my rising taxes force me to give up my dreams? How does inflation factor into all of this? These are real concerns, and you’re not alone. Putting a plan around your financial future is what we do. If you have questions when it comes to your financial security, and if you’re looking for a personalized solution, contact us at Brayshaw Financial Group. 855-226-8551. It’s time for you to start getting answers to your questions. Headquartered in Bedford, New Hampshire, Brayshaw Financial has offices across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation to meet with us. Call us at 855-226-8551. Now back to Money on Tap, with Ben and Seth. Welcome back, you are listening to Money on Tap. You can reach us at 855-226-8551, or info@yourmoneyontap.com. We’ve had a lot of fun so far with Money in the News, and what’s on the horizon for us here at Money on Tap. It’s a Trump vs. Biden show. We love to take a look at all sides of the issue, here. That’s one of the things that we’ve continued to maintain from the beginning. We wanna take a look at all sides of you, your retirement plan, and it’s about 3D investing. We cannot pass up this opportunity to take a look at 2 different platforms, 2 different candidates, and what does the history tell us about presidential elections and election seasons?

Ben: This is the stuff that gets everyone wrapped up, like what are the stats, what are the odds, what is everything I should be doing if Trump got in, Biden got in, what’s the next 2 years look like? How does that work? We’ve got a nice list of info and things to think about. I preface the entire show myself by saying, this may not be normal. Considering the fact we’re coming out of a global pandemic, so I think some of these stats are buyer beware, don’t do anything based on these stats. But it’s really good to have some general views on that. We’re gonna framework the show today. One thing I’m excited about with Dan here today, we’re gonna talk about the general overview and stats around a general election and incumbent getting knocked out. What does that look like, financially, traditionally? Then we’re gonna jump into what does it look like a Trump reelection, and what does it look like with Biden, the incumbent gets thrown out. We’re gonna come back on everything and really talk about the crises of what a disputed election might really look like. There’s so much conversation about mail-in ballots and fraud, Hilary telling Biden not to concede, there’s a lot of things around this that’s out of the spirit of how the US government or the Presidential elections have been handled in the last few hundred years. Usually there’s a fair concede, and a seamless transition of power, and what might that do to the market? So with that, I’m gonna start off with one particular stat. I’m gonna hand it over to my partners a little bit too. When a new party comes into power—if Biden happens to overthrow Trump, the analysts have found that the stock market gains an average of 5% in a mid-election cycle. When a president is re-elected, the stock market returns are a little higher, 6.5%, which is interesting, and I feel like it’s more of feeling comfortable in more of the same, maybe?

Dan: I think that’s probably a big piece of it. There’s always fear of change, and in this particular election cycle, you couldn’t find 2 more polar opposite candidates, in terms of their platform, views on taxation, and the industries their policies favor.

Seth: I Think some of the interesting data that I’m looking at here, which is from Schwab, it’s a great resource as far as what are the stats telling us. Not only what you articulated there, as far as an incumbent being overthrown, I like overthrown, like they got ousted. That’s how that worked. The market performing positive in both scenarios, and it’s a percentage difference in either one of those scenarios, and I think that’s the backbone of what the market has given us, is this understanding that over time it will go up. We have pullbacks and we have seasons, and we have these places where the market is lately violent, in terms of how quickly it’ll drop and how quickly it can come back. Over time, we have a positive outcome. More positive with the return of the seated president than the new president coming in. if you take a look at some of the other numbers there, in the numbers we have from Schwab, the 2 calendar years following an election, they tended to be slightly less positive. However, the average annual return is a 5.8% and 4.5%, respectively. It’s the third calendar year that’s been the most fruitful, ending in a positive territory, 82% of the time, with an annual average return of 13.7%. In terms of why does the market do what it does, and the market respond really well to understanding what is going on. When the market takes a look around and says, we get it, we’re in, it responds very well. I think that’s one of the things that the third year can typically do, or give us, as far as that reflection on how does the market respond to whatever’s going on around us. As long as it knows what’s going on around us, it’s doing well.

Dan: I think key to that point, Seth, is, the one instance where there is concern following an election, is if it’s been a disputed election, and Ben alluded to the fact that we’ve heard from both parties of potential elements on how they’ll behave, dependent on how this thing goes. In 2000, there was some dispute around the mail-in ballots and how things went down in FL, and that suspended the results for a while. The effect that had, the S&P was down 6% those first 2 weeks following the election. The DJI was down 5% in the same 2-week period. After that, volatility settled out, but for the year, the S&P remained down 9%.

Ben: The disputed election scenario is a real problem for our country. There’s no 2 ways about it. I think the thing I look at inside this whole piece is trying to understand the overall odds of what the market looks like, right? We’re not voting, we’re not investing based on 1 vote. We’re investing based on long term stats, likelihood on how the economy is going to move forward. We talk about the pandemic, we talk about technology, how does that look like, what does that play into our future. The 1 stat in that Schwab article is that 17 of the past 23 presidential election years, 74% of the time essentially, the market is up during the election year, and the average is about 7.1%, which is positive. It doesn’t matter what happens on the outcome. 74% of the time, the market’s positive during the election year. When the election happens in November, we still have 2 full months of the remaining year. That gives some good exposure for people who are very concerned about how the election came out to move their money out to cause a turndown, but that doesn’t seem to happen a majority of the time. I think that’s a pretty good indicator that just the election itself is not a long-term decision factor for a lot of investors. I also think that when you look at the preceding years that this article talks about, it brings together a couple of really interesting points. One of them is that in the year following the election, and the next following year, Seth mentioned 5.8% or 4.5% returns. That is still happening the majority of the time. We’re still having positive returns, no matter what the scenario is long-term, which is causing an upward trend. I think one piece that really says to me, I really gotta get my money in, is that year 3. That third year, right before the election year, is when the market seems to—80% of the time, it’s up 13%.

Dan: Speaking about that third year following the election, keep in mind what’s going on. The midterm senate elections have just taken place. From a regulatory perspective and corporations that make up the economy, they have a good handle on, at least for the 12-month period, what the lay of the land looks like.

Ben: Yeah, that’s the piece of the election—as an average investor, a lot of people say, I don’t know what’s going to happen. The truth is the big companies have all these things running in the background of every software program they have. They know the midterms; they know what the incumbent will do. There’s a lot of—they generally know, this is what we have to be prepared for, and this is how we hedge it.

Seth: One of the questions I have Dan, is—you’d talked about the 2000 election, and I’m trying to remember who was running against Bush at the time.

Dan: Al Gore.

Seth: That’s right. It was Vice President Gore running against Bush. There was a dispute in that time. What happened in the rest of 2000? Tech bubble. And I think we have something similar in likeness. Trying to get likeness to likeness here, with the coronavirus. Potentially, an election kerfuffle, or debacle with nobody being able to get to the polls to poll in person. Plus, there’s the mail-in ballots being as slow as possible at the moment, too. Can we tell or read into this, one direction or another, what’s going to happen? No, we don’t, and you gave us some great data there that supported, potentially, what we could look at in the short term. The question we want to ask is, are we going to invest? Are we investors? Are we long-term or short-term investors? The data that supports what we would say is, that yes, historically, you’re looking at roughly a 5% return, which is—do you want that or not? Do you have another place you’re gonna get that? Okay, great, go get it. Are you waiting around for that third year? 82% of the time, that average of 13.2%, no, we’re long-term in this thing. The question we want to come to, is, yes, we’re going to continue with our plan, which is supported by the data. We’re going to continue to invest. Do you remember the last election? What happened the night of, or the day of that election? Was that intense?

Ben: Yeah, the market crashed overnight for almost 1,000 points, which doesn’t sound like a lot anymore. The last 6 months, a 1,000-point move, but overnight it was down 900 in change that night. Rebounded, it was positive 500 or 600, it was almost a 2000-1500-point swing.

Dan: It’s funny, when I was getting ready for the show and doing some research, kind of getting ready with some talking points, I crossed an article from 2016, and I forget the source of it. It was right at the top of Google, so you think it might’ve been a worthy publication. The analyst said there that he predicts with a 100% certainty a 50% drop if Trump wins. That’s huge.

Seth: I think it was interesting what you said, Ben, that 1000-point drop at that time.

Ben: That was when the news said Hillary won, that was when the market dropped, this swing happened, Trump was winning, the market had full recovery, that was scary. I’ve actually—we’ve alluded to that a little bit in the conversation on what would happen in the market if Trump wins. What we’ve seen with the riots right now, there’s protestors and there’s rioters. I don’t have a lot of respect for rioters. Protestors execute with inside the law, I’m totally fine with it. I think the rioters, I think this gets bad. People get fearful, what’s going to happen to these cities. Seth, you’re over near Port Linden, I’m hearing people saying Port Linden and Seattle, probably a 20-30-year recovery plan now. I don’t know if that’s true, but that’s a scary incident. If we have massive riots, cities generate more jobs than anywhere else in our country. I was listening to this on the news yesterday. We need to be champions of our cities, because they’re the ones that provide a lot of jobs: waiters and waitresses, people cleaning bathrooms, the hotels, or there’s just so many jobs in our cities. Our cities get destroyed, and people flee the cities, the jobs drop drastically, and that’s a huge issue for our long-term employment issues. One person was saying that New York is really in a tough spot. Jerry Seinfeld was criticizing the guy, and I was listening to all of this. If we have Trump reelected, and it does cause crazy riots and destroys more of our cities, it creates a longer recovery time for us as a country.

Dan: Service work is not one thing you can do remotely. You need to be present, taking care of your customers. The impact there, if it truly is that flight from cities, and the retail world in general, it’s scary what that impact would be.

Seth: There’s a lot on the ropes. Travel doesn’t happen without moving across the country. They haven’t figured out how to solve that one for us, or global spots. Geez, you wanna go to Hawaii? Good luck.

Dan: You taken your first virtual vacation yet, Seth? [Laughter]

Seth: Oh, Lord. We need help. [Laughter] I’m gonna move onto more numbers. One of the stats that I thought kind of amazing, I had no idea. This one really surprised me. The total return of the S&P 50-0 has averaged 54.7% under Democratic presidential nominations than under Republicans. That’s one that’s not getting out there, is it?

Ben: I’m gonna say that that’s because Democratic is benefitting off Republican work, and it’s Republicans fixing Democratic work. [Laughter]

Seth: You work so hard to get that pendulum swinging back the other way, that by the time you get out of office, it’s well on its way.

Ben: That’s the accusation of every presidential candidate.

Dan: There’s only so many times that Trump credits Obama for the economy, right? That doesn’t fit the story.

Ben: Everyone says he’s benefitting from Obama’s work, and vice versa. It is pretty surprising that when you have a democratic – that is a big difference. That’s a big deal. I think this was probably one of the more interesting pieces, and after I do the stats, Dan, I want to run into the sector conversation. Which sectors benefit whether Trump’s in office, or Biden’s in office. I think we can do that right after our break. The last stat here that’s interesting, is that when the S&P 500 has risen in the 3 months before an election, the incumbent party has generally gone on to win the white house. When it has fallen, in incumbent party has lost, and since 1928, this trend has broken 3 times, and 87% success rate, and hasn’t missed since 1980. That is a sobering conversation right there.

Seth: Folks, we have to do it, but know this, we will be right back with more Money on Tap. As Ben talked about, we have a lot more to uncover here. We’ve talked about performance and the correlation between democratic and republican candidate, and/or an incumbent, or a new candidate coming in. We’re gonna come right back and talk about the platforms and get down into the nitty gritty, folks. That’s what it’s all about. You can reach us at 855-226-8551 or info@yourmoneyontap.com.

Ben: Hi, my name is Ben Brayshaw, one of the co-hosts of Money on Tap. If you have questions when it comes to your retirement, and you’re looking for a personalized solution, contact us at Brayshaw Financial Group. In today’s volatile stock market, we can help you plan to find your successful retirement solution. Am I saving enough? Am I saving into the right places? Do my investments match my appetite for risk? Do I have a tax strategy that’s going to help me keep more of what I earn? How can I maximize my SSI? If you’re like most people, you are getting closer and closer to your retirement, and maybe wondering if you’re taking the right steps. If you’re in retirement, you may be wondering, am I maximizing my income while preserving my estate and caring for my family? We talk about all things financial, and what we call 3-dimensional investing, putting a plan around your financial future. If you feel that now is the time to start getting answers to some of these questions for your own situation, give us a call at Brayshaw Financial, at 855-226-8551. Headquartered in Bedford, NH, we have offices throughout New England, and across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation just to meet with us. We welcome you to our office. Call us at 855-226-8551.

Seth: Now back to Money on Tap, with Ben and Seth. Welcome back, you’re listening to Money on Tap. You can reach us at You can reach us at 855-226-8551 or info@yourmoneyontap.com. We’re jumping right back into Trump vs. Biden. Dan, you’ve done a great job in researching sectors and how this is a big deal. Either one of these scenarios, moving forward.

Dan: It’s really interesting, I think we mentioned earlier, it couldn’t be more polar opposite candidates. Really, in taking a look at the sectors, which sections of the economy and the market in general are likely to perform, it really comes down to 2 key considerations: It’s taxes, tariffs, and a 3^rd one is de-regulation. I think with Trump, we all understand where his platform is, and it’ll be more of the same from where we’re at. If we look at it from the sector perspective, he favors the fossil-fuel sector. Oil and gas will continue to perform, presuming we recover from the COVID thing and our travel gets back up. Financials, industrials, Trump has favored trying to bring back manufacturing back to the states, which boosts the financial sector greatly. One things that’s interesting with the financial de-regulation, is that the big cap, the kind of smaller sized businesses seem to really favor that lack of regulation, and some of the things he’s done has been in support of that economy. When you look at technology, that’s been neutral, real estate’s ben neutral, and they expect that to e the future as well. Looking at Biden at the other end of the ticket, the industries that would likely rebound or see a spike, given his winning the election, would be Chinese stocks, right? The China stocks which would fare better, presumably with a little less of the tariff pressure. Green movement, he’s a big supporter of that. Pharmaceuticals, health care, defense stocks and utilities, are all expected to rise if he were to win.

Ben: So’s gold. [Laughter] it’s interesting though, I don’t think that I’ve seen – I think the one piece about the sector comparison here is that I haven’t seen a more polar sector scenario between 2 candidates before. In previous scenarios, there would be some that would pretty much overlap as opportunities. You might say, hey, clean energy’s potentially an opportunity, or farming is an opportunity, with both candidates, that would be a safe sector to move to, almost irrelevant of who gets in. That’s kind of how the industry looks at this stuff, especially hedge funds. They look at the overall and say, this is a safe place to get in. That’s kind of the piece of the market that makes this such a vulnerable position based on who gets elected and how your assets are invested. If you’re heavy energy, unless it’s utilities, if you’re oil and gas heavy, because the market’s been pushed down—I like oil and gas. I’m kind of a long-term oil and gas user. I think that industry comes back as soon as airlines come back. We’ve got all these future retirees that still wanna do their European vacations and take their cruises, and people want to do that once this all kind of blows over. That demand for oil and gas comes back at strong thresholds. As much, I don’t know. I don’t think we’re gonna be where we’re at today. That’s why I’m an optimist in that area. With a Biden election, maybe that’s a problem.

Dan: One thing is consumption is a key driver, but regulation’s another. Clearly, these 2 candidates are total opposite ends of the spectrum in term of fossil fuel regulation, there’s no doubt about it.

Ben: I think the one piece about it, this is the first year we’ll have less gas and oil consumption in the US in any preceding year, because of the pandemic and the stay at home orders. Even in the previous year when we had more oil consumption in the country than the previous year, and we had the highest clean energy initiatives we’ve ever had, so more and more clean energy is being created. I think that speaks to the amount of oil consumption—we’re just absolutely dependent upon. The infrastructure has never been strong enough. You make a great point about China, if more solar comes, that’s gonna push more opportunities in China, just in the nature of the panels.

Dan: That’s a sub-sector of the sector itself, but considering the fact that in all likelihood, China will manufacture these solar panels, and American will install them. Getting back to the point of gas consumption, regardless of how green an instrument it is, you’re still gonna ship it across the ocean, load it onto a truck and drive it to where it’s going.

Ben: I was talking to this gentleman that drives a truck for a living, and we were chatting about how crucial that industry of transportation is. We are – every American should be thankful for every person willing to go out and drive for us and get the stuff we need all over the country. It doesn’t happen that way with—even if you’re loading trains to get stuff across the country, it’s still gonna get loaded onto a truck and get shipped somewhere.

Dan: Or a moving company that gets a Lamborghini. [Laughter]

Seth: Let’s talk about taxes, guys. The general or the gist, that I’ve seen, is that if you’re making over 400k, Biden is gonna have some significant increases in your taxes. The corporate tax rate is gonna be going up from 21% to 28%. That’s a huge difference in the corporate tax rate, but the top tax bracket is currently 37%, moving back to 39.6%, and if you make over 400k, there’s also gonna be social security tax there.

Ben: There’s a ton of stuff going on. We’ve already jumped into the Trump conversation to create a baseline of this. When Trump came in, he created a number of tax cuts, corporate and personal. He increased the child deductions, he made them basically credits, they weren’t just – they literally came off the amount of money you owe, which is a different type of tax, which was more beneficial for the average person who has children. Basically, he wants to keep these tax cuts flat. When Obama was president, the corporate tax rate was 35%. In Trump’s admin, they lowered it to 21%. Trump’s remains as is, we all agree on that, for the most part, other than the payroll short term tax cut?

Dan: Not a lot of changes to the platform. The expectation would be, should he remain in power, or would the tax scenario would remain the same?

Ben: The one thing that might change—he wants to find more stimulus, there’s some level of stimulus package that’s being sought after, and whether they get it through the payroll short term tax cut, I have no idea. I don’t have a solid pro or con opinion on that. We chatted online about the 2% cut they made, that didn’t really seem to do much.

Dan: I think one of the reasons Trump has kind of struggled with this payroll tax holiday suggesting is twofold: One is to defund social security, which is a major issue for all of us. Another point I saw that was interesting was really the most harmed element of our economy is that people are unemployed, and that’s not gonna help them. You don’t have a paycheck.

Ben: Absolutely. This is really—I think what the hope here is, by doing the payroll short term tax cut, that that would reduce the employer’s side of the financials that would allow them to afford potentially more employees to rehire. I think that’s the hope.

Dan: There’s 2 directions around the stimulus and Trump’s point is to reduce the burden on small businesses, in hopes that they hire. Biden’s platform is just send the money direct and hope people send it.

Seth: There’s a lot of moving pieces here. Kind of some takeaways: it’s important for us to lay out, not just the articulation of these numbers, but just takeaways for people that they can understand as they’re going about their daily lives, what is this going to look like for us.

Ben: With Biden and how this is gonna look, basically, his proposal is raising taxes on a number of different areas that will create somewhere between—there’s a number of different estimates but $3-4 trillion dollars in the next 10 years. This has to do with a couple ABC’s: one is to raise corporate tax rate from 21% to 28%, so he’s not bringing it back to Obama levels. He’s taking the top tax bracket, as you mentioned earlier, Seth, from that 37% to the 39.6% that it used to be. Pretty much not gonna happen, not gonna affect the average Joe for the most part. This is definitely more – if you’re in a corporation and you’re the acreage Joe, that would affect you. The big piece here is the Social Security item. This is something people might find completely irrelevant to them, and others would say that’s something I need to discus with my CPA. Social security tax on a self-employed individual, it stops at $137k. If a husband and wife each make $137k, they’re both paying social security tax to that number. After that, they don’t pay social security tax anymore. That’s where the current social security tax hits. If a wife makes $200k, they’re only paying social security tax on the first $137k. You’ll find a lot of self-employed people won’t give their spouse a paycheck for that reason. The move here is that social security tax would restart. You’d get social security tax up to $137k, and it would restart again at $400k. Let’s say you’re a self-employed person making $500k, and your wife stays at home with the social security piece, let’s say that stop your income at $400k, and pay your wife $100k to get her social security credits and also some income level items in her social security benefits.

Dan: Interesting take. That would make a lot of sense.

Seth: Folks, you’ve heard it from Dan, Ben, and me. This is the Trump vs. Biden show, it’s been a lot of fun brining you some numbers today. I can’t wait to see what happens next. It’s an exciting time of our life. Dan, thanks for being here.

Dan: Appreciate it, Seth. Thanks for having me.

Seth: That’s gonna be it for us at Money on Tap. Make it a great week.

SUMMARY

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

For anyone keeping up with the news, the year 2020 has been full of twists and turns, with one of the biggest debates being the upcoming Presidential election. Trump vs. Biden: who will win? On this episode of Money on Tap, Ben and Seth, along with a special guest, break down the details on how the stock market will be affected depending on who the winner of the election is. There’s statistics, predictions, and discussions around different things that the presidential election will ultimately affect. So if you’re wondering whether or not to invest depending on the final outcome, you came to the right place! Money on Tap will help you figure out how to best handle your finances before and after the election.

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

Money On Tap Show 139

401K - How Saving For Retirement May Not Make Sense 21494366

Seth: Welcome to Money on Tap. Your personal finance headquarters, where we bring out the professional’s experience and some fun. What we call 3-D investing, utilizing insurance, brokerage, and fee-based planning, that’s what we do on this show. We look at all sides of the issues, we bring a fully independent planning perspective to the table. Welcome to Money on Tap. My name’s Seth Krussman.

Ben: And I’m Ben Brayshaw.

Seth: What a show we have today. We cannot wait to get into this with you because it is so far out of left field from what we typically hear most of the people chattering about these days. We’re going to be talking about 401ks. We’re going to be talking about how these plans may no longer make much sense for savers.

Ben: Wait, did you say they’re not going to make sense for us, Seth? Tell me that again.

Seth: That’s what I’m saying. I’m saying that yes, it may not make sense. How is it possible? You’ve gotta stick around and find out. So glad to have you aboard today. Imagine your favorite landscape out there in the month of late August. That’s where we’re at today. Hopefully, you guys are enjoying some sunshine and you’re finding some light in your life to shine into the darkness, right? There’s certainly some opportunities to do that. We’re gonna do that here on Money on Tap. We’re gonna raise the bar. Ben’s gonna make you laugh a lot [laughter]. We’re hopefully gonna bring some things to the table today that you can bring home with you and have some dinnertime discussion with the family and your significant others, to think about your situation. Where you’re gonna be in 5 years. 10 years. Ben is walking away from me right now. He’s out. He said Seth, you’ve taken this show in a completely different direction than I was going, and I’m out. I’m still here for you, you still here Ben? You gonna come back?

Ben: I’m here. I wanted to go get my notes that I had left on the other table, so.

Seth: You really raised some of my abandonment issues there. Can’t even tell you how—I was feeling so alone. We’re gonna [laughter] have to re-record this show, just from the get-go, just so you folks know. If you wanna get a hold of those, like, hey these guys aren’t making sense right now, but we’re gonna have some fun and we’re gonna bring some good things to the table. We’re gonna help you get on track with your money, and your retirement. That’s a goal we have today, and hopefully we have some fun doing it. You’re listening to Money on Tap, you can reach us at 855-226-8551 or info@yourmoneyontap.com. If you missed it that first time, we have a podcast, you can grab it, and we’re gonna say it a couple more times throughout the show. Before we do that, it is time for money in the news.

Ben: Seth, we have some big news coming in here to our stock market. The Wall Street Journal had an article, the S&P 500 jumps to a new high, erasing the pandemic losses. Wow. That’s what probably everyone’s saying. We talked about this last week in our show about how we believe the market has continued to rise, that there’s going to be this constant push because of a huge swing from the bon market to the equity market because of yield. People are searching for yield. That has to do with the fed dropping rates. What’s interesting about this article and what brought it to life for me, is they actually talk a little bit about that in the article. They talk about how there is so much in the involvement of moving money, there’s this huge amount of people who actually sold way down in the market. Low 20,000 DJI range, they got out of the market, and they’re out, but where is all this money coming from? They’re actually saying that the bond market is really shifting to the equity side, looking for yield, because the bon market and the fed pushing the rates down so low, it’s becoming appealing. It’s definitely moving things forward.

Seth: This is an interesting thing for us to dive into, right after we have a show on the S&P 500. We articulate some of the things that you probably didn’t know about the S&P 500 that you didn’t know that you should be aware of. How much of the S&P is in 10 stocks, is what we boiled that show down into, people don’t know that it’s good for you to have it in mind. If you’re getting nothing from your bond portfolio, and there’s a load of cash out there in bonds, and the return, or the yield off of the S&P 500 is greater than that bond market, a rational human being says to me, I want that, right? Can you get—these are bond traders, these are market—they get it. They’re not emotionally tied to these returns and yields. It’s a different person out there than the original person that Ben was articulating, that got out around 20,000 on the DJI. That’s the retail investor, the majority of people out there dealing with their 401ks, trying to figure out how to retire. That’s you when you come to us and we have the conversation, this is how you do it. You don’t do that, because you will not be a person that’s very happy in the long run. The bond market coming into the equities market, right?

Ben: Yeah, we have $40 trillion in the bond market, and somewhere between $25-30 trillion in the equities market, and you’re looking at these risks. I was wondering if the WSJ—$40 trillion dollars in the bond market. $30 trillion in the equities stock market. If you’re chasing yield, and you’re an investor on yield, even though stocks are riskier than bonds by their risk nature, when your yield is 2-3 times on one side vs. the other, sometimes you want to take that risk, and I think that’s what’s happening—that’s what I believe is going to happen on some level, which is why I’ve been talking about the DJI crossing 30k in the 4^th quarter or the 1^st quarter next year. We’re saying that in the middle of a pandemic, I really thought because of the yield, and the compression of rates, there’s just really nowhere to go for money and return, and companies have to look for that.

Seth: Ben, you didn’t just say that last week, you said that 3 years ago, 5 years ago, and frankly, yeah, a little bit ahead of your time. That’s one of the things that Ray Dalio, if you’re familiar with the largest hedge fund in the world out there, has had a couple moments in his career too. Congratulations to you.

Ben: After the stock market dropped 34% from the February high to that March low, there was a lot of fear. A lot of fear, and that’s when advisors of all sorts can be helpful, because it helps you see the forest through the trees. Getting some perspective on what things are, and what’s going on, we were able to make allocation changes, and adjust, and we made purchases and types of assets we never owned before. The market’s up, we’re up, things are good. The market’s moving forwards, but there’s a lot of hesitancy in this world, and I mean, I know we’re holding a percent cash position in our management portfolios. We’re concerned there’s going to be a pullback on some level. The equity market has a lot f steam behind it as people chase rates. What happens to the bond market, a lot of people are talking about. We mentioned last week on the show too, there’s a lot of foreign money coming into the US, looking for rates as negative yields exist outside this country. That’s an interesting thing. Not to spend too much time on this article, but I’m going to jump over to the opposite version of this article, which is our friend, Warren Buffett. You wanna take this one, Seth?

Seth: I always wanna take the Warren Buffett and run. Yeah, love Warren Buffett, our friend. He got into the business at the ripe age of 25 years. If you’re not familiar with, or have never heard the name Warren Buffett—

Ben: There’s not much we can do for ya.

Seth: [Laughter] Welcome to the show. 1956, he got his career going, it was pulled together combined with $100k from his mom, sister, aunt, father-in-law, brother-in-law, sounds like a financial planner in the early stages of his career, right? He invested in companies, he believed he was undervalued, and that’s a value investor, what we call them today. In charge of management, free from his 7 partners, but enjoyed 25% of any gains beyond 6% return. That was the model that he was going in with. Here’s what’s really the point. In his 2^nd year, Buffett writes a letter to his stockholders, right? His partners, right? He says, my view of the general market level is that it’s priced above intrinsic value. The market’s overvalued. This view, if accurate, carries with the possibility of substantial decline in all stock prices. It appears to me that the decline in stock market prices has been less than the corporate earnings power under present business conditions. At any event, I think the probability is very slight, that current market levels will be thought of as cheap, 5 years from now. Fast forward, Ben?

Ben: This is crazy. When you think about it, in 1969, he achieved the annual return of 24.5% after deducting his fee. If you invested $100k with Buffett in 1957, it’d be worth today about $1.7 million. The annual return of the DJI was almost 7.5%.

Seth: Not today. That was the time period, the 1957-1969 time period, if that was the investment you made. Amazing.

Ben: This is a pretty phenomenal scenario, what has run the course. What ended up happening with Buffett was, he became the Chief Executive of Berkshire Hathaway. That’s the company a lot of people know of. What they didn’t know was, basically, they were a textile manufacturing company that was poorly performing, and then ultimately, he ended up investing in other companies across the—Wells Fargo, Fruit of the Loom, Geico—he has owned so much stuff inside this company. What’s interesting about this is that no one—industry or business—has limited its ability to return in its own industry, and that’s kind of what Buffett did here. When you really look at this whole thing—the reason for this article was that even Buffett has always felt that the stock market is overvalued. People are looking at the stock market and say8ing the S&P 500 is at its all-time high. Do I put my money in now? That’s the real million-dollar question. I’ll tell you what we’re going for people right now: we’re putting some of their assets in and holding some in cash. We’re not completely investing 100% of all assets, but even in our management portfolio, we’re 8% cash in those holdings. We know that pullbacks are inevitable in every market cycle, and even though there’s so much of this world that is doing well, inside that, a lot of the estimates are based on 2021 returns, and what expectations are net year, and that’s where people are investing.

Seth: There’s a part in Buffett’s career where he just about closes up shop, right? Calls it quits, and I think of where we originally were at with the people jumping out of the market, as the market took a dive in February through March. In March, we were having these discussions about what was the market gonna be like? Every investor has had that instinct to roll it up and walk away. It’s too much for me to handle, I don’t believe there’s an opportunity moving forward. There’s America, folks. That’s what Buffett comes back this year to say, do not bet against America. Wow, I get tingles when I think about that.

Ben: That’s where you have to be in this globe. Our next article is from the WSJ, this is interesting because this kind of has a very similar flair. I liked how all these pushed together well today. Simon, we’re talking about the Simon property group, which owns all the big malls in this country. The biggest US mall owner shows 2 sides: innovator, and traditionalist. What they’re talking about is, Simon property is doing a couple things. One is, they’re engaging with Amazon about using some of their big box store retail locations, like where the JCPenney’s are located, or whatever, Kohl’s, they want Amazon to make that a distribution portion of their warehouse. This is pretty interesting because Amazon’s looking at that and saying we can make this retail and warehouse space. For people who have any background with Amazon, they don’t have central warehouse space in the middle of the US like a lot of companies do. They own lots of little warehouses, so they can create this expedited delivery. Is this a problem? The big box stores are what have attracted a lot of people to coming to the mall. You go to Best Buy, here, there. That’s really where you end up saying, I’ve gotta go to best buy and then I’m gonna run over there and get a smoothie here, I’m gonna go to the apple store. They’re saying Amazon may be the draw where you go for retail, and you go and pick up your packages for same-day delivery. That’s an interesting piece, but Simon’s not limiting themselves. As Buffett had mentioned in that previous article, to one industry. Simon is in the middle of—they bought Aeropostale in 2016 out of bankruptcy, and that has been a successful transition. They bought other companies as well, and they agreed to buy Brooks Brothers and a couple other companies too, right Seth?

Seth: Yeah. JCPenney, you mentioned Aeropostale, Lucky Brand Jeans, there’s been over 26 retailers that have filed for bankruptcy thus far. They’re being restrained, and I think one of the things that I would applaud them on here, is restructuring in their environment. It’s incredible. Amazon is coming into this market and they’re doing so many things differently, like the curbside pickups, or if you’ve ever returned anything to Amazon, you have to have it picked up and dropped off. There’s things in the malls now, the building’s there, it’s just fitting it for the purposes of what Amazon uses it, or how they use it. To me, it almost looks like a match made in Heaven, but a totally different design of what I’m used to going to the mall in Christmas and looking for the Cinnabon.

Ben: I think this is a genius idea. I think it’s going to create more traffic than the standard store, because you say, hey, I’ve gotta go and drop this package off. I want to try those jeans off, I’ll just go there and do it, so I don’t have to worry about ordering and returning. I can see that all coming down. This is interesting because this is just a rebuild of Simon Properties. I like it a lot and the thinking, the process, I can see it kind of coming together, and it’s some real potential.

Seth: Amen, brother. I think that’s it—that’s going to do it for us, Money in the News. We’re going to come back here, and we’re going to be talking about 401k plans, and how they may no longer make sense for somebody that’s trying to save for retirement. That is a mind-blowing thing—the words come out of my mouth and I can’t even believe that we’re going—that’s the possible thing we’re going to talk about next. When we come back, we’re gonna talk about 401ks, and how saving into them may not make sense. You’re listening to Money on Tap. My name’s Seth Krussman, and I’m here with Ben Brayshaw. You can reach us at 855-226-8551 or info@yourmoneyontap.com.

Ben: Hi, my name is Ben Brayshaw, one of the co-hosts of Money on Tap. If you have questions when it comes to your retirement, and you’re looking for a personalized solution, contact us at Brayshaw Financial Group. In today’s volatile stock market, we can help you plan to find your successful retirement solution. Am I saving enough? Am I saving into the right places? Do my investments match my appetite for risk? Do I have a tax strategy that’s going to help me keep more of what I earn? How can I maximize my SSI? If you’re like most people, you are getting closer and closer to your retirement, and maybe wondering if you’re taking the right steps. If you’re in retirement, you may be wondering, am I maximizing my income while preserving my state and caring for my family? We talk about all things financial, and what we call 3-dimensional investing, putting a plan around your financial future. If you feel like now is the time to start getting answers to some of these questions for your own situation, give us a call at Brayshaw Financial, at 855-226-8551. Headquartered in Bedford, NH, we have offices throughout New England, and across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation just to meet with us. We welcome you to our office. Call us at 855-226-8551.

Seth: Now back to Money on Tap, with Ben and Seth. My name is Seth Krussman.

Ben: And I’m Ben Brayshaw. I’m gonna tell you, Seth, I’m pretty excited for this part of the conversation, because we have conversations about 401ks all the time, every day. With every person, almost. I want to make sure that we get some good distribution out there for 401k plan people who are doing that. This would apply for people who are on 403bs. 401as, some different codes that people may not have heard before. If you heard those and they’re familiar to you, tune in. Why are these plans so complicated, and why are we suggesting potentially, they may not make sense for you right now? In 1978, the revenue act allowed the 401k plan to come about. Debate about the 1974 Employee Retirement Security Act. If you’re a history buff, you can look all this stuff up. When we talk about a 401k, we’re talking about a defined contribution plan. The contribution is is that you’re making a contribution, a defined amount that you can contribute. A lot of people back in the 80s had defined benefit plans, which are pension plans. It’s a defined benefit that you receive in retirement, and that’s something that we meet a lot of people have a small pension plan, small defined plan, and they still exist. They were tremendously burdensome for companies they were a problem for a lot of companies, because they couldn’t manage them any better than they could do anything else. They said, we need to focus on our business practice and not worry about the defined business plans. Not only were they burdensome, but they were also arduous. A magnitude that you couldn’t even understand. What would happen is, is that when the market didn’t perform, not only did the company have to meet whatever the percentage your math guy said, hey, you need to put this much in. if the market declined in an unexpected way, they had to come up with some of those losses to find benefit for you, as the employee would still meet its number. To find contribution plans for the 401k and the contribution plans, they took a lot of the ownness off the companies, and put it on you, as the average joe. Probably less qualified to manage the money than the company, but still just as difficult for everybody. The company said, we’ll put the plan in place. I have a conspiracy theory about this thing, Seth, and that’s why Seth is letting me run with this. I truly believe that it was like, hey guys, we’re giving you this pension plan, it’s only doing 6-7% a year, but you could be making up so much more money on the stock market, so we’re going to open up this 401k for you, and you could be making more, getting investments, and we’re being too conservative, too. Truth is, what was really going on was they were just removing that entire risk from the company’s back numbers, and it made the companies stronger and financially viable. Now we have a bunch of people who are really unqualified to invest money. It’s not their fault, they haven’t been trained. Education doesn’t teach you about 401ks, it doesn’t say, these are what these investments are. It’s complicated, and you start out, there’s not enough money for anyone to manage it. You get an 800-number to call, and they tell you to mix it between stocks and bonds, basically mutual funds, TFs, and no one really knows what these big words are for the most part. We have this huge, massive, enormous amount of money in 401k plans in this country. Still, people have no real bearing on what they should do, or how they should do it. In the 1980s, 401k plans made a lot of sense. It made a lot of sense because the marginal, federal income tax rate was 43% in 1980, whereas today that average, in the same capacity, is about 12%. When we talk to people, we say, we’re at such low tax brackets, and it’s hard to believe at the 50s and 60s, the top bracket was 80-90%. Now, our rates are so low, why would you put stuff away and defer taxes if you think rates are going up? If you think rates are going down, then putting money away, tax-deferred scenarios, deferring the taxes till I can pay it at a lower rate. If your range is 12%, it’s not bad.

Seth: It’s not. 12%, in comparison, is a huge discount. There’s a lot of other numbers and factors to consider in this conversation. We’re gonna do our best to A) not completely alienate you. Anytime we talk about taxes, I know there’s at least 50% of you out there that are like, oh shoot, here we go. Ben starts talking about those taxes again. We’re gonna drive some of these numbers so that they’re relatable and understandable, and so we have the discussions that are important to you. There’s other opinions out there as well. There’s also a little bit of disclosure here, too. Ben and I support 401k plans in our practice, right? We have clients that have businesses, and that’s a part of the business world, and the practice of us in financial planning, is supporting our businesses and what’s important for them. 401k plans have their places and they work, okay? We’re not saying that. We support that and we believe that the 401k has its place. What we’re gonna talk about is your place, potentially, and understanding that relationship and how that’s changed. Just like the denied benefit plan, or how the pension has changed. I was thinking about, Ben, as you were mentioning pensions. We’ve done a lot of shows on pensions, the possible downfall of pensions, but there’s been a huge transition away from them. I don’t know a pension out there that’s really making it. There’s nobody brought to our attention that we could say this is a pension that’s meeting its obligations and it’s doing really well.

Ben: It’s got more money than we’ve ever expected.

Seth: Right. We’ve raised the benefits because the money let us do that. [Laughter] Yeah, I don’t find that story. I’d love to be able to spin that one, but it’s not available to us. These plans are still available. We still use them, but it’s in a way that’s appropriate, and usually there’s a massive catch-up that needs to happen for the business owner to meet their retirement needs. There’s different versions of the numbers that we’re gonna be talking about. Some of the questions that we have—it’s not as simple as the tax rate in 1980 was X, and the tax rate today is Y.

Ben: I have those numbers for you, Seth.

Seth: Good because I’m gonna have to pass it back here. I’m gonna come up with the counter to the argument. One of the things I love to think about is, what was the price of a CD in 1980? 10% at least, right? I know we’ve talked about the specifics on these numbers. Google me this, google me that. It was huge, the difference in what was going on in that time, the market, was a big difference. You got it, Ben?

Ben: So the CD rates had plummeted in 1980 from 17.7% to 8.3% between March and June.

Seth: That’s a story we don’t talk about very often. Geez.

Ben: That’s a random question for you, Seth. Anyways, what’s really interesting about 1980, is there was a lot going on. The tax rates compared to 1980 and today are significantly different. The top tax bracket in 1980 was 70%. If you made $215k in 1980, it was a 70% tax rate. If you made between $35k-45k roughly, the tax rate was 43%. 43%--our highest tax rate right now is 38.6%, 37% officially. Our top bracket is that it’s almost twice that top tax bracket in 1980. Significantly different tax scenario there. Seth, what I did, which was interesting, is I went to this website. No bearing to its validity, but it was just an interesting thing. I googled historical calculators to look at average inflation for the value of the dollar over time, and how much income would be. An inflation calculator, essentially. To find out what $45,800, which is the highest bracket that this article had talked about that we had referenced, had us going into this black hole of 401ks. $45,800 today is $146,390.

Seth: That was $45,800 in 1980, right? Is that what you’re saying. If we were to derive that number today, it would be what?

Ben: $146,000. So three times as much money. I was playing around with that, and I started looking at what would that equal in taxes? When it came down to it, if you made $45,800 in 1980, you would pay 27.8% would be your average rate of tax that you’d pay. A little over a quarter of that would go to taxes. At today’s dollars, you’d only pay 16.25% in taxes. Significantly lower. That’s $146,000, it’s a lot of income.

Seth: Yeah, it is, and A. these are straight across the board numbers. We’re talking about a direct line correlation over here. This isn’t taking into account how many kids you have, or any other factors…

Ben: Which would only lower your taxes.

Seth: I gotta get another one of those.

Ben: Nope, no more kids. I did that. [Laughter] I love the ones I have.

Seth: I think the government cut you off. It won’t give you any more benefits.

Ben: When you think about it, we’re in a lower tax bracket, no matter how you do the math here. The point here is that if 1980 vs. today, your percentage of taxes is lower. If you’re putting money away in a 401k to not pay taxes to get that deduction, meaning I don’t wanna pay taxes today at a lower value than it was at 40 years ago, I’m not really a believer that tax rates are gonna go up or down. We say that people all the time, right Seth? We’re like, do you think tax rates are gonna stay the same or go down in 20 years? Most people say, I think they’re gonna go up. If you’re putting money away and not paying taxes at 12, 15, or 20%, and you think taxes are gonna go up, why are you deferring taxes to pay on that money at 30, or 40%?

Seth: That’s the question we’re gonna come back with: why are you deferring your taxes if you’re currently paying lower tax rates than hypothetically, you could in the future? Then why would you today? We’re gonna take a quick break, you can reach us at 855-226-8551 or info@yourmoneyontap.com. Hi, my name is Seth Krussman, partner with Brayshaw Financial Group, and one of the cohosts of Money on Tap. One of the biggest concerns and largest expenses people face today is taxes. Without thoughtful planning, taxes can destroy future retirement dollars, eliminating the possibility of a timely retirement, or dreams of what you want retirement to look like. If you’re like most people, you’re maybe wondering if you’re taking the right steps. Will my income be enough? Will my rising taxes force me to give up my dreams? How does inflation factor into all of this? These are real concerns, and you’re not alone. Putting a plan around your financial future is what we do. If you have questions when it comes to your financial security, and if you’re looking for a personalized solution, contact us at Brayshaw Financial Group. 855-226-8551. It’s time for you to start getting answers to your questions. Headquartered in Bedford, New Hampshire, Brayshaw Financial has offices across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation to meet with us. Call us at 855-226-8551. Now back to Money on Tap, with Ben and Seth. Welcome back, you’re listening to Money on Tap. You can reach us at 855-226-8551, or info@yourmoneyontap.com. We are talking about today, the 401k plans. They may no longer make sense for savers.

Ben: I like the word useless. I’m just kidding.

Seth: We are referencing an article from Bloomberg, by Aaron Brown. It’s kind what brought it to our attention. It was by no means the first time Ben and I sat down and had this conversation or had this discussion with clients. It’s important to understand how and why you’re saving your money. Where are you putting it right now, and why? That’s what we’re trying to understand. In taxes, driving through that tax scenario that Ben has already articulated, in 1980, if you had $45,800, and there was a 43% tax bracket that was the marginal tax bracket at that time, the effective tax bracket was around 17.7%. today, drive those numbers forward, and what would those numbers equal? $106,990 and a 22% marginal tax bracket today, and 16.25% effective tax bracket. Significantly less in taxes today. One of the things, and why I go back to this is because as you’re making those contributions to the 401k, one of the original significant values that was there, and this is the concept that we still are—we have this idea we are still working from, is that I will save today, not pay taxes today, and in the future, when my income is probably less than it is currently, I’ll be paying less in taxes and retirement. That’s very possible; we’re not at all disputing that your income is gonna be less in retirement than it is today, or because of that income being less, you might be paying less based off of your income in retirement, but what we’re talking about here is that there was a really sizeable tax incentive to me saving into a 401k. based off of the tax bracket alone, the effective tax rates alone, of 27.78%, that you’d be getting that discount into your 401k contributions off the top, that’s how that would work in your income vs. the 16.25%, that’s a savings right there, of 11%.

Ben: Yeah, I look at this as telling people, if you put your money back in 1980, $1,000 into your 401k, $250 of that plus was the government’s money. Where today if you put $1,000 in, only $160 of that is the government’s money. It’s a big difference. It’s still considerable savings, but when you think about if the government raises taxes to 40-50%, if you take $1,000 out, you may only get to keep $500. If you paid the taxes today, you get to keep $850 of it, you know? We’re talking about, hey, you’re gonna make money and so forth, on that is tax deferred, but not nearly the same as it used to be. The article that we found, which was gonna be a Money in the News article, which triggers the conversation we have with people all the time, I’m gonna reference a couple of its numbers, but it talked about in 1980 the 401k equivalent to an additional investment return was 9.2% a year. That was a significant increase in opportunity right there. They said fast-forwarding to today, that benefit only comes out to about .6%, okay? That’s immeasurable in that 401ks usually cost more than a traditional IRA, or with all the low-cost investment strategies you have. 401ks in the 80s and 90s, they had investment opportunities that weren’t all that public. You had a number of opportunities that were unique and special, and it gave you a larger breadth of the market without having to worry about stocks. That’s available to almost any investor today at a super low cost, and it’s made 401ks, in some scenarios, super expensive.

Seth: Originally, the 3.5% that they were gonna be charging in in or out of these 401ks, in the fees side, that’s no longer there.

Ben: It’s no longer there, but you could be in a 401k that still has a pretty high fee structure, and a lot of people don’t even know.

Seth: Oh, yeah, because I’m gonna choose the large cap allocation, mid cap allocation here, and I looked at mid cap 2 years ago, and it was through the roof. Why wouldn’t I wanna own that asset? But the management fee on top of that could be, you know, 2-3% if you’re not paying attention to that.

Ben: There’s a couple things that are causing people really to reconsider their 401ks. It has a lot to do with the fact that it’s not just the income tax rates, it’s the capital gains rate. The capital gains rate in 1980 was like 28%. The long-term cap gains. Today, if you make under $80k, it’s 0%. You could buy equities, make a bunch of money in them, and as long your income is below $80k in retirement, or wherever you’re at, you can collect that money, tax free. It was a big hit, and that’s higher than the marginal rate, for $80k, which is 22%, at old capital gains rate. There’s a lot of arguments around not investing in 401ks, or 403bs, because of the various different types of movements. For a lot of people listening, I know people’s heads are spinning and they’re saying, what are you talking about? These are movements that financial planners do across the board, whether it’s us or someone else. They’re telling you, hey, these are the pros and cons. This is what we should do. This is how we should do it. This is how long you should hold something. These are things in our background: Looking at capital gains rates and trying to mitigate some of these taxes. Today, the tax rate, the 12% range, which is the marginal bracket you’re gonna be i: $80,250. That’s a really low bracket. You’ve got another 8% to go up in the tax bracket world. When you look back at the 1950s and 60s, and the bracket was in the 90s range, and that’s hard to believe, but you can go back and google it yourself. It was 92% was the highest tax bracket we’ve had. You look at that and say, could we ever get there again? I say yes, we can get there again, and I think the 1 thing that could catapult us well over the 50% range would be a real, true healthcare system. Whether you’re for or against it is irrelevant. If we had that, we would be in that tax bracket. I think the lowest European realm that has a national healthcare system was a 53%. Those are real issues that we face long-term.

Seth: There’s a lot more to offer today. In comparison to 1980, that’s for sure. The most popular investment strategies today—hard to find them, but they’re still intact. The fee structures have come down, the tax code has changed, and one of the things we talk about is location, location, location. This is a location, and inside of the location, you have some different places you can put your money inside the 401k. What is the first thing we’re gonna say if you have a 401k or 403b in front of you—what is the first thing we’re gonna say, is, what does the offer look like? They’re gonna make an offer to get your money in the door. Most of the time, that’s what we’re gonna consider free money. And anytime—we’re not talking about the Prince from Nigeria here, we’re talking about—

Ben: You got that email too, Seth? I thought I was the only one.

Seth: Are you still waiting on your money?

Ben: I sent him all my money and he said he’d pay me back tenfold. [Laughter]

Seth: Lord, help us. [Laughter] So, free money. Order of operations, everyone’s got the filter they’ve gotta run through, and we’re gonna say hey, do you have access to free money out there, because that’s a bonus.

Ben: Yeah, that free money, that match from your employer is a raise that you only collect if you contribute usually, and there’s all sorts of metrics around—dollar to dollar match, some will match a quarter percent every percent you put up to 4—there’s all different metrics, and we can do math around those things. We usually encourage people to take advantage of the match. If you don’t have a match, there’s usually other opportunities we’re talking about or considering the tax codes, where we’re at today. Locking in other opportunities is good. The Roth side is good as well. Hey, is a Roth IRA a possibility, or does your 401k offer a Roth compatibility? You could say, hey, I’ll do this into the match in the Roth side, because my tax rates are low, and that’s what I wanna do. Those are the different things that exist out there, and that’s our number 1 reason to encourage someone to do the 401k. the other reason is sometimes there are other opportunities that people are looking for, like loans. People might say, I might need a loan, and 401k will give you the potential to get a $50k loan out of it, and we will encourage people to take that loan and pay it back. Not that we encourage people to take loans from their retirement plans, but you can do it there with a lot more flexibility that you can do elsewhere. If I were to get into the political realm left, and I know we’re wrapping up the show. I would say that there’s 1 thing we need to do. Our government needs to make employer sponsored plans a little more tax friendly. They need to make them tax friendly, and this is the reason why this article made it onto the top of the list. It talked about a lot of things that are kind of looming in the background, whether making the gains on retirement plans tax-free, like the Roth, or creating some kind of component of the 401ks much more attractive, because they’ve lost a lot of their appeal.

Seth: Given the current tax rates and non-qualified assets outside of the 401k, to potentially be better performers in the long run, and offer diversification, and that location that we talk about in your strategy, what is it that’s gonna keep you engaged in the 401k and that being the primary solution to your retirement? I love what you had to say, there, there needs to be more inside of the code that allows for the investor to have a better outcome, and taxes really strips away a ton of that opportunity if not done, or looked at, with understanding.

Ben: I look back at some of the mistakes I’ve made in this industry, and in the early years, was taking for granted and not evaluating the math behind 401k contributions, and telling people, yeah, max out your 401k. taxes have gone down in the years I’ve been in business, but surely there are opportunities that people could’ve expanded upon, and this is one of those things that people need to evaluate if it makes sense for them.

Seth: In 4 years, if there’s a regime change here, we could be telling you something completely different. We could be saying nope, max it out, because taxes are back. That’s one perspective. Guys, it’s been so much fun, hasn’t it?

Ben: It has, it has.

Seth: Ben, you’re not gonna walk away from me again, are you?

Ben: No, I’m here for the long run, Seth.

Seth: We’ve been having so much fun with you guys and we appreciate you sticking around. If you are asking yourself the question, what am I gonna do in retirement, how am I gonna be successful in retirement, give us a call. 855-226-8551, or info@yourmoneyontap.com. We’d love to come alongside you and see how you can make retirement a reality. It’s a big deal, folks. We take it very seriously and we appreciate you being here with us today. Thank you so much.

SUMMARY

Money on Tap provides an in-depth look at the best way to manage your finances as you get closer and closer to retirement. Hosted by Ben Brayshaw and Seth Krussman, this podcast is chock full of information regarding managing money, being smart with finances, and a beginner’s guide to stocks. This hour-long podcast is an easy listen and a great way to learn more about how to be smart with your finances.

On this episode of Money on Tap, Ben and Seth recap the pros and cons of 401ks as the tax rates are changing annually. For some, 401ks are becoming outdated and there may be smarter options out there for saving money in order to retire comfortably. In an easy-to-understand way, the co-hosts of Money on Tap explain what each option looks like and what the ideal choice is for savers nowadays. Rest assured that there is an option out there for everyone, and Money on Tap desires to help each person get the best out of their financial choices.

Ben Brayshaw and Seth Krussman are partners of Brayshaw Financial Group. Having questions about retirement and financial planning is normal, and the Brayshaw Financial Group is here to help! Reach out to Ben and Seth at 855-226-8551, or info@yourmoneyontap.com.

MOT Show 138 2020-08-12 21439335

Seth: Welcome to Money on Tap! Money on Tap, your personal finance headquarters, where we bring out the professionals experience, and some fun in what we call three-dimensional investing, utilizing brokerage, insurance, and fee-based planning. That’s what we do on this show. We look at all sides of the issues, we bring a fully independent planning perspective to the table. Welcome back, it is so good to have you with us today at Money on Tap, my name is Seth Krussman.

Ben: And I’m Ben Brayshaw.

Seth: So today, we are going to be diving in, dipping in, wading above, well, we’re gonna stay afloat, but we’re gonna get into the S&P 500 index, and we’re gonna talk all about this index. The pros, the cons, the places that you need to just be aware of as an investor, because you’re probably thinking, ‘Hey, this thing’s a totally equally weighted, diverse thing that I can be putting my money, because everywhere I turn around, everyone says S&P 500.’

Ben: Everyone says by passive S&P 500, and everyone thinks you’re buying something, and they’re not really sure what they’re buying. I think I’m excited to expose a little bit of this.

Seth: That’s a strong statement. I like to get our day started that way. If you’re new to us, welcome! You can actually reach us at 855-226-8551, or info@yourmoneyontap.com. As I say that, I realize that maybe you’re not new to us. Maybe you call us on the regular, you’re still welcome to use those numbers. They haven’t changed. One of the things that we’re gonna start off with in this show, is we’re going to start off with some money in the news. Tesla, look out, because Amazon has just put you on notice. Amazon now has purchased Zukes, and if you’re not familiar with Zukes, what is Zukes? Zukes is one of the innovators in self-driving cars. You know, it’s a startup that they picked up for $1.2 billion, just a couple pennies for Amazon.

Ben: It’s like nothing for them. I think they just feel like, hey, let’s play in the car market for a little bit. It’s interesting, because Musk called Jeff Bezos a copycat, which was pretty funny, I thought that was interesting. Zukes has some pretty interesting technology that they feel is cutting-edge for basically how it looks at the surroundings, and the environment, and the movement. I don’t know all the—whatever it is that it does—that’s so uniquely different, they tried to describe, but it wasn’t really within my ballpark of expertise. Zuke’s goal was to develop the robo-taxi. That is what they want to do. A self-driving taxi, and Amazon wants to move this into self-driving delivery, which is very interesting.

Seth: So, why would Amazon be interested in this? It’s a trillion-dollar reason at the moment.

Ben: Because they show up to our house 5 times a day.

Seth: So are you saying Amazon drivers need to be aware because there could be—

Ben: Amazon could do a little bit with the organization piece of delivery. I’ll put that out there for them.

Seth: Okay. Well, this is totally off-topic of course, but there was the delivery that was drone delivery. That was a while ago, in the news like last year, maybe.

Ben: I have never gotten a drone delivery yet.

Seth: I’m still waiting for mine. Things keep showing up, but you’re right, I haven’t seen—

Ben: You just wonder—completely off topic—if some guy at Amazon says, ‘I wanna have the coolest, greatest drone in the world, and let’s pretend we’re gonna do drone delivery, and we’ll write it off as a business expense, and we’ll fly them around headquarters.’ But anyway, this is interesting, because the article goes on to basically talk about the fact that Amazon, Tesla, and Google are literally seeking the self-driving supremacy world. These 3 companies are fighting hard for it, and it is definitely the wave of the future.

Seth: Amen to that. With that, we’re gonna move onto the next article for you today. A couple of them, actually, that we’re gonna run in tandem here. This is, again, Tesla. Why are we talking so much about Tesla today, Ben?

Ben: Well, just because it happens to be in the news.

Seth: Okay.

Ben: Tesla has just announced a 5 for 1 stock split. If you have 100 shares, they’re gonna give you 500 shares. This is big news because Elon Musk has said repetitively that his stock is overpriced, and that has been something that he’s talked about, either they do cut, and so-forth. When you have a stock split, there is no change in value. The company is worth the same whether you have 100 shares, or you have 500 shares worth 1/5 of the value. The company has not done anything specifically to increase the value of the company, therefore the shares should be worth exactly 1/5. The understanding is that if they do a stock split, it gives more of an opportunity for people to own this.

Seth: Ben, that just makes no sense to me, though. Because if you’re telling me that I have 1 share, and then after a stock split, I’ve got 5 shares, 5 is more than 1.

Ben: Yes, it is, but it is 1/5^th of the value. This is interesting. There are so many opportunities to own stock, and you don’t have to necessarily split your stock, you can buy partial shares at different houses. I think Goldman-Sachs offers that ability and so-forth. So this isn’t entirely necessary, but what’s interesting about stock splits, and one of the arguments around not doing stock splits vs. doing stock splits, is a really high, expensive stock, like, you know Tesla’s $1400-1500 a share. There’s less volatility in a higher stock, theoretically. Someone who’s putting a few hundred dollars in a month in their brokerage account can’t buy Tesla that way, they’ve gotta save up for a few months to buy one share. When it drops way down, they can trade it more actively, and that’s something that may create volatility in the share price, and a concern for some investors.

Seth: That’s true. Same thing with Amazon. If you were to try to buy Amazon, you’re looking at a 6-month period before you’d be able to pick up a share at Amazon if you’re saving $500 a month. Certainly, that might deter me a little bit from—6 months of my savings in buying one share, vs. being able to pick it up here and there. I like what the brokerage houses have done with that, making it more readily available with partial shares, but I think one of the things there that I look at is their employees. A lot of their employees purchase stock programs that they have, so lowering the price there can make that more readily available for the employees to buy.

Ben: I’m pretty much in favor for a stock split. I think that it’s good for the overall market, sometimes, to have a stock split, to allow activity to occur. There’s a lot of people that want to get invested, and if you want to open your company to a broader range of investors, stock splits make it easier.

Seth: I agree. With that, there’s another stock split. This is not the stock split show, it just happened to show up on the radar. With Apple. I love the names we’re talking about today; we’ve got Amazon, Tesla, Apple, and Apple is doing a 4 to 1 stock split here. It’s nothing they haven’t done before, I want to say, what was it, 2014 and 2006, they’ve done this previously, but what’s different here, when we say Apple’s doing a stock split, is that Apple is not only in the S&P 500 index, it’s not only in the Nazstack, it’s also in the…what?

Ben: The Dow.

Seth: That’s right. So, this is an S&P 500 show, because we’re gonna loop back with some more Apple down the road here, and what that looks like in comparison from the S&P 500 and next to the Dow. They’re not created the same, the DJI and the S&P 500. So it makes a big difference when there’s a stock split with a stock in the Dow, because it is a price weighted index. What does that mean?

Ben: The thing about how they measure, and while these indexes are so relevant, is because of how they’re looked at. When your price weighted index, it’s much more complicated because it’s basically the higher your share price, the more impact you have to a price weighted index. When you cut your share price, it’s going to have less impact. Apple, who’s number 1 or number 2, I think they’re number 1 in the DJI right now, but they will be middle of the pack at best when they do a stock split. They will have less impact on the DJI moving forward. The SMP doesn’t have the same impact here. What’s interesting is, is that, with Apple, this 4 to 1 stock split, as of August 24^th, 2020, if you own Apple, you’re going to get 4 shares for every 1. I think this is their 4^th or 5^th split, they were added to the DJI back in 2015, so they replaced ATT&T, if my memory serves me correctly. They’ve had, I think this’ll be their 5^th split. Last time they split was in 2014, which was a 7 for 1 split. That’s kind of interesting. Apple has repetitively done this, this is part of their culture, it’s part of their story. They have done this because they believe there’s so many people who want to be a part of Apple, and it’s been a goal to always make it an affordable stock price. That is kind of an interesting thing, and there’s some other dynamics around this that will really play into our show moving forward, and I’m excited about it.

Seth: You’re listening to Money on Tap! You can reach us at 855-226-8551, or info@yourmoneyontap.com. Get ready, because when we come back, we’re gonna be talking about the S&P 500 index, folks. It’s gonna be a lot of fun.

Ben: Hi, my name is Ben Brayshaw, one of the cohosts of Money on Tap. If you have questions when it comes to your retirement, or you’re looking for a personalized solution, contact us at Brayshaw Financial Group. In today’s volatile stock market, we can help you plan to find your successful retirement solution. Am I saving enough? Am I saving into the right places? Do my investments match my appetite for risk? Do I have a tax strategy that’s going to help me keep more of what I earn? How can I maximize my SSI? If you’re like most people, you are getting closer and closer to your retirement, and maybe wondering if you’re taking the right steps. If you’re in retirement, you may be wondering, am I maximizing my income while preserving my state and taking care of my family? We talk about all things financial, and what we call 3-dimensinoal investing, putting a plan around your financial future. If you feel like now is the time to start getting answers to some of these questions for your own situation, give us a call at Brayshaw Financial, at 855-226-8551. Headquartered in Bedford, NH, we have offices throughout New England, and across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation just to meet with us. We welcome you to our office. Call us at 855-226-8551.

Seth: Now, back to Money on Tap with Ben and Seth. Welcome back, you are listening to Money on Tap, and we are about to start the S&P 500 show. You can reach us at 855-226-8551, or info@yourmoneyontap.com. Why is this such a big deal for you? Let’s talk about some of the history first, so you can understand, why would we even have this as a topic on this show.

Ben: Yeah, this is one of those things where everybody is an index investor, it seems like. Walks to our office and says, ‘Yeah, I have the 401k, I have the S&P 500 index, and I own the VOO or the IVV, or the SPY,’ and that’ all they own sometimes, which is a little scary. We use some of these ETFs, we’ve used ESPY and the IVV right now, those are two that we’ve used and are using. We’re not recommending those for anybody, but I would say that they’re kind of becoming commonplace for a lot of people, because they’re saying, ‘Hey, I wanna invest in the market, and I’m really not sure what to buy specifically, so I’m just gonna buy the SPY, and get general market exposure on this large cap, big boy, blue chip companies.’

Seth: It’s truly a backbone of investing if you are in the market. That’s one of the biggest pieces that we can take here, is when taking a look at the broader market, and how is the market doing? It is the go-to, the S&P 500 is the go-to for anybody out there that’s having a discussion around the market. It’s important for you to understand what’s under the hood here? We’ll get there, but before we do, where does it even come from? When we say S&P 500, also referred to as the SMP, it was introduced by Standard Imports in 1967, as stock market index, to track the value of the 500 large corporations listed on the New York Stock Exchange and the NASDAQ deposit, a couple of things we’ll get to down the road. Collection of stocks make up the SMP, and it’s intended to represent the overall composition of the US Economy. Are there more than 500 companies that are publicly traded within this band, this tier? Yeah, there are. You can take a look at the Russell, Russell 3000 pulls in 3000 companies that are pretty much these large cap, larger cap, and they break that 3000 into some small cap, and some other caps inside there as well. There’s some different ways to look at the US economy, as a whole.

Ben: Lots of caps going on here, Seth.

Seth: Woohoo!

Ben: I think the thing is, one thing that’s really good about the concept, or the conversation around the S&P 500 is that we have real conversation about 500 to be potentially the largest companies in the US. So it really gives us an indicator of where the US economy and the larger company space is moving.

Seth: Is it a perfect conversation? Is it a perfect index, or a perfect view of what is happening in terms of our economy? You could argue one way or the other.

Ben: As we look at these hidden risks of the S&P 500, and as we go through this today, I think we’re really gonna have a lot of people say, ‘I agree, or I don’t agree with this being an issue or a concern for me.’ For the people who feel maybe that these hidden risks are relevant for you, we’re gonna have some solution pieces around how to address some of the risks that are associated with it. As we go through the S&P 500, and Seth, you’re talking about the history. I think one of the pieces about the S&P 500, because it’s kind of mysterious, right? With a DOW, we have 30 stocks. You can look them up, you can read about them, and so-forth. The S&P 500, standard imports doesn’t put a list out of the 500 stocks, okay? I think that’s where we start getting a little bit, like, well then, who’s in there? You don’t have a list?

Seth: And how much of who’s in there—at what level is in there?

Ben: Right, I mean, it’s a little bit, I don’t know, concerning on some level. You say, ‘Hey, we got this index,’ that the Standard Import is doing, and they’re not gonna tell you a little bit about it, but they’re gonna take the company’s market cap, which they base it on, they base it on a couple different things, which is a little ambiguous, but they basically take the publicly traded shares, and they do the math around that on the market cap. And they divide by the total of all market caps, but we don’t know what the total of all the market caps are, because that divisor is unknown, because they don’t let us know what the S&P 500 is truly made up of. So how—when you buy the S&P 500 index fund in your 401k, do you even know that you’re buying the S&P 500?

Seth: You don’t. That’s it. You really don’t. As close as you can possibly get, is really the best solution that anybody out there, creating the tradable indexes that we’ve talked about, that Ben’s talked about, that’s as close as you’re gonna get, folks. Some of it’s pretty darn good, right? That’s the deviation off of these, is that some of them are less near to the index.

Ben: I mean, this speculation around the different holdings, it’s astronomically broad, because the thing is, it’s the 500 largest US companies. We all know that Amazon, Netflix, Google, Microsoft, you know, PayPal, whatever, we know that these companies are in there. They’re definitely in the top 500. Some of the calculation methods that they’re doing, kind of the last few, last 50 or 100 or so, is kind of ambiguously in question.

Seth: You know, it’s not the same method, but you are in kind of the same place when you talk about the DOW, right? The DOW-30, which is kind of the big retail investors, which is what everybody has looked at out there, for those 30 companies. There’s still some proprietary information that you’re gonna get close, but you’re not gonna have the exact number on.

Ben: They kick people out of the DOW, too. GU was kicked out of the DJI what was after 109 years of being in there, or some crazy thing. The question mark was, should they have been kicked out?

Seth: They didn’t ask me, so I don’t know.

Ben: They didn’t ask me either. These are things that these indices have. We base a lot of trust and belief in the movement of the market, based on these indices, and honestly, there’s so many pieces to them that we don’t understand, don’t know. How much market manipulation goes into indices. How much market manipulation goes into indices? We believe it, we go, ‘Hey, the market’s up today, because the indices says it is.’ But then you go into one piece that’s very interesting, okay? Why is the total dividend yellow, the S&P 500, just 1.8%, but according to Fact Set screen, the average company in the index is yielding 3%?

Seth: That has to do with the market capitalization and the waiting.

Ben: Darn right it does. When you start really breaking down these different pieces, you say to yourself, ‘How am I doing?’ we have benchmarks and all these different pieces that we compare, we say, ‘Hey this is how we invest,’ but if you buy the S&P 500 index of any one of these, and then you say, how does it compare to the S&P 500? It’s just very interesting how they can be completely—they’re trying to mimic it, but they can be off.

Seth: So, key takeaways on these pieces, are that the S&P 500 index is a market capitalization weighted index, of 500 largest US publicly traded companies. It’s a float-weighted index, meaning the market company’s capitalization are adjusted by the number of shares available for public trading, only public trading shares. The index is widely regarded as the best gauge of the large cap US equities. That’s debatable, but as a result, there are a lot of funds out there that are designed to track the performance of the SMP. I don’t know how many 401k’s out there don’t offer something that is either in a mutual fund form, or an ETF form that’s designed to track this, but if yours doesn’t, call us. Because it should be there, somehow, some way. We’re going to get into, what is the breakdown? What are the specifics? Why would there be any kind of a takeaway that you should be cautious, as far as your understanding of what’s in—you’re listening to Money on Tap, you can reach us at 855-226-8551, or info@yourmoneyontap.com. We’re gonna take a quick break and we’ll be right back, with more on the S&P 500 index, how’s it put together, and what you should know about it.

Seth: Hi, my name is Seth Krussman, partner with Brayshaw Financial Group, and one of the cohosts of Money on Tap. One of the biggest concerns and largest expenses people face today is taxes. Without thoughtful planning, taxes can destroy future retirement dollars, eliminating the possibility of a timely retirement, or dreams of what you want retirement to look like. If you’re like most people, you’re maybe wondering if you’re taking the right steps. Will my income be enough? Will my rising taxes force me to give up my dreams? How does inflation factor into all of this? These are real concerns, and you’re not alone. Putting a plan around your financial future is what we do. If you have questions when it comes to your financial security, and if you’re looking for a personalized solution, contact us at Brayshaw Financial Group. 855-226-8551. It’s time for you to start getting answers to your questions. Headquartered in New Hampshire, Brayshaw Financial has offices across the country. We’d love the opportunity to show you how we can help. There’s absolutely no cost or obligation to meet with us. Call us at 855-226-8551. Now back to Money on Tap, with Ben and Seth. Welcome back, you’re listening to Money on Tap. You can reach us at 855-226-8551, or info@yourmoneyontap.com. Today we are talking about the S&P 500 index, and one of the most widely quoted American index, because it represents the largest publicly traded companies in the US. 500 of them. It really focuses on the US Market’s large cap, which is capitalization. When we say cap, that’s what we’re talking about, the sector. It’s also float-weighted index, which means the market company caps are adjusted based on the number of shares available for public trading, and it goes up, and it goes down.

Ben: You know, Seth, you were right on, man, just led me right into where I wanted to go. The thing about the S&P 500 is that when it was introduced in 1957, during its first decade, it rose nearly 700 points, okay, and then between 1969-1981, it eventually fell to under 300. The S&P 500 is trading between 3300-3400 today, so that’s a significant difference from the 300 levels. If we all want to think back to 2007, which most people don’t, okay? Beginning in October, it bought about, in 2009, from to about 57.7% DSMP loss, so you would’ve lost about 60% of your money in the S&P 500.

Seth: Over a roughly 2-year period.

Ben: Barely, barely. That’s what’s scary about that, is that it is such a popular investment, right? It’s pretty much the mainstay conversation for the vast majority of people when they look at their 401k. you say, why is that, with an inidicy that has dropped 60%? Over the last decade, we’ve seen it reach its all-time high, its climbed over 400%. So in the last 10 years, if you didn’t know the S&P 500, you didn’t see those kind of returns. 400%, it’s like, that’s like a decade, that’s 10 years. If you double your money in 10 years, that’s 7.2% rate of return. If you were to look at the bottom and you look at the top, we have had an astronomical level of growth in there. Why is that? Why is it that we’re talking about hidden risks, potentially, in the S&P 500, in the investment, in these types of popular, mainstream investment items? That’s because of a lot of the unknown factors. Seth and I, we talk to people all the time about how when you own the index, you really don’t necessarily own 500 companies. That’s the thing, when people buy indexes, they think they’re getting this broad range and very diversified allocation, and I want to bring to the forefront today, a couple of the holding patterns of the top 3 indexes we hear spoken about, and that would be the SPY, that’s the spider comparison to the S&P 500, the VOO, which is the vanguard, and the IVV. It’s a little bit concerning when you break it down. What we’re talking about here is—anyone can do this. You can go to Yahoo finance, which is where I’m looking right now. I’m going to the holding summary of the SPY. When you think about the S&P 500 being 500 companies, 500 different stocks, okay? When you buy the SPY, the top 10 holdings will consume 26.8% of your total assets. So over a quarter of your investment is in the top 10 holdings, okay? Matter of fact, when you look at the top 5 or 6 holdings, you’re at about 20%. What I see here is, Microsoft is at 6%, Apple’s at 5.78%, Amazon’s 4.49%, Facebook is 2.1%, Google combined is a little over 3%, Johnson and Johnson is 1.44%, Berkshire Hathaway is 1.35%, that’s the B class. Visa is 1.7%, and Proctor and Gamble is 1.15%. when you buy the SPY, you have 10 companies that are automatically over 25% of your entire portfolio. If I go and look at the VOO, I have a very similar mix. 25.59% are 10 holdings, which also include Microsoft, Apple, Amazon, Facebook, Google, J and J, Visa, Berkshire, and Proctor and Gamble. The percentages are a little different. They own a little more of Visa than Proctor and Gamble, but we’re talking about less than 10 or 15 basis points here. The rest of the stuff is pretty much in line. When I go to IVV, which is just the iShares version of the S&P 500, I have a very similar story. All pretty much the same, okay? But that’s 26.9%. Now, all 3 of these say that when you invest instantly, a quarter of your money is in 10 stocks. That doesn’t give you really some kind of very composite based, diversified exposure, in my opinion, to the S&P 500. What’s really funny is when I take a step in the other direction, and let’s say I wanted to just own the tech sector, and I said—you called me and said, ‘Ben, I really want to own the NASDAQ, and the common NASDAQ ticker in the TF world is QQQ, and I just want to compare the actual holding differences, okay?’ The percentages are different, but the actual holding show a very interesting similarity. The top 10 holdings in the VMO I mentioned were Microsoft, Amazon, Apple, Google, and Facebook. The first few holdings in the QQQ are Apple, Amazon, Microsoft, Facebook, Google. This is meant to be a tech holding, the difference really is, there is a difference. The difference is that the top 10 holdings in the QQQ will actually amount to 54% of your holdings. If you said to me, ‘Ben I really want to get the S&P 500, but I want to focus in tech, and I want to do a 50-50 split,’ and you tell me, ‘Buy the VOO, and the QQQ, which are the S&P 500,’ and NASDAQ focused tech holding, you’d be looking at having an overlap in Apple, of your entire portfolio being 18%. That’s amazing. You couldn’t make a purchase for somebody at 18% in Apple in a brokerage account, just buying stocks without getting a phone call or a notice from compliance.

Seth: So you’re saying that we’re fully diversified when we buy both of those 50-50, right? And I’m being totally facetious here. That’s the idea that people hold onto, right? The misconception can be, if I buy SPY for the exposure to the S&P 500 index, the thought there is that, I’m gonna own 500 companies, and that’s gonna be split up 1/500^th between each one of those, or even if I don’t, the feeling can be, if I’m in something like that, I have a greater safety than I would if I were to go and buy, do my best to try to pick up 500 different stocks, or let’s say 100 different stocks, or something like that. It’s a composite, right? There’s a whole bunch inside of this, but you’re saying there’s 25-26% of that holding, 1/4^th of that holding, in 10 different companies.

Ben: If you were to say, I wanna do this, with the two different holdings here, for instance. You’re looking at 30-40% of your entire portfolio broken up among 15 companies, because there’s a little bit of difference in the next few. When you go to the QQQ, you’re looking at Intel, Nvidia, Adobe, and PayPal. Okay, those are 4 new holdings, so that’s a little bit more diversification. This is kind of over the top problematic.

Seth: And then what happens if you go and you’re looking at or following some market commentary out there that’s saying what are the top 4 companies to invest in for the next 10 years, and you’re buying more, possibly, of any one of these holdings, and then you’re getting yourself into 30% in Apple, or something like that, without really understanding, you already own 18% if you own that 50-50 portfolio before of the SPY and the QQQ.

Ben: It wouldn’t be 18%, it’d probably be more like 9%, because you’re 50-50. When you actually break it down, the overlay of these portfolios is horrendously bad. You shouldn’t have this kind of exposure to one company, or one scenario. Look at Enron. Enron, huge energy company, just total problems everywhere, we know Enron wouldn’t be the first major company to report a major problem, and if all of a sudden, 8, 10, 12%--if you have a ton of money in one stock, it’s not diversified, it’s not healthy. It’s not how most people who own an index or what they believe should be diversified, trying to get some simple exposure, really brings them.

Seth: This brings up a question I would have as far as timeline. If we were to look at the S&P 500 over—the numbers I’m looking at here are June of 1980 to June of 2020. 40 years, say you’re in the workforce for 40 years and you’re investing in the S&P 500, what would you expect as far as a return from that? That’s one of the bigger challenges that we have, when we get closer towards this 2020, and the end of that career or working, what is the exposure, when you’re really looking at them. Ben was talking about that potentially being, on average, around a 50% drawdown in the index, which is then relying not on 500 companies, roughly 10 holdings that are significantly weighted in there. If you look at those numbers over the course of that time, you’re right around 9% return, if you reinvest the dividends, you’re roughly around 11%. You can take a look at corridors for that, it changes the numbers somewhat, but that’s where people’s mindset goes. The average investor really only gets 2-4% for that same period of time. That’s a 3rd party resource that we take a look at and try to compare numbers to. In terms of you, how we care about you, is helping you to understand what is that you own, and why, and how much of it you should be in there. That’s kind of the secret, that’s our concern for you as the investor.

Ben: You know, Seth, you bring up a great point. Sometimes we find investors are their worst enemy. I meet financial advisors, that say I make more money for my clients than I do for myself. We’ve laughed at that with people. There’s such an emotional stake inside investing your own money, and people get very nervous, and they can’t see the forest through the trees. I like the concept of having someone else to bounce stuff off. That’s part of what we do, that’s who we are. I want to say that I am not against Index investing, or passive investing. We use that. We use an active/passive strategy quite a bit, for a lot of people. We believe in the passive holdings, but we also believe that there is some intelligence behind some of this that can be managed, and that’s why we utilize some of these pieces. For most people, they say if you buy and hold, it’ll work out. In some market time periods, you’re absolutely correct. In other market type periods, active investing blows passive investing away. We believe you can probably, maybe do a little bit better in utilizing both strategies, because we don’t believe any one is correct. The market overruns never end, so how does that work? I think at the same time, Fidelity had one of their greats talk about how his portfolio had done phenomenal, but his average investor was way below that return, because they kept going in on his fund, as if he didn’t know what he was doing. It’s kind of funny because he was already actively managing it. This is a common story inside of all this. I think John Hancock did a study, and they said, it’s over 80% of people never rebalance, or reallocate their 401k, and that’s probably a lot due to the idea of set it, forget it. That concept of don’t trade it because you’re just going to cause problems. The market moves up on its own, and there’s also the idea that I can buy these indicy investments and ride it for the long haul. All of those things could be playing into that study, but we do find that people choose these investments Day 1, and then they never look at them again. Until they say, I need to retire, and I need to go talk to a financial planner. There’s a real problem with that.

Seth: You want to have exposure, right/ That’s one of the things we come back to. Unless you are the kind of investor, you only invest in real estate. You actively manage that real estate yourself. We know people that do that all the time. I only invest in bonds. That’s one kind of investor. We recognize that. We’re not saying that this solution is the end all be all for everybody out there. That’s wonderful if you know what you’re doing, and that’s your bent, and you go do that—wonderful. The average investor out there has a 401k, or they’ve built up this portfolio on the side. Why would you want to own the S&P 500? How much of that—we would call it a core holding for a lot of the portfolios that we’re taking a look at, we would consider it in some portion, or part, something that we would want to participate it, and we can take that 40 year story of the person investing in the 40 years that they’re in the workforce, and reinvesting, and reinvesting. We want to be a part of that story that has that 9% return. 11% return, whatever. This is why we want—we also want to understand that what’s under the hood here, and what are you actually participating in? the caution here is, if you’re thinking one thing, and not understanding how this vehicle operates, you can basically wind up in  a car crash pretty quickly. You want to be able to stick with the program, you want to be able to build the roadmap, you want to be able to understand, if you’re 100% involved in the S&P 500, that you have a quarter of those holdings that are held up by 10 companies. The likelihood of something happening in the future, where, over a 2 year period of time, you can have your holdings draw down 50%, you’re okay with that, because you have this bigger picture in front of you, and that helps keep you on track and engaged, and doing what you need to do to have a successful outcome, which we call retirement for most people.

Ben: That’s a great point, Seth, and I think that’s what we’re talking about, is the bubble. Everyone knows the story of the bubble when you talk about the mark. They talk about the tech bubble, the real-estate bubble, the market bubble. It’s the one that’s going to burst, and I think when you have the S&P 500 index, any one of these, you talk about even fang stocks, and Netflix isn’t even on the top 10 of these items. They talk about FANG, Facebook, Apple, Netflix, Google, Amazon, the problem is if we have a tech bubble, your index investment just crashes. There’s so much tech buried into the first 20% of your holdings. You could see a significant drop, just in a major tech change across the board. So much of the S&P 500 as well, not just the top 10 are tech-based.

Seth: I’m gonna throw another ticker out there. The Tesla ticker that we were talking about, which is a part of this story moving forward, you could have the FATMAG, is what it would be—instead of the FANMAG, you’d have a FATMAG there.

Ben: That was interesting, I did see in the article that we read in the one before. I think people don’t understand this liability that they’re taking on, this risk of the tech. Tech grows and grows and grows; Amazon is training at 100 its PE. When I look at price earnings, and I’m saying to myself, I’ve had people say, you just have to ignore Amazon’s PE, and it doesn’t really matter because it’s always treated—it’s never correlated to the PE properly like everyone else. It’s still its price earnings. You can’t just ignore some of this data, and to ignore the fact that we, yeah, we might be a stay at home world, we might be in a tech-focused scenario, but we are seeing tech stocks having risen 100, 200, 300, 400% since their lows in March. We have seen some crazy tech scenarios. If we go back to a social society, they’re not going to be necessarily where the investments are. Even if the tech bubble isn’t necessarily a bubble, but it’s a short fall, it’s still going to pull back your portfolio in a heavier manner than a properly weighted, properly diversified portfolio, that we would completely engage all of our clients to look at.

Seth: What are some of the advantages when you’re taking a look at the S&P 500 as an investment, or for your portfolio, if you were younger in your investing, the beauty here is that you have time, and that there’s a simplicity to this. You’re not gonna have to go up, you can be an index investor. You don’t have to go out and manage what’s under the hood there. What was under the hood in 2000, Cisco was a huge part of the index at that point. It’s no longer a story as much as it was. There’s going to be some rotating factors in the economy, the participation there is kind of done for you. That’s where we’re preaching to this other side of the eye out here, where we don’t want people to fall asleep. The younger investor can do a little bit more of set it and forget it. We would focus more on the activity, usually in that demographic of, create a saving activity, go ahead and dollar cost average, continue to buy into the market, and buy into this index idea, because over time, that’s going to simplify your life, and we’re going to turn around in 10 years and be looking at something that, if you were to manage that by yourself, and doing buying, holding, and selling you’re probably going to wind up being more of that 2-4% person. We want to have you on the upper end of that. We want to have a more successful story and a better outcome that way. There’s some benefits there with the SMP that are really hard to create or duplicate on your own. We get that.

Ben: You’re bringing up some really good points, and one thing I was thinking about as you were saying that. When you look at the bond market, you look at the stock market, there’s a lot of money there, okay? What a lot of people don’t realize is that the bond markets make up about $40 trillion. The domestic stock market is—this is US numbers—is less than $20 trillion. The stock market is less than half the size, a little over 1/3, of what the bond market is. As yields drop, as interest rates go lower, people are going to fine yield in the equity markets. When a stock is providing a 5% yield, and a bond maybe pays a 4% yield, the reason people prefer bonds at 4% vs. stocks at 5%, as a bond investor, you are the first one that’s going to be liquidated for the money. You’re gonna get your money back, more likely than an equity investor or stockholder. You’re the last person in line to get paid if the company goes under. People say, for that risk difference, I’m willing to take a little less money because I have less risk in the bond market. If all of a sudden, if bonds are only paying 2%, and stocks are paying 4-5%, you’re talking about a major differential. People are saying that the yield outweighs the risk. That becomes a major attraction. There’s a lot of conversation about the bond market sliding into the stock market. What does that do for our bond market? I’m not very concerned about it, because since our fed has kept ourselves in the 0 to positive yield perspective, a lot of money overseas, where’s there’s negative yields, has been flying into the US, buying our bonds. It’s been keeping our bond market quite afloat. I do see our US investors sliding into bonds, looking for yield, looking for opportunity in the equity space. Has the interest rate declined? It’s kind of normal thinking. If rates go up, if you can take less risk and still hit your return, why not? That’s a lot of what’s going on here. I think that over the next number of years, whether that’s 5-20 years, I do think as long as these yields are low, we’re gonna see moving out of the bond market, and flying into the stock market. Potentially putting up the market. As I talk about this, and Seth said I could bring this up on the show, so I’m gonna do this. When we talked about the Apple split, and you’re talking about the general, overall perspective of what’s happening in the stock market, we look at these indices like the S&P 500 or the DJI to say hey, the market’s moving. What’s interesting about the S&P 500 is that a stock split really means nothing to it. Because the DJI is a price rated indicy—the price of the stock is how its weighted—a reverse stock split actually will impact the moving forward scenario of how the DJI creeps up. I think with Apple being the number 1 priced stock, in the DOW, as it grows, it has the largest impact on what the DJI reports as how much it goes up. A lot pf people don’t know this, they look at the 30 companies and so forth. It’s not just 30 companies, it’s based on what their stock price is. When Apple does a reverse split on their stock price, when Apple now grows, it’s trading around 450ish. Let’s say it was a 400 stock and they do a reverse split, 4-1. Now they have 400 shares vs. 100 shares in that scenario. You have ¼ of the value to start with. As that share price grows, it’s going to impact the DJI Jones less. It won’t affect the S&P 500; it will still have the same correlation because they use the number of outstanding shares against that market cap. In DJI Jones, the impact is less. If you were a conspiracy theorist, you’d say, for Apple, it’s kind of opportune to do a reverse split right before an election, because theoretically, it would cause the DJI Jones to rise less as it continues to grow more. That’s kind of a scary ability to manipulate something that’s probably the number 1 indicy that people look at to see how the market’s doing. If I asked somebody what the DJI was, they’d know. If I asked them what the SMP was, they might not even have a clue what the number was. They wouldn’t even know within 1000 points what the SMP was. That’s something to really be aware of.

Seth: This makes me rethink our DOW30 show. It was a fun show to go back and think about, because not only was it 30 stocks in the DOW, we were speculating the DJI was going to rise to 30,000. We need to walk that back a couple years with COVID.

Ben: No, I’m still DJI,000 this year, this quarter and next. I still believe that happens. With Apple doing this reverse stock split, it definitely makes it harder. Apple could still grow at the same mega pace it’s growing and have less impact on the DOW. That’s not something that people know.

Seth: How many people can really even tell us the 30 in the DJI currently? Frankly, it’s not that important for you at the moment to know all of these things. The thing that’s really important for you as an investor to know is this: You’ve gotta have a plan, people! If you don’t, you’re just shooting from the hip, and historically, that’s not gonna get you close to target, right? You need to have this out there. You need to have this piece out there, that says, this is what I want, and this is how I’m going to get there. Understanding that, we can take a look deeper into, what is it you have under the hood, in your car, the vehicle that’s getting you to the finish line here. That’s what’s important to take away here. First and foremost, you’ve gotta have a plan. That’s what we do at Brayshaw Financial group. We are planners. We sit down with you, take the time to uncover who you are as an individual investor, what are your goals, everything revolves around those pieces. What’s your timeline and risk in all of this? That helps put together the program that’s gonna help you get to where you wanna go. Believe it or not, somewhere in there, in some small part, you’re probably going to see something like SPY, right? Or QQQ, or IVV. I feel like when I say IVV, I hear the Jackson 5 song pop into my head. Neither here nor there, folks, but that’s what happens sometimes when you say these things over and over again. It’s fun and it should be fun, and you should be able to grab this and take it home with you and feel really good about where you’re headed. If you don’t have that experience going on right now, give us a call. You can reach us at 855-226-8551, or info@yourmoneyontap.com. You’re gonna talk to Ben, me, we’re gonna put a plan around your finances and goals, and help you get there. I can’t tell you how fun that is to have those meetings and times with you. We appreciate all the people that are listening to us here. You can reach us at 855-226-8551 or info@yourmoneyontap.com. You can also find us on Facebook or at /3binvsting. We’re also on Twitter at @bfg_llc. As always, you can also find us at www.yourmoneyontap.com Thanks for listening, and we can’ t wait to make it a great day and a great life with you at Money on Tap.  

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Seth: Welcome to Money on Tap! Money on Tap, your personal finance headquarters, where we bring out the professional’s experience in some fun! In what we call three-dimensional investing utilizing insurance, brokerage and fee-based planning. That’s what we do on this show. We look at all sides of the issues -we bring a fully independent planning perspective to the table. 

Seth: Welcome back! You are listening to Money on Tap! This is your personal finance headquarters. My name is Seth Krussman.

Ben: And I’m Ben Brayshaw.

Seth: We are glad to have your aboard for the ride today. Hey, we are going to be talking about personal finance, your finance, things that you need to be paying attention to in your personal finance journey and it’s from the perspective of a couple of guys that this is what we do. We’re financial planners and we’re independent financial planners. We look at all sides of the issues and we really do want to make sure that our clients, our listeners are getting the information in front of you today that is critical for you to take that next step in your personal finance journey.

Ben: Yeah, and I think, Seth, a lot of people don’t know just being a financial planner and they don’t understand the fiduciaries and the oversight that we have to apply and people are looking for the fiduciaries in their life to help them through this time and that’s a big, huge, red topic word and I think that’s important that our listeners know that that’s something we bring to the table as well.

Seth: So, is that what our show is about today?

Ben: No, our show has a lot about scams in it today Seth. Actually, the thing about our show today I’m very excited about and I wasn’t originally excited about it but I got excited about it the more I did it. The IRS came out with a list of scams and we went through that and we broken out a number of them for you and we have 9 scams you need to be aware of in 2020 here that may or may not be an impact for you during this difficult time of corona.

Seth: Yeah, if you have a phone number which, by the way, we have a phone number which is 855 226 8551 sometimes we need a reminder like that. Oh yeah, we’ve got to get that out there to you so that you can give us a call. Right now we need to have a conversation with you about what’s going on in your financial world and we can help you that’s priority for us, but if you have a phone number guess what? You probably are going to be very familiar with the content that we’re going to talk about today because so much of what is happening with scams and the world of scams happens over the phone and it happens through robo calls, it happens all the time and you’re apart of the conversation today and we’re glad to have you. Before we get going in that direction, which is where we plan to land the plane today, we’re going to talk about Money in the News.

[Music]

Ben: So, today Seth we have – I mean corona is all over the place, right? I mean it is a pandemic, it is a nightmare we haven’t talked much about it, but on the investment front we have an article here from Wall Street Journal, Money in the News here Visor in Bio-tech get 1.95 billion that’s “B” as in boy vaccine orders in money that 1.95 billion dollars for order from our US government. I was going to say it’s not 1.95 billion orders, it’s money – they are looking to buy 100 million doses of their experimental COVID-19 vaccine to provide for Americans free of charge. Now, the 1.95 billion it’s an interesting number and I was actually trying to figure out where that comes from and I was reading the article they are charge $19.50 per vaccine shot which makes sense.

Seth: Oh, I haven’t even broken out the calculator on that. I guess you don’t really need to because 1.95, makes sense.

Ben: So, 100 million doses they want to buy. Now, 320, 320, 30, 40 Americans in this country there’s 2/3 of us who don’t get this thing, okay? So the government is going to buy the first third the rest of it is all on you. I'm just kidding of course the COVID vaccine is $19.50 a shot the government is paying for and that's interesting because it's very similar to the price of a flu shot. I was actually surprised by that that was $19.00 more than I thought that you paid for the flu shot I thought every flu shot was $0.50.

yeah

Seth: yeah the last time I sat down and took a look at that that data never

Ben: we've never looked at vaccine data before life is so what's interesting though is that that vaccine that we saw the there are basically five different types and companies are basically racing hey there is a race to find the vaccine everyone of our listeners knows about this what a lot of people don't know is that once this thing is approved it will be the first RNA approved vaccine in history and this is what makes this a gigantic story what people don't realize is that we have never manipulated or altered someone’s RNA to ever accomplish a vaccine at all it's never been done this way. So corona is a virus of some sort that a traditional vaccine method is not something that could work and they’ve discovered that from working with SARS and MEARS and trying to come up with a vaccine like that that the only success they’ve ever had was with RNA manipulation. Now there is 100 million vaccines shots out there and they are racing to get this thing in the market I will not be the first in line I'm OK with being the 2nd 2/3 maybe but from that standpoint if you're going to manipulate my RNA you've never done it before I'm not exactly the person that's likely to die of this I'm not going to be running out to get this thing but there are a lot of people that are signing up to do this there's a 30,000 person study done and they've come up with some pretty interesting sub results so if this thing gets approved SARS is going to get a ton of money.

Seth: so some of the other companies here that they're sending money towards what it looks like really it includes a 1.2 million dollars deal with AstraZeneca for 300 million doses vaccine developed by Oxford University, University of Oxford A 1.6 million dollar agreement novax will fund clinical studies of this experimental vaccine and establish a large scale manufacturing of dosages however that agreement with Pfizer antech it is the largest from the US so far and it's really to secure the COVID vaccine supplies and it won't find any research development so a little bit of development there with that seed money that are happening with the government and these big players there that are really buying for this space for the vaccine world.

Ben: you know I think the vaccine is a huge conversation peace it's something that Wall Street is definitely looking for a vaccine to hit to make the market launch but the market is begging I mean I literally look at the stock market every day 1000 times a day antech is begging to skyrocket it is just waiting for the vaccine story to happen for the market to just absolutely move I've talked to suppliers I've talked to different companies different people different organizations and they all said theory they have so much demand everybody that I've talked to is busy what's not busy is small America you know the mom and pop grocery stores the and even that –

Seth: yeah I was going to say the grocery stores are pretty busy.

Ben: yeah but I'm thinking about the mom and pop store on the side that's if you're looking at Main Street the little trinket shops the gift shops I don't know if you have the paper store over there Seth and we have it over here and it's just Chapter 11 or 7 I can't remember it's a big gift store over here ah my wife loves it and it's just really popular I go there every Mother's Day it's like I can pick anything off the shelf and that's going away potentially and then

Seth: so are you going to go to the closeout sale and get the next 20 years of mothers days gifts in one grab?

Ben: I might, I might just buy a store

Seth: I'm not telling Kim

Ben: but there's a lot of pain restaurants are suffering there are businesses that are suffering Main Street America is really going to hurt big America big corporate America doesn't seems to be if anything booming from this which is kind of an amazing thing so this vaccine the market is just dying churning waiting for there to be a vaccine cure or vaccine treatment that just works once that happens I think America starts moving forward because I think what we can't seem to protect is the elderly once we can figure out how to really protect the people who are sick or the elderly or the people who are most vulnerable to this once we get some way to protect them the world goes forward right because everyone is concerned about that

Seth: agreed it is on our thoughts our prayers and it's encouraging I think to see this is 30,000 people that are lined up to kind of be the test group at the end of the month and that's far faster than I think anybody saw possible an anticipated and I think one of the blessings that we have currently of being where we're at with what we're at what we're going through is technology the exponential growth of technology am by a farmer being on the forefront of that platform for us like you said RNA the Messenger RNA is something never, never seen before could revolutionize a lot of things out there I wonder what comes next

Ben: yeah absolutely

Seth: all right folks are you wearing a face mask today? if you're not you need to call us at 855-226-8551 that's the number here for Money on Tap and Ben will tell you Ben will tell you about wearing a face mask at work or not that is a hot topic right as I was reading this article here from Wall Street Journal give a little credit where credit is due here by Sarah Needleman it’s interesting, right?

Ben: These articles, this article is hilarious mean –

Seth: The No-Maskers and the Maskers

Ben: This is in everything and every work environment I mean if you can’t have a good laugh over this article it’s great. As offices reopen amid coronavirus worker’s clash over masks, cubical barriers and Lysol. It’s every scenario you could possibly – I mean where is the show The Office when you need it because this would be hilarious in that show but people are literally at odds and they’re talking about everything from physical confrontation which could all imagine to people putting paperclip entryways to their cubicles

Seth: Yeah, litter barriers so nobody can sneak in and look over their shoulder while they’re working on their project and breathe on them which frankly I think that should just should not be allowed in the a workplace period. Just do not do that to me.

Ben: That is not a social normal the thing about this is we are crossing a major, major issue here in America right? They did some sort of study and an overwhelmingly majority of people want to go back to work in a normal work environment wants it safe or feel it’s safe. A number of people are actually getting called back obviously earlier because things are opening up and we need to move forward but that doesn’t mean that people don’t have fears for family and friends and all the different pieces so there’s masks, there’s social distancing there’s all these recommendations, there’s all this stuff going on out there some companies have it some companies don’t and it’s hard to enforce because people, some people have medical expectations or they have this going on there’s all sorts of different things and even some of the people who are in charge who are wearing the masks below the face and I don’t know, whether you’re a masker or a non-masker I don’t want to wear a mask. I just don’t want to but when asked I will that’s where I’m at. I try to stay appropriately distanced I don’t hug and shake hands with people and I’m okay with the distance it’s alright with me.

Seth: If you want to know the difference between Ben and I I’m the hugger, Ben is not.

Ben: I am not a hugger.

Seth: We discovered that early on in our college career where we just had that awkward moment and it passed.

Ben: Seth wanted a hug, I don’t know. Goodbye Seth!

Seth: So I was having a conversation with a friend of mine this past weekend and he works at manufacturing plant, he’s a machinist and his wife’s a nurse so these were interesting conversations to me, one really focused on the healthcare sector and what’s happening there and the other was really in manufacturing which is a huge part of the sustainability of us as a whole. What was happening for them was they were getting this huge influx of people saying top down you must be wearing these masks and keeping 6 feet in the plant and as a group they decided we are not going to wear masks as machinist in our plant we’re dealing with all these other particles, dust and these different factors that they have to have really a clean breathing experience or a cleaner breathing experience but the mask was actually keeping them from they do have a really strict 6ft social distancing policy and they keep that in place so that was how they worked through that. I don’t mind the 6ft distancing as a rule of thumb. I think it’s kind of fun to see the people who are not or who always crept into that bubble beforehand. You know what I’m talking about. I’m good with 3ft and they are at that foot, foot and a half

Ben: Space invaders are the worst! I mean there is nothing worse than a space invader if you don't know somebody stay away I don't know I've never been you know me said I'm not a space invader so I try to avoid but that being said this is clearly a hot topic because we know there's problems with masks we know there's benefits from masks we don't know where this all flies I mean we have Sergeant generals telling us not to wear them then telling us to wear them then we're hearing reports of this I mean stuff is developing every second we don't know the best thing we could possibly do is just if you're sick or concerned stay home that's honestly if you're really in fear that's my best recommendation otherwise you're taking a risk you don't know I mean they say it's now rarely transferable be a touching things it used to be it wouldn't go away for seven days we just don't know what we don't know if you're sick or concerned I recommend staying home in order your stuff off of Amazon that is all

Seth: yeah I would also say ask people what they are comfortable with too I think everybody having this empathy towards the other person if you have a situation that you're dealing with just recognize that and be understanding towards other people's needs and do the best that you possibly can to respect whatever somebody else is needing at that moment and their space that's there's too is that the opposite of what you just said?

Ben: probably but it's OK and you're good at that so now that we've guaranteed to offend pretty much everybody and with everything we just said stick with us folks we've got one more article--

Seth: get that phone number out there because we have to give people an opportunity to call us an rant so you can call us at 855-226-8551 or info@yourmoneyontap.com

Ben: Let's just give them your cell phone number Seth I'd rather all the ranting go straight to you

Seth: good stuff what's next?

Ben: send your complaint email to Seth at brayshawfinancial.com that's his email address you're welcome OK so our last article to get off of COVID The S&P 500 Bullish technical procedure with Golden cross this is a big deal this is a big, big deal if you don't know what we're talking about listen up The S&P 500 is sending the signal that has basically marked the end of every bear market in history what that is that's when the benchmark of the 50 day moving average crosses over the 200 day moving average and last week it happened

Seth: So what is what do we mean by that Golden cross you guys talking about your crosses all the time but who cares the 50 day moving average is just that when you take a look at any kind of a benchmark or an index there are averages that you can create 50 day moving average is going to move more quickly because of the shortness of that. And that measurement in that average as opposed to a 200 day and if you take a look at you can take a look at these moving averages and just Google it if you want to take a look at the charts and just see what it kind of has this Golden cross how does it work in what is it and you'll see where these two different lines one kind of smoother moving along the 200 day average and more in step with the index which on this measurement is the S&P 500 and when they've crossed over there is a bearish crossover which is the one that comes down usually when that happens that potentially triggers some traders or some active managers in their polios to reassess hey we're where are we at with this are we going into a cache mode that is kind of like a trade a protection strategy in managing those assets but what we're just talking about here is a recovery from a severe pull back for a bear market which is what we just recovered from a crossover and then historically tells us what

Ben: well it tells us it's the end have a bad news day you know when the market crashed or crashes like it did this crossover happens is usually saying that we have anywhere from a 12 to an 18 month bull run ahead which is interesting because I really do feel like the market wants two catapult not because yeah there are pending orders there's all sorts of different things our government just influx 5 trillion dollars of stimulus between the Fed and the US government it's crazy how much stimulus there is out there and that money is going to go somewhere people are going to do something with it and we're talking about big dollars I mean big big dollars and that's going to cost some level of inflation a lot of that money is not going to get paid back it's going to potentially be something that's on the books for debt and more tax issues to deal with Within the future but this Golden cross is something that literally almost every time it's been the end of the bad news days and the beginning of forward progress

Seth: so do you put all of your ducks in an eggs in this basket I was going to say ducks in this basket but I don't think that's the expression

Ben: I'm going to say from a client's perspective the answer should probably be no

Seth: so we wouldn't put a ton of faith into a Golden cross by itself it's just a signal out there what is it out there why are we saying this is potentially significant the biggest reason for the optimism here is that the it is reversed what happened a very negative medium versus long term trend and that has led to big gains over the next 6 to 12 months every time for the last 70 years if you take a look at that research OK So what happened is of note is that when that crossover happened that 50 day moving average dipped more than 90% below the 200 day average so sometimes we've had these conversations around markets and what's happening in markets and historically where we're at with the market and I like it I like to compare it to a rubber band of sorts there's some elasticity especially when you talk about where the indexes are at in comparison to where they were at 2030 years ago the numbers are just that much larger so when the market has moved in the last several years take the 2018 2019 sequence in the market there it was dramatic and when it moved back it moved back in a similar fashion that that was dramatic that’s when we take a look at the elasticity And the recent elasticity of the market and how quickly it's moved down or up

Ben: you know I think The thing is for some of our listeners this is a little bit Greek to them 200 and 50 day moving averages it’s a big thing to think about. The 200 moving day averages is just 200 hundred days values of the S&P beginning averaged together looking a that whole moving process and looking at 50 days and just taking those so everyday you have a different 200 days or one day or whatever day is moving forward and we're constantly looking at that moving dot that creates each day of the past 200 hundred days and then looking at the 50 days and that’s is something that a lot of technical analysis are being based off of out of a lot very big managed money companies and this is something that we’ll probably institute additional buys and probably some forward market moving just by it’s own trigger itself but again Seth it doesn’t necessarily mean to buy. People are looking for that kind of computerized technical investment strategy this would be a big trigger and that’s why we bring this to you today.

Seth: Some people in the management styles are very rules based that means of something X happens then Y happens Could be considered it's for us to talk about really at least right

Ben: yeah I love this stuff it's great

Seth: Ann if you want to talk to Ben about it you can reach him at 855226 8551 or info@yourmoneyontap.com he thought I was going to give you his cell phone number but that's alright you can call me personally and I'll give it to you you can also reach us at info at your money on tap.com what are we going to be talking about next we are going to be talking about The IRS recently published tax scams or the scams that are out there The IRS has been incorporated in a lot of these and there letting us know hey this is what's going on out there and trust us we know that you have been a part of those as well because everybody has

Ben: it almost sounded like you said The IRS was a scam which some of our listeners would probably agree with

Seth: oh boy that was a no comment from me we'll be right back you're listening to Money on Tap don't go anywhere!

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Seth: Hello, my name is Seth Krussman partner with Brayshaw Financial Group and one of the co-hosts of Money on Tap. One of the biggest concerns and largest expenses people face today is taxes. Without thoughtful planning, taxes can destroy future retirement dollars, eliminating the possibility of a timely retirement or dreams of what you want retirement to look like. If you’re like most people, you’re getting closer and closer to retirement and you may be wondering if you’re taking the right steps, “Will my income be enough?” “Will rising taxes force me to give up my dreams?” “How does inflation factor into all of this?” These are real concerns and you’re not alone. Putting a plan around your financial future is what we do. If you have questions when it comes to your financial security and if you’re looking for a personalized solution, contact us at Brayshaw Financial Group 855 226 8551. It’s time for you to start getting answers to your questions. Headquartered at Bedford, New Hampshire, Brayshaw Financial has offices across the country. We’d love the opportunity to show you how we can help- there’s absolutely no cost or obligation to meet with us. Call us at 855 226 8551, 855 226 8551.

Seth: Welcome back you are listening to Money on Tap1 You can reach us at 8552268551 or email at info@yourmoneyontap.com. We’re talking about tax scams. Tax scams. Let me ask you a question: have you ever clicked on an email and before you knew it you were carried away into the ethos of the web and some site that before you really knew what was going on and felt an instinctive I need to know what’s going on over here before you end up in some site that’s asking you for some personal financial information and all of sudden you’re alarms go off in the back and say oh my gosh I’m not where I’m supposed to be or where I thought I would be I think I had that experience then there’s the fear that comes along outside of that where you’re watching you and monitoring your bank account so you’re social media accounts whatever is out there with your information on it wondering who’s now emailing all of your friends or acquaintances dire straight emails telling them that you’re locked up on a jail in Antarctica and you need $50,000 to get out.

Ben: Sounds personal there Seth!

Seth: Yeah it’s the book that I’m writing right now (not really) so  these experiences if you know anybody that has An email address or a social media account they probably had something that similar to this so with that information right we are going to uncover The 2020 top board of scams right now

Ben: we've got 9 scan items that if you're listening an everyone should listen clear because these are solid issues that exist The IRS thought it was important enough to publish it it's something that we should be listening to because it is not to their benefit necessarily for publishing other than to let the buyer beware the listener beware so number one and I think the number one that we're most familiar with is social media scamming an I think we've all seen some level of social media scamming if you're on social media and you’ve seen scams and so forth with the social media scamming probably the most current one is the COVID by tricking people too do something regarding social media or they'll have a picture or an ad that will say help somebody it will be something along those lines you have also been led to basically what the IRS is pointing out here is that it's really an identity theft that's really there a number one issue is trying to grab your identity and in everything that is the core of what they're trying to do

Seth: Yeah there may not be an outcome just from the social media scam immediately The goal usually is usually a multi-tiered or a layered type of a scam and the end gold is to get just as much of your information as possible power wagon play that they can then turn into some other outcome down the road which is the ultimate of the payoff late here and I'm thinking of somebody direct message me not somebody that I talked to on social media or frequently but all of a sudden I've got this message

Ben: from someone you might trust or that you think you trust

Seth: yeah and I'm like oh hey wow it's good to hear from you yeah and this has happened as a matter of fact this has happened on a couple of different social media platforms to me where they were direct messaging me and I had to stop what I was doing because I was first of all I'm a pretty social polite person if you're reaching out to say hi to me unless your name is Ben Brayshaw I might have a conversation with you but the conversation was so vanilla not really going anywhere I said hey this is my protection for myself and I made sure that I wasn't being rude and I just said hey can you tell me the last time or where we met you know something that both of us would know and that was an immediate shutdown to the conversation and clearly it wasn't the person on the other end it was somebody that had gotten hacked or whatever but that was an attempt right there to go ahead and get information from me and it really did look really legitimate and it was kind of not something that posed an immediate threat to me but it was the process of building up towards that and it could land like that so

Ben: yeah that's definitely one of those things that's out there and #2 that we have here is just the IRS phishing that happens through email and the concept that you're getting emailed I mean we get emails all the time looking for information and so forth but some people will reach out as if they are the IRS and as taxpayers for information about refunds or impact payments or something along those lines and there's a link to click on and so forth and it will eventually ask you to put in your social to confirm that it is used and so forth the IRS does not do this the IRS was in the letter and you will call them that's how it works and there will be things like the IRS is doing criminal investigations and they won't do that they just don't do that and those emails that you get are not IRS ever

Seth: And they are using letters as well so be cautious in that it’s not just an email but where you can get a direct communication from the IRS that should be you should pay attention and be cautious build in some kind of safeguards for yourself in that process A go directly to the IRS website call them directly

Ben: Yeah if you have something going on and you’re not sure if it’s real or not real you can reach us and give us a call and that number is 8552268551 this is one of those things where if you’re just sitting there and saying you get this email I’m not sure if it’s real or not let us take a look maybe we can take a look and figure it out and what’s really I think the thing Seth number 3 that probably irks me the most right now with everything that’s going on is these fake charities. Its just such a nasty thing to do it’s just almost unhuman but basically criminals just exploit natural disasters during the COVID pandemic creating fake charities click on here donate to this help the people of this city or the hospital workers I mean not that those types of things are not good things but the scamming around that is just horrific and so if you’re ever going to donate to a charity and we’ve chatted about this in the past go online if someone calls you about a charity to give to ask for website ask for a phone number to call back on if they’re not wiling to do that stuff or they seem questionable about that that should be a big red flag they should really be able to be directed to a real website you should really be able to determine whether they are a legitimate tax exempt 501C3 document you should be able to see those files on their website those things should always be available to--  

Seth: Use the search tool on IRS.gov as a matter of that they are readily available if you’re trying just vet whoever it is that is looking for donations which is really critical during these times we don’t want to say forget, absolutely don’t forget about the legitimate organizations that are helping people. One of the shows that we did it was years ago we should probably bring it back now is a show on gifting and qualifying what gift giving for you and there’s lots of organizations that quality as under the tax exemption such as a charity or charitable gifts however they clearly do not use the money that you’re gifting towards you that they thing they are they really hope for other people’s income.

Ben: In some cases that was correct but a lot of what was interesting about that show I was thinking about that too Seth was the amount of money out of every dollar how many pennies actually went to the point of the cause that you were donating to and a lot of times it was a lot less than 15% it was just some horrendous 20% was actually going to this cause and the rest was going to basically people who run the organization Anne going into their pocket kind of a sad story there when we ran that article I mean that's that show was a long time ago that's something to be aware of there's another there is a number of different IRS scams out there we talked about the email peas we talked about a couple different things but one of the I think one of the things regarding The IRS payment that you owe them money that's going to come in a number of more as we talked about that email we talked about social media we talked about phone calls but the way it's done I think is something to be aware of so the IRS payment scams we have three ways that people get forced or feel forced into IRS payment scams one is beat they target seniors that is pretty well known that the seniors owe money and the IRS is going to either levy something and then they get very concerned and honestly elderly people who get older you get more anxious we see that in our industry quite often and we try to help people through that stuff we tell our clients if you get something like this please call us contact us but then there is a different level of this because it's not just the seniors but it's the threatening phone calls that go out the seniors and to general people threatening all sorts of levies and you need to pay immediately

Seth: The second group of  people who are really susceptible to this open Gallery are your non English negative speakers which is a second language to them they could have been in the US for years you know fully legitimately legal hard residence whatever it is but the fact is they just don't have a real good grasp of what is possible in the US when someone is on the phone threatening jail that might have totally been what would happen who knows whatever country they're coming from that is very possible that's just not what anybody in the US is going to experience is the IRS calling you and saying hey you know what you are going to jail give me this information

Ben: Yeah I mean threatening in revoking green cards all sorts of crazy stuff and you might not even be you might be an actual citizen but they just throw this thing out and they basically blanket 10,000 people in the specific area that they know that are non speaking non English and somebody there's got a great green card

Seth: Just last week I've got probably 2 voice mails from a robo call right that's what's being used predominantly right now and that they are telling me that they are going to revoke my Social Security number

Ben: and we should Seth

Seth: I am 99.99% confident no one can do that

Ben: yeah they're not giving those things out for free

Seth: right right and the other one now this is this was kind of interesting to me because it was I think I actually took the call or for whatever reason it was a live person but what I could hear that clued me in that this was not a legitimate call is in the background you could hear a call center all right that's one of the first signs yeah I know it was a call center and clearly has not an English speaker those were a couple of things that typically took me and that said this is probably not reality or this is not a phone call that was originate 'ed from the Americans like they said I think the third thing was it was a Las Vegas number

Ben: alright #5 this one is really kind of disturbing because this is something that could really be easily done by anybody but people who do tax returns there are people who do fraudulent tax returns and they will unscrupulously rip apart your tax returns file it with their bank information to have your refund sent to you and then send you a tax return that shows you broke even or didn't know anything and that's really scary because they're caught every year there is a number of tax repairs that are caught on a regular basis but the IRS said this is becoming more and more of an issue and something you should be aware of so if you get your taxes done really cheap it's kind of like wow you could really get taken advantage of and something to be a problem

Seth: we're gonna take a quick break you are listening to the tops top of the tax scams that are going on right now in 2020 so when we get back we will have more for you. You are listening to money on tap you can reach us at 855-226-8551 or info at your money on tap.com

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Ben: Hi, my name is Ben Brayshaw, one of the co-hosts of Money on Tap. If you have questions when it comes to your retirement and are looking for a personalized solution, contact us at Brayshaw Financial Group. In today’s volatile stock market, we can help you plan to find your successful retirement solution. Am I saving enough? Am I saving into the right places? Do my investments match my appetite for risks? Do I have a tax strategy that is going to help me keep more of what I earn? How can I maximum my Social Security income? If you are like most people, you are getting closer and closer to your retirement and may be wondering if you’re taking the right steps. If you’re in retirement, you may be wondering am I maximizing my income while preserving my estate and caring for my family? We talk about all things financial in what we call 3-Diminsional investing: putting a plan around your financial future. If you feel that now is the time to start getting the answers to your questions for your own situation, give us a call at Brayshaw Financial Group at 855 226 8551. Headquartered in Bedford, New Hampshire, we have office throughout New England and across the country. We would love an opportunity to show you how we can help. There’s absolutely no cost or obligation just to meet with us and we welcome you to our office. Call us at 855 226 8551.

Narrator: Now back with Money on Tap with Ben and Seth!

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Seth: Welcome back you’re listening to Money on Tap! You can reach us at 8552268551 or info@yourmoneyontap.com. Now, we are talking about and going to land this plane with the finalist of the 2020 Tax Scams that you need to be aware of tax scams, are they all tax scams? You know what, they are just scams A lot of them are from the IRS though.

Ben: It's funny though this is the top 20 scams in 2020 and they say that they are taxed but they're not all tax they are anyone who have a tax lien potentially that they could be used for but #6 here is the tax debt  resolution companies they've kind of been compromised you owe money to the IRS trying to find somebody to help you get through that stuff and they say oh we can help you settle your debt for half of your money everyone's heard those stupid commercials but we've settled hundreds of thousands of dollars for a 10 grand well the inside these things inside these games some of the stuff they charge and then they don't even potentially get it done or they can't do anything on top of it is really interesting to those things one thing the IRS is pushing hard to address now I don't know if that's self-seeking on their part I know they said hey look at the other side maybe they're doing too much compromising and they want to tell you that these are scams there are probably good ones out there but essentially buyer beware

Seth: yeah so fake payments or basically a repayment demand so how is this working

Ben: this is really interesting Seth I was reading this and I was kind of like wow this takes a lot of work

Seth: yeah well you know where all of this kind of originated from though this originated from the first one that we were talking about they got your information somehow either through social media or whatever however they got your information there has been an accumulation of a process this is where this is starting to land is ultimately they are going to feel or obtain your personal data Social Security number all that stuff is factored in but then they create a bogus tax return Anne refund the deposit into the checking or savings account OK now once that hits what they are going to do is they are basically going to call you up posing as the IRS

Ben: yes just to be clear they're going to make the deposit happen to your account like you're actually going to get money legitimately from the IRS because of the fake return that they filed

Seth: or somewhat legitimately because it may not be accurate filing

Ben: right but the money is legitimately from the IRS I mean it did come from the IRS

Seth: right it looks like it's above work and then they're going to tell you hey we made a mistake and you now need to pay us back and this is how we want that payment which this is the big trigger for me is that they want you to buy specific cards like Macy's cards

Ben: which to me sounds why would that be a trigger for somebody there's gotta be a better way to do that maybe I'm not into this but if someone is calling me and saying hey I'm with the IRS we overpaid you accidentally in I need you to send me gift cards like the IRS doesn't take gift cards that’s the only breakdown but it is really interesting that people are having a nightmare can you imagine people filing a fake return on you

Seth: So payroll or an HR scam this is a heads up out there that an employer tax professional or a tax payer basically guard against this again this is a fishing scam but it’s in the purpose of it is to obtain W2s and other tax information so once those things are obtained then they’ll go ahead and continue on with on the scams that we talked about but really it’s or again they will request these cards to be purchases with those monies still don’t understand how somebody would ever purchase a gift card in various denominations 

Ben: Well I think it’s kind of interesting that the people are like getting and this was kind of all brought up because of COVID everyone is working remotely hey listening I’ve got to change my banking information HR I’ve changed my bank they send them new documents and then boom all of a sudden they’re getting someone else’s paycheck and deposited it in their bank its kind of an interesting story

Seth: And here’s the last but potentially not the least because it feels like we could probably turn around and do another show on this next week with how quickly these move this is it ransom wear if you’re not familiar with what this looks like or how this works so pay attention you go ahead and you click on that email right you see some email it’s telling you we need this information this is critical you can click on this and somehow you are targeted or sent over to a network server and malware is downloaded into your computer in the process or somehow ultimately you’ve taken an action usually of clicking on an email or going to a website something that’s authorizes the malware access to your computer downloaded some bogus software that is supposed to do something that you didn’t go and vet them that source or that platform as a legitimate software it now owns your computer.  And it shuts down your ability to do anything from that computer without hanging up and these are substantial sums that they are talking about here you know $10,000 or more for you to just get the access to your computer now I was shocked at how many people I know personally that have had this experience and if you’ve been locked out of your ability  to work to have access to you know accounts that you may have there or other people’s information that you may have there it is a big part of what we protect ourselves and our clients from with multiple layers of protection but you as a consumer do not have that at your fingertips or more than likely don’t so it is up to you  to be incredibly cautious with what it is that you’re doing online and what emails you’re clicking so that nobody has the ability to take over your computer.

Ben: That’s a long list of scams and I think there is a lot of people who probably are listening who have been scammed. If you’re one of them sorry to hear that and if you feel like you are being scammed or have been scammed or aren’t even sure how to figure it out or if you need any help you can call us at 8552268551, we’re here to help. You can also email us at info@yourmoneyontap.com that’s info at your money on tap dot com. That number again 8552268551. Seth I’m excited about next week’s show.

Top Tax Scams 21319215

Seth: I was going to say the same thing.

Ben: No, go ahead.

Seth: No, that’s not very fair or balanced one of us has to be no it’s great we’re going to be talking about our favorite index of them all the S&P 500 and it’s going to surprise you what in the world is under the hood what is this S&P 500 thing what does it mean to ne what do I care. Is that exciting?

Ben: Well, I think what is going to be exciting is the breakdown of all the risks people have no idea about.

Seth: Yeah, a little drama in there gotta make it a little drama in there. Hey, it’s fun you guys and we appreciate you hanging out with us here today and all the contact information that you’ve written down. Give us a call. We can’t wait to have a conversation with you and help you figure out and understand and feel confident about your next step that’s all about you and it’s all about you taking that step and doing it with confidence. Thanks for joining us today you’ve been listening to Money on Tap! You can reach us at 8552268551 or info@yourmoneyontap.com. Also, we’re in podcast you can find us at any of the podcast venues out there we appreciate the likes and the listens we’re also at Facebook at backslash 3D investing and twitter at bfg_llc we appreciate you joining us here today and we hope that you make it a great day and a great life thanks for joining us with Money on Tap.

The Future of Social Security 21217841

Seth: Welcome to Money on Tap! Money on Tap, your personal finance headquarters, where we bring out the professional’s experience in some fun! In what we call three-dimensional investing utilizing insurance, brokerage and fee-based planning. That’s what we do on this show. We look at all sides of the issues -we bring a fully independent planning perspective to the table. Welcome back, you’re listening to Money on Tap! My name is Seth Krussman.

Ben: And I’m Ben Brayshaw.

Seth: We are so blessed to have you here with us today! We are just counting on all ten fingers and toes all of our blessings today that we count as being here in the US with you today.

Ben: Seth I would just tell you that you don’t have 10 fingers. You have eight fingers and two thumbs, but you count all of them!

Seth: I hope I was in that math, I was going for 20 total and I think I wound up giving the image that I just have ten total fingers and toes. I’m grateful that that’s not the case.

Ben: Good. Good.

Seth: In all seriousness, because we’re all so super serious about what we’re going to talk about here today. We’re going to be talking about some personal finance. We’re going to be getting into social security.

Ben: I like the lightness in the beginning of the show Seth and then you’re like we’re going to be talking about social security because this topic is going to be tough.

Seth: Well, you made me even more happy all of a sudden. I felt like I could just dive right in because I realize that I’ve got 8 fingers and 8 toes and so we’re going to be good to go.

Ben: But we’ve got a mountain to climb in social security. We’re going to talk about that today. We’re going to talk a little bit about some of the fears that people have about social security. We’re going to talk a little bit about what maybe the future looks like with social security, so this is an interesting topic, something that we’ve been chatting about on and off its actually something, Seth, that you and I we talked a little bit about it in brevity a little bit of shows ago and we said we want to dive a little bit deeper on this and I’m glad that we’re doing this because a lot of our listeners – there’s a lot of people out there like I don’t think I’m going to collect on social security or it’s not going to be there when I retire or what’s going to happen and then this person says its all going to be fine, it’s all going to work out. I don’t know, there’s a lot out there and I’m excited to talk about that later today.

Seth: That makes one of us because it’s a conversation that must be had and its good to have and if you want to have that conversation with us, you can reach us at 855 226 8551 or info@yourmoneyontap.com. Now, was there anything else you wanted to squeeze into this time before we dive in or dip in?

Ben: No, I’m good. Let’s go!

Seth: Are we going to get ankle deep or are we just going to go?

Ben: Let’s make it happen.

Seth: You got it. Hey, it’s time for Money in the News!

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Seth: If you didn’t catch this little ditty here, from the Wall Street Journal, gotta give it a little but of credit, lot of credit because we’ve got Eun-Young Jeong and Paul Hannon – you always stick me with the names – telling us that global manufacturing shows fresh signs of recovery.

Ben: This is a solid article. This is kind of the article that makes you feel good after you read it. This is one of those articles that says man, I’m all in. I am all in! They basically are going through the entire concept of what global manufacturing looks like and kind of sort of the index manufacturing. For instance, they talk about the US purchasing manager’s index which is an inject on the manufacturing purchases going on and they talk about June being at 49.8 which is up significantly from the 39.8 in May. Now, it’s interesting because we’re watching and we’re going to talk a little but about jobs and what’s going on with jobs in America but then they go on to say June was at 52.6 up from that and they’re talking about a different index, forgive me here, but the Institute of Applied Management states that its 56 from 43.1 in May. This is the strongest, monthly gain since records began back in 1948 in January by the ISM. So, this is really interesting when you really think about just the magnitude of the swings we’re having. When we talked about the jobs report in May and the 2.5 million jobs that were added, we’re going to get a little more into that, but when you think about these massive first-time events that are going on in our country, right Seth? This is just something like hey this is the largest something that, this is the largest something this and we’re having these huge swings and it’s making economic records across the board in all sorts of categories and industries and manufacturing here.

Seth: Yeah this could definitely be taken at a look at as a leading indicator on what’s happening in terms of our turn-around in the economy, some of what’s not really known is or articulated by these numbers if we – cherry picking data is one of those things that could be done all day long and we can read articles where people are just pulling stuff out and like look at this, you know, and we try to be a bit objective around the information. So, one of the things that isn’t really known here is what is the measure nor apparent from these types of data such as unusual circumstances that we’re in and how much better and in proportion of the pre-crisis activity levels that have been regained and that’s a quote actually from Josh Shiprah, Shipero at MFR Inc. So, what is it in that that we’re taking a look at that we don’t really have yet we will know more July 15^th when federal reserve releases it’s industrial measure for June, but it looks so cool on the frontend, doesn’t it?

Ben: It looks like it’s going to be solid and you know Seth looking at some of these bar charts and graph and so forth in this article and kind of digging through it, it’s interesting because they’re comparing China with German, France and Japan and they’re going through it and you can see where China had this kind of, I mean it is a solid “V” that looks like a V I learned to write in grammar school. I mean this thing is plunging down below 50 and it is tipping the scales at south of 40 and then rising, rocketing north back to 50 and I’m looking at these kind of movements but then you like France. They go from this 50 range down to 30 and I mean that’s a V shape and they’re right back over 50. The only real struggle Japan is struggling, Germany is kind of recovering but they’re all V shaped and those are straight up demand orders and that’s kind of interesting because there’s a lot to follow that. I mean we talked about that a few weeks ago about semi-conductors and how we had looked at semi-conductors even in our own portfolios and leading indicators we felt like China would be that and China is I think the world’s largest semi-conductor producer and I think that manufacturing piece is pushing that right there and I think we’re seeing that. It’s just shocking to me that China, as big as they are and how short that period was for them.

Seth: When I look at this graph, Ben, it reminds me of pulling the all-nighter in college trying to write my report and falling asleep at the end of that sentence and it kind of just scribbles off the page and I’m like woah, wait a second, back out of here!

Ben: That’s a great point, that’s a good illustration Seth knowing you, that’s probably accurate.

Seth: It was last night actually. Trying to get this put together before the kids went to bed.

Ben: It’s almost like someone fell off the page and dragged the pencil down and then woke up and said oh goodness, gracious my pencil is supposed to be up there. I mean it’s really kind of out of control.

Seth: Never seen anything like it, except for that.

Ben: It looks like a bleep, oops we turned of the switch, we have no production and now we have all this production again and it’s not like it’s really shy or anything. I mean they are right back up. Other than Japan they are right back up to where they basically all were which is scary as it can be but wonderful for our economy and definitely solid, positive news. You know, Seth, we talked about jobs and I’m going to jump here to Barron’s article it talks about 2.4 million jobs were added in June. ADP report says lead by small businesses. Now, this Seth, is very interesting because why I really like this article was it kind of corrects some data that’s out there that a lot of people have. We talked about record setting jobs reports of 2.5 million people with jobs in May, right? I mean that was the big news. Well, actually, there was a revision for May to 2.3 million jobs added.

Seth: Only a .8 off million.

Ben: Only a 20% miss on the boogie here on jobs. I mean why is this buried in the news? I mean this is a big deal. This is not 2.5, this 3.1 million jobs added—an originally reported 2.8 million jobs lost. I mean this is crazy. The numbers are completely backwards here and not even providing – listen, if you had 2.5 million jobs or 3.1 million jobs added, that’s a significant, that’s a monumental difference. First of all, 2.5 million jobs is like the fastest job adding in history but we were actually off by over 20% that’s kind of a remarkable mistake and kind of an overlooked topic. Why is that just being dismissed? That’s enormous, and then, they think the increase for June which is basically 2.4 million which is a great runner up here they actually are saying how they have all this post data that has to really settle before they can actually mark off the real job count but it’s at least 2.4.

Seth: Yeah, for sees an increase of 4 million in June for non-farm payrolls that’s assuming no significant revisions to the May figure. I think the numbers just keep on going up.

Ben: Which is, I mean, when you think about what’s going on here we’ve got some partial reclosures of restaurants and stores and stay at home potentially being executed again and we got a lot of like woes and concerns that jobs are being had and that’s a really solid strong sign and I think that has a lot to do with the demand arc that we just went through and the fact that there is more demand than people realize. It’s not like we had some kid of economy that was bustling and churning in itself. We have an economy that has lots of cash with lots of demand and even though we shut off, that demand and that need it still more important than saving the cash which is a great sign for our economy.

Seth: I thought you were going to say at the beginning of this article why you like this article so much is because it was by Lisa Bilfest but you were going to be able to say it better than I could given my track record with any author so far.

Ben: Lisa Bilfest and I are good friends, so yes.

Seth: Yeah, so anyways… Here’s what history tells me about Ben and authors and their names is that actually the next article here is Here’s What History Tells Us Happens After the S&P 500’s Best Quarters of all time as Strategist says it’s set to repeat and that’s by Callum Keown. So here we go guys we just finished one of the best quarters ever since 1950 in the S&P.

Ben: That’s crazy.

Seth: Right?

Ben: That is nuts! It was quite a quarter. I mean we had some volatile crazy, crazy swings it’s not like it was a straight up quarter it was bizarre. Matter of fact, when you look at the first and second quarter of this year you probably couldn’t find more opposite more – it’s really bizarre. I mean you just don’t see this folks. When you talk about pandemic, I mean unprecedented like the last two quarters have had an absolute fly. So, the big question is what do I do next? How do I invest from this point forward because a lot of people they are not back to where they were? People are still underwater in a lot of cases and we’re seeing this massive rise, we’re hearing there’s tons of people making money, tons of people who’ve lost money and a lot of average investors are sitting there saying to themselves, what do I do now?