Carter, John Dean, Ray Lucia discussed on The Ray Lucia Show
Alright y and say Joe w. This is the Ray Lucia show. Thanks very much, myself round of applause. That's so amazing. Thank you so much. Thank you tuning in the one talk show in America that helps you make better money, moves the program, all about your money, your business, and your alive. John dean and the house or their big bad hair, you should give yourself a hand. Nobody else to do. I've been giving you a hand up hand up. Since nineteen Ninety-one, it's been a long time and a good one too. I think it's been fantastic. Thank you for all the help. Yes. Yes. We're only we're only like two and a half years away from thirty. Yeah, I know I know the fact that we're only thirty nine years old. Nine years during recess. Third grade. Hey, I think I know where this came from, and it may be a setup Carter, who is an advisory says, in training, emailed, me, just this last weekend, and he said something like I keep hearing about being debt free paying off the mortgage, and then investing in twelve percent mutual funds so that I can take an eight percent income and allow four percent for inflation, way, where where does this is this is Carter and advisor. Maybe it's Carter page. That's the only one that I know's first name first name is Carter looking for. Yeah. No kidding. Is this is an advisor to be an intriguing advisors here about this evidently? And I think I know where I don't want to get into the situation of, of where let's, let's help Carter and many others. Because let's face it, there's this huge mantra that's been going on for years about how you need to be depth three before you start investing. And that's a discussion. We've had a number of times on this program. The difference between good debt and bad debt as an example. I think we all know that. I mean it's pretty basic, you would think, so, although I listened to some of these get out of debt people, and they say, don't invest to your mortgage is paid off. Exactly. Well, that's exactly what this Carter is suggesting is this doesn't make sense, folks. Okay. So let's just do the simple man. And by the way, most of them, are dealing with behavior and not mathematics. Because if you're dealing with mathematics, it's pretty simple. Right. If you have a four percent loan, and you're in a thirty percent tax bracket, then it's costing you two point eight percent for the use of the money, right guppies two point eight percent. So you're bogey is two point eight. So I ask you, can you beat as a long term investor, because a mortgage is thirty years. Right. That's pretty long term. So can you beat over a thirty year time period, they compounded two point eight percent return net after taxes and the answer is you'd be an imbecile not to be able to do that. If you just close your eyes and put your money, sixty forty mix into any kind of blend of stocks and bonds. If you put it all in the stock market, he probably closer to eight you're saying over thirty years, and that's not taking withdrawal, that's not taking any withdrawal. So that was the second part of Carter's. And text here or Email I should say because he's saying invest twelve percent. I know where the twelve percent k came from don't buy it. It's a ridiculous assumption. And it's even more ridiculous. To assume twelve percent. Takeout. Eight leave four for inflation, while you're distributing the assets because every single mutual fund. That's a growth stock mutual fund, by the way, that's one hundred percent invested in the stock market. But every one of those ones that maybe did twelve percent over a twenty or thirty year period, probably haven't done it over the last twenty years because you had to blow up. So when when this fellow is talking about twelve percent. He's using a time period in which the markets were quite prolific. Like from the mid eighties to say the year two thousand that twenty five year period, a lot of mutual funds did twelve percent. Compounded? But starting in two thousand to today, I know of none novel last ten years. Yeah there's a ton of done fifteen percent, maybe twenty percent but leading into the ten year bull market longest in history. Yeah. Two major fifty percent bullets. So when you shake it up now twelve percent is way too aggressive. Now. It's funny because Peter Lynch and there's no one, I think in the industry, that's no more revered as a portfolio manager, money manager, money, man. Then Peter winch. He's, you know, the fidelity vice-chair guru, and he managed the fidelity Magellan fund for I don't know, a couple of decades at least two massive returns like twenty eight percent or twenty five percent. And he's the guy that made famous John by what you know. Yeah. Yeah. Seve's brilliant. I mean, the guy you would think that with all that prowess, he must have been doing something that others weren't doing. You know the by the by what you know thing sounds good on paper. But there's a whole lot of stuff. I don't know much about let's call it in technology. You're of course. And so if that were me, I would have never owned apple or Microsoft or any of those tech companies that zone so well Google. You would've owned guitar company. Absolutely something sports related perhaps, right? L the football. Yeah. There you go. Body ridell Ida had two two on the right now. I think once the why ones with an eye, but you got a couple of times word right L tattooed backwards at your art. When you got hit by a helmet with that. That's another indeed. So, so Carter, if this is a real Email, I suspect that it is. I'm not questioning got nowhere at all. I think I know where it all came from. And the fact is, yes, it's important to be, quote, bad debt free. So let's all agree that, if you have high interest rate, credit card debt cetera et cetera bad debt. It's good to pay that down. Now, there's a mantra out there that suggests that you should focus your attention on paying down the lowest payment debt for what was the. Well, they're, they're there couple of schools of thought interest rate to pay that down. I some people say that others say, take the one with the lowest balance balance as at first, so you get that out of the way and you see a sense of accomplishment. Right. So one is behavioral. Yeah. The other is mathematical, right behavior. If you're if you need the behavioral help, then do that, you know wheel whatever they call it where you pay off the low balance. I apply. You pay minimum payments on everything else. And then you apply the maximum. They get the low balance paid off. Now for a guy that owns an HP twelve see, like the one I got him my hand here. That's stupid. I mean, come on. You got an eighteen percent credit card with a you know, a twenty thousand dollar balanced, and you got a three percent, credit card or Bank loan for a car with a you know. Three three thousand dollar balance. No. If you want to focus your attention as much as possible on the twenty percent interest rate cost, I tend to agree with, that, although I do see the psychological, psychological benefit. I it's, it's different for everybody. If you owe twenty thousand dollars eighteen percent you better pay pay that off. I absolutely three thousand at eighteen percent and you owe two thousand three percent and you want to get one of them out of the way, maybe you could do this marginal. I mean, that was marginal case. But, but just understand we talk about behavioral finance all the time in this program, and there's nothing more powerful than learning what your behavior is. And then adopting or. Somehow, managing your finances accordingly. But you should also understand the mathematics behind it. It's not just about behavior and this eight percent safe withdrawal rate thing. I'll have more to say about withdrawal rates either later on this show or another shows. But, but the fact the fact of the matter is eight percent is fine, if you're only going to live ten year. Because if you suffer through, I mean, just think, again, simple, mathematics, you have a million dollar portfolio you lose fifty seven percent. You're sitting on four hundred thousand dollars. And now you're gonna take eight percent of the million dollars taking eighty thousand bucks out. So a flat return means you can live five years. Okay. No. That is not an advisable thing to do, even though somebody that you may respect said. So you're talking about taking eight percent of whatever the of the original bound, the originally that balance not, what's leftover not the RAM D method here. No, no, no. Not. The are him.