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July Mailbag with Jason Moser
"The. Multiple answers I'm out Southwick and I'm joined, is always by broke camp. Personal Finance expert here at the Motley Fool. Hey, BRO, well! Hello Alison. It's the July mailbag where we answer your questions and this month it's with the help of multiple analyst Jason Moser. Should you buy a house now? What is modern portfolio theory and also here Jason's thoughts on a lot of stocks all that and more on this week's episode of Molly fully answers. Jason thanks coming back. you know I mean i. told you you invite me. I'M GONNA. Be here every single time. Thanks for having me back. I mean we appreciate it because we know you're a busy man, and so we do appreciate that you carve out time for us in our little show, don't. Always always make time for those important people in my life rule number one make time for allison and Bro I love. It sounds like a good one to me. Everybody wins. All right well, I guess we should just get into it, so the first question comes from Darren I've subscribed to the full for over a year and I'm really pleased with the service. I would like to know your thoughts about my holdings in Shop Affi- I've bought several times over the last three years, and it's now over thirty five percent of my portfolio and I. Don't know if I should continue holding or trimmed down. What would you advise a good problem to have I was gonna say that exact same thing? That's a good problem have? In a very glad, you have subscribed to our services in your really pleased. That's that's what we aim to to do. We aim to please help you make money and so yeah. This is one of those situations that we will find ourselves in from time to time as investors. A nice problem to have but something you do need to address at some point because it is going to be a little bit different for everybody. In so coming from the perspective of I, also own shop, a Fi stock in it's it's a wonderful investment. It certainly is taking up a bigger. Part of my portfolio a not at thirty five percent where you are. I think for me. It really does boil down to. That sleeping at night test in other words, you need to be able to go to sleep at night without worrying about this kind of stuff, and if you feel like shop, a Fi represents too much. Of your portfolio if you feel like you're overly allocated their, then, you may need to consider pulling it back a little, but now I mean it's. It's I think it's always important. Note you know. It's a big difference between building up a position buying a position to make this size to make this type of allocation in your portfolio. It's another thing entirely to have position grow into beat into becoming that size i. mean that that is that is in a little bit of a different dynamic there, so people all the different ways, some sometimes folks will, they will just sort of looking at it from the house money, concept or you. You just sell enough shares to recoup your initial investment, and then you let the rest of it go. Some people are perfectly fine with thirty five percent. Some people are not. They want a pair back so i. do think you need to kind of figure out what helps you sleep at night I do think that shop by a great business. I think the biggest risk in only shop, if I right now is valuation, just because it's dominating, it's space, but it's not making any money yet, and it's probably going to be a little while until they do so that valuation risk is there, but ultimately yeah I think determine. Where you feel most comfortable with it, and if you feel like you need to put a little bit of that money off the table, and he thirty five percents a lot, certainly very understandable. If they've said something you need to do if you do decide to pair it back a little bit. You've made multiple purchases, so you can identify the shares to sell to manage the tax consequence if this isn't a brokerage account and not an IRA. All right next question comes from Steven. If you are forced into unemployment, you are paying federal income taxes on unemployment payments are not contributing to social security nor to Medicare. How does this affect your future calculation of social security benefits and can one contribute to the social security fund during unemployment to mitigate any adverse effects on benefits, it is a little bit adding insult to injury, but you do owe federal income taxes on your unemployment benefits, and if your state charges has a state income tax, you probably have to pay state tax on that, although there are a handful of states that exempt unemployment benefits, so that's good news. And by the way you, you could have taxes withheld from your unemployment benefits you file. This form called form w four V. if you want, they withhold ten percent, or you can do quarterly estimated payments if you wanNA avoid that big tax bill at the end of the year, but if you're strapped for cash is probably just better to get the money now worried about your taxes later Eh. Stephen notes out. You do not pay payroll taxes. Those are the things that go into social security and Medicare so. So. It could result in a lower social security benefit, however, keep in mind that social security is based on your thirty five highest earning years, so if you enter the workforce at say twenty two and you work until you're mid to late sixties. That's more than forty years where the working so hopefully. If you miss out, if this year is not so good somewhere among those other forty, five or so years, you've had thirty five really good year so that this year won't be that big of a deal. So it probably will be okay. And then to address the last question. Unfortunately, no, you cannot make voluntary contributions to social security. There is at least one academic working paper out there. That suggested that people could buy into social security by like extra credits as opposed to contributing to your 401k, but so far that has not been passed by Congress I had an ex. Question comes from Sam. I heard to stocks discussed on another full podcast. When I read articles about them, it mentions they are thinly traded. I have two questions one I'm sure my position would still be quite small so I think I'd still be able to get in and out, but are there other things I should think about when it's a thinly traded stock and question number two. Is there a certain amount of? Daily volume you like to look for when considering a stock foreign investment. What volume do you want to see to not be? Quote thinly traded stock. Yes very good question in thinly traded stock just refers to the either the amount of shares or the dollar volume of shares that would trade on any given. Market Day and so. The. Thinly traded stock. The the problem is that you may not necessarily able to buy and or sell at the prices. You necessarily think you might be able to in other words when you look at a stock's price and you're looking through the. What what's going on throughout the day on the market, you'll see that did ask spread, which is essentially the bid. Ask spread is it's what someone's willing to pay for the stock versus what someone is asking to be paid for the stock? Because you know you have a buyer and a seller on on in every transaction they're. Normally most cases, these business business bread is very tiny, the couple of pennies maybe for most stocks because they're. They're heavily traded right there. There are plenty of dollar volume. But there are a lot of smaller companies small caps in particular in in you know a micro cap, specifically that don't necessarily meet these kinds of thresholds, and so you definitely have to be aware of that now I'll go back in time just a little bit, too. When we were running the service here at the fool called million dollar portfolios Roman Romani portfolio that we help manage members, and it was never really a problem, but we did have a condition in there. We were always looking for at least ten million dollars in average. Trading volume total daily volume now understand I'm not saying the number of shares saying the amount of money so basically shares times price, but we're always looking for at least ten million dollars. That wasn't set in stone it. It was an idea for us. It wasn't ever really a problem because we had a very diversified portfolio with a number of different types of companies, but when you're looking for smaller companies, you would've just keep that in mind that did ask. Spread is is something that just because it says the stock is twenty dollars. That doesn't necessarily mean you'll pay twenty dollars if there is a a big spread there between the bid, and the ask in so I think whenever you're considering stocks that have any lighter trading volume or thinly traded stock. Just be sure to use limit orders. Limit Orders of let us stipulate the price that you are willing to pay for or that you're willing to. To accept a if you're selling a limit, order is just a really good way to protect yourself from any unwanted surprise thinly traded stocks. You might not always necessarily get them when you want them, so you might have to lead that limited are in there for a little while, but but a limit order is a great way to protect you from any unwanted surprises. Next question comes from Randall. I'm in my late thirties now, but earlier in my life. I was very very bad with my money. Collection Calls Welfare and bankruptcy or not strangers to me. I've been at the bottom then I met the love of my life, and she convinced me to turn things around ten, and a half years later and I have done a complete one eighty, I took control of our finances rebuilt my credit and started investing and listening to all you find folks all. I opened it investing account with the goal of saving and building enough a down payment on a home. I'm happy to say we've now reached that goal. I recently sold at a profit because I didn't want that. Money tied up in the market. If we are close to needing it for a house, but now that we're here, I'm not sure what to do. We currently rent a basement apartment and our neighbors general living situation are less than ideal to put it mildly. So, we're champing at the bit to jump into the housing market that being said the experts have been calling for a drop in the housing market for a while, and that was before the pandemic hit now I'm worried that if we buy right away a year or two or three from now, interest rates will spike, and we could be put in a difficult situation. I live near Toronto. Canada or the housing market is already highly inflated in relation to the rest of the country should I be worried? While Randall first of all congrats on turning your financial life around love hearing success stories like that so good job on that. So I'll start with my standard answer with the rent versus buy decision, and that is just pull up spreadsheet and compare the all in cost of renting, including what you could earn on the money that use for down payment versus the all in cost of buying including the opportunity cost of putting down payment as opposed to having invested as well as insurance and taxes and maintenance, and all that stuff and project, where you might be in five to ten years based on various scenarios on what happens to stocks, if you. Rent an invest the down payment versus what happens to? What you'd look like depending on where home prices go. Generally speaking. If mortgage rates go up, that could way down on real estate prices we did see mortgage rates. Go Up for a bit a few years ago, but the housing market did find, but you could certainly envision a scenario where rates went much much higher, making houses, much less affordable and prices would have to adjust. But I don't expect that to happen anytime soon. I think we're. GonNa have low rates for awhile, but beyond that I don't know I've given up trying to predict where interest rates are going or even paying attention to people who try to predict where interest rates are going, so who knows? That said since you live in Canada. I thought I'd check. In where rates are these days and I and I got a brief reminder that things are actually different in Canada so I did a little bit of research. And then realize I had reach out to someone who knows, I reached out to Canadian Motley fool analysts Jim Gillies, and he had some thoughts so first of all just for you non-canadians out there. It is really different so in America. We get this thirty year mortgage than we have the same payment for thirty years. It's fixed. They don't have that in Canada. What's the most common is a twenty five year? But only the first few years or fixed. And then adjusts so in that context you can understand why Randall is worried about interest rates going up because over the next depending on which alone he gets the most popular is a five year fixed, and then you basically have to go get a new loan probably. So that put that in context, a little more, but also Toronto, really is crazy expensive. Vs from the end of last year that put it as the most overvalued real estate market in the world behind Munich. As Jim pointed out in our call here in the US we had our housing peak in two, thousand, six, two, thousand seven, and then we had what he called a reset, which is basically prices came down significantly candidate and have that slight downturn at home prices, but then they just kept on going up, so it really is different there, so when Jim explain all this to me, the difference in mortgages and the difference in home prices. Frankly he was inclined to say to this guy. You Might WanNa rent for while more and see what happens, but he also had the good advice of okay. What if you buy in prices? Come Down Fifteen percent twenty percent. What if they come down to a point where he upside down? You owe more than the home is worth. Are you okay with that? If. You're okay with that. Maybe it's okay to do that. But it certainly sounds like dicey situation than if someone were telling me like I'm thinking of do this in Dubuque Iowa or something like that. couple of other differences. In case you're curious about Canada in the US. Your mortgage is portable in Canada south. You Buy A. Get the five year mortgage, but then move get to take the mortgage with you for the next house and interest is not tax deductible. US Look at you, Robert, broke? Camp Can Canadian real estate experts there you go. Next! Question comes from Chris. I was on twitter the other day and saw that one of your contributors Brian Feroldi tweeted that he doesn't believe in a long list of technical trading terms and then modern portfolio theory. Can you help me understand what not believing an MP? T with mean this? He believed that diversification doesn't reduce risk. Also every financial adviser I've ever talked to his preached empty, so I would love to hear the counterargument. Jason you're not Brian for all the. Question I am not Brian for all the do get the talk of Brian Pretty good bit though. I I must admit I. Don't know what he said here in regard to modern portfolio theory and all of these technical trading arms. But I think I can take a guess. Generally speaking I agree with them, and I think you could sit there and look up the portfolio theory in you know read about it as much as you want. Just go to google modern portfolio theory, and you can dig right in there, but in a nutshell ultimately, what modern portfolio theory is the intention behind it? It's meant to reduce risk while maximizing returns. It assumes that investors don't like risk. They prefer less risky portfolios to riskier ones in order to achieve a certain level of return so right there. I kind of kind of lost me right there because I don't believe that every ever investors risk averse I think some investors have a very. Healthy, appetite for risk, and frankly I would say I got a pretty high tolerance for risk when it comes to investing, made it just because of what I do for a living but I. You know to me I like having that trade off least unhappy. Happy to take some risks there. If I feel like that upside, it's going to be potentially worth. So with modern portfolio theory, it introduces a lot of fancy math in the form of variances and correlations in order to come up with this. Quantifiable, investing strategy that ultimately helps reduce risk while allowing the investor to achieve. Certain returns in. Maybe it works for some not I'm not dismissing it personally I. Don't use it, I don't personally subscribe to it I. Don't need it. I think honestly for us. In a really believe it's extends to to most people in our full universe is that is individual investors I think a more meaningful way to reduce risk. is to just extend your timeline like invest longer. So like Tom Gardner said a number of years back when we were. Working on Motley, fool one basically take your take the time line that you think you want to own any individual stocks you buy shares of starbucks and I plan on owning it for you know five years. Okay, we'll just double it. Cloning it for ten in all of a sudden right there. You've given yourself more time. Time is one of the big advantages we have is individual investors. Money managers don't have that advantage, Wall Street done generally handed abandoned, either, but if you can be patient and just invest in good businesses. That risk really starts to come down over time. There are plenty of studies out there. That show that risk comes down the longer you hold onto those stocks, which into me, just renders modern portfolio, theory, more or less not useful mean on things, not useful for everybody, but it's not useful for me and based on Chris. Question It sounds like a agree with what Brian was saying there. We think I'll add to. That is I agree that risk is really not that much of a consideration if you are saving for retirement. But once you are in retirement man, and just say like you know what the market's not I'm going to extend my time highs in ten years. Because you need to spend money in that situation, I think diversification is important. It's important to have assets that don't always move the same direction at the same time. For some fools. That's just as simple as keeping any money need the next five years in cash, so you're right out any ups and downs, and that can be fine. But I. do think it makes sense to have. A mix of investment so that right now, technology stocks are doing very well, and we hope that continues to do well, but we remember was that happened in two thousand from two thousand to two, and there were down for quite a while anyone who retired in one, thousand, nine, hundred nine, or so it was very happy to have some small caps value maybe a. A little international, some reits to ride out the storm Yeah I think we talk about that often like recognizing where you are as an investor in life, are you in the grow your wealth stage, or are you in the protector stage, because they are two very different strategies, and we're all hopefully going to be in both of them at one point or another right? I personally and still on the grow your wealth stage I. Think we all probably are, but you will at some point get to where you need to focus on protecting the wealth that you've made so that you can then have that money to spend, and that definitely will dictate your investment strategy things that you're invested in and whatnot. Generally speaking I do like the idea for people who are just risk averse and have this notion that investing is just too risky. I mean the fact of the matter is not investing as far away greater risk like not investing. You will never grow your money if you don't the best, so if if if risk is a problem, I think generally speaking. Along the lines of diversification idea that that bros. talking about him, he just invest in invest in SNP index fund is something that just follows the progress and p. you know you're going to be participating in and if you look at that over the over the stretch of time, their five ten twenty thirty years, I mean that trend does go one way. It, but clearly the older you get, the more you need to start focusing on protecting your wealth, and that will change the way you view things. Right next question comes from Alex from Alexandria if I buy Muny bonds from another state in my IRA. Is it still taxable and Alexander with who we have a bond on and we do have a bunch. I know Alex up super excited about having a bunch on in Alexandria to I can't believe I haven't been there. It's like two miles from my house, but we still haven't been oh i. know because there's a global pandemic going on and we. saw. Alyx if we buy me bonds from another state in my IRA is still taxable. Bro, help him out or her or so Muny Barnes. People Invest Immunity bonds because they're free of federal taxes and in many cases. If you're buying bonds issued by the place you live, they might be free of state and local taxes, so that can be doubly triply tax free. That's why people buy 'em. There are some times, however that if you own immune, abound outside of an IRA. Pay Taxes and this surprises some people. There's something called the minimum tax. If you buy immunity bond at a discount, and then it matures at par. If you buy a distress, Muny bond for like you put an eight thousand dollars, and you sell it later for ten thousand dollars as a capital gain. You'll be taxed on that. So, there are some times when you would pay taxes on media. Now, Alex is asking what if it's an IRA? Do I have to worry about paying tax interest. If it comes from another state and the answer is no, you won't have to worry about that. The only thing I would say is. Generally speaking immune bond already has built in tax advantages, so you wouldn't keep it in an IRA, unless there's the example of the stuff I was saying previously like for. It's one of those exceptions when him UNIBOND would result in taxes than you might WanNa keep it an IRA, but generally speaking. If you're going to buy Muny Bond, keep it out of an IRA. Next question comes from Boone. I just did my first. Roth conversion and looked at that old account for the first time in. There was the expected dividend producing fund I remembered, but there was a stock chesapeake energy that I had completely forgotten about since I purchased the stock in two thousand, six fifteen. It's down way down like eight point five percent off the purchase price. What should I do with it now? It's in a tax deferred accounts so I. Don't think the loss is realized until I. Start to pull money out of the account and that might not. Not Be for fifteen years current value of all my shares will be about one percent of the value of the account after the conversion. Do I sell in the very little value? I had left and depend on E. Trade to keep up with lost for me or should I hold on based on the slim chance. The stock will be worth more in the next ten years. Oil Stocks do act unusually on occasion, only oil stocks. Stock everything else makes that usually. Chesapeake has been really. Interesting Story to follow and frankly. I don't I. Don't know that I would look at it today. As a business that I'd WANNA own so typically if I. You know I think it was yet idea. Didn't sound like a position are actively building united investment didn't work out. I mean that that happens to all of us. We don't get them all right. We have a philosophy here at the full. A lot of do we like to? Water flowers and pull the weeds, and that's just a nice way of saying. Add to our winners in to get rid of losers in. This I think is more than likely slated to continue being a loser I mean. Chesapeake has lost a lot of value. In it does sound like based on when you purchased this, these is absolutely busted I mean. There there are all sorts of reasons to sell one of them is if you thesis busted and the reason why you invest in the company is is no longer the case, and I would he probably is the case with Chesapeake so to me like you know, you could sit there and let it go, but but what's the goal trying to get back to even, or are you trying to get back a couple of bucks for me a lot of times? I'll I'll take a little opportunity here and there to just go ahead and pull those weeds sell it. Be Done with it. In even though it's just unique out a little bit value there, you can still take that money and do something more productive with it. So. Yeah T to me. I can't tell you to buy or sell obviously, but I can certainly understand. Selling in this case, but I you know. As as oil and natural gas energy can can turn around. This is going to be one that has a lot of headwinds in in. You might be waiting a very long time to to get any of this money back. I point out here that I it seems that maybe boone has a slight misunderstanding of how taxes in aries work because he talked about realizing the loss when he takes the money out and trade keeping track of the loss for him, it sounds to me that he thinks that he can write the loss off whence he takes the money out. That may not be the case, but just to be clear. One of the great benefits of an IRA is you don't pay taxes on the gains, interest and dividends from year to year. But. One of the drawbacks is. You can't take a capital loss on that as well so there's really no no way to benefit on your tax return from this loss. Next question comes from Benjamin. You recommend seeing a fee. Only financial adviser for check in every so often I know there is the Garrett planning network and others to help find an advisor. But what questions do you ask? And what answers do you listen for when trying to find one that is worth his or her one hundred fifty to two hundred fifty per hour. So I would say start first with asking yourself some questions. What are you looking for? You could go for the whole launch. Lada where someone is managing your money analyzing retirement plan helping new save and a five twenty nine. Maybe even doing your taxes with some financial planners do help with the state planning, or are you looking for something more targeted? You just want advice about am I saving enough for retirement, or are you close to retirement? You're like I just WanNa make sure that I'm doing right when terms like choosing my Medicare plan and claiming social security at the right time, so first of all just be very clear of what you're looking for. Then if it involves investments in any way, you WanNa, make sure that you find someone who is at least in the general same area philosophically and I say this, because many financial planners are hardcore index. And if you come to them as a motley fool, listener member with a lot of individual stocks. They may say okay. I'll give you some general asset allocation guidance, or they'll say I don't care if you like to pick. Stocks are not my advises, sell the stocks and go to index funds, so you want to make sure that if you're gonNA, ask for any sort of investment. Advice that you wanna find someone who's someone somewhat at least aligned for what you're looking for. Once, you've got that then. Just asked some of the typical stuff. You might expect so credentials certified financial planner. Are they a CPA either their personal financial specialist. How long they've been in the business. There are lots of people who. have not been in the business very long. Even though they're not young people, a lot of people choose financial planning as a second career, which I think is great, but just because someone may be look like they're in their forties or fifties. Sixties doesn't mean they've been in the business that long, and you WANNA. See if they've worked with someone like you right so if you have. Maybe. You have a large amount of wealth large income huge portfolio. You WanNa make sure that they have experienced with dealing with those issues, but on the flip side to if if you have, are you know middle income, decent size portfolio, but nothing too complicated. You don't WanNa. Go to someone who's used to dealing with someone who's wealthier partially because those people charge a lot more. You want to find someone who's kind of a little more lined up with what you're doing. Then make appointments with three folks. All of them will do get do free. Get acquainted means, and you're just looking for someone who you feel comfortable with. Since, you mentioned Garrett Big Fan of the Gary Planning Network and other is is not for the National Association of Personal Financial Advisers. But Garrett on their website has a how to choose an adviser section. Just Google attitude visor Garrett Planet Network has a great chapter from a dummies book that they wrote about how to choose adviser, and they have a good questionnaire that you can print out in US asking lots of good questions of financial planner. It's tough. Choosing a financial planner like my mom just went through that Bro! Is You know and she didn't really have a lot of options in Boise Idaho. Maybe two and one of them, she I never called her back, and never got back her, and the other one was just so busy just so busy, and just she just never. It's it can be rough. Finding a financial planner can be I. Think what we'll see is one of the consequences of this. Of the coronavirus pandemic. Just, like we are all used to working from home, many financial advisors and financial planners an now working from home. So in what they're doing is they're becoming licensed in more states. So, if you are more comfortable, working with someone over zoom remotely I think you don't have to stick with someone in your area. You can go beyond your locations, but you know some people don't feel comfortable that if if they're going to have someone managing their life savings, they want to be able to meet them in person. That's just a personal choice. All right next question comes from twitter. Is that right from sully what I hear? Okay? I just listened to the episode mentioning Your Weakness Two. Shopping carts and Tj, Maxx that me or you Jason. Accused me. Thoughts on the stock. If I had a war on Amazon, basket would be Costco TJ maxx Home Depot tractor supply. What would be your basket against online retail? That's funny. Well okay, listen I wouldn't have basket against online retail, because online retails where it's at. The whole idea. The whole idea behind the basket approaches to find a long term trend that you feel like the world is headed toward and so the war on cash basket, for example that was always one about people using cash war, traffic payments now with that said I get the spirit of the question some going to answer it because I do like some of these ideas. And I I would definitely include Costco in their in Home Depot's well. Home Depot gets a lot of my money. Doesn't, but they have a very loyal fan base of customers that just are happy to renew year in year out. So I love those membership models there, so costco and a Home Depot for sure you know I'm going to give a little shout at my wife Robin I. Know that she would approve of my adding target to the mixer. She hasn't been raving about targets APP and ordering on the APP the able to go to the store. Just pick it up right there I've talked with Ron Gross on more than one occasion about target and how this really has. Become a twenty first century resale right they're doing. They're doing everything online and in physical stores. What they call Alma Channel and then my fourth and I'm GONNA. Take this. You probably aren't expecting this when Alison. I'm GonNa Shock and all you. I'm ready. I'm ready Alta. We're going. Make up my I know my daughter's love. It ugly ugly Mug like this. What do I know about makeup? Tell you what. Get! A House with two daughters and a wife. That's what I know about make. There's a lot of it in an Ulta is a really really good business. They actually have a very nice diversified revenue stream. They've got the salon a`dynamic of the business which encourages people to go there they do have an online business. They have an augmented reality function there at where you can actually like. Try things on makeup to see how it looks. Mary Dillon just a phenomenal other adults of that's my fourth, their Ulta but they I appreciate the spirit of the question I like the idea I'm not saying this is the basket. I'm not tracking this basket in a not a not backing this basket, but in the spirit of the question if I had to develop. A basket, such as this one I think it'd go with those four. Yeah, I mean I guess you just have to think about what retail out there is something that you would still physically go to. Because the actual retail experience is being in the space is the experience and what you're there for? And I know I mean before Corona virus we I would go to target and just just couldn't believe how much money I had spent from walking through a few of the aisles. TJ Max is just a phenomenal business I mean what they've done through the years. Is really capitalized on the nature of the business, the advantage they have in that treasure hunt kind of nature like you go to TJ Max, maybe not necessarily looking for something, and then you end up finding a lot of things, and it can be a little bit lumping at times, but but generally speaking like management's a very good job of running that business, and they know how to exploit the advantage of experience. I think they're online game. Though I think they could probably get something going with online, and they just have not have not yet and so I. Haven't since Corona Virus for example. I haven't spent a single dollar there, but I continue to still shop at. Home Depot I. Think Yeah! We still shopping at home depot because we're doing. You know you gotta buy lumber somewhere. And I know my grandparents out in my my inlaws out in rural Virginia. They love tractor supply store, but that's not. That's not in where we live, but. Still New deck at the house there allison. I mean you, can you see? A big exposed beam behind me and some drywall work that needs to happen. Have lots of drywall work that needs to happen now though. Yeah Anyway get to that. All right next question comes from Matthew. I got married to my amazing wife nine days ago in a small Kobe nineteen wedding in our front yard after we postponed it from its original date in April all. It was definitely different, but still very special. My question is in relation to this wonderful event. My salary has been at a level that has allowed me to fund a roth. Ira I love the optionality of it, but after marrying my bad ass, wife are combined. Salaries are now over the limit that would allow me to fund the Roth. IRA does this affect occur immediately? Do I need to now open up a traditional. IRA and begin funding it or do I have until the end of the year. Matthew wants a Roth Bachelor party one last. Well Matthew I have bad news. When it comes to most things in taxes, your status and your age and things like that depends on where you are on the last day of the year, said if you're married on the last day of the year, you were considered married for the whole year. So that means if you contributed started contributing to a Roth IRA for twenty twenty. You need to call up your brokerage. Firm and re characterize that as a traditional. Now don't have any other traditional IRA, as it's very easy to do the back door, Ross which we've talked about before you can just google it or even when you call the brokerage, just say I want to do the backdoor. Roth and they'll tell you what to do. If, you have other traditional IRA as you can still do. It just becomes more complicated and you'll probably pay more taxes. So you, but you may not be totally out of luck and I should say that's only if you have a traditional IRA doesn't matter if your wife has traditional areas. One exception by the way of of what I just said. In terms of tax status and last day of the year is distributions from retirement accounts before it's age fifty nine and a half, you actually have to be age fifty nine and a half to avoid that ten percent early distribution penalty, unless some of the many exceptions that are out there exist. Right next question comes from Warren Warren Buffett. Maybe I don't know that's why I was thinking. He's asking about coq, so maybe maybe. Once James Opinion on coke. By? Or hold? Wants to now. I'd give buffet night give. Kiesel Warren of the same advice and I would say. For some I'm not buying it. Not Buying it I'm not holding it if I own it. I guess that means sell it. Even Atlanta Georgia person like you i. feel like it's almost sacrilege. I am pretty close to probably not being ever even invited back. But the facts are the facts. Okay, I mean you do have to look at the stock itself has been ain't bad stockton for the last five years. I mean I do understand why when you look at it what they do, I mean they have. Four hundred master brands, and less than fifty percent of them are the big global brands that are actually responsible for almost all of their revenue when I say almost only ninety eight percent, so it's a business. It's very reliant on on. You know a small portfolio of really successful grants. The problem is now. We've always talked about cocoa beans such a great distribution story and that's true. They've got a distribution network. It's just phenomenal, but the problem is now. They're what they're distributing is is being seen as not so good for you in so you're seeing them. Have it into to essentially pivot away from what you know brought them all of the success for all these years. Years in soda and that that's not going to change I. Mean you're always GonNa have people to drink soda? People are not to drinking as much soda going forward in the numbers of just kind of the kind of shown that through that through the quarters in the years of Coca, Cola and Pepsi Pepsi. Has the salty snacks division, which I've always been very. Impressed by I, mean I love a good Cheeto, and so I mean anytime you can throw a bag of those cheetos in my Patriot Amok GonNa, turn it their coq. Interrupting, but I think this is also very important point. You tried the Jalapeno White Cheddar crunchy cheetos. The White Shit or so. I've tried to Jalapeno ones but I've not seen the white Cheddar White Cheddar Jalapeno crunchy cheetos. Don't get the puffy. The poofy ones are not as good, but the crunchy white Cheddar Jalapeno Cheetahs. them by them. They're amazing. I have to back. Pain you. I'll get those next time. I promise I, mean Eh. One. crunchy wants the puffy ones, so that people won't you're not? You're not seeing poopie. Who using poofy Joe Copy? We'll be Coca doesn't have that dynamic of their business. They don't have that dynamic to their business, and they've suffered from that Pepsi's Pepsi's outperform coca-cola over the last several years. It's not safe. Pepsi or coke get it back. I'm sure they probably can. But what I am saying is I think there are a lot of better ideas out there, and so I wouldn't be putting new money into Coca Cola and frankly if I did own it. I probably would look at selling it and you know if you've got a beverage company, maybe own starbucks. It seems like the science coming out in support of coffee, right? It's coming and telling you that these sodas. They're gonNA. Make you fat. Coffee, it could extend your life. It could help you live longer. SMART Mexican looking this a starbucks as well is. That sounds like study from the copy roasters of America. Do! Something that Chris Hill sent me the other day. that. We sleep at night. I'm glad I've been drinking coffee as long as I have God knows what I would look like otherwise. You're a good looking man. Rick. good-looking next question comes from. A. I'm trying to save money for my kid's College. Fund while the five nine is a great option. I'm limited to investing in mutual funds, which means at best I'm going to get what the market gets assuming I do some sort of low cost index fund and I be a capital F. Fool investor have been doing much better than the market in the last three years of being a member of. Of Stock Advisor Enroll breakers, even during this pandemic mess by listening to every full podcast and following David and Tom's and yours and every one else's in the full universe. My portfolio of about one hundred stocks is up here today. Thirty percent to the market's down five percent as of day as of today weighed down by three sluggish five to nine plants that are also down five percent each. I feel like throwing away money by using the five to nine, and not being allowed to select my own great companies in which to invest. What's more, my understanding is that the five to nine does not count as an asset for the kid when applying for student aid, but the coverdale does. So I come to you with a simple question. Can I have my cake and eat it, too? What if I wanted to use the coverdell to buy individual stocks? Until the child is nearing college? At which point I then converted to a five to nine. This allows me to get better returns and avoid it being an asset for financial aid and get the favorable tax benefit. So, chose this question, because first of all Dune does a good job explaining the benefits of the coverdell over the five twenty nine, you can buy individual stocks. You can buy and sell them all day long. We recommend that, but you can. Whereas with the five twenty nine, you can only make two changes to the investments a year, and it's all mutual funds. So. That's you did a good job of explaining that. I will point out with the coverdell. It's gotta low contribution limit of only two thousand dollars a year, so for some people save more for college, but they can max out to cover it out, but then put the rest in a five twenty nine. One thing that doomed does not have quite right. Is The financial aid treatment the financial aid treatment? Coverdale's and five twenty nine is identical. They're treated as assets of the parent, not the kid that is favourable from a financial aid perspective. It's not negligible doesn't mean it doesn't have any effect on financial aid, but it's better than an asset that is owned. By the kid. He can. Transfer money from the Coverdell to the five twenty nine. If for some reason, he decides to do that, but you can't transfer it. The other way around so were convinced to try out the covered. You have money in a five twenty nine. You can't move it from the five twenty nine. To the coverdale. What other interesting thing that he pointed out is that he is doing very well with his investments, and he owns about one hundred stocks. We get this question a lot. Either on the show, or on the full live that we run every day for members of full services, and that is how many stocks should I own, and if I owned too many are not just owning index fund watering down my returns, but here's an example if someone owns a one hundred stocks is still crushing the market. Idol last question comes from Cameron thoughts on the valuation of Stone Co in light of the corona virus for a fragile country like Brazil. This could be the tipping point after so many other headwinds. But how does that affect stone? coz Business Jason I. Don't even know what Stone Co is. What is still business? Yes, don't Coz a payments company that's focused on Latin American markets in Brazil and particular in so I guess it could be. Draw you can draw a parallel to to a with square through pay pal at, but generally speaking I mean it's payments. Company focused on Latin America. Primarily Brazil. Is the big money making market kind of like Marco Libra, they're. In I, I, it's a it's. A NEAT opportunity, gained a lot of headline recently, when and it was, it was seen that Berkshire hathaway. Warren Buffett's company Berkshire hathaway taken a five percent position in the company, which is pretty considerable i. Think in the near term. You have to acknowledge the fact that. They're gonNA, be some real headwinds in in Brazil particularly because of the pandemic I mean. The flip side of that is role in same boat kind of in that regard. The entire world is dealing with it, so it's not specifically you know it's. It's not particular to one economy or one country some. To get hit harder than others I, do feel like Brazil. Be at a place where they can recover from this given You know some of the other businesses in the area. I mean that that that I think is. Who knows ultimately how? That's GONNA shake, but generally speaking. I think the move away from cash towards cashless. Transactions in and financial software that's not stopping if anything, this hastens that which which is what I think, Cameron's talking about there and for a company like stone. Co, neither are other companies in the space pags bureau in roquetas libra to but you know moving money around is a big big market opportunity, and there's nothing that says they won't be able to expand well beyond the Latin American markets, too, so I I'd say cautiously optimistic I mean I
"muny bond" Discussed on Bloomberg Radio New York
"Visors a three and a half billion dollar fund located a three and a half billion dollar firm now located in Sarasota Florida John is a CFA as well as having earned a masters in economics from brown so earlier we were discussing the dislocation and corporates and treasuries let's talk a little bit about the muny market from everything I heard and saw during the beginning volatility early in March it looks like the muny bond market had just gone berserk maybe maybe even the most severe dislocation of any of the fixed income trading we've seen tell us what happened and so far have the markets recovered yet sure I mean it was certainly a market certainly historical volatility and historic loss in almost historic rebounding you know I I still I harken back to March ninth win treasury prices were spiking upward and yells are dropping and that rendered most firms out there on Wall Street important to actually give you a bit on bonds because they couldn't have done anything some prices were backed off and that combined with the stock market is starting to roll over partly because the price of oil is dropping and there's concern on the economy and the coronavirus picking up and we certainly had a perfect storm of dropping equity prices people looking for cash wherever it could be and that involve the selling of bond funds and bond ETFs into a market that was overwhelmed so when you think about bond yields moving up from two percent to four percent that is a stark rise in a very short period of time two hundred basis points and essentially doubling the deals like I said most of that was almost all liquidity related and and not credit related and and and yet there are concerns out there but course about municipalities and how they're gonna fare through this our view point on that is that most really kind of high quality general obligation and an essential service sponsor gonna be fine you know what you end up doing is you're looking at the a sensuality of the services the prism of the virus and things look a little different if you're talking about something like that a rapid transit bond or near poor planning center but that that was not the cause of the sell off in the middle talks set so this wasn't a systemic issue this was just a massive amount.
'Don't guess entry points': How advisers handle their own money when stocks tank
"Tax now money tax in the future money and then there's tax never money in the sense that you got it out of the way in the form of a Roth right and there's also things like a muny bonds that could have some tax favorability that's that's built into so tax diversification is huge but putting that to one side in going back to what we started off the show with here HM stock market this week I mean that this is definitely this is been one for for the record books yes yes makes my eye twitch well if if that's all it's doing for you is an eye twitch I I think you're doing better than a lot of people yeah I know I'm I'm I'm putting it mildly but yes it's hung it look it's almost like a a sucker punch but you know it really Wallace yes huge yeah and I was reading a report just recently from the format we fall in and they were kind of breaking things down and what would you think about it you know number one three months ago the market has had never been this high right so so we hit this this all time how hi the dial the drop that we've seen here it's a big one yes now it hasn't exactly put a dent in the maybe a minor one dad but it would have to put a massive dent in the overall bull market that long term investors have you know been experiencing for more than a decade now it's coming up here Jan March nineteenth you know if we make it March ninth of own nine till till now would basically hit the eleventh year of a bull gap which is the longest ever as you said that's unheard of yes yeah but the double close you know you see the Dow's first close above twenty eight thousand points came on November sixteenth so even though the Dow he does lost a few thousand points here it you know it probably only cost you know long term investors a small portion of the games that they've enjoyed being invested over the long run for these last going on eleven years that makes sense yes actually does so is it a sucker punch yes does it knocked the wind out of you absolutely some of that is just being spoiled as we have been for eleven years yes and this this epic run that we've seen just go from the start of two thousand nineteen in which you saw the S. and P. last year up you know twenty five twenty six percent nasdaq over yup thirty percent yeah it hit you hard but number two selling gonna make a point you're selling after a big drop has historically been a bad move yes right panel II can't you can't but you have to be cautious there's you do want to take certain action making sure in assessing how much risk you have and what the the worst case scenario would be but it it's hard to whether a big down day in the market you know but it happens yes you know in in bad weeks come along with it you know but here's one consolation history does give us you know many many examples of nice rebound to have follow tough days yes you know if if we look back Jen that happened during the major market crashes of nineteen twenty nine you'll be a great depression era that happened in nineteen eighty seven black Monday and there were the market dropped twenty two percent that day you know I'm at the mention that I think we had a bad week look at that that's true yeah in your you have to go back that far again there were several occasions during the financial crisis of oh seven oh nine when when huge balances immediately followed massive downward move so panic selling after a big drop means you'll miss out at an any balance that comes after that and I get it sometimes you honestly know what this is becoming a little bit uncomfortable for me Gasol so maybe I should shift you know take some of the chips off the table take some of the profits while I have them it shift some of the major one citing guess what maybe you do that and then if this does continue to slide down at some point you look for a buying opportunity and then you could basically kind of dollar cost average on the way back up if you're putting money in over over time but this can sometimes eat itself too much too quick you miss a balance and that can leave you in a very difficult the position that put you into a spot where you're trying to decide when to get back in yes right so you got out and then you can miss the swing missed the kind of bungee sport court going back up yeah exactly so your number three don't don't lose your long term confidence in the market you know it if you look you know too much at the risks involved the stock market investing in a single day or even a week or a month consecutive panic it again I get it sometimes it it makes sense yes it takes some of the money off the table but you don't want to go to an all out panic exactly right so market ups and downs are ever present but when you look at a longer term horizons Jen you know you'll you'll find that it's rare for stocks to to post losses long term in fact over a long enough period of time such as twenty years the broader markets over twenty years have never suffered losses now again that depends on your age your
"muny bond" Discussed on WBZ NewsRadio 1030
"The next one is ETF. So it's like, I can imagine, you know, the average person. Listen, what the heck am I supposed to do? So those calls, but then you know, you gotta make it all relative to the person who's calling me. My client, our new person just radio listener, of course. And again, like, you know, just quickly before the break, you see the tax free Muny bond commercial, and you should have Uni bonds for your retirement and all these commercials. You know, walking on the beach. Everything's great. I want to be. Yeah. Give me that piece the investments, but but again, it's all what is appropriate few taxi Muniz the benefit of of those courses for the tax free benefit. So if you have a non IRA non retirement account that you're in a high tax bracket in the you know, the the with as instead of investing in taxable corporate bonds are taxable government bonds invest in tax free Muniz, and you get the the federal and you could get the state tax tax benefit. So that could make sense if you want a conservative investment, but doesn't mean they're all conservative. They could be depending on the credit worthiness of the institution municipality offering that and so it depends on your tax bracket. And it depends type of account. You have some really help you if it's a Roth IRA or an IRA or a 4._0._1._K because tax free investment inside. There is a relevant. It's just taxable. Or are you know? The tax consequences. Come when you withdraw it. So, but of course, a regular account with you withdraw a notch. You get a ten ninety nine every year for any taxable interests that dividends or capital. So another long winded answer, but that's just. These these commercials are all our products that may be appropriate for you and not appropriate for you. So out of that when you said, you know, somebody actually did that was that you knew the clients, so well that instantly you're able to go you let me tell you. And this is why that's not right for you. Exactly. And then that person's able to go. Oh, I was just kind of curious to worry about that commercial. I'm now educated going. Is not for me. But for the average person when you're sitting there on the receiving end of all those different commercials. You sit there going, oh, maybe I need that. Well, maybe I should do that. And we sit there and at the end of the day. We're like, I don't know what I should do. They all sounded good because the picture of the walking on the beach. It's like, yeah. That's the end result. That's what I want. I don't know how to get a picture of someone walking on the beach. Going. This is more available in the marketplace today than before. Exactly, that's the whole. That's the key. Right. And if you are unaware of how investments work our financial product before you invest any money in it. You really should do you do diligence in not just, you know, invest in something what thou doing your research or having someone do that research for you, even if it's being offered to you. I don't wanna get into all Newington. Right. I really don't. But there are a lot of nudey products out there that offer income like guaranteed income that comes along with the new itty, but it's not your real money. It's just an accounting value that the insurance company uses so we see many commercials a lot of marketing that goes along with commercial. So you as a consumer because they know what you're thinking so to speak. They know that you're worried about income for your retirement in the money lost vulnerabilities. There you go. But what you need to understand is an set up before. And I'll say it again. Because again, we've been. Doing this a long time with the newest there is a good. There's a lot of good annuities out there. There is the bad. And my opinion Paul's opinions a lot of bad annuities out there, the the ugly and the very ugly. And so you need to be careful because we've seen it so many times with people coming into our office with me for the first time and the first time, and they purchase us a nudie a couple of three years ago, whatever it might be. And they thought they had some type of guarantee on it. But they didn't realize the differential between the guarantee and they're real money. And they certainly most many times it realize the annual fees come along with those type of annuities. So before you invest in any type of annuity. You should as a consumer just understand this annuity product may sound good. But I need to compare that with several other annuities and see the benefits between each of them. So that I'm making sure that I've done my due diligence. And I'm finding the best nudie for me. If an annuity makes sense for you. So in that could be the same. With mutual funds. It could be the same issue. It could be same with any type of investment that before you go ahead, and you invest in that particular financial product, or mutual whatever, you should know all about it. And you should also know about its peers in its performance and its history and all of them, and when you're saying due diligence you're also talking about get a second opinion on stuff because sometimes people are like, oh, it sounds so good. It makes so much sense. And all I really care about is making sure that I have monthly income. That's my bottom line, the marketing out there for products is either, you know, they know that two biggest fears that retirees face is making sure they have enough income and making sure they don't lose money the money so fair cells. So that's the big thing is with a lot of these products. You know, there's a big compensation for the professional offering them. But you know, that's not terrible. I mean, you know. The people in business. But is that the best benefit for you for that for that? You know, what the professional is offering. So you just really want to do diligence. And I talked about an previous shows, especially, you know, certain investment products like annuities. They have a long term commitment that that what they call us under schedule Joanie and different companies have different products, like one annuity company might have ten different annuities, and some have shortest are under schedule some have a longer, and sometimes, you know, might just be the different compensation to the professional, which is seems kinda crazy. But what I would say is that when you are, you know, it's one thing if you are investing say in a mill load index mutual fund or exchange traded fund, it's basically it's liquid practically speak, you know, especially in ETF you could sell it today. I mean by today and sell it tomorrow might go up and down value. But you're not committed for so many years to keep that investment. But when you invest in an annuity. Not that it's good or bad. It's just a long term commitment. If you understand the benefits and that commitment is okay. But you know, it's should do more of a due diligence because it's a long term commitment. It's not just something you can change your mind tomorrow. It's just like, you know, choosing social security pension options. You know once you choose. That's it. So you wanna do you do diligence before you choose, you know, things that are going to affect you know, social security and pensions, they affect the rest of your life, possibly spells his wife life and also maybe a family's inheritance. Depending on what choices you choose especially with pensions. So crazy that and we we did the money minutes on it that that all week ahead people asking me about some, you know, some of those questions, and it's really nice if you have a pension here and there, but Mike goodness that making will come in with pension with the pension packages. It's all the different options pension benefits in could be twenty different options this single single life with survivor seventy five percent fifty percent Pasha lumps. Tom full lump sums single with term certain five ten twenty years..
"muny bond" Discussed on Biz Talk Radio
"Get on the debt side. You know, you have corporate bonds junk bonds, you have Muny bonds. You have treasury bonds you have government bonds of mortgage bonds. I should say tips and so forth, diversifying amongst the various bonds. You can do. Sometimes it's easier to buy a goal anywhere bond mutual fund, and you could achieve that with ETF's or bond managed vonda counts, as you know, I'm not a big bond guy either. But I do believe Vons should represent a portion of your portfolio, but I would say both public and once again private debt there are places in the private debt arena where you can get a lack of correlation to the interest rate market. You're not gonna get totally slammed. If I make a loan to John dean at eight percent is secure it with his home, which he's got sixty percent equity in. I'm getting an eight percent return. I don't really care if interest rates go up that eight percent return is way above market, and I'm doing fine. And I'm hoping John defaults because I want his house now, that's the kind of private debt is again, if you're getting something like eight percent in your example, there's a little bit of risk there too. Correct. Yeah. The risk is you don't pay the mortgage, and I got a foreclose and make sure you pay your back property taxes. There's risk and everything, of course. And I'm not suggesting that individuals do this on their own. I'm just suggesting that you hire a really good adviser that knows their way around the public and private markets. That's all. And then Finally, I dunno. If it's finally but off the top of my head. You have the insurance products that exists today many of which either existed in the future, but we're not nearly as competitive or have not become as as as well known by the financial markets in the financial press insurance products that we talked about. Spears for example, single you've got Q lacks. Now, you've got a fixed annuities index to noodles you got variable annuities. There's just a whole host of them. There's also guaranteed investment contracts on the corporate side and the pension side stable value funds, all of those many of those should say germinate from the insurance industry and should be looked into as a means of protecting you against the market calamities of the future. And we will have some in most of our lifetimes, we will experience one two three four maybe more crashes and probably ten or twelve perhaps a dozen corrections before we croak. So this is super important for you to be discussing with your financial advisers. How do you diversify your assets? And how do you protect yourself from the market calamities? Of the future. And how do you keep the powder dry when the markets aren't doing what you expect them to do is it more important for somebody who's closer to retirement to consider this as it would be per se thirty year old who's got plenty of time. Yeah. Clearly, no matter. What happens even if the market takes a dive in your one hundred percent aggressive growth at age thirty. You got time to you. You can take advantage of that the thirty year old would hope that the market would crash. I wanted to crash I wanted to collapse the day after I start my four. Oh, right. Exactly. So so I mean, it is it is something that thirty year olds should learn and understand certainly thirty year olds would do well by investing in multiple asset classes, but a thirty year old vying a bond or a bond fund for accumulation doesn't make much sense, it only makes sense in that. It would it would potentially cause them to lose less when the markets go down therefore keeping their powder. Dry. A tad bit longer. But if they can be educated about how the stock market works and in the long run that decline or that crash or that correction actually ends up being better for the younger person. It's not so good when you're withdrawing money, but it's fantastic. When you're adding money to the account. See I don't need to be in my mind, if I'm thirty I don't need dry powder. Let it get wet fine. By me. I don't even need it. Because it's going to be dry by the time. I'm sixty but you've spent the last twenty twenty five years studying this stuff with those like me who talk about every single day. Yeah. Right. So you're dealing with the psychological effects. No. And most most of the time, you're dealing you could. That's it. You can convince somebody over and over. Here's a plan. Here's the strategy. This is why it's going to work don't worry about it. But somebody's gonna say in my head. I'm thirty years old. I can't take any losses. So I'm going to just put half my portfolio into bond. Well, and you know, when when all the gurus out there designing portfolios. They're not designing.
"muny bond" Discussed on BizTalk Radio
"Risks by increasing the importance of the ordering of investment returns in retirement. Translation. First of all when you go from accumulation to decumulation, it's not only a change in investments. It's a change in investment mentality. I was speaking with Steve out or last hour as a matter of fact, and I said, well, what would be wrong in this rising interest rate environment and rising real estate price environment. If instead of buying an investment property using leverage with higher interest rates to just replace some of my bonds in my retirement portfolio with an all cash investment and a rental property. And of course, he logically said, well, why don't you buy two or three of them used leverage and make more money? Well at forty five maybe that's the objective at sixty five. Maybe what I want is a check every single month that I don't have to worry about the difference between accumulation and de cumulation, what is your decumulation strategy? And then the ordering of where you take your money from those decisions are critical because remember as we've discussed you've got pretax money in IRA's 4._0._1._K's and so forth. You have post tax money and your brokerage account Muny bonds, CDs stocks. You have Roth money, which is all tax free coming out, but post-tax going in and then you have tax deferred money in things such as annuities and or real estate real estate. You have to pay capital gains tax upon sale annuities you pay ordinary tax upon sale. So there may be some tax arbitraging that you need to learn about all of these decisions are critically important when we talk about the visible spending constraint. Then we go to heighten investment risk retirees experienced heightened vulnerability to sequence of returns risk once they are spending from their investment portfolio. I've spent a lot of time on this in the past because it is perhaps the least understood and most serious risk that retirees face sequence risk means that if you retire on the wrong date and other words in the wrong timing you enter retirement during a period of negative or dismal or low returns. The longevity of your assets goes down substantially. He says the dynamics of sequence risk suggests that the retirement prospects for a particular group of retirees could be jeopardized by prolonged recessionary environment early in retirement, even without an accompanying economic catastrophe. In other words, if you retire and the market goes bear or we enter a recessionary period that lasts a while like nineteen sixty six to nineteen eighty two. I could quote a few others. Then the survivability of your assets and your retirement goes down significantly. And this is why I have talked about these fifteen year cycles, and why ten to fifteen years before retirement you've got to get your plan. You cannot wait. Until six months before retirement to put your plan in place now may work out. It may not. But if the recession hits shortly thereafter, it may really really upset the plan if it hasn't been implemented well in advance. Very very important the next one unknown longevity having a long life is certainly wonderful. But if you run out of money, it ain't so much fun. So what is your game plan for longevity?.
"muny bond" Discussed on KFI AM 640
"That the taxable equivalent yield varies from bond to bond depending on where you live that's right if you live in, Virginia and you buy a bond. From Maryland you get a smaller tax break because you only get the state deduction as a Virginia resident. If you buy a Virginia bond if you buy. Maryland bond or one from Wyoming or Illinois or Utah you're not going. To get, the state tax break so you need to know this because the, reason you're buying the bond is because you. Liked the tax free benefit but You're not. Maximizing the, tax benefit if you. Buy an out of state bond investors don't realize this in many cases. And so. I encourage the SEC to establish rules that would require brokers to disclose the fact that prices of negotiable to make the markups disclosed prior to the trade and, let consumers know with taxable equivalent yield is based on their state of residency and the bonds. They're buying. All of this an effort to increase and improve transparency in the, Muny bond market because you as an investor deserve nothing less if you are a Muny bond. Buyer if you own Uni bonds, you should talk with us about your portfolio to see if in fact, you are fully aware of the risks associated with. Your portfolio to determine if perhaps there are alternatives that might be superior for your personal situation hey speaking of lemme, mentioned You are. Free, retirement review to help you figure out. If the. Amount of money. You have saved is sufficient to, generate the income you're going to need throughout your..
"muny bond" Discussed on KFI AM 640
"Buy one for five thousand dollars and this is why so many retirees many people who don't have. Awful lot of money instead of. Putting the money into you know maybe a Bank account or a treasury or money market they go by Muny bond because they figure wow this is tax, free and it's, guaranteed by the government that, issued the bond what they don't realize is that the markup when you buy a small quantity is huge they knew. That the markup for trades of a million dollars is. Three tenths of, a percent When. You buy bonds for only twenty five grand, or, less it's ten times more the SEC's concerned about this and it has to. Do with transparency and that's why I was really excited to talk about this on my. Panel with the SEC and there were two main points that I raised in my comments I Many. Investors do not realize because the SEC does not require this disclosure many, investors do not realize. That prices are negotiable if you say to your broker you want, to buy Meany bond and your broker quotes you aband- he says here's a given bond here's the interest rate and here's the maturity date you don't know that's. Negotiable If you go. To another broker for, the very same bond you. Might get a. Better yield Many investors don't realize this I argued. That the SEC should make that disclosure prominent that. Brokers should be required to say to consumers this is what we're offering. You for, the bond this may be different from what others are offering you, for the bond I mean you know that. You can negotiate the price when. You buy car you need to know that you can go, she ate a bond as well One of the thing I encourage the SEC to do and that's to publish the taxable equivalent yield you get this when you buy, a car the EPA has a guest rating right it tells you how many miles per gallon. This car. Is going to drive in you know it's not terribly accurate it's, not gonna be exactly what you get when you drive the car doesn't matter it's a good. Way for you to be able, to compare this car to another car to help you make an informed, decision when you're making your purchase investors don't realize..
"muny bond" Discussed on WRVA
"From bond to bond depending on where you live, that's right if you live in. Virginia and you buy a bond from Maryland you get a smaller tax break because you only get the. State deduction is a Virginia resident if you buy. Virginia bond if you buy Maryland bond or one from Wyoming or Illinois. Or Utah, you're not gonna pay tax break, so you need to. Know this because the, reason you're buying the bond is 'cause you. Like the tax free benefit but You're not maximizing the tax rebel if it if, you buy an, out of state bond. Investors don't realize this in many cases and so I encourage the SEC to. Establish rules that. Would require brokers to disclose the fact that prices negotiable to make the markups disclosed prior to the trade and to let consumers know with taxable equivalent yield is. Based on their state of residency in the bombs they're buying all of this an effort to. Increase an. Improve transparency in the Muny bond market because you as an investor, deserve nothing less if you are a Muny bond buyer if you own Uni bonds you should. Talk with us about your, portfolio to see if in fact you are fully aware of the risks, associated with your portfolio to determine. If perhaps there are alternatives that might be superior for your personal situation speaking of lemme mention to you are free, retirement Review to help you figure out if the amount of money you have saved is, sufficient to generate..
"muny bond" Discussed on WRVA
"Any bond You can buy one for five thousand dollars and this is why so many retirees. Many people who don't have awful. Lot of money instead of putting the money into you know maybe a Bank account or a treasury or money market they go by Muny bond because they, figure wow this, is tax free and it's, guaranteed by the government that issued the bond what they don't realize is that the markup when you buy a small. Quantity is huge they noted that the markup for trades. Of a million, dollars is three tenths of a percent When you. Buy a bonds for only twenty five grand, or, less it's ten times more the SEC's concerned about this and it has to. Do with transparency and that's why I was really excited to talk about this on my. Panel with the SEC and there were two main points that I raised in my comments I Many investors do not realize because the SEC does not require this disclosure, many investors do not. Realize that prices are negotiable if you say to your broker you, be bond and your broker quote you a bond he says here's a given bond here's the interest rate and here's the maturity date you don't know that that's. Negotiable If you. Go to another broker, for the very same bond. You might get a better yield Many investors don't realize this I argued. That the SEC should make that disclosure prominent that. Brokers should be required to say to consumers this is what we're offering. You for, the bond this may be different, from what others are. Offering you for the, bond I mean you know that you can. Go she it the price when. You buy car you need to know that you can go, she ate a bond as well One of the thing I encourage the SEC to do and that's to publish the taxable equivalent yield you get this when you. Buy a car the EPA has guest rating right it tells you how many miles per gallon. This car. Is going to drive and you know it's not terribly accurate it's, not going to be exactly what you get when you drive the car it doesn't matter it's. A good way for you, to be able to compare this car to another car to help you, make an informed decision when you're. Making your purchase investors don't realize that the taxable equivalent yield varies.
"muny bond" Discussed on WCBS Newsradio 880
"Investors don't realize that the taxable equivalent yield varies from bond to bond depending on, where you live that's right if you, live in Virginia and you. Buy a bond from Maryland you get a smaller tax break because you only get the state deduction as. A Virginia resident if you buy Virginia bond so. You need to know this because the reason you're buying a bond is. 'cause you, like the tax rebel but you're not maximizing the tax it if, you buy an out of state bond investors. Don't realize this in many cases And. So I encourage the SEC to establish rules that would require brokers to disclose the fact that prices of negotiable to make the markups disclosed prior to the trade, and let consumers know what the taxable equivalent yield is based on their state of residency in. The bonds. They're buying all of this an effort to increase an improve transparency, in the Muny bond market because you as an investor deserve nothing less if you are a Muny bond buyer if you. Own Uni bonds you should talk with us about your portfolio to see if in fact you are fully aware, of the risks associated with your portfolio to determine if perhaps there are alternatives that, might be superior for your personal situation I'm very happy to tell, you that financial advisor magazine, has just come out with its listing of what they call the giants of the registered investment advisor industry and of the seven hundred seven.
"muny bond" Discussed on WCBM 680 AM
"Any bond you. Can buy one For five thousand dollars and this. Is why so many retirees many. People who don't have awful lot of money instead of putting the money into you know maybe a Bank account or a treasury or money market they go, by Unibond because, they figure well this is, tax free and it's guaranteed by the government that issued the bond what they don't realize is that the markup when. You buy a small quantity is huge they noted that. The markup for, trades of, a million dollars is three, tenths of a percent When you buy. A bonds for only twenty five grand, or, less it's ten times more the SEC's concerned about this and it has to. Do with transparency and that's why I was really excited to talk about this on my. Panel with the SEC and there were two main points that I raised in my comments I Many, investors do not realize because the SEC does not require this disclosure, many investors do not. Realize that prices are negotiable if you say to your broker you, wanna buy Muny bond and your broker quote you aband- he says here's a given bond here's the interest rate and here's the maturity date you don't know that's. Negotiable If you go. To another broker for, the very same bond you. Might get a. Better yield Many investors don't realize this I argued. That the SEC should make that disclosure prominent that. Brokers should be required to say to consumers this is what we're offering. You for, the bond this may be different from what others are. Offering you for the, bond I mean you know that you can. Go see it the price when. You buy car you need to know that you can go, she ate a bond as well One of the thing I encourage the SEC to do and that's to publish the taxable equivalent yield you get this when, you buy a car the EPA has guest rating right it tells you how many miles per. Gallon this. Car is going to drive and you know it's not terribly accurate, it's not going to be exactly what you get when you drive the car doesn't matter it's. A good way for you, to be able to compare this car to another, car to help, you make an informed decision when you're making your. Purchase investors don't realize that.
"muny bond" Discussed on KLBJ 590AM
"To the program thank you very much i enjoy your show alone a lot thank you i have two questions if i can the first one hundred percent disabled better and i get military disability i also get social security disability and i'm fifty years old i know at some point my social security disability switches from social security disability to social security and you guys are always talking about you know you don't wanna pay taxes on that based upon other income and right now they don't charge me taxes on my disability because it is disability in all my income is i don't have any income outside of that but when it switches from disability regular social security will they count my military disability is income against whatever income allowed to have with that so your va or military pension it you there's a disability pension correct it's one hundred percent this military active service disabled i get and so that's federally tax free you're not having to pay tax on that correct okay so here's the thing income even federally tax or tax free municipal bond income counts towards those income thresholds now when it comes to a disability military pension i've not run into a situation where we've had to worry about taxation on that however i would want you to defer to the social security administration on that just a verify because what what i see with are more savvy investors that are using muny bond income.
"muny bond" Discussed on BizTalk Radio
"Background folks you know the other day i had lunch with a financial planner very brilliant financial advisor and we were talking about this whole longevity planning thing and this particular individual was picking my brain on some recommendations for clients and we're talking about the fact that they add muny bond portfolio and they add some mutual funds and ira's and all that stuff and a big roth i mean like a six figure roth ira and and she asked me about whether or not it would make sense for her to dump the muny bonds and this person's portfolio and by taxable bonds inside the roth ira which quite frankly is a brilliant move now typically when we look at roth ira's we say well let's grow grow grow grow grow it and we'll leave that money to the heirs and they'll get a big tax free inheritance but it depends on what you're trying to do you wanna make your heirs rich or do you want to manage your tax bracket while you're in retirement and make yourself rich i don't know so i had a question and it's one that has never been asking me before she said what happens to an annuity she was going to buy like a lifetime income annuity what happens when you exceed your basis well first off what does that mean well if you buy an annuity and you outlive your life expectancy then at some point you will have gotten back all of the premium or principle that you've put into that annuity by annuity for one hundred thousand bucks i get ten thousand bucks a year after you know ten eleven twelve years i've gotten all my principal back at that point one hundred percent of the money that i get from the insurance company is taxable at ordinary income because they have no basis left right but in a roth ira it's always taxable excuse me tax free so.
"muny bond" Discussed on BizTalk Radio
"Great when you might oughta wanna flip that and not by muny bonds but rather by taxable bonds because the taxes deferred inside your ira's meanwhile you get all of that growth tax favored in a stock account when you own it personally dividends may or may not be taxed but if they are taxed they're always taxed at a lower rate so asset location plays a key role in all of this and don't forget that the way social security taxation it is calculated by the way it's an eighteen step calculation so it's not that easy to do but by and large all you need to do really is take half of your social security benefits and add that to your other income and if you're married in that exceeds forty four thousand dollars then eighty five percent of your social security will be subject to taxes but still not one hundred percent so delaying social security and doing roth conversions many times can get you in a position where you're only paying tax on fifty percent of your social security or not paying tax on your social security at all so these are are critically important steps that you need to go through my preference is the start looking at them you know a dozen or so years before retirement so then wealth management dot com ask advisers how would you rate the level.
"muny bond" Discussed on Talk Radio WPHT 1210
"The show's content is the basis for an investment decisions instead consulted financial advisor or conduct road due diligence calls a prescreened and show was prerecorded earlier this week rick l denison investment adviser representative of element financial services a registered investment advisor which furnishes this program and also registered principal of the legacy securities and affiliated broker dealer member finra as pc cattleman show now here's wick at a very happy weekend to you welcome to the rick edelman show brandon courses in the studio with me today this great to be hurric thank you brandon for joining us we have had a tumultuous market over the past couple of weeks but the focus has been all on the stock market but it's not just the stock market that investors need to be looking out for the municipal bond index fell more in the first quarter than any first quarter and get this fifteen years that's unbelievable i don't think people realized how much muny bonds have fallen in the past three months the biggest in fifteen years and this is measured by popular index it's down over one percent which again is a big loss in the context of this investment category and it's for a number of reasons one is the new tax rates so two thousand eighteen the rates are a little bit less so tax free interest is a little bit less valuable but also we're seeing rising interest rates which also hurt now the inflows into this category rick people investing into muny bonds the lowest in five years and it's a ninety two percent drop over the five year average which is telling evidence that people have said oh my goodness i can't believe how much money i'm losing a municipal bonds because let's face it the people who buy municipal bonds tend to be older more conservative fiscal conservative investors who want current income and they want to avoid taxes and they haven't seen losses in this category for such a long period of time and so this is.
"muny bond" Discussed on BizTalk Radio
"You know it's now sixty five year olds there's probably a forty percent chance one or the other of them exceeds age ninety ninety five so i'm thinking that they have longevity so what about delaying social security as an annuity for my future answer yes how do i finance that well i'm thinking a couple of things number one i'm thinking there's three hundred thousand dollars in muniz what do you need the moonies for what are they going to earn you three percent if you're lucky you're getting three percent on blended muny bond ladder probably two and a half doesn't sound all that exciting to me you're going to go into retirement and your tax rates gonna come down a lot for example with a paid for house you have no interest deductions maybe you'll have some property tax deductions would probably not all that much because you're going to have what almost twenty seven thousand dollars of free money so you're going to be in the zero percent tax bracket for the first twenty seven thousand dollars of your income so if i'd delayed social security did a reverse mortgage i guess the other thing i want to talk about i could live off of my reverse mortgage and then do roth conversions again i haven't done the math on this but i'm thinking out loud long jetty legacy taxes post retirement i get the first twenty seven thousand dollars tax free the next what nineteen twenty thousand there's going to be taxed and the ten percent rate and probably the next sixty thousand we'll be taxed in the twelve percent rate so that's two thousand and five for about eight thousand dollars in annual taxes i can convert one hundred thousand bucks plus per year into a roth so of my reverse mortgage can get me where i.
"muny bond" Discussed on Bloomberg Radio New York
"The leaders there kind of targeted guam day all tourism numbers decline a little bit and that's recovered since then i'm not gonna let you go without giving me sort of a grand overview of muniz at this point we saw well give us an indication of how the meaning market is doing the media market is not doing very well this year we had a story out yesterday that the first quarter was the worst first quarter since nineteen ninetysix for muniz bond investors are very concerned about rising interest rates going up faster than expected and the the bad performance has actually been sort of a head scratcher in some ways because muny bond supply is down very very significantly but we're still seeing inflows into mutual funds so really unions are just sort of following treasuries but it's definitely a market that's being hit with bad performance so far this year both their tax status that's still is quite an advantage for a lot of investors that's not change absolutes it's still an advantage for individuals but for corporations like banks and insurance companies they're having questions about whether they still want to buy municipals because corporate tax rates have been slashed so much what does one get an average in in a state where it's triple tax free we've kind of return and we talking about if you invest in illinois you can get spreads over two percentage points over the triple a benchmark if you invest in state that's like not well i'm not gonna say teetering i mean new york you can get a few basis points below the benchmark it really depends on the state and i mean there's still some some yield to be found in in states across the us everything from amanda albright from bloomberg briefs this morning you could read it.
"muny bond" Discussed on BizTalk Radio
"Personal loans or some high interest mortgage debt remember there are some individuals many who will not be getting a mortgage interest deduction now that you have a twenty four thousand dollar exemption for married couples under the age of sixty five it's twenty six six for those over sixty five that means before you get a penny in mortgage interest write offs and property taxes and all that you got to exceed the twenty four twenty six thousand dollars so if you're if you've got a four percent loan and it's not income tax deductible that's like buying a muny bond for four percent that's guaranteed paying down debt makes a lot of sense especially now obviously we've talked about having enough saved money to spend in the event of a market calamity and there will be one we just don't know when and it may take you four or five years before you get back to even it may take you ten years before you see daylight or fifteen years we don't know so you wanna make sure that you have a bucket of safe money from which to derive whatever income you might need and certainly an emergency fund or a mechanism to get to emergency money i mean i've used by 401k loan provisions in the past as emergency funds i've used by life insurance policies my fixed life insurance policies way more than once in times where.