Best In Wealth Podcast

Why are we worried about the world, the economy, the stock market, and our investment accounts? The stock market started the year great. The S&P 500 was up over 10% at the end of the first quarter. But the stock market has dropped steadily in the first 19 days of April. My business Partner, Brian, wrote an article titled “The Wall of Worry.” In this episode of Best in Wealth, I’ll cover some of the details of his article and share why family stewards can take a deep breath. [bctt tweet="How can you overcome concerns about the stock market, inflation, and the geopolitical climate? I share some statistics to calm your nerves in this episode of Best in Wealth! #Investing #FinancialPlanning #WealthManagement" username=""] Outline of This Episode [2:29] Why is everyone so worried? [3:52] The market reacted to inflation [9:52] The geopolitical climate [15:03] What do we know? The market reacted to inflation The financial markets saw a great start in 2024. US stocks raced to almost 10% gains in the first quarter. Things have since been dropping, almost back to where we started. We saw the same pattern in 2023. The inflation report released in March reported a 3.5% annual rate—higher than expected. It also likely closed the door on a June interest-rate cut by the Fed. That news made the stock market drop quickly in April. Why? The stock market had priced in six interest rate cuts in 2024. But because inflation ticked higher, the expectation has shifted to maybe three cuts. Market participants are clearly worried. In June 2022, CPI inflation was at its peak at 9.1%. It’s dropped every quarter since. In June 2023, we were down in the threes. In March, it was 3.5%. When you look at the report, you’ll see progress. Battling inflation is a messy process. We should consider ourselves fortunate that inflation has fallen as much as it has, without a catastrophic event happening in the economy or labor market. We’ve avoided a recession so far. The average rate of inflation over the last 100 years is 3%. Our latest inflation rate was 3.5%. The Fed wants the inflation rate to be 2%. But 3% inflation might be the “new normal.” [bctt tweet="worrying? I share some thoughts in this episode of Best in Wealth! #Investing #FinancialPlanning #WealthManagement" username=""] The market reacted to the geopolitical climate Stocks were up while bonds and oil were down as Brian wrote this article on Monday the 15th. It was the opposite of what we thought would happen. What were past reactions to major geopolitical events? They might surprise you: In the six months following the onset of WWI in 1914, the DOW dropped 30%. The market closed for six months. But it rose more than 88% in the following year—the highest annual return on record. Hitler invaded Poland on September 1st, 1939, beginning WWII. When the market opened, the DOW rose 10% in a single day. The DOW Jones lost 1% and remained calm during the 13 day period of the Cuban Missile Crisis in 1932. The stock market opened up at 4.5% the day after JFK was assassinated and gained more than 15% in 1964. Stocks fell sharply after the 9/11 attacks, dropping 15% in the two weeks following the tragedy. The economy was already in a deep recession. Within a couple of months, the stock market had gained back all of its losses. The US invaded Iraq in March 2003. Stocks rose 2.3% the following day and finished the year with a gain of more than 30%. When the geopolitical climate is uncertain, it causes us to feel anxious and can lead to panic. But it rarely pays off to make portfolio changes in reaction to geopolitics. Why? We don’t know what’s going to happen. The more we dwell on it, the more our minds go to worst-case scenarios. While we might be right about our predictions, we...

The mutual fund landscape is complex, with thousands of choices. In fact, at the end of 2023, there were 4,722 US-domiciled funds that we could choose from. Of those, 2,043 were from US equities, 1,124 were international funds domiciled in the US, and over 1,500 were bond funds. If you add all the money from these funds, it totals 10.6 trillion dollars. $5.4 trillion is in US equity funds, $2.1 trillion is in international equities, and $3 trillion is in bond funds. Whew. If you decide to buy an ETF or mutual fund, you’re spreading out your risk (as opposed to buying individual stocks). But how do you choose between the thousands of options? Should you choose between the thousands of options? My goal is to help you understand the landscape of mutual funds so you can make informed decisions in this episode of Best in Wealth! [bctt tweet="In this episode of Best in Wealth, I dive into the mutual fund landscape and how it works. Give it a listen! #wealth #investing #FinancialPlanning #WealthManagement" username=""] Outline of This Episode [1:08] Did you fill out an NCAA bracket? [3:32] The mutual fund landscape [6:21] What is an active mutual fund versus an index fund? [11:28] Actively managed funds aren’t performing well [16:48] Are you an active or passive investor? [18:02] Is there a better way? What is an index fund? An index fund is your first option for investing in a mutual fund. An index fund tracks indexes, such as the S&P 500 or Russell 3,000. You’re buying “the market.” You will receive the return of that market (minus expenses and tracking error). If you want to do better than an index fund and do better than the average of the stock market, you hire someone to manage it for you (i.e. buy into an actively traded fund). [bctt tweet="What is an index fund? I cover the basics of mutual funds (and how many there are to choose from) in this episode of Best in Wealth! #wealth #investing #FinancialPlanning #WealthManagement" username=""] What is an active mutual fund? An active fund is your second option for investing in a mutual fund. You have the option to buy that fund through your brokerage account or 401k. Active funds have a mutual fund manager and a team of people making decisions on the fund’s behalf. The manager is the “expert.” They look at all of the publicly traded companies and choose the ones that will be in the fund. That manager and his/her team might decide to sell some of those companies. You’re hiring this manager to do well, to beat the market. But how do you know if they’re doing well? The University of Chicago’s Center for Research and Security Prices is a great place to start. They looked at every single publicly traded company and created indexes to see how the market was doing. They’re how we learned that the US stock market averaged a 9% return per year. But this throws a wrench in things: It’s not looking good for the actively traded funds. Actively managed funds aren’t performing well On 12/31/13, there were 3,022 funds available to choose from. As of 12/31/23, only 67% of those funds still exist. Why? Those 33% weren’t performing well. When we look at winners, looking back 10 years, only 25% of the experts beat the market. You only have a 25% chance of selecting an actively managed fund that will beat the market. 15 years ago, there were 3,241 funds and only 51% of them survived and only 21% of them had beaten their benchmark. Only 45% of the funds that existed 20 years ago survived. Of the 2,860 funds available 20 years ago, only 18% have beaten the market. What does this tell me? Actively managed funds aren’t doing any better than index funds. Chances are, whether you buy into an index fund or an active fund, it’s not always the best...

The #1 issue most people face when it comes to retirement is running out of money. Secondly, most people want to live the best retirement that they can. If there is anything left, they will gladly give it to their children—but it does not need to be millions of dollars. Too many people are dying with too much money and never got to live out the retirement of their dreams. You have been saving your entire life. You should not be scared to spend the money and fear it running out. So how do we make sure that does not happen? I will share some of the common solutions—and our strategy at Fortress Planning Group—in this episode of Best in Wealth. [bctt tweet="The #1 issue most people face when it comes to retirement is running out of money. How do we solve for that at Fortress Planning Group? Learn more in episode #242 of Best in Wealth! #retirement #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [1:07] Spending money in your retirement [2:49] The two central issues with retirement income [4:38] Solution #1: Purchase an annuity [5:50] Solution #2: Live off your dividends [8:00] Solution #3: The 4% rule [10:04] Solution #4: Guyton and Klinger’s Guardrails [15:30] Utilizing risk-based guardrails Solution #1: Purchase an annuity An annuity has the potential to give you steady income until you die. Let’s say you give $1 million to an insurance company in exchange for monthly payments. It might be $4,000-$6,000 per month. But when you pass away, the insurance company keeps your money. If the insurance company goes out of business, you lose those monthly payments. Many people still use annuities to fund their retirement. The biggest drawback is that most people do not think about inflation. That money will not go as far in 20 years. Solution #2: Live off your dividends Let’s say you have $1 million and you decide to buy a company that is paying a nice dividend. Let’s just say you are receiving a 5% dividend or $50,000 a year to live off of. But most people do not know that dividends can go down. Secondly, when the stock price fluctuates, your $1 million could lose value. Someone who invested in Wachovia Bank lost everything when they filed bankruptcy. The investment became worthless. [bctt tweet="Can you fund your retirement by living off your dividends? I share why this isn’t the wisest decision (and what we do instead) in this episode of Best in Wealth! #retirement #RetirementPlanning #WealthManagement" username=""] Solution #3: Follow the 4% rule Stocks can gain value over their lifetime. The 4% rule means that if you have $1 million, you could live off of a 4% withdrawal from your portfolio the first year. Every year, you take an inflation adjusted raise. If inflation is 10%, you withdraw $44,000. If you do that, your purchasing power stays the same. Bengen looked at every 30-year period in history and 93% of the time, the 4% rule works. What about the other 7% of the time? What doesn’t the 4% rule solve for? Solution #4: Guyton and Klinger’s Guardrails Guyton and Klinger’s Guardrails try to solve for both running out of money and dying with too much money. They propose that a 4% withdrawal can be too small of an amount. They usually start with withdrawals of 4.5–5%. How is their process different? If you start with $1 million and the portfolio goes to $1.2 million, you give yourself a raise as well as an adjustment for inflation. And if your portfolio goes down to $800,000, you have to be willing to take a pay cut until the portfolio gets back above your lower guardrail. When you take raises when your portfolio is doing well, it solves the issue of dying with too much money left. You rely on your guardrails to dictate what you do. But we do not entirely use this strategy—or any of these strategies—at Fortress Planning...

What is a Roth conversion? Should you do a Roth conversion? When is the best time to do a Roth conversion? If questions like these have been circulating in your mind, this is the episode for you. I will break down when doing a Roth conversion might make sense for you (and why your CPA might not like it) in this episode of Best in Wealth. [bctt tweet="What is a Roth conversion? Should you do a Roth conversion? I share my expert opinion in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [1:03] There are some great CPAs out there [3:56] What is a Roth 401K or IRA? [7:41] Should you do a Roth conversion? [9:37] When to do a Roth conversion [13:37] Why you should work with a financial advisor Understanding Roth conversions Your money is either taxable, tax-deferred, or tax-free. Taxable money might be held in a savings account or brokerage account. You may collect interest and dividends. Taxes are due in the year those things happen. Tax-deferred accounts are traditional IRAs, traditional 401Ks, and other retirement plans. You’re contributing money to get a tax break. The money grows and you have to pay taxes on the earnings you make. A tax-free account—like a Roth IRA or 401K—means you contribute after-tax money. You also do not pay taxes on the distributions (because you already paid the taxes). You can convert some of a traditional IRA or 401K and convert it into a Roth account. But all of those dollars are taxable. If you make $100,000, a Roth conversion might land you in the 22% tax bracket (and likely the next one or two brackets above that). It may not be wise to do a large Roth conversion when you make a good amount of money. So when should you? Should you do a Roth conversion? If you have deferred money in a Roth IRA, you can do a conversion. But should you? When would you consider it? There’s no easy answer and it will be different for everyone. But there are some circumstances in which it might be better. For example, if you lost your job, took a sabbatical, or did not earn as much money and you are in a low tax bracket because of it, it might be a great time to do a Roth conversion. If your income level is lower, you can convert some over at a lower tax rate than when you made the contribution. [bctt tweet="Should you do a Roth conversion? I break down why it’s not a one-size-fits-all answer in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Roth conversions cannot be undone Before doing a Roth conversion, consult with a CPA or Financial Advisor. Why? Because it cannot be undone. Let’s say you are taking a sabbatical or recently got laid off. So you decided to convert $50,000 of your traditional IRA. But two months later you are offered a job you cannot refuse. You get a sign-on bonus of $100,000. Suddenly you are making $300,000 a year. That $50,000 that was going to be taxed at 10% is now in the 32% tax bracket. Ouch. In the old days, you could move it back—you cannot do that anymore. So if you are on a sabbatical or lost your job, wait until later in the year before doing a Roth conversion. When should you do a Roth conversion? Retirees who have a long runway before receiving social security or taking required minimum distributions and those with large traditional accounts can consider it. If you can live on your taxable account and there is no other taxable income coming in, you can do conversions over years at a lower tax rate. Once you start collecting social security, it can be more difficult to do conversions because it may increase your tax rate. That is why you need to work with a financial advisor.

David Booth—the Executive Chairman and Co-Founder of Dimensional Fund Advisors—recently wrote an article entitled “Uncertainty is Underrated.” In this episode of Best in Wealth, I will read this intriguing article and share why I agree that—while it sounds scary—uncertainty has a positive impact on our lives. [bctt tweet="Uncertainty is underrated. I share why the impact of uncertainty is positive in this episode of Best in Wealth. #wealth #investing #WealthManagement" username=""] Outline of This Episode [1:23] The blue cruise function on my F150 [3:11] David Booth’s article on uncertainty [10:36] Life is one cost-benefit analysis after another [13:22] How to manage risk: What to do (and not do) [19:31] Why you need to know the basics about uncertainty Uncertainty is why we see stock market returns Without uncertainty, there would be no 10% annualized return on the stock market. How? According to David, “If there was no uncertainty, returns would be predictable and there would be no difference between putting your money in a savings account or investing it in the stock market.” Risk makes potential rewards possible. When you have money in your savings account and it is earning interest, it is certain that you will receive interest payments. The stock market is different. It is a roller-coaster. The S&P 500 was down 18.5% in 2022 and up 26% in 2023 (which is not abnormal). Uncertainty simply means that we do not know—from day-to-day, week-to-week, or month-to-month—what those returns will look like. Everyone is guessing. Over time, the stock market has delivered a 10% return. The reason we see a higher rate of return in the stock market is only because of the uncertainty. [bctt tweet="Without uncertainty, there’d be no 10% annualized return on the stock market. How? I share the reasons in episode #240 of the Best in Wealth podcast! #wealth #investing #WealthManagement" username=""] Life is one cost-benefit analysis after another What is loss aversion? It is the premise that a loss can feel twice as painful as a gain of an equal amount. It might be one reason why uncertainty is underrated. An 18% drop in the stock market feels twice as bad as when the stock market goes up 18%. David points out that “Because of uncertainty, life is one cost-benefit analysis after another, and we have no choice but to manage risk.” We cannot ignore it or eliminate it entirely, nor would we want to. But what we must do is prepare for it. And humanity is no stranger to uncertainty. We have to make choices every day and those choices are how we manage risk. David points out that we cannot control the weather. But if it looks like it is going to rain, we might carry an umbrella around. The cost is the weight of the umbrella but the benefit of that cost is staying dry. He shares that “When it comes to investing, you cannot manage stock market returns, but you can manage the risk you take.” How to manage risk: What to do (and not do) So how do we get better at managing risk? What not to do: Do not try to predict the unpredictable by trying to time the market or pick winning stocks. Many of us struggle with the desire to time the market. But we cannot time it. When we try, it is a loser’s game. You will likely leave a lot of money on the table. What to do: Diversify your portfolio to reduce risk and capture return. Secondly, figure out the amount of risk that you are comfortable with. You should invest and be prepared for a range of outcomes. When you have a plan that you can depend on—and experience uncertainty—the more likely you are to succeed long-term. We have all been managing risks and rewards our entire lives. Some years are better than others. But we stick around to see what...

If you opened up and looked at your 401k statement, chances are that some of your investments are international. You are investing in companies outside of the United States. If you are invested in a target date fund, it is almost certain. It may be in mutual funds or ETFs. It may be in developed or emerging markets through reliable stock exchanges. But should you own companies outside of the US? Emerging markets in developing countries have not moved much in the last 10 years. The US has had quite a run. Why would you invest internationally? These are all good questions to ask. I will do my best to answer them in this episode of Best in Wealth. [bctt tweet="Should your retirement portfolio be diversified internationally? I cover why the answer is “YES” in this episode of Best in Wealth! #Investing #Retirement #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [2:21] Should I be internationally diversified in my retirement portfolio? [4:58] You are likely investing internationally already [7:05] Investing internationally creates a diversified portfolio [8:44] How the US ranks compared to other countries [16:25] Other asset classes performed well [17:59] Another reason to be internationally diversified You are likely investing internationally already What kind of car do you drive? If you drive a GM, a Ford, or a Tesla, they are domestic-based companies. You are likely invested in them, too. Many car manufacturers are based internationally. BMW, Mercedes, Volkswagen, Porsche, etc. are owned by a German company. Chrysler, Jeep, and Dodge companies are owned by companies in Italy. The list goes on. We know these cars. Most of the cars we buy and drive every single day are sold by companies that exist outside of the United States. There are many outstanding companies located outside of the US. And if you are invested in them, you’re investing internationally. Investing internationally creates a diversified portfolio You know that we do not try to time companies, sectors, countries, international vs. US—we do not time anything. Instead, we diversify your portfolio at a risk level you are comfortable with. We make sure it fits within your retirement plan. A well-diversified portfolio sets you up for a greater chance of success, without big swings. The more asset classes we can add—including international investments—the smoother the “ride” will be. [bctt tweet="Reason #1 you should invest internationally: Investing internationally creates a diversified portfolio. Why else should you diversify? Find out in episode #239 of Best in Wealth! #Investing #Retirement #RetirementPlanning #WealthManagement" username=""] How the US ranks compared to other countries It may surprise you that the US is not the only big “player” in the stock market. There are what we consider 45 “reliable” stock exchanges globally. Where did the US rank out of the 45 international stock exchanges in the 4th quarter of 2023? We were not #1. Poland actually produced the best returns. The US ranked #20, about the middle of the pack. Let’s look at some more numbers: What about the full calendar year? Hungary, Poland, and Greece were up over 50% in 2023. The S&P 500 was up 26%. The US ranked 13th. Thailand and Hong Kong stock exchanges ranked last. From 2010–2020, the US did really well. But during that decade, the #1 country was New Zealand. The US was ranked #2. What about 2000–2009? This was a rough time in the US. We started the decade with the Doc-Com bubble. We ended it with the Great Recession. The top two countries were Brazil and the Czech Republic. Greece, Finland, Japan, and the United States ranked at the bottom. If you started the 2000–2009 decade with $1 million, you ended it with about $900,000. Not good. But if you had

How often should you look at your investments? Some of my clients look at their investments every day. Some look weekly, monthly, quarterly, annually—and some never look at them. So what is my answer? It depends. After listening to this episode of Best in Wealth, you will know how often you should check on your investments (based on you). [bctt tweet="How often should you look at your investments? Some of my clients look at their investments every day. Daily, monthly, weekly, quarterly, or annually? I share my surprising answer in this episode of Best in Wealth! #Investing #Invest #RetirementPlanning" username=""] Outline of This Episode [2:18] Whole30: The importance of consistency and discipline [6:51] The third-best tennis player in the world [9:52] The track record of the S&P 500 [17:51] What looking at the S&P 500 tells us [20:55] How many times should you look at your portfolio? The third-best tennis player in the world Let’s talk about tennis for a minute. Roger Federer was one of the top three tennis players of all time. He is elite. Of the millions of tennis players who grew up playing, got scholarships, and played the best they possibly could at the pro level, Roger was one of the best. Roger won 20 Grand Slam Men’s Single titles, the 3rd most of all time. He is the only player to win five consecutive US Open titles. He won 40 consecutive matches at the US Open. He is the second male player to reach the French Open and Wimbledon finals in the same year for four consecutive years. He is the only male player to appear in at least one Grand Slam Semi-Final for 18 consecutive years. He won eight Wimbledon titles. He is one of the best to ever play the game. But what does any of this have to do with investing? [bctt tweet="What does the third-best tennis player in the world have to do with #investing? Find out in this episode of Best in Wealth! #Investing #Invest #RetirementPlanning" username=""] The track record of the S&P 500 Let’s switch gears and talk about the S&P 500 (which you can not invest in but it is a benchmark). The S&P 500 has had an amazing track record. The average return is a little over 10% per year. But what does that mean? What does a 10% return look like? Let’s compare the S&P 500 to a high-yield savings account. A 10% return means that every seven years, your money will double. If you have $1 million in investments—and actually earn 10%—it will be $2 million in seven years. The rule of 72 says that if you divide 72 by your interest rate, that is the number of years it will take to double. So if you put your money in a high-yield savings account—likely earning around 4.5% right now—it will take 16 years to double. That is why we need to invest in some things that will grow faster—even faster than a high-yield savings account. What does any of this have to do with Roger? In tennis, each time someone serves the ball, you are playing for a point. When you get enough points, you win the set. When you win enough sets, you win the match. He is one of the best players ever—but he only won a point 54% of the time. Roger won 75% of his sets. And Roger won 81% of his matches. You are probably thinking, “Scott—how does this have anything to do with how often you should look at your investments?” Stick with me. [bctt tweet="What does the S&P 500 and Roger Federer have in common? I share some surprising facts in this episode of Best in Wealth! #Investing #Invest #RetirementPlanning" username=""] What looking at the S&P 500 tells us The S&P 500 plays a game every time the stock market is open. How often is the S&P 500 positive or negative? Let’s call a positive result a “win” and a negative return a “loss.”...

BRICS is an acronym that denoted the emerging economies of Brazil, Russia, India, China, and South America. The stock market returns were really good. The economies were expected to continue to explode. So people started pouring into the BRICS. Many people who invested did poorly because they were late to the game. Before BRICS, it was popular to invest in the Nifty Fifty (the 50 most popular companies). News columnists are always looking for the next bright, shiny object. The current “Shiny object” is the Magnificent Seven. What is the Magnificent Seven? How do they perform compared to the US stock market? How is the Magnificent Seven performing year-to-date? Will the stock returns persist? I share what you need to know about the Magnificent Seven in this episode of Best in Wealth. [bctt tweet="Should you invest in the Magnificent Seven? I share some research (and my personal opinion) in this episode of Best in Wealth! #investing #PersonalFinance #FinancialPlanning" username=""] Outline of This Episode [1:27] Investing in the BRICS and the Nifty Fifty [4:07] What are the Magnificent Seven? [7:01] How well are the Magnificent Seven doing? [11:03] Will their high performance continue? [16:54] Should you invest in the Magnificent Seven? What are the Magnificent Seven? The Magnificent Seven consists of seven companies in America that are doing the best. It probably won’t surprise you that the companies are: Apple, Microsoft, Alphabet (Google), Amazon, Nvidia, Tesla, and Meta. These companies have performed very well in 2023. At the end of July, the stock market was doing well. The US stock market return (mostly the S&P 500) was up over 20%. The next few months were horrible. November and December have improved. The S&P 500 was up 24.5% when I recorded this episode. What if we took that 20% return and stripped out the Magnificent Seven companies? The return would go from 20.3% to 10.8%—almost halved. Seven companies—out of 4,000—comprised almost half of the return. Unbelievable. How well are Magnificent Seven doing? These companies have done well in 2023. Secondly, they are so big that when they perform well, it will shock the US Market compared to smaller companies doing well. Ending 12/14/2023, these company’s returns are astounding: Apple: Up 58.4% YTD Microsoft: Up 52.74% YTD Google: Up 48.5% YTD Amazon: Up 71.78% YTD Tesla: Up 132% YTD Facebook: Up 167% YTD Nvidia: Up 238% YTD Isn’t that Magnificent? But we saw outsized performance just like this in the BRICS, when compared to the US stock market. [bctt tweet="How well are Magnificent Seven doing? Will they continue to perform? What does the research tell us? Learn more in episode #237 of Best in Wealth! #investing #PersonalFinance #FinancialPlanning" username=""] Will their high performance continue? The Magnificent Seven have been performing well for a long time. In his article, “Magnificent 7 Outperformance May Not Continue,” Wes Crill and his team share that they do not believe the high performance will continue. Looking at annualized returns in excess of the US market before and after joining the top 10 largest US stocks, starting in January 1927–December 2022. 10 years before, the average return was 12% 5 years before, the average return was 20.3% 3 years before, the average return was 27% However, things changed significantly after joining the top 10. 3 years after, the average return was 0.6% 5 years after, the average return was -0.9% 10 years after, the average...

Charlie Munger was the Vice Chairman of Berkshire Hathaway and Warren Buffet’s right-hand man. He quit a well-established law career to become Warren Buffet’s partner, transforming a textile company into the successful firm Berkshire Hathaway is today. Charlie passed away last week at the age of 99. He was a prolific author and investor and full of wisdom. Warren Buffet described Charlie as the originator of their investing approach. In this episode of Best in Wealth, I will share eight of his quotes, both simple and profound, that every investor can learn from. [bctt tweet="In this episode of Best in Wealth, I share eight of Charlie Munger’s best life lessons. Don’t miss his words of wisdom! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [1:04] Who have you learned from? [2:24] Charlie Munger’s Life Lessons [5:18] Lesson #1: Embrace life-long learning [6:34] Lesson #2: Remain optimistic [8:46] Lesson #3: Accept risk to get rewarded [10:44] Lesson #4: Munger’s formula for success [11:57] Lesson #5: Buy wonderful businesses at fair prices [14:18] Lesson #6: Help others know more [15:08] Lesson #7: Do not be driven by envy [16:23] Lesson #8: Spend your life well “Lifelong learning is paramount to long-term success.” You should always be learning more. Anyone you know who is highly successful is committed to learning. You must be humble enough to admit that you do not know everything. Can one of your major goals for the new year be learning more? Reading more books? What doors will open for you when you focus on learning on growth? Another thing that Charlie said was “The best thing a human being can do is to help another human being know more.” If I am going to encounter somebody, I want to learn from them. Secondly, I want them to learn something—hopefully good—from me. Why not learn from each other? [bctt tweet="“Lifelong learning is paramount to long-term success.” We can learn a lot from the words of Charlie Munger. Check out this episode of Best in Wealth to hear more! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] “If I can be optimistic when I’m nearly dead, surely the rest of you can handle a little inflation.” This was something Charlie said in the 2010 annual Berkshire Hathaway meeting. In 2010, inflation was running higher. He was around 86 at the time. What happened to us when inflation rose in 2023? We felt like the world was ending. How we should behave should always be the same. If he can be optimistic, we can handle a little inflation. There will always be something else to overcome, right? Charlie also said, “If you are not willing to react with equanimity to a market price decline of 50% two or three times a century, you are not fit to be a common shareholder and you deserve the mediocre result you are going to get.” If you cannot stay composed when a market declines 2–3 times a century, you cannot handle a high-risk stock portfolio. This happened during the Great Recession and in 2009. Return and risk are directly related. If you want more of a return, you have to accept more risk. Charlie's most important architectural feat was designing Berkshire “Forget what you know about buying fair businesses at wonderful prices. Instead, buy wonderful businesses at fair prices.” This means buying value companies. At Fortress, we like to use book value. Wonderful businesses can be expensive and trade at high multiples. Their book value and stock value are far apart. Those are considered growth companies. But if wonderful businesses have fallen on rough times—like airlines during the Covid pandemic—it is a wonderful business selling at a fair...

Over the last three years, US net worth has increased drastically. But it is taboo to talk about money with family and friends, let alone net worth. But don’t you want to know how you are doing relative to your peers? If so, this is the episode of Best in Wealth for you. In this episode, we break down the numbers to see how you are doing compared to the average American. [bctt tweet="What is the average net worth of US households with age factored in? Find out what the numbers are—and why it matters—in this episode of Best in Wealth! #wealth #PersonalFinance #WealthManagement" username=""] Outline of This Episode [2:23] Average net worth by age [4:18] What is net worth? [5:15] What is the average net worth of US households? [6:57] What is the median net worth of US households? [7:40] The average and median net worth by age bracket [9:19] Are you on track with the median or average? [13:50] Your goal depends on your goals What is net worth? Your net worth is your assets minus your liabilities. It is everything you own—your house, car, stocks, rental properties, retirement accounts, etc. minus anything you owe to others (credit card debt, student loan debt, mortgage, car loans, etc.). Net worth today includes adjustments for inflation. What is the average net worth of US households? The average net worth of US households in 2022—across all age groups—was $1,059,000, an increase of $200,000 from the average net worth in 2019. It seems high, right? The typical American is not walking around with a million-dollar net worth. So what is happening? The average net worth is skewed by the outliers. If nine people walked into a bar with an average net worth of $10,000 and Elon Musk walked in—whose net worth is north of $200 billion—the average net worth in the bar would skyrocket to over $20 billion. That is why you have to look at median net worth. Half of households will fall above or below that line. The median net worth of US households is $192,700. That is 1/5th of the average net worth—but still an increase of about $50,000 since 2019. But these figures do not adjust for age which is the most crucial variable we need to control for. [bctt tweet="What is the average net worth of US households? I share the interesting numbers (so you know where you stand) in this episode of Best in Wealth! #wealth #PersonalFinance #WealthManagement" username=""] The average and median net worth by age bracket Here is the average net worth by age: Under 35: $183,000 35–44: $548,000 45–54: $971,000 55–64: $1.5 million 65–74: $1.8 million 75+: $1.6 million But the average net worth is skewed by the richest of the rich. So what is the median? Under 35: $39,000 35–44: $135,000 45–54: $247,000 55–64: $364,000 65–74: $410,000 75+: $335,000 Are you on track with the median or average? If you are listening to this podcast, you likely earn over the average salary in the United States (which is $50,000). If you are making $100,000+, look at the median net worth to see how you compare. If you are looking to overachieve, look at the averages. If you are in the top 10% of incomes, we need a realistic number for you. If you are in the 90th percentile of income earners, and you are 45–54, you should aim for $1.9 million. If you are 55–64, you should shoot for $2.9 million. Are you on track? Listen to hear what the rest of the brackets should look like for high achievers. Because we all want to be ready for retirement, right? [bctt tweet="What is your net worth? Do you know where it should be at your current age? Listen to this episode of Best in Wealth to learn more! #wealth...

American wealth is growing—but you would never know it. Every three years, the Federal Reserve releases a report that summarizes the changes to family finances in the United States. The most recent report was released in early October 2023. What did it say? One of my business partners, Brian Cayon CFA®, CPA, covers it in his article titled “4.9%.” We will cover the news in this episode of Best in Wealth. [bctt tweet="Is American Household Wealth Growing? I’ll go over what the Fed is saying in this episode of Best in Wealth! #wealth #investing #PersonalFinance #FinancialPlanning #WealthManagement" username=""] Outline of This Episode [1:19] Positivity or negativity: which will you choose? [3:42] Changes in U.S. Family Finances from 2019 to 2022 [7:55] Where was the largest increase in wealth? [9:03] Theory #1: The media loves bad news [12:29] Theory #2: The pandemic played head games with us Changes in U.S. Family Finances from 2019 to 2022 The Fed’s report, “Changes in U.S. Family Finances from 2019 to 2022” showed that net worth for US households grew a stunning 37% from 2019 to 2022. That is a massive increase in wealth, especially because 2022 was one of the worst years for a diversified portfolio. Before you say “It’s all because of rising home prices,” renters experienced a bigger increase in net worth than homeowners! Home prices played a role but they were not the primary driver. The numbers are also adjusted for inflation. This is the biggest increase ever. So what do the numbers tell us? From 1989–1992, household net worth grew by -5% From 1992–1995 it grew by 9% From 1995–1998, it grew by 17% From 1998–2001 it grew by 11% From 2001–2004, it grew by 1% From 2004–2007, it grew by 18% From 2007–2010, during the great recession, it shrunk by –39% From 2010–2013, it shrunk by -1% From 2013–2016, it grew by 16% From 2016–2019, it grew by 18% From 2019-2022, it grew 37% What else is surprising? Where the largest increase in wealth was realized. The largest increase in wealth came from the under-35 cohort, who saw a 143% increase in net worth. The 55–64 bracket saw a 48% increase in net worth. Young people as a whole are in a much better place than a few years ago. [bctt tweet="What changes happened with U.S. Family Finances from 2019 to 2022? The answers might shock you. Check out this episode of Best in Wealth! #wealth #investing #PersonalFinance #FinancialPlanning #WealthManagement" username=""] Why does it feel like the world is falling apart? When we turn on the news it feels like the world is caving in. It feels like the world is miserable. While there is a war, labor strikes, inflation, etc., the economy is doing well. So why are predictions so dire? Brian has two theories. Firstly, the media has always loved bad news. It has spent the last two years bashing us with recession predictions in the second half of 2023 or early 2024. When was the last time you saw an article about inflation falling? Or you saw that companies going on hiring sprees? The more frightened we are, the more likely we are to read a story or buy a magazine. The media wants their clicks so they can make more money. The media will not allow us to enjoy good news. Rapidly rising prices and interest rates are shocking The pandemic played head games with us. There was tons of cash on hand because people were not spending. Prices lowered while incomes rose. Now, in a short period, we are seeing rapidly rising prices and interest rates. It is a shock to our equilibrium that will take a while for investors to absorb...

I was reading an article that got me thinking. What do my kids need to learn? What have I already taught them that is important? What do I need to reinforce? I came up with a list of five things—that seem like they should be no-brainers—that more and more kids do not know. We need to teach our kids important life lessons as early as we can. What are my five? Learn more in this episode of Best in Wealth. [bctt tweet="In this episode of Best in Wealth, I share 5 life lessons our kids need to learn. #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [2:55] Lesson #1: You have to work hard [4:37] Lesson #2: Math is important [6:54] Lesson #3: Life skills cannot be neglected [8:17] Lesson #4: Focus on your health [9:44] Lesson #5: Build relationships Lesson #1: You have to work hard We need to teach our kids the importance of work ethic. There are no freebies in life. The most accomplished people are the hardest workers. You have to work hard to get what you want. All of my daughters love Taylor Swift. She would never be at the top of the music industry without a lot of hard work and dedication. I believe that God built us to work. We feel our most accomplished when we work. And when we retire, we still need to work, it will just be different. Lesson #2: Math is important Bad math is what gets most adults in trouble. My middle daughter wants to go to college out-of-state. In my opinion, she needs a good quality in-state tuition education. If you borrow $100,000 for a degree that will earn you $30,000 a year, you do not understand basic numbers. When it comes to real-world math, it does not take much to learn. Spending $6 every day on a latte at your favorite coffee shop adds up. That is over $2,000 a year. That is a couple of car payments or money toward student loans. You could start a Roth IRA with that money. [bctt tweet="Math is important. Bad math is what gets most adults in trouble. So what do our kids need to learn? I share some thoughts in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #WealthManagement" username=""] Lesson #3: Life skills can’t be neglected Kids cannot spend all of their time on social media or playing video games. They need to learn important life skills. They should be able to do their own laundry. They need to learn how to cook (so they do not have to go out to eat for every meal). They need to learn how to clean, mow the lawn, etc. The list can be long but these things are important. Lesson #4: Health is more important than wealth Obesity, diabetes, and heart failure are rising among kids. My local schools are moving beyond teaching the basics of sports. They are teaching kids high-intensity exercise that they can do for the rest of their lives. When you are young, you heal quickly. As you get older, an injury might take weeks to heal. Kids need to learn that preventative measures are important. They should see their doctor, dentist, etc. regularly to prevent future problems. Because you cannot enjoy life without your health. Lesson #5: Build relationships We need to teach our kids to build great relationships and be great friends. I still have a group of friends that I have known since 6th grade. They know me inside and out. We laugh hard and we fight hard. We are not afraid to face hard topics. I do not see enough friendships like this in our world. Relationships actually help us live longer, too. Surround yourself with people as you get older and you will live longer. Are any of these life lessons on your list? What would you add? Let me know! [bctt tweet="We need to teach our kids to build great relationships and be great friends. Why is it so important? Learn...

The S&P 500 was down 4% in September, continuing the downward trend we also saw in August. And almost ALL of the asset classes have been down the last couple of months. To address this troubling trend, my business partner, Brian Cayon, CFA®, CPA, wrote an article about the 4th quarter. So in this episode of Best in Wealth, we will talk about his research and seek to answer the question: Will we see a 4th quarter rally? [bctt tweet="Will we see a 4th quarter rally in 2023? I share some research in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [1:05] Thank you for being a listener! [2:14] What is causing the stock market decline? [6:21] What is the S&P 500 telling us? [10:12] Research on the 4th quarter since 1952 [15:07] Will we have a 4th quarter rally? What is causing the stock market decline? The majority of the September decline in the S&P 500 came right after the Fed meeting when they announced that they would leave the interest rates unchanged after having raised them continuously. You would think that would be pretty good news, right? But after the meeting, the Fed implied that rates are likely to stay higher for longer. After that, there were huge selloffs in the market. If we look at the last couple of months, all of the headlines are threatening our 401Ks. There might be another government shutdown. There are also talks of a UAW strike. We are seeing rising oil prices. It is natural for us to feel some angst. It can be tempting to make changes to your retirement accounts instead of staying the course (according to your investment policy statement). But oftentimes when we try to make drastic changes, we sell the things that are rallying and buy the things that are about to pull back. It is difficult to stay calm. [bctt tweet="What’s contributing to the stock market decline that we’ve seen in August and September? I share some thoughts in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] What is the S&P 500 telling us? The S&P 500 was among the worst-performing asset classes in 2022 at -18.5%. It had a horrible run for 2.5 years, ending 12/31/2022. The S&P 500 went up over 15% this year. When this happens, it is not uncommon for asset classes to take a breather. And we can definitely call this a breather. But this does not happen very often. Brian looked at over 70 years in his research. We have only had a negative August and September 13 times since 1952. In 2022, August was -4.2%. September was -9.3%. Remember how we felt last year? How did we do historically in October? 77% of the time—10 out of the 13 years—October has been positive. In 2022, we were up 8% in October. In 2011, we were up 10.8%. In 1974, we were up 15.3% in October. There were three times when October was also negative (1952, 1957, and 1990). In two of those years, we were down less than 1%. In 1957 we were down 3.2%. This should give us all hope. Research on the 4th quarter since 1952 If we average the whole 4th quarter, how many of them ended positively? 12 out of 13 times, the 4th quarter has ended positively. A few times it was over 10%! The S&P 500 averages 10% per year. But we had a year where we were down -43%. We had a year where the S&P 500 was up over 40%. The stock market rarely lands near that 10% average. What if we make an emotional response to our money and do not stick around for the returns? What if we remove our money and then end the year positively? If you are a good family steward, you are investing in every asset class. 93% of the time we see a positive 4th quarter after a bad August and...

What financial issues do you need to think about before the end of the year? There are three big groups to consider: tax planning, cash flow, and insurance. In this episode of Best in Wealth, I have broken down 15 points across each of these groups. They are all important to consider to maximize your finances both in retirement and while preparing for retirement.  [bctt tweet="In this episode of Best in Wealth, I dive into some important end-of-year financial planning issues to consider. Do not miss it! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [1:11] How I prepare my grass before winter [4:51] Topic #1: Tax planning issues [17:00] Topic #2: Cash flow planning issues [19:33] Topic #3: Insurance planning issues Topic #1: Tax planning issues Do you have unrealized investment losses or gains in your taxable account? Now is the time to do some tax-loss harvesting. Realizing losses can help you offset gains. You can deduct $3,000 on this year's taxes if you have losses. If you have more than $3,000, you can carry them forward. Are you subject to taking any RMDs (required minimum distributions) including inherited IRAs? You can aggregate your IRAs together and take an RMD out of one account. If your RMD is amongst multiple 401K plans, you must take an RMD from each of them. If you do not do this by the end of the year, you will be subject to a huge penalty. Do you expect your income to increase in the future? If so, consider making Roth IRA or 401k contributions and doing Roth conversions while you are in a lower tax bracket. If you expect your income to decrease in the future, now is the year to defer contributions as much as you can. If you are on the threshold of the next tax bracket, how can you defer some of that income to stay in the lower tax bracket? There are numerous tax brackets to be mindful of (listen to learn more about them). Are you charitably inclined? If so, think about taking qualified charitable distributions. Once you turn 70 ½, you are allowed to give directly from your IRA to a charity. If you are able to do that, you are not having to pay taxes on the money to give to charity. It also lowers your required minimum distributions in the future. Will you be receiving any significant windfalls that could impact your tax liability (inheritance, stock options, bonus, etc.)? We want to look at your withholdings and make sure you do not get stuck with a huge tax bill. Do you own a business? If you own a pass-through business, consider the Qualified Business Income (QBI) deduction eligibility rules. Some businesses allow you to take advantage of a 20% tax break. Have there been any changes to your marital status? Did you lose a spouse? How will it impact your tax liability? You can still file as married filing jointly, so there are some things to consider while you are still able to do so. [bctt tweet="In this episode of Best in Wealth, I cover some tax planning issues you need to consider before the end of the year. Check it out! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Topic #2: Cash flow planning issues Are you able to save more? If you are, consider contributing $3,850 (single) or $7,750 (family) to your HSA. If you are older than 55, you can contribute an additional $1,000. HSA's are amazing. If you have an employer-sponsored retirement plan, like a 401k, you may be able to save more. Consult...

What makes for a happy retirement? According to Merrill Lynch, “Only 51% of 25–34 year old's say that they often feel happy compared to 76% of people ages 65–74.” So what makes them happy? An article entitled “Why 72% of Retirees Are Happy” talks about three financial traits and six non-financial traits of happy retirees. What are these 9 traits? Find out what they are—and if you are implementing them—in this episode of Best in Wealth. [bctt tweet="What are the 9 traits of a happy retirement? I’ll fill you in on the secret in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [1:05] What things make you happy? [5:19] 3 financial traits that make for a happy retirement [8:44] 6 non-financial traits of happy retirees [17:07] Why planning your retirement is important 3 financial traits that make for a happy retirement Fritz from The Retirement Manifesto grabbed his information from a book called “What the Happiest Retirees Know: 10 Habits for a Healthy, Secure, and Joyful Life.” What are the three traits? Having at least $500,000 in liquid assets: The book must be a bit older because most people want at least $1 million of liquid assets. Most should strive for $2 million or more, depending on your retirement plan. Fill in the blank: What should your number be? Having your mortgage paid off: I work with countless retirees. This definitely makes for a happier retiree. It is a large burden lifted off your shoulders. But, if you refinanced at a low rate, it might not be in your best interest to pay off your mortgage immediately. Why? You could receive a higher interest rate by putting that money in a money market or high-yield savings account. Having multiple streams of income: If you have liquid assets, it counts as an income stream. Social security is another source. Perhaps you have a pension. What about annuities or rental income? Multiple income streams are imperative. What do you think of this list? [bctt tweet="There are 3 financial traits that will make for a happy retirement. What are they? Listen to episode #230 of Best in Wealth to find out! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] 6 non-financial traits of happy retirees What non-financial traits will make you happier in retirement? Curiosity: Those who have a variety of hobbies and interests tend to be happier. It keeps you busy. Curiosity leads you to try new things. Purpose: According to “What the Happiest Retirees Know,” 97% of retirees with a strong sense of purpose were generally happy compared with 76% without that same sense. You have to figure out what your purpose in retirement is. What is near and dear to you? Social connections: Humans need relationships. Retirees who are not married are 4.5x more likely to be unhappy. If you are single, you need to build relationships—and many of them. Put yourself out there and try new things to meet people. The number of friends a retiree has is more correlated with...

I recently read an article by David Booth—the executive chairman of Dimensional Fund Advisors—titled “Practicing Healthy Habits, Pursuing Wealthy Outcomes.” In the article, David shares some correlations he saw between health and investing after reading “Outlive: The Science and Art of Longevity” by Peter Attia. The book dissects scientific research on aging to explore strategies to live longer and healthier. David saw some parallels between how we talk about health and think about investing. In this episode of Best in Wealth, I will share how you can invest in your wealth—and your health—by taking these three observations to heart. [bctt tweet="I share three important observations on the parallels between #wealth and #health in this episode of Best in Wealth! #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [1:03] How are you doing with your healthy habits? [2:55] The Science and Art of Longevity [6:52] Observation #1: There is no one-size-fits-all solution [9:33] Observation #2: There are no quick fixes [14:31] Observation #3: Prevent problems vs. fix them Observation #1: There is no one-size-fits-all solution to health and wealth There is no one-size-fits-all solution for health. Everyone's body is different. Some people need to lose weight, others need to gain it. Some people need to focus on building muscle and others need to focus on cardiovascular health. The list goes on. There is also no one-size-fits-all solution for investing. Every investor has different goals and risk tolerances. Some people want a cabin up north. Some people want a condo. Some people would rather have a boat or luxury car. Some people want none of those things. Secondly, everyone has a different risk tolerance. The best investment plan is one that you can stick with through hard times. [bctt tweet="There is no one-size-fits-all solution to #health and #wealth. Why? Learn more in this episode of Best in Wealth! #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Observation #2: There are no quick fixes There is no special pill for health or wealth. Exercise programs and diets will not get you results in days and weeks. Most of us will never have a six-pack. If you have a bad heart, you cannot stop eating something today and reverse everything immediately. And when it comes to being wealthy, there are definitely no quick fixes. Why? The stock market has an average return of 10% per year. That means that your money can double every seven years. However, we rarely hit 10% in any given year. Out of the last 100 years, the stock market has only been up between 8–12% six times. It is usually much higher or lower. To take advantage of the miracle of compounding, it takes time. David Booth points out that “Good investing, like good health, requires long-term discipline and commitment.” Observation #3: Prevent problems vs. fix them It is better to exercise regularly and eat well to prevent illness than find yourself in a position of having to fix something. Start being healthy now versus being told you have high cholesterol and a weak heart. Do not wait for the bad things to happen. You can proactively approach investing. You can build a smart portfolio and develop a plan that accounts for a wide range of outcomes. You can make peace with uncertainty. Do not wait to start planning for retirement. You can save more, plan better, get the right insurance in place, and much more if you start early and...

Is social security going to run out in 2033? If I am a high-income earner, will social security reduce my benefit? For those of us who have planned for social security, as we are getting closer and closer to retirement, do we have cause to be anxious? In this episode of Best in Wealth I will answer both questions (but do not be afraid). [bctt tweet="Is social security going to run out in 2033? Listen to episode #228 of Best in Wealth and I’ll break it down for you! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [1:11] What will happen when you become empty nesters? [5:20] Will social security run out in 2033? [9:13] Will the age of retirement shift again? [11:11] How social security payments are calculated [20:31] Will they take my social security benefits away? Will social security run out in 2033? The quick answer is no. If you are working right now, you are paying 6.2% of every dollar you earn (up to the cap) to social security. Your employer has to pay another 6.2%, for a grand total of 12.4%. All of that money is used towards paying those collecting social security. When we have more money coming in, we add to the Old-Age and Survivors Insurance Trust Fund (OASI) (the social security trust fund). What is the problem? More people are collecting social security than there is money coming in. The trust fund will hit zero by 2033—but only if we do not do anything about it. If nothing happens, it does not mean that social security is done. Every person still working is still paying 12.4%. There is still enough money coming in to pay for 75–77% of all the benefits of people retiring for another 75 years. That is some relief, right? Will the age of “full retirement” shift again? Did you know we also ran into this problem in 1983? The social security trust fund was about to hit zero. What happened? Over the course of 23 years, they raised the full retirement age from 65 to 67. Because the government did this, they predicted that social security would not go bankrupt for 50 years. They will be right (give or take 6 months). What does that mean for us? If we raise the full social security age from 67 to 69, we could easily add another 40–50 years to the social security trust fund. Because life expectancy is far higher now, it makes sense. They would do this gradually over a 20-year period. But they will not do anything until they have to. [bctt tweet="Will the age of “full retirement” shift again? Yes, you heard that right: again. I share my educated opinion in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] How social security payments are calculated If you are a high-income earner, will the government take away some—or all—of your social security? To answer this question, we need to address how your social security payment is calculated. Make no mistake: It is a complex formula. The government takes the average of your highest 35 working years to come up with the Average Indexed Monthly Earnings (AIME). However, every year is indexed up for inflation. What does that mean? The first year I worked and paid into social security was 1989. I made $1,992. However, that number is indexed up to almost $6,000. In 1996, I made $19,800, which is indexed up to $39,500. In 2000, I made $45,692 which is equivalent to $87,000 in today's dollars. The second thing that you need to know is that social security is taxed up to a cap. In 2023, if you make over $160,200, everything above that is not taxed at 6.2%. Once you have reached 35 working years, you divide the total amount by 420 and come up with your AIME. Once we have that number, we know what...

Have you thought about purchasing a second home? Does it sound nice to have a place to vacation that is all yours? Do you dream of owning a Florida home or a cabin “up north?” Have you considered the pros and cons of owning a second home? Before a second home becomes part of your dream retirement, consider some of these pros and cons so you can make the best decision for you. [bctt tweet="What are the pros and cons of owning a second home? Find out in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement #InvestmentProperty" username=""] Outline of This Episode [1:10] Needs, wants, and wishes in retirement planning [2:52] Have you thought about owning a second home? [6:00] The hidden costs associated with owning a second home [7:29] Tax, lending, and insurance considerations [10:40] Would you consider renting out your second home? [13:55] Will you lower vacation expenses? [16:25] Will your second property steal your time? The hidden costs associated with owning a second home Think about the costs associated with owning your primary residence. You will have to factor in all of these same costs when you purchase a second home: Appliances Furniture Cookware Linens Utilities (internet, cable, electric, water) Down payment Second mortgage Property taxes Insurance HOA fees Home repairs and improvements Maintaining the yard Even after factoring in all of the expected expenses, you have to consider unexpected expenses. What if your furnace goes out and you have to replace it? What if a storm damages your roof and you have to get it fixed? The hidden costs of owning a second home might make you seriously reconsider the idea. Tax, lending, and insurance considerations The maximum amount you can write off for state, local, and property taxes is $10,000 per year. It doesn’t matter if you have a second home. If you have a mortgage on the property, the combined mortgage interest that you can deduct from your taxes has been reduced to $750,000. Usually, you get better financing rates with your primary residence. Your second home might not get the best mortgage rate. Secondly, most lenders require at least 20% down to purchase a second home or investment property. Some insurers are completely pulling out of certain markets (such as Florida and California), so you will pay more for things like flood insurance. You need to think through these costs because these things add up. [bctt tweet="What tax, lending, and insurance considerations should you think through before purchasing a second home? I share some insight in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #RetirementPlanning #WealthManagement #InvestmentProperty" username=""] Can you reduce the costs of your second home? Why not rent out your second home part of the time? That might be a way to recoup some of the costs (But keep in mind that many towns have limitations on short-term or vacation rentals). How much can you make renting out the second home? If you only rent out the second home for 14 days, you will not have to pay Federal taxes on that gain. If you want to rent out for more than 14 days, at $10,000 a week, your costs will still add up. It might cost you $2,000 a week to maintain the residence (mortgage, insurance, cleaning, etc.). You will also have to pay Federal taxes. You will also be adding more to your adjusted gross income. That could push you into the IRMAA surcharge. You might have to pay more for healthcare. You might not be able to write off other things in a higher income bracket. Will owning a second home equal fewer...

I have client after client tell me that the world is going to hell in a handbasket. Leaders gain power by vowing a return to the “Good ‘ol days.” But is your mind playing tricks on you? According to research by Adam Mastroianni and Daniel Gilbert, your brain has tricked you into thinking everything is worse. There is a set of cognitive biases in our brains that cause us to perceive a fall from grace—even when it has not happened. These well-established psychological phenomena have us focusing on the negative. So before you empty your portfolio and bury your money in your backyard, listen to this episode of Best in Wealth. Because there is reason to remain hopeful. [bctt tweet="Is more decline an illusion—or reality? Hear my thoughts—and why it matters to investing—in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [1:06] How good things used to be [2:09] Is your mind playing tricks on you? [5:53] The types of questions asked in the survey [7:29] Biased exposure and biased memory [13:30] People exempt their own social circles from decline [15:40] How to remain positive despite our biases Is your mind playing tricks on you? Until now, researchers had only theorized why people believe that things have gotten worse. But Adam and Daniel were the first to investigate, test, and explain where that mindset comes from. They have collected thousands of surveys from all races, religions, economic backgrounds, etc. They have found that people believe that everything is worse now compared to 20, 30, 40, or 50 years ago. But people are wrong about the decline of morality. They have been collecting this research for 25 years. When they asked people the current state of morality, people gave almost identical answers over the last 25 years. Every year, people reported a decline in morality. But why does everyone always think things are worse? Is it because they are actually worse? Now I am not saying that things are not bad. We are facing a war between Ukraine and Russia. People in the US are divided on every front, politically or otherwise. We are dealing with high inflation. But is it noticeably different than 20, 30, 40, or 50 years ago? These two researchers compiled the evidence. What do they think? [bctt tweet="Is your mind playing tricks on you? Has the world actually gotten worse? Find out what the research says about moral decline in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Biased exposure and biased memory It is all an illusion created by our brains because of biased exposure and biased memories. Biased exposure happens when people encounter and pay attention to negative information because it dominates the news cycle. All we see are bad things. Negativity is perpetuated in our culture. Secondly, humans have biased memories. The negativity of negative information fades faster than the positivity of positive information. When you get dumped, it hurts in the moment. But as you rationalize, reframe, and distance yourself from the memory, the sting fades. But the memory of meeting my wife for the first time? I can still see her walking into the bar. I will never forget that. I still feel giddy inside. When you remember your childhood, you likely remember the holidays, the birthdays, summertime, etc. Your world was great. But do you remember getting dumped? Do you remember getting in trouble? When you put these two cognitive mechanisms together, you create the illusion that things are worse off now than they were. In the article, Adam says, “When you’re standing in a wasteland—but remember a...

What is a financial power of attorney? The financial power of attorney is a legal document where you specify individuals to act on your behalf in financial matters if/when you become incapacitated. If you become incapacitated, someone still has to pay your bills. Who is going to do it? Life must go on. If you do not have a financial power of attorney, who makes the decisions? The court. So many people do not have any estate planning documents because they think they are too young. They think they are too busy to get it done. They are worried that it is too expensive. So they do nothing. But that is the wrong decision. In this episode of Best in Wealth, I am going to walk you through answering four questions: Who will be your financial power of attorney? What financial powers do they have? When are you granting these powers? Why did you choose this person? If you do not have a designated financial power of attorney, let this episode be the first step you take toward making this important decision. Disclaimer: I am not an attorney and this is not legal advice. [bctt tweet="What is a financial power of attorney? Why do you need one? Get the important details in this episode of Best in Wealth! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [4:54] What is the financial power of attorney? [7:41] Question #1: Who will be your financial power of attorney? [9:18] Question #2: What financial powers do they have? [11:31] Question #3: When are you granting these powers? [13:24] Question #4: Why did you choose this person? Who will be your financial power of attorney? For most people, it is your spouse. But what if you are not married? Who can you trust? Perhaps a sibling, friend, or other relative? You need to put a lot of thought into this decision. These are the people who will handle your finances—you better trust them. If you have already designated a financial power of attorney, review the document to remind yourself who it is. What financial powers do they have? Are you giving this person financial powers for everything or just some things? Can you trust them to make trades in your retirement account(s)? Can you trust them to write checks? What about changing beneficiaries on your IRA or revocable trust? Will they collect rent on your behalf? Can they sell your car? When you see an attorney, they will give you a list of what is standard AND a list of what is not. Maybe you will only give this individual financial power of attorney for the standard list. If you already have a designated financial power of attorney, review what powers you have granted to them. [bctt tweet="Do you have a designated Financial Power of Attorney? What financial powers do they have? Find out why it matters in this episode of Best in Wealth. #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] When are you granting these powers? Generally, you grant financial power of attorney to someone in two situations. The first is when you become incapacitated. But the power of attorney has to prove to the courts that you are incapacitated. So what is your definition of incapacitated? Is it spelled out in your document? Being incapacitated can be a gray area. Some people grant financial power of attorney immediately so their financial power of attorney does not have to prove incapacitation. But you have to trust that person with your life. Question #4: Why did you choose this person? If your spouse is no longer around, how do you choose who will handle your financial matters? You might list both of your siblings so you do not hurt...