Ask HTM - Moving Beyond the S&P, Investing for a Down Payment, & Lump Sum Number Crunching #910

Let’s dive into the week with some fresh listener questions we have lined up for you! And don't just stand on the sidelines- if you have a question you’d like us to answer, toss your voice memo our way. It only takes about 90 seconds to record and you can find a step by step guide over at HowToMoney.com/ask . Regardless of how random or bizarre you might think it is, we want to hear it!

 

1 - Can you help me crunch the numbers to determine: lump sum or a monthly pension?

2 - How should I invest down payment money for a home purchase?

3 - Should my relative consider annuities for a large inheritance?

4 - Did I invest in the S&P 500 correctly?

 

Want more How To Money in your life? Here are some additional ways to get ahead with your personal finances:

• Knowing your ‘money gear’ is a crucial part of your personal finance journey. Start here. 
• Sign up for the weekly HTM newsletter. It’s fun, free, & practical.
• Join a thriving community of fellow money in the HTM Facebook group.
• Find the best credit card for you with our new credit card tool!
• Massively reduce your cell phone bill each month by switching to a discount provider like Mint Mobile.

 

During this episode we enjoyed a Breakfast Ante Meridiem by Monday Night Brewing! And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!

 

Best friends out!

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Welcome to Hout of Money. I'm Joel, I'm Matt. Today
we're answering your listener questions. I'll get you switching things

(00:26):
up with a little more staccato with my delivery. You
were happy Monday every time. That was just my AI voice.
Oh please. AI voices now are seamlessly human. If you've
listened to any of the Google's Notebook podcast creators, it
sounds like what was.

Speaker 2 (00:43):
That app we were messing with when Chris Hutchins came
to visit us.

Speaker 1 (00:45):
That's what it was. Oh yeah, so like you can,
you can input a bunch of data and then we'll
create what they think a podcast is. So he had one.

Speaker 2 (00:52):
Where you could essentially use AI to be an assistant
and call people on your behuse and have a conversation.

Speaker 1 (00:58):
I forget what that was. That was Ray. I still
don't believe that there wasn't somebody sitting in a call center,
because I could hear like the call center of people
behind them.

Speaker 2 (01:07):
I have mostly insulated myself from the realities of artificial intelligence.
I don't use it myself in any meaningful way, and
so to see that I was like, oh my gosh, if.

Speaker 1 (01:15):
This is real, this has gotten good some of the
Google products that are being rolled out where they are
creating a podcast from scratch, and they are mimicking what
they think a podcast should sound like, with the little
things that you and I tend to say, like in
between sentences where we're interjecting odd little sounds and affirmations,
things like that.

Speaker 2 (01:31):
The groans I make when you speak sometimes oh yeah, things.

Speaker 1 (01:34):
Like that, for instance, Like they're totally incorporating that, which
is kind of mind blowing. Yeah. No, this is a
listener question Monday, and we've got a lot of investing
questions to get to today. A listener bought some S
and P five hundred and now they're asking like, what
do I do now? It's more of a beginner investing question.
Another listener is asking about investing a home down payment.

(01:55):
This is sort of a medium sort of level investing question.
Also a medium term goal that they're saving four and
so we've got all different levels. Here's a more pro
level question. Someone is asking about whether they should take
the lump sum versus the monthly pension amount. So we're
going to crunch some numbers. Yeah you want this question desperately. Yeah, Yeah,

(02:16):
we'll get to it. We'll get to it, No need
to get ahead of ourselves.

Speaker 2 (02:18):
Well, and we asked for that question specifically, or you
did because I went to somebody else for my advice
on that and you were devastated.

Speaker 1 (02:25):
So I'm claud. We get to tackled that on.

Speaker 2 (02:28):
Today's show, but before we get to them, I just, Matt,
I just want to mention we have a new article
up on the website about something called rent vesting. I
think it's a new term for something people have been doing,
probably for that at least some people have participated in
at different points in time where instead of buying a
primary residence, you continue renting and the home that you're

(02:49):
saving up, the home that you actually buy is located
elsewhere and it's your first rental property.

Speaker 1 (02:54):
Which I didn't think there were maybe that many folks
that did that until I started thinking for a second.
And actually so we talked with was it last week
or two weeks last week that we've been with Dave Meyer?
And that's what he's technically doing right now. He's living
in Europe and renting over there. But there's a many
properties here stateside. But I will say I do think
this is probably a difficult thing for a lot of

(03:14):
folks to do. If you are looking to purchase an
investment property that is a long distance, right, like best
case scenario, it's somewhere where you used to live, so
you're familiar with the area. Maybe you were able to
get that lower mortgage rate because it was a primary
for you, and now you've moved on. You know you're
living somewhere else, but you've held onto that as an investment.
I think that's kind of like the best case scenario,
but I think it's a lot tougher if you're thinking,

(03:36):
if you are currently living somewhere that's really expensive, you
want to diversify, you want to get into real estate,
and you're thinking, let me buy in this town that
I've never been to before, or maybe I've only been
there once. Like, that's tricky, man. Like there's a whole
lot of work that goes into I guess getting that
framework and that team together to where you can make
that prea You've.

Speaker 2 (03:54):
Talked about the importance of having a team if you're
going to invest remotely, and so yeah, I think you're right.
Like rent vesting is possible. We've had an article about
it up on the website about it. I think people
should check it out if if they're interested, because if
you do live in one of those high cost of
living locations, like you might be saying, I think we
like we took a listener question recently from someone living
in New Jersey and they're like, it's really really expensive here,

(04:15):
so maybe you keep renting, and maybe you do. If
you really want to own real estate, then you buy
it elsewhere. But you're right, there are some hurdles there.
We outline that in the piece.

Speaker 1 (04:24):
But what's great there it might be we're jumping over
so our buddy O'Leary, that's what I'm gonna I'm gonna
start calling him that because yeah, just to keep things
nice and simple. But he's currently doing this, which is
what's so cool about about that particular article. He's actually
speaking from personal experience there. But I know he lives
in California and owns property in Texas, an expensive part
of California, a fancy part of LA and he's.

Speaker 2 (04:45):
Never lived in Texas, so it's not like he did
it because I used to live there. That's true, and
he's he's done decently well.

Speaker 1 (04:50):
Although again I do think that that is a workable
situation where you are familiar enough with a town, or
like if it's your hometown and you and you have
an excuse to go back there. You're going back there
over Christmas or the holidays, right, okay, let me go
check in on the property. Basically, if this is like
a Hallmark Christmas movie and which are my favorite? And
you're like living in the fancy city, but then you

(05:12):
go home to visit your folks over the holidays. But
but twist in the plot, your high school girlfriend is
actually your tenant, and now you've got a victor? What
do you do? Right? Oh? That would be I would
watch that one, would you? Yeah? Okay, you're the high
powered I've never want a female attorney. And you go
back home and oh, man, the guy you had a
crush on in high school who happens to be a

(05:33):
hot fireman living in your property trying to raise his
two kids, what do you do? Wow? You could talk.

Speaker 2 (05:40):
I feel like you've got a job in Hollywood coming
up with these plots. I don't watch the me neither
Hallmark channel, but I think I know what they're about.

Speaker 1 (05:47):
Though.

Speaker 2 (05:48):
Yeah, I think you've kind of down down pat All right, Well,
just letting you know. We'll link to that piece in
the show notes. And it's just kind of an interesting
way to think about starting your real estate spree if
you're interested in going that direction, if you feel like
the stakes are too high where you actually live totally.

Speaker 1 (06:06):
Matt.

Speaker 2 (06:06):
Let's mention the beer we're having on this episode. It's
called Breakfast Anti Meridium. It is an Imperial brown ale
with lots of goodies.

Speaker 1 (06:15):
Thrown in there.

Speaker 2 (06:15):
Heck yeah, wow, it smells delicious. So we'll give our
thoughts on this one at the end of the episode.
But let's take your listener questions and if you have
a money question, we would love to hear it. Just
record it on the voice memo of your app send
it over our way. We are giving away how to
money socks Matt for anybody who sends over a question
that we take on the podcast through the end of

(06:36):
the year that how to money socks are coveted, they
are comfy, they are We'll show everyone in the world
and around you that you have style. So send us
your listener question. We'd love to hear it. You can
find the instructions at how toomoney dot com slash ask
Let's get to a question, the question you have been
waiting for Matt about whether or not to take a
pension or to grab that lumps home.

Speaker 3 (06:58):
Hey, Matt and Joel, this is Trent from Uri in Washington.
I was so excited to hear you guys talk about
the lump sum versus pension options on last week's show,
as thats my number one retirement question currently. I thought
about sending this question to my other podcast friends, but
when I heard how crushed Matt was that he didn't
get to help run Jewels numbers, how can I not
send this question to Matt? Okay, So here's my options

(07:21):
for my monthly pension. I have the option of two
one hundred and twenty nine dollars a month, and that
is with a seventy five percent survivorship to my wife.
My lump sum option would be five hundred and sixty
seven one hundred and forty seven dollars and I would
run that out to about the mid nineties, so let's
say aged ninety five. If you guys could tell me

(07:43):
how to calculate this or run the numbers and give
me your opinion, I sure would appreciate it. As far
as other retirement assets, I have a little bit over
two million dollars and some investments such as Roth's traditional
iras HSA's and the majority being in a four to
zher one K. And then I have about one hundred
and fifty four thousand dollars in cash that I plan

(08:03):
to live on my first year in retirement and possibly
why a used car. I plan to retire hopefully next
year at the age of fifty five. So again, if
you guys can give me your opinion, I surely would
appreciate it. Have a great day.

Speaker 1 (08:17):
Woo, finally somebody that trusts me. Trend do you want
to be my best friend?

Speaker 2 (08:25):
I trust you, all right, yeah, And I don't know.
Maybe I'll get your recheck with my numbers if if
you're interested.

Speaker 1 (08:31):
Well, and it's ill see we'll see if we arrived
at different answers to to Trent's questions, and you might
be like, oh, actually I didn't think about that. That's
some good insights. I hadn't really thought about that.

Speaker 2 (08:39):
Well, I'm glad you finally have a lump sum versus
like pension questions served up to you.

Speaker 1 (08:44):
Matt, like you deserve this question. The numbers man, that's
what it's all about. I love it because there's no
bias when it comes to number like is it's just
black and white when it comes to numbers. Obviously, even
that there's still a lot. There's a lot.

Speaker 2 (08:55):
There's a lot of numbers that need to be considered here.
I'm gonna say, sure, there's the numbers are import but
then how those numbers impact your lifestyle, how you live,
and the risk reward ratio, and how the factors into
your psychology that's important too.

Speaker 4 (09:08):
Right.

Speaker 1 (09:08):
Numbers just give you a solid foundation to work from though,
right otherwise it just feels like you're building an argument
or making a case on squishy, swampy ground as opposed
to something that's rock solid. You know that, Like, Okay,
at the very least we know whatever it is that
these numbers say that we can count on that.

Speaker 2 (09:23):
The numbers are informative. And if you don't run the numbers, yeah,
you're liable to make a gut reaction.

Speaker 1 (09:28):
That's not good.

Speaker 2 (09:29):
But if you run the numbers, then I think it
can and factor in those other things, then it can
help you make a wise decision. And massive congrats by
the way to Trent on being able to retire at
fifty five. That's incredible. He's obviously got his money stuff together.
He's made a lot of smart decisions over the course
of many years to set himself up for this ability,
and I just appreciate his optimism. Also Matt on life expectancy.

(09:51):
Trent plans on getting pretty close to centenarian status.

Speaker 1 (09:55):
I dig it.

Speaker 2 (09:55):
See living in a blue zone there. I don't know
if state of Washington is in a blue zone. But Trent,
you get there, hope you achieve it. He wants to
live with Mathuzla Age that was the oldest person in
the Heabre Bible, in the Old Testament. So yeah, well,
I don't think he's actually going to get to I
think he was like nine hundred and something years old,
So I don't think Trent's actually going to make it
that one.

Speaker 1 (10:13):
By the way, did you notice that Trent this multimillionaire,
He's planning on buying a used car. I don't know
if you if you heard that, Trent is obviously our
kind of guy. I actually do think I could be
friends with Trent. But let's get down to the numbers.
Let's get down to business. There are so many different
elements that factor into this decision and five hundred and
sixty thousand dollars in one lump sum specifically, I think

(10:36):
he said five hundred and sixty seven one hundred and
forty seven dollars. Gotta be specific here. That is a
massive chunk of money. But the certainty of two one
hundred and twenty nine dollars a month in perpetuity for
potentially four decades, that is, that's that's pretty sweet as well, true,
especially if he lives beyond that ninety five yeah you live, Yeah,

(10:59):
But which one makes the most sense? Well, when you
run the numbers. And by the way, so Trent, he
actually sent along a site called honest Math, which looks awesome.
I read up on it and it was started by
somebody who's in the industry and was looking for a
product that was out there that was non biased, that
wasn't trying to sell people things, and so which is
why they called it honest Math. I could see that

(11:20):
being a great resource for a lot of folks. But
also Schwab, they've got a great calculator where I didn't
have to create an account to access the calculators. I
just did that. But when you crunch the numbers, you
find that the lump some it makes sense if you
think you can snag a re turn that's greater than
five point three seven percent. So and you know, the
question kind of boils down to whether or not you

(11:42):
think that that is likely what you would expect to
see from the market with that lump sum, where you
to go ahead and invest it.

Speaker 2 (11:48):
Yeah, and that might sound kind of easy. I mean,
if you look in a recent history save these accounts
and CDs, they were paying in that neighborhood, right, so
you're like, oh, five plus percent, I can get that
risk taken. Or you just look at the last two
years in the stock market and you're like earning more
than five percent. I mean the stock market this year
is up like thirty percent, right, So this sounds very doable.

(12:09):
But I think you have to not just look at
like the most recent history, but also kind of take
a larger window in order to make a good decision here.
If rates continue to decline, we're talking about having to
take on more risk in order to achieve those returns
that you need, which means putting a decent bit of
that lump sum that you would get into the market.

(12:30):
And this will be wise considering how many decades you're
trying to fund anyway, right, like four decades of retirement here,
But there's still risk when it comes to making that decision.
I think it's important also to mention that age is
a factor in Trent's decision, right, Like when I'm running
the numbers, Matt, I'm forty years old. Trent is almost

(12:50):
fifty five, and he's planning on retiring soon. And so
we're in kind of two different situations here where Trent
can and should be taking some market risk if he
takes the lumps, but he might not be able to
have as market heavy of an investing focus as I
can be, given the extra one and a half decades
that I have to endure potential downturns, so.

Speaker 1 (13:10):
Some swings in the market.

Speaker 2 (13:11):
Yeah, I think it's just important for Trent to realize, Hey,
we're kind of in different scenarios here, and that guaranteed
return and the facts on the ground they are they're
similar in some ways, but they're also different in others.

Speaker 1 (13:23):
That's true. Yeah. I'll point out as well though that
Trent he did he mentioned he's got over like two
million dollars in other accounts. I think he said he's
got like over one hundred and fifty thousand dollars in
cash that he's looking to uh to spend as well,
And so that tells me, I mean, that puts me
more in the camp of maybe invest a little bit
more aggressively because of the fact that he's going to
be able to weather downturns in the market. That's a

(13:44):
good point. He's got a little more I don't know,
there's a little more slack in the leash. If the
market dives to the left, it's like he's got time
to basically respond to that and maybe brace a little bit.

Speaker 2 (13:55):
Yeah, I guess if it's a big dog you're saying,
it sounds like based on the way he lives, and
I'm based on what he's been able to amass as
a nest egg over time, he's got more flexibility than
the average person.

Speaker 1 (14:05):
And so if you're if this was his only source
of margin, it would be different. That's right.

Speaker 2 (14:10):
You almost like are forced to take the guaranteed pension
because you don't have that ability to take on additional risk.

Speaker 1 (14:16):
That's exactly right. And I guess the other factor too.
He mentioned some of the different assets that he has,
but he did I don't think he shared what his
cost of living was, like how much she's looking to
spend every single year? And so I don't know, maybe
that one hundred and fifty k that could last you
or between six months. Actually, I mean it could last
you one month depending on your lifestyle, or it could

(14:36):
last you like five years. He's popping bottles at the club.
We'll see all night every night, bottam of blah. Like
you are making an educated guest, right that this is
a strategic bet when you make this decision, like you're
even making a prediction about how long you're actually going
to live and not everything comes down to the numbers.

Speaker 2 (14:53):
Wait say that again, because I don't think I've ever
heard you say that before.

Speaker 1 (14:56):
So you got to take behavior, You got to take
your psychology, what you're willing to endure into account as well.
You're taking my point of view, Well, part of the
decision does come down to your risk tolerance. You know,
how much of a financial buffer have you built up,
How flexible do you plan on being with your spending
in retirement, Because if your goal, if you simply are
only looking at the numbers and your goal is to
maximize those dollars, to the absolute fullest. Let's say you've

(15:18):
got a high risk appetite will taking the lump sum
and investing those dollars in the market. That can make sense.
If that were to be the case, you could certainly,
I think you can see your network grow more quickly,
offering you more optionality. And those numbers too, that that
we mentioned that needing to see a five point three
seven percent return in the market. That's also assuming that
your pension has a cost of living adjustment built into it,

(15:41):
and not all pensions do. Most government pensions do, but
not all of them do. And so basically, if you
don't include that, we run those numbers based on two percent,
then you can count on needing to earn less than
that two percent, less than five point three to seven percent.
So you're looking at three point three seven percent returns
from the market in order to earn more than what

(16:02):
you would without pension.

Speaker 2 (16:03):
Yeah, so, Matt, this comes down to whether or not
how much risk you feel like you could stomach or
if you prefer certainty, and there is a lot of
certainty that the monthly pension check provides, right, it would
provide a solid benefit for your spouse as well. If
you don't make it to ninety five and she does.
And if that feels like a security blanket for you two,

(16:24):
and I think that's something that needs to be discussed
between the two of you. That's understandable that choice can
make sense. And if you offer the lump sum right,
you've got to be ready to take a massive potential
tax hit alongside the risk in the year that you
take it right. So if twenty percent is withheld from
that lump sum for tax purposes, unless you roll it
into an IRA, and that would really be I think

(16:46):
the only way that taking the lump sum makes sense
is sticking it into an IRA. I mean, otherwise this
single year tax bomb would probably be too much to bear, so.

Speaker 1 (16:54):
It would be massive. So most pension issuers take that
twenty percent off to be compliant to the IRS. But
it's likely, I mean, assuming you're still earning money from
your job, your effective tax rate is going to be
more than twenty percent. For much higher than that, I guess,
not much higher. Your marginal tax rate is going to
be much higher, most likely in the third of the
dollar in the lump sum above and beyond what you

(17:16):
make in your day job. Will we tax a much
higher rate.

Speaker 2 (17:18):
And so that's why taking the lump sum as a
cash payment is like really scary from a tax perspective.

Speaker 1 (17:25):
There's a whole whole lot of dollars that you're giving
to the government all at once. And ultimately, I think
this decision boils down to your your primary goal trend.
You know, is it to maximize returns and hopes of
amassing a bigger nest egg, to increase spending and retirement enjoyment,
or even you know, if you wanted to kind of
give some of that money away, or is it to
minimize the downside risk that you're going to face. I

(17:46):
don't think whichever way you choose, I don't think either
decision is right or wrong. And of course, since none
of us can predict the future and when it comes
to market returns or when it comes to our own mortality,
I think, you know, we're doing the best we can
with information on hand, and I think you're going to
make the best decision as well. So Trent, thank you
for making my day and allowing me to get nerdy

(18:06):
and crunch some numbers. But Joel, we got more to
get to. We're gonna talk about annuities. Here for a minute,
which is not a typical topic on how to money.
We'll get to that more right after this. All right,
we're back.

Speaker 2 (18:24):
We've got more of your questions to get to on
this episode. Matt, We've got a question from a listener
who is a ridiculously good planner.

Speaker 1 (18:33):
Hi, Matt and Joel.

Speaker 4 (18:34):
My name is Sam and I'm from Saint Paul, Minnesota.
I found this podcast back during COVID and I love
the content and advice you share. My husband and I
are planning on buying a house in the next three
to four years. We're in our early twenties and right
now we love the apartment living, but we know eventually
we'll want to settle down. Right now, we are lucky

(18:55):
enough to have great jobs we love and very low expenses,
so we are able to save half our income each month.
Knowing interest rates will likely be falling soon, We're not
quite sure where the best place to save our money is.
I've been recommended going through my local credit union and
doing a CD or money market, but I'm not sure

(19:15):
what the pros and cons are to each. Please let
me know your thoughts and what you would do in
our situation.

Speaker 1 (19:21):
Sam, I'm so glad you found how to money back?
Did she say, back during the pandemic twenty twenty. I
feel like those were years that we all needed a
little bit of additional guidance as to what was going
on in the world. Gosh, things were changing crazy week.

Speaker 2 (19:33):
That's when the Friday Flight came about, because indeed we
were like, wait a second, I feel like we need
a show every single week that's talking about all the
crazy things that are going on.

Speaker 1 (19:41):
With a lot of moving parts. Yeah, and the world.

Speaker 2 (19:43):
I'm glad we've kept it around, but man, I feel
like it was like appointment listening.

Speaker 1 (19:46):
Is we felt compelled to create that at that point,
absolutely totally. Yeah. But Sam, you use the phrase lucky enough,
and I think that's really important because I think luck
is a significant factor in all of our lives. But
you have also so many choices that have set you
up for success. Not many folks are able to save
fifty percent of their income. That is a tall order.

(20:08):
That is a sick That is a very nice savings
rate right there. And I want to just encourage you
that the choices that y'all have been making are absolutely working,
and they're going to make buying a home. You know,
in your case, three to four years, it's going to
make that a reality. Yeah.

Speaker 2 (20:23):
I was just talking to one of my buddies, Matt,
and he was saying he's got a friend who makes
six hundred thousand dollars a year and is kind of
consistently living paycheck to paycheck and doing like some of
these stupid things.

Speaker 1 (20:35):
Oh my gosh.

Speaker 2 (20:35):
And I was thinking, if you put that money in
my hands and told me I had to spend it,
I wouldn't know what to do. Like I would, I'd
be like, how what am I going to spend it on?
I don't know, Like it would take some work, but
you would find a way. Maybe my vision feels like
it doesn't quite exist for that, so I don't know.
I think Sam yeah needs to give herself some credit
because there's a lot of people out there who make
a whole lot more money than she does who are

(20:56):
spending the bulk of it. Yeah, they're spending it all
and so you're having a fifty percent saving right is
nothing to seaz it.

Speaker 1 (21:01):
I think that's a part of it. Like it made
me think how, like I said, it would take some work,
and I think that's exactly what it would take because
you get used to doing the things that you do,
and so you get like, if you're used to spending money,
you just get better at spending money, and you just
as you earn more money, you're like, well, I'm pretty
good at spending money. Watch this. Yeah, and then they
go off and buy this. Buy. But like, when it
comes to being frugal and finding ways to question the

(21:22):
things that you're spending money on, like, you get better
and better at that. I think oftentimes you find yourself
drawn to one or the other. It's almost polarizing. I
don't know, it's difficult to find somebody who's living in
a sort of balanced way, or are they able to
connect some of the sacrifices they're making in the here
now to some of those in this case, medium term,
short term goals.

Speaker 2 (21:40):
Yeah, And in this case, you're right, it's like, hey,
this intentional potentially what might feel like to some excessive
frugality is leading to this end game that's going to
be incredible for she and her herth spouse. Right, So
I love how far they're planning ahead.

Speaker 1 (21:55):
Right.

Speaker 2 (21:56):
They're content with apartment living, but they know that owning
the home is a medium term goal, and there's just
way too many folks out there who decide, you know what,
this year feels like the year for home ownership. I think,
I think I want to try to buy one in
twenty twenty four.

Speaker 1 (22:10):
Yeah, exactly.

Speaker 2 (22:11):
Or it's like, you know what, it's November, spring buying season.
That's what I'm going to jump in on this thing.
And then they start thinking about how to a massive
down payment, but they haven't given themselves a long enough timeline.

Speaker 1 (22:21):
They don't have enough runway.

Speaker 2 (22:22):
It means they don't have enough to put down. They
have to settle for a home that they wouldn't otherwise
op the purchase, or they take on a mortgage that's
beyond their means. Right they they're like, Okay, I'm going
to put three and a half percent down instead of
ten percent, and so my mortgage is a little out
of control. And guess what it's even on like this
starter home that I don't really love and I don't
plan on being in for very long. I think figuring

(22:44):
out those goals in advance, well in advance, and then
saving diligently it makes that endeavor joyful instead of being
just fraught with peril.

Speaker 1 (22:52):
Totally. Yeah, I think a part of the reason for
saving so dang much of their income, the reason that
this is such a big win at this point in
time is that Sam and her husband can be reaching
not just a new home, but I think they can
be reaching multiple goals at once. Yeah, Well, the savings
rate that large, for sure. I'm guessing that they're investing
a decent chunk of that massive savings rate while also
having plenty of money left over to funnel into savings

(23:14):
for that down payment. And I think if their savings
rate was just more typical, right like, even if it
was just like twenty percent instead, I think they would
they might have to end up scrimping on one goal
or the other, you know, where they're maybe delaying financial
independence further down the road, or maybe they're really focused
on financial independence and said they're gonna forego home ownership.

(23:35):
Saving fifty percent is it's admirable, and it's not easy.
It's not easy, and then they may not be able
to keep it up for you know, for forever. Makes
me think of our buddy Jordan grummot aka dot G
that he always talks about frontloading the sacrifice, and that
is what Sam is doing. And I think certainly in
three or four years from now, I think they will

(23:56):
be glad that they did.

Speaker 2 (23:57):
Yeah, it's like holding that pedal to the metal for
a hand of years early on can mean that you
can relax your foot significantly, let that Tesla auto drive
matt take hold or something like that.

Speaker 1 (24:07):
I don't know.

Speaker 2 (24:08):
I've never I've driven to Tesla once, but I've never
done the auto drive thing. I've been in Tesla's that
are on auto drives.

Speaker 1 (24:14):
It's scary. It's scary for you.

Speaker 2 (24:16):
That's cool, But I think that is the kind of
scenario you can expect if you have that significant of
a savings rate for a decent period of time in
those early years, is you just have so much more optionality,
so much more flexibility a few years down the road.
So onto Sam's specific question, where should she save those dollars?
I think a CD can make a lot of sense

(24:36):
right now, a certificate of deposit. And that's particularly true
I think when it looks like and we don't know
how much, how far, or how fast, interest rates are
going to decline, but it does look like they will
decline more in the coming months or years. If you're
locking up those funds for twelve to eighteen months. It
ensures that you're going to continue to receive a higher

(24:58):
payout right as the high old savings accounts rates go down.
So right now still pretty solid, but those are likely
to get worse and worse because right when the FED
cuts rates, guess what goes down. Not the rate to
borrow money oftentimes, but the rate on your savings typically
goes down immediately. And so this is particularly true because
the liquidity it's not a concern for your dollars right now.

(25:20):
It's not like you're you're saying, oh, but I might
need to tap some of those just in case. You
have a kind of a targeted window of three to
four years.

Speaker 1 (25:28):
So as a known timeline, Yes.

Speaker 2 (25:29):
I think locking it up should shouldn't cause really any angst.
And so one of the things I think she mentioned
was going with her local credit union. Well, that might
or might not make the most sense, right because rates
on CDs and savings products can vary wildly. Is your
credit union competitive in that space? I mean, maybe, but
maybe not. I think the best place to compare CD

(25:50):
rates in highlight sav INGUS accounts rates to is a
site like doctor Offcredit Dot com and we're likely talking
about here, Matt. When it comes to a lump sum
down payment, we're talking about a big start chunk of money.
So the extra half percent or one percent it really
matters on something like this. Where As we're talking about, Oh,
I've got three thousand bucks in savings, should I go
from the four percent of the five percent account? No,

(26:11):
it's probably not worth jumping through those hoops, but it
is worth opening up an account at another institution if
we're talking about a significant bump in interest rate on
a big chunk of money that they're holding onto.

Speaker 1 (26:21):
Yeah, and specific to their timeline. I did a quick google,
and depending on how quick you are to get out
there and get searched, but I saw a three year
CD at a credit union up in Michigan that all
it takes is a fight dollar donation to like some
sort of local charity, and boom, you have access to
this three year, four point three five percent certificate of deposit,

(26:42):
which might be like totally perfect for the year them
a three year window. But on top of that, I mean,
I think chances are that she's going to have new
savings flowing in every month, and so I think she
could open up a CD with the bulk of her
current savings pile, but then funnel additional incoming dollars into
just like a basic Hygilts savings account or even a
money market account, the best of which are still at

(27:03):
this point at least paying north of like four and
a quarter c It's platinum savings account. It has been
an upper echelon account four years now, and we need
to kind of go this approach, like you are protecting
the bulk of your dollars from declining interest rates, and
then you're getting the best current rates for these new
savings dollars that you don't have on hand. The only

(27:24):
other reason I would sort of question this is one
other thing that you mentioned was that you love and
this is this stood out to me because not many
people love living in an apartment, but you said that.
You said that we love apartment living right now, and
so I would ask you how flexible are you when
it comes to buying a home in three to four years,
because if you have a little bit of flexibility when

(27:44):
it comes to your timeline, man, I would be so
tempted to invest those dollars as a like straight up
in the market. So I have some numbers to illustrate it, Joel,
I'm gonna crunch them numbers again. Do it mean it's
gonna say, yeah, three year window, it's too risky. But
if you can bump bump that window out to five
or six years, investing might make the most sense. Yeah,
like even four to five years. Because so the media,
according to FED, the median home today is four hundred

(28:06):
and twenty thousand dollars. So you're looking at a down
payment of eighty four thousand dollars. And let's just say,
because they've been saving fifty percent of their income right now,
they might already have that cash in the bank. And
so if you were to just stick that into a
highyield savings where you're earning let's say four and a
quarter percent, well, that eighty four k is going to
grow to one hundred thousand dollars in four years. That's solid. Yeah,
like that's really nice. But before you to invest that

(28:27):
in the market, in historically speaking, you're looking at ten
percent in the market. You're not just looking at one
hundred thousand dollars in four years, you're looking at one
hundred and twenty three thousand dollars. A lot more buying power. Yeah,
like that's a chick.

Speaker 2 (28:39):
Whether it means you can afford maybe slightly more house
than you thought, or you can reduce that mortgage payments
significantly gain more favorable terms, like I would be so tempted,
especially again given the fact that you're it sounds like
you're all about apartment living.

Speaker 1 (28:52):
You know, you're like, don't thread me with a good
time living in an apartment where I don't have to keep
up with any maintenance. And so for you, just in
your specific case, Sam, I wonder if you know, were
you two experienced declients in the market for y'all to say,
all right, we'll just keep hanging out here, it's a blast.
Just punt the home ownership timeline a little bit longer
down the road, a year or two, and wait for
the market to return. I think the two things risk

(29:13):
tolerance and timeline. So ye, how are you feeling about
those things? And if you do have that flexibility to punt,
then I think Matt, your suggestion is a good one.
I think if you're like, we we love it now,
but three years from now, we know, we know that
we're going to win a house, We're.

Speaker 2 (29:28):
Gonna have triplets and I don't know how you would
know that ahead of time. But if you know that
and you're like home ownership somehow, if you necessity you're clairvoyant,
please give me a call. I have other questions for you.
But that's the kind of that's the kind of thing
where if you know that's coming down the pike, then
you're like, well, home ownership is non negotiable in three years,
then investing is I think too risky. But if you've
got that flexibility and you can change the timeline, then

(29:49):
investing makes a good bit of sense.

Speaker 1 (29:51):
Joel, let's get to our next question. This is a
question that has to do with a pretty sizable inheritance.

Speaker 5 (29:57):
Hey, Matt and Joel, this is justin from Iowa.

Speaker 1 (29:59):
Go Hawks.

Speaker 5 (30:00):
Really appreciate the podcast, and I've learned a lot from
you guys, so thanks for doing the good work. I
got a two part question for you this week. I
have a relative who recently inherited a large sum of
money and asked me for advice on what to do
with it. She just turned sixty, so putting it in
IRA does not make much sense, so I suggested a

(30:22):
brokerage account. She didn't like that idea because she didn't
want to risk losing any of her money. She just
wants a safe place to put it until she can
figure out what to do with it long term. She
was thinking of buying it an annuity. I know from
past episodes you guys are not the biggest fans of annuities.

(30:45):
So here's my two part question. One, what are the
details of an annuity and what is it specifically that
you don't really like about them? And two, what would
be your advice to this family member of mine on
where she could put it to limporarily that would give
her some return and not risk losing any of it
until she figures out what she wants to do with it.

(31:07):
Thanks appreciate the show. You guys are awesome. Keep up
the good work.

Speaker 1 (31:12):
Ooh man love.

Speaker 2 (31:13):
I love waiting in a financial drama between family members.
It's my favorite thing. Put me in the middle. I'll
referee this thing. It's not like I'll get everyone on.

Speaker 1 (31:21):
The same page. Justin was loaning money to a cousin
and now that cousin is refusing to pay it back,
and they've just you know, they're looking ahead to Thanksgiving
and they're like, oh, this is gonna be so awkward. Yeah,
that would actually be more fun to wait into. Hey,
let me solve that problem. Please. Thanksgiving brings out the
best in all of us, in all of our families,
doesn't it. Yeah a lot. Thanksgiving. It so depends on

(31:42):
what your family's like. Now I love I man, what
about Thanksgiving after presidential election?

Speaker 2 (31:47):
Oh gosh, yeah, it depends. I mean, it depends on
what your family's like. And if y'all are reasonable and
you put your relationship ahead of your politics, which I
hope that's.

Speaker 1 (31:56):
True for everyone out there. I agree.

Speaker 2 (31:57):
All right, First things, First, timeline. I feel like this
is something that kind of keeps coming up. A timeline
and risk tolerance or this is the investing ask how
to Money episode? Which is there anything more fun to
do than invest a bunch of money?

Speaker 1 (32:09):
It was pretty fun. I guess you could spend it
if you're like the friend that was making six thousand dollars.
But for them, maybe investing isn't much fun. But for
the rest of us who are looking to grow our
networth over the long term, that's right.

Speaker 2 (32:19):
And investing the two things when you're always thinking about, well,
what sort of risk can I take and what do
I want to see from my money in terms of returns, Well,
how much time do you have and how much risk
do you feel like you're able to bear? Those are
really factors for what you choose to do with the
money in your possession. And it sounds like justin your

(32:41):
your relative here is fairly risk averse. But I think
if the conversation pathway is open, I would want to
talk to her about the risks of not taking much risk.
Oh and you know in inflation, right, this is the
perfect actually time to talk about inflation with somebody else.
It has always been in all will be kind of

(33:01):
the silent killer when it comes to money that's not invested.

Speaker 1 (33:04):
It's like carbon monoxide. Yeah, it's like this slow thing
and can't see it, can't smell it, but it'll mess
you up.

Speaker 2 (33:09):
If you're in a garage with the car running, it
will mess you up. And so, given what we've all
experienced over the past four years or so, though everyone
viscerally understands the reality of inflation, so it's not like
you have to even explain it all too much. It's
like it's true bacon and eggs or insurance costs, whatever
it is, whatever you want to point to your relative
is going to understand the impact that inflation has had

(33:30):
on her life. The trouble is people don't always know
how to counteract the negative influence of inflation, how to
kind of beat what inflation is trying to do your money,
which is to make it worth less over time, and
you know, saving that money, Yeah, you might be able
to eke out a return that's slightly higher than the
pace of inflation, but we also don't know how long

(33:51):
that's going to last, with rates going down and the
rate of inflation not seeming to want to go beneath
that two and a half percent mark. Matt, So, I
think now is as good a time as any to
kind of have that conversation around inflation and what needs
to be done in order to ensure that being too
risk sensitive is actually one of the riskiest things you

(34:12):
can be as well, totally.

Speaker 1 (34:14):
Yeah. Risk Folks tend to want to avoid it, and
people often think of the stock market as being potentially risky,
But dude, inflation is a known risk and the proble
one we undervalue most of the yeah. Yeah, and it's
you know, the price we pay for attempting to eliminate
risk and gain more certainty that typically causes us to
miss out on upsides. So what is it that your

(34:36):
family member, that your relative here justin should do well
the tax advantaged account? I think that actually could make sense.
You mentioned how she's sixty, and maybe that that is
something that doesn't make sense. It has less to do
with her age, and I think it has more to
do with what it is she's actually going to invest in.

Speaker 2 (34:52):
Yeah, the investment choices inside of that account.

Speaker 1 (34:54):
They Matt, Yeah, Like there's no age limit on contributing
to an IRA. I guess she just needs to make
sure that she has and earned income. But the investments
that go inside of that I rate she doesn't have
to go all in on like a one hundred percent
basket of stocks depending on a few other factors like
that would it probably be an unwise investment at age sixty.

(35:15):
But I'm thinking about like a target date fund that
could offer the best of both worlds, where it's going
to give her some needed market exposure aka risk, while
not being invested in a way that's going to generate
over the top amount of risk for her specific Yeah.

Speaker 2 (35:30):
Because like when you're sixty, you you don't want to
be like, let me go one hundred percent on in
video because it's been rock and let's see what happens.
Maybe they go from a three point whatever trillion dollar
company to a six trillion dollar company and now I'm
sept for life. Like that, that would be too risky
at that age, and honestly, it's probably too risky at
any age for anyone to participate in. But trying to

(35:52):
avoid investing risk completely just put your relative in the
position of running out of money, which is another risky
scenario we like her to avoid. And it sounds like
for some reason she's keen on annuities. I would be curious.
This is a place where I would ask questions. Also,
why is that? Like what made her think that annuities
were the right solution to this problem? And justin I

(36:14):
would ask this specifically, has she talked to a financial
advisor who sells annuities right, because if so, it's important
for her to know that advisor stands to benefit with
a big commission check right at their route. Annuities are
an attempt to take a sum of cash and to
turn it into a recurring monthly check. And that's not

(36:34):
necessarily a bad thing. The problem is that annuities come
in a whole bunch of different flavors, some of them
more expensive than others and some of them more or
less bad than others. They exist kind of on a spectrum,
but the vast majority are complicated. They're expensive. The beastly
commission is only one part of the cost. Over the
top surrender charges. Let's say, that's another horrifying feature that

(36:55):
many annuities come with. And so if annuities didn't cost
an arm and a leg, probably wouldn't dislike them so
much because they can give people predictable income over an
extended period of time if they have a lump sum
and they don't have excess flexibility in their lives like
they need that known quantity of a predictable monthly payment.

(37:16):
An annuity can make sense, But just so many of
them are wrought with high fees, high commissions, and gotcha's
on the back end. That's what scares me about people
going with annuities, especially if they don't know what they're
doing totally.

Speaker 1 (37:27):
Yeah, I mean you mentioned the surrender charges. It sounds
like she is going to want to do something with
his money. She just doesn't know what she wants to do.
With it yet and man to pay out the nose
to get that money back out of that annuity would
be a situation I would not want to find myself in.
But when it comes to some of the different advisors
out there who are selling annuities, well, there are some
products that are far more favorable to the end purchaser.

(37:50):
There are some different commission free annuities. But the other
problem is investors often don't understand how the annuity they
are buying works. This is according to JD. Power, that
it's obviously not good. People are really complicated products often
because they're sold right. They're sold to them, they're talked
up to them, and they're saying, well, you have a
nice suit on. You sound like you know what you're doing.

(38:10):
I guess I should trust you. I'm going to buy
the annuity you're telling me about. But when it comes
down to it, most people don't understand how they work
and what they're sticking their money in exactly. And again
it sounds like she might want to do something with
his money, she just doesn't know exactly what she wants
to do with it yet, and getting it tied up
into an annuity sounds like a knot that would be
difficult to untie. But the only annuities that we are

(38:33):
a little more sympathetic towards are immediate annuities, and your
relative might be a good candidate for that because she
would be turning that lump sum into a dependable monthly
check at a lower cost. And you can get these
from lower cost brokerages out there like Fidelity instead of
going through an actual insurance salesperson. That's one of the
biggest differences. It's just it's almost like a completely different

(38:55):
product because of the fact that this isn't something that
has favorable terms for whoever it is that is looking
to sell it and to make a profit off.

Speaker 2 (39:02):
Of it, and it's kind of buried on the websites
of decent financial institutions like Fidelity. Because Fidelity is so
good at doing so many other things, annuities typically are
on the way back burner for them, and that's why
most of the time, the only ways people encounter annuities
is from these high commission it's her and salespeople, and
there's a reason they're selling it because that's what puts

(39:23):
food on the table for their families. But typically it's
at a disadvantage for you when it comes to the
financial terms involved in that annuity, which is why most
of them suck.

Speaker 1 (39:31):
Yeah, And something else that he said is the fact
that she is looking for a temporary spot, which tells
me that she doesn't She doesn't sound like she's needing
this money to live off of. Basically she's trying to like,
if you need this money to live off of, you're
not trying to figure out what to do with this
money like you are, like, Oh, I need to start
drawing down on that to pay the bills to be
able to cover the groceries.

Speaker 2 (39:51):
The fact that she and if that's the case and
you wanted to alast one of those immediate annuities might
make sense.

Speaker 1 (39:56):
Or even just investing it, because if you don't need
the money at all, like I feel like this is
another where man just sticking it in the market, it
could make a ton of sense, even though she's reticent
to expose that money to the overl stock market.

Speaker 2 (40:08):
So I guess what I would do is I would
ask where did that idea come from? Like who placed that?
Who incepted that idea in your brain? And so why
do you think that's the best way to go and
talk about the downside risks of inflation and how important
it is to combat that, and how taking at least
some risk, measured risk, makes the most sense to be

(40:29):
able to extend those dollars, make them work for her
for an extended period of time. Locking them up into
an expensive annuity probably isn't the best decision A low
cost annuity maybe, depending on her circumstances. But hopefully you
got some good thought starters for that conversation, and hopefully
you can help her ask some of those important questions
to drill down and find the right decision for her. Matt,

(40:49):
We've got more to get to on this episode, and
we got any in testing one. One question we got
to get to. We'll hit that up right after this.

Speaker 1 (41:04):
Let's continue with our investing focused episode today. Of course,
now we've got to get to our Facebook question of
the week, which is from McHale. Is that how you
would say this? Okay? Yeah, actually done. This was not
somebody who sent us a voice memo. It's written out
over in Facebook. But Mikale wrote, so I am wondering something.
I hear that one of the first things you do
to invest is buy into the s and P five

(41:26):
hundred index. But what does that really mean? I have
a fidelity account and there isn't much there, but I
bought one S and P five hundred. I'm assuming that's
a share. How much do I really buy? Or is
it like a one and done deal? Joel Is Michale
done with investing?

Speaker 2 (41:45):
Are they said one share that's all you need, You're fine?
Or should they keep at it?

Speaker 1 (41:49):
Well?

Speaker 2 (41:49):
No, I mean I think this opens up actually a
litany of questions. Really, but maybe first we should say
what the S and P five hundred is, Matt And basically,
it's an index.

Speaker 1 (41:57):
Of It's a collection. I guess we shouldn't use the name.

Speaker 2 (42:00):
Of the definition collection of companies. And you're buying slices
and dices of each one of these companies five hundred
companies at one time. When you buy a single share
of an S and P five hundred index fund, and
so it's called the SMP five hundred, you own a
small amount of Apple, a small amount of Nvidia, small
amount of Tesla Coca Cola. I mean there you can go.

Speaker 1 (42:19):
Amount of Dell, which was most recently added to the SMP.

Speaker 2 (42:22):
Okay, so yeah, we can name four hundred ninety five
more companies, but we won't. We will relent. But basically
that's what you're doing. You're becoming an investor. You're becoming
a partial owner in every single one of those companies,
which is kind of cool when you think about it,
you're like, super cool.

Speaker 1 (42:36):
I make the S and P five hundred like the
coolest thing out there. Yeah, I love it.

Speaker 2 (42:40):
You don't run the joint at any one of those companies,
but you have a stake in their success.

Speaker 1 (42:44):
So I am all in on the S and P
five hundred. If folks are wondering, uh, yeah, I don't
do the total stock market. I like the five hundred
biggest companies that are out there. There you go, another
little side SMP five hundred trivia note. Do you know
how often they rebalance and decide what companies get to
be a part of the people? Oh, I don't know.

Speaker 2 (43:01):
I saw that Nvidia just made it into the Dow Jones,
which is a different index with far fewer companies. But
I'm going to say once a year.

Speaker 1 (43:07):
It's quarterly, so four times a year, and I think
I saw that. Interestingly enough, American Airlines as well as Etsy,
they both got the boot. Oh yeah, they're no longer
part of the five hunder club.

Speaker 2 (43:19):
And so that is the I think selling point for
something like an S and P five hundred index fund
is that it's self cleansing to a.

Speaker 1 (43:26):
Certain extent as well.

Speaker 2 (43:27):
Right, they kick out companies who aren't holding up their
bargain and.

Speaker 1 (43:31):
So get too small are and being traded enough.

Speaker 2 (43:33):
All these indexes do that, right, because when the Dow
Jones took on in Nvidia, they kicked out Intel and saying, listen,
you guys, you.

Speaker 1 (43:41):
Guys have been slapping the face. Yeah, but it makes.

Speaker 2 (43:44):
Sense, right, It makes sense that investors at some point
don't want to own that index if it's holding on to.

Speaker 1 (43:49):
Too much crap. Dow Jones was like, I want some
of that new thing over there, that Invidia, Intel you
were cool like twenty years ago, but they haven't kept
up with the times.

Speaker 2 (43:58):
And so I think it's this is huge for Michail, like,
congrats on this new beginning becoming an investor, and Matt,
I don't know about you. I still remember those early
months trying to figure out all the terminology around investing.
There are contribution limits, there are different account types, there
are different index funds, and so it can feel like
a fire hose of information coming at you. Yeah, I

(44:20):
get that, and so that the whole goal of this podcast,
if you listen over long enough time, is that you
become super familiar with those terms and you feel confident
in your ability to invest and make money. Well, one
of the biggest mistakes that early investors actually make is
sticking money into one of their tax advantage retirement accounts,
but then they don't invest the money. It's like sitting
on the sidelines in cash. Yes it's inside of the account,

(44:42):
but you didn't buy a fund inside of that. McHale's
not making that mistake. At least he has bought shares
of the S and P five hundred and this is.

Speaker 1 (44:49):
A good thing.

Speaker 2 (44:50):
Now he is actually an investor, that's right.

Speaker 1 (44:53):
Yeah, And he's also doing business with Fidelity, which makes
him a genius man. He's like, because multiple steps along
the right pat you're gonna get the ultra low cost
funds that are over there. I'm thinking of f Z
Rocks for instance. That's their total stock market fund that
a lot of fire folks are all about. But they
don't charge any expenses on that fund.

Speaker 2 (45:12):
But I'm curious, which is career because most funds have
even though minimal, they have some sort of expensory here
point zero even feel it so like, but FC rocks
is one of those things. At fidelly On, I think
they have like four or six of those funds. Yeah,
and it's cool because like they rolled that out maybe
three years ago. It's legit freec free.

Speaker 1 (45:29):
I like free. We're talking about the actual things that
you're investing in, or the we're talking about the I
guess the passengers that you'd put in the vehicle, but
let's talk about the actual vehicle, because I'm curious which
account you are investing in, because our favorite for almost
all new investors out there is to start by getting
the match first of all, in there your four with
K if you've got one of those, But if you
don't have one, the roth Ira is going to be

(45:51):
your next bet. And that's because of the tax advantage
nature of it. After that, a taxable brokerage account is
what you might wait, you're gonna look at it. That's
usually reserved though after you've been crushing it in those
tax advantaged accounts for years. And that's one of the
things with Fidelity. I thought to myself, Man, it's been
a while since I've opened a new account, what Fidelity,

(46:12):
And I was curious to see how they position or
how they lay out the choices, and I was surprised
to see that it felt like the default option was
the brokerage account. They actually call it the Fidelity account
with a little trademark, little symbol after it, to make
it seem like, oh, well, this is the one that
I should be I should be choosing. Well, it's like

(46:33):
and I don't think they're doing it maliciously. I think
it's just maybe like just poor like user interface kind
of thing they should be highlighting for most people with
roth Ira, Yes, yeah, like that should be the first
I don't know.

Speaker 2 (46:43):
I mean that's what knock on a lot of those
those different new, newer brokerage firms. Specifically, for a long
time they didn't have access to any retirement accounts and
that was a huge problem.

Speaker 1 (46:53):
That's the first thing you should be focused on. But yeah,
that kind of bothered me a little bit, the fact
that and they even highlighted it. They're like, you can
get investing with just one dollar, and made it seem
like sort of the entry point for most folks, and
that's the that's the one sort of thing that stood
out to me. Then I thought, man, I don't really
like the fact that it seems like they're steering folks
to that. Again, I don't think they're doing that intentionally.
But you want to make sure that you are contributing

(47:15):
first to your roth Ira one hundred percent.

Speaker 2 (47:17):
And this might sound counterintuitive, but also don't invest too
much too early, like check out our seven money gears
on the website, because we just don't want you investing
too much and then having to pull it out at
an inopportune time. Matt, you've shared the story before on
the on the pod about how you open up the
roth Ira you stuck money in and then you're like,
wait a second.

Speaker 1 (47:36):
Because I heard that was the ticket to being wealthy.

Speaker 2 (47:39):
I don't have any liquid cash anymore, and so now
I need to pull money out from the roth and
like it was far too soon.

Speaker 1 (47:45):
It's not often that I make mistakes show, but when
I do that, they're big.

Speaker 2 (47:48):
Well, we'll highlight the two you've ever made in your
life here on the show on a repeat basis. And
so basically, if if you are investing, if you're sticking
the money in. Make sure you have enough cash in
liquid reserve in a same these account so you can
leave it in. The whole goal is to invest the
dollars for decades and then continue to invest more dollars.
That's what's going to lead you down the road of

(48:09):
financial independence. So set up a recurring investment into that
roth ira, buying an index fund like FZ Rocks like
Matt mentioned, or a similar fund, so that you, as
our friend Nick Majuli would say, just keep buying. And
it's really not much more complicated than that. There are
some people out there who might want to make it
sound like it's rocket science, but pretty simply, it's choosing

(48:32):
the best tax advantaged account with low costs and a diverse,
well diversified index fund and socking money in regularly over
the course of decades. And you'll wake up one morning
and be like, wait a second, I've got high six figures.
I've got seven figures worth're monning on hand. How did
that happen? It was just doing the right thing on
repeat for but sure that long period of time.

Speaker 1 (48:51):
That's right, Joe. But let's go ahead and get back
to the beer that you and I enjoyed during this episode,
which was a breakfast anti Meridium by Monday Night Brewing.
What were your thoughts on this one, buddy, dude, all I.

Speaker 2 (49:03):
Can say is it was fantastic, so good, absolutely lovely,
and this is the perfect fall beer. I love a
good Imperial Brown at the Curial Brown. We talked recently
about how regular brownailes kind of suck, but like Imperial
brownails are where it's at, and this.

Speaker 1 (49:19):
Is a perfect Regular browns are good if you're not
looking for something that's quite as beastly as as this
guy is.

Speaker 2 (49:25):
Sorry, I want the beast sleep. And this one was
aged in maple bourbon barrels.

Speaker 1 (49:29):
I think the maple is strong with this one. It's
so strong in with the coffee and the vanilla. It's
like this you're sitting down to breakfast, breakfast out made
in heaven. It's like you're enjoying some pancakes with the
maple syrup poured over topes, along with a nice mug
of some freshly brewed preferably ground in the burgrinder, with
a V sixty four over a cup of coffee. He
lost me there at your side. I've heard these terms.

(49:51):
It's so stinking good, so you want to. I don't
know if I ever told you the story, but I
was shooting an event at Monday Night Brewing. It was
a wedding and Peter he he had recently taken over
as headbroommaster there at Monday Night, and was like, hey
what because he knew I was into beer. And this
is like fifteen years ago, but even then he was
just like, hey, I know you're into it when once
you come back here and have a taste. And I
got to have a taste of this, like straight out

(50:13):
of the giant, I don't know, big silver thing, and
I was I think at that point in time, I
knew that Money Night had made an excellent decision in
hiring him. Like he had a wine he was like
a wine stop. He had a wine background, and then
came into the beer scene and quickly turned things around
when it came to Monday Night and some of the
amazing beers that they were that shortly after him taking over,

(50:35):
that they were putting out there, but.

Speaker 2 (50:36):
They I mean they went for still so good. They
went from a five to a ten pretty quickly. You know,
when when Peter started making the beers and and this
is there's they were fine, they were solid back in
the day, but man, this is one of the finest
examples of his work. He took it to a whole
new level.

Speaker 1 (50:51):
And then was the first time though that I've ever
had the breakfast variant, which you know, you get all
these additional adjunct flavors going on and makes it incredibly enjoyable.
And sometimes to share with you, those adjuncts are overpowering
or I hate it when it changes the texture of
the bear right, like when they don't do a good
job filtering it out, or maybe they don't want to filter.

Speaker 2 (51:08):
The base beer is kind of lame and they think
the adjuncts are going to cover it up. No, this
is a great beer with like the solid highlighting it.

Speaker 1 (51:15):
Yeah, It's like it's like getting a really nice looking
Christmas tree, but then you've also got the beautiful ornaments.
Because if you just get like a scrawny looking tree
and you put like the silly Charlie Brown style, yeah,
then it's just it's kind of it's kind of sad.
You know, I wish Snoopy did Wonders with history. We
could have done better. Maybe with the original tree, this
had it all, but buddy. That's going to be it
for this episode. You can find show notes up on

(51:35):
the website at howtomoney dot com. We'll make sure to
link to some of the different resources that we mentioned,
including a link to that website Honest Math, where if
you're starting to want to crunch the numbers, you're getting
a little bit closer to retirement and you want to
see maybe how long your money's going to last. What's
amazing about that site is they run a bunch of
like they run a Monte Carlo simulation on it, and
they run through like thousands of different scenarios and they

(51:58):
give you the average, to give you the median as well,
and then you can make an informed decision from there.
It's like what Nate Silver is to political polling, they
are to your money and retirement simulations. That's right, all right, Yeah,
you can look for that up at how somemoney dot com.
You're gonna take us out. Sure, that's gonna do it
for this one. Until next time, Best Friends Out, Best
Friends Out.