How 595,000 People Reached MILLIONAIRE Status (And How You Can Too)

More than half a million new 401(k) millionaires were created this year...you can be next. We unpack why the 401(k) is still the #1 path to wealth, the psychology behind automatic investing, and how small, consistent steps can build seven-figure futures. Then we dive into Financial Mutant questions, from Roth IRAs to real estate, and shares behind-the-scenes stories from the studio. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Jump start your journey with our FREE financial resources⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Reach your goals faster with our products⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Take the relationship to the next level: become a client⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Subscribe on YouTube for early access and go beyond the podcast⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Connect with us on social media for more content⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠NordVPN.com/MONEYGUY⁠⁠⁠⁠⁠⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

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• 0:26Speaker 01

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• 1:02Brian Preston?

  595,000 millionaires were admitted using this tactic, and you can do it too.

• 1:10Speaker 03

  And Brad, I am so excited about this because we love being able to share stories of how people can reach financial independence. And for a lot of people, the road to financial independence has to pass through the two comma club. They want to hit that millionaire status. And we know right now that there are 595,000 people that have been able to do that one very specific way.

• 1:33Brian Preston?

  Yeah, I mean, this is one, we kind of look quarterly that this data gets released. And it's kind of fun to celebrate because there was a 16% jump in the amount of millionaires. And should we share, Bo?

• 1:47Speaker 03

  Let's show it to them.

• 1:47Brian Preston?

  It's from Fidelity. You know, Fidelity is one of the largest 401k providers in the United States. And once you know it, that 595,000 individuals at the end of quarter two out of their 24.6 million 401k participants, that's about 2.4% for those that are really quick with their math. That's amazing.

• 2:10Speaker 03

  And this is not incredibly surprising to us, while it may be incredibly surprising to you, because we know that from various studies, whether it be the Millionaire Next Door, or from the Ramsey Solutions study, or even from us doing our millionaire survey, we know that a lot of millionaires out there use the 401k as one of the very main tools to building their wealth. And for a lot of folks, it is the account that actually crosses in to that seven-figure status. And it sounds like that number, just like we saw from Q1 to Q2, is growing and growing and growing.

• 2:41Brian Preston?

  Well, I mean, if you've just, if your only information source is social media, you might be like, well, why would you do a 401k? From everything I see, I should be doing whole life insurance and, you know, crypto and all these other things, because 401ks, according to these guys, are dogs. Let us show you why the 401k is the secret sauce. Why, exactly what Beau shared, this is the biggest, the first account to cross into double, comma, seven-figure status for most people, because it's got a lot working for it. And we want to go into the three ingredients of wealth. Just for those who don't remember, I'll go ahead and give you the summation. Discipline is the first ingredient. We're going to show you how the 401k checks that box. If you have enough discipline that creates

• 3:25Brian Preston?

  margin in your life, you can create money from that. We're going to talk about how the 401k definitely gives you some money. And then the third and most valuable component is of course, time. With that, Beau, let's talk about why 401ks rock.

• 3:41Speaker 03

  Yeah, so discipline, uh, discipline is the first ingredient to wealth creation. And 401ks are a fantastic mechanism for you to set something up that automates your discipline process. All you have to think is, when you become eligible, or when you get that job, or when you start with that new employer, they'll give you some wage deferral form, or they'll give you a login, where you can go in and select how much you want to put in your 401k. And for most folks, you just go in, you have to select a number. I want to put in 5%, 10%, whatever that number is, and then you are off to the races, without having to think about it every pay period, without having to think about it every month. But I have to do anything on your own, you can get this wheel spinning in motion

• 4:26Speaker 03

  all the way towards your wealth building, great, big, beautiful tomorrow, without having to waste a whole lot of mental calories.

• 4:32Brian Preston?

  I love that we actually said, quit fighting it. Let's just go ahead and go with what Brian says. Automatic for the people. Cause look, there's a lot of quit out there. We often tell everybody, building wealth is surprisingly simple. Now, don't mishear us. It's not easy because if it was easy, everybody would do it, but it is simple. And what I like is with a 401k, it doesn't let people quit as easily. So the stick with itness is, is getting easier and easier. And if you want to know what we mean by this, the government has been trying, remember, there are a lot of, for all the things we talk about the government, they do understand that from a policy standpoint, it's good if your citizens are saving and they're disciplined in their own right, because more people who are

• 5:14Brian Preston?

  financially independent don't need as much from the government. They can hopefully be just net providers of taxes. So, so if you look at the data that's coming out of what Vanguard and others are doing, the government has set legislation up to where it's encouraging employers to create automatic enrollment and they're giving additional incentives to employers for this. And man, oh man, is this like watering the garden of opportunities because look at the, from 2006 all the way through 2024, the amount of plans that have auto enrollment and getting people to jump into automatic for the people, always be buying is really something that's going to be good and the next generation's going to be rewarded for it.

• 5:54Speaker 03

  Now, look, we don't want you to take a passive role. We want you to be active in how you build for your future, but the system is now being set up in a way that even if you maybe miss it, or maybe you missed that enrollment window, or maybe you're going through all the HR forums, you don't see them, there are now automatic enrollments to get you moving in this right direction. But since you are a financial mutant and since you're going to track your net worth every year, and since you're going to be keeping an eye on this, if you are someone that was auto enrolled, it'd be a great time for you to go revisit and say, man, oh, I got auto enrolled at 3%, but you know what? I could really be doing 5%. I could be doing 10% or At the very, very minimum, I could at least be doing enough to make sure that I get

• 6:36Speaker 03

  that free money. Cause another great benefit of 401ks is they oftentimes come with a free money component.

• 6:43Brian Preston?

  Well, this is the one that like it's, it's, it's a social media crime. When I see people on social media trashing, they're like, why do you care that you, you have a 401k gives you free money? It's only 3%. And I'm like,

• 6:56Speaker 03

  Only 3%?

• 6:57Brian Preston?

  Only 3%? Think about, I mean, you've done the math on that? If you, I mean, if you make 50 grand, that's $1,500.

• 7:04Speaker 03

  That's significant.

• 7:05Brian Preston?

  Right now, I'll walk in, I'll reach out through the screen, you know, like some sci-fi movie, horror film, and I just, instead of doing bad things, I just plopped $1,500 in front of you. Every one of you like, that's a pretty cool trick.

• 7:19Speaker 03

  I'll take that.

• 7:19Brian Preston?

  I'd love that. If you make a hundred grand as a household, $3,000, it's free and clear. That's pretty amazing stuff. And that's exactly what's happening with 401ks. Now, a lot of you are like, oh, your employers are counting on it. It's already built into your pay. Yeah. So you're crazy if you leave it on the table, because I can tell you as, as people who hire, you know, dozens of people every, you know, every year to two years, is that we do take that into account in your compensation. So when I find out that 25 to 30% of people are not maxing out their 401ks to get the full free money, don't leave that money on the table. It's just, it literally is money that should be working for you in your army of dollar bills.

• 8:01Speaker 03

  And it's so important. It's so valuable. When we think about how you should prioritize, what you do with your money, it is literally step two of the financial order of operations. If you're not familiar, Brian, can you hold the thing up for me?

• 8:13Brian Preston?

  It's hidden under here.

• 8:14Speaker 03

  The financial order of operations is a nine step process to show you what you should do with your next dollar. Well, after you get past step number one, step number two is, don't leave any of the free money on the table. So if you participate in a 401k, 403B, 457, one of those types of plans, and there is a matching component available, make sure that you are getting that. Cause once you figure out the discipline, and now you have the money, now you can imply the third, the third ingredient of wealth creation, the most powerful one. Which is time.

• 8:45Brian Preston?

  Well, think about it. 401ks, these are retirement accounts that don't make it easy for you to get access to the money because they're set up for your retirement. Where do we see, when we get the Fred data, the Federal Reserve data on where Americans' wealth is, it's usually in home equity.

• 9:02Speaker 03

  Yep.

• 9:03Brian Preston?

  Because what is that? That's a forced saving vehicle. You buy a house, you start just making monthly payments on your mortgage, it builds up the equity. The 401k is the next best thing because it, once again, is defining your behavior and making the stick with it-ness last, where you actually get 10 years, 20 years, 30 years of compounding growth. And that's where the magic stuff is. It starts really slow. You're gonna feel like, man, this is slow. I'm gonna quit after the next five. Fortunately, the 401k doesn't let you get access to the money. So you're like, okay, well, I guess I'll just keep doing it. And then, voila, 20 years in the future, you're like, holy cow, this thing actually works. This, there's something magical about this whole compounding growth thing.

• 9:43Speaker 03

  It's actually, and we actually have a concept, an idea that you've heard on this show a ton of times called the Wealth Multiplier. It's all have these little koozies showing that for a 20-year-old, a dollar can turn into $88. If you can give it time, compound interest really can be the eighth wonder of the world. So if you have a 45-year time horizon, $1 can turn into 88. If you have a 35-year time horizon, $1 can turn into 23. If you have a 25-year time horizon, $1 can turn into $7. The earlier you figure this out, the more powerful your dollars can be. And a 401k is a great place to figure this out because it can likely set you up for huge financial success in the future.

• 10:26Brian Preston?

  I can see. People are gonna see this and they're like, well, wait a minute. I'm 23. I'm 27. I'm 32. Don't worry. Go to moneyguy.com/resources. We have calculators. We have, we've gone all in on this Wealth Multiplier thing because we want you to get that excited about it. So go out and find out specifically what your Wealth Multiplier is and start thinking about how you spend your money differently, how you need to be saving, and of course, investing your army of dollar bills because of the Wealth Multiplier.

• 10:52Speaker 03

  Brian, I love that this quarter it was 595,000. I think after this episode is released, it's probably going to jump up to a million new people.

• 10:59Brian Preston?

  Well, and that's not just, that's just fidelity. Think about Vanguard's another big 401k provider, Charles Schwab, and there's a bunch of other small 401k providers. If you added them all up, I just get excited that it shows more and more people, especially through auto enrollment, hopefully through education sources like the Money Guy Show. You too can join the ranks. Don't let, you know, everybody out there telling you the system's stacked against you. It's stacked for you. If you just take a little bit today and build your great, big, beautiful tomorrow.

• 11:27Speaker 03

  We love that we get to share this kind of information. We love that we can load you guys up because we genuinely do believe that there's a better way to do money. So every Tuesday at 10 a.m. We like to show up right here and answer your questions and speak to the things that you guys care about. So if you have a question, if you want to get our take on something right now, we have the team out in the wings collecting your questions. Make sure that you get them loaded up because I don't know, maybe we're going to give some stuff away today. I don't know. Maybe we're going to give some stuff away.

• 11:54Brian Preston?

  There's an elephant in the room, though. I didn't know. And I was trying to figure out, is this, is this a like, um, Boys to Men? Is this like New Kids on the Block? Is this N'Sync? Backstreet Boys? Um, maybe even we go back. Who did, um?

• 12:11Speaker 04

  Oh, wait, I know what it is, Bo. I know what he's talking about. It took me all that time, though. I was like, where's he going? What's he gonna say?

• 12:17Brian Preston?

  We do Jackson Fox. I mean, we all showed up today wearing the same outfits without even, I mean, we look like we're about to go on tour. We ought to kind of like stay, get back to back and like cross arms together. I mean, we couldn't, what was funny is I walked in and I saw Bo and I was like, dang gummit. Because I had on a completely different outfit. My wife, when I was in the, making my coffee, it's more she goes, it's show day and that's what you're gonna wear?

• 12:41Speaker 04

  Oh.

• 12:41Brian Preston?

  And I was like, I was like, so it doesn't look good. Yeah, well, it was this black, it was a camo, but with black camo. And she's like, I don't know if that's on air ready. So I was like,

• 12:52Speaker 04

  Okay, I'm actually with Jennifer.

• 12:53Brian Preston?

  So I was like, it looked cool to me, but I guess, you know. Conquering the money world in black camo was not doing it for my wife. So I was like, okay, I'll go change. And I put this on and I walk in and I see Bo and I'm like, oh crap. Now it's gonna be like, we're gonna have the Arnold Schwarzenegger versus Danny DeVito Twins reference. And I'm definitely gonna be the Danny DeVito in this thing.

• 13:13Speaker 03

  No, no, we don't know who's who. We'll leave it up to their imagination.

• 13:14Brian Preston?

  Then Caleb on the content team goes, y'all look like step brothers. And then, and then now, y'all just need to know the lay of the land. Rebi shows up a little, she always makes like the Kramer type entrance into the content meetings at 8:30. So she comes barreling in at the last minute into the content meeting. I didn't mean that in a bad way. I mean, look, Kramer was one of the most popular people on Seinfeld. So your entrance is actually a good thing. And we, the whole content room just went, oh my God, she's wearing the same shirt too. So.

• 13:44Speaker 04

  I'm literally wearing the same brand, very close color, Money Guy logo, all of it.

• 13:49Speaker 03

  It's, it's unbelievable to me that if we were going to assign.

• 13:52Brian Preston?

  Bell Biv DeVoe. I'm trying to think of other.

• 13:54Speaker 03

  If we were gonna assign Seinfeld characters.

• 13:57Speaker 04

  I have never been compared to Kramer before. That's a first for me.

• 14:02Brian Preston?

  Yeah, it could have been Newman. By the way, he's a UGA grad.

• 14:07Speaker 03

  He did go to, he did go to.

• 14:08Brian Preston?

  Did he grad? I don't know if he grad, but Ron Seacrest and Newman.

• 14:11Speaker 03

  Yep, both of them.

• 14:12Brian Preston?

  There we go. And the guy from Lost.

• 14:15Speaker 03

  I don't know that one.

• 14:16Brian Preston?

  Good looking guy from Lost. Is that who it is?

• 14:20Speaker 04

  Matthew Fox.

• 14:21Brian Preston?

  No, no, it was the other one. The one Sawyer.

• 14:23Speaker 04

  Sawyer. I don't know. I don't know their names. I'm sorry.

• 14:26Speaker 03

  Never seen the show before.

• 14:27Brian Preston?

  And Brian and Bo.

• 14:28Speaker 03

  And Brian and Bo. That's, that's UGA. Alums. I love them.

• 14:32Brian Preston?

  They put us up on the wall. It's like Sawyer. It's like Newman, Ron Seacrest and then Brian and Bo.

• 14:38Speaker 04

  Now that we've discussed University of Georgia TV and the fact that we are all matching this morning.

• 14:42Speaker 03

  Did I get to say the thing? Hey, Rebi, I'm gonna throw it over.

• 14:44Speaker 04

  I don't know if we did, because I've got questions queued up.

• 14:46Brian Preston?

  There's one more thing you gotta do. It's sitting out in the room. Quack, quack, quack, quack, quack.

• 14:49Speaker 04

  It is Tumblr day.

• 14:51Brian Preston?

  There you go.

• 14:52Speaker 04

  As Brian just said, the tumblers, remember they are transformers. They can be hot beverage containers or cold beverage koozies.

• 15:00Brian Preston?

  Koozies or tumblers.

• 15:03Speaker 04

  So, let's give away some tumblers and talk some personal finance. Interesting question from eMoney up first. It says, since the IRS rounds to the nearest dollar, can I technically put $7,049 in my Roth IRA? And of course, the limit is currently $7,000.

• 15:26Speaker 04

  Annually, what do you think?

• 15:28Brian Preston?

  That one actually got, cause I, I mean, it's getting a little cold outside. It's like a little snap bubble that popped out a little bit there with that one. That I was like, it got me. E-money got me a little bit, cause that one made me like laugh a little bit. So, but when I saw, this is a financial mutant question if I've ever seen one.

• 15:44Speaker 03

  If my kids, E-money, were asking this question, I'd say, kids, just because you can do something does not mean that you should do something. Just because you could potentially get away with something that's against the rules does not mean we should break the rules just to see if we can get away with it. That'd be my first answer. So, if the Roth IRA limits are 7,000, you should indeed stick to 7,000, even if you thought you could figure out some backdoor way to get 7,000. They'll never know. But, let me tell you this, and a lot of people don't realize this, and a lot of people, this is very helpful at the end of the year. Most custodians, Fidelity, Charles Schwab, Vanguard, if you have auto contribution set up, but maybe you have like your credit card rewards, also, you know, your cash back also gets paid into your Roth IRA, and you get

• 16:27Speaker 03

  to the end of the year and you didn't factor that in, you're like, oh no, I'm gonna overfund. Most custodians will cut off your contribution exactly right at 7,000. So, most custodians won't even let you put in more than 7,000, even if you wanted to. So, they've kind of, they try to protect you from that. Now, obviously, if you, if you're changing custodians, you can run afoul there, if you have other stuff like that going on. But I don't think it'd be a super easy thing to do, but even if it was easy, I don't think I'd recommend it.

• 16:55Brian Preston?

  I love where your mind is, E-money. That's kind of like an Ocean's 11, 12, 13, 14 type strategy, or Superman 2, or whatever, where you're basically gonna take a penny off of every transaction. I like where your brain's at, but unfortunately, I think Bo's right. Even though the IRS probably would have, be none the wiser, um, your custodian is going to be the gatekeeper that probably shuts that down.

• 17:16Speaker 03

  Could you imagine how boring Ocean's 15 would have been if it was all, if the entire plot was like, how to get an extra 49 cents into my Roth IRA?

• 17:24Brian Preston?

  Money addition.

• 17:25Speaker 04

  That's 49 cents.

• 17:26Brian Preston?

  We'd make it entertaining. We'd all show up in our, in our money swag. What could go wrong?

• 17:33Speaker 03

  They'd never catch on to it.

• 17:34Brian Preston?

  We'd be a great caper.

• 17:35Speaker 04

  We'll do something. Um, E-money, thank you for the question. I'm honestly pretty sure you have a Tumblr, but if you don't, it is Tumblr day. Email [email protected].

• 17:47Speaker 04

  All right, ICL is the next question. It says, "I will have two W-2 incomes coming in and both offer 401K contributions. What is the max amount I can contribute? Also, is there a limit to how much employers can contribute to 401Ks?"

• 18:06Brian Preston?

  What a great question.

• 18:07Speaker 04

  I know, right? Like, this is a very unique.

• 18:09Brian Preston?

  And it lets us be really nerdy and cool because we're gonna say Icy. Oh, wait, I thought that was a great rapper name until I saw how it spelt and I was like, "Mmm, that makes me think of Cola and Cherry." So, it's a little different. But you are limited by 415, what's called 415 limits. So, the government, even if you have multiple employers or jobs, you only get to make one maximum contribution of salary deferrals into your retirement plans. And that goes for 403Bs, that goes for 401Ks. They're all under that code section, 415. So, for this year, was it 23,500?

• 18:46Speaker 03

  23,500.

• 18:47Brian Preston?

  So, you could do 23,500. Now, the crazy thing is, is you could do 12,500 at this one. You could do 11,000. Does it say 500 on that other one? So, 11,000, whatever. You could do whatever math you want to do to get to 23,500, but that's it. Now, here's the other part. But what happens to the employer portion? Do they have the same restrictions or is there a really big opportunity there?

• 19:10Speaker 03

  Yeah, so this one is a little unique. 415 limits have salary deferrals of 23,500, but they actually go all the way up to $70,000 if you're gonna fully fill up that across your contributions and your employer contributions. Well, one of the things, even though the salary deferral aggregates that 23,500, employer contributions do not aggregate. So, you could have one plan where you have $70,000 a year going in. And then if you had another 401K that you had access to, while you, as the employee, could not put more money in there, your employer could elect to make an employer profit-sharing contribution into that one. So, you only get one 23,500, but employers can do multiple sources. Now, there is one small caveat that's worth noting, and this might hit some of you.

• 19:54Speaker 03

  You mentioned, Bron, you know, 401Ks and 403Bs and those different plan types. They aggregate across that 23,500. However... There is one. There's one that does not aggregate because it's in a separate code section and that is a 457. So if you're someone who has access to a 401k plan or a 403B plan and also a 457, you can actually fill out those salary deferrals twice. You can do 23.5 into the 401k, 403B, and another 23.5 into the 457. So you can double dip if you have that account structure combination available to you.

• 20:29Brian Preston?

  Yeah, that's a major hack. That's awesome.

• 20:32Speaker 04

  Good stuff. ICL, if you would like a Money Guy Tumblr, we would love to send you one.

• 20:36Speaker 03

  I just got thirsty.

• 20:37Speaker 04

  Just email moneyguy.com.

• 20:39Brian Preston?

  You saw it spelt. That's just like the little icy machine.

• 20:42Speaker 03

  It was. You were thinking it was like ICE. Like, right? Like that's

• 20:46Brian Preston?

  It was like ICL, yeah. Coming out with a hot new track. And then I saw, and I was like, it's like cherry and cola mixed.

• 20:55Speaker 03

  Nailed it.

• 20:56Speaker 04

  Delightful. Okay, next question is from JB. It says, can you count credit card rewards towards your savings rate? Hear me out. It says in the question, hear me out.

• 21:11Brian Preston?

  Judging it.

• 21:12Speaker 04

  The next part says, I have the Fidelity 2% cash back card that goes into my brokerage. Can I count this towards my savings rate? Smart, fancy, financial mutant, or getting a little too cute with it? What do you think?

• 21:25Brian Preston?

  Yeah, I mean, I think it's getting a little too cute with it because also, this falls under the category of, because I saw somebody ask the question of, why do you, after your certain level of income, do you not get to count your employer? It's because we're trying to create structures to where you are very deliberate with every dollar comes into your army of dollar bills. Why would I want to give you a shortcut that lets you basically cut the corner off of 2%? By the way, hopefully you're not spending, if you make this amount of money, hopefully you're not spending just as much on the credit card to count that as 2%. But just think about that. The logistics of trying to figure out how this, I guess is not that hard because you'd be like, oh, $300 got deposited, 300 divided by whatever my annual income is. But still, I think it's not worth the squeeze

• 22:09Brian Preston?

  of the fruit. I mean, this is the hassle factor. Plus, I want you saving as much as possible, within reason, but as all your basic life. But this is something that I don't think is worth it.

• 22:19Speaker 03

  Yeah, saving is saving and consuming is consuming. Now, if you're going to consume and you're going to make the decision to buy stuff, we love the idea of you doing it in a way that's as cost effective as possible. Maybe that's through a credit card where I have some reward structure. Maybe that's through some online portal where I get a discount. Maybe I'm using coupon codes, whatever that is. If you're going to spend money, we want you to spend as little as possible and get as good of a deal as possible. But that is a different line. That's a different behavior than the saving side. I would just consider credit card rebates, rewards, deposits are going in as like gravy and cherry on, that's a gross mixture. As either gravy or a cherry on top. Not together, but it does not get to count as savings.

• 23:03Brian Preston?

  Well, and I think it also works against, I want you to do an automatic for the people and the fact that you set up automated processes, make the good habits as easy as possible. And if you're doing some weird, convoluted calculation where you say, well, I know I got rebate, you know, credit card rewards coming in this month. So let me make sure I leave enough room on my savings. It just, it's working against it. It's, don't get busy doing nothing. That, that, it's just not worth the, all the factors in there. I'd rather you make it automatic and set up the monthly savings and investments and live your best life.

• 23:35Speaker 03

  Love that. I love, I love the fidelity card getting tons of love in the comments too.

• 23:39Speaker 04

  Tons of love.

• 23:39Brian Preston?

  Yeah, we, I mean, I use that one. Not that fidelity gives us any thank you for, for being an advocate for them on that. I'm sorry, should I have said that?

• 23:47Speaker 04

  Some great cash back though. Um, JB, thank you for the question. Seriously, a good question. I hope that helps you not be too cute with it.

• 23:56Brian Preston?

  I mean, behind the scenes, like we, like when we were approaching advertisers or others for like sponsoring the studio or whatever, you know, I don't know. I'll just be quiet. Get us in trouble.

• 24:07Speaker 04

  Brian's ready to spill some tea that I don't even know what he's gonna spill.

• 24:10Speaker 03

  How'd you sleep last night?

• 24:11Speaker 04

  He's ready.

• 24:12Brian Preston?

  I slept good.

• 24:12Speaker 03

  I like this, this seems like four hour Brian, but I know you got more than four hours.

• 24:17Brian Preston?

  No, I gotta get, no, this is because yesterday was four hour Brian and the previous day was five hour Brian. So seven hour Brian is like, hot dog. This is what it's like when we actually charge this thing.

• 24:27Speaker 03

  Love it.

• 24:28Speaker 04

  I really love it.

• 24:28Speaker 03

  This is what it's like when we charge this thing.

• 24:30Speaker 04

  That's hilarious.

• 24:33Speaker 00

  This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18 plus.

• 24:58Speaker 01

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• 25:28Speaker 04

  All right. We've got another question. Erwell, did I give JB a Tumblr?

• 25:33Speaker 03

  No, you did not.

• 25:33Speaker 04

  JB, if you don't have a Tumblr, email [email protected] since we answered your question. Now I'm going to get to Doug P.'s question. It says, my question is what to do with equity in investment properties? I refinanced the mortgages on those on those properties four years ago. Rates are at about 3.75%. The equity is just building up, just sitting there.

• 26:00Speaker 04

  Should he do anything with this? How should he think about this? He seems bothered. What do you guys think?

• 26:05Speaker 03

  I think a lot of people, whether it be your primary residence or whether it be investment properties, have this struggle. They end up thinking to themselves, man, all right, I got this piece of property. It's gone up in value and I see all this wealth accumulating. I have all this built up equity inside of this illiquid asset. Man, is it just wasting away? Should I be doing something else with that? I think that is flawed thinking. I think that's flawed logic. And I think that people who try to get like really, okay, I'm gonna buy it and I'm gonna, I'm gonna have the equity increase and I'm gonna go borrow against that equity. I'm gonna go deploy that.

• 26:45Speaker 03

  You are now going likely further out on the risk spectrum than I think you really want to go because one of the things that you're going to notice Doug is if the rates when you refinance are 3.75% and you're gonna go now try to tap into that equity, you are likely not going to get 3.75% again. You're getting something closer to six and a half, seven, seven and a half percent now. I just don't think that makes a ton of sense. Agree, disagree, one or five?

• 27:09Brian Preston?

  Well, I think it's you have to markets and have different, there's a time and a place, different decisions coming to vogue. And with a higher interest rate environment and you've got 3.75% mortgage rates on your rental property, those are like, people are very excited about those rates. That's because that's allowing you to do multiple things. It allows you to have lots of flexibility on tenants, you know, because now you don't have to cover. That's the problem. I think a lot of people don't understand is that when you sell a piece of real estate, the previous owner might've had it at a three and a half percent mortgage. When the new investor comes in and buys a piece of rental property and they're paying at six and a half percent,

• 27:50Brian Preston?

  the carry cost on just making the note is much higher and that probably means there's gonna be higher rent. Whereas I like that, you know, you have a lot of flexibility because this is going to cash flow much easier at the 3.75. The way I'm handling this with clients, because I do have a number of clients who they're doing it because remember, real estate in our eyes, under financial order of operations is a step eight of the financial order of operations. You won't have this probably because hopefully the typical financial mutant, you're not only going to have, you know, rental real estate, if you did this right in step eight, you're going to have Roth IRAs, you've got 401ks, you're going to have taxable brokerage accounts, you're going to have a whole plethora of opportunities of how you're going to get access to money in retirement.

• 28:32Brian Preston?

  So you can choose the most efficient and best one. And that's why I have clients that they, they love the real estate game. They've had tremendous success with it. But it's going to be part of their Retirement plan is they kind of simplify because no, real estate is not passive despite what the brochure says. I mean, we own a number of real estate properties. And if you're going to do it right, you're going to be in the weeds on it. And for some of my several real estate clients, we're going to, we're going to be divesting out of some of these properties, simplifying the financial life. And that's when we'll take that equity and roll it into the diversified portfolio at that point.

• 29:09Speaker 03

  I think another thing, and this might help, this was Doug, right? If you are doing an annual net worth, I do this, you don't have to do this, but this is what I do. And I know Brian does the same thing. Whenever it comes to real estate that I'm not planning on selling anytime soon, rather than valuing it on my net worth statement at market value, I instead value it at cost plus any improvements. So what it prevents me from doing is like looking at my primary residence. You know, I bought my house in this town a number of years ago. The housing market's gone really well. And so on paper, value of my house looks awesome. But I don't want to count that as part of my net worth building. I'm not going to sell my primary house. It's where we're going to be, it's where we're going to stay, it's where we're going to live.

• 29:54Speaker 03

  So I value it at cost. I do the same thing for any long-term investment properties I plan on holding. I think if you can do that, it will curb you from saying, man, I'm, I'm missing out on this opportunity. I mean, we need to be capitalizing on this equity. I don't think that's necessary in order to keep building financial independence.

• 30:10Brian Preston?

  Well, I know I have several clients have, because they bought real estate, residential rental properties in like 2009 or 2010. I mean, these, these are key demo times that if you bought in, you couldn't do anything but make money.

• 30:27Brian Preston?

  So these are large portions of their future retirement. I do like the fact of. You know, you have to be mindful that real estate is illiquid and you have to have a plan for how you're going to turn it into a liquid part of your retirement. If you're not doing it through the cash flow, because a lot of people, now, if you're a person that loves real estate and you're going to be active even in retirement with it, because maybe you're retiring at 55, you know, there's nothing wrong if the cash flow is now essentially a pension. You've created your own pension. But for a lot of people, if you need access to the equity, you're going to have probably, because I don't know that I want you in retirement, say, 60 years old, going and releveraging the asset. I mean, because that really is pushing you out on

• 31:05Speaker 03

  On the risk.

• 31:06Brian Preston?

  On the risk spectrum, when you're trying to be as financially independent and remove obligations off of your life, because obligations are risk in retirement. So that's, that's why I would think, build it into your total plan. This is the part where we talk about, take the relationship to the next level. It's very personal in the personal finances. How do we take all these complicated decisions and successes you've had and now to streamline it into your best version of yourself? This is a big part of it right here, is how do we take an illiquid asset, bring that in with all your liquid assets and find the most optimal from a tax efficiency, as well as from risk, as well as how do we maximize the returns? These things all work together, but it gets complicated really quick.

• 31:48Speaker 03

  Love that.

• 31:49Speaker 04

  Fantastic. Doug P., thank you for the question. Thank you for being here.

• 31:54Brian Preston?

  Doug P. really doesn't love it, because that's like, it depends. I hate giving it depends answers, but do you see how many variables are out there? I mean, it is, there's a lot of moving, and it's a blessing.

• 32:04Speaker 04

  Heard very wise people say, personal finance is personal, Brian. So I think you did great. Doug P., thank you for the question. And if you would like a Money Guy Tumblr, just email [email protected] and we would love to send one to you.

• 32:17Speaker 03

  I have a question. Can I ask a question?

• 32:19Speaker 04

  You may.

• 32:20Speaker 03

  You don't have to give me a Tumblr. I've got one. A lot of people in the comments, I've been seeing this in our, in our comments and I saw one just come through. People have been noticing you've been on a little bit of a fitness journey. They have. People have been like commenting like Brian seems to be doing alright. I just thought, so one of the questions, guys, hey, what's Brian's fitness route? Like, like what this, this new Brian? What's he begun focusing on? What's he begin like diving, dialing into? Anything you want to kind of share?

• 32:47Brian Preston?

  I don't mind because I want you guys, you're financial mutants. And I found out when y'all come and do studio tours that I am, when you, when a show creates an avatar of who their audience is, there's really two avatars currently and it seems like it's Bo and Brian. I mean, because you guys come in and we all could be like hanging out.

• 33:03Speaker 03

  Yeah.

• 33:04Brian Preston?

  And that's not, that's not a guy, girl thing. Because I mean, a lot of you like, you're like my brother or my uncle, or you know, so it's, so, but here's what's happened to me and y'all have heard me talk about it. Health is wealth. When I crossed 40, I had that great sage advice from um, my former pastor Gary. I was in a small men's group with him and, and he had talked about, because he was a few years older than me and in my late 30s and he was already in his 40s. He's like, man, that fork in the road, you gotta start exercising. So, and hanging out. Bo is a great influence because, I mean, look at him. He's a specimen. So he's, you know, it makes you feel like you should be doing better. So in 40s, I was doing something. Nothing great. And then, but y'all know I've crossed into my 50s and that, that kicks like a donkey.

• 33:48Brian Preston?

  I mean, it really does. And not, not that I feel like I'm going anywhere, but there's definitely some, I have a 50s hangover in the fact that my father passed away at 55 and I know I've got to be very deliberate with, and so I'm proactive with my healthcare, with making sure I'm trying to stay ahead. And, and I'm happy to report, like, because I'm, I'm proactive. I'm getting heart scans and all these things that you hear about, like executive stuff. Because I want to be giving you guys financial advice for decades. I don't want to be done with this thing. Because I like to think, even though I'm in my 50s, hopefully, you know, according to my, a lot of my trackers, I'm in my 40s from a health standpoint. I want to be that way with the content creation too. Is that um, I've, I've, I've kicked up, you

• 34:29Brian Preston?

  know, the, the cardio side. I'm walking. I mean, truthfully, that is the-

• 34:34Speaker 03

  So when do you walk, Ron?

• 34:35Brian Preston?

  I walk in the morning, I walk in the evening. It's really, that's why, I will tell you, this is the first year I'm kind of depressed about daylight savings time because it's going to squeeze my window down because we're central time here in Tennessee and central time is the greatest thing in the world, except for when we fall back. Because I've already, through my daughter, because she's now, because I probably, because I put out these vibes, I've gone through Grok and asked it, hey, when, when are we going to have the less, least amount of light? And it's like December 1st through 11th, it's gonna be dark here like 4:30. How stinky is that? I mean, that's just, that's not cool. Let's get on, let's get on that fallback. We don't need to be falling back. I'd like it to be 5:30 if we could. But, um, but I've been walking, I still go to Orange Theory probably

• 35:20Brian Preston?

  three to four times a week. I was doing that probably twice. But I've been doing that three to four times a week. And, um, and I'm just not, and here's the other thing, it's, it's kind of like, what's that comedian? I love her because I saw her at the Grand Ole Opry recently. She's got the Netflix show now. But she was like, avoid the, the bread and the sugar. Um, you know, Leanne, Leanne Morgan, is that right? Is that, is that the comedian? That sounds right. But, um, yeah, so I've been avoiding the bread and the sugars too.

• 35:48Speaker 03

  See, I've seen you, you're doing a lot of walking, walking in the mornings, walking in the evenings, even sometimes you'll get a midday after we have lunch or whatever, which I think is awesome. And what I think is really cool is on those walks, you've been doing something else too.

• 36:02Brian Preston?

  Well, this is Bo. Y'all wonder where ideas come from? You know, we went to that Press Publish conference. Did I say that right?

• 36:09Speaker 03

  Nailed it.

• 36:10Brian Preston?

  Always. And Bo was like, man, well, it's walking. You want to do something with that, you know, because I always, and, and we, so Bo and I created a notes database that we're sharing back and forth with just ideas. And we've got like a hundred of them. I mean, it's how, it's crazy how we know each other's brains. And it's fun. I mean, I've just been having a blast, kind of, you know, coming up with tidbits of parental advice or things I wish I'd have known when I was younger, or just, I don't know that I'm going to share the, the Taco Bell 3, 2, 1 strategy yet, but I'm willing, but it might make it in there eventually. But, but I'm definitely sharing a lot of funny things that I've figured out in life. And you guys, y'all been great. I love the comments that y'all are saying when you're, when you're watching these, because I think they're going

• 36:54Brian Preston?

  out on Instagram, they're going out on TikTok and Facebook.

• 36:56Speaker 03

  Matt, what's our, what's our handle? So I can throw it out there? Money Guy Show. If you go check out Money Guy Show on Instagram.

• 37:02Speaker 04

  I didn't know that. It's not that hard.

• 37:05Speaker 03

  Money Guy Show on Instagram, Money Guy Show on TikTok. If you want to have some tangent time with Brian, that's what these things are, what they're designed to be. So if you haven't checked that out, make sure you go like, subscribe and follow.

• 37:17Speaker 04

  They're very, uh, they're very warm. Like, it makes me feel happy.

• 37:20Speaker 03

  It's like going on a walk with Brian.

• 37:21Speaker 04

  Yeah, it's like you're hanging out with Brian.

• 37:22Brian Preston?

  We also, I mean, a lot of time when we have studio tours, people say, Brian, I love the tangents you do, but, but from a content standpoint, it's not always great that I go on random tangents. I don't mean to, it's just who, how I'm wired. Um, so this is just gives me a creative way to, to put those in a place that, um, that's probably constructive for the content. Doesn't mean that tangents are going away. I can't help myself, but it at least gives them another healthy place.

• 37:46Speaker 04

  Oh, they're here to stay. We're just finding the right places to put them. It's gonna be awesome.

• 37:49Brian Preston?

  Yeah. It seems like, so they're probably now live streams are probably gonna get a little extra. I mean, you always get their, their, their portion.

• 37:56Speaker 04

  I think this always gets a little extra. We're just spreading the love. All right. Doug P., I did give you a Tumblr, I believe, but you know [email protected] if I did not. And I have another question queued up from ostheboss1216. It says, hello, Money Guy team. I am proposing to my girlfriend of two plus years this Thanksgiving.

• 38:21Speaker 03

  Let's go.

• 38:22Speaker 04

  Congrats.

• 38:23Brian Preston?

  Hope she doesn't watch the Money Guy Show.

• 38:25Speaker 04

  See, I feel bad. I want her to watch the Money Guy Show, but hopefully not in the next two months.

• 38:28Brian Preston?

  Let's go ruin the surprise.

• 38:29Speaker 04

  Um, the question says, could you share financial advice that you wish you knew before getting married? For context, they're both juniors in college. They're both savers. Thank you.

• 38:40Speaker 03

  Well, you know what? I think you've already, the fact that you've already, uh, made the assessment, hey, we're both savers, means that you've had some conversation around, hey, how do you look at money? What do you think about money? Because I think one of the things that couples can do really, really well before you enter into marriage is have the conversation around finances. Hey, what does your balance sheet look like? And, and maybe you don't make it sound that nerdy, but like, hey, do you struggle with credit card debt? Do you understand what a Roth, like? So that way you can figure out, are you guys on the same page? Because it's amazing when you see two people come together and one is like an incredible saver and the other is an incredible spender. It creates a lot of friction. So if you can figure that out on the front end and begin working on, okay,

• 39:24Speaker 03

  how are we going to set up our financial situation? So that we can be successful through this marriage, so that we can be successful through this partnership. It's going to be a lot easier than trying to figure that out as you go through it. So I think the fact that you and your girlfriend are already having those conversations around, okay, what do we want our future financial life to look like? What are our goals, both short term, intermediate term and long term? I think communication is key and the more you can have those conversations early on, the less surprised you'll be when all of a sudden you find out your spouse spends like, you know, 40 or 50 bucks on shampoo. Or you find out that throw pillows are a necessity inside of a household.

• 40:09Speaker 03

  If you can talk about that stuff in the front end, you'll set yourself up for success.

• 40:12Brian Preston?

  I have a fun exercise for us, the boss. Now, it's not going to be video form because we've been doing this long enough that this doesn't have a video equivalent of itself. But back in 2012, Bo got married. That's how long we've been doing this because you're like, wait a minute, it's 2025. Yeah, we've been doing this show a long time. And one of the funnest shows I think I've ever done is I asked Bo a bunch of financial questions of what he thought marriage was going to be like. Now, I think we did a 2013 show where we did a year in the future. And that, but those are some just stellar content. So, us the boss, if you want to, because that way you get to see here a young Bo talk about how he thought his, his wife wasn't going to spend more than like 20 bucks on stuff.

• 40:51Speaker 03

  That was our check in number was 40 bucks.

• 40:53Brian Preston?

  Was it 20 or 40? It was 40 bucks. So 40 bucks. And I, I think I said at the line, even in that show, I was like, I bet her shampoo costs more than 40 bucks.

• 41:02Speaker 03

  And he was right.

• 41:03Brian Preston?

  So it's one of those things where it's fun to kind of hear and reminisce where Bo is a financial mutant, get just getting married, what he was thinking, you might, you know, resemble yourself in, in, in listening to that content. Now, here's where the advice is, is open communication. Of course, Bo kind of hit that. Y'all need to be talking about, first of all, don't skip out on the big life stuff. I mean, this is, I'm always amazed because it's going to, you're going to go ahead and just help you out tremendously. If you start talking about, hey, where are we at with kids? Where are we at with religion? And then next is, you know, probably third on that is like, hey, what do you think about joint accounts versus are we going to keep things separate? How much debt do you have? I mean, you don't want secrets. Secrets kill marriages in a lot

• 41:47Brian Preston?

  of ways. So you just want to have open conversations about what you have going on. Because I mean, I've watched enough, you know, Christmas movies. You want to make sure that who you're marrying is not a princess or a prince, and they're just not telling you. And then that creates its own little diabolical thing that you'll have to work through. But it's, but it is one of those things, open communication. That wasn't, y'all didn't even laugh. So

• 42:07Speaker 03

  No, I gave you a chuckle.

• 42:08Brian Preston?

  And then I think, and then I think about, what's the parable of the, is it the Magi or whatever? Is just try to be selfless.

• 42:14Speaker 04

  Gift of the Magi. We've done this before.

• 42:16Brian Preston?

  Gift of the Magi. So you just want to go into marriage knowing that you're going to, it needs to be a selfless thing. And I think if both, if both people come into the marriage, understanding you have to give of yourself, you know, you're setting yourself up for long-term success. And it, but, and go through, I mean, I know, I think one of the important things I did was, we did some counseling through our church or something like that, just to kind of make sure we were priming the pump on the communication and other things. Because don't just, just because you have love and passion doesn't mean that you got all the boxes checked. You need to do a little, you know, measure twice, cut once. I'm making sure y'all have good, open communication.

• 42:53Speaker 03

  Love that. And congratulations, by the way.

• 42:55Speaker 04

  Yeah, very exciting. Great advice, guys. Thank you, Oss the Boss, for your question. If you would like a Money Guy Tumblr, if you don't have one yet, just email [email protected].

• 43:06Speaker 04

  Next question is from Drew H.

• 43:10Speaker 04

  It says, first time chatter, long time watcher. Welcome. What are you laughing at, Bo Hanson?

• 43:16Speaker 03

  Did you not see the pump fake right there? That's fine. That's okay.

• 43:19Brian Preston?

  Well, here, I'll let you do Drew H. Because I was saying, you know, we have Making a Millionaire. We have Making a Millionaire. You know what would be a fun show? Because I had such a good time with Bo's show where we asked the questions. We, and I don't know if Making a Millionaire, if we even have any candidates out there. But a show like that with two, two young people that are about to get, you know,

• 43:39Speaker 04

  Oh, like about to get married.

• 43:40Brian Preston?

  To kind of compare and contrast and talk about money.

• 43:42Speaker 04

  Didn't we have an engaged couple on?

• 43:44Brian Preston?

  That would just be fun.

• 43:45Speaker 03

  Oh.

• 43:45Speaker 04

  Maybe Missed Off.

• 43:46Brian Preston?

  Because Bo was fun. I mean, I wish we could have gotten, if I could go back in time and put a young Bo and Jenna on the, on the show, and then we have Making a Millionaire that way, it would have been hilarious.

• 43:55Speaker 03

  That would have been.

• 43:55Brian Preston?

  It would have killed.

• 43:56Speaker 03

  That would have been a lot of fun.

• 43:57Brian Preston?

  Okay, go back to Drew H. I'm so sorry.

• 43:58Speaker 04

  Well, I'm sorry I interrupted you there, Brian.

• 43:59Brian Preston?

  No, you didn't. My brain is just like, it was a little delayed.

• 44:03Speaker 04

  Okay, back to Drew H.'s question. Wonderful. It says, first time chatter, long time watcher. He's on Foo's step eight.

• 44:12Brian Preston?

  Congratulations.

• 44:13Speaker 04

  Is there a point where Roth conversions become counterproductive if your pension income will fill most of your retirement spending needs?

• 44:24Speaker 03

  I think the question that Drew is asking here is, can you have too much Roth? Now, I don't know your answer, Drew, so I want to like, think through that. Because let me explain to you a scenario where I've seen Roth conversions be slightly detrimental. Someone has a lot of pre-tax assets and they have a little bit of after-tax assets, and they want to start converting to Roth. And so they retire early and they begin doing these Roth conversions so that they can move some of the pre-tax, some of the pre-tax bucket into the Roth bucket. Well, they end up using all of their after-tax assets to pay the taxes on those Roth conversions. So they finally find themselves in a point where all they have are Roth assets and pre-tax assets.

• 45:07Speaker 03

  Now, if you're over 59 and a half, that's not necessarily a bad thing because you can get to that Roth money just as easy, if not easier, than you could get to the after-tax money. But if you're below 59 and a half, and you don't leave your. Any dry powder to pay for living expenses, you could potentially have an issue. However, you said in your question, man, I actually have a pension that's going to be coming in. So if I have provided for my living needs and I'm going to have a pension coming in, what I'm likely concerned more about and thinking more about if I'm in your situation, Drew, is what are required minimum distributions going to look like for me at age 73? Or if I'm younger at age 75?

• 45:48Speaker 03

  And I may want to begin doing Roth conversions now so that I don't have these huge RMDs later in my 70s and 80s. And I'm actually going to let my Roth converting be less of a strategy around how am I going to pay for my retirement living expenses and more about, okay, what's my estate planning and legacy planning look like? Because Roth assets are some of the absolute best assets to ultimately get to leave to your heirs.

• 46:12Brian Preston?

  Um, here's my take on this. By the way, I love that you're already in step eight and I don't, did Drew give us his age? He did not. So I don't know how early in the process to be a step eight, but it's still pretty cool that you're thinking about Roth conversions. But here's, you need to know the negatives of Roth conversions because they also are part of why there's positives because we, our favorite account structure, you're not supposed to tell who your favorite child is, but I'll tell you ours is Roth because they grow tax free and man, we all get excited about tax free. But there's a game you're playing. You're hoping for tax arbitrage. That's the whole thing with Roth conversions, meaning that you want to, you want to be able

• 46:53Brian Preston?

  to turn your tax, your pre-tax assets, your tax deferred assets that are like in 401ks and other things, because you know, the government, there's a clock ticking in the background with required minimum distributions. You're trying to figure out how you, and it doesn't matter. By the way, if you die with these, your heirs will eventually pay the tax. Somebody's paying the taxes on all those pre-tax assets. So you're trying to figure out, how do you get them in, out of the tax structure with as little about us taxes as possible? Well, some people get so excited about Roth assets that they, even when they're in peak earning years, they lose their mind and they start doing Roth conversions way too early. And when you're in a higher tax bracket, that is not a tax arbitrage situation. You're actually paying maximum taxes when you do that type of stuff.

• 47:36Brian Preston?

  We'd much more prefer for you to find, to play the tax arbitrage when hopefully you're out of your peak earning years. You drop your earned income because maybe you retired early, you're part of the fire slash fine movement. And all of a sudden, your tax rates go to the seller and you're able to essentially convert assets with minimal tax impact, minimal tax drag, because taxes are a problem. Because what happens is, is that you have to pay the taxes from some assets. And as Beau just shared, a lot of times that comes from your taxable assets, which might be your bridge account, if you're part of that part moving and you're retiring before, you know, 59 and a half, that could be your bridge money that you're actually spending off of.

• 48:18Brian Preston?

  There's also the opportunity cost of anything you pay in taxes. No longer is in your army of dollar bills working for you. So that's why it has to be a very deliberate calculation to make sure that you're taking advantage of the lowest tax rate possible that won't hurt your long-term future, but you're also working against the cash flow. And that's why, once again, this is another one of those when it might make sense to have a financial advisor, is because this is what a financial planner does for you. It's not just asset. Everybody thinks a financial planner is just gonna put you in an index fund and asset. No, a good financial planner is gonna start doing, running tax projections. They're gonna start running through cash flow analysis of what retirement looks like in the first five to seven years. You know, what is it if you convert this amount this year versus

• 49:03Brian Preston?

  then? What's the opportunity cost lost by us doing this? Is this a truly an arbitrage? Or are we just paying taxes earlier than we should? This is what we do for a living. And I think people, that's why whenever you see all the people who trash financial advisors, I'm like, you haven't really talked to a financial planner. Because if you're, all you're doing is investment management, that's already been commoditized. You just go buy an index target retirement fund. You don't even need to hire a financial advisor. So if we're gonna pay for this building and all these people in here, we better be doing a heck of a lot more than that. And Drew, that's where actually, we have to, you know, help you put the personal in personal finance of figuring out what your best path forward

• 49:44Brian Preston?

  is. So that's the negatives of Roth conversions are taxes, reduction in the taxable assets, and then the opportunity cost of that money will never get to work again, once you pay the government. So you just have to kind of understand those negatives and then figure out how you can find the most optimal time to work through, because you do have that clock in the background with the required minimum distributions.

• 50:04Speaker 03

  The only thing I'm going to add to that, and this is a practical thing. A lot of people think, all right, I want to see if I can do a Roth conversion. I'm going to go Google, or I'm not even going to Google anymore. I'm going to use AI and say, hey, should I do a Roth conversion? It'll spit out, hey, here are the pros of Roth conversions, here are the benefits, and you give it all the details to give you some stuff. It's interesting, whenever we do like a full Roth conversion analysis for a client, what we do is we lay out a best laid plan. Hey, you retire at 58, here's our Roth conversion strategy that we're going to anticipate implementing from age 58 all the way out until age 75. It's really like 58 to 63 because you've got Medicare surcharges, you've got to figure out when social happens, and after that, it's from there until 75. So you lay out this best laid plan, but you know what actually happens in practice? Every single year, you revisit, iterate, and adjust that plan.

• 50:49Speaker 03

  So it's not uncommon that we might start for the first three years of someone's retirement, planning on this, but something changes. They move, they change states, they buy a piece of property, whatever that thing is, and all of a sudden now that plan that we were on needs to pivot, needs to shift. It is a dynamic process. A lot of people think that like, oh, retirement's, you know, super easy, I'm just going to retire and I'm going to have 4% withdrawal rate, and that's all there is to it. It is very nuanced, and Roth conversions are one of those that are very, very nuanced, and can have huge implications over the lifetime of a financial planner.

• 51:19Brian Preston?

  And I'll tell you, just kind of getting behind the curtain of what financial planners do, typically it's a two, two transaction discussion. It's because we'll, at the start, at the end of the year, we'll kind of game plan at the end of the year what we think we're going to be able to do in a Roth conversion this year. But we don't actually pull the trigger on it until typically fourth quarter.

• 51:37Speaker 03

  That's right.

• 51:37Brian Preston?

  And here's why it's typically fourth quarter. Clients, you guys, and you're going to do this for yourself too, you'll have outside income sources that just come out of the blue. You're like, oh, but this happened. You're like, well crud, that kind of screws this up because now, because Bo just said it. You have to realize your Medicare, you know, there's, there's your Medicare premiums, your taxability, your social security, all these things every year get reset, and we have to take that into account. And so that's why it's usually a two conversation conversion. It's because you have your best laid plan where you're kind of in the beginning of the year thinking about things, but then when you actually go to implement, you have to make sure that you double check all the variables that came into play.

• 52:18Speaker 03

  Love that.

• 52:20Speaker 04

  Fantastic. Well Drew H, welcome to Asking a Question. He's a first time chatter, a long time watcher. So that was fun.

• 52:28Brian Preston?

  This reminds me, I don't mean to belabor things, but I think about when I got Lasik surgery, you know, when I got Lasik surgery in the mid 2000s, and I'm sure it's this way now, too, is that the robots had gotten so good that all you had to do was go to these, if you're on the Sunday papers, if anybody even has a Sunday paper anymore, I'm sure they advertise just now on social media, you could get your eyes done for $500 a piece or something through Lasik. Back then? Yeah, it was something cheap because, you know, these places, clinics were set up to basically just, you know, blow and go and, you know, cut your eye and then do it. And I'm sure for 90% of the people, that was great. But it's, but for me, I was like, hey, I want to make sure I can see. I only got two of these things.

• 53:13Brian Preston?

  I might be willing to stay and pay him $500. How about if I pay $4,000 and I get the same eye doctor as Greg Maddux, who, you know, was one of the world's greatest pitchers. That way, when the robot doesn't, or some scenario hits that the robot doesn't like, I've got a world-class person that's going to make sure that I don't give up my eyeballs because I was just trying to save $3,500. It's not like a buy one, get one free deal. Yeah, I mean, it's just because I'm only going to do this traction once. So maybe this isn't where I need to save my 3,000 bucks. So I feel like good financial management, that's why we get a bad rap, financial advisors. Look, now, there's a lot of people, I think, if you're like, I was, I was out with a great friend and he works with one of these, I'm

• 53:56Brian Preston?

  not going to say the name, but the custodians that do financial, do financial planning and charge an asset under management fee. And I was like, are they looking at your, your property and casualty? Are they looking at you? Are you doing a tax projection or anything? It's like, no, they only do my investments and they, they tell me they can't do anything outside of what they manage. And I'm like, is that even financial planning? What they're doing for you? It's investment. And it sounds like they're just managing your money. So to just be careful with that. There is a better way to do money. That's why we share so much, you know, we try to give you the ins and outs of this thing. So we agree. I mean, we probably jump in on the chorus when Ramit and others are kind of trashing financial advice like, yeah, that's probably not great financial planning. But if you actually see what

• 54:37Brian Preston?

  is really going on behind the curtain, it's a little different and it just hits differently. And you kind of know that, and I think that's where we're going probably with all the AI stuff, too, is that, you know, the robots are going to get really good. But then you're gonna be like, is that really where I should save my money? Or is maybe some personalization okay on that?

• 54:58Speaker 03

  Love that.

• 54:59Speaker 04

  Yeah.

• 54:59Speaker 03

  I don't know if you know this, a good friend of ours just popped into the chat. Did you see that? Did you? Are you aware?

• 55:06Brian Preston?

  So is it true that the Humphrey baby is here? Because I think that everybody loved it. I said, so talk to us about baby Humphrey. And what's funny is Humphrey, because I tried to do prep when we had Humphrey on and the story told was not any of the prep. It was the coolest thing. I had no idea. I'm realizing a lot of these content creators have really cool parents and Humphrey is definitely one of them. His father, you know, flying unmarked planes for the CIA.

• 55:31Speaker 03

  No, no, don't tell him. If you don't know what he's talking about, you need to go make sure

• 55:33Speaker 04

  you go watch it last week's live stream.

• 55:35Speaker 03

  See what I did there?

• 55:36Brian Preston?

  See, I'm good. I just tell it all. I just lay it out there for you. But welcome Humphrey. We always love it when we have friends show up like that.

• 55:42Speaker 03

  Oh, that's hilarious.

• 55:44Speaker 04

  Incredible.

• 55:45Speaker 03

  It is a great episode. I think we have some more. I think there's more Humphrey content to come, both his channel and our channel.

• 55:51Speaker 04

  Subscribe to Humphrey Yang's channel and to this Money Guy Show channel because there's more coming pretty soon, actually.

• 55:57Speaker 03

  Very soon.

• 55:58Speaker 04

  Very soon. Drew H, if you would like a Money Guy Tumblr, just email [email protected].

• 56:06Speaker 04

  All right. Next question is from just Josh and ya. It says, is there a certain level of wealth?

• 56:13Speaker 03

  Time out.

• 56:15Speaker 03

  Time out.

• 56:15Speaker 04

  What?

• 56:17Speaker 03

  My wife likes to read to our kids.

• 56:19Brian Preston?

  Right.

• 56:20Speaker 03

  Me, not a big reader. I don't mind admitting it.

• 56:23Speaker 04

  You don't like to read your kids?

• 56:24Brian Preston?

  Wait, I hear the successful people have to read like 12 books a year.

• 56:27Speaker 04

  Darth Vader.

• 56:28Speaker 03

  I've read 12 books since I got out of high school.

• 56:32Speaker 03

  My wife is a great reader, though. So my kids want us to like read stories or whatever. And so I'm like, uh, this moose, this moose belongs to me.

• 56:41Brian Preston?

  No, your kids are reading like legit. They came by the other day and they had like all these autobiographies and stuff like that. I was, I was really impressed.

• 56:47Speaker 03

  They are way, way cooler than I am. Here's what I'm saying, though. My wife is what I call a vocal inflection reader. Meaning when she reads, she's gonna do the, the accents and she's gonna do the excitement.

• 57:01Speaker 04

  Oh, yeah.

• 57:02Speaker 03

  And what I just heard from just Josh, Rebe is that kind of mom. I bet you and Rebe, you are an accent mom reader, aren't you?

• 57:09Speaker 04

  Not accent. But yeah, like I'm gonna have fun with it. I'm gonna sit and read a book.

• 57:15Speaker 03

  When you read, when you used to read to your kids, did you like change your voices and stuff?

• 57:19Brian Preston?

  Yeah, I think so. I mean, I think I, right now, if you put a kid's book in front of me, I probably would do it, jump into that motion.

• 57:26Speaker 04

  I wonder if there's a correlation, cause I think Brian and I were both theater kids in some respect.

• 57:31Brian Preston?

  I was a theater kid.

• 57:32Speaker 04

  There's some element of that. So it's just like, you were not. That's why, that's why, very small sample size, but.

• 57:40Brian Preston?

  Jac, you, we've all seen Revenge of the Nerds.

• 57:45Speaker 03

  What's funny is, no, we have, me and you have seen, you, a lot of folks in this room have not seen Revenge of the Nerds.

• 57:49Brian Preston?

  I mean, Bo in the Alpha Betas or whatever, he's going around and putting everybody in the locker. I'm the one over there, you know, hanging out with the violin kids.

• 57:57Speaker 03

  That's hilarious.

• 57:59Speaker 04

  Okay, do you want to read just Josh?

• 58:00Brian Preston?

  Yeah, let's get back on track here.

• 58:04Speaker 04

  Just Josh and ya says, is there a certain level of wealth where it makes sense to start using a charitable giving fund?

• 58:11Brian Preston?

  Oh, yeah.

• 58:12Speaker 04

  Or can that be done at any point in your financial journey? And I know this is one of those like, I don't know, kind of like behind the scenes things that gets you guys really excited. So can you give us a little insight on charitable giving funds?

• 58:25Brian Preston?

  Something that it requires a little of your, I call it a, a bowling point, um, indicator that you're doing well. Is because what makes these charitable giving funds, these donor advised funds, um, really powerful is that if you have, appreciated holdings, it can be stocks, it can be mutual funds, it can be anything that's appreciated in your brokerage account. You can now, if you're charitably inclined, you can start giving these appreciated holdings. If you're charitable minded to the charity from these donor funds and then you get a tax deduction for the market value, the charity gets use of that market value, whatever the market values, because they're going to liquidate it. And you never have to pay income taxes on that appreciated

• 59:10Brian Preston?

  holdings. So a lot of you, I mean, I have, I just did a transaction last week and the holding that I did had an appreciation of 166%.

• 59:19Speaker 03

  It's amazing.

• 59:19Brian Preston?

  So you think about what I was able to give to this charity is, I mean, it's amazing what I was able to give and I'm going to get a tax benefit. They're going to get great use of this and then I'm going to basically walk away from all that appreciation and paying income taxes on it. So it is, but it's not one of those things. I think, you know, it is one of those things where if you're brand new in the journey, you'll get excited about finding out about this thing, but the, it just might not have the juice yet until you have appreciated holdings. Do you disagree or disagree? Agree. I should have said that better.

• 59:56Speaker 04

  Do you disagree?

• 59:57Speaker 03

  Do you disagree?

• 59:57Brian Preston?

  Or do you disagree? Because you always say agree, disagree, or want to fight.

• 1:00:01Speaker 03

  I don't want to fight you. You're too fit now. I, I agree with you completely, but his question was, is there a certain level of wealth where it makes sense? I do not think it has to be level of wealth. And I wrote down sort of three different times that we see people do this. One, you had already mentioned, if you have any highly appreciated securities, even if you hate, I mean, I bought this stock for $500 and it turned into a thousand. Well, that's a great stock, or that's a great holding that you could give to a donor advised fund. You could get the deduction and you can essentially wipe away those capital gains. So obviously gifting appreciated securities makes a lot of sense. The second time where a donor advised fund or charitable giving account can make a lot of sense is if you're someone who needs to do charitable bunching. Meaning, hey, I give, you know, like I give, I'm going to make up a number, $10,000 to charity

• 1:00:46Speaker 03

  every year, but because the standard deduction is so high right now, every year I just take the standard deduction. So even though I'm giving to charity, I'm not really getting a benefit from that. Well, if you fall into that category, it might make sense for you to say, hey, instead of me giving 10,000 every year, I'm going to put $20,000 into my charitable giving fund this year, and I'm just going to do that every two years. So one year I'll take the standard deduction and the next year I itemize and the next year standard, next year itemize. So if you need to bunch a donor advised fund or charitable giving account is great for allowing you to do that to actually get a tax benefit. And then here's the third, and this one's not as often talked about, but we see this with a lot of our clients. A number of people like to give to a lot of charities. I give to 25 different charities throughout the course of the year.

• 1:01:30Speaker 03

  Well, it's really hard to track down, okay, where's my giving receipt? And I gotta get this and I gotta list them all. If you're someone who gives to a number of different organizations or supports a number of different causes and you would like to consolidate what you have to keep track of, a charitable giving account is great for that because all you have to track is what goes into the charitable giving account. Even if you distribute it across 100 different organizations, all you have to report in your taxes is the one amount that went in. So it's a great tool for consolidation when it comes to charitable giving.

• 1:01:59Brian Preston?

  And also, it is interesting that you can, if you're doing the bunching like Bo was talking about, you control when you distribute it later to the charity. So if you know your charity is kind of, you know, like think about your church and you're bunching every, every two years. It doesn't mean you're only making contributions to your church every two years. You could actually still spread out your, your distributions to them so that their, their cash flow is not impacted either. It's a really, it's a powerful tool for financial mutants once you get in. And what I like is because initially you see a lot of charities, they'd say, hey, if you have appreciated stocks, let us know because they've set up their own brokerage account. But if you had mutual funds or ETFs, they were kind of, not really ETFs, but mutual funds for sure, they had trouble.

• 1:02:44Brian Preston?

  But I loved when these donor advised funds came around because a lot of, I'm an index investor and all of a sudden, now all of a sudden, these index funds you could even give to charity much easier through these, these donor advised funds. That's, it's a win-win, really cool thing.

• 1:02:57Speaker 03

  Love that.

• 1:02:58Speaker 04

  Love it. Well, just Josh and ya, if you would like a Money Guy Tumblr, just email [email protected]. I love what's going on over at moneyguy.com. So if you haven't been there recently, head over there, see all of the content that we've got.

• 1:03:13Brian Preston?

  Have we launched the new stuff, like the new organization stuff in there? Is that still not live yet? Like on the website, you know how we've been working the background for months and months and months and months? Is that live yet or is that still coming?

• 1:03:24Speaker 04

  Yes, and I was actually just making a mental note to get some cool visuals of it so I could tell them about it next week. But since you are our loyal fans, yes, there is some really cool stuff up there right now that we have finally launched, a little soft launch, that is going to help you find things even more efficiently. We have really common topics, trending topics that you can sort by, and it will show you all of our ultimate guides, resources, and full episodes that are covering those topics. That should help you search and find content that matters to you even faster and better. So definitely go check that out. I'll be talking more about some of the stuff that's going on on the website in the coming weeks and months. But moneyguy.com, definitely go check that out because we are

• 1:04:07Speaker 04

  always improving it and trying to make it the most valuable resource that it can be for our financial mutants, because we really appreciate you guys and we're on this journey with you.

• 1:04:17Brian Preston?

  I get excited because I know when we do studio tours and all these people are like, "Holy cow." And I'm like, "Yeah, it's, um, Bowen, I don't know how to turn on any of this stuff anymore." So I mean, that's a good, and it's kind of that way. I love that about the website, too, because in the past, it was just a place to kind of just compile and keep a historical record of our, of our content. But it has gone so beyond that now. Now we've become very deliberate that hopefully you guys in the audience, too, you know that this is part of your wealth building journey. I mean, I was in Costco this weekend, and there I fell prey to going over and talking to one of these kiosk workers who were selling something that I've seen on TikTok. And I was like, "Oh, my God, this is actually, I can see the product in person." And I'm not going to tell you what it is. It was embarrassing.

• 1:05:01Brian Preston?

  But, um, anyway, I was talking to this key, I'll tell you all off air later. But, um, and so this was, she's like, "Oh, so what do you do for a living?" And I don't tell people like YouTube. So I just say like, "I'm a financial planner." And she's like, "Oh, well, my brother needs a financial planner right now." I'm like, "Okay, your brother needs a financial planner. He's not going to hire somebody that you helped fit this thing for." So she's like, "Well, where do I go now?" I was like, "Just if you go to Money Guy, just go to moneyguy.com, it'll be good." And she goes, "So I just tell them to go to Money?" And I was like, "Yeah." I think she thought I was... Being weird.

• 1:05:33Speaker 03

  Why did you say I'm a financial advisor?

• 1:05:36Brian Preston?

  What am I supposed to say, Bo?

• 1:05:37Speaker 03

  Anytime someone says, hey, what do you do for a living? I say, we have a personal finance YouTube channel. That's what I say.

• 1:05:42Brian Preston?

  That sounds so, everybody wants to be on YouTube. So I don't like to tell people I'm on YouTube.

• 1:05:46Speaker 03

  Oh, I don't want to, I don't want to tell people the one thing that everybody wants to know and wants to know more about.

• 1:05:52Brian Preston?

  I don't tell, I don't tell people.

• 1:05:54Speaker 03

  You're right, everybody's dying to hear that you're a financial advisor. And what do they think? Oh, either one, he's going to sell me something or two, my brother's uncle's brother in law wants to come talk to you. That's all it ever is.

• 1:06:03Brian Preston?

  Okay, I don't even know why I brought up Costco at this point. I shouldn't have done that. I should, I should be much better at saying, hey, give us a little bit of today. And if you just put something to work, it's going to help you build your great, big, beautiful tomorrow. This is the worst closing in history. I'm your host, Brian, go to moneyguy.com/resources, trying to salvage it. Joined by Mr. Bo Hanson, the rest of the content team, Money Guy team, out.

• 1:06:27Speaker 03

  The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss.

• 1:07:00Speaker 05

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