Is the S&P 500 Overweighted? Becoming an Accidental Landlord? Can We Retire Early and Move to Japan? (Money Q&A)

Overweighted S&P 500. Accidental landlords. Early retirement in Japan. 👉 Join Andrew's FREE Masterclass The Portfolio Pyramid: https://event.webinarjam.com/q05p7/register/q05p7b65?webinar_id=24 What You'll Learn in This Episode Whether the S&P 500 is actually diversified when 39% sits in just 10 stocks A Vanguard phishing scam that almost fooled Andrew's own wife and how to spot it How a 33-year-old with $800K invested can move to Japan and still retire wealthy Why a cash flow negative rental property is a liability no matter what the appreciation looks like How to factor a military pension into a retirement plan and whether a spouse even needs to work Why an 18-year-old with $20K invested could have $2.3 million without adding another dollar How to build a retirement plan around a future teacher's pension when you are just getting started Start Here Join the community built to help you master your money, stay accountable, and reach financial freedom. 👉 Try Master Money Academy FREE for 7 days today! https://mastermoney.co/join/ 👉 Join Andrew’s FREE Investing for Beginners Masterclass https://event.webinarjam.com/q05p7/register/0o8z9io?webinar_id=21 👉 Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! https://expert-hustler-605.ck.page/6aa7bb9a79 Partner Deals Indeed → Get a $75 sponsored job credit http://Indeed.com/personalfinance Policygenius → Free life insurance quote http://policygenius.com Chime → Get more rewarding fee-free banking at https://www.chime.com/PFP Monarch Money → The all-in-one financial tool + Get 50% Off at http://www.monarch.com/PFP Shopify → Sign up for your one-dollar-per-month trial today at http://shopify.com/pfp Wayfair → Up to 60% off | MEMORIAL DAY WAREHOUSE CLEAROUT http://wayfair.com DeleteMe → 20% off with code PFP https://joindeleteme.com/PFP20/ Tool/s Mentioned The Retirement Calculator https://expert-hustler-605.kit.com/e6b8d4f8a2 Compound Interest Calculator https://expert-hustler-605.kit.com/aefaaad27e Book/s Mentioned Die With Zero by Bill Perkins Watch Next This is THE BIGGEST RISK to Your Retirement Portfolio https://youtu.be/7gXKEy66-bA The Insurance Crisis Nobody Is Talking About (With Bob Litterman) https://youtu.be/gBuIOQKQgFM He Lost $50 Million In Real Estate Then Got Rich Again (With Rod Khleif) https://youtu.be/rKuN2ZcUYWQ How to Become a Stealth Wealth Millionaire (With JC Rodriguez) https://youtu.be/Y83BTQONiJc High Income Tax Strategies, Selling a House to Invest in the S&P 500, and Converting $100K to a Roth IRA (Money Q&A) https://youtu.be/NR-LlTqb7Cs Connect with Andrew Instagram → https://bit.ly/Skool-Instagram TikTok → https://bit.ly/Skool-TikTok Facebook → https://bit.ly/Skool-Facebook Podcast → https://bit.ly/Skool-Podcast Youtube → bit.ly/Skool-Youtube Newsletter → https://bit.ly/Skool-Newsletter Website →⁠ https://mastermoney.co ⁠ X → ⁠https://x.com/mastermoneyco LinkedIn →⁠ ⁠⁠https://www.linkedin.com/in/andrew-giancola-45027b340 ⁠ Question for you: Which of these three situations sounds most like yours right now: overconcentrated portfolio, accidental landlord, or dreaming of retiring somewhere else? Drop it in the comments. 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.

• 0:00Andrew Giancola?

  When I started the Personal Finance Podcast, I had no idea how big it could become. I just knew I had something I wanted to share, so I started putting it online. And looking back, I definitely wish I would have started a decade earlier. One of the horror parts about building something online, though, is making it look professional. A website used to mean hiring a developer, figuring out design, and potentially spending thousands of dollars. In fact, on my website, I spent tens of thousands of dollars. That's what impressed me when playing around with Hostinger's AI Website Builder. I told it what kind of website I wanted, and I built the first version in minutes. No coding, no designer, or developer needed. And Hostinger doesn't stop at launch.

• 0:44Andrew Giancola?

  Their AI can help with SEO, website copy, email marketing, and more. Plus, your domain, website, email, and marketing can all live in one account, with plans starting at just $3 every single month. Hostinger builds your vision step by step. Create your website today. Go to hostinger.com/pfp and use code PFP for 10% off now. Now, if you watch this podcast on Spotify, Apple Podcasts, or YouTube, you've probably noticed the wood slat walls behind us. We wanted this podcast set to look professional, but also not be a project that was overly complicated. And I found these slat walls on Wayfair, and it completely changed this space. And it's now basically the background that you see in every single podcast

• 1:29Andrew Giancola?

  or piece of content that we record. And that's one of the things that I love about Wayfair. You can shop thousands of products across different styles and budgets, use customer photos and reviews to see how things actually look in real homes, and find something that fits your space. They also have Wayfair Verified Products that are hand-vetted by product specialists using a 10-point quality inspection. And with more than 20 million verified 5-star reviews, you can feel a lot more confident about what you're ordering. I've used Wayfair for this studio and our home, and I absolutely recommend them for your space. So transform your space with pieces that hold up to real life. Join Wayfair Rewards today and get 5% back on every single purchase.

• 2:14Andrew Giancola?

  Head to wayfair.com or shop the Wayfair app for all things home. That's W-A-Y-F-A-I-R.com. Wayfair: Every Style, Every Home.

• 2:28Andrew Giancola?

  On this episode of the Personal Finance Podcast, are index funds diversified? We're going to dive into it in this Money Q and A.

• 2:45Andrew Giancola?

  What's up everybody? And welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of mastermoney.co. And today on the Personal Finance Podcast, we're going to be talking through your questions on this episode of Money Q and A. If you guys have any questions, make sure you join the Master Money Newsletter by going to mastermoney.co/newsletter. And you can respond to any of those emails that we send out every single week and ask your question there. You could also ask questions down below on Spotify, Apple Podcasts, YouTube, or wherever you are watching this in the comments section. And we will try to answer as many questions as possible on these Q and As. We get tons and tons of questions from each and every single one of you.

• 3:30Andrew Giancola?

  And I am really excited to dive into this as we go into each one. We're going to be talking about how to factor in pensions into your retirement plan. We're going to be talking through a couple who became accidental landlords and what they should do with their property. We're going to be talking through, is the S and P 500 overweighted? Because the top 10 holdings are really over concentrated. I'm going to talk through how a stay at home mom can think through contributing financially and adding in some income sources. So this is action packed. I think we got eight or nine questions in this episode. So I am really excited to dive deeper. Also, we're going to go through a Vanguard scam that has been going on over the course of the last couple of weeks. I want to make sure all of my folks who are listening, who have Vanguard are aware of this scam because it even almost got me as someone

• 4:13Andrew Giancola?

  who is always looking out for those financial scams. So I want you to make sure that this is something that you are aware of as well. So this by far is a jam packed episode. I don't want to waste any more time. Let's get into it.

• 4:28Andrew Giancola?

  All right. So the first question that we have today actually came from a member of Master Money Academy and shout out to Alyssa in Master Money Academy. She asked this question about a month or so ago, talking through the S and P 500 and is the S and P 500 overweighted? Now, this is a hot topic in the index fund and ETF category because we are seeing massive shifts in the top 10 holdings of the S and P 500. And so this is something I want to spend a little bit of time talking through because I think it's very important for you as listeners to understand what is going on here. Now, in the age of AI, there are a big, big difference between what used to happen over the course of the last couple of years, and I will give you the statistics on this shortly, but also what's happening with the top 10 holdings of the S and

• 5:13Andrew Giancola?

  P 500. We are seeing the top 10 holdings in the S and P 500 taking over a very large position in our index funds and ETFs. And to put this into perspective, at the time I'm recording this, it's about 39% of the S and P 500 is concentrated into the top 10 holdings. And so the question then comes up with a lot of folks, is this actually being diversified? Because I have 10 different stocks that are about 39% of the S and P 500. And so this can happen for a number of different reasons. One of the reasons why it's shifting right now is because of the AI boom and the AI surge that we are seeing in the stock market, where if you look at the top 10 holdings

• 5:54Andrew Giancola?

  in the S and P 500, for the most part, it is going to be companies like Nvidia, Apple, Tesla, Amazon, all these different companies that are highly concentrated in AI. And they are companies that are really betting the form on AI. And so I want to go into the stats of what is exactly happening right now so that you have an understanding of what's going on, some of the things that you can do about this if you are worried about it. And then we'll dive deeper into how to think about this and how I'm thinking about this with my own personal portfolio. So just a couple of months ago, about a month ago, when this first question first came up, the S and P 500 was overweighted with the top 10 holdings of about 41%. It has then come down to about 39%. And this is a big

• 6:37Andrew Giancola?

  In 1990, the 10 largest companies by market cap made up roughly 19% of the S and P 500. And by the end of 2000, the top 10 accounted for about 23%, with index concentration peaking during the year at about 27%. But on average, it was about 23% for that decade. Now, the individual weight for 2026 is going to tell the story because we have Nvidia at 8.4%. We have Apple at 7%. We have Microsoft at 4.9%. We have Amazon at 4.1%, Alphabet at 3.6%, with a further 11.3% concentrated in the next five holdings. Now, this is a very important thing to note.

• 7:18Andrew Giancola?

  So the S and P 500 does have a lot of its holdings concentrated in the top 10. But let's look at VTI for an example. And VTI is Vanguard's total stock market ETF, where you're holding over 3,500 different companies. And so VTI is only slightly less concentrated. In fact, the top 10 holdings constitute about 32% of the overall fund. And so even owning an additional 3,500 companies, instead of the initial S and P 500's 500 companies, only drops your concentration from 39% to 32%. And so the tale of thousands of small companies doesn't make that big of a difference. But what about QQQ?

• 7:59Andrew Giancola?

  Now, the QQQ should be much more concentrated than some of these other holdings. QQQ is the top 100 companies in the US. And so obviously, the concentration is going to be even higher. In fact, the top 10 holdings make up about 46.99% of the fund. And if you hold QQQ, the NASDAQ 100, then you're going to see just a much more concentrated position as you start to think through this. And so the risks could be real for you, depending on what your risk tolerance is. And I'm going to talk about three potential risks that could be in play. I also, just so you know, before we go through these risks, am not that concerned about this, and I will talk about why in a second. First is single stock shock risk is genuinely higher than it used to be.

• 8:43Andrew Giancola?

  Nvidia, if it has a bad day, it can genuinely Move your index fund or ETF. It can shift what your returns are in that given day. Now, we as long-term investors and most people listening to this podcast are long-term investors for the bulk and the majority of your portfolio. We as long-term investors should not worry about day-to-day, week-to-week, or even month-to-month on what is happening with your individual stocks. But I just want to make note that these big companies, if AI has a bad day, it will shift the S and P 500. But number two, is correlation risk. And so the thing about this is, back in the day, in the 90s and even in the early 2000s, the top 10 holdings in the S and P 500 were all not correlated.

• 9:28Andrew Giancola?

  Right now, what we are looking at, and I think this is the biggest risk overall, is that all of these stocks, for the most part, are correlated. They're all correlated to tech. They are very tech-heavy and they are very integrated with AI. And so because they're all correlated, usually when an industry has a bad day, they all have a bad day, which will mean your portfolio could take a hit, depending on what happens there. But third, the historical pattern is worth flagging on this. So historically, high concentration has tended to lead to poor forward returns in the S and P 500, and the current levels suggest a forward return estimate that is negative on some models. I don't care about that. Why? Because long-term, again, I look at the S and P 500 as a holding, and if I'm going

• 10:12Andrew Giancola?

  to hold this thing for the next 50, 60, maybe 70 years, if I live past 100, come on, AI, give me a longer lifespan, then we're going to be looking at something where I just want to hold this long-term. I want to buy a piece of the US economy, the 500 largest companies in the entire world, and I want to make sure that I am holding those long-term. And so for me specifically, that is something I want to look at. Now, what are people overweighting in this argument? Because those are three risks. They're three very real risks and things that we do want to factor in. But one is the word concentration. I think a lot of people correlate the word concentration with something like bubble, but concentration is not the same thing as overvaluation. The top 10 holdings in the S and P 500 are the top 10 holdings because they generate an enormous amount of revenue. They are solid.

• 10:57Andrew Giancola?

  Fantastic companies and fantastic businesses that I would like to hold long term. Concentration, number two, also self-corrects. This is why I love index funds and ETFs. Because if a company starts to not do well, if a company is in the top 10 holdings and it just completely tanks, then it's replaced with another company that is doing very well. And so index funds and ETFs, they automatically self-correct based on what the market is doing. Now, if the entire market is down, obviously your index fund and ETF is going to go down. You're going to have good years and you're going to have bad years. But what I love about this is they're self-cleansing. They cleanse themselves. And so if a company struggles, it is out of the S and P 500 and a better company comes in. And for the long-term dollar-cost average investor, if you're taking a portion of your paycheck every single month,

• 11:42Andrew Giancola?

  you're putting into your Roth IRA or your 401K or your HSA or your taxable brokerage account, day-to-day concentration numbers matter a lot less than someone who is looking at day trading or looking at options, or they're looking at specific things that they are trying to do to make this work. And so what can you do about this? What are some of the things that you can think through if you want to reduce this concentration? For me, not a huge deal, but there are some things that you can do. One is you can add in some more international funds. If you're worried about the S and P 500 concentration, you can look at international funds. You can look at something like a world index fund. They now have world index funds that I think could be very interesting. But again, you want to look at the top holdings of those funds and compare,

• 12:25Andrew Giancola?

  are these companies that I want to own in comparison to the S and P 500? And many times that's the evaluation that I make. And when I look at that, I'll compare Nestle to Nvidia, for example. And I'm like, well, I'd rather own Nvidia as a larger portion of the concentration. And so this is why I do that. But some of you are very bullish on international investments. And if you are, you can add in international investments to your portfolio. Another thing you could do is add in something like emerging markets. And emerging markets can be another concentration of international funds if you wanted to go that route. You can add in a small-cap index. You can add in a mid-cap index. You can add a concentration of other industries. So let's say, for example, you want to own a bunch of equities, but you're like, I don't want to be so

• 13:07Andrew Giancola?

  So heavily concentrated into tech, you can own an ETF that holds other equities that are in the healthcare industry, or holds equities in real estate, or holds equities in other industries that are going to help you further diversify. Again, whenever we are worried about concentration, what do we do? Diversify, diversify, diversify. Diversification is the name of the game. Anytime you are worried about over concentration, and it is the thing that I always go and look to if I do start to worry about that. Everyone's risk tolerance is different. Your boy here is really concerned about getting the highest possible returns I can while passively investing, because I'm not going to try to beat the market. I am just going to try to become the market. And so this is something where if you are worried about this over concentration,

• 13:51Andrew Giancola?

  just looking at some additional funds that you could add to your portfolio that do not have this tech-heavy asset can be something to consider. So that is how I look about this. I hope that is helpful for a lot of you out there. Sure, the S and P 500 is at its highest weight overall. And could this get to somewhere where we see it just continue to climb as we have over the course of a couple of decades? I don't know. That's not something I have a crystal ball with. But if history repeats itself, we can see a lot of these companies are getting bigger and bigger, and they're getting bigger very quickly. And so because of that, we can see a shift. Now here's something else. There's some IPOs coming up over the course of the next couple of weeks. At the time of recording this, we have SpaceX coming up in the next couple of weeks. We have Anthropic coming up in the next couple of weeks, which is Claude. We have OpenAI, which is ChatGPT coming up.

• 14:36Andrew Giancola?

  And so all of these companies are going to be massive, massive benefactors, and probably will enter the S and P 500 over the course of the next couple of years. Now again, when you are a new IPO company, you cannot enter the S and P 500 for the first four quarters that you are a public company. You can enter the NASDAQ, so your QQQ stocks and your stocks that are holding the NASDAQ could have a big impact. But if you are holding stocks with the S and P 500, then they will not be as impacted right up front, because you can't enter the S and P 500 until you have been a company for four quarters and looking at those results over those four quarters. So make sure you note that as well. Those three companies that are entering the market will most likely End up in your index funds at some point in time over the course of the next couple of

• 15:21Andrew Giancola?

  years. But again, I don't have a crystal ball. They could enter the market and then all of a sudden they could have some problems within their businesses as well, which is the concentration risk of holding individual stocks. So I own individual stocks. It's not something I am saying to not own. There's a lot of them I am buying as of recent, but it is something that I think that you just need to understand what the risks are in comparison to just holding index funds long term. That is the name of the game. And for the bulk of my portfolio, it is index funds ETFs. I'm not trying to beat the market with a lot of those. So hopefully that is helpful. And let me know if you have any questions on that.

• 15:55Andrew Giancola?

  All right. The next thing I want to talk about here is this Vanguard scam that has been coming up over the course of the last couple of days. And so we got this actually in my wife's email originally got it first. And so she posted this into Master Money Academy, talking about this new scam email that's coming up that looks exactly like Vanguard. And so we'll put up image of this on the screen if you're watching on video so that you can see this. But there is an email that's going out for Vanguard customers that basically says, hey, you maxed out your IRA for 2025. And so my wife's name is Irene. So it says, congratulations Irene. Now that you've maxed out your Roth IRA for the year, be sure to check out other ways you can grow your retirement savings. And it is in the exact branding of Vanguard. It is in the exact way that they kind of show their,

• 16:38Andrew Giancola?

  their compound interest images that they always show at Vanguard. And this looks real. And she was about to click it because she was saying, hey, this says for 2025, we did this a while ago. Why is this popping up right now? And all of a sudden I said, hold on a second, let me look at it. And so we looked deeper into it. And all of a sudden we realized, oh, this is not real. Because when you look back at the email and the email was pretty close to being exactly like Vanguard. This is something where I don't know what happens when you click that button. But if they got you to log in or give your login information, I can imagine this could be a bad situation. So first, if you have friends or family who are part of Vanguard or who invest in Vanguard, somehow this is happening right now. I have contacts at Vanguard. I already sent this over to them. I'm

• 17:20Andrew Giancola?

  waiting to hear back from them. So I'll let you know or give you an update if something does happen. But just letting you know, first, watch out for this email. Because this is really important and you got to make sure that you flag this. Now, one thing to do is anytime you get a banking email, I don't care who it's from because this has happened to me with Chase as well. But anytime you get a banking email, I almost wouldn't click it through your email. Instead, go back and log through your banking portal or log through your brokerage portal and see what the notification is that way. Now, sure, if you open the email, there could be some things that happen there. But anytime you get a banking email, I would just avoid it at all costs. And especially if it's urgent, okay? Number two is never click the link. This is a genius way to do it, the way that these scammers are looking at this link.

• 18:05Andrew Giancola?

  Because it says, hey, you maxed out your Roth IRA. And if somebody did not max out their Roth IRA, they'd be like, what? What the heck are they talking about? Click and then all of a sudden, your brokerage opens, you log in and boom, they have your information. Really important to be mindful of that. So it's not just like urging you to do something negative. It's not saying, hey, somebody stole funds or did you wire this money? No, this said something positive. Did you max out your Roth IRA? Congratulations on maxing out your Roth IRA. That is a little bit of a mentality shift that I think is interesting. Number three is be suspicious of anything that wants you to act. Even if it's positive like this, be suspicious of that. And make sure you hover over links before you trust them. Again, that will show you the URL.

• 18:47Andrew Giancola?

  And if it's not vanguard.com backslash whatever, then that could be an issue too. Four is in reality, I would be looking at the sender address, seeing if it's real and making sure that's, that's a big thing. And then there's other things that you can do as well that I think is really important. Now, if you want this kind of stuff to happen less to you. If you want to make sure that you are getting less of these scammy emails because they do happen all the time and they're happening more and more. And again, a lot of times these are slowly starting to be one of those things where I'm moving through my emails really, really quick. I see one of those and now I'm kind of making a policy for myself. I'm not clicking banking emails anymore. I'm really not. I'm just going to go in and look at the notifications every time I log into my bank and see if there's anything there that I need to see.

• 19:30Andrew Giancola?

  And in fact, the reality is for a lot of these banking emails, they don't give you information that you really need to know anyway. Instead, you just got to kind of log in and make sure you understand what is going on. Now, if you want this to happen even less than you though, is I would, I would recommend removing your personal information. That means that there are these data brokers out there who collect your personal information, like your name, your address, your phone number, and all those different things. And if you Google your name, your address, or your phone number in quotations, you're going to see all this information pop up from all these different websites that are data brokers. And so if you want to get that information removed, which is one of the most tedious things to do if you try to do it yourself, then I would use a service called DeleteMe. So what DeleteMe does is they go in and get your personal information removed

• 20:13Andrew Giancola?

  from all those data brokers, so this doesn't continue to happen to you in this way, shape, or form. And so if someone gets access to a piece of your information, they can go to these data brokers and pull the rest. So DeleteMe removes it from all those different data brokers, so you can worry less about this stuff. And so if you go to joindelete.me/pfp20, that'll get you 20% off of DeleteMe there. And again, it's a service that I have been using for years and years and years now. We've talked about them for years on this podcast. One of the best services out there to give you a little more peace of mind surrounding scammers. I want every person listening to this podcast to never get scammed, and DeleteMe is one of the ways to make sure that you are protecting yourself. You gotta have a financial protection plan in place,

• 20:57Andrew Giancola?

  and DeleteMe is one of the core pieces of financial protection for me specifically. And so I hope you give them a try and check them out, because they are absolutely fantastic and one of the best services out there that I use. So if you guys got this email, let me know down in the comments below. I'd love to hear if you got this email. Did you click on it not even realizing that's what you were doing? And it asked you to log in, and maybe you were too lazy to log in, so you didn't. But let me know down below. Did you get this email if you're a Vanguard person? I want to hear it in the comments, because this is something we had a couple of Master Money Academy members state that they got this. And so I want to hear how many folks actually got this email. So really, really interesting. But if you have Schwab or anything else, make sure you're watching out for this stuff, so you don't get nailed.

• 21:38Andrew Giancola?

  All right, the next one, this is a fun one. I'm excited to dive into this. So this is from Kevin. So Kevin says, hi, Andrew. I'm trying to navigate a financial plan that allows my wife and me to make our dream move to Japan. Very, very cool. I am recently married with kids, potentially on the way, and I am making good money in the US working in tech, but would likely face a close to 80% pay cut once I move. I am 33 now, and if I stayed in the US, I would likely be able to hit my retirement number before 45, as I am continuing to move up in my role and compensation with $800,000 invested and saving 10K per month. What sort of things should I be thinking about when navigating this kind of transition? And what is the right balance between waiting and saving versus taking the plunge and

• 22:23Andrew Giancola?

  moving? So Kevin, this is a great problem to have. And first of all, this is such a cool idea. Congratulations on wanting to move to Japan. I think that's just so fun to have the ability and the dream to do that. And this is what money allows you to do. For everybody listening right now, money is the tool that allows you to get what you want in life. And this is exactly what I mean. Kevin is putting together a plan right now to have the ability for him and his family to move to Japan, because that is what his dream is. That's what they want to do. They want to spend more time in Japan. And so we're trying to figure out here, well, how do we do that? How can we think about this and make this dream a reality? And so for every person listening right now, this is so cool. And I think this is one of those things that you need to realize that you can do stuff just like this.

• 23:05Andrew Giancola?

  You've actually got free will, and you can use your free will with the more money that you have, the more freedom that you're going to have in your life. So Kevin, first of all, you're already winning with this math. If you have $800,000 invested at age 33, here's what this does, even if you never contribute another dollar, because I ran the numbers on this, I want you to hear about this. So a 7% real rate of return, like, let's be conservative here, we're planning out for retirement, you'd have roughly $1.8 million by 45, about $3.5 million by 55, and close to $7 million by age 65. That means your traditional retirement is essentially handled when you run the numbers like this, okay? So for anybody who wants to run the same exact numbers that I just did right there,

• 23:48Andrew Giancola?

  if you go to mastermoney.co/resources, we have a free retirement number calculator that you can run numbers like this on that, but that's where we're running these, okay? So what you've actually done... As you've gone through this and you have said, hey, I could potentially, depending on how much money you want to spend, become coast FII right now. So for anybody that doesn't know what coast FII is, this is where you get to a certain point in time in your life where you have enough money saved up or compound interest is going to do the rest of the work. So if you don't contribute more money going forward, compound interest will do it all for you. And so for Kevin, he's in a wonderful position that by age 65 could potentially have $7 million or if he only needed $3.5 million, could start drawing down that at age 55. And I want you to reframe the way that you're thinking about this, Kevin,

• 24:33Andrew Giancola?

  because now you don't have to choose between Japan and a secure retirement. You can have both. You can have it all because you set yourself up early on in life to have the ability to have this wonderful amount saved up for retirement. Now, the 80% pay cut is part two of this equation. And we want to make sure that we think through, okay, well, if I go to Japan, I take this 80% pay cut. What is going to happen here? Well, would that pay cut, if the 20% cover your costs of living in Japan? That would be the next part of this equation that I would want to be thinking through. Because if the cost of living in Japan is going to be lower, depending on where you live, like in Tokyo, obviously the cost of living is significantly higher. But in other parts of Japan, the cost of living is usually lower than the US.

• 25:16Andrew Giancola?

  And so we want to think through, would this cover my cost of living? If not, what are some of the things that I could do to help cover this cost of living? Well, we can build up our portfolio over the course of the next couple of years. But I would come up with some sort of Japan budget. Now, break down this budget by what you think it would cost. And you can utilize or have some conversations with people. It's a lot easier to find this information than it used to be. Where if you say, hey, I'm targeting living in this location and living in this location costs X amount of dollars per year for me and my family, depending on how many children we have. And so you're thinking through this process that way. Now, if your new salary covers your new life and you already have the money on hand for retirement that could be coast FII, then this is a really good position to be in because your retirement could be covered.

• 26:01Andrew Giancola?

  And then you just need that 20% to cover you in Japan. And so that is one way to look at this and having the flexibility available. Because you're so young, you can do some cool stuff with that. Then if you decide, okay, well, I want to increase my income here in Japan. Maybe you want to start an online business because you work in tech or you want to do something, you know, along those lines. Could be some cool stuff that you could do in Japan by just, you know, making some more money on the internet. And then three, I would define what the number needs to look like before you move. So if you want to retire by 45, for example, like you mentioned earlier, and you're on track to be able to do that, then as you start to progress through life and as you start to think through the next couple of years, you could say to yourself, okay, well, what does this cost by number need to get to

• 26:44Andrew Giancola?

  for me to be able to live out my dream and cover some of the living costs in Japan? Maybe you need to supplement some of those living costs. But then in addition, you can also get to a point in time where you are really on track to be able to do this. So let's say by age 37, you feel as though, okay, I'm going to save an extra, you know, $100,000 per year over the course of the next five years. And so you have an extra $500,000 that you put into the market. Maybe it grows to 1.8, 1.9, 2 million bucks by the time you reach that age, depending on what the market does over the course of the next five years. And so you're sitting there at that point in time, having the ability to have those funds available and working with the 20% to cover your living expenses. Again, if that 20% covers your living expenses, you're in a really, really good spot.

• 27:27Andrew Giancola?

  And then the kids timeline is a real, real interesting component to this. You can look through what the cost of living with having kids in Japan is going to be. And if that shift is dramatically cheaper than in the US, then that is also going to help you with your equation as you start to think about this. And so what I would recommend is kind of getting over the psychology of this is the harder part. Because when you start to think about this, you're saying to yourself, well, what if I'm missing out on compounding years? Or what if I make a mistake in the numbers or the math? And that's something that we have to be realistic about. And so as we start to think through this, I would say first, work on the psychology. What are the reasons why you want to go there? What are the reasons that are holding you back? Do you feel as though you're going to have enough in retirement over the course of the next couple of years?

• 28:11Andrew Giancola?

  Those three things alone can help you solve this equation. If you actually have the math on hand and if you actually go through this, it's going to be black and white right in front of you. And then all you have to do from there is take the leap. Taking the leap is a lot easier said than done. And so those are some of the things that I just want you to make sure that you're thinking through. Also, if you decide you go to Japan and you're like five years down the line, you're like, actually, I don't want to do this. Do you feel as though you could come back to the US and start working back in tech again? If you do, and you feel as though you can do that, then you have nothing to lose when it comes to taking that leap of faith, especially in the position that you're currently in right now. You can come back, find a job in that industry, or if you work in a similar industry over in Japan, that means you wouldn't have any gaps in your resume when it came to tech. So you could even do that for the first couple of years, just to hedge or protect

• 28:56Andrew Giancola?

  against maybe you not liking living over there. So that's another consideration when you're thinking about this on the career level. So here's what I would do. One is I would run the numbers on how much you want in retirement. If you feel as though you're on track to do that, and you are willing to even have coast fine in place, that'd be really, really powerful. Number two is run the numbers on the cost of living in Japan. Let's say the 20% only covers half of your cost of living. Well, how are you going to supplement the rest of the income? That's going to be question number two. You can either stay longer in the US and have enough money on hand to supplement that extra 20%, while the rest of your portfolio compounds via coast fine. Or secondarily, you can make the move and figure out if you can make more money in Japan

• 29:39Andrew Giancola?

  once you get there and kind of test it out for the first couple of years. I would probably go with option one over option two when I'm thinking about that. But that is something you could do. And then number three is I would get over the psychology. I know this is tough, but the psychology of making the move, I think that is one of those things. If you are dreaming about this, and you really want to do this, you should go for it and kind of set the timeline of when it's going to happen. Is it going to happen at age 37? Is it going to happen at age 35? When do you want this to happen? And how do you want to think about this? Now, if you feel more secure because you reached age 45 and you feel as though then you kind of have your life established and you understand, you know, how many children you're going to have and what it's going to look like. There's nothing wrong with that, but just making sure that you are doing what you want in life. There's a book called, if you haven't read it yet, called Die With Zero.

• 30:22Andrew Giancola?

  I would highly recommend that you read it because this is going to help you reframe the psychology side of this equation where losing out on those really valuable early years. When you're in your 30s, maybe you want to spend more time in Japan because you want to do more active things there and you want to be able to kind of engrain you and your family and the culture and do some cool stuff. Well, if that's the case, you know, doing this earlier Rather than later, there's nothing wrong with that. And I think that's a really, really powerful move. So again, I am really, really excited for you. Let me know what you decide to do because I really want to hear more about this. I think this is a very cool way to spend money and a very cool way to use money as a tool to get what you want out of life. So congrats to you and your family. Super, super excited and congrats on getting married to you. I think that's absolutely wonderful.

• 31:06Andrew Giancola?

  All right. The next question is from Amanda. So my husband and I accidentally became landlords when his job required us to move. We bought our house for $300,000 and currently owe about $289,000 at 5.6%. We currently rent it out for about $2,275 a month at a small loss, though tenants may renew at $2,500. We think we could sell for around $350,000, but may owe capital gains. We have about $38,000 in student loans at 8.99% and $7,500 on a car loan at 8.59%. Long term, we want to build a real estate portfolio. Should we sell to eliminate the debt or keep this as the start of our portfolio?

• 31:50Andrew Giancola?

  So Amanda, before you decide anything, I want to kind of fix one assumption in your question, which we will talk through. A lot of you listening right now may have become accidental landlords. This happens to a lot of folks out there where you have to move very quickly for a job. All of a sudden you have the house on hand and you don't know what to do next. So you decide, okay, I'm just going to rent this out and test out this real estate thing. So so far, Amanda, you, it sounds like you are enjoying the real estate process because you want to be landlords in the future. So one big thing that stands out right now in your situation is that you are cash flow negative. I am not a fan whatsoever of any real estate investment being cash flow negative. And so you have something actually very powerful right now, as long as you have lived in that home for the last two to five years that I want to point out. Because you moved for a job and this was your primary home,

• 32:35Andrew Giancola?

  you likely still qualify for the home sale exclusion. Now, if you haven't looked into this yet, I would highly recommend that you look into this. And if you have a CPA in your corner, you could talk to them about this as well. So if you live in that home for two of the last five years, you have the opportunity. To not pay capital gains on this money all the way up to $500,000. So in your specific situation, if your gain is roughly 50 grand, you wouldn't pay capital gains on the profits on that money. So you wouldn't have to worry about the capital gains if you live in the home two out of the last five years as your primary residence. Now, there's even a partial exclusion specifically for job-related moves if you don't quite hit the two years.

• 33:18Andrew Giancola?

  So for you saying, hey, we may own capital gains here. That may be a non-issue because there is that partial exclusion, but it is time sensitive. Okay. So starting off, I want you to look into that first. Number two is run the actual net proceeds number. So I did a little quick math here, back of the napkin math, just to see where we would land on this. So let's say you sell at $350,000. You pay off the $289,000 mortgage and you take off about 6% in selling costs. So that'd be about $21,000. If you can find an agent or someone to sell you this home for even less than that, great. If you can find somebody that does 2% or even 1%, some agents do that now, even better, which leaves about $40,000 left in your pocket, which is likely with little to no tax owed on this overall.

• 34:01Andrew Giancola?

  So if you did all that math and you had $40,000 left over, let's look at this for a second. Cause then all of a sudden, we have a couple of pieces of debt here that is high interest debt that we want to get rid of, obviously. So you have 38,000 in student loans at 8.99%, which would be my highest priority in this situation. You also have $7,500 in the car at 8.59%, which means you have about $45,500 in high interest debt that you are looking to get paid down. You want to get rid of it. Obviously that's why you're kind of talking about this. And so paying off the 9% debt is a guaranteed 9% rate of return if you do this. So you sell the home, okay? You pay no capital gains on that because you figured out the exclusion. And if you only can get a partial exclusion, that's also something to look into.

• 34:44Andrew Giancola?

  But let's say you have that $40,000 available. All of a sudden, you can take this $40,000 and you have a guaranteed 9% rate of return if you pay off that debt. If you get rid of that debt completely in student loan debt where you don't have to worry about it anymore. And so selling wipes out nearly $40,000 of that 45. $5,500 in high interest debt that you have on hand. Now here's the next part of this equation because you're saying, well, I want to be a landlord long-term, which is absolutely a wonderful thing. And I commend you for thinking through all this stuff because this is absolutely amazing. But if the rental property is losing you money every single month, this is not an investment. It's a liability. And so for me, I'm saying to myself, I will never hold a real estate asset that has negative cash flow. Why?

• 35:26Andrew Giancola?

  Because those dollars, even if you decided to sell it and not pay off the debt, those dollars can be invested. And historically, something like the S and P 500 has returned to investors. What we know over the course of the last 10 to 20 years is right around 12%. Now, is that going to happen in the future? I don't know, but I wouldn't bank on it always. And instead you want to make sure that you are conservative with your numbers. So look in between seven and 10% is the numbers that you want to think through. So even if you held this property, it is literally in my eyes, a liability because it's losing you money every single month. But in addition to the negative cash flow, you also have to pay for maintenance repairs. This is going to be a money pit unless you make a choice here on what you really want to do. When you start to go back to investing in real estate, then what I would say is you can say to yourself,

• 36:10Andrew Giancola?

  let's find cash flow producing properties going forward that actually have positive cash flow. If that is part of your overall strategy. Okay. Now, the arguments that you have to keep it is yes, you have a sub 6% mortgage and the home is appreciating. Those are two arguments a lot of people will have, but if it's negative cash flow, it's not of interest to me ever. Because it becomes just an overall liability and you are taking money out of your pocket and putting it into an asset that is not producing an income for you. That is a liability in my eyes. Obviously a home is always an asset, but it's a liability in my eyes for your balance sheet specifically. So to get the portfolio you want, what I would do personally, if I was in your shoes, is I would move on from the property when the tenant leaves and/or if the tenant's still in there, you could do it now. Cause it's a lot easier to sell an empty home.

• 36:56Andrew Giancola?

  And I would then take the money and the proceeds from selling the home and pay off the student loan.

• 37:04Andrew Giancola?

  And then from there, start building wealth based on that foundation. Because you have a really good position that you could be in. If you have that foundation where you are literally having zero high interest debt. You've got the mortgage on the old home paid off. The old home helped you pay off your student loans. That's fantastic. And so you have the ability to do some really cool stuff. Then you can build out your portfolio and begin investing in rental properties based on having that foundation of zero high interest debt. You can pay off the rest of the vehicle while you're kind of working through that stuff. And have the ability to start from a position of strength instead of a position that you're currently in where you are losing money every single month. And so that's exactly how I would do this. And I know it's hard to kind of get rid of a home when you feel as though I want to invest in real estate long term.

• 37:48Andrew Giancola?

  But it's actually starting with a position of strength. And so that is the way that I would approach this going forward. Really great question and congrats to you guys on working through this. I think that's absolutely fantastic and hope you're enjoying the new location that you're living in. Really, really great stuff. But if you have any other questions on this, feel free to shoot me an email. It's kind of amazing how much can change in just a single year. Every summer, the kids are a little bigger, a little more independent, and life looks a little different than it did the year before. And it reminds me that while we can't predict the future, we can prepare for it. That's one of the reasons I like PolicyGenius. See, PolicyGenius isn't an insurance company. They're an online marketplace that lets you compare life insurance quotes

• 38:30Andrew Giancola?

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• 39:14Andrew Giancola?

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• 39:59Andrew Giancola?

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• 40:44Andrew Giancola?

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• 41:29Andrew Giancola?

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• 42:14Andrew Giancola?

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• 42:57Andrew Giancola?

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• 43:12Andrew Giancola?

  So the next question is from Katie and Katie says, I'm trying to balance staying home with my child and I want to create a steady, flexible income. Is there any ideas that you have based on this? So for anybody out there who was kind of going through this, I'm going to give you just a couple of quick tips on what you should consider. One is if you have skills on hand, if there's something that you're pretty good at, try to find a way to monetize that skill. If you're like, I don't know where to start, here's what I would say is list all of your skills on a Google Doc or wherever else and then take those skills and say, hey, Claude, hey, ChatGPT, these are all the skills that I have on hand. I'm a stay at home mom and I am trying to figure out exactly what I need to do next. What are some of the side business ideas that you have

• 43:53Andrew Giancola?

  that I can do while my kids are napping or while my kids are doing other activities that I can start to contribute financially to the household? It's going to spit out a bunch of different ideas based on your skill sets. So that's the first thing I would say is thinking through all the skills that you have already built. Maybe you are really good at crafts. Maybe you're really good at math. Maybe you're really good at writing. Maybe you're really good at social media. Maybe you're really good at marketing. There's so many different things that you can do from home that can be really powerful. Number two, think about what people already ask you to help them with. If you're having a hard time figuring out what your skills are, what do people ask you to help them with? What are things that people say you are really good at this? Let me give you an example. So my wife is really good at sleep training. So sleep training is, you know, you get your kids to

• 44:36Andrew Giancola?

  sleep through the night. Well, she gets our kids three in a row now. She's gotten them to sleep through the night really early on. Like I'm talking to, you know, a few weeks into when they are born. And we have never had a single kid sleep in our bed in the middle of the night. We've never had a single kid have any issues and people always ask her for sleep training advice because she is so good at understanding what the needs of a child are and how to get them to fall asleep faster and how to get them to sleep through the night. So all my kids sleep about 12 hours a night. They all go to bed at the same time and it is one of the best things that she ever did because it allows us, the parents, to also get a good night's sleep. And so it was important to me and so she figured out, you know, some of the best ways to do that. And we kind of worked as a team together to make sure that we could figure this out. Now, the interesting thing about that was each of our

• 45:18Andrew Giancola?

  children needed different strategies in order to get them to that point in time. And so because of this, she's very good at this. So if she was going to monetize something, this would be a wonderful skill for her to monetize. She also worked in the corporate world for a very long time, doing all different things from marketing and all this other stuff. So she could go back to those skills and do something like this. For you specifically, though, what are some of your skills that you have? What are some of the things that you've done in the past? What are some of the jobs that you've had in the past that you feel as? So you can monetize then I would say to pick a monetization model that fits your schedule. So what I mean by that is you could trade time for money and do consultations. You could build something once that sells repeatedly. So something like a video course,

• 46:00Andrew Giancola?

  if you're teaching sleep training, for example, and/or you could find some recurring income and, you know, start a membership or subscriptions, things like that. But pick your income model that fits your schedule based on being a stay at home mother. I think that's going to be the next thing that you do. And then start getting after it. Test one out and don't quit, you know, do this for a certain period of time. Test out to see if it works and see if it's really, really helpful for you. I think that's a great place to start where you can help contribute financially and get the ball rolling. I think it's a really fun idea and it's really something that can help you guys long term, even if you set a goal. What I like to do is set a goal with side hustles back when I would start them and I would say, okay, I want to make sure that I can pay the light bill first. Then I want to make sure I can pay off some sort of debt. Then I want to make sure I can pay the car payment. Then I want to make sure I can, you know, pay

• 46:43Andrew Giancola?

  the mortgage and then we just go down the line and kind of think through some of the goals that you have and some of the areas that you want to contribute to and take care of. That keeps you motivated and that gives you your why. So really great stuff here. And then if it takes off and it really does well, you have a full-time business that you could be working on in the future. So really, really great stuff. I'm so glad you're thinking about this and let me know if you have any questions on that.

• 47:07Andrew Giancola?

  The next one is from Tyler. Tyler says, I just bought a place and I'm trying to revamp my budget based on new percentages. My mortgage and HOA together are about 37% of my income, but I want to keep investing at 18 to 24%. Where does that leave me for fun money and food money? And how do I make the numbers work? So Tyler, first thing I would say is the 37% is high. That is outside of the parameters that we want you at housing to be between 28 to 30% of your income max. And so 37% is going to be outside of the traditional guidelines that we give. It's not a crisis, but it is something that you want to consider. Now, because of this, you have to give 7% somewhere else. You have to reduce your spending 7% somewhere else in your entire budget in order to make all of this work. That's what you have to do. So like folks

• 47:51Andrew Giancola?

  in New York City, for example, if they were spending 30 37% of their income on housing, I would tell them, okay, well, your transportation should go down because you don't have a car or car insurance. And so maybe you're riding the subway or you're walking for most of your transportation. And so that number should go down. You've got to figure out what would work best for you based on that. Because if you lay out the whole pie in numbers, you look at this, every single hundred dollars that you make, $37 of that is going to go towards your housing, mortgage and HOA. And then investing is going to be anywhere from 18 to $24 per month, which I love that you are sticking to that because you absolutely need to. And that leaves you somewhere between 39 to $45 for everything else. So what are the non-negotiables on your list? Food, obviously is a non-negotiable.

• 48:35Andrew Giancola?

  Transportation, you got to get from point A to point B. That's most likely a non-negotiable. Health and medical stuff, that's a non-negotiable, having that on hand. Making sure the debt payments are there, the insurance payments, those are all non-negotiables. So let's say, for example, all of that stuff is another 20% of your income. And so now we're looking at this and we're saying, okay, well, food and groceries, all that other stuff. Maybe it's going to leave you with another, or anywhere from, you know, 12 to 18% range for fun stuff and where the fun stuff is going to be. But you got to kind of go down the list and figure out exactly where it's going to land based on the other parameters. But 7%, you know, 7% is going to go away and it's going to have to go to something because over 30% is being spent on housing and HOA.

• 49:18Andrew Giancola?

  And again, it can absolutely be done. And in 2026, some people want to prioritize that over some other areas and I completely get it. And if you are prioritizing that, you just got to know something's got to give and it's not your investments. Please make sure that your investments can kind of stay in that range. Instead, try to find some of those other areas that you are not feeling as valuable about. Like if you eat out a lot and you say, hey, I don't really care about eating out. I'm going to reduce that down and it will help me with my 7%. That's great. Or if you feel as though there are things that you are doing, you want to downgrade your car because you want the nicer house. And maybe you say, okay, I'll sell my car and I will remove my car payment and just pay cash for a car that's, you know, five years old. Well, that's another thing that you can do, another move that you can make that could help you pretty quickly. Or if there are just areas that you're overspending, you're like, I don't care about this stuff.

• 50:03Andrew Giancola?

  I'm going to stop. Spinning in these areas, maybe you got a fancy, you know, membership somewhere, or you're doing things that you feel as though you're just frivolously spinning on just random stuff that you don't care about. Those are the areas that you can cut pretty quickly and make it easy. And then the rest of it's there. So again, congrats on the, on the new house. I think that's wonderful. And just make sure you understand kind of what the parameters of everything else is. And then the other way to do this is also obviously increase your income because then it just reduces the percentage that you're spending on your home. So that is another thing for a lot of folks out there is if you feel as though you're overspending on a home and you feel like you could increase your income if you really pushed, that's another thing to do. And it will reduce that percentage pretty quickly. That's why we do it in a percentage base because it allows you flexibilities to shift some of this stuff. So congrats on that home. I think that's absolutely fantastic. If you have any questions on that, please let me know.

• 50:50Andrew Giancola?

  All right. The next one is from Greg. Greg says, Andrew, I'm trying to figure out how my military pension impacts my savings for retirement. First of all, Greg, thank you for your service. Absolutely fantastic. I truly, truly appreciate you. Again, I have tons of family members who are service members and cannot thank you enough for your service. I know the sacrifices that you have to go through to even get to that point in time of being in the military. So really, really appreciate it. I believe the biggest benefit is the reduced cost of healthcare for myself and my family. But at 44, if I start a second career, will I have enough so my spouse won't need to work? So first, this is a really great thing to have, Greg, is having this pension because a military pension at 44 is a guaranteed paycheck for life. So you can think of this as your income floor.

• 51:35Andrew Giancola?

  So lifetime income where we're looking at, this is your floor where you can start at this point in time and you could think through the cost of living adjustments. You can treat this like a bond or an annuity or whatever else. This guaranteed income directly reduces the amount of money that you need to have on hand in your portfolio. It directly changes the numbers and changes the math dramatically. And so because you have this, this is going to be a great starting point. And again, I would highly recommend, Greg, we have a retirement calculator that you can use. And if you go to mastermoney.co/resources, we will have the retirement calculator there where you can find your retirement number based on this. And we have a section in there where if you have a pension, you can put the pension number in of how much you're making every single month and it will Reduce your retirement number based on the pension. So that's something I would definitely recommend looking into as we go through this.

• 52:19Andrew Giancola?

  Secondly, as you are absolutely right about healthcare. Healthcare is a big deal for folks who want to retire early. And we've seen people retire at 50 and have to go back to work because they have to pay 1,500 to 2,500 dollars in order to be able to afford healthcare before they reach Medicare age. Because you have this reduced healthcare cost, that is one of the biggest costs in retirement. It's a big, big deal. And so you could say to yourself, okay, well, I'm going to be saving myself an additional chunk of money here that I think is a really big deal. Most people on average in retirement spend about $300,000 on healthcare. And so that's a big deal. Now, whether your spouse works comes down to one quick calculation. What are your household expenses? How much do you burn every single month? So if you add up your annual expenses, subtract your guaranteed pension of how much you're going

• 53:03Andrew Giancola?

  to be making every single year, then subtract your healthcare savings and anything else that's there. What's left is the gap you actually need to fill. So let's say your pension covers, I'm just going to use easy numbers here. You want to spend $100,000 per year. And let's say your pension covers $60,000 of it. Not sure if it would, but that's one thing to consider. And then you come down and you're like, I got $40,000 left that I need to come up with. Well, will social security cover a portion in that? Maybe. If not, then we need to look at what we need to fill the portfolio with. Well, we know with the 4% rule, you could draw on 4% every single year. It's be about a million bucks in a portfolio before you want to retire. And so if you're going to be working for the next couple of years, you can say to yourself, okay, well, I got this pension in place and it covers X amount of my expenses. I just need to be able to cover an extra $40,000 per year.

• 53:48Andrew Giancola?

  And maybe, you know, if you start working a second career, you're making, you know, 40 to 60,000 dollars, then that's going to be the way that you look at this. And the second career can also be a huge wealth accelerator. Let's say you bank some of that stuff and you want to live a fun, amazing retirement. And so you start your second career over the course of the next 10 to 15 years. Then you could take a portion of that saving and save it for your retirement portfolio and use the rest as living expenses and money that you can spend over that timeframe. So it's one of those things that I think is really, really important. The pension is such a hack when it comes to building wealth. And the fact that you have it and you are young enough at 44 to be able to do some really cool stuff, I think is powerful. So take your Yearly expenses, subtract it from your guaranteed pension and what's left is what you need. That's what you need to make sure that you are covering either with your second career

• 54:32Andrew Giancola?

  and building up your portfolio to be able to cover that portion. Now you can also factor in that, again, like I said, social security. And if you do factor in social security, you can go to like ssa.gov, for example, see how much you're going to get in social security. That would be the the next factor as well. But again, with the pension income, that might reduce the social security income pretty dramatically because it's income that's coming in. So you just want to kind of factor all that stuff in and make sure that you're looking at each one of those pieces. But healthcare is a big deal. That's awesome for you. So thank you again, and I truly, truly appreciate your service.

• 55:03Andrew Giancola?

  The next one is from Trent. Trent says, hey, Andrew, I'm 18 and graduating high school this spring with my associate's degree. So I'll ideally only have about 2.5 years left of college, studying accounting and financial planning, working towards my CPA and CFP. Wow, you got that double whammy going. I love it. I started investing at 15 and right now I have about $17,000 in my brokerage account. Incredible. And $3,000 in my Roth IRA. My parents are covering college and I run a photography business on the side. During college, how would you recommend balancing investing between a Roth IRA and taxable brokerage? I want to maximize my Roth advantage while still keeping enough accessible for post-grad flexibility and thank you for all you do.

• 55:43Andrew Giancola?

  Trent, you are crushing it, my man. Having 20 grand at the age of 18 is absolutely incredible. I think when I was 18, all I had in my name was maybe 2,000 or 3,000 bucks. And for the most part, it was, you know, from working and kind of saving and I don't even probably have think I had it invested right. So you are absolutely crushing it, my friend. And this is something that is absolutely amazing. So I want to talk through some of the things that I would think through first. If it was me and I were in your shoes, I would attack the Roth first. So if you're making enough money in your photography business to be able to save, I would save in the Roth first. What does that give you flexibility for? Well, your contributions absolutely had to, although I wouldn't interrupt compound interest unnecessarily, but you could pull those out if

• 56:23Andrew Giancola?

  you absolutely had to post-grad. But I would try to put as much as I possibly can. It is unbeatable when you have a 50-plus timeline. Why? Because when you look at this, that tax-free growth over Timeframe is a huge, huge deal. In fact, if I use the Master Money Investment Calculator and I go in there and look at, okay, well, what would it be over the course of just 50 years? If you maxed this thing out over the course of the next 50 years, okay? We're going to do $7,500 over 50 years at a 7% rate of return and your additional contribution. All right, so we're going to look at that. We'll do it at the end of every single year, just to look at it. And over 50 years, okay? You would have $3.1 million in your Roth IRA. You would have contributed $375,000 over that timeframe.

• 57:08Andrew Giancola?

  And you would have $2,759,000 in your Roth IRA. And this is at a 7% rate of return. I'm going to do a 10 just for fun in a second. $2.7 million in your Roth IRA, completely tax-free. But let's do a 10% rate of return, look at what it could become. It's just crazy. Time is so crazy. If you did it at a 10% rate of return, same numbers, 7,500 bucks per year. And obviously that balance is going to go up in the Roth every year. So you'd even have more than this. We just don't know what that's going to be in the future. You would have contributed $375,000 and you would have 8.7 million in total interest, meaning the amount of money that your money would have made, completely tax-free. That's why I would choose the Roth first and why I would be very bullish on the Roth long-term. Because there's a really, really cool stuff that you could do with the Roth.

• 57:53Andrew Giancola?

  And then I would look at the other 2,500 in the taxable. Taxable gives you that flexibility. If you do decide you want to retire early, as you start to make a lot more money, when you are a CPA or a CFP, then you'd be able to just dump a lot more into that taxable brokerage account at that point in time. But the Roth just gives you that flexibility that you want. Now, if you're like, no, I want to retire at 40. I know I want to retire at 40 and this is what I want to do. Then adding a little more to the taxable is A-OK. But I would try to put as much in the Roth as I possibly can. Because again, those contributions can be withdrawn at any point in time. So for me, anybody who's young or a teenager, the Roth is a wonderful, wonderful account. And most likely you are really seeing the results of that just based on that tax-free growth. I love it for that reason. And then if you want that additional flexibility, as you start to make more money,

• 58:38Andrew Giancola?

  I would start to pour more into the taxable. I think that's the way that I would look at that personally. But again, if you want a lot of flexibility, Then the taxable, you can split it off 50 50 if you want. It's going to depend on what you truly want. But congratulations for being 18, having $20,000 already invested. That is absolutely incredible. Let's say you stopped investing. I'm just curious now, let's see what this would grow to at a 10% rate of return. Cause I just want to see like how you've positioned yourself already. I think it's so cool. So if we did that, you would have $2.3 million. Literally, if you didn't invest another dollar at 10% rate of return.

• 59:11Andrew Giancola?

  It's crazy what can happen when you have time. And that's, I think, just why it is so important to get started early. So my friends out there listening, if you are a teenager listening or in high school, or you're starting to think about investing your money. That's how powerful it can be if you just get started. All right, let's jump to the next question.

• 59:30Andrew Giancola?

  The next one is from Nicholas. So hello, Andrew. I've been watching your podcast on Spotify and have enjoyed the content so far. I'm in my twenties, trying to become a teacher in Ohio, but currently working in Indiana with no pension and contributions going anywhere. How do I factor a future teacher's pension into my plan? Investing on a lower income and still save for a wedding house and kits. Great question, Nicholas. And I think this is something as you are still, you know, if you're in college, it sounds like, and you're trying to think through, well, what's the next thing you need to do? I would first, again, I keep plugging this because this is the reason why we created this tool. Cause I know so many people can use it. But if you go to mastermoney.co/resources and use that retirement number resource, it's going to give you a lot of information on, on how to use this for your specific situation. So right now, focusing on what you can get control is the most important.

• 1:00:13Andrew Giancola?

  So right now, you don't have the pension in place yet. And so we need to focus on our current portfolio and starting to invest for that going forward. But then, as you're starting to save for a wedding, for kids, for future expenses, I would start a high yield savings account and start sending some money over to some of those goals. Just get in the ball rolling, even if it's a small amount of money can be very, very helpful. And as you start to think through building this out, what I would do next is think through the pension. And if you think you're definitely going to go and work in Ohio, well, how long does it take for you to get that pension vested? A lot of times it's three, four, five years before it kind of locks in and make sure that you have it on hand. In some states, you may have to be a teacher for 30 years before you actually get the pension. So it depends. Depends on the state and kind of what you're looking at there.

• 1:00:56Andrew Giancola?

  So figure that part out first and make sure that you at least stay as long as you are going to have that vested. If you are going to bank on this. Then number two is once you know what that pension number is going to be. What you want to do is figure out how much you're going to spend in retirement and subtract the amount of money that you feel as though the pension is going to be giving you. And that gap, the difference between your pension and the amount of money that you're going to have on hand is going to be how much that you need to save for retirement. And so when you look at this, you say to yourself, okay, well, I'm going to spend a hundred thousand dollars per year. My pension is going to give me forty thousand dollars per year. I need to make up for another sixty. Well, sixty thousand dollars, if you look at that and multiply it by 25 is going to be 1.5 million dollars is what your portfolio needs to be.

• 1:01:37Andrew Giancola?

  And so then you try to figure out, okay, well, I can use, uh, you know, you can use our compound interest calculator if you want to. That will kind of help you factor in. Well, if I invest this amount, how do I get to the point in time where I have 1.5 million dollars by the time I want to retire? And it will walk you through those steps. That's exactly how you do the math and exactly how you think about it. So you don't have to worry as much about some of these other factors. Pensions are wonderful because they give you that guaranteed income, that income floor that gets you started. Now, social security for some folks, especially when you're a teacher, and even in the last question where we had talking through, uh, the military pension. A lot of times, social security could go away, uh, if you have that pension on hand, or you may not get much in your social security. So you got to look into that as well and see how that factors in, uh, because it is something down the line that you just want to think through.

• 1:02:21Andrew Giancola?

  And then I would compartmentalize wedding house, kids, all that kind of stuff. If it's a shorter term goal, that would go into the high yield savings account and start to invest in the short term goal. Money you need within the next couple of years would kind of go into midterm goals and then long term goals will be your retirement. And I would kind of separate those three and then just attack all three of those goals and make sure you're saving towards them. That's going to be the best thing over the course of the next couple of years. But factoring in it is just a quick math problem. And honestly, once you have that number in place, it may change over time and that's okay. You got to feel that that's okay. You just got to make adjustments year in and year out. And for everybody listening, we want you tracking your retirement number on a yearly basis because of this reason. Life's going to change. Things are going to shift. You may want to move to Japan. You may get a pension that you didn't realize you were going to get. You may get a big giant bonus.

• 1:03:04Andrew Giancola?

  They get an inheritance and so you can shift the numbers in your retirement plan if you are tracking it on a yearly basis. I don't care if you're 25 or 55, you need to track your retirement number every single year. So really great question. Thank you so much for sending that in Nicholas. And that's it for today's money Q and A. I hope you guys enjoyed this episode. A bunch of wonderful questions. If you want to get your question answered on the show, again, make sure you join the master money newsletter by going to mastermoney.co/newsletter. You can get your question there. Or if you want me to answer your question live, right in front of you, where you can continue to ask me questions every single week. Join Master Money Academy. There's a seven day free trial down below in the show notes for you to check it out. It is one of the best ways to spend your

• 1:03:48Andrew Giancola?

  dollars. It costs less than a coffee every single week, guys. It is especially with that seven day free trial. You can test it out and see if it's right for you. Again, thank you guys so much for being here. My goal is to bring you as much value as we possibly can. I hope we did that today and we will see you on the next episode.