When Always Be Buying Goes WRONG!

"I’m obsessed with checking my accounts daily, and I have major FOMO if I don’t. Is there a downside to Dollar Cost Averaging daily instead of on a less frequent basis?" We'll walk you through that question and more in today's Q&A episode! 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. 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.

• 0:00Brian Preston?

  Always be buying. Is there too much of a good thing?

• 0:09Speaker 01

  Brian, I am so excited to talk about this because I love when our financial mutants take an idea that we share with them and they grab on to it and they love on it and they make it their own. But sometimes, just like with most things, perhaps there can be too much of a good thing. And right now, one of the questions that we're going to answer is going to deal with that. This question came in from Earl the squirrel.

• 0:35Brian Preston?

  Earl the squirrel.

• 0:36Speaker 01

  That asked this question. And Earl said, "I'm obsessed with checking my accounts daily and I have major FOMO if I don't check them daily. Is there a downside to dollar cost averaging on a daily basis instead of on a less frequent basis?" Can that be better? As someone who dollar cost averages many, many times throughout the month himself, what say you to the answer? What say you to this question?

• 1:02Brian Preston?

  I feel a little responsibility here, but Earl, every day? Is that what Earl said?

• 1:09Speaker 01

  Every day.

• 1:12Brian Preston?

  And he says he gets a little sad if he doesn't check his accounts.

• 1:15Speaker 01

  "Major FOMO" was the exact language that Earl the squirrel used.

• 1:19Brian Preston?

  Okay. Look, I don't mind being self-reflective and giving the experience shares in the fact that I've told you guys that I was doing monthly purchases and then at some point that warped itself to where I was buying twice a month. And I was like, well, twice a month was good. You know what would be really fun? If I did this every week. So I do have monthly, I mean, weekly purchases in my investment, in my after-tax joint investment account.

• 1:45Speaker 01

  Okay.

• 1:45Brian Preston?

  And then, of course, 401K goes in every month. Some of the other accounts, they get grouped and funded only once, you know, because you can profit sharing, Roth conversions. Those things are all one-offs. But I think about Earl. I don't know that I've ever heard anybody say they want to do every day.

• 2:02Speaker 01

  Daily.

• 2:04Brian Preston?

  So, and I'll give some stats because Earl will probably love this since he's obviously taken this thing from here and he's taken, launched into outer space with taking it and jumping a mile. If you look at the markets since 1937, if you look on a daily basis, markets are up 53% of the time.

• 2:24Speaker 01

  On a day by day, about, some days are up, some days are down.

• 2:27Brian Preston?

  It's a little better than a coin flip. If you do it monthly, which is what the majority of, I think, people do when we're talking about dollar cost averaging, it's 62.9% of the time it's up.

• 2:38Speaker 01

  Okay.

• 2:39Brian Preston?

  And then if you do this quarterly, because some people get, you know, bonuses or other things that come through quarterly, it's up 69% of the time. If you're only funding stuff once a year, because it's the one-off type of things, you know, like I was talking about my, you know, if you're doing backdoor Roth conversions, other things like that, it's up 77% of the time. But this is losing the question for the forest of all those stats is because what I worry about with Earl the squirrel is that from a behavioral standpoint, the hyper-focus on the daily ups and downs is probably doing more emotional damage and actually hurting the actual completion

• 3:22Brian Preston?

  of his financial goals over the long term than even giving all those stats that I just shared.

• 3:27Speaker 01

  Yeah, the question that I would have for Earl is if you're doing this, is the juice really worth the squeeze? Like, does it, are you actually getting a benefit from doing this? It's no different than if you try to watch grass grow, or you try to watch paint dry. It's really, really difficult to see that happening. But if you're someone who doesn't check your accounts daily, and maybe you only look at them on a month-end basis, or you look at them quarterly, or I think what's great is if you really only look at your total account balance once a year when you do your annual net worth statement, you will be amazed at the ground you are able to cover throughout the course of a year. But if you're tracking it and watching it every day, I agree, Brian, I think that you'd be likely an emotional wreck

• 4:11Speaker 01

  that on good days you're up and on down days you're down. And if we know that the market on a day-by-day basis is only up about 53% of the time, that means half the time you're happy and half the time you're sad. When in reality, if you look at it less frequently and you see the accounts moving, you're going to be amazed that, man, every time I look at my accounts, I looked at it six months ago and, man, it's higher now, or I looked at it a year ago and now they're higher. I think that you're going to have a lot higher likelihood of staying the course and sticking with it if you approach it that way.

• 4:44Brian Preston?

  Here's the key takeaway. Everything we're trying to share with you is how can we take the emotion out of the transaction? Because most people are horrible at controlling their emotions. The whole fear, greed, battle that's constantly going. Always be buying. The whole superpower of this is that it makes the good habit of building wealth as easy as possible. But then it makes the bad habit of overspending and waiting until you're investing only what's left over. You're actually getting ahead of that by paying yourself first. That's why I love always be buying. But if you're doing this in a detrimental way, where you're doing it on a daily basis. It's giving you emotional stress in a lot of ways.

• 5:28Brian Preston?

  You are using ABB All Wrong. And I would ask you to revisit that because what this is really supposed to be working on is making it automatic for the people and giving you that inevitable walk towards wealth.

• 5:40Speaker 01

  Love it. Uh, Meghan, is today a Tumblr day? She's saying no. No, it's not. Meghan says no. You know what? I'm giving you all tumblers anyways, even though Meghan said absolutely not. So Earl the squirrel, if you would like your koozie Tumblr, Tumblr koozie. You can write winner, W I N N E R. It's the only time I'm going to spell it at moneyguy.com. We would love to get that out to you.

• 6:05Brian Preston?

  By the way, I think the chaos is because we're missing a key member today. I look over at the chair. I even thought about pouring some of my flavored water out on the curve. Um, because I mean, I think half the reason, because it was weird. You introducing the question like that. Rebby rocks it. I don't know if we didn't turn the lights on just because she wasn't over there and we're all trying to save the power. But it feels, it feels kind of dim and dark over there. And it adds to the element.

• 6:33Speaker 01

  How funny would it be if they just like cut over to her camera and it's just a sad, empty seat?

• 6:37Brian Preston?

  One is the law. It's just, but Rebby, we're thinking about you. And I think a lot of you guys, when we do these live streams, now we're filled with people. We got people over here. We got people over here. But, um, we actually all have a good time with each other. So it is, it is one of those things when we lose one of the key cogs out for a while, a glorious thing. Growing the family, it's a good thing. But, um, and we have no announcements on that yet. She's. She is working this morning, but she's hanging out at the family, but we miss, we miss Rebe.

• 7:06Speaker 01

  So Rebe, if you're out there watching, hey, we miss you here. All right. You ready for another question?

• 7:10Brian Preston?

  Yeah, we can do this.

• 7:11Speaker 01

  All right, let's go. This question is from Devo. Devo said, hey, money guy thoughts on gambling on stocks? I give myself $100 a paycheck to gamble on individual stocks for fun. I'm in my 40s with 200K invested and allocate over $1,000 a month into target date funds. So this is what it sounds like Devo saying, hey, I'm doing what the money guys tell me. I'm saving consistently. I'm at the point in my career or my savings journey where I'm using target retirement index funds. So it's kind of set it and forget it where I can choose, okay, when do I think I'm going to retire and need this money? And how much can I save? And that's all I've got to think about. And I'm doing that part and that part's chiseled off.

• 7:55Speaker 01

  Is it okay if $100 every paycheck, and I don't know if you're paid bi-weekly or if you're paid monthly or maybe weekly? Is it okay if I take that money and I gamble, Devo's words, on stocks? I'm going to tell you, Brian, when I read this question, I don't have a problem with that. Cause to me, it's no different than if Devo said, hey, can I spend $100 per paycheck to go golf? To go to the movies, to go pursue any other hobby that I might have? It just so happens that it sounds like Devo's hobby is trying to guess which stocks are going to do well and which ones aren't.

• 8:30Brian Preston?

  So you guys know, I usually write down a few notes. I wrote down three quick things. I wrote, sure, have at it. And then I wrote number three. Because this is the thing, you know, is that I don't mind, is like you said, a hobby. But here's the thing that I would ask you is check yourself before you wreck yourself. And the fact of, does this cause stress for you? Meaning that when the stock goes up, you're like hot diggity dog, you're super happy on those days. But when the stock goes down, because you're not, I'm sure you're not buying the S and P 500 with these. You're buying individual, high-flying, highly volatile stocks.

• 9:11Brian Preston?

  If you find yourself on the days that those stocks are down 6% or 7%, you go home and you're kicking dirt and you're, you know, you're getting in fights with your loved ones. Ask yourself, is it worth it? Because here's what I find so interesting about individual stocks. And I'm guilty of this myself, is that. We've had people on when we've met with them and they've actually hit some high flyers. Is that you're never going to be content because if you hit it, you're going to likely after the stock is up three, four, maybe five fold, you'll eventually take your profit and then if it goes up 10 to 20 fold, you're gonna be like,

• 9:49Speaker 01

  I missed out.

• 9:50Brian Preston?

  Why did I sell that stock? That could have been the one where I turned $10,000 into a million dollars. I'm an idiot for selling that. And then it could go the other way is that you hit one or two and then you decide, you know, I've made a good money on these, I'll roll it into this high flyer. And then you lose 40% pretty quickly and you'll just cuss and kick the dirt on that too. So it's just be careful because if you, if you fall in love with these individual stocks and you're setting a place setting at Thanksgiving this year for them and you know, you're passing the gravy dish by and saying, hey Nvidia, would you like an extra helping of this as well? And you know, that is a problem because you're emotionally, you're treating them like,

• 10:33Brian Preston?

  you know, this is supposed to be an investment, it's supposed to not have emotion. It's supposed to be just something that grows and builds in the background. But unfortunately, when you do individual stocks, you do find yourself getting emotionally attached to them.

• 10:44Speaker 01

  Yeah, and I think just like with gambling, it can be a very slippery slope. It may be a hundred bucks paycheck right now, but maybe you do have some luck and you start to believe that you have some skill at this. And so then you increase it to 150 or 200 and then it goes on and on. And so you just have to make sure that you understand your own unique personality, that you don't fall into that trap. And then I would argue, you said you're in your 40s. You realize that every dollar you can put away at age 40 has the chance to turn into $7 by the time you get to age 65. So even though it's quote unquote only a hundred dollars, each one of those hundred dollars could turn into 700 by the time that you get to retirement. So there's nothing wrong with doing this on a small scale, but me personally, I like

• 11:27Speaker 01

  seeing my money grow and compound and turn over.

• 11:31Brian Preston?

  Yeah, but you've done this too. We've all done this. We have a no hypocrite policy around here. So I mean, we're all guilty of this as well. Well, I'm just saying, just know yourself. Check yourself before you wreck yourself.

• 11:41Speaker 01

  Is that what you're saying?

• 11:42Brian Preston?

  Yeah.

• 11:42Speaker 01

  That's what you're saying. Alright, hey, Devo, if you would like a Tumblr, you can write [email protected] and we'd love to get that out to you, even though Megan said no. Alright, let's go.

• 11:53Brian Preston?

  Poor Megan over there. Megan, you ought to sit in the hot chair over there so we can turn the lights on.

• 11:57Speaker 01

  She shook her head no, like I wasn't gonna be able to give away tumblers this week.

• 12:00Brian Preston?

  Y'all can take turns. We'll just put each of y'all over in the chair and flash the camera on and... There's only one of you that gave me a thumbs up. Everybody else is like, "Oh, my gosh, why are we in here?"

• 12:10Speaker 01

  Alright, you ready for another question?

• 12:12Brian Preston?

  Sure.

• 12:12Speaker 01

  This one is from E-Money.

• 12:14Brian Preston?

  What would happen if I'd have said no?

• 12:17Speaker 01

  Well, we would have just shut it down and then we'd, you know, we'd be done.

• 12:19Brian Preston?

  Okay, E-Money!

• 12:21Speaker 01

  E-Money said, "Hey, can you rank different account types based on what is best and worst to inherit it? I'm specifically interested in where HSA falls." And I think this is a really interesting question because there has been some legislation over the past couple of years that has impacted how we leave assets to our heirs, or if we are heirs, how we inherit assets. And not all accounts are created differently, so I think it'd be interesting, Brian, if you could talk a little bit about what are the best accounts for people to inherit? And as we think about legacy planning and leaving assets behind to future generations, if we want to maximize and optimize that, what kind of accounts should we think about? And then what are some other benefits that maybe it's not even like an inheritance thing,

• 13:06Speaker 01

  but what are unique benefits that each of the account types, when you think about the three buckets, might have from someone who's inheriting these assets?

• 13:14Brian Preston?

  Yeah, I'm gonna go, I'm sure you'll fill in the gaps on me and whatever, but the, it's easy. And by the way, this did change. The stretch IRA rules have changed a lot. Now, you really have, unless there's, you're developmentally, you know, disabled or other issues, or a spouse, IRAs now get 10 years. And they've now codified and corrected a lot of this because there was a lot of gray area over it, but the IRS has finally come out. So, I'd still say Roth. I mean, because tax-free growth is pretty spectacular, even if it's 10 years. A long period of time to get some tax-free growth?

• 13:49Speaker 01

  Yes, like as you build Roth dollars right now, not only are those dollars growing tax-free for your entire lifetime if you don't use them, but it's your lifetime plus 10 years for your non-spouse beneficiary.

• 14:01Brian Preston?

  I've even seen people who have estate planning issues that have done that for the sake of, you know, let's go ahead and fund some after-tax so we can get some more Roth assets. Next, I put taxable. I mean, because I like the step-up in basis.

• 14:14Speaker 01

  What's a step-up in basis, Brian?

• 14:15Brian Preston?

  So when you pass away, you know, if you've got a bunch of embedded gains, you know, if you sold them while you're alive, you have to pay capital gains tax on it. But if you pass away with those appreciated assets, you actually, your beneficiaries could inherit them tax-free. And this is why I get mad when people, you know, like all of a sudden on your deathbed, if you sign over the deed of your house to your kids, no, don't do that. Because more than likely, your house appreciated 50% over the last five years like everybody else's did. You want to have your beneficiaries inherit and get that step-up in basis. So taxable assets, and by the way, I'm thinking about in traditional investments, but as you heard, this applies to real estate as well. So that's always a great thing to inherit.

• 14:57Brian Preston?

  And then I guess you could then start talking about, and this gets into the things that will have asterisks and some rules to them, is traditional IRAs and savings accounts, those are harder to invest. Yes, you get the 10 years potentially, but there's also, you know, required minimum distribution rules that you have to pay attention to.

• 15:16Speaker 01

  And it'll be taxable to your beneficiaries.

• 15:16Brian Preston?

  So I guess I would say maybe I would put the HSA before those.

• 15:22Speaker 01

  Okay.

• 15:23Brian Preston?

  Because think about this, I'm doing this in real time.

• 15:25Speaker 01

  Sure.

• 15:26Brian Preston?

  Those have RMD requirements and other things that's going to complicate it.

• 15:30Speaker 01

  Those being 401Ks and IRAs and that kind of thing.

• 15:32Brian Preston?

  Whereas an health savings account, the, first of all, the estate, before you start making distributions, you should see how many expenses you can actually get that money out within the estate completely tax-free. Are there medical expenses that need to be reimbursed?

• 15:47Speaker 01

  If the decedent had been tracking their medical expenses.

• 15:49Brian Preston?

  If you're tracking expenses, the estate could go file the tax-free distribution and turn that money into essentially taxable money that gets distributed out to. The beneficiaries, if there's large HSAs and they didn't track and the estate didn't claim what was qualified medical expenses, you, the beneficiary, could still inherit these assets. And then you're just gonna pay, it's gonna be like a quasi-retirement asset, you're gonna have to pay income taxes on the distributions.

• 16:17Speaker 01

  But no penalty.

• 16:18Brian Preston?

  But no penalties, and I don't think it, I'm not sure on the RMDs on that, but I'm, or the 10-year holdings, I think it's just gonna make you distribute it pretty quickly. And then that leads to the retirement, I don't know, those are kind of a toss-up, because I like that 10-year stretch is pretty valuable. Somewhere in there, that's the gray zone, that's the personal and personal finance, too.

• 16:38Speaker 01

  Yeah, so I think, what I love is, is you recognize that different types of accounts are taxed and treated differently as they become part of your financial plan. But when you do move, not just from the make wealth stage, and not just into the maintain wealth stage, but once you get into the multiply wealth stage, and you do, again, thinking through these things, there is a lot of fun planning you can do, to think about, okay, what are the best ways I can leave an inheritance behind for my kids, or my heirs, or my beneficiaries? And eMoney, the factors you've been thinking about that shows you probably, financial mutant, right?

• 17:14Brian Preston?

  Well, and this is also, I mean, this is why it's good to, I say that complexity will naturally find you, you don't even have to go looking for it, it's just you'll know it when it slaps you across the face, and you go, gosh, I didn't even thought about it. But you can see, I was, my eyes probably even lit up, because it is a fun exercise to start thinking about how you're going to navigate the jigsaw puzzle of complexity, on different account structures. Each choice you make is going to have a different result, and you're trying to balance the pros, the cons, and really help people navigate the best decision. It's fun for us to kind of optimize that. And imagine if you could have somebody in your corner who has those skillsets, who has that aptitude, and then while you're in your hardest of times, because realize, if you're the executor, or whatever, you

• 17:59Brian Preston?

  have a loved one that passed away. So you might not even be in your clearest of mind, because you had such a huge life event. Isn't it nice to have somebody that can kind of help you navigate that, even when you're probably, who has your same mindset, has that financial mutant mentality, but just doesn't have the pullback, or the struggle of some of the emotional stuff that you're gonna be dealing with, in the realities of life?

• 18:22Speaker 01

  Love it. E Money, that was a fantastic question. If you would like, E Money, I feel like I recognize your name. I feel like you have one of these, but if you do not have a Tumblr, you can reach out to winner, W I, I'm not going to spell it, at moneyguy.com. [email protected]. We'd love to get that to you. I can, so, okay, so right now, I see Matt flailing his arms. You want me to tell them the, you want me to tell them the, all right, we're supposed to announce something. This is why we don't, if we don't have Rebe here, we totally forget. You know what we're supposed to announce?

• 18:50Brian Preston?

  I have no idea what we're supposed to announce.

• 18:52Speaker 01

  So, right now, there is a huge, huge sale going on.

• 18:58Brian Preston?

  Yeah, that, yeah, y'all get in there and get that.

• 19:00Speaker 01

  A huge Black Friday sale going on. Right now, we're doing something that we have never done before. We have dropped the prices on some of our courses and tools in a way that we've never done before.

• 19:12Brian Preston?

  That's lovely. We've actually gone insane in the fact that Bo did this, by the way, because we had an idea of what we were going to do for Black Friday, and then Bo goes, no, no, no, why don't we, since we're already at this point, just go ahead and unleash it at this.

• 19:26Speaker 01

  Because I feel like more people need it. More people need to have access to our tools, to the things that we're able to use. So I wanted to make it very easy for people to get it in their hands.

• 19:36Brian Preston?

  And since we didn't talk about this, obviously, since I'm like, I have no idea what you're going to talk about, Bo, you know, doop, doop, doop, doop. But I will say, even though we're doing some of the world's best pricing on any of the things we've ever done with Financial Order of Operations, all the other stuff, I think it's crazy. We didn't even plan this. I was kind of surprised. I was just out there doing my typical thing. I was trying to go read Amazon reviews. I'm such an idiot.

• 20:00Speaker 01

  That's what you do instead of social media.

• 20:02Brian Preston?

  If I get bored, I go on Amazon, I go on Goodreads, and I read reviews. While I was on Amazon looking at reviews, I was like, holy cow, I've never seen the price that cheap. So Millionaire Mission right now on Amazon is below 20 bucks. I've never seen it that price. I don't even know how all this stuff works. I'm so, such a noob when it comes to publishing. So I don't think it's anything to do with my publisher. I think Amazon is just like, hey, let's see if we can push these things. I think when I checked it this morning, we're getting close to 40% of the books that they're selling at this discount price it sold. So get in there, let's see if we can get it to 100%, because maybe then Amazon will order even more. I like that thought. That'd be kind of cool.

• 20:40Speaker 01

  If you want to know more, you can go to learn.moneyguy.com. I believe that our sale ends on December 2nd. Is that right?

• 20:49Brian Preston?

  Sorry to step all over the other deal.

• 20:51Speaker 01

  I'm sorry. Go to moneyguy.com/blackfriday. If you want to see all the Black Friday deals, you only have 13 days left to do this. It's the biggest sale we've ever had on all of our products because we want them to get in your hands. Rebe would be so proud of us right now.

• 21:07Brian Preston?

  Well, she'd be proud of you. Me, I'm over here muddying the water, talking about millionaire mission, telling you I don't know what's going on.

• 21:15Speaker 01

  We're having a huge sale and Brian just sent everybody to Amazon.

• 21:17Brian Preston?

  So give that website again. It's moneyguy.com/blackfriday?

• 21:21Speaker 01

  That's right. Moneyguy.com/blackfriday.

• 21:23Brian Preston?

  Yeah, y'all go check that out and then go to Amazon after that.

• 21:28Speaker 01

  Oh, Rebe, if you're watching, we need you back. We already need you back. All right. We're doing questions. You want to answer another question?

• 21:35Speaker 02

  The Money Guy Show is hosted by Brian Preston. 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 and does not constitute financial, tax, investment, or legal advice.