Vanguard Predicts Market Collapse in 2026 (Are They Right?)

Vanguard released their annual Economic and Market Outlook, and this year isn't a happy report. We take a look at some of the key insights, then give you the steps you can take to protect your finances - no matter how the market performs. Then we answer your financial questions and have yet another update to our "It Doesn't Depend" rapid fire segment! ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠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. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠DRINKAG1.com/MONEYGUY Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:01Speaker 00

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

• 0:26Speaker 01

  This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.

• 1:01Brian Preston?

  Oh no! Vanguard's predicting the market's gonna collapse. What shall we do?

• 1:07Speaker 03

  Brian, I am so excited about this because it seems like inevitably this happens. We've been here before. There are some market predictors out there suggesting, man, okay, we've had a decent run up. It must mean that now is the time to start worrying.

• 1:22Brian Preston?

  No, it's much more than that, Bo. You're so polite. Is that I actually think that if I was in another life, I want to be the Vanguard economic predictor.

• 1:32Speaker 03

  The market predictor of Vanguard.

• 1:34Brian Preston?

  Because it's going to be, it's gonna be just very much like the Maytag repairman that's in the commercials is because you just go, hey, it's time for you to come out and tell everybody your economic prediction. And he goes.

• 1:48Brian Preston?

  It's scary out there. There's bad stuff coming.

• 1:51Speaker 03

  Below average returns coming your way.

• 1:52Brian Preston?

  Below average returns, set it. And then we'll do this for the next 10 years. And guess what? Nobody ever gets ticked off at this guy or gal.

• 2:01Speaker 03

  Because things always end up better.

• 2:02Brian Preston?

  Because when things are better, everybody's like, oh, it's okay. Things turned out better than he anticipated or she anticipated. That that doesn't mean that we should give them awards or or give them the what the market pays attention to this report every year. You can set a clock to it. We'll be covering this probably next year at the same time, same bat place, and it will be just as negative as it is currently.

• 2:25Speaker 03

  Yeah, so they released this report. It's called the Economic and Market Outlook, and this year, this is what it said. It says, AI exuberance, economic upside, stock market downside. It doesn't sound very good. It sounds like, man, we've been through this thing, and they even have some data in there that taken out of context might be alarming. They said that we could even potentially right now be at a wealth tipping point that's worth recognizing, and this is how they quantified that. They said in the-

• 2:55Brian Preston?

  Now, wait a minute, wait a minute, because this is no different than when I watch football or sports. There'll be some, they even put graphs around it on whatever networks got the Super Bowl, and they'll say, every year that Patrick Mahomes eats Taco Bell before he plays football, they typically win the Super Bowl. There'll be some crazy data mine stat that they will pull up on screen and even, you know, gloss it up. I feel like what we're about to see now is Vanguard, once again, will go cherry pick some data on why you should be petrified.

• 3:29Speaker 03

  So we're doing it. We're doing the same thing that the Super Bowl folks do. Is that what you're saying?

• 3:33Brian Preston?

  Exactly. Well, we're not doing it. The media, the financial media is doing this to the public.

• 3:38Speaker 03

  Well, this is what they said. They said, okay, if we look at five-year rolling periods, based on historical medians, how much does equity increase over a five-year period? Equity, meaning like stock market, US equities, and then how much is real estate? And over a five-year period, the historical median is about 23% rise in equity prices or stock prices, and about a 22% rise in real estate value. So if you look at the increase in wealth across those two metrics over a five-year period, on average, it should be around 46%. That's the historical median. Well, they said if we think about the last, you know, last time we saw a lot of exuberance, a really frothy market-

• 4:18Brian Preston?

  Here's the Taco Bell.

• 4:20Speaker 03

  We can go to the dot com and we see that during the dot com or right before the dot com bubble crash. If we look at how much equity has increased over that five year period is about 57%. If you look at real estate, it was about 26%. So there was an 82% increase in wealth across those two metrics in that five year period. And so this was the question that Vanguard posed. If that's the historical median and this is what it looked like right before the dot com crash, where are we today? And if we look at the last four, last five years, you can see that based on stock market returns, equity, wealth increase, it's about 44%. And real estate is about 28%. So the conclusion that Vanguard drew from this data was that, man, it looks like we're

• 5:04Speaker 03

  a lot closer right now to dot com bubble territory than we are to historical median. So, well, Brian, what do you say to that? How do you respond to that?

• 5:14Brian Preston?

  They don't really know. And also they buried in some optimism within even their pessimistic report. And if you want proof on this, because look, we've started keeping score on this stuff. And if you look at the next slide is what they predict will be the weighted average annual performance over the next 10 years. They say it's going to be between 4 to 5% annually. So the reason that I tell you there's even a little bit of optimism in there is that we're going to show you what they predicted in 2024 and what they predicted last year in 2025. And here's what I think is interesting. The 10 year predicted prediction in 2024 was 3.7 to 5.7. Well,

• 5:55Speaker 03

  Now it's a little bit higher.

• 5:56Brian Preston?

  We're 4 to 5, so somehow we're a little higher. And then fast forward to 2025, what did they predict last year? 2.8 to 4.8. So even though they're about to show you, because we're going to show you that what the headlines were the last two years, they've still now built themselves an out by going a little bit more optimistic on that 10 year annualized. What could that be? It's all the technology changes. They're hedging themselves just in case we're in a unique time from a technology perspective that pushes this up even higher.

• 6:23Speaker 03

  Yeah, we thought it'd be interesting to go back to some of their historical reports to see what they said. And if we just go back just a few years. 2024, the headline was US equity valuations need to fall to return to fair value. Well, we have the benefit of history on our side and we can say, okay, well, what did the market do in 2024? It actually made 23.3%. So that headline did not lead to an appropriate market reaction based on what headline was. But what about 2025? It said, digging deeper into US equity overvaluation. And what did we see in 2025? The markets again made 16 and a half percent.

• 7:01Speaker 03

  So obviously what Vanguard is espousing, what they are saying is not necessarily true to what we're actually seeing as investors in the real world.

• 7:10Brian Preston?

  Now, look, the market could fall.

• 7:12Speaker 03

  Sure.

• 7:12Brian Preston?

  Very well, it could fall this year, but the thing is, I'm always telling people, it doesn't matter as long as you have a plan that's good before, during, or after. I'm just saying, my big takeaway is don't fall prey to the sensational headline.

• 7:27Speaker 03

  Yeah, not, not only does it, it doesn't matter if the market falls. No one knows, and I think I'd be very careful of anyone out there telling, hey, this is what's going to happen in the next six months, 12 months, 24 months. Because nobody actually knows. And what ends up happening is you see these headlines all the time around this, you know, someone says, so and so market predictor has predicted 50 of the last three recessions. Right? Because they keep saying it's going to be bad, it's going to be bad, it's going to be bad. Vanguard hasn't been a whole lot different because they've had a pretty negative market outlook for really the last decade. And realistically, the last decade's been a pretty great time to be an investor in US equities.

• 8:06Brian Preston?

  Well, the reality is, and this is because I never know how long somebody's been an investor to understand what to anticipate or predict, or, or even think is going to come your way. And I always remind everybody that investing is like walking up that hill with the yo-yo. Now, I know, look, I, I age myself because I went through a yo-yo phase in my childhood. I don't even know if kids, young people even know what yo-yos are anymore, but it is.

• 8:29Speaker 03

  Yo-yo still a thing?

• 8:30Brian Preston?

  It's this, it is, it is, I mean, any young people over there on the, on the content team that yo-yo too? So maybe everybody knows what yo-yos are, but you know, yo-yos, you throw them up. You throw them down, but if you're walking up the hill, even though every time you throw the yo-yo up or down, it's and that's what day to day volatility in the market feels like. If you're walking to higher and higher ground, that day to day volatility or throwing the the yo-yo up and down just doesn't matter in the grand scheme of it. And that's what I always try to remind everybody is don't get caught up in the sensational headlines. Don't get caught up in the predictions because you are going to find yourself in a completely different place. If you just know how this game works.

• 9:11Speaker 03

  But volatility is a thing that exists in investing. It's not uncommon for the market to go down. If you invest for a long enough time, you're going to experience that. And so what you want to make sure of is as an investor, you make sure that your plan is built for both the good and the bad times relative to where you are. Obviously, your portfolio, the way that you invest, what your allocation looks like, should look very different if you were a 25 year old at the very beginning of your journey, or if you are a 55 year old getting close to the end of your accumulation journey. You want to make sure that your plan appropriately accounts for the fact that, yes, downturns could happen. What's the best way for me to take advantage of those?

• 9:53Brian Preston?

  And that's that leads to First Trust does a great job. If you want perspective on what's going on in the markets is if you compare what we as investors and and just this whole relationship with fear and greed and us as humans, the creatures of humans, we feel the pain of loss much more than we we enjoy the the winds of making money. And that's why you see so much content, you see headlines and everything is preparing you for the losses. Because they know that's the sensational stuff that's going to capture you and get keep your eyes and your ears focused on it. But when you actually when in doubt, zoom out and look at the history of the financial markets, bull markets are so much more part of what you can expect than the bear.

• 10:38Brian Preston?

  And then if you look at what First Trust put together, and this is as of the end of 2024, bull market periods typically around 4.3 years cumulative returns of around 150.

• 10:50Brian Preston?

  Bear market is the thing we're all scared to death of typically lasts less than right around 11 months.

• 10:55Speaker 03

  Less than one year.

• 10:56Brian Preston?

  With an average cumulative loss of 30, close to 32%.

• 11:00Speaker 03

  One fifth of the upside.

• 11:01Brian Preston?

  So it's back to the point that it's always better to be an investor. You essentially are part of the house, meaning things are in your favor to actually be a long-term investor. If you just understand this, and I subscribe to this law of accelerating returns, you know, realize wealth creation is not a zero-sum game. Nobody has to lose for you to make money. If you actually go look at what the earnings of the financial markets were like back in the 60s and 70s, they are exponentially bigger now. Now, look, inflation is definitely a portion of that, but a lot of that is also the innovation and that the pizza pie actually got bigger.

• 11:42Brian Preston?

  And I think as long as we're growing this thing, now, look, I don't know if we make the AI, the robots, and they eventually just it turns into the matrix. But, you know, so there is that risk, but you know what? There's not a financial product that's going to actually help you survive that part of it. So it leads me back to what can we do, assuming that this actually, this law of accelerating returns is going to make innovation and earnings and everything keep growing, is that we can remember, always be buying.

• 12:09Speaker 03

  Always be buying.

• 12:10Brian Preston?

  That's what you can do. And then promise yourself, because all of you new investors who find our content, that first 10 years is going to be an education for you. You have to promise that you're going to hold on, even if 2026 is the year that the stock market gets punched in the mouth, you're going to be okay if you will just always be buying, stay consistent and realize you're throwing that yo-yo up and down as you walk higher and higher up the hill.

• 12:36Speaker 03

  It seems like there's always going to be voices out there that are trying to frighten you, scare you, tell you how scary and how uncertain things are. I hope that we get to be the counter to that. I hope we can be the ones that tell you, hey, if you have a plan in place and you stick to that plan, the markets are resilient. If you can be resilient as an investor, you'll likely be rewarded over the long term. That we get to sit in this seat, sharing that kind of information. I love that we get to sit here, Brian, every single Tuesday at 10 a.m. Central, and we get to load you guys up. We get to answer questions about the things that you care about. So if you have a question for us, you want to get our take, you want us to weigh in on something in your life, right now, we have the team out in

• 13:20Speaker 03

  the wings collecting your questions. So if you have a question, make sure you get it into the chat right now, because we really do believe that there is a better way to do money. So with that, Crave, the Director Rebe, I'm gonna throw it over to you.

• 13:33Speaker 04

  William H.'s question. It says, "Hi, Money Guy team. What do you guys think of saving for kids' college in a brokerage account instead of a 529? The tax benefits of 529 are great, but I love the flexibility of a brokerage account. Thanks." Because I know you guys really appreciate 529s too. So what do you think?

• 13:53Speaker 03

  Um, okay, so here's, I'm gonna, I'm gonna give you an analogy. Uh, my wife and I recently went to Montana, and you may be wondering, what in the world does this have to do with this question? But I'm gonna get there. And one of the things we did when we were in Montana is there were some frontier skills thing. And one of the frontier skills that I got to learn was how to take a stick and another stick and a rope. Oh, you get to make fire. I got to make fire, right? And I was able to like, if you really get that thing going, you can make a friction fire, and they can teach you how to do that. And that's a fine way to make fire. If you're out somewhere, that's a great way to make fire. You will accomplish the goal of creating fire. But where we sit today, there are much more efficient ways to do that, right?

• 14:36Speaker 03

  Like, I can just go get a lighter, or I can get a match, and perhaps that's gonna be a better way, a less painful, more efficient way to accomplish the same goal. That's how I would still answer your question about saving for college. Can you save for it in an after-tax brokerage account? Absolutely. You can do that. You can build the money. You'll have a little bit of tax drag there, and you can pull those dollars out, and you can pay for higher education. But if you know that your goal is gonna be for college, and you know that's what those dollars are gonna go, go towards, in my opinion, there is no better, no more vehicle to be able to do that than a 529.

• 15:13Brian Preston?

  So William's counterpoints go probably be, but yeah, I like the thought though with all the student loan debt and, people questioning what's going on in colleges. What if my kid doesn't actually, we need more flexibility. That's what I would think somebody like William would be asking, hey, let's do the brokerage account because now it, it has some separation. There's no penalties and I could have access to the money. Let me play even that angle because I'll make a case that 529s have actually gotten better. Um, I think when these things first came on the scene, they were specifically set up for college funding. But everything that I've seen coming down the pipe for the last two decades on 529s is they're actually opening up and providing even more access to these

• 15:57Brian Preston?

  turbocharged savings vehicles. Cause here's why we love them. And then I want to continue on with my, my line of thought there. Is that you put in contributions to a 529 in many states out there. If you're, if you're funding in your state funded plan, um, and you have an income tax in that state. They gives you, a lot of them are giving you tax incentives. You need to go and do your research, do your due diligence to figure out, like we live in state Tennessee. There's nothing like that. But in the state of Georgia, well, there was a very large one. So go and do your research because there might be some incentives even from a tax perspective to help you fund this thing. But here's where they've made 529s even better. So you get that, you get the, the tax deduction in the current.

• 16:38Brian Preston?

  If you use these for qualified education expenses in the future, all the growth is completely tax free.

• 16:45Speaker 03

  That's right.

• 16:46Brian Preston?

  And here's the other thing, if your kids get a scholarship or some other way, you can even get access to the growth of these, these 529 assets and still pay income taxes, but you can waive the penalties. If you get scholarships, there's even a get out of jail free. If you, if you're, if you're one of the, your kids are gifted athlete or a gifted scholar. There's even ways to get access to the money. It's going to be just like a brokerage account, by the way. So, which is pretty cool in those aspects, but I love the opportunity and I used it. Remember my daughter is graduating this May from college, 529, man, oh, man, it's a high.

• 17:22Brian Preston?

  It's a high five moment because it was just so powerful to watch my little $2,000 a year contributions because that was the majority of my time that my daughter was a, that I lived in Georgia. That was the most you could put in. Now they, they beefed that up even more. You can put, I think you can put up to 8,000 per beneficiary, but it was 2,000 for a lot of the time. And that's what I was putting in. It was $500 a quarter. And to watch these accounts pay for literally three years of my daughter's college because compounding growth was really spectacular. And here's where these things have gotten even better. And I'm sorry to totally filibuster this thing and take it from you.

• 17:57Speaker 03

  No, you're doing great.

• 17:58Brian Preston?

  Is that if you think about, now you can use it for trade schools. You can use it K through 12. They've also, it used to be if you did it K through 12 for like private school and other things, it was capped at $10,000 a year. They just boosted it to $20,000 a year. So these things, and now even you can fund Roth IRAs when they first come out into the workforce with 529s. They've really created a lot of avenues that even if your kid's not traditionally college bound, you're going to be able to find use for this money. And then here's the catch all that even catches, you know, for later. If you think there's a chance you might have grandbabies, meaning your children will have kids, even if they don't go to college, there might be an opportunity to roll those assets over to even their own children or another family member. Pretty, pretty powerful stuff.

• 18:42Speaker 03

  There's a lot more escape hatches than there used to be. And if you're thinking about this woman, did William say how, how old his children were? Did he mention that? He did not. If you got a really young kid, you're like, man, I just don't know how this is changing. There's nothing that says you have to do all of your savings in that vehicle. You can do both.

• 19:00Brian Preston?

  It's an and instead of an or.

• 19:01Speaker 03

  Maybe figure out, okay, what's the, what's the lowest level I can fund to get the tax benefits? Or maybe I just want to shoot for a 50% of college or 75% of college to come from the 529 and will make up the rest in the brokerage account? There's nothing wrong with doing that. You have to determine, okay, what's the best way? But it's, it's an incredibly efficient vehicle to save for that goal.

• 19:22Brian Preston?

  I'm going to say something. This is probably not a great show, but we ought to do an, an and versus an or show. It's because there's so many concepts in the financial world. It's just like, you know, when we hear people talk about Roth IRA or your 401K. It's usually an and. But a lot of people ask questions, they're looking for either or, and we're like, no, it's and. That's probably not a great show.

• 19:45Speaker 03

  Let's put that on the title list of really clickable titles.

• 19:47Brian Preston?

  And or.

• 19:48Speaker 03

  The And or Show. The Money Guy And or Show this week.

• 19:51Speaker 04

  Would you click on that show?

• 19:52Brian Preston?

  I'm really good at kinda doing some of this stuff. Maybe I'm not the greatest for coming up with the next show idea.

• 19:58Speaker 04

  No, I think you gotta, you gotta get all the ideas out there, right? And then one of them's gonna stick.

• 20:02Speaker 03

  Hey, there's no bad idea in content creation. They just don't all make it all the way out to the public.

• 20:07Brian Preston?

  Oh, no. With YouTube, you quickly find out if it's a bad idea.

• 20:11Speaker 04

  Well, William H., thank you so much for your question. We're gonna do a few more questions, but in the meantime, let's prep for our rapid fire segment. This is our It Does Not Depend rapid fire segment. So if you would like to submit a question that Brian and Bo have to answer in under 60 seconds.

• 20:29Brian Preston?

  Favorite section of the show.

• 20:29Speaker 04

  Together.

• 20:30Speaker 03

  You don't mean that.

• 20:31Speaker 04

  Just drop your question in the chat. Make sure you put RF for rapid fire in front of it, so we know that you wanna be part of that segment. And then remember at the end of the segment, we will have a Maybe It Does Depend segment, where you guys get to hash out anything that was left unsaid by your rapid fire answers.

• 20:51Speaker 03

  I love that.

• 20:52Speaker 04

  All right, so we'll be watching the chat.

• 20:54Brian Preston?

  I was trying to think of something that Bo doesn't like to do that we can make him, and the low lying fruit is swimming. But we're not, no, but we're not gonna go there, cuz I do that too much. I pull that one too much. I'm trying to think of what else we could pull that Bo's not good at. The problem is he's good at everything, so it just doesn't hold water. But I'm like, it's so unfair that part of why I think this, this appeals to everybody is they like seeing me squirm cuz I'm not good at it.

• 21:16Speaker 03

  Literally, before you even got it out, Jake said RF, that was Kimbo Swim. Like, he literally got that. So you have planted this seed in the minds of our folks that I.

• 21:25Brian Preston?

  It's not. It's more of like a fact sharing.

• 21:28Speaker 03

  I can swim. I can swim.

• 21:31Speaker 04

  We should ask that and just hear you both in tandem. Brian goes, no. Bo says, yes. Next question. All right.

• 21:39Brian Preston?

  No, when we ever, if we ever do, you know how I always say, hey, if we hit like a million subscribers, we're gonna do this. If we ever find the content team in the ocean together, we can test this. They probably, okay, here's a sidebar, here's a sidebar.

• 21:55Speaker 04

  That scenario.

• 21:55Brian Preston?

  Back when, this is pre, this is pre anybody. I think Bo's the only one other in the room. Bo and I, when we, when we abound wealth, kind of started taking roots here in Tennessee. We went to the team and we said, hey, when we reach this asset under management level goal, I'm gonna take everybody on a cruise.

• 22:11Speaker 03

  We're going to big firm cruise, you and a plus one.

• 22:13Brian Preston?

  And we quickly, we hit this goal and I remember I was so excited. We're gonna go on a firm cruise. And then I started, and there was only like five employees, six employees. It was not many of us. And so this wasn't even gonna break the bank. But I was, so I went around and I quickly saw that the only people that wanted to go on a cruise together was me and Bo.

• 22:32Speaker 03

  It was just us two.

• 22:33Brian Preston?

  And our spouses, because everybody else was like, oh, we want, we actually hit that number. Oh, okay. Let me see if my calendar's open. So I actually had to amend the giveaway and I was like, okay, would you rather, I went and did a poll with our five or six employees at that time. And I was like, okay, it's an all expense for you and your spouse to go on this cruise, or I can give you an extra, I can get a cash bonus. It was me, you and Carol.

• 22:58Speaker 03

  And everybody else took the bonus.

• 23:00Brian Preston?

  So it must've been more than five or six, because it was me, you and Carol wanted to go on the cruise. Everybody else took the cash option.

• 23:07Speaker 03

  It's a shame.

• 23:07Brian Preston?

  And I've realized you never joke about that I was going to, so I don't want to know if the content team would want to go to the beach or not with us.

• 23:16Speaker 04

  He just doesn't want to know.

• 23:17Brian Preston?

  Cause it would break my heart, because I would like to go to the beach so we could not only in addition to spend time with the content team, we could do the exercise of throwing Bo out in the ocean.

• 23:26Speaker 04

  He wants to make content.

• 23:27Brian Preston?

  And I would be on, I would be on ready. Don't worry. I would be able to recount, you know,

• 23:30Speaker 04

  Yeah, you would have to save him.

• 23:31Brian Preston?

  Get up, he hadn't even saved him and pulled him in. But, um, but that's not probably never gonna happen. I think, I think Rebe would probably want to go to the beach with us.

• 23:39Speaker 04

  I would go to the beach, yeah. Sounds fun.

• 23:40Speaker 03

  Cruise, money guy cruise.

• 23:41Brian Preston?

  I'm not, I don't want to, nobody else volunteer. I don't want to know. I do not want to know if you want to go to the beach with us, because it might break my heart.

• 23:49Speaker 04

  Oh, man. All right, let's dive into Jacob's question next. It says, hey, my wife, who's 35, and I, 30, will make over 200K for household income for the first time this year, which is, you know, a big milestone.

• 24:02Brian Preston?

  At a young age, too. Go on, player.

• 24:06Speaker 03

  Go on, player? Isn't it play on, player? Isn't that the way?

• 24:10Brian Preston?

  I make up my own stuff, Bo. Don't you figure this out? My brain, it creates its own universe.

• 24:15Speaker 03

  You go on, player.

• 24:16Speaker 04

  Uh, the next part of the question says-

• 24:18Brian Preston?

  Don't hate the player, hate the game.

• 24:23Brian Preston?

  Okay, keep going, I'm sorry.

• 24:24Speaker 04

  So Jacob continues.

• 24:25Brian Preston?

  Step all over your question.

• 24:26Speaker 04

  We both work for a private giving us, for a private company, I believe, giving us ESOP shares, ESOP shares. Can we still include the shares in the 25%? We can't buy in.

• 24:40Speaker 03

  Well, well, this is, okay, so, so what, what is your 25% savings? For us, it's the behavioral number that you're putting away, right? Like, so why do we want you to save 25%? It's, hey, if I make $100, $1,000, $10,000, $100,000, I'm saving 25% of that gross for the future. Now, you're in this situation where it sounds like your employer is gifting you ESOP shares. Now, not all ESOPs are created the same. And for those of you who don't know, this is a unique entity structure where all of the employees, or at least all the participants in the ESOP are actually owners of the company. So, it's not, it's a, it's an employee-owned company, and ESOP stands for Employee Stock Ownership Plan.

• 25:24Speaker 03

  Well, if you're just being gifted those shares, it's nothing behavioral that you're doing. And so, like, can that be included on your net worth statement? Is that part of your overall net worth? Absolutely. But at a high income, at a $200,000 income, should that replace or take part in, uh, your 25% savings rate? Brian, as I'm thinking through this, I think it's a lot like an employer match at that level, and what do we say about employer match?

• 25:51Brian Preston?

  Oh, I'm willing, I'm willing to go hard in the paint on that this is a twofer. Is it because, by the way, Jacob, you, you guys, you just shared, you're across 200- 100,000 and y'all are young, 35 and 30. You have too big risk for you in the long-term future. First of all, people, because I saw this in the comment section over the weekend. Somebody goes, where is this? Why is it 200,000 for married couples and 100,000 for a single individual? On this 25% where we get to count the employer versus not count. It's because of that social safety net and realize the more success you have, the more responsibility falls on your shoulders. If you, if you're, if you're a person, if you're, you never make more than $80,000 a year.

• 26:31Brian Preston?

  As a household, as an individual, you're pretty, social security is going to probably pay you 20, 25,000, 30,000. You know, depend on how much, you know, where's cost of living is at the time and inflation and so forth. That's going to cover a big chunk of your retirement, especially if you're only living on 60 or 70% of what you made. But for somebody who's making two, three, four, because you're, you're assuming at y'all's age, y'all's income keeps going up. And you start, if you spend based upon what your income is, it's going to require a big pot of money to replace that. So that's, that's one risk you have there is that you're far away from the social safety net. So you better be saving accordingly because you probably have bigger taste, bigger consumption.

• 27:15Brian Preston?

  So you need to plan accordingly. The second thing I worry about with an ESOP is that, you know, the viability of the company. Now this could be huge for you, no different than like Bo and I are small business owners. On our net worth statements, that potentially could look big, but the reality is we don't get to use that. It's not liquid yet. It's not liquid. It's, it's kind of just something that's sitting out there and you know, it's, it's a cherry on top of your sundae. It's not necessarily promised to you. So I would, I would worry because what happens, and we've seen this by the way, where you have this, every year you get an annual valuation or whatever, and it tells you how much this thing's worth. That might turn into something that creates even more financial success for you,

• 27:57Brian Preston?

  but it might not. We've seen businesses that have collapsed. And then you don't get that valuation. And what if you were now counting that with your high income? You didn't save what you could have because you're like, ah, I got that ESOP just sitting over there. What if that didn't come out? You might have an, uh-oh, what do we do now? So that's why I consider this a twofer. You should definitely be trying to build up your 25% of your gross income savings habit because you have two risks. You have that you're, you're building up well beyond the social safety net. Number two is you're not promised that ESOP will turn into big money for you down the road necessarily if the company ever runs into any financial issues.

• 28:36Speaker 03

  And if it does turn into big money and you have been saving, what that means for you is you have flexibility and options earlier in life. If you guys can begin saving that 25% at 30 and 35, life's gonna likely look really, really good in the 40s and 50s where you're gonna be able to do what you want because you want to do it, not because you have to do it. And that's a fantastic place to be in.

• 28:58Brian Preston?

  The big thing is it's okay. You know, if you under expect and you plan accordingly, then you get, cause that's what I did. When I planned on retiring at 50 and now here I am beyond 50, I don't want to, it's not really a bragging as you get older beyond 50, but I love the additional flexibility. It's not hard for me to process. I get more flexibility and options. What I don't want you to do is start off poor. You build up some success, but then because of unfortunate things and not good planning, you go back to being poor. That hurts. I can tell you that, that doesn't feel good whatsoever. So that's more of a risk than it is if you are over optimistic on your assumption planning and then you, you find, or you underestimate

• 29:42Brian Preston?

  your assumptions and then you pleasantly get surprised. That, that's a better case study.

• 29:46Speaker 03

  Love it.

• 29:47Brian Preston?

  Better planning objective.

• 29:49Speaker 04

  Well, Jacob, thank you so much for the question. We appreciate it. We're gonna do one more before our rapid fire segment.

• 29:54Brian Preston?

  Oh, gosh.

• 29:54Speaker 04

  So.

• 29:57Speaker 03

  You know, this is a show. This is, you're, he's putting on a show. You love this. You love the rapid fire. I know you do. I can see it. I can see it in your face.

• 30:06Brian Preston?

  Tuesdays. I love show days. I woke up excited to come in here.

• 30:10Speaker 04

  This may be the end of the rapid fire segments.

• 30:12Brian Preston?

  On that we were going to be, that this rapid fire is now becoming a weekly thing.

• 30:16Speaker 04

  Oh, man. We actually have some fun, a fun addition to the rapid fire segment today, too. So if you're watching, stay tuned.

• 30:22Brian Preston?

  Yeah, that's what we need.

• 30:23Speaker 04

  All right, let's just do a normal Q and A question, though. Here we go. It's from HRJ7656. It says, hi, Money Guy team. I'm 33 and work in the trades and will get a pension at retirement. This is my first year maxing out a Roth IRA as well.

• 30:37Brian Preston?

  Nice.

• 30:38Speaker 04

  I've heard I should keep my age in bonds in the account. Should I follow this or go harder with stocks since my pension is very stable and well-funded in out, in out, in our union? That's what he means.

• 30:52Speaker 03

  Yeah, there's, there's two things. Um, since you brought up the, since you brought up the big one, I'll leave that one for you. Uh, you have to be careful of these rule of thumbs. Hey, when it comes to investing, my allocation should be X. And you know, you can hear, hey, I don't want to hold, you know, my age in fixed income, or I want 100 minus my age in equities, or you know, fill in the blank on whatever metric you're using. You need to be really, really careful about that because if I were reviewing your portfolio now, not, not knowing your unique risk tolerance, your unique risk horizon, uh, risk capacity, having an idea of your time horizon, but not knowing your other wealth. I don't know that I'm going to recommend a 33 year old have 33% of their, their assets in fixed income.

• 31:35Speaker 03

  That seems like way, way, way overly conservative to me, most likely. So I worry that if you keep 33% of your assets in fixed income or conservative investments, your wealth multiplier is not going to be what it could be. And if you don't know what I'm talking about, go to moneyguy.com and you, uh, slash resources, you can play with our wealth multiplier tool. And you can actually put in there, uh, your age and how much you're saving. Just think about that Roth IRA, that 7,500 that you're going to max out for the first First time this year and look at what that can turn into by the time that you get to age 65. Now, the wealth multiplier is precipitated upon the fact that that's going to be a growth type investment,

• 32:17Speaker 03

  a growth type asset. If you have 33% of that in bonds or fixed income or CDs or cash or whatever, there's a really good chance that you're not going to recognize that and that's probably going to be overly conservative for where you at. But Brian, you bring up another point, just based on the type of account that has to factor in also.

• 32:35Brian Preston?

  Yeah, I mean, there's two things that hit me hard on this is I think about a lot of my early career when I started my, my first financial company was I had a lot of educators that were clients and now I've worked with these people for 20 plus years and I've gotten to experience what it's like to work with all these educators in their retirement years. And what's amazing to me is that for a lot of these educators, they don't spend a lot of money. I mean, they have very low expenses and then they, a lot of them went and worked in the central office and a lot of those formulas is the last three, your highest three years. So their pensions cover 85 to 100% of their living,

• 33:16Brian Preston?

  retirement and living expenses. So we found out we never even really touched their financial assets. You're crazy if you don't take into these type of things, exactly what you brought up with the question, you know, your cash levels or your pension levels, because those might be able to offset and act as the essential, you know,

• 33:34Speaker 03

  The conservative.

• 33:35Brian Preston?

  The conservative side of your investment portfolio. So that's the first thing that I would, because I will confirm that you're right to even think about that. The second thing is what Bo is alluding to. It ties into Roth accounts, the superpower of them is they grow completely tax-free. So if you think about the decades that you're going to have compounding growth working for you, the fact that they're growing completely tax-free is something that you ought to maximize. That's why I always, you know, when I talk about in Millionaire Mission, you want growth assets in your Roth IRA, because you want to stick it to the man legally as much as possible.

• 34:16Brian Preston?

  To grow that. Now, you don't want to be so aggressive that you potentially could lose the money because it's not a place for speculative investing, but it is definitely a place that you want to maximize growth opportunities. So I don't know that I would recommend putting such a high level of conservative assets in the Roth. You know, when we talk about the three bucket strategy, you're going to have after tax assets, tax deferred assets, and then you're going to have tax free assets. You're going to, when you put together your own personal jigsaw puzzle of your allocations by different account structures, you're probably going to put your aggressive stuff in those Roth accounts and you're going to put your conservative stuff in that tax deferred account because you're going to already pay ordinary income taxes when you pull that money out anyway. So let's go ahead and put conservative stuff in there.

• 35:00Brian Preston?

  There's going to be taxes, ordinary income. So that way they work together. As you can quickly see, even if we give you all the detailed pieces, this gets complex really quick. That's why I always tell clients, your hardest years are typically those retirement years as you're trying to figure out how we use the money in the three bucket strategy. When you get to that level of complexity, that's where we do the porch light on. So you can consider taking the relationship to the next level.

• 35:24Speaker 03

  And then just one last thing I'll throw in there is you're thinking about your allocation. This is your first year maxing out your Roth IRA and you're kind of like caught up on how do I allocate? What do I do? Where should I put it? This is one of the reasons why we love target retirement index funds because at your age, if you pick a long dated target funds, you know, 2060, 2065, you know, you kind of figure out which one makes sense. The vast majority of that target retirement index fund is going to be on the equity side anyways, and it's going to do the natural allocating for you. So you don't have to over complicate it. You just got to answer two questions. When do I think I might need this money? When am I going to retire? Or when am I going to turn 59 and a half for Roth?

• 36:04Speaker 03

  And then how much can I save? You focus on those things and let the market do its job of allowing compound interest to be the wind at your sails, wind at your back, the wind in your sails at your back.

• 36:18Speaker 04

  He's like warming up physically, like getting ready for the intense sprint of the rapid fire segment. And he's right to be doing that because it is time for our it does not depend rapid fire segment where Brian and Beau will answer your questions in 60 seconds

• 36:36Brian Preston?

  Combined.

• 36:37Speaker 04

  Combined, so 30 seconds each. Um, and they cannot say it depends, or they're disqualified from answering.

• 36:45Brian Preston?

  By the way, before you start, I'm not trying, I am delaying it on purpose a little bit. Guys, I've been saying we need a buzzer or something. You ought to have seen that weak sauce that came into the content meeting this morning and Rebi was even embarrassed like, no, we can't use that. We're trying to figure out if we're going to do this, if we're going to do it, we need to find a way to really almost not, not the shock collar. I think that might've been a, not a great suggestion.

• 37:10Speaker 04

  That was your idea.

• 37:11Brian Preston?

  But, but we should probably have something that at least wakes you up a little bit if you, you know, if you break any rules.

• 37:17Speaker 04

  All right. We are going to dive into the segment, but remember at the very end, we will have our

• 37:20Brian Preston?

  You sure you want to start this?

• 37:22Speaker 04

  Maybe it does depend segment where you can say all the things that you didn't have time to say and expound upon if you wish.

• 37:30Speaker 00

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

• 37:56Speaker 01

  This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.

• 38:25Speaker 04

  So with that, let's dive straight into question number one.

• 38:29Speaker 03

  Was there some unique that you said there's a different thing about this one?

• 38:31Speaker 04

  Yes, now, uh, everyone watching is going to be able to see the timer counting down.

• 38:36Speaker 03

  Oh, so they're gonna know.

• 38:37Brian Preston?

  Wow, look at us, making an investment in the timers.

• 38:41Speaker 04

  Or not well.

• 38:42Speaker 03

  Alright.

• 38:43Speaker 04

  Alright, it says, the first question, I know you love Roth, but with two incomes, we have Roth 401K, Roth 403B, Roth 457, and MBD Roth. How much is too much of a good thing?

• 38:58Speaker 03

  There's no such thing as too much Roth, but I want to make sure, based on your income, you're not missing out on current day tax benefits. If you're in a higher tax bracket, 30% or above, when you make your contributions through retirement accounts, you'll likely want to think through, man, if I, every dollar I save could save me 30 cents in taxes. So you can't have too much Roth unless you're sacrificing current year big tax savings to build those Roth assets.

• 39:24Brian Preston?

  I disagree. There is too much Roth if you, um, if you find that you're miserable in life because you're a miser. Um, I have clients that have, they so want to just stick it to the government as much as possible, that they're not going on vacations, they're not enjoying the moment. Family members are uncomfortable around them because they're completely so, so tightwad-ish that it's not even fun to, to be in their presence, that that's the bounce. Look, I love Roth, go out there and maximize it, but do not lose your life to where you look back with regret.

• 39:57Speaker 04

  And wow, stuck the landing.

• 40:00Brian Preston?

  Well, I see a timer.

• 40:00Speaker 04

  With one second left.

• 40:01Brian Preston?

  I see a timer now. Y'all, y'all wise up, and now last week I was like, is a timer?

• 40:07Speaker 04

  I love the disagreement, I audibly gasped, that was fun. Alright, next question says.

• 40:12Brian Preston?

  Well, I mean, come on, like, get as much as you want, be a pig and slop.

• 40:15Speaker 03

  No, no, no, he was asking a tactical, he was asking a tactical question.

• 40:19Speaker 04

  60 seconds are up.

• 40:20Speaker 03

  Oh, we're coming back to this one.

• 40:21Speaker 04

  Next question says, focus on HSA, Roth, or emergency first at 25.

• 40:29Brian Preston?

  I mean, come on, this isn't even a question. Follow the financial order of operations. We have, there's no guesswork in this. That's why we tell you step one, you've gotta get your, your highest deductibles covered. You asking us, you know, then we gotta get off the debt. We gotta get the free money from the employer. That's actually number two. And then, you know, then you get into the HSA and the Roth. I guess if you're trying to figure out, do you do HSA or Roth? You know, we like the HSA because it's triple tax advantage a touch more.

• 40:57Speaker 03

  But one of the ones was, was emergency fund in there, right?

• 41:00Speaker 04

  Yes.

• 41:00Speaker 03

  So emergency fund has to happen before this, right? So it's gotta be step four. If you follow the foo, you will not be led astray.

• 41:07Speaker 04

  Love it. Next question.

• 41:08Brian Preston?

  Can I take this 20 seconds?

• 41:10Speaker 04

  No.

• 41:12Speaker 04

  What's the best way to get over not wanting to spend money?

• 41:18Speaker 03

  It's a hard one because some people do not get as much utility from spending as they do from saving. So the first thing I figure out is, is there another party involved? Are there, is there a spouse? Are there kids? Are there other people who might get utility from spending? And you might, you don't love the spending, but you love the memories and you love the things that you can create. And you love what the money allows you to do. So I would focus on those things and it might help you loosen the purse strings a touch.

• 41:46Brian Preston?

  Money's only a tool. So go out there and do an audit of happiness. What actually makes you happy? What do you spend? Is it getting coffee? Is it going on trips? Is it buying gifts for people you love? Is it being charitable with organizations that you feel like are making the world a better place? There is something that moves the needle for you emotionally as well as reaches you from a happiness as well as fulfillment standpoint. Go out there and lean into that so that you can walk away from the regret. Cause I don't want you to be a miser. I want you to be a financial mutant.

• 42:17Speaker 04

  Wow. When Brian can see the countdown.

• 42:20Brian Preston?

  Here's the thing, I think, I think this might be like Rocky IV. Now that I have the tool, I feel like maybe week three of doing this, I'm, it's starting to feel like this, I'm getting into a groove.

• 42:30Speaker 04

  Look at him, he's getting a little confidence back.

• 42:31Brian Preston?

  I'm getting a little draining. I feel like, you know, you're, by the way, you're Dolph Lundgren. Well, it's just because you see, it's the, it's the workout, you know?

• 42:38Speaker 03

  Oh, cause like Dolph had all the tools.

• 42:41Brian Preston?

  You see Rocky Balboa like dragging railroad ties and, and you know, in his gray sweat suit. That's, that's me right now.

• 42:48Speaker 03

  So I'm Drago and you.

• 42:50Brian Preston?

  Of course you're Drago.

• 42:51Speaker 03

  Of course I'm Drago.

• 42:51Speaker 04

  Okay, there you go.

• 42:52Brian Preston?

  I mean, you told us you eat cereal with no shirt on. I wear a shirt everywhere.

• 42:57Speaker 04

  All right, moving on. The next question says, assuming Roth conversions make sense in your situation, where do they fit in the foo?

• 43:07Speaker 03

  Assuming Roth conversions make... If it's backdoor Roth conversions, step five. Backdoor Roth conversions and step five. If it's Roth conversions, like I'm converting my pre-tax assets to Roth, meaning I'm incurring a larger tax liability than I would otherwise, I'm going to argue that's a later stage, like a step seven-ish in there.

• 43:29Brian Preston?

  It's a step eight.

• 43:31Speaker 03

  I said step seven-ish. Like, once you get to saving 25% Roth conversions?

• 43:35Brian Preston?

  Okay, I'll give you that. I think that...

• 43:38Speaker 03

  You just want to disagree.

• 43:40Brian Preston?

  I do like to disagree, but actually, I think Bo, to bring it back on... I think Bo stuck the landing on that, because I do think backdoor Roth contributions are step five. I think when you get into doing conversions, that's more of a step seven and eight of the Financial Order of Operations.

• 43:58Speaker 03

  What I'm noticing is when you can see the timer, you're so much more...

• 44:00Speaker 04

  He's so efficient. You're good at this.

• 44:03Speaker 03

  If you only did 40 seconds, could you still get it in, you think, now that you see the timer?

• 44:06Brian Preston?

  The timer helps.

• 44:06Speaker 04

  You better watch out. We're gonna change it up for next week. Next question says...

• 44:10Brian Preston?

  Imagine what it's gonna be like when I have the shock collar on.

• 44:13Speaker 04

  Wild times. Next question, is favorite Olympic event?

• 44:18Brian Preston?

  I have watched so much figure skating and ice dancing.

• 44:22Speaker 04

  It's a good one.

• 44:23Brian Preston?

  So, I mean, that's... I even... Personal disclosure, I actually set my DVR, my YouTube TV, to record all those events, and I've watched a lot of them.

• 44:34Speaker 03

  This is the first year I've...

• 44:36Brian Preston?

  Bo's like, the Olympics are on?

• 44:38Speaker 03

  I'm like, what, the Olympics? Uh, yeah, I've not been watching a ton, but a lot of people here have been watching a ton. So, when I walk past their desks, I can see it. Um, first year I knew that two-person luge was a thing.

• 44:50Brian Preston?

  Oh. Oh, you've seen all the stuff on social media.

• 44:51Speaker 03

  That's what I've seen. I've seen all the stuff. And I was like, I want to know more about this. And that's a wild.

• 44:55Brian Preston?

  There's a lot of sports like that. I'm like, things that make you go hmm.

• 44:58Speaker 03

  It's a wild thing. So two, two person lose. And by the way, this, the question didn't specify Winter Olympics. So I bet you could have chosen a summer thing.

• 45:06Brian Preston?

  No, but we're all thinking about the Winter Olympics right now. By the way, the other one that, that just blows my mind because it's like shuffleboard is the one where they all the brooms out.

• 45:13Speaker 03

  The, uh, the, what's that? It's fishing, not fishing. Um.

• 45:16Brian Preston?

  Fishing?

• 45:16Speaker 03

  Not, what's it called?

• 45:17Speaker 04

  Is it curling?

• 45:18Speaker 03

  Curling, curling, curling.

• 45:20Speaker 04

  I was like fishing. Okay.

• 45:21Speaker 03

  No, it wasn't fishing. It wasn't fishing.

• 45:22Brian Preston?

  That was the ones I've seen everybody have.

• 45:23Speaker 04

  All right, we're out of time. We're out of time. We're on to the next question. The next question is, is having six figures in cash overkill in a high yield savings account?

• 45:33Speaker 03

  It.

• 45:34Brian Preston?

  No, you're, that's mean.

• 45:36Speaker 04

  That was so close.

• 45:37Brian Preston?

  That is such a mean question.

• 45:40Speaker 03

  If you are not.

• 45:40Speaker 04

  It does not depend.

• 45:41Speaker 03

  If you are not at financial independence and you've not built up your asset base to where now your circumstance justifies that much cash, you could be missing out on a lot of opportunity by having that cash thing in a high yield.

• 45:58Brian Preston?

  I would bring it back to what is your income and what are your living expenses is in, or paying respect to the three to six months? And then are there additional factors that need to be taken into consideration? If you're, if you own a business and you have a lot of employees, that's naturally going to push your cash up. Or if you're in step eight of the financial order of operations, you might decide to use cash as more of a wealth builder, an opportunity thing to go out there and grab it because you have cash when nobody else does. Um, but otherwise let the financial order of operations be your guide.

• 46:28Speaker 04

  Beautiful. Next question says, you often talk about the three bucket tax strategy. Since Roth is so good and I'm not trying to lower my taxable income, why would I contribute to the other two buckets? Go.

• 46:43Brian Preston?

  I don't mind sharing that Bo and I had a whole conversation at the coffee machine this morning where he's trying to convince me that I ought to quit doing pre-tax contributions.

• 46:51Speaker 03

  You're not supposed to tell them that.

• 46:52Brian Preston?

  And just do Roth only.

• 46:55Brian Preston?

  Well, because, I mean, for legacy planning, because I'm never going to be in a low tax situation based upon where the size of my retirement assets are.

• 47:06Speaker 03

  I think a lot of people at lower incomes that don't justify doing pre-tax will likely build the majority of their assets in Roth. So they're going to do Roth IRAs, they're going to do Roth 401K, they're going to have an emergency reserve that kind of serves as that after-tax bucket even though it's cash. And so the only way their pre-tax bucket would possibly get built is if their employer contributions are going in pre-tax. So it's not uncommon for someone to get two financial independence at that level with all Roth assets, emergency reserve cash on the side, and a little bit of pre-tax because of the employer match.

• 47:41Speaker 04

  Great, very efficient. Next question says, getting married next month, how does the Money Guy team recommend on bank account structure? We both work and have the same income.

• 47:53Speaker 03

  All jo... Oh, is it your turn or my turn?

• 47:55Brian Preston?

  If you're young and there's not any complications like kids from a previous marriage, I would prefer everybody just be joint. I prefer joint accounts because it takes the power out of the money. Because what I... And by the way, even if y'all make the same income now, you're not promised it in 10 years from now, or even five years from now when you start having children and other things, that one of you might decide to stay home with the children, you want to take the power out of the money.

• 48:20Speaker 03

  My opinion is that joint accounts and joint assets is the best structure, although we have a number of clients that do keep things separate. And that's okay, there are just different things you have to think through there. But if you're asking for a newly married couple, the best way to navigate it, my advice would be to join everything.

• 48:37Speaker 04

  Great answer.

• 48:38Brian Preston?

  See, I keep wanting to take his extra time because I think, we'll come back to that one.

• 48:43Speaker 04

  We'll come back, we'll come back. Um, two more for our rapid fire segment. This next one says, um, 27 male and 32 female. Should I put more than 5% on the first home? If we have 100K saved for a down payment on a 350 to 400K home?

• 49:01Brian Preston?

  I would want to know, are you ahead of the curve, behind the curve, or right where you're supposed to be? So go to learn.moneyguy.com to see if you're ahead of the curve, behind the curve, right where you're supposed to be. Because, look, there's nothing that says, I love if you can put down 20% on a house. What I'm trying to do is give you options so that you can get into a house, but also not stray too far away from the financial order of operations. I don't want you to be house rich, life poor. I want you to have the perfect balance of financial assets, housing assets, and so forth.

• 49:30Speaker 03

  32 years old, 27 years old?

• 49:32Speaker 04

  Yes.

• 49:32Speaker 03

  $100,000 down payment, $350,000 house?

• 49:36Speaker 04

  Yes.

• 49:36Speaker 03

  I'd want to look at your other accounts to see, do you have a solid financial foundation in place? Where those dollars are going to grow towards financial independence? Because if you're behind the curve, it might not make sense to put 20% down. It might not make sense to put $100,000 down. You should go to moneyguy.com/resources. You should go check the wealth multiplier, see what those dollars can turn into. If you put them to work, it might be more efficient than putting them inside the mortgage.

• 50:01Speaker 04

  Woo, right up to the end. All right, last but certainly not least, South Dakota resident here. What does it look like to be a client of you all? You mentioned last week that you don't have any from South Dakota. I think that's the only state we're missing.

• 50:16Brian Preston?

  First of all, you hear harp music. And then, um, it's like a dream sequence and you're like, holy cow, I didn't know it could be this good. That is, that's what, and then we might even have like some extra swag we throw your way for being the 50th state that we have clients in. We need to go audit that to make sure we haven't made some audacious claim without knowing if it's true. But, um, we definitely can make it a celebratory moment if we had all 50 states covered.

• 50:42Speaker 03

  People ask all the time, what is it you do for clients? And the most simple way we can say that is our goal. Is to serve as your personal CFO, meaning any financial question you have, anything that comes up in your financial life, we want you to feel like you have a team in place that can help you navigate that, that can help you answer that. Yes, we talk about tax strategy, we talk about investments, we talk about portfolio, but we also want to talk about the other stuff. How does your long-term goals align with the short-term decisions you're making? How do you make sure your family's protected? How are you making sure that your legacy lives on the way you want to? We want to serve as your personal CFO.

• 51:17Speaker 04

  Woo!

• 51:17Speaker 03

  I get, it starts, the timer goes faster at the end.

• 51:20Brian Preston?

  I do have a sidebar. Just give me a little grace.

• 51:23Speaker 04

  Lucky because we have now reached the end of the It Depends Rapid Fire segment, and we are moving into the Maybe It Does Depend segment, where you can say all the things.

• 51:32Brian Preston?

  Well, I found, I chuckled, I was entertaining myself because I was like harp music, that's such an interesting thing to say. And then it hit me, it's probably, I don't want to break anybody's confidence, but we do have a content member that has a child that's taking harp, right?

• 51:46Speaker 03

  A harpist.

• 51:47Brian Preston?

  Oh, see? So this stuff actually could happen. We might be able to, you come in from South Dakota, I might pull him out of stu-, get him to pull out of school to come in here and play the harp.

• 51:57Speaker 04

  Oh, I love that. Okay, one thing that you did not get to say for our South Dakota Financial Mutant, if you go to moneyguy.com and click on become a client, that's how you actually start the process. So you kind of left out a key piece, but I added it back in. You're welcome. Yeah, that'll let you see how to get the conversation started. It'll give you a form to fill out and connect with one of our advisors.

• 52:19Brian Preston?

  Here's the thing, I know on question five and six, I put asterisks next to them because I had additional stuff to say, but I dumped so much data out of my brain to make this 30-second segment. I have no idea.

• 52:31Speaker 03

  Six figures in cash. Number five was, what if I have six figures in emergency cash? Is that too much?

• 52:37Brian Preston?

  Well, I mean, that one is for sure, it depends.

• 52:40Speaker 03

  Right.

• 52:40Brian Preston?

  Is because.

• 52:41Speaker 03

  What's it depend on?

• 52:42Speaker 04

  Yeah, what's it depend on?

• 52:43Brian Preston?

  I tried to, the way I tried to do that one was actually go through the variables because most people, look, most financial mutants actually go the side of not having enough cash because you just, you feel like cash is trash. So this is, you're already in, in, in, it's unique if you're building up extra cash in the background. So I was trying to give you all the ways in the financial order of operations that it could potentially work. I don't remember what my other point was besides that.

• 53:09Speaker 03

  A hundred, there are people out there and we have clients who this a hundred thousand dollars represents their emergency fund.

• 53:14Brian Preston?

  No, they have to. We have quite a few clients. I mean, I'm guilty of, I, I carry so much cash because of all the businesses and other things. And I've been rewarded for having that cash when, when things are bad. I mean, because we, I'm telling you, when you have cash and nobody else does, when markets go really ugly and there's, you'd think every, every time, every two years out of every decade, when we go into these dark periods, where the economy goes into recession, you'd think, hey, I ought to have a little extra cash if you're in step eight of the financial order of operations. But so few people do it. It's only, it's like me and Warren Buffett.

• 53:48Speaker 03

  Well, I'd like to think I'm in that category too, because there might be, there might be things like a.

• 53:53Brian Preston?

  Me, Bo and Warren Buffett.

• 53:54Speaker 03

  There we go, the three of us.

• 53:56Brian Preston?

  Big island.

• 53:57Speaker 03

  There might be, or there might be opportunities. There might be, uh, you know, a building that you were looking at comes available and now you can move on that. Or there might be an opportunity to renovate or whatever that thing may be.

• 54:08Brian Preston?

  But don't mishear us. Don't be loading up the cash if you hadn't even funded your Roth IRA.

• 54:12Speaker 03

  Yeah, no, that's the cash built up after the 25%.

• 54:16Speaker 04

  That's step eight behavior.

• 54:17Speaker 03

  It's really a step eight thing. Um, this one was getting married, joint finances was number six. If you had anything to say on that.

• 54:24Brian Preston?

  Yeah, that one is, look, cause I do prefer joint accounts because I've seen it, the success I have in my own marriage, you know, and I've been married. My wife and I were trying to figure, we, we did figure it out, but now I'm getting confused because of the math we were doing with, I think I'm in my 28, I'm in my 28th year. I'm in my 29th year, close to 30 years of marriage.

• 54:46Speaker 03

  Round it up.

• 54:47Brian Preston?

  And a joint, and I like the fact that since we both came into the marriage, it's worked out well. But, but as a financial planner, I have very unique things. I have knowledge of seeing clients come in where maybe they met in their 30s or, you know, 40s and had children from other marriages and, or there's different count structures where maybe like the parents of one of the spouses set up accounts when they were kids. And there's weird dynamics with that, that you have to keep some assets separated. That's why a financial planner, these are complications that it's hard for me to say one size fits all. But I know in generality, if you come into the marriage with no assets or you're just starting out, I always try to take the money as a power source out of the equation. So it doesn't create weird dynamics.

• 55:31Speaker 03

  But even in that situation, because I've got, I've got some clients right now, getting married later in life. You know, successful assets are, are not evenly distributed. And one of the things we've talked about is, hey, let's make sure we keep all this stuff separate. Let's make sure we have the appropriate protections in place. But hey, once you guys come together, everything from here on forward is joint.

• 55:49Brian Preston?

  Yeah, that's set up like the earnings, all the earnings are jumping into a joint account.

• 55:53Speaker 03

  That's right.

• 55:53Brian Preston?

  And it takes the power. Yeah, it's still on the same.

• 55:56Speaker 03

  So in my mind, I still call that joint finances. And even if you have separate finances, it's really, really important. You want to operate on joint goals. I have not seen this happen with clients yet. Where they said, hey, my money's my money and my spouse's money is my spouse's money. Buddy, I hope that they're okay to retire when I get to retirement. You know, they have to have cohesive goals that, hey, we're, even though we might be doing things separately and we have separate structures and the allocations might be a little unique. We're working towards a common goal and those common goals are goals that we have as an enterprise and a household. If you can structure it that way, the separate account thing works. But if it's all like, hey, what I do with mine is mine and what, what they do with theirs is theirs. And there's no

• 56:37Speaker 03

  conversation around that, it's just likely going to be a very inefficient structure. When it comes to goals, when it comes to saving, when it comes to taxes, there has to be some sort of like, at least integration around the purpose behind the dollars.

• 56:50Brian Preston?

  My most uncomfortable client meetings are clients that are doing, running these separate accounts. Um, because man, oh man, it's just so weird.

• 57:02Brian Preston?

  Especially when you have success and by the way, you can't even, I know everybody immediately jumps to stereotypes in their head. No, I see it. I see it on both sides on, on the power structure play. And you know, and then when you talk, start talking about paying off the house and they're like, well, who's paying? You're not taking it out of my account. You pay. I did. I covered this. I put the, the deck on last year and you're like, oh my gosh, I'm not, guys chill out. We're in this together, remember? It's so funny. And that, but it highlights to me, that's why I get a front row seat to seeing success, is I see the possession of the assets when people is mine, mine, mine. And that's so

• 57:44Brian Preston?

  two become one. And maybe that's traditional, but I just think about it, you know, one of the things my, my wife and I have rules. We never, never throw in a fight, you don't say, we're going to get divorced or you bring that up. That's, that's no go land. And then another one that I, nobody talks about who makes the money. Because if you, if you, if that ever comes up, I know it's probably a fight that's going to take weeks to heal from. It's not one that we come back to two hours from now and we say, hey, wasn't that ridiculous that we were, no, don't talk about who makes the money.

• 58:15Speaker 04

  Yeah. No, that's good stuff. Another thing that you mentioned, Brian, I remember you said, if you want to know your head of the curve, behind the curve, right on the curve, go to moneyguy.com. I wanted to call out a few specific resources and maybe you had one in mind, but I know we have the prodigious accumulator of wealth calculator. So you can literally go plug in some of your like, oh, my age and how much I have saved and it will kind of give you a sliding scale of like, oh yeah, you're where you need to be. Or, oh wow, you're a prodigious accumulator of wealth. Like you're a financial mutant or hey, you're a little behind. Here's some stuff you can look at to catch up. So be sure to go to moneyguy.com/resources and maybe check that one out. Did you have anything else in mind, Brian? That was the one that came to my mind.

• 58:55Brian Preston?

  No, I mean, there was the know your number.

• 58:57Speaker 03

  Know your number.

• 58:58Speaker 04

  Yeah.

• 58:58Brian Preston?

  Just the spreadsheet to know, so you can go out there. I'm excited whenever we get to share some of the updates that we're doing on some of these things, too, in the future as well. I'm not gonna say anymore. I know.

• 59:09Speaker 04

  I love it. We have like a built in teaser strategy in everything we do.

• 59:14Speaker 03

  It's a built in teaser strategy.

• 59:15Brian Preston?

  It's called Brian.

• 59:16Speaker 04

  The strategy is Brian Preston.

• 59:18Brian Preston?

  Brian can't keep a secret.

• 59:19Speaker 03

  Oh, that's hilarious.

• 59:20Speaker 04

  Oh, I love it.

• 59:21Speaker 03

  By the way, for someone who poo-pooed the entire rapid fire segment.

• 59:24Speaker 04

  And then you crushed it.

• 59:25Speaker 03

  I felt like you crushed it.

• 59:25Speaker 04

  What was that?

• 59:26Brian Preston?

  I mean, self, self rating myself, I felt like I was much, I think it was, I felt like I was a Vanguard analyst.

• 59:32Speaker 03

  You stuck so many.

• 59:33Brian Preston?

  I under predicted what I was gonna do and then I came in much harder.

• 59:36Speaker 03

  Over before.

• 59:36Brian Preston?

  Yeah, I mean, that's what me and Vanguard.

• 59:38Speaker 03

  Like an Olympic gymnast, you stuck the landing over and over and over again.

• 59:41Brian Preston?

  So maybe I like this.

• 59:42Speaker 04

  Oh, I love it. All right. Want to do one more long form question for good measure?

• 59:47Speaker 03

  Yes, ma'am.

• 59:48Speaker 04

  Travis W. says, hey, guys, congrats on the Clips channel. Thanks, that's very nice of you.

• 59:52Speaker 03

  Oh, hey, tell them about the Clips channel.

• 59:53Speaker 04

  I know.

• 59:54Speaker 03

  For those who don't know.

• 59:54Brian Preston?

  We bring it up one time last week.

• 59:56Speaker 03

  57 minutes in, what are we doing?

• 59:59Brian Preston?

  We should have brought this up at the front end.

• 1:00:01Speaker 03

  Clips channel.

• 1:00:01Speaker 04

  Guys, we're gonna keep having the Clips channel. We can talk about it as much as we want, anytime.

• 1:00:06Brian Preston?

  I did too.

• 1:00:07Speaker 03

  Wait, will you tell them, tell the people, tell them about the thing, tell them about it.

• 1:00:10Speaker 04

  You can now go to subscribe to the Money Guy Clips channel because we heard you and we are now at a point where we were able to make this happen. All highlights of our episodes that we were posting on our main channel are now posted exclusively to the Money Guy Clips channel. So if you like that kind of content and want the bite size, you can go there. And now on the Money Guy Show channel, where you are used to coming, that you know and love, that is posting only all original long form content there. And we hope you like it. So far, very positive feedback. Thanks for your support on both channels and we're excited about the future.

• 1:00:46Speaker 03

  People keep asking like why we did it. It's because you guys asked for it. Like, we heard feedback.

• 1:00:50Speaker 04

  Totally.

• 1:00:50Speaker 03

  Feedback, feedback, feedback. Man, it'd be great if you guys could bifurcate, if you could separate those two. And so we did it. We did it for you guys.

• 1:00:55Brian Preston?

  But call to action, because I mean, we. Please go subscribe and then tell your friends and family about it because here's the thing. We know that the machine's gonna be ticked off at us for probably a few months. Because anytime you change anything of the data, the way you're feeding it to the algorithm, you have to wait for the monster to kind of give you, it's like the Wizard of Oz, telling you yea or nay if this was a good idea. So we need you guys organically. We don't ask for a ton, but I'd love for you to tell friends and family about us so we can hopefully make it through the doldrums of upsetting the machine.

• 1:01:32Speaker 04

  I think we're gonna be just fine.

• 1:01:33Brian Preston?

  But was there a question there?

• 1:01:34Speaker 04

  So I love that.

• 1:01:34Brian Preston?

  There was a question.

• 1:01:36Speaker 03

  There was a question that started.

• 1:01:37Brian Preston?

  There's a question in there somewhere.

• 1:01:38Speaker 04

  And Travis was just being nice and said, "Congrats on the Clips channel," which is so nice. But his actual question said, "My wife and I are saving for a down payment. Should we also be bolstering our emergency fund to our predicted monthly burn rate? Or does that come later?"

• 1:01:52Speaker 03

  Well, I think, I think a lot of people, when they think about acquiring a home, they immediately think about down payment, down payment, down payment, down payment. They don't recognize, there are other costs that come with homeownership.

• 1:02:04Brian Preston?

  Yeah, there are.

• 1:02:04Speaker 03

  Immediately after closing.

• 1:02:06Brian Preston?

  Ladders.

• 1:02:07Speaker 03

  Lawn mowers.

• 1:02:08Brian Preston?

  Blinds.

• 1:02:09Speaker 03

  Let's just name a bunch of things.

• 1:02:10Brian Preston?

  Trash cans, toilet paper holders.

• 1:02:13Speaker 03

  Keep going, dude. You're crushing it.

• 1:02:14Brian Preston?

  Oh, I mean, no, I could, I could think of all the things that we have to buy.

• 1:02:18Speaker 04

  Yeah, you're not wrong.

• 1:02:19Brian Preston?

  I mean, all these things that you don't think about. Cleaning supplies.

• 1:02:22Speaker 03

  And so one of the things you want to do is you don't want to just save just enough for the down payment. It's nice if you get a little bit of cushion in there because one, there are likely to be closing costs associated with your mortgage that you either have to roll into the mortgage or you have to pay outside of the mortgage. But then you are going to have those getting in the home costs, moving costs, toilet paper holders, all the things that he just mentioned. So whenever someone's saving for a house, we always tell them, "Hey, save a little bit beyond that." Yes, I do think it makes a ton of sense to bolster your emergency fund, to get a little bit more cash in there so that it's more of a smooth and seamless transition, even on the other side of homeownership.

• 1:02:58Brian Preston?

  Well, begin with the end in mind, so in the, plus also, I think about like a good quarterback. He doesn't throw where the receiver is currently. He throws to where the receiver's going to be when the, when the. Ball intersects with them and that's exactly, I like what you're doing there is that because I do think especially in that first house, that three to 5% house down payment, it does, because it takes a period of time to build it up. It does become kind of an extension of step four, the financial order of operations and your emergency reserves. So I like you kind of bolstering your emergency reserves, not only for the three to 5% down payment, but also what the new updated burn rate is on your household, because there will definitely be an impact with having the new house and the carry cost.

• 1:03:41Speaker 04

  Love it. Well, thank you so much Travis for the question. We will be back here Tuesday at 10 a.m. Central, taking your questions live on YouTube. And until then, make sure you go to moneyguy.com and check out all of the free resources that we've made for you. And also subscribe to both channels, The Money Guy Show and Money Guy Clips if you haven't yet, because then it lets us know you're out there and really helps us just spread the word about these powerful financial principles that we all know and love and that have really made a difference in all of our lives. So thanks for your support.

• 1:04:13Brian Preston?

  Earlier, there was somebody who said, hey, how do I get to feel better about spending more money? And I said, go do a happiness audit, figure out what makes you happy. I hope you guys know, because Bo, even at the coffee, we talk about big life things. He's like, you ever retiring? And you guys make me so happy. I think the answer is probably no. Because y'all are part of my happiness factor is coming to see you, sit down every Tuesday and recording these shows, knowing that our content's intersecting, seeing the reviews even of Millionaire Mission on Amazon and Goodreads. It means the world to us and it really puts me in a happy place knowing we are changing the world for the better, to help personal finance become that much easier. So thank you for tuning in.

• 1:04:57Brian Preston?

  I'm your host, Brian, joined by Mr. Bo, Rebby and the rest of the content team, Money Guy, out.

• 1:05:06Speaker 03

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

• 1:05:36Speaker 04

  Now at Kroger, your points add up to more ways to save every trip. Use them your way to take dollars off groceries at checkout or save at the pump. You can even save up to $35 on your next fill-up. Same points, more choices. And with low prices on fresh, quality food, plus digital and personalized offers tailored to how you shop, your dollar goes further. Redeem your points online or in the app. Kroger, fresh for everyone. Restrictions apply. See site or store for details.

• 1:06:07Speaker 05

  When you're building a company, you learn that trust is what closes deals. You may have the best product, but buyers won't sign without proof that your product is secure, especially if it has AI. Vanta gets you compliant fast with SOC 2, ISO 27001, and more, and keeps you secure with continuous monitoring. Hyperbound, a YC-backed startup, used Vanta to unlock the Fortune 100 in under a year. Snowfire got audit-ready in a month and closed a multimillion-dollar deal. Trust matters. Get started at vanta.com.