How Much Should You Save for Retirement?

Our new and improved resource: How Much Should You Save shows how much you should save at your age for your target retirement goals. We walk you through the numbers and new insights that reveal the power of time and how investing today can turn into bigger wealth tomorrow. Then we answer your financial questions on everything from college tuition to HSA tracking to investing strategies. Plus a fun rapid fire segment that includes a final score that might shock you... ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠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.

• 0:00Speaker 00

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• 0:36Brian Preston?

  Wouldn't it be awesome if somebody actually would just tell you how much you should save and invest to reach all your financial goals?

• 0:44Speaker 02

  Brett, I am so excited about this because we love that we get to constantly iterate and improve and come up with ideas and change things and adjust things. And we have something that we've been working on for a while now that we are so excited we get to release to you guys that will hopefully help you do money better.

• 1:06Brian Preston?

  Well, if you hang out with us at any point in time, you find out one of our cornerstone things is we tell people, we want to get you if you can live on less than you make and start saving and investing 20 to 25%, you're going to be set.

• 1:20Speaker 02

  Yep.

• 1:21Brian Preston?

  But I've always known, there's a few warts to this.

• 1:23Speaker 02

  Sure.

• 1:24Brian Preston?

  First of all, if you start saving and investing when you're 20 years old, 25%, that's more aspiration.

• 1:30Speaker 02

  It's going to be hard to do.

• 1:31Brian Preston?

  It's going to be hard to do. And if you do it, you're probably going to end up with a lot more money. But I just, I knew enough factors that if I could just throw it out there for everybody, even for the 20 somethings, they would be okay saying 20, 25% because the net was catching enough people. I'm happy to report, we've been like some mad scientists in the lab, working through some, some deliverables. We've now emerged from the lab and we're willing to share with you a brand new updated resource that I think you guys are going to absolutely love.

• 2:02Speaker 02

  Yeah, this is our new and improved, how much should you save resource intended to show you that based on Your age and based on the goal that you want to retire, the goal that you want to hit financial independence, what should your savings rate be all the times because we get question, well, is 25% right for me is 25% and for most people we say, hey, you want to start out and that's what you want to be aspirational for. We're going to walk you why, walk you through why we say that. But now we actually are showing you the data that we base that off of now before we actually talk about the deliverable itself. And obviously, we want you guys to go download this and check it out. I want to tell you how we did the math because I think understanding how

• 2:45Speaker 02

  the math works is going to let you appreciate what we're showing here. So what we assumed is when you invest, we're going to assume for a 20 year old, you get a 10% rate of return. And then the rate of return drops by one tenth of a percentage point every single year. So 10%, 9.9%, 9.8%, so on and so forth. We also assumed a 3% inflation rate. We know that since 1980, the average rate of inflation we've seen in this country from 1980 all the way through 2026 is exactly 3.07%. So with a 3% inflation rate, we assume that your wages in this scenario increased at the rate of inflation about 3% because we want your buying power to remain the same. If

• 3:27Speaker 02

  you're a 20 year old or 30 year old or projecting out what you're going to leave on, live on when you're 55 or six, we wanted them to stay the same. And we assumed that across all categories, we're going to look at a 4% withdrawal rate. Okay, how much of how big does the portfolio in need to be in order for me to pull 4% off and be able to do that in perpetuity? And the goal is that we want when you reach financial independence, you to be able to replace 80% of your pre-retirement income. Now, Brian, people are already going to say, guys, when you retire, you don't base it off income. Why are we talking about income? Let's go ahead and address that that elephant in the room right now.

• 4:05Brian Preston?

  Well, the big thing is, is we don't know what your expenses are going to be. And we have to create a deliverable that catches as many people as possible. And what's consistent is we can use at least income and then know that you're only going to need a percentage of that because you won't have to save the savings. rate and so forth. So it's easier to base it off of income because it captures way more people. Obviously, if you're landing the airplane and you're within five years of retirement, for sure, know what your expenses are, base your retirement plan off of your expenses. We're financial planners. That's exactly what we do for our clients. But if you're looking for a great resource that gets you really close and gets you motivated while you're young and decades from retirement, this is a much more effective way to do it.

• 4:46Speaker 02

  All right. So how do you read it? So now that you understand the math, okay, well, let's say you're a 24 year old and you want to retire at age 55 and at age 55, you want to be able to replace 80% of your pre-retirement income, you would need to save 20%. So for a 24 year old, if you can save 20% of your gross income, that will put you on the path to have an 80% income replacement ratio at age 55. Does this mean that this is your retirement plan? No, may it never be, but does this give you an idea of the direction that you ought to move? Or some general guidance and guidelines for you to figure out, okay, man, am I ahead of the curve? Am I behind the curve? Am I right on the curve? And so a lot of people ask this question, Brian.

• 5:31Speaker 02

  Okay, but, but so I see this guys, well, here's why 25. Why you, you could have picked any percentage between zero to 100. Why did you guys stick to and camp on 25 and why is that what you recommend?

• 5:42Brian Preston?

  Well, once again, wisdom of knowledge and experiences, we know, and it's confirmed. If you go look at what Charles Schwab found, the actual average American doesn't even begin saving and investing until age 30. Now, we, the ideal, we want you to be a financial mutant, just like I was, where I came out of college and day one, you put your army of dollars to work. But that's just not what most people do. Even when we, you know, do our questionnaire of our millionaire clients, we often find that people feel like their biggest regret is they started a little bit later than they should have. And the typical American is age 30. So if you now apply that age 30 to the charts, voila, look at that, somewhere between, and we use the retirement age of 60.

• 6:24Brian Preston?

  We didn't even go to traditional 65. We went 60 because we're financial mutants. We want to live life a little. A little differently. You can see there we are right there between 24 to 26%. Right in the middle of 25.

• 6:35Speaker 02

  Right there at 25. And we know that even, let's say that you got started even a little bit later, perhaps. Maybe you were a little bit further down the road and you figured this out. Even if you're someone who doesn't start saving and investing until your mid 30s, age 34, age 35. A 25% savings rate will still get you to retirement by a normal retirement age of age 65. So perhaps you're starting late, or maybe you're not someone who started late. But perhaps you don't know what unknown unknowns are going to come your way. Oftentimes we hit the messy middle and we get married and we have kids and we buy the house and we have these other goals. And perhaps our savings rate doesn't stay static. If you can get to 25% or the earlier you can get to 25%,

• 7:18Speaker 02

  the more flexibility, the more freedom you're going to allow your future self to take. So that's why we love saying 25%. A lot of people, Brian, like, man, but that just still seems.

• 7:28Brian Preston?

  It seems high.

• 7:29Speaker 02

  It seems high.

• 7:30Brian Preston?

  Even a friend of ours, Rob Berger, did a response, reacted to something with our savings rate. And Rob loves our stuff, but he even is like, man, they're just way high on that. And I always like to remind people, look, our system also includes, includes that free money from your employer. And we know that the typical employer is giving contributions close to 5% towards your retirement. You get to count that as long as your income for a single individual is under a hundred thousand, 200,000 for a married couple, because that way, look, we've even built that into a mathematical calculation. That's because anybody who makes lower than those levels, you're close enough to getting social security and other things. We think that that's appropriate. If you make higher than that, it's going to put more weight on your shoulders.

• 8:13Brian Preston?

  You need to plan accordingly. But if you take that into account and go back to the chart now, you can see for a lot of people now, if you find, if you discover this in your 20s. If you do 15% and your employer does 5%, you're going to be A-OK.

• 8:27Speaker 02

  That's right.

• 8:27Brian Preston?

  If you're like the typical American and you don't even discover investing until you're 30 years of age, you do 20%, your employer does 5%, you're going to be A-OK. Discover this later, you're going to need to save at higher rates. If you want to retire early, you're going to need to save at higher rates. We've built this into the system.

• 8:46Speaker 02

  All right, so I want you guys, go out to moneyguy.com/resources, download this deliverable. We want this to be useful for you. We want it to be useful for people that you influence. We want it to be useful for people in your family so that you can show them exactly how powerful starting early can be, but also give them an actual number that they can shoot for to end up in the place that they want to be if they are just starting out. How much did you save? Moneyguy.com/resources. Now, I love this, Brian. All this, the comments are coming in, they're amazing. And people are like, okay, well, does this assume starting at zero? Yes, this assumes starting at zero. What if I have some savings? What if I've done? We have some amazing calculators out on the website that if you have $4,000, $8,000,

• 9:31Speaker 02

  $50,000 saved up, you can go put it into our compound interest calculator and see what that has the ability to turn into. We want you to have all of these tools available at your disposal. So whatever question you're trying to answer, if you go to moneyguy.com, you can find the answer to that question. It's one of the reasons why, Brian, every single Tuesday at 10 a.m. Central time, we like to sit right here and answer your questions, the things that you're curious about, the things that you want us to speak to, the things that you want us to answer. So right now, if you have a question that you want us to weigh in on, we have the team out in the wings collecting your questions. So make sure you get them in the chat because we believe, and we really do believe this, that there is a better way to do money.

• 10:15Speaker 02

  So with that, Creative Director Rebe, I'm going to throw it over to you.

• 10:20Speaker 03

  The first one is from J. Karen 001. It says, "My son got into a very good college, but for the full price is $100,000 per year."

• 10:30Brian Preston?

  Ooh. Whoa.

• 10:31Speaker 03

  Yeah, "We have enough to cover one year in a 529. How do I explain that having this much debt when you graduate is not ideal?"

• 10:39Speaker 02

  Man, this is a, this is a really, really hard one. And I feel like I have, Brian, some counterparts that I graduated with, like graduated high school with, and even some people younger than me, that they got accepted into very prestigious schools. And it was one of those things that like, man, if I can, then I should. Like, if I can get in, if they do accept me, then I have to go there. How could I not? It'd be wasting a lot of opportunity. And I worry that that is perhaps flawed thinking. Now, I don't want to suggest that $100,000 a year tuition in certain instances and certain circumstances might make sense. Graduating with $300,000 of student loan debt is not something that's entirely unfounded

• 11:23Speaker 02

  amongst even the clients with whom we work. But you have to begin with the end in mind. And the question I think that I would have, the conversation I think that I would recommend you have with your son is, all right, let's play this out. Let's see what the end game is. You get through this degree, you get this diploma, you get this thing. Then what? Where are you going to go? What are you going to land? What will be the ROI, the return on investment of this degree? And, and what I worry about, and I think this is going to happen for a lot of big, major, expensive schools, when you really do the math, oftentimes I don't think the ROI is going to shake out.

• 12:02Brian Preston?

  Look, I'm just gonna be blunt. One of the things, we just did a, we got a show that's coming out in the next few weeks, on is it harder for the new generations versus the younger generations, the older generations? You know, we kind of looked at the, the baby boomers versus Gen Z. And the, the category that just was a huge disappointment is education. Is because if you want to know something that, you know, because a lot of the stuff that is out there on affordability and so forth, you go, when you watch this show, you're gonna say, "It's not as bad as you would think." But education? It's a dumpster fire, straight up dumpster fire because these education, these institutions

• 12:47Brian Preston?

  have run up the cost of tuition so much that it's almost like, what is, because remember, what is the whole purpose of going to college is to better yourself so you can make more money and be a productive individual when you hit the workforce and maximize your earning potential.

• 13:04Brian Preston?

  I think they lost the plot on that to a degree is because, and that's what exactly, I wouldn't do this. I'm just straight up telling you, I don't care how prestigious and who you think you're gonna rub elbows with. I'm just, this is Brian talking. Because $300,000 of debt, you imagine, you come out of college, 22 years of age, with $250,000 to $300,000 of debt, you know, you better, they better load you up, you better just, day one, you get a corner office being a hedge fund manager. And that's not what's gonna be happening. That might be what they put in the brochure. And maybe your kid's gonna go to school with a hedge fund manager's kid, but it's, um, you know, so you get to hang out on their yacht for the three years you're in college,

• 13:45Brian Preston?

  but then after that, it's gonna be like, whoa, you know, you don't get to do that anymore. You know, so it's just, and plus, if you read a millionaire mission, I have a whole section on begin with the end in mind with education. And I put the majors that have the easiest potential of paying back debt, or student loan debt, and the majors that do the worst. I would say, and then I'll also put some stats in there on how many of your CEOs and successful people come from state colleges, not the Ivy Leagues, the state colleges, and you're the much more affordable state colleges. You're gonna find that if you're a good apple, that is really smart, you know what,

• 14:27Brian Preston?

  and I just had this advice with the young man that's dating my oldest daughter.

• 14:34Brian Preston?

  Go choose a major. No, believe me, this, you have to know, there's some conversations that came out of this. And I found out he just recently updated his major. I kind of felt guilty later. When I found out his major, I was like, dude, you are a smart guy. You've got all these presidential scholarships and so forth. Choose a major that's going to thin the herd. Because I was like, if you go to college with this super horsepower brain of yours, and you get the major that the person that struggled to get in, and you're just not going to be different enough to get a job that's going to pay you. Go choose a high-powered, high-octane major. And look, I'm biased. I said accounting.

• 15:09Speaker 02

  Who would have thought that? I would have, would you have guessed he would have said accounting?

• 15:12Brian Preston?

  And that's not because, look, I know AI is going to take out the taxes. We're probably going to do taxes differently in the future, but still, it is the language of business. I mean, there's a reason that all through my career, everybody's always wanted to go into business with me is because I know how financial statements work. I know how compliance issues work. I know why everything is because you get thrown in the deep end with the language of business with accounting. And I think that that's what I would just come back to this individual and say, look, begin with the end in mind. What do you actually want to do? Because if you're going to go to an Ivy League school to go work in a community or be a parole officer, and there's nothing wrong with that. It's just, but how are you ever going to pay back a $300,000 student loan debt with the, you have to choose a major and then work in

• 15:56Brian Preston?

  that field. That's the other thing. Every year when we do our study on our clients, 66% of them work in their field of study, whereas the general population, I think it's around 62 to 64%, do not work in their field of study. So don't get trapped in this brochure of doing an Ivy League or an expensive private school and just strap yourself with $300,000 debt. That's my opinion. That's not personal advice. That's an opinion from a, from a guy who loves education and, but hates what's happened to the education.

• 16:29Speaker 02

  Two, just additional thoughts that I'm going to throw on this. When you get your college diploma, and they print it out, and you hang it in your office, nowhere on your diploma does it say how many years you went to that school. So if you're going to go somewhere that's crazy expensive, perhaps it makes sense to go somewhere much less expensive to get your core classes out, to get all those base levels. And then once you actually get into your major, get into your special schools, well, maybe then that school pays off. That's just sort of my first thought. So just cause- Just because you want to graduate from a school does not mean you have to attend that school for all of the years necessary to graduate. That part was for free. Here's the second part. We hire tons of people and we interview tons of people and we interview for different types of jobs, different types of positions.

• 17:12Speaker 02

  Generally speaking, the college that you went to, the education that you received matters the most. I understand this is blanket advice, but in our experience, matters the most for the first job that you get. First job that you get, there it matters. Once you've gotten your first job, after that, it becomes much more about your realistic, pertinent work experience. What have you experienced? What have you encountered? And it's much, much less about the degree. So when we hire someone who has a few years in financial plan, we really don't care what school that they went to, whether it was some pristine prestigious Ivy League or some local community college. We care about what's happened since then.

• 17:52Speaker 02

  So a lot of what the college degree is doing is getting your foot in the door of the career. And I know that doesn't always hold, but for a lot of us, a lot of our employees and for a lot of our clients and for a lot of the people we interact with, that's the way that it works. And so again, if I'm thinking about ROI, I want the largest return at the lowest cost. I think you have to measure that out.

• 18:16Brian Preston?

  Can I say one other thing that cracked, that just blew my mind and I actually wanted to turn over the desk when I heard it? The Ivy Leagues, you can't get merit-based scholarships.

• 18:26Speaker 02

  No.

• 18:27Brian Preston?

  They don't do merit-based scholarships. Somebody correct me in the comments, but I think I had a prospect that, you know, they were looking at Yale or something like that. No, there was a client. It was a client. Their daughter was really, just wanted to go to Yale. And I was like, well, I'm sure they're going to qualify for a scholarship. And they're like, they don't, they don't do those type of scholarships. Somebody correct me in the comments section, but that's what, that's what I, I think when we were working with this client on their Yale-bound child, it was, I was shocked that these, they have created such a scarcity environment that it really does hose your future.

• 19:04Speaker 02

  Last little thing I would do, and this is for...

• 19:07Brian Preston?

  Because I like going to this college for free if you can. Look at those scholarships.

• 19:10Speaker 02

  I don't know if it was Jay or JC. The, the, the crux of your question was how do I communicate how expensive this $300,000 of debt might be? Well, you can calculate the payment schedule and you can amortize it and you can show your child that. I'd also encourage you, go to moneyguide.com/resources and either use our compound interest calculator, wealth multiplier and show them realistically that $300,000 is going to go towards satisfying debt. If that money were deployed elsewhere over the course of time, it's going to take to pay back that debt, what could it turn into? And what you may find out is that degree doesn't really cost 300,000 or 400 if you include your contribution. That degree probably costs millions upon millions upon millions of dollars and the

• 19:55Speaker 02

  opportunity cost of paying back those dollars. So it's worth just going into it, eyes wide open.

• 20:03Brian Preston?

  I bet there's a math calculation. Like if this was a financial planning client, I would, I would create a spreadsheet also that would show that because of the $300,000 of student loan debt, even if this job, you made 30, 40, 50% more your entire career, I don't think you could overcome the opportunity cost of just going to the state college for free on a full scholarship, probably.

• 20:26Speaker 03

  Yeah.

• 20:27Brian Preston?

  Cause that's the situation. Truthfully, a lot of these state colleges will pay you to go to school. If you're that smart and you get these high of SAT or ACT scores, you literally can go to college for free and then potentially even get scouted. Be like Bo. Bo took a pay cut when he took his first job with me. Cause he was on so many scholarships. Bo had merit as well as needs based scholarships because he was a poor kid. And so he, I mean, he was literally just making bank off going to college.

• 20:52Speaker 03

  Listen, it worked out for him, okay?

• 20:54Speaker 02

  That's amazing.

• 20:55Brian Preston?

  That's true. It's true. I mean, I'm not making, I didn't say that for comedy. It's, you know, good comedy has a little touch of reality to it.

• 21:02Speaker 02

  It's true. It's true. It was a pay cut.

• 21:05Speaker 03

  That was a great conversation.

• 21:07Brian Preston?

  It was a good pay. There was a great opportunity cost with coming here, but you did take a pay cut leaving college to come to work here.

• 21:13Speaker 02

  I did learn though, what was it, two weeks ago, that if I really want to advance my career, I gotta jump jobs.

• 21:18Brian Preston?

  Oh yeah. Somebody said, we didn't react to that. I was like, Bo, you're doing it wrong. You stayed in the same job.

• 21:23Speaker 02

  20 years into this one, I gotta start, I gotta start looking.

• 21:27Speaker 03

  Oh, that's funny.

• 21:28Brian Preston?

  If we do this, we're only gonna go, we'll cover three questions today.

• 21:32Speaker 02

  Somebody just said, this is the longest answer to a Q and A question.

• 21:35Brian Preston?

  It hit a chord. I was just like, oh, my gosh.

• 21:38Speaker 03

  Jakeharin001, great question. Clearly got us really talking. And if you would like a Money Guy Tumblr. I am dubbing today Tumblr Day. So if you would like a Tumblr, you can cash in on that at [email protected]. Just send us an email. Let us know. We answered your question on the show.

• 21:58Speaker 03

  All right. I do want us to get our rapid fire questions in the live stream chat if you are watching live.

• 22:06Brian Preston?

  Are we going back to rapid fire?

• 22:07Speaker 02

  After the 50 minute question.

• 22:08Brian Preston?

  We're not doing like movie quotes or headline reviews?

• 22:11Speaker 03

  I do have a fun add-on for you guys to try again, just like we did fruits and vegetables last week. But I'll let you know when we get to the rapid fire. But yes, put RF at the beginning of your question in the live chat and we will get that queued up and get ready for rapid fire in a few minutes here, probably between the 30 and 40 minute mark of the show. All right, let's go to the next question from ToTheHouse4368.

• 22:37Brian Preston?

  To the house!

• 22:38Speaker 03

  It says, "Hi, Money Guy team. My employer is introducing an employee stock purchase plan, or ESPP, through Fidelity. They are offering a 15% discount with a look back. Is this a no-brainer to invest in if I have the funds?"

• 22:55Brian Preston?

  Yes, next question.

• 22:57Speaker 03

  Could you explain what it is as well? Maybe just give a little context? Or were you trying to outdo your last one? You did the longest answer and you're about to do the shortest answer on this?

• 23:06Speaker 02

  So for those of you that aren't aware, employee stock purchase plan is an opportunity that an employer, and it's not just publicly traded employers. A lot of times you can do this with private employers as well, where there's an opportunity for you as an employee to purchase the stock of the company with whom you work. And even better than being able to become an owner of that company, they often issue that stock at some sort of discount. In this case, it's a 15% discount and there's a look back period, which I'm assuming for To The House means that they look at... At the price at the end of the period and price at the beginning of the period. And they pick the lowest price there.

• 23:43Brian Preston?

  Amps up the return.

• 23:44Speaker 02

  And then you get a 15% discount on that. So we're talking about free money on free money on free money on free money. And that's exactly how we look at it. Uh, we think that ESPP plans, when there's a discount, when that's available, are just like step two of the, Brian, can you hold the thing up for me? Are just like step two of the financial order of operations where you get free employer money. Now, where do you have to be careful? Where do you want to be, be mindful? Uh, well, most ESPP plans are capped at a certain dollar figure. You can only participate up $25,000 of benefit per year inside the ESPP. And some ESPP plans have a lockup where you actually have to hold the stock for a, a certain period of time for the inner qualifying disposition. Sometimes that's 12 months, sometimes that's 18 months.

• 24:28Speaker 02

  If you're in this scenario where they don't let you liquidate the stock and you have to hold it. And let's assume that you have other compensation coming your way as well. You have stock options in RSUs. It would become very easy to become highly concentrated in your employer's stock. Does that mean that you don't need to do the ESPP? Not necessarily. It just means that you ought to have a strategy in terms of how you're thinking about all the different pieces of stock exposure you're going to have. But we love ESPPs. In this case, it sounds like, yeah, this one is a no brainer, but it's a no brainer that you just gotta use your brain for a little bit.

• 25:04Brian Preston?

  Yeah, you gotta make it automatic. Create a system to where you don't want to have all of your human capital tied into where you have all of your investment capital. And that's what happens when you, too much of a good thing. So that's why you will need to create a structured system to where there's a plan to liquidate these funds, to diversify, take the gains and diversify. What you'll have to figure out is how fluid your liquidity is in your emergency reserves and other things, to really go for the bonus round of getting the 12 month holding period. So you qualify for the long-term capital gains versus ordinary income tax rates. Um, and, but you can still create a system with that structure.

• 25:43Brian Preston?

  And then every year you just now get on a conveyor belt of that you're turning parts of this ESPP into part of your liquid capital outside of the company. It's powerful, but you just gotta go into with your eyes open. So you don't get too concentrated where you have both your human capital, meaning your wages, your time. Tied up into where you're trying to build financial independence in your investment capital, there is too much of a good thing to create a system to protect you from that.

• 26:11Speaker 02

  Love that.

• 26:12Speaker 03

  That's great. To the house 4368. If you would like a Money Guy Tumblr, just email [email protected] since we answered your question today. I saw we had a friend show up in the live stream chat. It was Money Guy Clips channel. So if you have not checked out that channel yet, be sure to go subscribe. You guys got excited, didn't you?

• 26:33Speaker 02

  I was like, who was it?

• 26:34Speaker 03

  The call is coming from inside the house.

• 26:36Brian Preston?

  It's just a gimmick to get people to go look at our Clips channel.

• 26:40Speaker 03

  Well, I thought it was clever of our team to pop in there as Money Guy Clips. And I was going to mention it anyway. We've been really, it's been fun to watch. Everybody, go check out the Clips channel and also just the response. A lot of you spoke very positively of how we split our highlight clips onto one channel for folks who want those. And now on this channel that you're watching or listening to, the Money Guy Show channel, it's all unique content. We're only posting original long form content here. So when you subscribe to each channel, you know what you're getting. So if you haven't subscribed to Money Guy Clips and you like watching our highlights, be sure to go check it out and give us some love or share with your friends. It's a great place to kind of get started on the Money Guy Show and more bite sized chunks. That may be a good thing to

• 27:23Speaker 03

  share with folks as well. So just wanted to give that a shout out.

• 27:26Brian Preston?

  It's the free sample selection.

• 27:28Speaker 02

  That's right.

• 27:28Speaker 03

  Free sample. I mean, our entire show is kind of free sample, I thought, but okay, cool.

• 27:34Brian Preston?

  Give us a sample. Here's your sample. You'll love it. We have the best chicken in town.

• 27:37Speaker 02

  A lot of people have asked, you know, hey, why'd you do that? Why'd you split it off? And it's one of those things that at the end of the day, what we really want is we want things to be better for you guys. So whenever we make any kind of decision of something we're doing around here, there's usually a reason and thought process behind like, man, this is something we can do. And if we do this thing, it's going to be able to make something more viable, better, more available, more attainable. And the Clips channel was just one example of us doing that.

• 28:04Brian Preston?

  It's almost like we're planners.

• 28:06Speaker 02

  It's like, it's like the

• 28:08Brian Preston?

  Beginning with the end in mind.

• 28:09Speaker 02

  Like there's thoughts behind the decisions.

• 28:13Speaker 03

  Ready for another question?

• 28:14Speaker 02

  Yes, ma'am.

• 28:14Speaker 03

  Awesome. Kevin B. 8679 says, "Hey, Money Guy team. My wife and I, both early 40s, have been diligent investors since our 20s."

• 28:25Speaker 02

  Let's go.

• 28:26Speaker 03

  "We are so far ahead of our goals. Could we take a savings gap year to fully enjoy the fruits of our labor?"

• 28:35Speaker 02

  We say all the time that one of the benefits of saving early, getting out ahead early, hitting 25% early, is you give yourself future flexibility. You give yourself future options. You give yourself the choice to be flexible in the future. And if one of those things you want to do is takes a savings holiday, or you call it a savings gap year, I say that's A-OK. That's one of the things about knowing if you're ahead of the curve, behind the curve, right on the curve. Yeah, can you do it? Is it all right? Absolutely. Now, I will say, one of the things, we have clients who have done this. There are a lot of times that you still want to think about the tax stuff. So even though I have like a savings year, well, this might have been the year that I'm able to do some Roth stuff, or I'm able to, or there might be a compelling reason

• 29:20Speaker 02

  to put money in my 401K, less so for the savings aspect, but more so for the tax savings. I still want you thinking through those things. But if you are so far ahead that it allows you to take your foot off the gas, I think that's awesome.

• 29:34Brian Preston?

  Yeah, just make sure you do the work. Measure twice, cut once, you know, so that way it's not, "I feel like I'm ahead." Did you actually know you're ahead? And then I do think you're probably going to want to lean into the things that Bo was just talking about, like employer free money. Yeah, you gotta still do that because you're just good with money. You can't leave free money on the table. And then also, I would tell you, if you, like, just like I talk about a millionaire mission, I talk about Roth contributions that I missed because I was either starting a company and I missed about $10,000 of total contributions over a four or five year period. And I still kick myself for that because I know what that opportunity cost without legacy for my daughter and my family could be if I had funded, that fully funded those Roth IRAs.

• 30:19Brian Preston?

  So I would just, things like that, that you just can't get the water Back up the hill because the opportunity is just so strong. You know, you probably fund those, but then use the rest, reward yourself. And I think it's a okay.

• 30:29Speaker 02

  Now, someone, I don't want to take credit for this because someone said this in the chat and I think it's a great idea. It says, hey, you just gotta be careful. Don't let a gap year turn to a gap decade.

• 30:37Brian Preston?

  Yeah.

• 30:38Speaker 02

  Cause it's great.

• 30:39Brian Preston?

  Don't we all know college friends that did that?

• 30:40Speaker 02

  Man, absolutely. Hey, I'm just gonna take a year and go find myself. And they took them 20 years to go.

• 30:45Brian Preston?

  They never got the degree. They never got the degree. I got, I got, I have several friends that took us, I'm gonna take a gap year. I'm gonna take off and go work this job just to build up a little extra money and never got the degree.

• 30:55Speaker 02

  Being ahead of the curve is great. So long as you don't make decisions that end up putting you behind the curve. And remember, one of the things what most likely happens is when we take a break on savings, what we, what we tend to do is we ramp up our consumption. So we allow our lifestyle to increase for that year. Well, if it's a sticky lifestyle increase, meaning I use that to buy the newer car, buy the newer house, go on the vacation, whatever that thing is. Recognize that now you've increased your footprint. So the additional savings in the future may need to be higher to account for that additional lifestyle. Again, these are all wonderful things and all things that you can do. You just don't want to surprise yourself.

• 31:32Speaker 02

  And I love that what, it's just, it's just worth noting. Kevin said, hey, we started in our twenties and we're now in our forties. Can we do this? This is different. And I want all of my, my young 20 year olds to hear this. This is not someone who says, hey, I started saving when I was 23 and I'm 26 and I'm way ahead of the curve.

• 31:53Brian Preston?

  Yeah.

• 31:53Speaker 02

  Can I, can I take it? That's not the same thing. So just recognize there's a time and a place for being able to do this. And it's after, it's after you've been doing it for a while.

• 32:03Brian Preston?

  Yeah, no, they've built up enough assets. I bet these things are doing, reached a lot of our millionaire milestones just off the size of their army of dollars.

• 32:12Speaker 02

  Yep.

• 32:13Speaker 03

  Fantastic. Well, Kevin B 8679, thank you for the question. We hope that helps. Just email winner at moneyguy.com if you personally would like a money guy Tumblr.

• 32:23Speaker 02

  Oh, Kevin said they have eight to 10 times their salary invested. You know, the goal for by the time you get to 40.

• 32:28Speaker 03

  He did say way ahead of the goals.

• 32:32Speaker 02

  Can you pull up the slide, moneyguy.com slash become a client? Just check that out. That's a great thing for someone in their early 40s.

• 32:41Speaker 00

  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.

• 33:10Speaker 04

  Kayak searches and compares hundreds of travel sites. But unless I repeat the word kayak, Kayak thinks you won't remember that. So Kayak asked me to say kayak as many times as possible. Kayak. Kayak. Kayak. Kayak. Kayak, kayak, kayak. Kayak. Search and compare travel deals with Kayak. Got that right.

• 33:31Speaker 03

  Good dropping. Love it.

• 33:32Brian Preston?

  We'll leave the porch light on for you.

• 33:33Speaker 03

  All right, let's move into our it does not depend rapid fire segment where Brian and Bo will rapid fire answer your personal finance questions, but they cannot say the words it depends. They have 30 seconds combined after the question is read. I am going to give them an additional for fun challenge today.

• 33:52Brian Preston?

  Okay, what's the gimmick?

• 33:53Speaker 03

  To see what they do with it. I want to show Brian, give you a little nod, and see how many Disney references you can bake into your answer. And remember, I am going to be a little harder on you if you just kind of say.

• 34:07Brian Preston?

  Oh gosh, now this is.

• 34:08Speaker 03

  Mulan at the end of your question, that does not count. Brian is stressed, look at him. But you can recall Disney stuff, Disney characters, Disney phrases. I think you can. Bo, I'm not positive about, but we'll see what happens.

• 34:21Brian Preston?

  Well, I can, but normally, but you put stress and all of a sudden I turn into a different animal altogether.

• 34:26Speaker 03

  That's the fun of this game. You were getting too good at 30 seconds, so we've got to do something.

• 34:30Brian Preston?

  Bo's good at it. I think everybody comes to see the hijinks of me struggling and failing.

• 34:35Speaker 02

  Did you see how many people began in their normal nomenclature on the internet using Kiwi Happy and Banana Happy?

• 34:42Speaker 03

  I use it regularly now.

• 34:43Speaker 02

  Right, like it's like a thing. You, it's a, you created a trend of being Kiwi happy.

• 34:47Speaker 03

  Makes me Kiwi happy.

• 34:48Speaker 02

  Makes me banana happy over here.

• 34:50Speaker 03

  Exactly. If you don't know what we're referencing, go listen to a couple Ask Money Guy shows.

• 34:54Brian Preston?

  So I guess that'd make me banana happy.

• 34:55Speaker 03

  Past.

• 34:58Speaker 03

  Oh, man, I love that. All right, so with that, let's move into rapid fire. Here we go. Question one, can you do both step four and five together if you're past a three-month emergency fund and why?

• 35:18Speaker 02

  I'm gonna say yes, because if you have the three months, you're on, you have an emergency fund in place, but you are building towards a full emergency fund. And I really want you to be able to take advantage of that Roth if you can, and you can get those dollars if you need them.

• 35:33Brian Preston?

  Look, first, you gotta make sure the slipper fits, just like Cinderella, and make sure you have, that three months really does give you the protection, so at midnight, you don't turn into the pumpkin.

• 35:45Speaker 03

  I'm so impressed.

• 35:46Speaker 02

  I'm, I'm going to lose this one.

• 35:48Speaker 03

  This is magical. Brian just got 10 points on the board, and we are moving on to question two.

• 35:54Brian Preston?

  But yeah, I like Roth IRAs.

• 35:57Speaker 03

  That wasn't even in the 30 seconds.

• 35:59Brian Preston?

  That's step five.

• 36:00Speaker 03

  Next question. In your opinion, what is the best way to save HSA receipts for future reimbursement?

• 36:10Speaker 02

  Oh, don't think I'm going first every time.

• 36:11Brian Preston?

  No, I think you, I mean, you have to put yourself in the future, like in Wally, and you have to kind of plan ahead, so scanning the documents in and then saving them so you have them in the future, no matter what happens to mankind.

• 36:25Speaker 02

  For all of my, yeah, for all of my receipts, I scan them into a folder by year, and I also have a spreadsheet where I'll list them out. So if I have to show the spreadsheet and the receipts, I have a repository that I could very easily come up with those whenever I do HSA reimbursements.

• 36:39Speaker 03

  Well done on all fronts. 10 more points to Brian. All right, next question. Is it okay to buy a fun car with a loan if you are on step eight and ahead of the curve?

• 36:52Speaker 02

  Yeah, if you're on step eight, you get to do what you want to do, the way that you want to do it. And if what, you're saving 25%, you're building towards financial independence, you've done all the things that you need to be doing, then absolutely, you can go buy a fun car. And if you choose to finance it, that's your prerogative at that point.

• 37:14Brian Preston?

  I'm sitting there trying to think of this. Look, Gaston would drive a fancy car financed. But I don't know that I think it's the greatest idea.

• 37:22Speaker 03

  Time's up. Time's up. I don't know if you get that one, Brian. That seemed like you just threw that one in.

• 37:26Brian Preston?

  No, I knew because I had a way I was gonna go in it, but I just didn't have enough time. I was trying, I was blanking on Gaston's name for some reason.

• 37:32Speaker 03

  So, no points on the board for that, although valiant effort. Okay, next question. When Brian says "automatic for the people," is he referencing R E M?

• 37:44Brian Preston?

  Well, it's actually R E M and Weaver D's.

• 37:46Speaker 02

  I was about to say Weaver D's, baby.

• 37:48Brian Preston?

  Remember, I went to U G A, Bo went to U G A. That's where R E M got "automatic for the people." It's a slogan for a famous restaurant now.

• 37:57Speaker 02

  Really, really good restaurant.

• 37:59Speaker 03

  Nice. Little bit of trivia for you.

• 38:00Brian Preston?

  I didn't give any Disney. I should have put a Disney on there, too.

• 38:03Speaker 03

  That's all right. You did a U G A reference. And apparently, yeah, you did a lot of references there, apparently. Anyway, moving on.

• 38:08Brian Preston?

  A lot of pixie dust there.

• 38:09Speaker 03

  Yes. Where does saving for maternity leave about to start the messy middle fall in the foo?

• 38:18Speaker 02

  It's gonna be like a four thing, emergency funds. And it's one of those things where if you're saving for maternity leave and you're gonna be out of, out of income, you need to make sure you have enough resources to cover while you're out, especially if it's gonna be non-paid maternity. So I'm gonna say it's inside step four.

• 38:35Brian Preston?

  Yeah, I was gonna say it, just like, you know, because when you have kids, you get in the weeds, just like Rapunzel, and you're stuck up there worried about how you recover things. So make sure you have a good emergency reserves. It gets you three to six months, so you can survive that well.

• 38:47Speaker 03

  Don't be stuck like Rapunzel. 10 points for Brian. All right, next question. This one's for Brian. Your view on the future of the CPA career path as AI capability continues to improve?

• 39:03Brian Preston?

  I think it's like most things. I think that a lot of people are calling for destruction, but I think there's going to be opportunity to maximize. Yes, compliance is going to be different, meaning tax filing. But if you don't think that we're going to still need people's intelligence on how financial statements and businesses work, I think you're mistaken.

• 39:19Speaker 02

  You said this was for him, but I'll just tack on to.

• 39:22Speaker 03

  Please do.

• 39:23Speaker 02

  I agree. I think that tax preparation will become much more automated, much more efficient, and it will allow CPAs not fall into the slog of taxes in the way they have previously. Mulan.

• 39:35Speaker 03

  Oh, that's exactly what I said not to do. Come on, you know Disney references.

• 39:40Speaker 02

  If you had said Mulan, I wouldn't have even come up with that one.

• 39:43Speaker 03

  All right, next question.

• 39:44Speaker 02

  I'm just waiting for one, one single question about lions, or about fatherhood, or about something, because that's the only thing I can think of is Lion King. I'm literally just naming every character in The Lion King right now.

• 39:57Speaker 03

  That's all you can think? I know you have some certain types of fans in your household.

• 40:02Speaker 02

  I'm just telling you. I'm telling you.

• 40:04Speaker 03

  Anyway, moving on to the next question. Does it make sense to withdraw from an HSA with the required medical receipts to fully fund a Roth IRA in a given year?

• 40:19Speaker 03

  Nobody who's listening can see you shake your head.

• 40:23Brian Preston?

  But if you're tight on money, you have no money, and you could pull out of that, would you not fund a Roth IRA with that?

• 40:29Speaker 02

  I think my.

• 40:30Brian Preston?

  Because we let them get into emergency reserves for funding that sometimes.

• 40:33Speaker 02

  Yeah, but I think that HSAs are more valuable than Roth, so I think that would actually be maybe stepping it down a touch, especially if I have the receipts to be able to do it. Because I don't want to rob Peter to pay Paul. I want to add to both.

• 40:45Speaker 03

  Time is up. We'll come back to it.

• 40:47Brian Preston?

  I'm going to tell you, that one would definitely, that's a depends answer. I mean, I'm just saying that after the fact.

• 40:55Speaker 03

  I need to dock 10 points from your score.

• 40:57Speaker 02

  I want to think through why it would depend. Let's, we're going to talk more about, we're going to come back to that one.

• 41:01Speaker 03

  You did not fulfill the time requirement on that. All right. What skills would you recommend people that are new to the workforce? So what skills would you recommend to people who are new to the workforce with AI up and coming?

• 41:16Speaker 02

  My, my opinion, interpersonal skills, the ability to talk and communicate directly with another human being, look them in the eyes, have a conversation, make people feel heard, make people feel welcomed. I think that that's something that AI is not going to be able to replace.

• 41:33Brian Preston?

  Yeah, I mean, you, you want to be the, the, the Tigger of poo. And the fact that you want to be so bubbly and friendly that because no AI is ever going to be, if you ever notice, AI can't write jokes very well. They're just not funny. So be Tigger. I, I, let's face it, I dialed that one in.

• 41:51Speaker 03

  It still worked though. Like I feel like I still give you the points for it.

• 41:54Brian Preston?

  Well, I mean, Bo had already taken all the good, easy answer on that. So I felt like I was just giving him a punctuation.

• 42:01Speaker 03

  All right. Next question. My advisor, 1.5% actively manages equities and is confident he'll always outperform, but most data shows index funds win in the long term. How should I evaluate that? I'm 29, married, we're dinks and step six of the food.

• 42:19Brian Preston?

  I just have one statement, then I'll let you take it. Pride and ego comes before the fall.

• 42:25Speaker 02

  Yeah. If he says he's going to do that over and over, has he been doing it? Like, has he been outperforming? Um, for asset management only, active management, one and a half is pretty, pretty steep. Uh, just to try to go out there and, and pick and do selections. But I don't want to be so presumptuous and say, oh, no, no, no, he can't do it. He can't do it. He can't do it. I mean, if your advisor is Warren Buffett, he has a track record of doing that. But I'd want to see the guys, the person, the advisor's track record.

• 42:50Brian Preston?

  It's not Disney, but I'd like to see the sports almanac.

• 42:55Speaker 02

  Now back to features, not Disney.

• 42:58Brian Preston?

  It's universal.

• 43:00Speaker 03

  All right. Last question. Buckeye fan here. This is not from me, by the way.

• 43:05Brian Preston?

  No, there's enough of you already in the room.

• 43:07Speaker 02

  Wow, that it made it in here.

• 43:08Speaker 03

  As UGA alums, do you hate Florida, Auburn, or G Tech the most?

• 43:14Speaker 02

  Yes. No.

• 43:16Speaker 03

  That was not the question.

• 43:17Speaker 02

  We, we have, uh, we have friends at all of those. So I wouldn't say that I hate any of them. I don't, I don't pull for any of them very often, uh, ever.

• 43:27Brian Preston?

  I can't, I don't hate any of those. And I have a story. That's why I say depends on every one of those.

• 43:32Speaker 03

  Oh, you just, okay.

• 43:34Brian Preston?

  Cause I want to give a better answer on that. I want to give a better answer on that.

• 43:38Speaker 03

  Rapid fire is now.

• 43:39Brian Preston?

  I can give a much better answer on that one.

• 43:41Speaker 03

  And Bo did not try at all on the Disney reference. So Bo, Brian won 40 to nothing.

• 43:46Speaker 02

  I mean, not even, skunked me and just absolutely demolished me.

• 43:50Speaker 03

  I can't believe neither of you just threw in a great big vehicle tomorrow.

• 43:55Brian Preston?

  You know what? I actually was, I wanted to say it. I was gonna say it.

• 43:58Speaker 03

  Retirement. Done and done.

• 43:59Brian Preston?

  I wanted to say it.

• 44:00Speaker 03

  10 points on the board, but I will take those 10 points. Cause I thought of it.

• 44:05Brian Preston?

  No.

• 44:06Speaker 02

  That would have been good.

• 44:07Speaker 03

  Would have been good.

• 44:09Brian Preston?

  So can I, can I clarify the college question?

• 44:11Speaker 03

  You can. We'll start there.

• 44:13Brian Preston?

  Um, look, I have a close, y'all, y'all realize I grew up a Florida fan. My dad played down, my dad played down at the University of Florida. He was Steve Spurrier's blind side of left tackle. Um, for all those years, he was friends with Steve. Um, so I went to University of Georgia because of this beautiful thing called in-state tuition. Um, cause I had some scholarships because of the Gulf War that didn't end up happening. So it was kind of a coincidence that I ended up at the University of Georgia. So that's why I don't dislike Florida. I'm one of the unique Georgia fans. I want Georgia to win, but I don't have the hate for Florida. Because I just know I'm too close to that program, um, from childhood. Uh, the other, the other thing, Auburn.

• 44:56Brian Preston?

  I almost went to Auburn. I even did a walking video on this is that I was early accepted to Auburn and I gave the story of that Auburn's recruitment plan back in the nineties was they, they just had your, your family pull up in a minivan. They threw the most attractive person you've ever seen into the minivan with you and rode around with your family, showed you the campus, took you in to meet the professors. It's brilliant. It was diabolic. Um, and the fact that I immediately is like, um, that I was going to go to this school. So I told all my buddies in my junior year. After I done this and got early acceptance, hey, I'm going to Auburn. A lot of my buddies from high school ended up going to Auburn because we were, we had this pact that we were going to do it together. Um, and then of course that scholarship fell through. I ended up going to UGA.

• 45:39Brian Preston?

  But I spent a ton of time at Auburn, went to a lot of house parties and other things. I mean, I literally would skip weeks. Because there's this thing called student notes back when I was a, I'm sure it's illegal now, but I would literally during.

• 45:51Speaker 02

  We're in the realm of AI.

• 45:53Brian Preston?

  I mean, well.

• 45:54Speaker 02

  Student notes is what they're now.

• 45:55Brian Preston?

  By the way, for those that didn't know, they printed on red paper. They would pay nerds to go copy, sit in class and write down notes. And then for the people who didn't want to go to those big lecture classes, you just go buy the notes and I can memorize anything. So I would, I would ace exams. Those, those, those big classes were easier. Um, majors I had to actually go to class, but I would spend weeks over in Auburn. So I have a lot of love for Auburn as well. That's why I pick on all Auburn fans is because there's a likeness there. And then.

• 46:24Speaker 02

  Speaking of nerds, what's the story?

• 46:25Brian Preston?

  And then the other one now, I pick on, I pick on tech a lot, but I do have one of my dearest, dearest friends. And I toured tech because I came really close to thinking about tech too, because it's, you know, it's, I'm nerdy and I was good at math. Um, all through high school. So my, but one of my dear friends went to tech and, um, so I, I have a lot of love for, for tech as well.

• 46:47Speaker 03

  Very thorough answer.

• 46:48Brian Preston?

  Well, I mean, all those schools I have some affinity to because of just personal friends and close.

• 46:54Speaker 03

  Boat is not relevant.

• 46:56Speaker 02

  I'll throw in a go dogs to respond on that.

• 46:58Speaker 03

  Now, since we're in our does depend segment on, there was a question that you guys just kind of stopped and did not fulfill the requirement on. It was, does it make sense to withdraw from an HSA with the required medical receipts to fully fund a Roth IRA in a given year? There was a lot of debate going on.

• 47:13Brian Preston?

  I think Roths are better than HSAs in the long term.

• 47:15Speaker 03

  Oh, is that where I?

• 47:16Brian Preston?

  That's where we have a disagreement. Because look, I do agree HSAs are triple tax advantage, quattro tax advantage. If your employer has the right structure, which is just completely incredible, but it is amazing from a legacy standpoint. Cause maybe it's different because I'm now in this stage where I'm thinking about. Legacy of my assets and having a special needs child that can actually stretch the retirement accounts over their life expectancy because of her, her struggles. The Roth is just so dagum cool that it's tax free for forever essentially.

• 47:50Speaker 02

  And that's why I'm not, I'm not suggesting that you don't do the Roth. I'd love to do you, I'd love to see you do both, but if you already have the receipts that can justify pulling the money out of the HSA, I'm going to argue you already have the receipts that you could do that at any point in the future. So you've already got the dollars acting and behaving like a Roth in every single aspect. Except for the legacy aspect. That's a really great point. But I think I'm going to leave an HSA because once I put them in the, I mean, I guess technically I can get to a penalty free, tax free. I pull my basis out. But man, that HSA money, it's still growing tax free and it's free and clear if I've got the receipts to get it out. I like the HSA dollars.

• 48:29Speaker 02

  But I would find some way to do both of them if you can. That would be my absolute best answer.

• 48:36Brian Preston?

  You say instead of or it's an and.

• 48:38Speaker 02

  Instead of or it's an and. I think so.

• 48:41Speaker 03

  There you go.

• 48:42Brian Preston?

  Go make more money.

• 48:44Speaker 03

  Just go make some more.

• 48:45Brian Preston?

  There's no depends with that. Spend less or make more.

• 48:48Speaker 03

  Oh man. That was fun. A few honorable mentions I do agree with our audience on. Can't believe you didn't do a Cars reference and a question about Cars. Lightning McQueen, anyone? Also, uh, somebody said, can't believe you didn't say a whole new world when it comes to talking about AI.

• 49:06Speaker 02

  I have a good one too.

• 49:07Speaker 03

  I know. There were some good ones in there.

• 49:09Speaker 02

  What's a quote from Cars?

• 49:12Brian Preston?

  Chao.

• 49:13Speaker 03

  I thought like you could just say, you know, oh, don't go take out, or I guess if you're on step eight, you could take out a loan to buy a fancy Lightning McQueen or like, I don't know. You could throw in one of their names or something.

• 49:23Brian Preston?

  I'd probably been more of a Mater.

• 49:25Speaker 02

  Oh, yeah.

• 49:25Speaker 03

  There you go.

• 49:26Speaker 02

  We're both thinking.

• 49:26Speaker 03

  Conquer. Exactly. So anyway, you could have taken several, several ways, but just for fun, I wanted to shout out because the audience was having some of the same thoughts that I was having. All right.

• 49:38Speaker 02

  Toy store?

• 49:38Speaker 03

  With that.

• 49:39Speaker 02

  Pixar, that's not Disney, right?

• 49:40Brian Preston?

  Well, Pixar is Disney.

• 49:42Speaker 03

  Yeah, Pixar.

• 49:42Brian Preston?

  Marvel's Disney.

• 49:43Speaker 02

  So any Toy Story reference would have been.

• 49:45Brian Preston?

  In a weird way, even The Simpsons are now Disney.

• 49:49Speaker 02

  Really?

• 49:49Brian Preston?

  Yeah, because they bought Fox.

• 49:51Speaker 02

  Aye, caramba.

• 49:52Speaker 03

  But you're not gonna like go to the Disney parks and see The Simpsons there.

• 49:56Brian Preston?

  Give it a few years.

• 49:57Speaker 03

  Lightning McQueen.

• 49:58Brian Preston?

  I mean, you get the curl at Universal, but give it a few years, you never know.

• 50:01Speaker 02

  We rode this.

• 50:02Brian Preston?

  There's some weird dynamics.

• 50:03Speaker 02

  We rode The Simpsons ride at Universal and it was funny because they have like a little like thing that plays. It's so, that stuff was so funny when I was a kid. My kids did not think it was hilarious and would not get away with that being like cartoon programming that these days. Very different.

• 50:17Speaker 03

  I don't know if it was ever designed for children.

• 50:18Brian Preston?

  It was crusty because it's crusty. He's always ripping off heads and doing all kind of crazy gross stuff.

• 50:24Speaker 03

  Oh, man. All right, we've got a few more questions. Oh, also.

• 50:28Speaker 02

  Twenty-three eight for Mater, cash only for Lightning McQueen.

• 50:30Speaker 03

  See?

• 50:31Speaker 02

  That's good.

• 50:31Speaker 03

  It writes itself.

• 50:32Speaker 02

  That's really good.

• 50:34Speaker 03

  Writes itself. Also, Brian literally said pride goes before a fall. You instantly move Fossa falling off the cliff, pride rock. Well, you could have, you could have incorporated like he's just laid that.

• 50:44Brian Preston?

  She's mad she's not answering.

• 50:46Speaker 03

  He just handed that to you on a platter.

• 50:47Speaker 02

  This was, this rapid fire was for you.

• 50:49Speaker 03

  No, honestly, I thought this is so easy. They're gonna nail this.

• 50:54Brian Preston?

  It's hard to do stuff under, under pressure.

• 50:56Speaker 03

  It's true. Well, that's, it's also meant to be a little difficult.

• 50:59Speaker 02

  I just don't have like a really good like Disney catalog here. Ready to roll.

• 51:03Speaker 03

  I overestimated your Disney catalog, but it was fun. Thank you for humoring me. Thank you for the great answers to the financial questions.

• 51:10Brian Preston?

  I think Bo has classified himself as a Universal family anyway because they just got back from vacation.

• 51:14Speaker 02

  It was great.

• 51:15Speaker 03

  Maybe so.

• 51:16Speaker 02

  It was really great.

• 51:17Speaker 03

  Next, no, we won't do Universal references. I feel like that'd be even harder.

• 51:20Speaker 02

  All I'm gonna do is Back to the Future the entire time.

• 51:24Speaker 03

  All right, let's do a couple more long form questions and give away a couple more tubblers maybe. Let's move to Haley's question. It says, as you make more income over time, when do you circle back to fund your emergency fund more? I'm having a hard time grasping when you go back and fund it further, assuming you make more over time.

• 51:44Brian Preston?

  It's not, it's not a one and done.

• 51:47Speaker 02

  Yeah, this is not, this is where like the art meets the science of it. And I think there's not a right or wrong answer, but a really great time to do it is every single year when you do your annual net worth statement. One of the things you're going to put on there is what are my cash and cash equivalents? Well, as soon as you like, see that number sitting there, you want to do a mental check in your mind. Say, okay, what's my burn rate right now? Okay, I spend $5,000 a month, every month. I need a six month emergency fund. I need $30,000 in there. Oh, I've only got $25,000. Okay, I need to beef that up. That would be a really good time to check it and it gives you like a reminder annually. But that's not like a hard and fast rule.

• 52:27Brian Preston?

  Also, I think when you get pay raises or your income's going up.

• 52:30Speaker 02

  Oh, for sure.

• 52:30Brian Preston?

  You immediately look at it and go, because look, life happens. So you're going to have stuff coming in and out of your emergency reserves. Because you know, your water heater goes out, you have to replace the roof. There's all kinds of things. So a perfect time is when you get a pay raise. You, you know, you can think about, hey, from a forced scarcity standpoint, yes, I'm going to have 20, 25% of my money going towards investments. But I probably should go ahead and beef up my emergency reserves because three to six months is not what I made last year. It's three to six months of what I'm spending now. And so it's an ongoing analysis of what you have coming in and out of your household and financially.

• 53:12Brian Preston?

  And then you just the engine is getting beefed up every year as your income production gets stronger and stronger. You need to act accordingly and keep money going in to, to, to feed the fuel of not only your emergency reserves, but your Roth IRAs and everything else as you're going through the financial order of operations.

• 53:29Speaker 02

  Love that.

• 53:31Brian Preston?

  Your shovel is kind of, you're shoveling the coal into the different furnaces to keep the motors running.

• 53:39Speaker 03

  Great.

• 53:39Speaker 02

  Ken laughed at that.

• 53:43Speaker 03

  Well Haley, if you would like a Tumblr, just email [email protected]. We would love to send you one. Next question is from Pepster60. It says, "What do the guys think of adjusting my portfolio mix to more conservative when markets are at all-time highs and less conservative on corrections?" For context, we're in step nine and have about 2.5 million saved and 60, they're 65 and retired.

• 54:09Speaker 02

  I get, I get really nervous about people, because what you're, I'm going to reread your question with slightly different vernacular. Hey, what do the guys think about timing the market when it's scary and being aggressive when it's not scary? Well, we don't think the timing of the market works really well.

• 54:27Brian Preston?

  Or reverses, kind of, because it's saying when the markets are all-time highs.

• 54:29Speaker 02

  Yeah, to be, go more conservative and vice versa. Problem is, markets, especially bull markets, can run really hot for a really, really long time and bear markets can turn really, really quickly. This, to me, just seems like a way of market timing without calling it that. So what I'd rather see with a portfolio of $2.5 million at age 65 and retired, is an allocation that makes sense whether the market is at an all-time high or whether it is in a correction. If you have the right asset mix, the right asset allocation, it ought to be sound in both of those environments, so you're not having to make those adjustments.

• 55:09Brian Preston?

  Yeah, I mean, that's what I was going to say. We want, 65-year-old, you've kind of won the game. And I don't know what your burn rate is, but that's why I'd immediately want to stress test your plan, see how ahead of the curve you are, because then we could adjust the allocation based upon how much you want to build for legacy, how much needs to be built for just paying today's expenses. And in that way, the plan is good before, during, or after, no matter what life or the financial markets throw at you. I wouldn't be so in the weeds that I'm literally trying to day trade or time the market based upon valuations, because I just... It's exactly what Bo said is that the typical bear market is like 11 months or something like

• 55:53Brian Preston?

  that, but bull markets can run years and you just, I'd feel for you if you're trying to go all of a sudden very conservative because you think we're in this bull market and things are overvalued and then you kick yourself. You're just setting yourself up for a lot of just, you know, hassle factor of majoring in the minors versus, you know, just your money should work harder than you do and you should be on a beach somewhere enjoying your money.

• 56:18Speaker 02

  And this is not a hard and fast rule, but in our experience, as people age, they become more sensitive to like changes and but due to that increased sensitivity, they're likely to seek out confirmation bias. Oh, oh, right now the market's overheated. Oh, if you are constantly thinking, oh, I'm going to change when X happens, you begin to start looking for and seeing X a lot more frequently and oh, now, okay, the market just went down 5%. I need to adjust. Oh, the market's all the time. I need to adjust. And what you end up doing is creating a lot of motion inside your portfolio and oftentimes that motion is one, going to create costs, but two, you're likely going to be getting it wrong more often than you're getting

• 57:03Speaker 02

  it right. I just don't think it sets you up for a ton of success.

• 57:07Speaker 03

  That's great. You want to do one more?

• 57:09Brian Preston?

  Let's do one more.

• 57:10Speaker 03

  Let's do it. Scott H. asks, can you please explain how the HSA can be used as an investment account as opposed to spending it on medical costs each year? I believe you can reimburse past medical expenses later in life and we've had a lot of debate about why HSAs are so great. So really break it down for Scott.

• 57:28Brian Preston?

  Now, look, first I want to take some credit because I think we have single-handedly helped a stat that comes out every year forever. And I love this stat is we were saying only 4% of Americans were actually investing their HSA. I'm happy to report and I think it's because we've been sounding the alarm on this. That number is like 12 to 15% now.

• 57:45Speaker 02

  That's right.

• 57:46Brian Preston?

  So, so still, but you know, 80 plus percent of Americans are still using their HSA as a clearing account and I would still can tell you to pay attention because you remember with an HSA, you have to have a High deductible insurance plan. Make sure you're keeping enough liquid for your out of pockets and any deductibles that you need to be nervous about. Because you don't want to get caught in a medical year that you can't invest. But assuming you have that covered, yeah, a lot of your HSAs can are attached to like. I know a lot of us are using fidelity now.

• 58:17Speaker 02

  That's right.

• 58:18Brian Preston?

  And it's very easy to go buy index funds and other things. Just like you would with your brokerage accounts or your 401ks or your Roth IRAs. You can do that within your health savings account. Once you figure out how much needs to be for liquidity to cover, you know, deductibles and how much can I just let it work in the long term? And just grip, rip and go.

• 58:39Speaker 02

  And so here's what you do, you incur that medical expense today. You pay for it out of pocket with cash that you have on hand. You save the receipt, you scan it in most likely in some sort of digital form. You have a spreadsheet where you're kind of keeping track of that. And then if you invest those dollars and they grow through time, you can then reimburse yourself at any point in the future for that medical expense. You can be in the year 2040 reimbursing yourself for medical expenses that you incurred in the year 2026. It's a fantastic way to build up a truly legit pot of tax free, readily available assets. You just have to make sure that, like you said, you have the cash to cover your deductibles or anything of that nature.

• 59:22Speaker 02

  Then you also have the cash that you can actually cover those medical expenses with outside resources.

• 59:26Brian Preston?

  Well, I mean, if you think about in terms of, let's say a $25,000 of contributions and expenses. But that, but you know, fast forward to 12 years in the future or 15 years in the future, and now it's worth $100,000. The thing I always thought was magical was you can go and reimburse yourself in the future for that $25,000. But the net $75,000 gain.

• 59:49Speaker 02

  Still working.

• 59:50Brian Preston?

  It's still working and it's not taxable or it's just out there. It's like it's magically created because you did, now you did have to have the cash to cover those expenses in the, in the year that you incurred them. But it really is a magical thing. I mean, here's where I'll take it, take it into bonus rounds. You know, my youngest daughter is, will never probably live on her own. And we've had to, we moved here to Tennessee for a special school. That special school is 50 grand plus a year. I get a letter every year from the school and we have a medical doctor and everything where this is a qualified medical expense. I've been paying for these tuition fees. I have without a doubt know better how big my health savings account gets.

• 1:00:32Speaker 02

  You're gonna be cool.

• 1:00:32Brian Preston?

  It's going to be tax free when I pull it out because of that private school that we moved up here for. So that's why I'm like, grow, baby, grow, because I can't wait to pull the money out at some point completely tax free.

• 1:00:45Speaker 02

  Love that.

• 1:00:46Speaker 03

  Grow, baby, grow. And with that, make sure you go to moneyguy.com/resources to see how your savings can grow with our new resource. How much should you save? You can download that for free. Again, moneyguy.com/resources. And if the slipper fits, as Brian says, you can also click on the button that says, become a client and just learn more about what we do at Abound Wealth Management. So, thank you so much for joining us today on the live stream. We'll be back every Tuesday at 10 a.m. Central and we can't wait.

• 1:01:17Brian Preston?

  Kudos to you because you know, I probably y'all figured out, I'm not exactly the biggest fan of it depends section, the rapid fire. But Rebi.

• 1:01:27Speaker 02

  Somehow they made it perfect.

• 1:01:28Brian Preston?

  Somehow she, she put Disney in there. So it makes me smile. You know, the things that you talked about, and I did, I actually thought about, I want to make sure I say great, big, beautiful tomorrow. Also was trying to get a Sherman's brother reference in there, maybe even the Bancroft brothers reference in there just because we had, we have had both Tom and Tony by the studios here in the, in the last few weeks. So just some really cool Disney stuff. And for those of you don't know any of those things I just said, go do a little, little dive and I think you'll be impressed. I'm your host, Brian, joined by Bo and the rest of the content team, Money Guy team, out.

• 1:02:01Speaker 03

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