My First Market Crash. Is This Time Really Different?

You've seen it. You've heard about it. You've read about it. The stock market is down. SPOILER ALERT: Our advice stands strong - and we've got data to support it. After talking through current events, we answer your questions (covering topics from investment allocation to vesting schedules to debt payoff). We even touch on a sticky situation when it comes to investing for an upcoming wedding! 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

• 0:00Speaker 00

  My first big market crash, but is this time really different?

• 0:10Speaker 01

  Rebi, I am so excited to talk about this. And I know what you guys are thinking. Okay, no, no way can Bo actually be excited to talk about a downturn, about a market crash. But I actually am. And let me tell you why I am, because I feel like there are so many voices out there and there is so much negativity. I don't think that what you are being told is accurate. I don't think that what most of us are being told is going to be the best thing for our future selves. So I'm so happy that we have this platform where we can speak to that, where we can share the information that is actually valuable for you guys, that will actually help you do money better. That's what we do every Tuesday morning here at 10 a.m. Central time. I forgot what time we do it at.

• 0:55Speaker 00

  Tuesday morning works.

• 0:56Speaker 01

  That's what we do. We want to load you guys up with answers to your questions. So right now, we have the team out in the wings collecting your questions. So if you have something, maybe you're nervous, maybe you're concerned, maybe you read something, saw something, heard something, you just want to know our take on that, or maybe how you should think about it as you navigate your financial life. We want you to get your question in the chat right now. And with that, Creative Director Rebi, I'm gonna throw it over to you.

• 1:22Speaker 00

  Well, I want to start off with kind of my question about what you're saying.

• 1:26Speaker 01

  I love it. You're sitting in the seat.

• 1:27Speaker 00

  Because here's the thing, you know, I have been following the Money Guy rules for several years now, since I met you and Brian. And I'm finally kind of starting to see some of those financial milestones like in my sights, right? Like, it's exciting, it's great, it's working. And so I have a feeling a lot of our Money Guy family is kind of sitting in that spot too, right? And so now, when the market starts to go down,

• 1:55Speaker 00

  It's starting to feel a little bit worse, right? Because now we have something to lose.

• 1:59Speaker 01

  You actually have something to lose now, right?

• 2:00Speaker 00

  Because the first time, obviously, this isn't like my actual first first downturn.

• 2:05Speaker 01

  First time you've had some money, though.

• 2:07Speaker 00

  Exactly. Like, when you are losing, like, for example, like, 3% on 100K hurts a lot more than 3% of 1K.

• 2:14Speaker 01

  That's right, yeah, for sure.

• 2:15Speaker 00

  And I've had personal friends, like, very smart, savvy, like, wonderful, awesome people, like, tell me, "Oh, I cashed out, because I'm just tired of seeing that number go down. I'm tired of losing that money that I put in. Like, it's not worth it. I'll, I'll put it back later." And, you know, academically, I know that this is not probably the right move, but what are we to do? Like, I feel like there are other millennials, early 30s people like me, or just people who are following the foo, who see these headlands pop up, see this unstable economy, and are like, "Okay, is this actually bad? Um, this feels different. This hits different this time." What would you say to people like me and people who are sitting in this position with me today?

• 2:58Speaker 01

  First of all, if, if you're an investor out there, and you've seen the volatility over these past few weeks, and the dollar value of the change in your accounts was significant and made you feel uncomfortable, pause for a moment and just think, "Man, what a testament to how good I've been at building wealth. I actually have built up enough money now that when the market goes down, that when it goes negative, that when I lose value, it's painful, it's substantial, there is material behind it. That's a sign that you've been doing the things that you're supposed to do." So I love hearing you say, "Hey, you know, very first downturn, who care? I didn't have a lot of money. Now, I, I got a little bit of jingle, and it hurts, and I see the numbers. So what should I be doing? And how should I be thinking about that?"

• 3:42Speaker 01

  Well, I think the very first thing we ought to do is we ought to level set with where are we right now? Now, as of...

• 3:48Speaker 00

  Yes, is this actually bad? What is happening right now?

• 3:50Speaker 01

  Right? Now, if, if you, if you go scroll through social media, you turn on the news, you're gonna hear, "Market crash, pending doom, the sky is falling." But in reality, as we sit right here, right now, when you think about the S&P 500, present day... It's about 8.5% off of its all-time high. So it's down about 8.5% from where it was earlier this year. If you look at the year-to-date performance, we're down about 4.5%. So this is not like a, "Oh, my goodness, what's happened?" Now, that doesn't mean that we're at the bottom. And that doesn't mean that we might not see more pain to come, potentially. What it does mean is that, realistically, right now, we're less than 10% down. Yeah. Now, we were talking in pre-show. Do you realize that since, like, the 50s, right? This is like way, way back.

• 4:34Speaker 01

  Most years, the intra-year average decline in the stock market, as measured by the S&P 500, is about 14%. So even if you think about, on average, the S&P makes somewhere between like 9% to 11% per year. And in like 8 out of 10 years, the market's up. And yet, in every one of those years, intra-year, market loses like 14% at some point in it. We're not even at the average right now. So right now, where we sit today, we're down like 8.5% off of the high. But let's assume that this is the beginning. And let's assume that, okay, maybe things are gonna get more difficult, more turbulent, more volatile. It's helpful when we think about markets in terms of, okay, when in doubt, I zoom out. Is this time really different?

• 5:19Speaker 01

  There's a great illustration. We've shown a ton of times over the years, just comparing historical bear markets to historical bull markets. Right? And what I think is absolutely fascinating is when you look at this, and I'll describe this for those of you that are out there listening on Spotify or out on iTunes. It shows how severe the bull market was, meaning how much money was made, or how severe the bear market was, how much money was lost. And then it also shows the duration. How long did it last? How long was the bear market? And how long was the bull market? And what's fascinating is when you look at this, you can see that just, before we even like dive into the numbers, the market is up a lot more than it's down. It just spends a lot more time up and down.

• 6:01Speaker 01

  And when it goes up, it generally tends to go up a lot more than it goes down when it's down. If you look at the average 10-year, the average duration of a bear market, and this is back from 1942 all the way through the end of last year. The average bear market loss, again, this is average, so this includes like Great Recession, everything, about 32%, right? That's, I don't want to downplay that. I don't want to make that seem like that's insignificant. It's about 32% down, but the average duration is only about 11 months. So, most bear markets, most downturns, most pullbacks, don't even make it for a full year. So, you think about that on one hand, and then you contrast that to the average bull market. Well, the average bull market goes up 150% on average.

• 6:46Speaker 01

  It's crazy. 150%. It's a lot more. And it generally lasts for over four years, 4.3 years. Again, if you just measure the averages from 1940 all the way until now. So, if you are betting on which side of the equation you're going to fall on, markets more often than not are up and more often spend time in positive territory than negative territory, even if, on a short term, it goes up and down, up and down, up and down. So, the question you ask is, okay, well, if I'm a millennial, what do I do? Or if this feels uncultured, but how should I feel? How should I feel about this? Let me tell you what you don't want to do. I'm going to be very honest with you. I do not know what the market's going to do over the next month. And I know that's shocking. I know you guys come here because you think we have all the answers.

• 7:29Speaker 01

  I don't know what it's going to do over the next six months, or the next 12 months, or the next 18 months, and nobody does. So, if you have this mindset where, hey, you know what? Okay, I'm just going to, I'm going to sell, I'm going to go to cash, I'm going to sit on the sidelines, I'm going to wait for things to get better, I hate to break this to you, you do not have the ability to do that. And frankly, I don't think that anyone has the ability to time the markets in that way. So, what do you do? How do you focus on this? Well, if you're a millennial, and you're a young person, and this is, again, this is so counterintuitive, you should be excited.

• 8:06Speaker 01

  Okay, I know, I lost money, markets are down, it's painful. You should be excited because right now, if the market's going down, if the market continues to go down, every dollar that you put to work, every dollar that you invest, every dollar that you put into your Roth, into your 401K, into your HSA, you're buying at a discount, buying at a discount, buying at a discount, buying at a discount. Warren Buffett says, you know, when it's raining gold, you don't go reach for a thimble, you reach for a wash tub. You want to grab as much of that gold as possible. I started investing in 2007, that was when like my investing career started, and I started putting money into Roth IRA. Now, it wasn't a ton back then, it was like 20, 50, 100 bucks a month, but I remember going through 2008. That was a crazy time to start investing.

• 8:51Speaker 01

  And then going through the first quarter of 2009, because market actually didn't hit the bottom until March 9th of 2009. And I remember every hundred dollars going in, going in, going in. If you fast forward to 2010, 2011, 2012, and I'll look back at those contributions that I made, even though it would have been easier to turn off the automatic savings, to keep that money, to build up cash, whatever, I look at how much those contributions made. It was wild. And one of our content writers, I think Nick said, if you were just, if you would have just invested in the S and P 500 on March 9th of 2009, bottom of the great recession, it was, what was it Nick, like 700 plus percent? It was a lot. Or something like that. It's insane. So what do you have to do? You have to stay level-headed, you have to keep your wits about you, and we say, always

• 9:36Speaker 01

  be buying. So if you're a millennial, a young person, my mind, my financial mind actually warps, and I'll start thinking, man, are there some areas I can cut back? Are there some ways? You know, I'm already, I'm already doing all the saving, I'm already doing the 25% plus, but man, can I save a little bit more? Can I put a little bit more to work for me? Can I find some way to get more dollars going? So that's for my young people. Just now, very briefly, I want to speak to the other segment of the population, because there are some folks out there who are saying, man, Bo, I hear you, but I'm not 30 anymore. Right. I've been working for 30 years, and I'm, I'm getting close to retirement, and I'm getting close to needing these dollars. It's why we tell you that your portfolio allocation should change. So you're allocation should look different when you're in your 40s and 50s than it did when you're in

• 10:20Speaker 01

  your 20s and 30s. And so if you've been managing that appropriately, when you see these big swings where the market loses 3% in one day, hopefully your portfolio, because it's well diversified, does not have those same swings. And if you have been building up your cash position and you have that six-month emergency fund, or if you're someone who's getting close to retirement, you have that 12 to 18 months of living expenses, or maybe even 24 months of living expenses. If you're in retirement, you know that no matter what the market throws at you over the next 12, 24, maybe even 36 months, you have liquidity to keep you covered. So you don't have to make desperate, dire decisions, and you can give your money time to recover, your money time to revisit.

• 11:03Speaker 01

  But one of the things I would do at this point, and I think downturns are always wonderful for all of us to do this, assess how you're feeling, right? Like, right now, if you're thinking, uh-oh, I am losing sleep at night, I can't stop looking at my accounts, I feel nervous, I feel anxious, there's a really good chance that one of two things is happening. Either you don't understand what's actually going on. That's why we have this show. It's why we do stuff like showing you bear markets and bull markets and talk about intra-year declines. It's why we do sort of those things, so that you can be more well-educated. Or the second thing that could be going on is you might be in a portfolio that's not a great fit for you. Or maybe you skipped some of the steps in the financial order of operation, and you need to take this time to go say, you know what?

• 11:47Speaker 01

  I'm gonna get my emergency fund in place. I'm gonna go bolster the steps before where I was at now, so that no matter what the market does, no matter what the economy does, no matter what this environment I'm in does, I know that I have a plan that's gonna be great before the stuff hits the fan. It's gonna be great while the stuff is hitting the fan. And when I look back, it will have been great even after the stuff is done, been flung by the fan.

• 12:15Speaker 00

  So are you saying I should be so excited?

• 12:17Speaker 01

  So excited.

• 12:18Speaker 00

  For this downturn?

• 12:19Speaker 01

  Yes, because this is where, for young people saving and building, if you are under the age of 40, right now, you should be licking your chops and holy cow, I can't believe I'm getting this on sale right now. How can I max out that Roth? How can I max what they just say? How can I get more into my 401K? And I assure you, there's a high likelihood, if you can do that and you have the wherewithal to do that, your future self is going to look back and as Brian would say, give you a big old sloppy wet hug. I don't even know what that means. But that's what your future self will do. If you can stay disciplined, always be buying, stick to the plan, and don't let yourself lose your mind, even when it seems like the rest of the world around you is losing its mind.

• 13:04Speaker 00

  It's a great perspective. If you hang out with them, they make you a lot less nervous about this kind of thing. So I'm really glad that you're here because we love talking about these topics, sharing our experience, sharing some good food for thought, and that's why we're about to answer a bunch of your questions, all about personal finance. So we've got a few queued up, but keep them coming, throw them into the chat, and we will choose some to answer. So are you ready to dive in?

• 13:28Speaker 01

  Was that okay? I just, I get so excited.

• 13:31Speaker 00

  Yes, it was great.

• 13:31Speaker 01

  I legitimately get excited about this.

• 13:33Speaker 00

  And you could, like, it's contagious.

• 13:35Speaker 01

  But the market's down and I'm losing money and it's negative. And, and, and, look, for my clients out there who still listen to this, I'm not excited that you're losing money. I'm not, I'm not like, oh, great, we're making less money. That's not a good thing, but I recognize it for what it is. It's an opportunity for pruning. It's an opportunity for reinvestment. It's an opportunity for rebalancing, reallocating, loss harvesting. There are things that you can do in this moment to take advantage of it as a financial mutant. And for folks who are positioned to do that, man, this, these moments are the difference making moments. And it feels so crazy, I'm talking about it like we're down 50%. We're down eight and a half percent.

• 14:13Speaker 00

  Get us the other part.

• 14:14Speaker 01

  But if it gets worse, if it gets, if it gets more dire, if it gets more volatile, have the mind about you that I'm going to do this differently than my peers. I'm going to do it differently than the person who's freaking out and selling and going to cash, because I understand how these things work and I understand how real wealth is built.

• 14:34Speaker 00

  Yep. No, I love it. We do have a question that has to do with the current market downturn to kick us off from S. Sand. He says, "With the current market downturn, is it opportunistic to front-load some of the 25% savings instead of spreading it out evenly throughout the year?"

• 14:51Speaker 01

  Yep.

• 14:52Speaker 00

  Thanks. And honestly, like, this is echoing kind of what you're saying. So, thinking about it in the terms of, okay, you should shoot for investing 25% of your gross income. What do you think of that idea?

• 15:01Speaker 01

  So, I said this earlier, and I will reiterate it for you, Sand. S. Or S. Or S. Sand. I don't know what the market's gonna do in the next month, in the next six months, next 12 months, next 18. If you can tell me what the market will do, or what the market is going to do, I will tell you the absolute most advantageous strategy. Absent that, we don't know. And this is what's really, really hard about this. It's hard to catch a falling knife, right? Because you don't know where the bottom actually exists. You could accelerate right now, say, "Okay, I'm saving 25%, but I see an opportunity, so I'm gonna front-end load my savings." And that may look great unless the market goes down another 25% from here. Well, then you would have been better off not doing it.

• 15:46Speaker 01

  So, when I have people who are trying to figure this out, who are trying to think through this, my first answer is, always be buying, for sure. We always want you to be buying. So, I would not say, "Front-end load today so that you cannot save tomorrow." But if you have little, like, thresholds in your mind, like, you know what? Okay, I'm saving 150 bucks a month. If I see the market go down 10%, I'm gonna increase my 150 to 200 a month. I'm gonna figure out how to do that, how to make... I don't think that that is timing the market. I only think that's trying to game the system. I think that's just recognizing when there's opportunity. And then, if the market goes down 20%, okay, you know what? I'm gonna go from 200 a month to 250 a month. And I can play those games

• 16:28Speaker 01

  with myself so that I'm getting more and more excited, even though the rest of the world is getting more and more frightened. I'm trying to be greedy when others are fearful, and fearful when others are greedy. This is a great time to be able to do that. So, I don't think there's anything wrong with accelerating your savings, but I would not Rob from your future saving self to do that. So if you're saving 25% and it's the only 25% that you're going to save, rather than trying to get too, too cute with it, I would stick to the plan, stick to the plan, stick to the plan. Cause what I want you to do is waste all that dry powder today and not have anything left the rest of the year. Cause it, it might, it might get better and or worse, it might get worse, which is better for those of you that are saving.

• 17:09Speaker 00

  Yeah. No, I was just, I had the financial order of operations sheet up because that's exactly what I was thinking too. Like, hey, this is great.

• 17:16Speaker 01

  A copy of that.

• 17:17Speaker 00

  Moneyguy.com slash resources. You too can have this lovely copy of the nine steps of the financial order of operations, what to do with your next dollar. So yeah, I think that as long as you're cognizant of the foo and not like really hosing the first few steps in order to front load that I like, I think what you said was great.

• 17:35Speaker 01

  I love it.

• 17:37Speaker 00

  All right. We're going to move on to KG's question.

• 17:41Speaker 01

  Can I, can I throw one other thing out there?

• 17:43Speaker 00

  Yes.

• 17:44Speaker 01

  We don't know what the future is going to hold. Have I said that enough that we don't, we don't have a crystal ball? But here's what I do know, and this I do know with crystal clear clarity, we're going to continue pumping out content that speaks to whatever's going on in the world around us. And the only way you're going to know about the content we're pumping out is if you are subscribed. So if you like this, and if you want to make sure that you are aware, when we have a new making a million, making a millionaire episode coming out on Mondays, or when we have a new live stream on Tuesdays, or when we have a new mini show coming out on Wednesdays, or when we have a long show coming out on Fridays, the only way you're going to know about that is if you are subscribed to the channel. So if you're not subscribed, you should subscribe right now.

• 18:25Speaker 00

  Absolutely. All right. Ready for KG's question?

• 18:30Speaker 01

  Yes, ma'am.

• 18:31Speaker 00

  It says, I'm saving each year towards major expenses like a new roof. That's not an emergency fund item. How much is too much to save for things like a roof, a new AC, a new boiler, or other major repairs? That's a lot of high yield savings account cash.

• 18:48Speaker 01

  Sure.

• 18:48Speaker 00

  So this is like the how much cash is too much cash question.

• 18:51Speaker 01

  Well, so KG, let's think about this for a moment. What is the emerg- Fund therefore it's for emergencies now I have no problem if you want to think about having an ongoing maintenance budget like okay I know I might need what was it a new roof or I might need a new AC or I might need a new boiler but odds are you're not gonna need all those things at the same time so if you have a roof and you're like man okay this roof is starting to age and I know it's gonna cost extra replace it I want to just start saving a little bit extra into my emergency fund great if you're doing that does that also mean that you need to have more money allocated for the boiler and more money allocated for the major repair and more money allocated for

• 19:31Speaker 01

  the next car and more money out maybe not because all of these things are likely not gonna hit at one time what will keep you protected is if you do have that fully funded emergency will you hold up the thing for me step four of the financial order of operations says and I want to have three to six months of my living expenses in liquid cash that's the uh-oh money what you're talking about is not uh-oh money it's the oh money like the oh I got this thing that came up so if you begin to save on that that's okay and that's if you want to continue building that that's wonderful where I see people getting problems in this isn't this where people they'll do the envelope system and buddy their envelopes could fill up the post office right because they have an envelope for this thing and for this thing and for this thing and for this thing and for this

• 20:14Speaker 01

  what ends up happening is there's a real opportunity cost of that if I have all of these cash dollars and buckets even though cash right now is yielding great it's still above 4% for a lot of high-yield money market funds it's not gonna do what the broad markets are gonna do and so if you just have all this cash sitting on sidelines waiting for the uh-oh and you're not maxing out your Roth IRA and you're not maxing out your HSA you're not putting money into your 401k you're not building up that after-tax account I would argue that you're not stewarding your opportunity well you're not taking advantage of what's available to you so there's nothing wrong with doing a little bit of it but I'd figure out what's reasonable so all right let's do some I'm gonna do some quick math here And I don't put public math, so this is pretty, pretty dangerous.

• 20:59Speaker 01

  Let's say that your emergency fund, you figure it out, six months, you need $30,000 in an emergency fund. Boom, that's my emergency fund. Okay, if I'm gonna have a roof repair, or I'm gonna have some other major expense, none of my baseline living expenses, $30,000 will cover me for six months. Maybe I'm okay if I let that fund creep up to like $40,000. There's no science, there's no math behind that. I just said, ah, maybe it's, what's that, 130% bigger than what I would have had otherwise? So that if I have a roof, okay, I can do the $10,000 for that. Or if I have the other repair, I can do that for that. Even if I have to dip into my emergency fund to do that thing, that's okay. That's what the emergency fund is there for. So if I have $10,000, I gotta pull five out of my emergency to do 15 for the new roof?

• 21:43Speaker 01

  Great, do that, and then go back to step four and start building your emergency fund up. Again, I just don't wanna see you sitting on tons and tons and tons of cash, when realistically, that cash could be working for you. KG didn't say how old they were, but I would encourage KG, go to moneyguy.com/resources, check out our Wealth Multiplier Tool. And just ask yourself, okay, this $1, should I put it in this contingency, uh, double emergency fund, or could I go have it multiply my wealth by some factor of 88 times over, 23 times over, seven times over, whatever your age is, and make that determination?

• 22:20Speaker 00

  Awesome. Great question KG, thank you for asking it, and thanks for being here today. All right, Zach's question is up next. He says, "Our first baby is due this month." So congratulations, first of all. "We are working on step three, paying off 37K combined on two car loans. Should we pause step three to move to step four and build up reserves with the baby coming? Both our jobs are in stable industry," which is good news. And I think this is a question a lot of people face, right? What do you think?

• 22:57Speaker 01

  That's a hard one. I mean, I don't, I don't, look, we don't have stumpers around here.

• 23:01Speaker 00

  I will say, let me give the caveat. We do at the Money Guy Show say like, there's not like some perfect magical financial time for you to have a baby. Like, that's a life, personal decision. You can make it work in a lot of different financial situations, right? On a lot of steps of the food.

• 23:17Speaker 01

  You'll notice.

• 23:18Speaker 00

  You're gonna be okay.

• 23:19Speaker 01

  Well, you hold the financial word up. You'll notice baby is not in here. Like, there's not, it's not like I gotta get past this step to be able to do that step. Like, that's a, that's a different type of decision. That's a life decision, not a financial decision.

• 23:31Speaker 00

  Well, here's what I also was thinking. Like, if they're on step three, that means they have their deductibles covered. So, like, say you have a high deductible plan. Okay, you're probably gonna hit that. Hey, you have that covered. Like, this is all good news, right?

• 23:41Speaker 01

  So, here's what, the only thing, this is where Zach, your, your question, like, you remember when you used to take tests and you'd read, you'd be like, "I know this, I know this, I know this." And the last thing they throw into that question, you're like, "Oh, they got me," right? We have a bunch of, a bunch of our associates here studying for CFP exam, and so they're like navigating all that right now, trying to figure that out.

• 23:59Speaker 01

  Here's what he said. He said that he's on step three, but the $37,000 is on auto loans.

• 24:04Speaker 00

  Right.

• 24:05Speaker 01

  Right? And so, one of the things I would ask you, Zach, is when you really assess this, are your auto loans, in fact, high interest debt? Like, because sometimes we say, you know, it's, it's a little nuanced based on your unique situation. If this were credit card debt, that's a different thing. If you're paying 22% plus of an annual interest rate on that credit card debt.

• 24:25Speaker 00

  That hurts a lot more to not knock out.

• 24:27Speaker 01

  The answer's easy, right? You knock out the credit card debt, because if you have an emergency, you know what you're gonna do? You're gonna swipe it right back on the credit card. So, even if you're building up cash, like, right, it's like robbing Peter to pay Paul. It's, you wanna attack that that way. If you have $37,000 of auto debt, here's the first question I'd ask you. Okay, let's look at your payments, and let's look at your cars, and are we inside that 238 cocoon? Like, are we in our 238 cocoon? Did I put, do I have 20% equity in the car? Have I been financing it for less than 36 months? And does the car payment not exceed 8% across both of them, 8% of my monthly gross income? If that's the case, and you determine...

• 25:06Speaker 01

  Okay, yeah, I've got an eight percent car loan, but I'm in my twenties and man, eight percent stinks and it's high ish, but maybe it's not high E for me. Especially if I'm in twenty three eight, I don't think there's anything wrong with beginning to build up cash in step four of your emergency fund. But you have to determine is the car debt actually high interest debt because when you have a baby and and look, you've got a gaggle of kids now, right?

• 25:31Speaker 00

  Yeah.

• 25:32Speaker 01

  There are expenses that you just don't expect.

• 25:35Speaker 00

  Right.

• 25:35Speaker 01

  Like, like, people like, oh, I gotta save for the baby because I'm getting the hospital bill. Yeah, that's part of it, but then you gotta get the diapers and the butt paste and this binky and that binky. And you try all the bottles and you get this thing and that.

• 25:48Speaker 00

  Right.

• 25:48Speaker 01

  And you're like, holy cow, where did all this money go? If you can have a little bit of excess cash and you can have that emergency fund, you can have that money built up. It just gives you the.

• 25:59Speaker 01

  Cause Zach, this is your first.

• 26:00Speaker 00

  Peace of mind.

• 26:01Speaker 01

  This is your first baby and and look, uh, we've both been there. It's not easy. It's wonderful, but there's going to be a stress that comes on when I don't remember for me. When they gave me my very, my first daughter, when they gave me that kid and said, here, you can take this home with you. I said, you are insane. I, I have no business taking this baby. This, at the hospital is wonderful. The nurses knew what to do and they'd come and they'd help and it was great. And there's this stress like, oh, wow, I'm in charge of this person. If you can do things as you navigate, like build up cash, like having an emergency fund, like have some reserves. So that that's kind of one less thing you gotta think about.

• 26:46Speaker 01

  It's just going to allow you to focus on the main thing, which is, hey, figuring out how to be a new parent. Figure out how this new family circumstance that you're walking through works. So I would, so I took a long time to answer the question. I would figure out are my, are, is my, are my auto loans, is my auto debt actually high interest? Is it inside the twenty three eight confines? If the answer is no, it's not defined as high interest based on my situation and it is inside of twenty three eight. I do think it's okay to begin building up some cash. If your thirty seven thousand is in credit card debt. You gotta just knock that out, knock that out, knock that out, knock that out. Because your credit card, until you get it paid off, is also your emergency fund, unfortunately.

• 27:28Speaker 01

  And far too many Americans find themselves in that spot.

• 27:32Speaker 00

  And I also think it's worth noting, like, you're kind of also acknowledging the foo is not necessarily a straight line. We talk about that a lot.

• 27:39Speaker 01

  Oh, do we have that thing? Can we pull that thing up?

• 27:41Speaker 00

  We might have that slide, so if we do, we're gonna pull it up. But, like, especially if your baby's due in like a month and you're like, man, I would just really feel better if we put this this X amount of dollars aside. Okay, do that for two or three months.

• 27:55Speaker 01

  Yep.

• 27:55Speaker 00

  And have a deal that, hey, but by the end of that three months, we're getting back and we're aggressively paying off the cars. You know, like, there's nothing, that's what, that's what real life is.

• 28:05Speaker 01

  I love it.

• 28:06Speaker 00

  You know, so it's not like you're totally breaking the foo by doing that. And in fact, the foo is what will keep you on track, that you won't just indefinitely stop that. It's going to like allow you to take that two to three month break because of life circumstance and then get right back on track and really not miss a beat. So.

• 28:23Speaker 01

  I love it.

• 28:24Speaker 00

  I think that was worth noting. Uh, okay. That was a really good question. Thank you for sharing, Zach, and congratulations. We're excited for you. Um, as Bo said, it's not always easy, but we're a big fan of babies and kids around here.

• 28:36Speaker 01

  Can I have a question?

• 28:36Speaker 00

  Exciting stuff.

• 28:37Speaker 01

  Um, we have a poll, we have a poll maker, y'all are poll makers over there. Just with our financial media, because obviously like stuff is going crazy, we talked about what to talk about. We want to talk about the market and the volatility and stuff. I want to know if our people are freaking out, just because like our, our financial mutants, like here are the options. Uh, yep, I'm freaking out. I don't like what's going on in the markets right now. Nope, I'm excited. I see this opportunity. Or three, I'm still trying to figure it out. I don't know which one. I would just be curious, because here's what I want to believe. I want to believe that we are, and we, I'm saying those financial mutants, we're a unique breed. We are a unique, uh, subset of the population that just sees the financial world differently.

• 29:18Speaker 01

  So I'm thinking they're gonna be like, yep, I am so, um, recognize this as an opportunity, I'm excited. But I'm just curious, so I would like to know what our financial mutants think.

• 29:27Speaker 00

  We'll have to keep an eye on that. We're gonna do another question and then we'll check out the results of that poll. But Sarah's question is up next. She says, "I'm 43 and my husband is 47. We have our 401ks and IRAs 100% in stocks. I plan on leaving them that way, but would love to hear your thoughts." And so would I.

• 29:48Speaker 01

  Sure. Okay. 100% stock portfolio. What that means is that you are at the whim of what the markets are doing. Now, when you say 100% in stocks, this is where I gotta get a little nuanced. Do you actually mean that you have 100% of all those assets in stocks? Meaning, I went and bought Nvidia, and I bought Tesla, and I bought Apple, and I bought Home Depot, and I bought fill in the blank, fill in the blank, fill in the blank, fill in the blank. Or is what you're saying, hey, I've just got it all in equities? Meaning, I've got all S&P 500, and I've got all, you know, whatever. I don't know the answer to that question. I would tell you, here's what we believe in here, and this is what

• 30:33Speaker 01

  we think makes sense when it comes to prudent investment management. We think that diversification makes a lot of sense. Even if you're gonna invest in quote-unquote "all stocks" on the equity side, we like diversifying our equity exposure. Meaning, S&P 500 is wonderful, but we also like small-cap stocks. And we like domestic equities, but we also like international equities. We also like things like real estate. Maybe you're investing like real estate investment trusts, or that sort of thing, like publicly traded real estate indices. So, there are ways you can be all stocks and still be diversified. Now, you said you're 43 and 47. You are not old, but you are not in your 30s either. And so, one of the questions I would begin to ask you, like, if you were coming to me as a

• 31:16Speaker 01

  client saying, "Hey, here's my portfolio. What should I do?" I'd say, "Okay, first of all, let's talk about your risk tolerance capacity. How do you guys view risk? What's your personality? Are you guys aligned? Is one of you a cowboy, and one of you a grandma, or vice versa? How do you guys individually look at risk? And does this portfolio make sense for both of you?" So, does it match your risk personality? And then I would ask, does it also match your risk capacity? When do you think you're gonna need this money? Are you planning on retiring at 55, at 59 and a half, at 60? Is this something that inside the near future, you may need these dollars? If so... I would argue that you should potentially be on some type of glide path. Yeah, maybe I've got an aggressive portfolio because I'm going to live well into my 90s.

• 32:00Speaker 01

  So some portion of these dollars has to pay for me for the next 50 years. But some portion might be needed in 10 years or 15 years. And as such, I should have a mix inside my portfolio of risk on assets. That's the equity stock piece and then risk off or risk reduced assets. And if I put a solid mix together, then what I begin to focus on as an investor at this stage of life, it's not just how much money I make. So often people are like, return, return, return, return, return, return. How much can I make? How much can I make? How much can I make? Our opinion is that's the wrong question to be answered, the wrong question to be asking. The question that you should be asking is, how much money do I get to keep over the long term? Meaning that when the markets are up, if I have an aggressive allocation,

• 32:45Speaker 01

  but well diversified with risk on, risk off assets, then I should be able to grab a big chunk of that upside. But in times like right now, when the market is volatile, when I see down volatility, I'm not out there flocking with the market. I only have a portion, a fraction of that downside. Well, if I can get a majority of the upside and a fraction of the downside, and I can do that consistently through time, then I'm going to likely be able to build towards my ultimate financial goal. So is an all-stock portfolio right for you? I don't know. I don't know you, Sarah. My bent, my bias would be, we like well diversified portfolios. And we like to think about return on a risk-adjusted basis. So I don't have to be out there taking all of the risk.

• 33:29Speaker 01

  I take some of that risk off the table and still have a similar long-term trajectory, long-term rate of return based on the way that I've constructed and allocated my portfolio. A lot of people find themselves in a similar situation to you, Sarah. This is one of those areas where if you're like, I don't know. I've always been aggressive. I've always invested in stocks. I've always been equity heavy. I don't know how to adjust, or how much to adjust, or where to adjust. This is a great time where it might make sense to take the relationship to the next level. To think about, man, I've only ever managed one portfolio. How wonderful it'd be if I had a team or an individual I could work with, who's managed hundreds of portfolios, who've seen people that weren't just 43 and 47, but there were people that were 33 and 37, all the way until they were 53 and 57.

• 34:14Speaker 01

  And how did that look? And how did they adjust? And how'd they navigate? So perhaps you're in that situation where it might be time for spot checks. Someone to give you a second set of eyes. We call that here, the abundant cycle. You've grown to the place where, man, I just wish I had a co-pilot, someone to help me steer this ship well. We'd encourage you to consider giving us that shot. You can go to moneyguy.com, work with us, aboundwealth.com, work with us. And one of our advisors would be happy to chat with you.

• 34:43Speaker 00

  Absolutely. That was a great question, Sarah. Thanks for sharing and thanks for being here during the live stream today. We do have some of the results of that poll, though. You said, are you sweating the dip? That's how we said it. Like, are you feeling nervous right now? 57% said, no, I am so excited.

• 35:02Speaker 01

  Awesome.

• 35:02Speaker 00

  So those are some financial mutants right there, right? 30%, we're very honest, said, not sure yet.

• 35:09Speaker 01

  Okay.

• 35:10Speaker 00

  Fair enough.

• 35:10Speaker 01

  All right.

• 35:11Speaker 00

  And then only 12% said yes. And if that's the case, I'm glad that you were here today. I'm glad that we're talking about this for everybody's benefit, but a good chunk of people, I think, are with us and needed that conversation.

• 35:23Speaker 01

  For the 42% of folks that were not, that I'm so excited, that's what we're here for.

• 35:27Speaker 00

  Yeah.

• 35:28Speaker 01

  We want to be, look, man, I don't know if you do this, but you go, I'm talking way more than I normally do, because I'm on the soapbox. I don't, when you're like scrolling, right? When you're scrolling through your socials, when you're checking your news, when you're looking at all this stuff, and it's just like, bad, bad, bad, negative, negative, negative, unrest, unrest, unrest. I hope that we get to be that beacon that's like, hey, this is just part of the process. It's gonna be okay. That's what we do. This is how we build wealth. We look different than- The world around us when it comes to how we make financial decisions and that's why, you know, it's, I make this weightlifting joke all the time. People say, okay, in the

• 36:11Speaker 01

  beginning, people always ask you why. Wow, why'd you do that? Why'd you do that? Why'd you do that? Why'd you do that? But in the end, people always ask you how. How'd you do that? How'd you do that? How'd you do that?

• 36:20Speaker 00

  That's right.

• 36:21Speaker 01

  Being a financial mutant is no different. So you're gonna make decisions today different than your peers make. And in the future, people are gonna look at you and be like, man, how'd you retire early? How did, how are you not freaking out when the world around you is falling? You're like, well, because I understand it. I'm a financial mutant. And they say, what's that? You say, well, let me tell you. Go to moneyguy.com and check it out.

• 36:42Speaker 00

  It's true. I love it. Okay, ready for the next question?

• 36:47Speaker 01

  Yes, ma'am.

• 36:48Speaker 00

  Speaking of, IB has the question. It says, what is the suggested threshold of how vested RSUs should make my portfolio before I am over-concentrated? I have 50K and they make up about 20% of my total portfolio. The rest of my portfolio is made up of ETFs and mutual funds. I have no debt, I'm 27, and I'll have about 70K more RSUs to vest this year. Okay, that was a lot of info.

• 37:18Speaker 01

  Yeah, yeah. So this is, IB, this is an incredibly common question we have. A lot of folks work for companies where part of their compensation is not in the salary that they make, but they also get equity incentive compensation. It might be in the form of options, they might be able to participate in like an employee stock purchase plan. In your case, there are RSUs, restricted stock units. Hey, I get granted this thing. If I work here for a certain amount of time, I get to unlock these things, the stock that then becomes mine. And so IB's question is essentially, how much is too much? Well, let me, I'll answer that question first. Our goal, when it comes to any concentrated equity exposure, is we really don't want it to exceed more than about 5 to 10% of your

• 37:59Speaker 01

  total portfolio value. So if you think about a number, what's my goal? 5 to 10%. However, it's not always easy to get there. You just told me that you have $50,000 of vested RSUs that represent 20% of your portfolio, and you're about to get $70,000 more. That means, I'm doing some quick math here. It sounds like your exposure is going to go from 20%, probably closer to like 40% or somewhere in that ballpark. A lot of people get on this incentive treadmill that we call it where there's new stuff coming in, new stuff coming in, new stuff coming in, new stuff coming in, and you might not be able to sell it quickly enough to get your exposure down. Or you may be saying, hey, I really, I work for this company and I believe it and I like

• 38:44Speaker 01

  it, or there's an expectation at our company that you have to have at least this much exposure. Or, man, when I was granted these RSUs, when they vested, I didn't do anything and the stock just shot up and now I've got these huge embedded gains. So that's why we tell people, when it comes to RSUs and incentives and options, it's always great to have a plan in place to figure out how you're going to navigate that. Now, you mentioned the vested RSUs. For those of you that don't know, when you get some equity exposure, there's two different ways you get it, right? There's the vested, I get it, it's mine, I can sell, I can do what I want. There's unvested. For IB, I would tell you, hey, you also don't just consider the vested, you need to look at the unvested portion. If you have a lot of unvested, right now he has 70,000 unvested, it sounds like, that's going to vest this year.

• 39:28Speaker 01

  I think you can be aggressive in how you divest your exposure because even if you're going to be aggressive in divesting that exposure, it's going to replace itself. It's going to be replenished, it's going to come back. Now, you want to do it in a tax-wise way. So that's why like right now, when you're looking at the other parts of your portfolio and you're seeing what you have, this is a great time when the market has some volatility. Maybe I go do some loss harvesting. Hey, I sell some of my mutual funds, sell some of my ETFs. Or maybe when I sell these RSUs, I'm able to sell some at loss positions that aren't going to have any adverse tax consequences. And I can bank up those losses and I can use those losses against future potential gains. If you're someone who's like, oh, I don't know what to do, man.

• 40:10Speaker 01

  I like my company, I like the stock, it's done well, it's rewarded me. How do I navigate this? Whenever we don't know the yes, no, right, wrong answer to make or decision to do, we like to remove emotion from the equation. And so one of the things I would tell IB is if you're thinking about how to go from 20% down to 10%, maybe set yourself a timeline. Hey, every month... I'm gonna sell $5,000 of my vested RSUs. I'm just gonna, just like I would dollar cost average into the market, I'm gonna dollar cost average out of the market. So if the company stock keeps going up, great. I'm making more and more and more money. If it goes down, hey, it's okay. I sold last month, capitalized. Sold last month, capitalized. Sold last month, capitalized. And that way, you remove the emotion from,

• 40:55Speaker 01

  and you have a systematic, pragmatic, prudent way to keep that exposure reined in if you can. It's a long way of say 5% to 10%.

• 41:05Speaker 00

  Thank you for the summary.

• 41:06Speaker 01

  My bad.

• 41:07Speaker 00

  No, it's all good. I think that context was necessary. IB, I hope that you found that helpful, and we really appreciate you asking the question. Yamalith has a question next. It says, "I'm 30 and a doctor in a Peds Fellowship."

• 41:21Speaker 01

  Hold on, sorry, my sticky notes. Y'all ever have these sticky notes?

• 41:23Speaker 00

  Oh, yeah. He's having a crisis. Because they, like, they open the two different ways. It's like the accordion style.

• 41:30Speaker 01

  If you were curious to him, I don't like him.

• 41:33Speaker 00

  Good to know. We'll fix that, maybe. We'll probably forget, but maybe we'll fix it.

• 41:39Speaker 00

  Okay, are you ready for Yamalith's question?

• 41:41Speaker 01

  Yep.

• 41:41Speaker 00

  Yamalith. I'm pretty sure I'm saying that right, but maybe not.

• 41:46Speaker 01

  Love it.

• 41:47Speaker 00

  The question says, "I'm 30 and a doctor at a Peds Fellowship. I started with debt of 164K, and three and a half years later, I'm down to 58K at a 6.3% rate. And there's no employer match either," he included. "Does the food change in long-term debt payoff for four-plus years with no investing?" So this is that question where, you know, a lot of our doctors, lawyers, like people with these expensive, long degrees, does the food change for them?

• 42:24Speaker 01

  Okay, so here's, here's something that I...

• 42:30Speaker 01

  Well, yeah, well, you've done something pretty amazing. So I didn't say, did you almost say when they came out of school? I'm 30.

• 42:38Speaker 00

  He's 30, yeah, so that gives you, so not too long.

• 42:40Speaker 01

  And in three and a, so three and a half years.

• 42:42Speaker 00

  And he said he's been paying it down for four plus years.

• 42:44Speaker 01

  And then three and a half.

• 42:45Speaker 00

  Yeah, or he's planning to, yeah.

• 42:46Speaker 01

  From three and a half down to 58. Does the food change and long-term debt pay off four plus years with no investing?

• 42:55Speaker 01

  Here's one of the questions that I would ask. So 6.3%. If you've, you've ever gone and listened to our, because I'm assuming this debt was student loan debt. That's a safe assumption, right?

• 43:06Speaker 01

  So we think that the way that you determine, because where I imagine you're at right now is you're working through the financial order of operations. Rebi, will you hold the thing up for me? Absolutely. And you're in step three and you're trying to figure, okay, is this student loan interest high interest debt or is it not? And now at 6.3% and 30 years old, you're kind of like right at that threshold. You're right at that threshold where you've gone from 164 to 58. Now, ah, here's, ah, here's the problem. You're 30 now, so you've turned the page. And I would argue that someone in their 30s looks different than someone in their 20s.

• 43:45Speaker 01

  So where you have been aggressively paying off the student loans from 164 to 58, I don't know if that's what I would have said to do. Because if you go to moneyguy.com/resources, check out a wealth multiplier. And I just want you to go look at the wealth multiplier for a 27, 28, 29-year-old. Every dollar that you can put to work for you, every dollar that you can plug into that wealth multiplier calculator will show you what it can turn into. Well, every dollar you put in the student loans is going to save you 6.3% in student loan interest. In my opinion, there's a really good chance that when you invest, when you put that money to work,

• 44:28Speaker 01

  you can likely do better than that for someone in their twenties. But now that you've flipped and you're in your thirties, you know, we have these thresholds. Like if your student loan interest is here, then you should pay it off. And here, then you should pay it off. And here, then you should pay it off. Well, now that you're in your thirties and your student loan interest is above 6%, I'd say, okay, well, now maybe it does make sense to begin paying that off. But I don't want you missing out on time. If you're a doctor and you have, I'm going to assume you're a pediatrician, it sounds like, a high income, I'd love for it to not be an either/or. I'd love for it to be a both because you have kind of missed out on that time in your twenties. I don't want you going another four years, knocking out this debt, satisfying this debt,

• 45:10Speaker 01

  not getting money working for you because I would have preferred you had some of that money working for you from 27 to 30. So the way that I would right this ship is I put together a timeline in my mind. Okay, I know I've got to pay another $58,000 off. I'm going to do that in three years, four years, five years, whatever that timeline is. So I'm going to calculate that. I'm going to amortize that. I'm going to figure the number. And that's what I'm going to do to satisfy this debt, to knock out this not quite high, not quite low interest debt. But then I'm going to save like a banshee. I'm going to get aggressive building my resources because now at age 30, I'm probably seven, eight years behind my peers who've been saving for almost a decade. And I recognize that while I didn't get to capitalize on those early years of saving and building,

• 45:55Speaker 01

  what I get to do now is because of my big shovel, I get to make up for lost time. And I get to hit that 25% savings rate and start saving aggressively for the future. So I would start thinking about not postponing, putting off investing, but how can I tackle both of these at the same time so that I can get the ball rolling on my wealth building journey?

• 46:17Speaker 00

  Yeah, no, that was really good, good thoughts. And yeah, I don't think the food changes, but there's like, he had, he, there is a unique circumstance there. There is a higher income and higher debt and other opportunities that go right along with the food.

• 46:32Speaker 00

  Okay, we're gonna move on to Joe S.'s question next. It says, "I've been saving for my wedding in September."

• 46:40Speaker 01

  Congratulations.

• 46:41Speaker 00

  It's in September of this year, and it's invested. When are you supposed to sell to go from invested to a high-yield savings account? And I might even go farther and say, "When should you invest money that you're saving up for a big expense? And when should you not?"

• 47:02Speaker 01

  All right, Joe, buckle up.

• 47:05Speaker 00

  Here we go.

• 47:07Speaker 01

  When it comes to investing, we want you to be investing dollars that you feel very confident you can walk away from for five years. Right? Like, what'd you give, 60 months? Like, "I don't need this money in the next 60 months. I'm gonna go away with it." Again, I don't do public math, but if you were getting married in September, and right now, today, it is March. We are not 60 months out. So, when is the right time to free up that capital? We are always gonna subscribe to one in the hand is more valuable than two in the bush. You've heard this common expression before? Money that you have today, you go ahead and lock in. You know you have it. You know you have it ready. Because here's what we don't know. Between now, March, and September, we don't know what the market's gonna do.

• 47:52Speaker 01

  Market could continue to fall, could continue to go down. We could see a big bear market. There could be a recession. We could go down 20%. Well, what if you, you know, you got that money invested? You're waiting, waiting, waiting. And you know what? You've saved. I've got, okay, I've got this $30,000 for a wedding. And then, all of a sudden, we have a 20% downturn from now to then. And that $30,000 turns into $24,000. Is that good math?

• 48:17Speaker 00

  I don't do public math either, but you get the idea.

• 48:20Speaker 01

  It turns down 20%. And now, you're like, "Well, man, I needed 30, and I've only got 24. I gotta make up 6,000, and then I have to go pull for my emergency fund. I have to go do this." So, I'm of the opinion, if you know you need that money in September, and this... It pains, this is, my compliance guy would say, hey, don't, don't give specific advice. This is not specific advice. In my experience, though, I would consider selling today. I would consider going ahead and getting that cash, because I don't know what tomorrow. The best time to have sold would have been last week, or the week before, or two weeks before, or 60 months before, so that I wasn't subjected to the market. And it's gonna, it's gonna be painful, because I'm telling you to sell right now, and the market's off 8.5% from its high, when it's down 4.5% year-to-date,

• 49:05Speaker 01

  and I think it's down again today. That's painful, but not knowing the future.

• 49:11Speaker 00

  It could be more painful.

• 49:12Speaker 01

  Money in the hand today is more valuable than the unknown of what it could or could not be tomorrow. So I don't want you investing money that you're gonna need in the next five years. If you know you have that wedding coming, you know it is pending, I would really consider going ahead and getting that capital available today, and then everything that you save between March and, and September, that you're saving for that specific goal, don't invest it, don't put in the market, put in cash, high-yield savings, because if you put in high-yield savings, it's still making like 4% right now, somewhere roughly around there. That's a great rate of return on short-term money. That's okay. It's much better than like negative rates of return.

• 49:50Speaker 00

  Can I flip this just slightly, to get your other perspective? So what if you decide you don't need this money for five years, so you do invest it?

• 49:59Speaker 01

  Sure.

• 49:59Speaker 00

  But then you still want to use it for something like, oh, my kid's wedding or something?

• 50:04Speaker 01

  Yeah.

• 50:04Speaker 00

  How would you sell out of that?

• 50:06Speaker 01

  When you...

• 50:06Speaker 00

  Because like, what if Joe did invest it for five years? I'm not 100% sure.

• 50:11Speaker 01

  When the clarity around when you need the money begins to become crystal clear, right? So, oh, you know, I've got, I've got daughter, my oldest daughter's 10, wedding nowhere in the near future. Nowhere in the near, you hear me, boys? Nowhere in the near future. But one day it will be. And so, okay, I can save and I can dollar cost average and I can build up for that and I can save and save and save. But, okay, she gets significantly out of college and she decides I'm gonna, I'm gonna get married, right? I'm gonna get married. We're gonna settle. Okay, this, she's with, okay, they're starting to get serious. Okay, great. It's beginning to look like it's going in that direction. Okay. All right. Hey, I'm thinking the guy comes and is like, hey, Mr. Hanson, I want to marry

• 50:54Speaker 01

  your daughter. I'm like, you're knucklehead, you're not good enough for her, but okay.

• 50:57Speaker 00

  Oh my goodness. I'm enjoying this scenario playing out.

• 51:01Speaker 01

  So then I begin to have some clarity. I start saying, okay, it looks like this is gonna happen. Looks like they were gonna have this long. Okay, just like I was dollar cost averaging into the market, when it begins to take shape, and I know that we're two years out, three years out, I might begin dollar cost divesting out of it. I'll begin just slowly selling until I know the date. And then once that date is set, I'm like, okay, I know I need X amount for the wedding. I'm gonna sell that today. I'm gonna have that sitting in cash and I'm just gonna have it sitting in a high yield. This is the same thing, if you're not saving for a wedding, you're saving for a car, for a vacation, for that next home, for whatever that thing may be. If you have an abstract timeline that's more than five years out, by all means, invest, dollar cost average. But as that timeline begins to get clearer and clearer and clearer, narrower and narrower and narrower, then you begin to start freeing up cash, cash, cash.

• 51:46Speaker 00

  New dollar cost average out.

• 51:47Speaker 01

  That's right. Liquidity is going to be your friend.

• 51:50Speaker 00

  Did you say two to three years, though? You realize how unrealistic that is, right? Like, like your daughter starts dating, you're like, oh, well, she's like three years out.

• 51:58Speaker 01

  I'm not ready to think about it.

• 51:59Speaker 00

  And then she comes to you and she's like, we're ready to get married. We're gonna get married in three months. What are you gonna do?

• 52:03Speaker 01

  I'm not ready. Just so y'all know, and hey, sweetheart, if you're listening to this, I think it's time that you hear this. I'm going to advocate for like the whole elope thing. I'll be like, hey, we can do the wedding, or dad will just pay for us to go off somewhere and we'll go to something and we'll all go have a trip and make an experience out of it.

• 52:23Speaker 00

  Maybe you should do it.

• 52:24Speaker 01

  I just think that makes a lot of sense.

• 52:26Speaker 00

  Honestly, maybe you should do it. If you're watching this.

• 52:27Speaker 01

  Bear Bear, if you're hearing that, that's what daddy wants to do.

• 52:30Speaker 00

  Or not. I don't know. All right. That was a good answer, though. I feel like...

• 52:34Speaker 01

  Did you get the offer? Did your parents offer to do that?

• 52:38Speaker 00

  Kind of.

• 52:39Speaker 01

  Didn't take them up, did you?

• 52:40Speaker 00

  I did take it up.

• 52:40Speaker 01

  See, no one ever does.

• 52:41Speaker 00

  And see, there's a little part, there's a tiny part of me that's like, maybe I should have. But we had a really nice day at our wedding, so I'm not mad about it.

• 52:48Speaker 01

  Weddings are wonderful. I love them. I would not go into debt for them and I would not

• 52:51Speaker 00

  Yes, I agree with that.

• 52:53Speaker 01

  Sacrifice my future well-being to pay for that. This is my hot take. This part you can write in pencil if you're taking notes. Everything else was pinned at this point, but this is pencil. I would not go into debt or like sacrifice future financial well-being to have some like big, wild extravagant wedding. I think you can bedazzle your basic wedding also.

• 53:12Speaker 00

  I completely agree.

• 53:14Speaker 01

  Thanks for coming to my TED Talk.

• 53:15Speaker 00

  You're welcome.

• 53:16Speaker 01

  Second time I've used that joke today. Content team thinks it's hilarious.

• 53:19Speaker 00

  Yeah, it really, really kills around here. Okay, want to hit another question?

• 53:24Speaker 01

  Yes, ma'am.

• 53:25Speaker 00

  Huey has a question. It says, "I follow your advice on choosing between Roth versus traditional 401K, but I am nervous about being overweight in one of those categories and giving myself fewer options in the future. How should I think about this?"

• 53:41Speaker 01

  Well, if Brian were here, he'd tell you, "There's no such thing as being overweight in Roth."

• 53:46Speaker 00

  Yeah, he loves Roth so much.

• 53:48Speaker 01

  You can't have too much Roth, but what happens most of the time is someone says, "Okay, guys, I listened to your rule on how to do pre-tax versus traditional." By the way, as a way of reminder, Reeves, this is the way we say it. If you take your marginal tax rate, so marginal is just the next dollar that you earn, what will be taxed at? You take your marginal federal rate, add it to your marginal state rate, combine those two. If it's below 25%, there's a good chance you should be doing Roth because you're in a pretty low tax bracket. If you add that marginal federal, you add that marginal state, it's above 30%, there's a good chance you should be doing traditional because you're saving like every dollar you put into your account can save you 30 cents in taxes, like a 30% imputed rate of return. So what we see a lot of times is people get to high earning,

• 54:33Speaker 01

  whether it be an individual household, years, pretty early on, and they start maxing out their traditional 401Ks and putting money in these tax-deferred vehicles, and they can't do Roth because maybe they make too much money, or maybe they don't have the right account structure to back doors. And so they build traditional, build traditional, build traditional. And so Huey right here says, "Man, I just, I'm nervous about being over-concentrated in one." And look, I get that. I would ask how old you are because like if you're in your 30s, I don't think you're going to have, you're likely not going to have a problem because there's a really good chance later on in your life, when you retire, when you go to start pulling money out, depending on what your other income sources look like, depending on how you're following the food, depending on if you're building up at least two of the tax buckets, the pre-tax

• 55:16Speaker 01

  bucket and then the after-tax bucket, you get to pick and choose what you pay in taxes. We did a great Making a Millionaire episode where we showed them, hey, based on your income right now, guys, even though you have this large seven-figure portfolio, we can manipulate your income in such a way where we can begin doing Roth conversions this year. And we can pay taxes to convert pre-tax assets to Roth at low tax brackets, that money's going to then become Roth and those Roth dollars are going to go tax-free into the future, into the future. I would argue for someone like Huey, there's a really good chance that you're going to have opportunities to do that later on. So again, back to this

• 55:56Speaker 01

  little analogy, one in the hand is better than two in the bush. If I can get 30% plus tax savings today, well, man, I'm going to go do that, max out my 401k, get that 30% tax savings. And with that tax savings, then I'm going to go fund a backdoor Roth, if I can. Or if I can't do that, then I'm going to go fund my after-tax brokerage account. And it's actually going to allow me to save more money for the future and give me more opportunities in the future. So I wouldn't, I would do the best you can. And then as you work through the FOO, as you begin defining what's the finish line, what's the end date look like, what's the end goal look like, you'll begin building the buckets based on your personal strategy, not just the generalized guideline strategy that we try to walk you

• 56:41Speaker 01

  through with the FOO.

• 56:42Speaker 00

  That was good stuff. Huey, thank you for asking the question and being here on our live stream today. And you know, if you're joining us for this live stream, you're probably a financial mutant. You probably see money a little bit differently. And we would consider you either a millionaire or a millionaire in the making. And I just had to mention, that is exactly why we have made that new show, Making a Millionaire, new episode out every other Monday, which means we have another one coming out next Monday.

• 57:10Speaker 01

  This Monday, coming up.

• 57:11Speaker 00

  Coming up. So I just wanted to, you have a thumbnail. There's one, we're excited about this one. You know, we've tried to get some different. Financial situations in the chair across from you. And this one's a really fun one. It's a different one, different situation than we've covered so far. So I just wanted to throw that out there. We made it for you. We hope these conversations are really helpful and you can kind of see yourself in some of these situations and hopefully gain a little bit of confidence and ideas for your own personal financial life.

• 57:43Speaker 01

  I love it. Now, we love, the whole idea, just again, I got the, I got the hot seat. So why don't I just say, you know, we love that we do this show where we get to walk you through the abundance cycle. You get to learn, learn, learn, learn. The idea of making a millionaire is we want to show you how, how we actually apply it. When you learn these things that we share on the show, how does this get applied? What's this look like in real life case studies, real life scenarios? So if you've not checked out Making a Millionaire, we'd love for you to do that. If you've not checked out our Wednesday mini-shows, we'd love for you to do that. If you've not subscribed to the channel, we would love for you to do that so that you know every time we put brand new content out because we believe that there's a better way to do money.

• 58:24Speaker 01

  And we want you to own your financial future so that your financial future does not own you. I'm Bo Hanson here with Creative Director Rebe. Money Guy team, out. 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.

• 59:06Speaker 01

  All investments involve a degree of risk, including the risk of loss.