11/11/24 Wealth Wisdom: 401(k) Essentials, Woolworths Watch, and Crypto by the Numbers

The Moneywise Radio Show and Podcast Monday, November 11th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Guys" podcast call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management instagram: MoneywiseWealthManagement

• 0:00Speaker 00

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• 0:30Speaker 02

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• 0:40Speaker 00

  Now, let's start the Money Wise Show.

• 0:42Speaker 03

  Welcome to the Money Wise Show. We are live from the padded radio room off Stockdale Highway on ESPN Bakersfield, 1230 AM, 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. I'm sure Wade and sitting here with me is?

• 1:03Speaker 04

  Sammy Abiyawi.

• 1:04Speaker 03

  Sammy, welcome back.

• 1:05Speaker 04

  Thanks. Great to be back.

• 1:08Speaker 03

  Yeah, you look great. You look great. You look refreshed coming back from the motherland.

• 1:13Speaker 04

  Yes, yes. It was a two-week trip, and I'm glad. I'm glad I'm back.

• 1:19Speaker 03

  I'm glad you're back, too. We've got a few messages. I want to start the show off answering these messages, and we can talk a little about your time being overseas over in Morocco. But first, here's a message. It says, "Any updates on when the Woolworths Building will be reopening, and will you be serving different food or just the usual 50s diner hamburgers and shakes? Thank you. We live around the corner from the building and see there's a lot more activity going on recently."

• 1:46Speaker 04

  That's right.

• 1:46Speaker 03

  So Sammy, yeah, let's give an update on the Woolworths.

• 1:50Speaker 04

  Yeah, yeah. Very, very good question. Very good question. And yeah, the construction is going really well. We're on track. Our goal is to open doors or move at the end of the first quarter of 2025. We do not foresee any delays right now. Even if the rain is here, everything is happening inside or indoors. So that's great. That's great. We're very excited for everything that's going to happen at the World Works, especially the luncheonette, as well, of course, as Money Wise is going into the first floor. Which is exciting.

• 2:22Speaker 03

  Yes. Yeah, it's so, so we're so excited about it. And, and you're, you're correct in, in tuning into all of the recent activity. That's because we're now, I mean, really, construction has started about six months ago. I mean, really, three years ago is when, is when we, we got the building. And, and design took about two years. And then we've been about six months into construction. And it's, they're going full steam ahead. And we're on track for the spring of next year to move in. Money Wise office will be there on the first floor, the second floor. And on the first floor, the luncheonette will be opening back up.

• 3:03Speaker 03

  And the first phase opening will be the menu that most people are familiar with, which is the burgers, fries, shakes, and the, that, that similar menu that was there before just about three years ago. So the, the hope is that once we kind of get things going, that perhaps we could expand out and do some other things. Because we have, we are not only preserving the last luncheonette in the country, but we're expanding the back of house and adding on a bar and more seating space. There'll be outdoor seating. So there will be, I think, a elevated experience for people to have there. Now there won't be the, what was there before, the antique store.

• 3:47Speaker 03

  Instead, there'll be more opportunity for people to hang out and be there. So tune in.

• 3:52Speaker 04

  It's going to be a community space. I'm very excited. I'm very excited for the potential of having a Moroccan burger. Flavor thing, so I don't know if we're gonna have it on the menu, but I'm hoping, I'm hoping. I'm lobbying, I should say, I'm lobbying for one.

• 4:05Speaker 03

  With a Moroccan.

• 4:06Speaker 00

  I was gonna say, what is that?

• 4:07Speaker 04

  It's a burger patty that has a lot of spices, not spicy, just a lot of spices. It's got, it's got a little bit of blended tomatoes, onions, some cumin, salt, pepper, paprika. It's, it's, it's a little bit more flavorful than what we are used to here in America.

• 4:25Speaker 03

  So just the beef, though, the ground beef, you just mix that in with it?

• 4:28Speaker 04

  Yep.

• 4:28Speaker 03

  And then everything else is sort of the standard bun?

• 4:31Speaker 04

  Yeah, standard bun, I mean, we could, we could use pita bread if, if, but, but we don't have to. Standard bun would be fine.

• 4:36Speaker 03

  Yeah, yeah, yeah.

• 4:37Speaker 04

  Yeah, with a slice of tomatoes, some onions, some lettuce, and a good mix of mayo and ketchup.

• 4:46Speaker 03

  Awesome, that's awesome. So that leads me to another question here, Sammy, and I'm gonna read this, and well, let's discuss this. So what are your thoughts? And I want to think, this came from an email from David. Info at moneywiseguys.com is where you can send an email. So this is really interesting, Sammy, I want to talk, get your thoughts on this, I'll read it. Says, what are your thoughts on both international and US large companies with the Trump presidency? I'm interested in the large picture of cause and effect. It appears that the price fluctuations on international stocks are reflecting fear of the potential Trump tariffs. What about many of the large US companies who seem to have their future growth projected primarily in other countries?

• 5:29Speaker 03

  There seems to be a disconnect about how global economic hardships can affect US growth companies. Perhaps investors only see the good during the honeymoon of the Trump presidency. What are your thoughts? So Sammy, the reason I think this is perfect, this is obviously, we're asking, and the question is asking, how, the Trump presidency, how's this gonna impact US companies? And perhaps the larger international companies won't do as well as the smaller, more midsize or smaller companies because of what policies and international policies that President Trump is talking about. So Sammy, maybe you can share a little? A little bit of your experience, you have family that lives overseas.

• 6:12Speaker 03

  What's some of the sense that you get about the impact that Trump is going to have on the global economy?

• 6:19Speaker 04

  So I watched a lot on news, especially during the French television, which is readily available in Morocco, because it's the language that's spoken there. Most of the channels cover the American elections almost 24 hours. The day before, the day after, the day off. And right after, the French president and a lot of the European leaders had an emergency meeting, or a meeting, talking about, to me, what it seemed like, the fear that Trump presidency is going to have, and the impact that it's going to have, especially on the European countries. So they talk about partnerships, they talked about not having most of their relationships just with the US,

• 7:03Speaker 04

  how they can, if Trump decides to increase tariffs, what their response is going to be. They talked about a little bit more independence and reliance on the US. So it was interesting to see that, like I said, I'm going to call it a little bit of fear, because that's what I heard in the message from the French president.

• 7:28Speaker 03

  Yeah, right, concern about what it might mean. Primarily, when President Trump talks about tariffs, that's a concern for other countries, because it's a higher cost for their goods to be exported out into our country.

• 7:42Speaker 04

  Yeah, so they have the advantage, the advantage is the low cost of labor. That's why European or American companies go overseas is because of the cost of the labor, as well as the tax benefits that they get. So countries like Morocco offer you, if you build a plant, you have 20 years to sometimes 50 years of tax-free operation. In addition to, if you pay a laborer here that's qualified, $45 to maybe $75 an hour, and it's unionized, well, the cost there is going to be about $10, $15. This is for a well-qualified individual, so it's a huge cost. Then... So that you you have cost savings.

• 8:24Speaker 04

  However, if you build or if you create a widget for fifty bucks and then now you have to pay forty percent or whatever percentage on tariffs, it might not make sense anymore.

• 8:38Speaker 03

  Right, right.

• 8:39Speaker 04

  That's what a lot of the fear is coming from, especially European countries that invested heavily in countries like like Africa or even Asian countries where they have plants. Their exports now might be hit with a lot of the tariffs that Trump is is talking about. Is it going to have the impact that we want on manufacturing here in the US? That remains to be seen.

• 9:01Speaker 03

  The what I've read from economists in discussing tariffs is the concern is if you raise the cost for for imports and that is a cost that Americans pay, it's a it's a cost then that Americans will say, well, I'm not willing to pay that much more for those those that let's let's take it real simple. Let's say you need a refrigerator, you go to Walmart, you're going to find your cheapest refrigerator at Walmart. That's because it's been imported. You're going to find a three hundred dollar refrigerator at Walmart. But if now there's going to be, say, a sixty percent increase tax on that via a tariff

• 9:46Speaker 03

  because that refrigerator came from China, okay, now you're going to pay a lot more for that, right? Four hundred and fifty dollars, let's say, for for that, a lot more for that refrigerator. And the consumer's going to pay that.

• 10:00Speaker 04

  Correct.

• 10:00Speaker 03

  And the idea, though, is, okay, now the consumer is going to say, well, I I still want to go back to that three hundred dollar refrigerator. Well, then let's look and see what companies here in America are manufacturing refrigerators for three hundred dollars. Well, you're not going to find them.

• 10:17Speaker 04

  I agree. I agree with you. So here's a thought. Here's what here's a thought, and this is something that just dawned on me. So we're in we're importing from China, right? China is using our consumption here in the US and other parts of the world to grow a very strong economy. Now, if we increase tariffs on China and Chinese products, let's say the US uses that and go and goes to countries like Morocco, like, hey, look, we we don't want to be investing in China anymore, but. We're gonna, we wanna regain our influence over the rest of the world like we had thirty, forty years ago. This is one way for us to do that. We go to countries and we say, look, we wanna start importing from you and we're not, we're gonna have some type of a trade agreement like the US now has with Morocco.

• 11:02Speaker 03

  Right, right.

• 11:03Speaker 04

  So the influence of China decreases in the rest of the world, in my opinion.

• 11:08Speaker 03

  Right.

• 11:09Speaker 04

  It might not be a bad thing in order for us to regain the influence that the US has had.

• 11:14Speaker 03

  Yeah, that's a good, that's a good point because it, the talk is that you wouldn't have an even tariff on everything, maybe China would get a sixty percent tariff.

• 11:22Speaker 04

  Correct.

• 11:23Speaker 03

  And maybe Mexico gets a twenty-five percent tariff and then that, what that does is opens up relations to other countries.

• 11:28Speaker 04

  Yeah, and we lost influence in countries like in Africa, for instance. Africa has fifty-two countries, we lost a lot of influence there. And Africa is a bread, a basket. Africa has a lot of resources and a lot of the companies that are now investing heavily in Africa are Chinese companies.

• 11:44Speaker 03

  Right, right.

• 11:45Speaker 04

  So we need to regain that influence. This is, to me, one way, if we use it right, to do that.

• 11:52Speaker 03

  Yeah, that's the question, if it, if it can work and, and without raising prices even more because, you know, I think the election, one of the things that it said is that people are, are still very upset about the, their, their own personal economy in terms of how much things are still costing them. People are still feeling the pain from inflation because the antidote to inflation is deflation, but we don't want deflation.

• 12:17Speaker 04

  No.

• 12:18Speaker 03

  Deflation is the worst thing that can happen to an economy. So the only, the next best antidote to inflation is you just have to give it time for people's incomes to catch up and for their rise of salaries to get up, up to a point, wages get to a point where they can then feel like it's not as expensive and that's what people are just gonna be feeling for a while.

• 12:41Speaker 04

  So I'll, I'll, I'll give you an example. I was, I had to travel to Morocco for some unfortunate events. My, my father was in the hospital. But being in the hospital, I asked a lot of questions out of the nurses. You know, how long do you go to school? How much do you get paid? So this nurse told me, she's been working at that hospital since twenty, twenty-twelve and her monthly salary is five hundred dollars. This is a nurse that went to school for three years after her high school and her salary is five hundred dollars. She's an experienced nurse, I've seen her work on my dad, she does a really good and clean work, five hundred bucks. Five hundred bucks.

• 13:14Speaker 03

  Five hundred bucks a month.

• 13:15Speaker 04

  No, no cola adjustments.

• 13:17Speaker 03

  Right.

• 13:18Speaker 04

  I mean, she works long hours. I've seen her work twelve hour shifts.

• 13:22Speaker 03

  Right.

• 13:22Speaker 04

  Five, five hundred dollars shared.

• 13:24Speaker 03

  Right.

• 13:25Speaker 04

  I mean, strays from the horse's mouth. This is not me getting it second hand.

• 13:28Speaker 03

  Yeah. Well, no, I think we talked about this before. The, I think the per capita GDP of, in Morocco was under eight thousand dollars.

• 13:37Speaker 04

  Correct.

• 13:38Speaker 03

  A year.

• 13:39Speaker 04

  Yeah.

• 13:40Speaker 03

  So that would, that would play out. Somebody, so she's making, she's making about what, you know, the median income would be for, uh, per capita.

• 13:49Speaker 04

  And, and their, by the way, their inflation is higher than ours. And it's not under control yet, like we have here.

• 13:54Speaker 03

  Right, right. Well, there are some, again, we don't realize how much, how mu, how blessed we are in America to have the, the ability to have the world's currency, to be able to borrow against ourselves and still have other people use our currency. It's just, it brings an enormous amount of economic stability.

• 14:16Speaker 04

  I agree. And also, I think if we do not catch up through manufacturing, creating opportunities for people to manufacture here in the US, we're gonna keep losing the influence we've had in, over the rest of the world, because we cannot just keep using the dollar as the currency without backing it with some type of ability to manufacture things ourselves here in this country.

• 14:40Speaker 03

  Yeah. Well, there's been a lot of, of progress in the last four years to, for example, bring over microchip manufacturing. Huge investments have been made into bringing in more manufacturing in the United States. Another good example is the tax incentives that are for electric vehicles. Those federal credits can only come if you're buying an electric vehicle that has a certain percentage of it manufactured here in the United States as an incentive to, for, for car manufacturers to build their cars here. So, there's some efforts.

• 15:11Speaker 04

  There, there are. And here's, here's one thing. We're not the only country that's, that's put in tariffs on Chinese products. I'll give you an example. My brother-in-law works for BMW in Germany. He's the software for, uh, part of BMW. He told me that because Germany put forty percent tariffs on Chinese EVs.

• 15:32Speaker 04

  You know, they were flooding the European market with

• 15:35Speaker 03

  The BYD cars?

• 15:37Speaker 04

  Eight thousand, twelve thousand dollar cars.

• 15:39Speaker 03

  Yeah, right.

• 15:40Speaker 04

  European countries could not compete.

• 15:42Speaker 03

  Right.

• 15:43Speaker 04

  So it's forty percent tariff on EVs in Germany.

• 15:46Speaker 03

  For Chinese electric vehicles?

• 15:48Speaker 04

  Yes. So we're not the only country that's thinking about it.

• 15:52Speaker 03

  Oh, yeah. We don't even allow it here. We don't allow Chinese cars. It can't be here, electric Chinese vehicles. Can't have them here. So this is so interesting. We're going to talk a little bit more about what's going on in the markets. What is this Trump trade? What does it mean if we have now what could be a Republican sweep? So a single party control between the White House and Congress? What does that mean to the stock market? At least, what has it meant in the past? We're going to cover that, plus much more. Don't go anywhere. We're Money Wise.

• 16:21Speaker 00

  Don't forget, Money Wise is more than a radio show. We're an independently owned, local wealth management firm with sixty-plus years of collective experience. Our financial advisors are here to help you, Kern County. Together, let's be smart, be safe, be money wise.

• 16:42Speaker 03

  Thanks for tuning in. Welcome to Money Wise Show. Appreciate the comments and questions. Keep them coming our way. Six six one, three nine six, one thousand. I'm Sharad Waite. I'm here with Sammy Abiyawi. We're talking about the Trump trade. Now, I want to say, we spent several months earlier this year on this show talking about and emphasizing the fact that, don't worry about who's elected in the White House, because it doesn't... Basically, we're saying it won't matter for the stock market. And I want to say that I still believe that. This is still one hundred percent the case. It doesn't matter. We can't go back and say, well, what happened if Kamala would have won?

• 17:25Speaker 03

  What would have happened to the stock market? Maybe the stock market would have done the exact same thing, but for different reasons. We have no idea of, like, knowing what that answer is. We do know that there's generally, you see volatility always. You see some volatility around the time, leading up to, and just follow. The presidential election. But I want to remind you of some of the, at least historically, what has happened to the stock market depending on who won in the election. And I'm going back to 1950. If you go back to 1950, if you wanted, if you wanted to say which, which party had the best results for the stock market on average, and we're talking about the S and P

• 18:09Speaker 03

  500, well, the worst case scenario is what we're about, what we could about to see right now, which is Republican, single-party control Republicans. That means a Republican president, Republican-controlled Senate, and a Republican-controlled House. That gives us an average annual return of the S and P 500 of 6.7%. The Democrats, which during, if you look at the single-party control for them, it's 8.6%. So basically, what we find is Democrats do better when they're all in control. They do better than when the Republicans are all under control.

• 18:51Speaker 03

  But what about when we have, what's the best-case scenario? Well, it's when we have a divided country. It's when we have a Democrat president and a Republican Congress. That's the best-case scenario going back to 1950. It's a 16.3% annualized rate of return in the S and P 500. If you have a Republican president and a Democratic Congress, that is the worst. Annual return, 4.9%. So this is unbelievable because it can go against conventional wisdom.

• 19:31Speaker 03

  I think conventional thought is Republicans are pro-business, lower taxes, therefore higher economic output, which if that's the case, it would be reflected in the stock market, and the stock market doesn't say that.

• 19:48Speaker 04

  I would be interested in knowing what the spending is under, you know, a single, like, what did you call it?

• 19:56Speaker 03

  Single-party.

• 19:57Speaker 04

  We have, we have, single-party, uh, uh, control versus a single-party control that's Democratic or Democrats.

• 20:06Speaker 03

  Right.

• 20:07Speaker 04

  Typically, at least, and maybe I'm generalizing here, Democrats have Tendency to spend more on public things or public spending versus Republicans. So the idea here is, I think what the GOP tends to go for is a we're gonna reduce taxes, it's gonna stimulate the economy by the companies keeping more profits within their retained earnings and reinvesting them in their operation, either R and D or new manufacturing or new employees, whatever the case is.

• 20:48Speaker 03

  Well, the complication with this is you have, let's say, if you have a scenario where mostly under Republicans, you have a less spending and under Democrats, you're spending more. That may be true, but you have Democrats or you have Republicans who aren't taxing as much and you have Democrats who are taxing generally more.

• 21:19Speaker 04

  Correct.

• 21:19Speaker 03

  So that means, under Democrats, you're bringing in more revenues, which is why the last time we had a budget positive, not a budget deficit, but we were budget positive was under a Democrat, under Clinton in the 90s. And you have to go way far back, I think to Kennedy's time, before then, before you found where we weren't running a budget deficit. That's because the Republicans will generally have this idea of lowering taxes, but at the same time, they're lowering the revenues that are coming in to pay, that we need to pay for services. So you have to borrow to be able to compensate for the lack of revenues that we have.

• 22:00Speaker 03

  So we tend to run larger deficits under Republican control because they're just, they're not, the spending is still happening.

• 22:10Speaker 04

  They're not taxing as much.

• 22:11Speaker 03

  Yeah.

• 22:11Speaker 04

  I hear what you're saying, I'm just thinking, you know, the economic impact of job creation. So under GOP control, or what I think the intention is, is for them to, for companies to keep more and invest in their operations so they can create more jobs. Indirectly, they are creating some type of federal income tax for the individuals. But the spending at the individual level, and this is what I want to research, is the spending under GOP control, you know, President's Senate, House, is it more, is it less? How does that compare to when it's controlled by the Democrats?

• 22:53Speaker 03

  Right.

• 22:54Speaker 04

  And I want to do that, and then I want to come back here on the show and talk about it. Because it's very intriguing to me, actually, to do that.

• 23:01Speaker 03

  Well, and you're sort of talking about trickle-down economics.

• 23:04Speaker 04

  Correct.

• 23:05Speaker 03

  And that gets very interesting, because trickle-down economics, as it turns out, the trickling down doesn't happen as you would think. It doesn't, the economic impact by lowering taxes isn't as straightforward as it may sound. There is definitely a stimulus that happens when corporate tax rates are lowered and when income tax rates are lowered. Obviously, if we could do without any taxes, that's the best-case economy, but we have all of these services that we've obligated ourselves to that aren't being fundamentally changed. And that's where you can only cut so much of the budget until after that, two-thirds

• 23:47Speaker 03

  of the budget are social programs, like Social Security and Medicare. And then the other part would be defense, which is very unlikely to cut much of the defense budget. So how much, you can't, there's not a whole lot there that the federal government could really cut out that's discretionary. So this kind of, this is really fascinating right now, because part of this Trump trade is based off of some of the relationships that he has had, that President Trump has made on the campaign trail, for example, with Elon Musk.

• 24:16Speaker 04

  Yeah.

• 24:17Speaker 03

  And you have Tesla, for example, that is doing very well since the trade, and it's a lot of investor optimism on the White House treating very favorably the company and being friendly to Tesla as an American-made EV.

• 24:40Speaker 04

  But I also read somewhere, I don't know if this is true or not, that President Trump is talking about getting away from the federal incentive. Towards EVs, so he can make it equitable between gas operated cars and EVs, which is not the case today.

• 24:55Speaker 03

  No, but maybe this is the genius in Elon Musk, or what he's trying to do is, well, President Trump tends to go do positive things for people who are saying positive things about him. You're not going to get anything done by being his enemy. And so, maybe it's a thing, it's a scenario where this is what investors are thinking. Who knows what they're thinking, but the reason why it's surged at least today as much as 10% the stock is because some investors are saying, well, this is, this looks like there's going to be favorable outcome for Tesla by the government, based off of, you know, the support that they were giving to the president.

• 25:38Speaker 04

  Maybe we're going to see electrical vehicles, you know, government operated EVs.

• 25:44Speaker 03

  Right, like all Teslas now.

• 25:46Speaker 04

  Yeah, yeah, yeah. You're on the freeway looking at a chase and then the Tesla dies.

• 25:51Speaker 03

  Exactly. Oh, it's just, it's not just Tesla. Part of the Trump trade is also Bitcoin. And we're seeing Bitcoin now at over $88,000.

• 26:00Speaker 04

  You know, I told you earlier, when I first joined MoneyWise, it was 26,880. 26,880, and now it's 88,000.

• 26:10Speaker 03

  You've quadrupled your money. That's crazy. This is again, the trade is based off of the idea because of President Trump's rhetoric, positive talk about cryptocurrency, offering it as potential solution. And Elon Musk is joining him and declaring this as a potential solution and making America stronger financially by investing in crypto and having the central bank open up more reserves towards cryptocurrency, which is just a very strange idea, considering cryptocurrency altogether. The total global value of cryptocurrency is around $2 trillion. $2 trillion.

• 26:56Speaker 03

  Our annual budget is 5 trillion. Our annual government budget is 5 trillion, right? Our annual GDP is 30 trillion. The global equity market is over 100 trillion. So best case scenario, cryptocurrency represents 2% of the global equity trade. It's not gone, even if we were responsible for somehow saving and capturing all cryptocurrency value in the entire global market, it's still only 2 trillion dollars. That's one, that we just, there's been, under Trump's presidency, there was over 2 trillion

• 27:40Speaker 03

  dollars of stimulus bills passed and tax cuts that were passed. So like these, it just doesn't, I don't know. It's again, it comes down to people not knowing the difference between a trillion and a billion.

• 27:51Speaker 04

  Yeah. I think once you pass the billion, it just becomes all fuzzy.

• 27:56Speaker 03

  Yeah.

• 27:56Speaker 04

  You know, I'm interested to, like, we talked about the reduction in corporate tax from 35 to 21% under the first Trump administration. And the hope there was a lot of these global companies, American global companies hoarding cash overseas, they were, we were hoping that they bring it back.

• 28:15Speaker 03

  Right.

• 28:16Speaker 04

  I mean, there's trillions of dollars, McDonald's, Apple, and other big companies that have cash overseas.

• 28:23Speaker 03

  Yes.

• 28:24Speaker 04

  Have we seen any of that happen? I personally don't think so.

• 28:28Speaker 03

  Yes, it was under the first Trump presidency, and we'll take a break. When we come back, we'll talk about it because I want to be reminded also, but there was a, this was a good move by the Trump's first presidency where he repaid, allowed a repatriation of dollars to a certain amount, it was almost like an amnesty period where you could bring your dollars back to the United States. Companies, publicly traded companies could.

• 28:52Speaker 04

  Replenish their balance sheets.

• 28:53Speaker 03

  Yes, at a favorable tax rate, and it was, it had some, it had some interesting impacts. We'll talk about that when we come back. We're Money Wise, don't go anywhere.

• 29:22Speaker 03

  Welcome to Money Wise. I'm Sharad Waite. I'm here with Sammy Abiyawi. We're talking about the Trump trade. We're talking about things that are happening in the markets and answering your questions. Keep them coming our way. 661-396-1000. There is a message here that I just saw. So I'll answer this and then I want to talk about the, what we were just talking about Sammy.

• 29:47Speaker 04

  I'll read it and then you can answer it.

• 29:48Speaker 03

  Perfect.

• 29:49Speaker 04

  Should I put all my money into my 401K or are other retirement accounts worth considering too? I am 31 years old and this is the first time putting into retirement.

• 30:00Speaker 03

  I love this. Great question. Thank you. So you're 31 years old, first time putting into retirement. Congratulations. You're not too late. You're definitely not too late. So way to go. Now, the question whether you should put all of it into your 401K of what you're saving, I can't say that. We're going to give kind of a general rule here. I would recommend that you have some emergency savings built up. And that doesn't have to be a lot, but let's say generally you want to be able to go at least a few months where you didn't have to borrow money or didn't have to go to your credit card. That might be really difficult to, it might sound really difficult to do, but

• 30:45Speaker 03

  trust me, it might take you a few months, but if you're not putting into your 401K, that might help because it sounds like you're already in the mindset of putting away some for retirement. So I would recommend that make sure that you have some emergency there. Now, if that's going to, at the same time, that shouldn't prevent you from still being able to contribute something to your 401K. Now, generally, your minimum might be something like $25 or $50 a month. It can be automatically taken out of your paycheck. So you don't even think about it. The great state of California now, I believe, is starting this year or starting in 2025 will make it mandatory.

• 31:24Speaker 03

  That your employer automatically enrolls you into the 401k unless you so you would now have to opt out to not be a part of the 401k. So the benefit of the 401k, one of the largest benefits, I believe, is the fact that it's automated. You don't have to think about it. You set it and you forget about it. So try to save both towards some emergency cash, but also you can start low if you need to until your emergency cash is built up. And then, yes, go for the 401k and and put in as much as you can there. And well, well, not, you know, sacrificing too much, but

• 32:05Speaker 03

  set it up so that it's just automatic. And there you go.

• 32:12Speaker 04

  You know, just just piggybacking on what you're saying, I read this article and just I just pulled that up again. This parking lot attendant of 44 years has never made more than $20,000 a year, and he's worth more than half a million dollars because he was able to save and he was able to invest. Yeah. So which which which to me is is really cool, because you don't need to be making a lot of money to be able to invest. Right. You have to have some type of a plan. And what you've just described, shared is have some savings, you know, I mean, any corporation, any individual should have some type of savings, three to six months, at least, I would recommend,

• 32:52Speaker 04

  if not longer. And then definitely investing in the 401k, because there are some benefits to that pre-tax benefits and what have you. And at 31, I think it's a good age.

• 33:04Speaker 03

  Yeah, you've got plenty of time, you can you can catch up. And the question about other retirement accounts, the 401k generally for most people, it's going to be better than an IRA, which almost anybody who's making money can open up an individual retirement account and start contributing. The reason why is because in a 401k, you have some other additional benefits that especially when you're younger, really nice, you can borrow against that 401k. So it's sort of like an added emergency fund for you can borrow against your own retirement account. Up to just a limited amount, but you still you have some some money there. And then you also have the the benefit of your employer match. So you can get that free money that that goes into your account.

• 33:46Speaker 03

  And then know that within your 401k, you have generally the option between your traditional or a Roth. So you inside the 401k, you may find that and and generally your 401k provider. If you've got a good financial advisor, they can help run the calculator for you. But you may want to look into considering a Roth or at least a portion of your money going into the Roth. And maybe a portion going into the traditional part of your 401k. Because the because in your earnings right now, they might be low enough to where you're not paying a super high income tax rate. So that you don't you're not really getting a lot of benefit from benefit from that tax deduction. You may find a greater benefit for that tax free growth.

• 34:31Speaker 03

  That could happen over the next 30 plus years before you retire. So just know that generally your 401k retirement provider can help with those calculations and help you know what percentage should go into which which retirement account. But that's a great question. Love it.

• 34:48Speaker 04

  Yeah, very good question.

• 34:50Speaker 03

  So Sammy, you were talking before the last break about the impact of the repatriation of cash that was sitting overseas. And it reminded me of something that was part of the Tax Cuts and Jobs Act. Again, we're talking about the Trump trade. Part of the Trump trade was this Jobs Act, which was enacted in 2017 during Trump's first presidential term. And it dramatically lowered rates for some people. The legislation included a higher standard deduction and a $2,000 tax tax credit for child tax credits and a $10,000 cap on state and local tax deduction.

• 35:34Speaker 03

  This is all due to expire at the end of this end of 2025. So Trump being reelected could further the chances of those tax changes being extended. Part of that Tax Cut and Jobs Act in 2017 included this.

• 35:55Speaker 03

  carve out to allow US companies who were doing business overseas to bring back over money at a significantly reduced tax burden for these companies. And the impact wasn't as big as experts were expecting, but there was still about $664 billion in overseas profits that in 2018 alone corporations brought back over into the United States. It started to die down after that. So when it was first announced, a lot of companies did this because they were able to repatriate, get this money back over and not have as big of an impact on their taxes.

• 36:40Speaker 03

  But it wasn't in the trillions, it was in the billions. Yeah, 664 billion. Yeah, 664 billion. But a large percentage of that money went towards the money that was brought back from overseas. The companies and the shareholders used it to buy more shares, so stock buybacks and then dividend payments, which this got a lot of criticism. I think we criticized it on this show, is the stock buyback purchases that were happening in 2018, 2019. It was a sort of a way of the government to give some incentives to corporations, but the public weren't seeing the benefits of that unless they happened to be shareholders.

• 37:25Speaker 03

  But this is unfortunately the nature of the game. Yeah. This is why Money Wise, we deal with registered investment securities because these are the investments that have a track record going back for a long time. Being part owner in a publicly traded company that is out there innovating, creating amazing products and just driven towards driving profit as part of the corporate. Mandate is to drive shareholder value. So, you know, if people really want to participate in these sort of advantages that multinational corporations offer, guess what? You can own a part of it.

• 38:09Speaker 04

  Yeah, you have to invest.

• 38:10Speaker 03

  You got to invest.

• 38:11Speaker 04

  Guess what? Get a 401K.

• 38:13Speaker 03

  You can do it through your 401K. You own a few shares, you know, of these companies. And you can broadly diversify yourselves pretty easily so that you're just owning a tiny little fraction so that you too get at least a little bit of the benefit.

• 38:30Speaker 04

  Advantage, yeah.

• 38:30Speaker 03

  Advantage that the big fat cats on Wall Street that they're getting. You know, we've sometimes have said this as an investment advisor. People come to us with some idea, business idea. I've got this idea, this invention, and it's going to do this and it's going to, you know, take over, you know, this sector. And sometimes you sit there and you listen, you go, okay, I've got a proposition for you. I've got a company that you can invest in that brings in trillions of dollars of revenue every year. They own almost half of the, over half of the market in cell phone, laptops and these devices.

• 39:10Speaker 04

  Tech devices, yeah.

• 39:11Speaker 03

  Would you be interested in that? Would you be, oh, yeah, that sounds fantastic. Well, guess what? You can. You know, there's, you name your company, Apple, Microsoft, Alphabet, you know. Name your company here and you too can participate in some of the benefits that these companies have and what they bring. So, you know, don't, you know, it's a double edged sword. So, there you go. We're going to take our final break of the day. We've got another great question coming and we'll answer that when we come back. We're Money Wise.

• 39:44Speaker 00

  Are you curious to learn more about how you can be money wise? Check out the Money Wise website at MoneyWiseGuys.com to get more info about what we do and how we can help you.

• 39:59Speaker 03

  Thanks for tuning in.

• 40:02Speaker 03

  Sammy Ali, Sammy Abby Ali, I'm Sharad Waite. We're Money Wise. We have a listener question. Sammy, you want to read that?

• 40:11Speaker 04

  Yes, sir, I would. What is the maximum 401k, 401k contribution for 2024 if over 50? Thank you, guys.

• 40:20Speaker 03

  So the 401k limits for contribution limits do go up every single year. The 401k limit, if you are under 50, this year is $23,500. The IRA limits didn't go up this year. It's still $7,000. However, if you're over 50, you can contribute an extra $1,000 towards your IRA. So, yeah, so 401k limits increase there a little bit. And hopefully that answers your questions. Contribute what you can. The 401k cases we were talking about before is this,

• 41:04Speaker 03

  it's usually the most convenient, easiest way for somebody to start contributing and save. California mandates employers over five, I think it's in 2025. They have to have some sort of retirement plan. If they don't, then you're, they're forced to provide the California plan.

• 41:25Speaker 04

  Mm hmm.

• 41:26Speaker 03

  And

• 41:26Speaker 04

  It's the Cal Save.

• 41:27Speaker 03

  Cal Savers.

• 41:27Speaker 04

  Cal Savers.

• 41:28Speaker 03

  Cal Savers Plan. And, you know, so they're, they're forcing you to save whether you like it or not. So Sammy, we were just talking about the, just before the break.

• 41:45Speaker 04

  Yeah, we're talking about the cash brought back from overseas, 664 billion, and not having the impact that basically we wanted

• 41:56Speaker 03

  Right.

• 41:56Speaker 04

  out of that because it was used to, for, for, for stock buybacks and shareholder dividends. So it was criticized back then, but maybe we did not read the fine print.

• 42:10Speaker 03

  Yeah, yeah, it's there's it's gonna be interesting to see what happens economically speaking. I still stand by the fact that the President of the United States, no matter who they are, has very doesn't have a lot of control over the global macroeconomic forces that are driven largely by free market. And so it's very difficult to know exactly what's gonna happen. And I just recommend, you know, staying staying diversified and following sort of that academic approach. This likely we won't continue to see these huge gains that we're seeing in the markets.

• 42:51Speaker 03

  This doesn't it's not a sustainable option for the markets to continue to go up into record territory forever. They do markets do have cycles and they do have pauses and.

• 43:04Speaker 04

  So we're not gonna keep having record numbers for the Dow and the Nasdaq and S and P?

• 43:13Speaker 03

  We could, it just doesn't always go up forever. I mean, I mean, I you can't you have to expect that eventually we'll have some corrections. But we'll take it while we have it, the S and P 500 closing above 6,000 for the first time. The S and P 5 the Dow closing above 44,000 for the first time ever. So we continue to get these all time highs, but we continue to have companies that are are creating incredible profits. Are expected to continue to create incredible profits. There are not all winners, though. We're losing some of the great American establishment dining establishments. T G I Fridays now is closing.

• 43:52Speaker 04

  Is it closing or closing stores or restaurants?

• 43:55Speaker 03

  They are closing their restaurants. The T G I Fridays filed for bankruptcy just this year. They're closing well, I don't know if they're closing all of them because they this goes through a. T G I Fridays just is going through a. Buy out through a private equity owner.

• 44:14Speaker 04

  I see.

• 44:14Speaker 03

  And so what happens when private equity buys up a failing company?

• 44:19Speaker 04

  They get rid of a lot of fat.

• 44:20Speaker 03

  They get a lot of fat. It's already like a fat thing and then they just cut out all the rest.

• 44:25Speaker 04

  You know, bare bone and then all this, they, they, they resell.

• 44:28Speaker 03

  Yeah.

• 44:29Speaker 04

  I'm just, I'm a T G I, I, I, I'm not a, I don't go there. I think I went there once. I got hit by a twenty dollar burger and I never went back. I don't know if that's the reason why they went into bankruptcy, but I think there's a shift in demographics and the, the way we eat out.

• 44:44Speaker 03

  Yeah.

• 44:45Speaker 04

  Because I think that I'm, I'm older, so I prefer to eat, to eat in the house, even if I order in, but the younger generation, I don't know if they're spending money or not.

• 44:56Speaker 03

  It's, this is part of a big demographic change. You have companies like Red Lobster, T G I Fridays. Denny's announced that they're closing a hundred and fifty restaurants. There's been a movement away from the, the, the, the family dining experience. So you have family dining that is basically being replaced by fast casual like Chipotle or Chick-fil-A that has, you know, drive-through and more convenient. So it's cheaper.

• 45:23Speaker 00

  Which is the same price.

• 45:25Speaker 03

  Right.

• 45:26Speaker 00

  Is Red Lobster or the T G I Fridays.

• 45:29Speaker 03

  Yeah.

• 45:29Speaker 00

  It's crazy.

• 45:30Speaker 03

  Yeah.

• 45:31Speaker 00

  And everybody's so lazy now. They just, if it doesn't deliver, if it's not on that Uber Eats list, they're not going anywhere.

• 45:38Speaker 04

  Dude, I mean, I'm, I'm, I'm telling you, not, the, the world is going that way. Morocco does not have Uber Eats, but they have the equivalent. It's called Glovo. And it's a local developer that developed the app. And I mean, these motorcycles, they drive crazy all around, man.

• 45:51Speaker 03

  Get there in no time.

• 45:52Speaker 00

  When I was in L A over the weekend, I saw not Uber Eats, but they had a, a robot that was delivering food on its own, had a little cart with eyes.

• 46:02Speaker 03

  Oh, yeah.

• 46:03Speaker 00

  And was driving down the streets. I was like, what?

• 46:05Speaker 03

  Oh, yeah. The future's here.

• 46:07Speaker 04

  Future's here.

• 46:08Speaker 03

  The average single person, the average single person in the United States, they spend two hundred dollars a month dining out. That's an average. Married couples without children, three hundred and forty dollars a month. Married couples with children. About $500 a month on average is spent out. And I'm thinking, yeah, but it doesn't take long, right? If you, if you've got a family of three.

• 46:30Speaker 04

  Yeah.

• 46:31Speaker 03

  You're, you're not going to spend less than, you know,

• 46:34Speaker 04

  That's probably right.

• 46:35Speaker 03

  Hundred bucks is hard to get out of.

• 46:36Speaker 04

  No, a hundred, that number of $500 is probably, probably right. That's probably right.

• 46:41Speaker 03

  Yeah.

• 46:41Speaker 04

  I'm going back to our listener question earlier about 401k. Imagine if you move from that into the 401k. Imagine that.

• 46:48Speaker 03

  Yeah.

• 46:48Speaker 04

  Or at least some type of an IRA where you can invest.

• 46:51Speaker 03

  Or just emergency savings, 500 bucks a month. Yeah, after, you know, six months, boom. You, you know, you've got a nice little chunk of change.

• 46:57Speaker 04

  I would lose weight.

• 46:58Speaker 03

  That's right. It's not helping Denny's, though. That's for sure. Well, then I want to thank all of our listeners for turning in, for tuning into the show. If you've missed any of our past programs, you can subscribe to Money Wise Guys Podcast. It's commercial free on all podcast formats like iTunes, Apple Podcasts, or even Spotify. As we leave, you can always check us out. More about Money Wise at MoneyWiseGuys.com. Tomorrow, we're going to be back tomorrow. Myself will be on the show along with Frank Lee. Remember these three things, be smart, be safe, and always be money wise.

• 47:39Speaker 02

  Securities offered through SCF Securities, Inc., member FINRA/SIPC. Investment advisory services offered through SCF Investment Advisors, Inc. SCF Securities, Inc. and Money Wise Wealth Management are independently owned and operated.