1/6/25 Securing Your Future: Social Security Changes, AI-Proof Careers, and Why a Financial Advisor Matters

The Moneywise Radio Show and Podcast January 6th, 2025 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

  From the padded radio room off Stockdale Highway, here is Money Wise. Call or text in at 661-396-1000.

• 0:09Speaker 01

  I need a dollar, dollar, dollar, that's what I need. Hey, hey. Well, I need a dollar, dollar, dollar, that's what I need. Hey, hey. Said I need a dollar, dollar, dollar, that's what I need. And if I share with you my story, would you share your dollar with me?

• 0:30Speaker 02

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

• 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 am Sharad Waite, and sitting here with me is?

• 1:04Speaker 04

  Sammy Abiyawi.

• 1:04Speaker 03

  Sammy Abiyawi, welcome. Happy Monday.

• 1:07Speaker 04

  Happy Monday to you, too. Excited to be here today.

• 1:09Speaker 03

  It's always exciting doing the show with you. We come in now after a weekend, and we stumble upon a few messages and questions. We're going to get right to that. First of all, Sammy, we haven't yet experienced a full week in the markets for 2025. We're in the new year, but last week was a short week because of New Year's. And then this week actually is going to be another short week because on Thursday, markets are going to be closed for President Carter's funeral. So we're kind of in another strange start off of a year for the markets. But we've got so many changes that we're anticipating coming up this year, including

• 1:54Speaker 03

  changes in Social Security, changes in the way that our taxes, the way we pay our taxes, the way that our, soon we'll find out, the way that our tariffs are all implemented. So so many things are about to happen this year, and so let's get to it.

• 2:16Speaker 04

  Yeah, which leads me to the first question we had from our listener. In line with the social security changes, I think, that happened, especially over the weekend from President Biden. So the message reads, "Good morning. What are the main differences in financial planning for people receiving SSI payments

• 2:37Speaker 04

  compared to standard social security benefits?" And the same person added, "And when are the benefits being sent out in 2025?"

• 2:45Speaker 03

  Yeah, so this is, let's start with this, Sammy. The question basically being, let's talk about the difference between SSI and social security retirement, because the lines get blurred a little bit because social security is in both of their names. But you have social security, SSI is a, is supplemental income, social security supplemental income, and it's essentially benefits that has no bearing on what your, what your work

• 3:14Speaker 04

  History.

• 3:14Speaker 03

  history is, or was. Whereas, social security retirement is based off of your work history and what you've paid into the program.

• 3:25Speaker 04

  I think we answered that question last week when you and I were on the show. You have to work forty, is it?

• 3:31Speaker 03

  Quarters.

• 3:31Speaker 04

  Quarters?

• 3:32Speaker 03

  Right.

• 3:33Speaker 04

  Ten years, almost?

• 3:34Speaker 03

  Ten years.

• 3:35Speaker 04

  Okay.

• 3:35Speaker 03

  Yeah.

• 3:36Speaker 04

  In order for you to qualify to receive social security benefits.

• 3:40Speaker 03

  That's right. And that is the social security retirement benefits. And those benefits are all based off of, you're not entitled for those, to those benefits until you reach age sixty-five, or depending on what year you were born, it, it, now generally those receiving it were born or sixty-six or sixty-seven, before you were entitled to your full retirement, social security retirement benefits. And that is all based off, again, of what you've contributed. You get a percentage of what you've contributed over those, over those ten years, or forty quarters. Whereas, SSI is a different program. It now still comes from our federal tax dollars,

• 4:20Speaker 03

  but that is a program that is designed to help sort of the basic needs, talking about food and shelter. So it's a

• 4:27Speaker 04

  And who qualifies for that? Is it, is it, do you have to be a certain age to qualify? Qualify for SSI?

• 4:32Speaker 03

  No, no.

• 4:33Speaker 04

  No?

• 4:34Speaker 03

  There's not a, there's not an age requirement. It's an income, an asset requirement.

• 4:39Speaker 04

  Okay.

• 4:40Speaker 03

  So, you know, you-

• 4:41Speaker 04

  So you have to have a limited resources in order for you to qualify for the program?

• 4:44Speaker 03

  That's right.

• 4:45Speaker 04

  Okay.

• 4:45Speaker 03

  Yeah, you have to have limited resources, limited income, limited resources for you to qualify for that program. So, I guess to answer the question then, coming back to the question, how do you, how do you do financial planning for somebody who's receiving

• 4:59Speaker 03

  two, a different pension payment? You're getting a pension from SSI versus you're getting a pension from social security retirement? And I, I think that really the, the financial planning is the same because we're still talking about a fixed income scenario, whether it's your pension is coming from SSI or social security retirement, or maybe it's just coming from schoolteacher retirement, the state teacher's retirement. Either way, you're on a fixed income. And so, I think they're, yeah.

• 5:29Speaker 04

  No, I was just gonna say, when, when I hear fixed income, I hear my voice, my inner voice says, budget, budget, budget.

• 5:36Speaker 03

  But, yeah, and not, not just budget, but that budget is so important because there's a part of that budget where you should be putting some away and for a rainy day fund. Because you don't have that.

• 5:46Speaker 04

  That's right.

• 5:47Speaker 03

  If you're just based on, if you, if you're just reliant on your monthly income, well, the good news is you've got that monthly income coming in. The bad news is it's the same, pretty much the same monthly income that's gonna be coming in. And so, you have to find ways, hopefully, to to, to put away some money so that you eventually get to the point where you still have, the still, still same rule of thumbs called three to six months of of expenses tucked away somewhere. So that way, you have your rainy day fund. And once you have your rainy day fund, okay, well now, now it's great. Now maybe you, you can increase your spending or, or change your budget accordingly. But now you're, you're essentially, your, your financial plan is like everybody else's financial plan.

• 6:31Speaker 03

  You know, stay within the budget. Reduce your risks through insurance if possible and you still have estate planning and the other financial planning needs.

• 6:42Speaker 04

  So for an SSI recipient, you have to qualify in order for you to get into the program. And what I, what I, what I found is that you have, you cannot have an income more than $2,000 if you're, if you're a couple.

• 6:57Speaker 03

  Right.

• 6:58Speaker 04

  And, and, and you have to maintain that going forward in order for you to, to remain on that program. The good thing about the SSI, if you qualify for it, then your insurance is taken care of.

• 7:11Speaker 03

  Yeah, right. Because SSI administers Medicare.

• 7:15Speaker 04

  That's right.

• 7:16Speaker 03

  And so you, you know, you have your benefits.

• 7:18Speaker 04

  Taken care of.

• 7:20Speaker 03

  That's right. Yeah. Yeah. Again, SSI is for people with limited income and resources. Also is designated for those who are disabled or blind. A work history again is not required, whereas social security is for those who have paid into the, into the pension, paid into the program. And it's really, your income is irrelevant. Outside income is irrelevant, meaning there are people who have extremely high incomes in retirement. It doesn't matter how much income you make, you're still entitled to your social security retirement.

• 7:55Speaker 04

  Because you're paid into it.

• 7:56Speaker 03

  And in fact, that kind of leads me to why I want to talk, continue on this subject here of social security, Sammy, because just today, President Biden, I believed it was today, President Biden signed into law to eliminate the windfall provision in the social security benefit. And this is a big, this is going to affect a lot of people.

• 8:16Speaker 04

  2.8 million people, according to what I read this morning.

• 8:20Speaker 03

  It's, it's huge. This is, this has been a law that has been troubling for us as financial advisors here at Money Wise for many years. And just today, of course, Congress has been working on this for a few years. Congress passed this last year, just towards the end of last year, and now into this new year, President Biden, as expected, signed into law the Social Security Fairness Act. And this is a law that eliminates these, there were two windfall provisions that were established 30 or 40 years ago, the windfall elimination provision and the government pension offset. These were both programs that were placed again almost 40 years ago and they were, they

• 9:00Speaker 03

  were created essentially to make sure that workers who earn a public pension from employment where they did not pay into social security, but they also qualify for social security benefits through other work that they still receive a payout. But previously that payout was reduced. Now that payout is going to be increased. That means, it's kind of complicated to explain Sammy, but essentially as we were saying, social security is a benefit for if you're paying into those quarters, but if you are a school teacher, for example, you're paying into a different public pension program. It's not social security.

• 9:41Speaker 03

  So you're not having your social security dollars withheld from your paycheck. Instead you're having, let's call it in this case, CalSTRS pension withheld from your paycheck. But what happens if you then quit teaching and you're no longer contributing to STIRS and you decide to go back into the workforce where you are now contributing to social security? Well, social security all of a sudden would look at your history and go, hey, we're only showing that you paid us for one or two years of working, whereas you go, no, hey, I was a teacher for 20 years. Well, previously they would say, we don't care that you were a teacher for 20 years before, you've got that pension, we're calculating social security over here off of what?

• 10:25Speaker 04

  How many quarters you worked?

• 10:26Speaker 03

  Yeah. And, and, and so you were out, and there were special circumstances where you were out hundreds, thousands of dollars a year because you're not getting that credit.

• 10:37Speaker 04

  That's right.

• 10:38Speaker 03

  For, for contributing to a public pension, you were just, to social security public pension, you were contributing to a different public pension. So this was a great move. As you said Sammy, how many people is this affected?

• 10:49Speaker 04

  2.8 is the estimate number.

• 10:51Speaker 03

  And can you, can, do you have the numbers roughly of what on average people are going to see a difference?

• 10:56Speaker 04

  Yeah, on average they said the increase could be between $360 to over $1,190 depending on what, so that's, that's huge, almost 1,200 bucks a month on the high end on 360, even $360. Shared for a social security recipient.

• 11:14Speaker 03

  A month extra.

• 11:16Speaker 04

  That's, that's huge.

• 11:17Speaker 03

  Yeah, yeah. So we're talking about the listener question about, you know, fixed income and how do you get financial plan on fixed income? Generally, you don't get these windfalls where bonuses. Oh, wow. I got a bonus this year. I mean, you have your normal cost of living adjustments. But other than that, you don't get these kinds of annual or monthly increases. So again, uh, $360 a month on average for the, for the eliminating of the windfall provision. And then about over $1,100 a month for the elimination of the GPO, the other, the other government pension, um, program. So wow.

• 11:54Speaker 04

  No, I don't want to be a Debbie Downer, but we've been talking about social security challenges when it comes to, uh, just the financial challenges it has and solvency or insolvency of the social security trust.

• 12:07Speaker 03

  Yeah.

• 12:08Speaker 04

  What is, is this going to have an impact? Is it going to like speed up that problem we're having as far as the solvency of the social security?

• 12:15Speaker 03

  It does speed up the insolvency of the, of social security by, I believe.

• 12:21Speaker 04

  Scare you?

• 12:23Speaker 03

  Well, let's look at it. Do you, do you, do you have the figure? Do you know what it is? I think it's about, I think it.

• 12:28Speaker 04

  $196 billion. It's, it's, it could increase the federal deficit by over $196 billion.

• 12:36Speaker 03

  Yeah. So it affects that, the social security trust fund by $196 billion. But what I want to, what I want to recount, and I have to go back and look at the figure, but it, it, it essentially, it, it, we will need to reduce the benefit that social security pays out a few months earlier, a few months earlier because of this new plan. I know it's kind of hard to wrap our heads around, but there's billions, hundreds of billions of dollars when, uh, a shortfall that we need to fund social security to get, to be able to keep it beyond the, over the, the, the, the expected date where it starts to have a shortfall, which is in about 10 years. And.

• 13:21Speaker 03

  The provisions, though, to be able to increase or extend that are pretty minimal. This is a good example of something that is not helping social security because it's a drag on social security. But the benefit that that those millions of people are going to receive over the next 10 years versus the cost to the social security pension seems very minimal in my mind.

• 13:46Speaker 04

  Are you talking about a trickle effect of the money being paid out to these individuals, them deploying this money in the economy and the impact we're going to be having on the economy?

• 13:56Speaker 03

  Yeah.

• 13:57Speaker 04

  Over the next 10 years?

• 13:58Speaker 03

  Right. It's not just the impact on the economy, but the impact on the social security trust fund. It depletes the trust fund by a certain amount of money, the 490 billion or whatever it is, but it's only a matter of a few months in terms of the funding of social security. So it's a it's another hole in the bucket.

• 14:20Speaker 04

  I have a solution for that.

• 14:21Speaker 03

  Yeah.

• 14:21Speaker 04

  We'll just hire more people in the economy.

• 14:23Speaker 03

  Just hire people to just work?

• 14:25Speaker 04

  To pay into social security for the next 30, 40 years.

• 14:28Speaker 03

  Yeah. You know, there is the demographic problem. Really, that's the biggest problem in social security.

• 14:33Speaker 04

  And I'm talking about high paying jobs. I'm talking about high paying jobs and I'm not talking about minimum paying jobs. I'm talking about let's create an economy that sustain high paying jobs. I'm talking about medical, talking about, you know, companies that manufacture this AI things.

• 14:50Speaker 03

  Yeah, like tech, high tech jobs.

• 14:52Speaker 04

  High tech jobs that now we are subcontracting in China and other countries.

• 14:57Speaker 03

  Right. Because we don't have the workers here.

• 15:00Speaker 04

  That's right.

• 15:00Speaker 03

  But we don't have, we don't, there's so many workers, we still have a shortage of workers here. I know that's kind of hard because we have an unemployment rate that's, call it 4% right now, but we're essentially at full employment, which means anybody who wants a job can get a job. And in fact, we still have a shortfall of, there still are more, or slightly more open job openings than we have available workers to fill. So.

• 15:25Speaker 04

  Especially certain jobs.

• 15:26Speaker 03

  Yes.

• 15:28Speaker 04

  High skilled individuals are very hard to come by.

• 15:31Speaker 03

  And certain trades.

• 15:32Speaker 04

  Certain trades, plumbing.

• 15:33Speaker 03

  Plumbing, electrical.

• 15:35Speaker 04

  AC or air conditioning and what have you. Those are in high demand.

• 15:41Speaker 03

  So I'm answering your question is that we, you know, our problem isn't that we don't have an, our problem isn't to create jobs so much as it is, we, we have a demographic problem not having enough people. Like we need more, we need more babies is what we need. We need parents having more children.

• 15:59Speaker 04

  I listened to this podcast and they talked about the new millionaires going forward are going to be plumbers and electricians and air conditioning trade.

• 16:08Speaker 03

  Yep.

• 16:09Speaker 04

  Individuals.

• 16:09Speaker 03

  Yeah. Oh yeah. It doesn't surprise me.

• 16:12Speaker 04

  Guess what? AI cannot replace that.

• 16:13Speaker 03

  That's right. Yeah. And, and there are people that are going through already multi generations where they think it's not a good job. They think it's a downgrade to work in plumbing versus, you know, being an attorney.

• 16:26Speaker 04

  So ask me this question as an immigrant.

• 16:28Speaker 03

  Yeah.

• 16:28Speaker 04

  When I first came to America, I went and I did my MBA and I spent a lot of money doing that and three years to get my degree.

• 16:35Speaker 03

  Yeah.

• 16:35Speaker 04

  hindsight 2020, if I, I've known and what have you, plumbing does not sound, I mean, you start on your six figures on your second, third year.

• 16:45Speaker 03

  Yeah.

• 16:45Speaker 04

  After graduating from trade school.

• 16:47Speaker 03

  Right. Not bad.

• 16:50Speaker 04

  That's not bad.

• 16:51Speaker 03

  Yeah. And not only that, but a lot of those plumbers then go on and start their own plumbing business.

• 16:55Speaker 04

  Own plumbing, then you work in your own hours.

• 16:57Speaker 03

  Right.

• 16:57Speaker 04

  I have plumber friends that work four or five hour days.

• 17:00Speaker 03

  Oh yeah.

• 17:01Speaker 04

  Steven, you have plumber, you know, you know, plumber or two.

• 17:05Speaker 00

  Only a couple.

• 17:06Speaker 04

  Right?

• 17:06Speaker 00

  Yep. One's retired and one's got a bad back.

• 17:13Speaker 03

  That's the other thing. You know, you have to be careful. You have to, you have to know your career path and a lot of those plumbers that have been career long plumbers, they're not, they're not bending down. You know, working on their hands and knees all the time, but.

• 17:25Speaker 04

  But, but to your point earlier, and I know I'm, I'm going away from the question, but I'm going to bring you back to the question and another route. You've talked about dealing with a financial advisor. What, what's your success rate in dealing if you have a financial advisor? Like you, you had that a three percent.

• 17:41Speaker 03

  Oh, well, that's part of their next message. Let's, let's, let's cover that. Um, we'll, we'll take a break right now and get to our next message, which essentially. Is asking about about the benefit of, you know, using a financial advisor or not, you know, or the, well, we'll read the question when we come back. We're money wise. We're going to address this plus much more. If you've got any questions or comments, bring them our way. 661 396 1000.

• 18:06Speaker 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.

• 18:24Speaker 03

  Welcome to Money Wise. Thanks so much for tuning in. I'm Sharad Waite. I'm here with Sammy Abiyawi. Call or text into the show 24 hours a day at 661 396 1000. Sammy, let's hear this next message.

• 18:40Speaker 04

  Yes. How can a new trader create a good plan that includes losses and stay confident in following it, even if it if markets are unpredictable?

• 18:50Speaker 03

  All right. So how can somebody plan for the curveballs that are thrown our way in the investment world? How does an individual do that? So this, I love this question, Sammy, we were preparing for the show this morning, thinking about this. It got me really excited because there are, I've talked about over the years, the difficulty that that lies in doing your own investments and your own planning, meaning sort of shutting out the world, sitting down in front of a screen, whether it's, you know, every day, every morning, when the markets open, or however it is through your spreadsheets, or whatever you've got going on. I have seen

• 19:34Speaker 03

  over the years, very, very few people that be successful at that on their own. What I've, what my experience has been is that those people generally start to get very, very pale. They, they start to have certain health issues, whether it's they start really shrinking, or they start really growing, but they, they sort of become a little strange. And I'm talking about not just financial. Planning type issues, but I'm talking about traders. So people who are looking at following trends, looking at at numbers and technical analysis and every day making those decisions and doing that.

• 20:15Speaker 03

  The the challenge becomes that you you would you you create a system. You can you can create your goals, you can create your targets. And the challenge comes when all of a sudden you are faced with the reality that it feels like those aren't working anymore. Because that happens in a normal business cycle, a normal business market, you're going to have these periods of times where you start to question your own your own rules. And if you were by yourself questioning your own rules, you generally you're much more susceptible to to error and having problems. So how how would you avoid that? As an individual investor, how do you avoid that?

• 20:57Speaker 03

  Well, you want to include outside influence. Sammy, we talk about this as as as business managers, the importance of outside consultants outside of where you are in in the weeds. Because why? You're like, why is why do we use those?

• 21:14Speaker 04

  Different perspective. Sometimes you if you're into the weeds, sometimes you just become biased towards a specific thing. And and if you're not careful, you will close your eyes to that bias or biases. And as such, you might not get the result or the goal that you really want.

• 21:34Speaker 03

  Right.

• 21:35Speaker 04

  So to me, I'm not I'm not a trader, but I'm an investor. I look at the first step is setting the goal. What's my goal? Is it a return? Is it immediate? Is it long term? That's what I kind of like comes to my mind. Sure. And then eventually I supplement that with talking to somebody who who knows this world a lot more than I do.

• 21:57Speaker 03

  The markets and the question specifically asking about, you know, what, you know, how to stay confident even if markets are unpredictable. Markets are unpredictable and they're always going to be unpredictable. If they were predictable, then everybody would do it. Correct. Because they know what's going to happen. That's right. And that's why it's so incredibly challenging to try to beat the markets. We talk about, you know, the fallacy of being able to consistently beat the markets is something that has given a lot of profits to Wall Street, but it doesn't benefit us, the everyday investor. Everyday investor needs to stick to a, you know, I don't want to call it simple, but

• 22:38Speaker 03

  a pretty straightforward plan that usually requires an outside influence like a financial advisor or an investment advisor of some sort. And it doesn't have to be how we do it here at MoneyWise, the physical financial advisor that you can come in and, you know, look at them in the eye, but certainly with somebody that is there that can take on that responsibility for making sure that your portfolio is behaving in the way that it's supposed to behave. In our world, we call that the fiduciary responsibility. It's us as financial advisors saying, look, I'm taking on the legal responsibility to make sure that this portfolio and this investment is going to do what it's designed to do.

• 23:21Speaker 03

  The mix of stocks and bonds and the strategy or money managers that are managing the stocks and bonds are doing exactly what they should be doing. And that's a full-time job. Many individuals can do that on their own, but I've met very few that can do it as well as somebody who's using an actual financial advisor with them. So that brings me to what I have, we've referenced many times, are a few different studies that show the benefits of using a financial advisor versus just doing it on your own. The most common reference study that we've talked about is Vanguard's Advisors' Alpha Research. It came out, there's been a few revisions, but 2019 was the first publication, estimates

• 24:06Speaker 03

  that working with a good financial advisor brings about a 3% in net return annually. That's a net return, that's after their fees, after the financial advisor's fees. So much, most of that benefit is coming from the behavioral coaching. It's like preventing the client from doing something.

• 24:25Speaker 03

  Against their own best interests, about half of that alpha or half of that gain that you get from the financial advisor just comes from that benefit alone.

• 24:35Speaker 04

  To me, to me, when I sit with a financial advisor, I know that financial advisor has maybe hundreds of other clients that not just, he does not just, or she does not just rely on market data, but they rely on their experience being exposed to multiple scenarios with multiple different type of clients in different age groups, industries, and that's what helps me, that's what makes me want to have a financial advisor, not just the data. Data is available to your point, Sherrod, but the experience of that financial advisor having been exposed to multiple scenarios is what I want to be paying for, and that's why I want to be with a financial advisor personally.

• 25:15Speaker 03

  That's right, and everybody needs a financial advisor of some sort. They might look a little bit different. You take somebody who's a high net worth individual, they're, you know, multi, multi millions of dollars and multiple businesses. Guess what? They too have a financial advisor. It might be in the form of their CPA.

• 25:33Speaker 04

  CFO.

• 25:33Speaker 03

  Or CFO, their accountant, their attorneys. They have people involved on the outside that they recognize, oh, these are things that I don't know because I'm doing, I'm doing this stuff over here. And so a great, a great parallel I've brought up is, have you ever worked with a trainer, like a personal trainer, like a physical trainer?

• 25:54Speaker 04

  Yeah.

• 25:55Speaker 03

  I have to over the years off and on and.

• 25:57Speaker 04

  I don't look it, but I did.

• 25:58Speaker 03

  I know, me too. Every single time when I had a personal trainer, I was in much better shape than when I was left to run my own, my own personal training plan. Now, right now, I don't have a personal trainer. I do my personal trainer. Oh, actually I do. My sister, my sister, my sister helps me practice a couple of times a week. That's true. I guarantee I would not be as much physically involved if I didn't have that accountability. Otherwise, I would start doing jumping jacks a little, a little weird, and all of a sudden I'd go to somebody who knows how to do jumping jacks and they go, you recognize. You're, you know, you're bending your, your waist or you're doing your head this way. You're going to have injuries and you're not, you know, I could have saved, you know,

• 26:42Speaker 03

  here I am trying to save 50 bucks a month or whatever it is to pay for, for, for some good advice. But everybody does better when they've got this outside view. Even if it's a financial advisor that you're meeting with once or twice a month that, a year. But they have that fiduciary hat that they can sort of put on and, and look out in your best interest. Not to try to sell you some insurance product or a mutual fund or something, but to literally just be on the same side of your table and guide you through. There's a couple more things I want to talk about this, Sammy, but I feel like we should take a break first. So we're going to do that. When we come back, I want to talk about this, cover more comments that we have in our message right now. Keep them coming our way. We're Money Wise.

• 27:26Speaker 00

  Are you an employee with a company sponsored retirement plan? Do you fully understand how you're invested and whether or not you are maximizing your retirement plan's options? For more information on a free assessment, contact Money Wise's 401k specialist, Justin Leland at 661-847-1000.

• 27:51Speaker 03

  Welcome to Money Wise.

• 27:54Speaker 00

  That was a, I was texting with our plumber friend and I told him I had a good song for him.

• 27:59Speaker 03

  Ah, there you go. There you go plumber friend. Thanks for, thanks for tuning in. A message from, from here, our plumber friend says, you guys are right. I've been a plumber for 30 years and it's a good, and it is good money. But Stephen is right. I've had a few surgeries on my back and knees. I still think the robots will figure it out and be much cheaper, but not in my lifetime. Ha, ha, ha. Yeah, for sure. The.

• 28:26Speaker 03

  Robots are going to figure it out eventually.

• 28:29Speaker 04

  I mean, for new construction, I think they're already doing it. But for, when you have a, you have a leak, I don't know. I just, I'd rather call that number and just have somebody come in.

• 28:42Speaker 03

  Yeah.

• 28:43Speaker 04

  You know?

• 28:44Speaker 03

  Yeah, and, and don't be shy. You're out there considering a career. Don't be shy, don't be shy.

• 28:50Speaker 04

  Nope.

• 28:50Speaker 03

  Some of those trades. We were talking last segment, Sammy, about the benefit, you know, investing on your own. Using a financial advisor, I mentioned the Alpha Study by Vanguard that shows that working with a good financial advisor can add about 3% in net returns. There's another study I wanted to mention, Morningstar's study in 2019 called Mind the Gap, found that individual investors typically underperform their own investments by about 1.7% annually. There's this behavior gap that occurs in the investments that individuals hold versus how the investments do outside in the general markets.

• 29:35Speaker 03

  They found that there's this behavior gap, meaning investors, that the general stock market investor does 1.7 on average, 1.7% less each year, even though they're all equity investors. This Dalbar study blows my mind every year. It's like, why, why, why are, why are people doing this? Well, in part because I don't think we're doing our job of getting the message out of the benefit of using a financial advisor. We can help close that behavior gap and, and help you get better returns, even though, of course, we do charge for our services. You pay us. We pay, we get paid directly from our clients to do the work. So that is a cost to you.

• 30:20Speaker 03

  But the idea is that you're using and benefiting from the advisor's perspective and the advisor's ability to help, help you navigate through the unpredictable, unpredictable nature of the stock market. And it's, you know, it's important, we're talking, every time we talk about averages or we talk about percentages, this is, we're talking again about generally out there. I, unfortunately, there are some financial advisors that they probably

• 30:53Speaker 03

  They may not help you.

• 30:55Speaker 04

  That's true.

• 30:55Speaker 03

  It's like it's.

• 30:56Speaker 04

  Not every financial advisor is a good.

• 30:58Speaker 03

  Is equal, yeah.

• 30:59Speaker 04

  And there's, there's, there's, yeah, there's categories.

• 31:03Speaker 03

  That's right. There's categories to them. You, you want to, you know, essentially use a financial advisor that has the ability to, you know, add value, has strong investment knowledge, high emotional discipline, follows, you know, simple, low-cost investment strategies that, that you at least understand to some level. It's not as complicated for you. You feel like you, you understand what you're getting and why you're getting it.

• 31:35Speaker 04

  And I don't want somebody to talk over my head.

• 31:38Speaker 03

  Yeah.

• 31:38Speaker 04

  I want somebody to kind of like dumb it down for me, you know, because that's not my world. That's your world, Mr. Financial Advisor. So you've got to figure out a language that's makes sense to me as your client.

• 31:51Speaker 03

  That's right.

• 31:52Speaker 04

  And, and I, and I think that, that's, that's what scares a lot of people, I think, from using a financial advisor because they don't want to feel like

• 32:02Speaker 04

  they're idiots, or they don't understand, or they're not intelligent. So it's up to us to get the word out, to create a channel for these people to come and seek that advice because it's available. And it does make more financial sense for them to use a financial advisor, in my opinion.

• 32:18Speaker 03

  Yeah.

• 32:18Speaker 04

  And financial advisors, to your point, shared, they exist in every industry. Like it, it can be a CFO for a high net worth client, whatever. It could be, you know, a CFP, in our case in MoneyWise, we have CFPs. So

• 32:35Speaker 04

  that it's available, the knowledge. And what I'm paying for is having somebody that has been exposed to multiple scenarios that can bring that life experience onto my. Own experience and add value to me.

• 32:49Speaker 03

  Right.

• 32:49Speaker 04

  And what I want to accomplish.

• 32:51Speaker 03

  That's right. Keep you out and keep you out of trouble.

• 32:53Speaker 04

  That's right.

• 32:53Speaker 03

  Make it making your own mistakes.

• 32:55Speaker 04

  That's right.

• 32:55Speaker 03

  So let's get to some of the headlines today, Sammy. I would talk, I think I talked about the Santa Claus rally with you.

• 33:01Speaker 04

  Yes, last week.

• 33:02Speaker 03

  The Santa Claus rally is a, is something that was, oh, forty, fifty years ago, picked up by the stock traders almanac, essentially found that however, the last five trading days of the year and the first two of the, of the new year, if there was, if those are positive, then you have a positive year in the, in the, in the stock market. Well, it turns out that now we're past those first two trading days of this year. And we know how the last five trading days of last year went. We do not have a so-called Santa Claus rally happening. That phenomenon is not, uh, didn't take place for us. But again, just like we said before, it's just, it's just one indicator.

• 33:47Speaker 03

  It's not written in stone and it doesn't really mean, it doesn't really mean.

• 33:51Speaker 04

  So Santa Claus did not deliver, huh?

• 33:53Speaker 03

  Santa Claus did not deliver this year. It's a little bit like the, uh, the, uh, what's the, the animal, the groundhog? The groundhog thing, you know, whether or not it pokes its head out and determines whether or not winter will last longer or not. Well, yeah, it's not super reliable. It's not a super reliable indicator. But, uh, but if that tells you anything, part of the reason is because we have a new administration coming in to the White House. And just before the election, Sammy, we heard so many people nervous about potential changes that would happen depending on who was elected or wasn't elected. We've had now a little bit of time to get past that.

• 34:33Speaker 03

  And now that we have President Trump, who will be taking office here very shortly this month, we're starting to get a little bit more clarification about what the president might be doing in terms of tariffs.

• 34:45Speaker 04

  So the approach, the approach might be a little bit different than the overall, just painting everything with, with one brush, ten to twenty percent tariffs over, overall, to maybe a targeted approach towards mainly China in this case, because he believes that China has. Not played fairly.

• 35:04Speaker 03

  Right.

• 35:05Speaker 04

  And I tend to be a supporter of that personally. I don't think that China plays a fair game when it comes to trade with the US.

• 35:14Speaker 03

  They don't, and this is where tariffs can be effective.

• 35:17Speaker 04

  That's right.

• 35:17Speaker 03

  But this is great news for investors because the concern is that if tariffs are implemented, that's just a tax, that's just an increase in the cost of what we pay for everything, and that won't be good. And so this is a good sign that President Trump is listening to his advisors. And again, maybe what we theorized what's happening is he's putting out there this as a, as pure negotiation tactic is, you know, sixty percent tariff.

• 35:44Speaker 04

  Come to the table.

• 35:45Speaker 03

  Yeah, this is what we're gonna do. We're putting a sixty percent tariff on everybody and everything. And now it's continued to walk back a lot from that stance. Even Trudeau today announcing his resignation in Canada, some theorizing this is because part of the pressures from the tariff talk that President Trump has given and the pressure that it's putting on Canada.

• 36:06Speaker 04

  I'm not a Canadian, but I'm gonna say hallelujah.

• 36:09Speaker 03

  Really?

• 36:10Speaker 04

  Congrats, Canadians.

• 36:11Speaker 03

  You're not a Trudeau fan, huh?

• 36:13Speaker 04

  No, no, I think his policies, like if you look deeply into the Canadian economy, it's been a disaster in the last five years.

• 36:20Speaker 03

  Yeah.

• 36:21Speaker 04

  Personally, I mean, I've read about it. A lot of people are not happy. Immigration slowed down to that country. That's just, like, to me, it tells me that something is not working. His policies have been very, very one-sided.

• 36:39Speaker 03

  Yeah.

• 36:40Speaker 04

  In my opinion.

• 36:40Speaker 03

  Well, Canada's in a tough spot because of their small, fairly small population. They have enormous amount of natural resources.

• 36:49Speaker 04

  That's right. What's the population of Canada? It's like, what, forty, forty million or something like that?

• 36:54Speaker 03

  Something like that.

• 36:55Speaker 04

  And they bring in about five hundred thousand new immigrants every year?

• 37:00Speaker 03

  Is that how many?

• 37:01Speaker 04

  Mm-hmm.

• 37:01Speaker 03

  They bring in?

• 37:01Speaker 04

  So this year, this year, they've approved for 2025, I think they've approved three hundred ninety-five or four hundred thousand new immigrants to come into the country. Now, here's, here's the caveat. After Trump won, a lot of the applications for immigration towards Canada, the highest number, US applications.

• 37:19Speaker 03

  Move people, Americans moving to Canada?

• 37:21Speaker 04

  Yeah, people want to go to Canada. I frankly don't.

• 37:26Speaker 03

  Yeah, so Canada has almost as many people, population, almost the same population as California.

• 37:32Speaker 04

  Yeah, I think it's 40, 40, yeah, that's what I thought.

• 37:34Speaker 03

  That's crazy. And yet.

• 37:36Speaker 04

  For that big of a country.

• 37:38Speaker 03

  Yes, exactly.

• 37:39Speaker 04

  So it's clustered, right? Like towards Montreal, Quebec and towards British Columbia on the west side. But there's a lot of emptiness.

• 37:50Speaker 03

  Yeah, they've, yeah, it's just huge, just massive piece of land.

• 37:56Speaker 04

  It is.

• 37:57Speaker 03

  But Trudeau in Canada has the same problem that Biden has and he'll have the same problem that President Trump will have, which is the president has has limited ability to be able to to manipulate the free market economy. You have free market forces that are much bigger.

• 38:14Speaker 04

  And they have a problem. We both have a problem. United States and Canada has a problem and that's job, jobs, not job creation, but available talent. Just service the openings we have.

• 38:26Speaker 03

  That's right. Yeah. The other headline here, Sam, we'll actually take a take our final break of the day and we'll talk about PG and E rates. You know, a lot of new year, new rates.

• 38:39Speaker 04

  Higher, lower?

• 38:40Speaker 03

  That's what I'm going to talk about. You may be surprised. We're Money Wise, we'll be right back.

• 38:44Speaker 00

  Are you nearing retirement and currently working with a financial advisor? Are you not sure if you're invested appropriately? Call our offices at 661-847-1000 to sit down with a Money Wise financial advisor for a no obligation assessment.

• 39:01Speaker 03

  Welcome to the Money Wise Show. Thanks for tuning in. If you missed any of these shows, you can always find us wherever you listen to your podcasts, whether it's Spotify or Apple. We're there. Check us out. It's not all bad news in the new year. Not everything's going up in price. PG&E gets a bad rap here in California, but Sammy, I was reading about rates that are going to take effect January 1st, right now. They took effect last week. They're actually going down. Does this surprise you?

• 39:29Speaker 04

  PG&E is going down.

• 39:30Speaker 03

  Going down. Yeah.

• 39:31Speaker 00

  I don't believe you.

• 39:32Speaker 04

  The end of the world is near.

• 39:33Speaker 03

  I know. I know. Beginning January 1st, customers not, uh, that have not already received these discounts are slated to get these discounts of about 4%, which on average is about $11 less a month than they paid in January of 2024.

• 39:51Speaker 00

  So now you can buy eggs.

• 39:53Speaker 03

  Yeah, use that dollar to buy eggs.

• 39:55Speaker 04

  I finally have enough for a meal at McDonald's.

• 40:00Speaker 00

  That's 11 hot dogs at Costco. I'm just saying.

• 40:03Speaker 04

  Hey, Costco hot dogs, Stephen. You owe me one, by the way. I'm going to save my appetite.

• 40:09Speaker 00

  Who goes to Costco and just gets one hot dog?

• 40:12Speaker 03

  Oh, nah. Can't just do one.

• 40:14Speaker 04

  No, you gotta do two, but you waste the second drink, though.

• 40:18Speaker 03

  Yeah.

• 40:19Speaker 04

  That's the challenge.

• 40:20Speaker 03

  Yeah, I know. Right. What do I do with this empty cup?

• 40:24Speaker 04

  So you end up having another drink.

• 40:26Speaker 03

  Take it home. Yeah, I was, I was a little surprised by this headline, but you know, looking into this PG&E headline a little bit more, well, it's down a little bit because it went up so much in 2023. Really, there was a big hit in, um, in 2023 increase, which people started to see in 2024. And those increases were offset by what PG&E later gave, which were some rebates and some credits to customers' bills. And as they readjusted the way that they are charging their, their ratepayers. And so it's a little deceptive that it's gone down a little bit this year because we went up so much last year, but still take it.

• 41:09Speaker 04

  But it's not just the PG&E that went up in the last couple of years for us. So PG&E caused these fires, right?

• 41:15Speaker 03

  Yes.

• 41:16Speaker 04

  Which caused us to lose our insurance coverage, if not increase the, the, the premium on our insurance coverage.

• 41:22Speaker 03

  Right.

• 41:23Speaker 04

  So to me, it's going down by 4%, but a lot of people are paying a lot more on their insurance because of the things that PG&E had caused, especially those fires in the forest.

• 41:34Speaker 03

  Yeah.

• 41:34Speaker 04

  So I'm still not a big lover or fan of PG&E.

• 41:39Speaker 03

  Yeah.

• 41:40Speaker 04

  Until this, they keep decreasing this, maybe I'll forgive them, but until then, I'm not.

• 41:46Speaker 03

  What they need to do is they need to change the way that Central Californians pay their rates because we're different than the coastal California where they don't have to run their air conditioner in the summer.

• 41:57Speaker 04

  Yeah.

• 41:58Speaker 03

  Like we do here. And yet we produce all of the green energy here too. And so, and the gas. So we just, we just get hit.

• 42:07Speaker 04

  Bad rap in the central.

• 42:09Speaker 03

  You mentioned though McDonald's, that another thing I wanted to bring up was, you remember the outrage that we had here in California when the minimum wage for fast food workers went up to $20 an hour last year?

• 42:22Speaker 04

  Yes.

• 42:22Speaker 03

  This went into effect last year. What do you think happened to fast food jobs, fast food worker jobs?

• 42:28Speaker 04

  Went down.

• 42:30Speaker 03

  Nope. Turns out it went up. We actually have more people working in fast food. There's 11,000 more people in California working in fast food than there were before the rate hike, before the minimum wage hike went up.

• 42:47Speaker 04

  I did, I would not have predicted that. I really thought the number of jobs will go down and we'll start seeing robots and AI and all the sort of things.

• 42:55Speaker 03

  Which we have, which we have. We've seen that. And we've seen restaurants become more efficient. And what we've also seen is these jobs actually become more attractive because now people are making 20 bucks an hour. So businesses are able to have a lot less turnover. They're able to spend less time and money on recruiting and training new hires. And the workers that they keep are more productive and they're more prone to not make mistakes. All of which lowers the employer's labor costs and.

• 43:27Speaker 04

  Eventually, yes.

• 43:28Speaker 03

  Eventually.

• 43:29Speaker 04

  That makes sense.

• 43:29Speaker 03

  At least it didn't hurt their labor costs enough to, for them to. Lay off where we saw it in the numbers. Now, of course, I'm just talking about the workers and the the jobs, but we are paying more for fast food, certainly, but on average, 3.7% last year increase in fast food costs, whereas we saw a pretty dramatic increase in the cost for employers to for people to work there. Now, again, we're just talking, they had to have, I think, 100, more than 100 stores, or is it 50 stores?

• 44:00Speaker 04

  50.

• 44:00Speaker 03

  50 stores before that minimum wage kicked in. But have you noticed, maybe it's just in my mind, but a difference in the level of service at the major fast food chains? Like, there's less people. If you're not getting a robot, you're getting a human, but the human you're getting seems to be a little bit more engaged, like a little bit more there. Maybe it's just me. But they're making 20 bucks an hour. They were making 15 before.

• 44:24Speaker 04

  I'll be honest with you. I have not been eating, you know, like, fast food, which is great. My waist cannot tolerate that.

• 44:32Speaker 03

  You called me out on it, Sammy. You called me out on my fast food eating. Well, next time you go get a, get a salad at a fast food restaurant and pay attention. It seems like there seems like people are a little bit.

• 44:46Speaker 04

  Pay attention, yes, definitely. That's actually good. That's actually good to hear.

• 44:49Speaker 03

  Yeah, but don't, don't eat junk. Keep, keep that health. Keep, keep healthy.

• 44:55Speaker 04

  Is Big Mac junk?

• 44:56Speaker 03

  Yes, Big Mac is definitely junk. Dolphins got eliminated. We didn't even get to it. Waited to the last 20 seconds of the show to say sorry, Stephen, break your heart. But that's okay. We'll be back tomorrow to talk more about this and your questions or comments our way. Remember, be smart, be safe, and always be money wise.

• 45:17Speaker 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.