Should I Own a Rental Property?

00:00:00.000 | (beeping)

00:00:02.180 | - This is Ask the Compound.

00:00:13.160 | Our email here is askthecompoundshow@gmail.com.

00:00:15.980 | We get questions every week from people on YouTube,

00:00:18.100 | email, Twitter, wherever.

00:00:21.220 | Always good ones.

00:00:22.060 | We got a bunch of good ones today.

00:00:22.880 | I even said to our expert guest host

00:00:25.700 | who kept coming on that we got some good ones.

00:00:29.420 | Today's show is sponsored by Future Proof.

00:00:31.120 | We're getting there.

00:00:32.040 | I was just telling someone,

00:00:33.540 | I always get really sad when the summer's over

00:00:35.480 | because I hate cold weather,

00:00:37.380 | which doesn't make sense since I live in Michigan.

00:00:39.600 | But Future Proof, being in the middle of September,

00:00:41.480 | gives me something to look forward to

00:00:42.720 | to extend the summer a little bit.

00:00:45.360 | So they tell me August 15th is the last day

00:00:47.760 | that you can register for the conference

00:00:50.440 | and still get a discounted ticket.

00:00:53.260 | Duncan may or may not be running a meetup

00:00:56.880 | for compound people, right?

00:00:59.620 | - It's true.

00:01:00.660 | We're trying to keep it nice and pretty intimate, though,

00:01:03.380 | so don't tell everyone on a live stream or anything.

00:01:06.220 | - Yeah, I kept out of the bag.

00:01:08.820 | Futureproof.advisorscircle.com.

00:01:11.300 | It's gonna be a blast.

00:01:12.220 | Can't wait.

00:01:13.700 | - Yeah, I can't wait.

00:01:15.380 | - Let's do a question.

00:01:16.380 | - Okay, so before we get started,

00:01:18.320 | we have a lot of overlap between all of our shows.

00:01:20.260 | I just wanted to address something you said yesterday

00:01:22.140 | that I felt like brought a little bit of shame

00:01:23.940 | to everyone at the compound and the firm,

00:01:25.940 | which was you were giving people a hard time

00:01:27.600 | about grinding coffee beans and getting whole bean coffee.

00:01:30.860 | - Listen, someone was grinding coffee beans

00:01:33.080 | while we were recording the show,

00:01:34.980 | and I just said maybe, maybe people who grind

00:01:39.280 | their own coffee beans are like,

00:01:41.040 | needs to take it easy a little bit.

00:01:42.600 | - No, I mean, I get that.

00:01:43.840 | People should not be grinding during a show, that's fair.

00:01:45.880 | But you were kind of calling into question

00:01:47.720 | and if you could actually taste the difference.

00:01:49.040 | So I just wanted to read a quick excerpt

00:01:51.600 | from this book called-- - Craft Coffee.

00:01:53.960 | - Craft Coffee, which is a bit of like a coffee Bible.

00:01:57.620 | It says, "Many of the delicate compounds

00:01:59.460 | "that make coffee taste great

00:02:00.580 | "are locked in the bean's structure,

00:02:02.300 | "but breaking that protection apart via grinding

00:02:04.440 | "exposes them to air, moisture, and light,

00:02:07.020 | "the ever-present banes of a coffee bean's existence.

00:02:09.860 | "All of those compounds will start to noticeably diminish,

00:02:13.260 | "at least to the train palate,

00:02:15.180 | "about 30 minutes after grinding.

00:02:17.140 | "And like the proverbial man who went out for cigarettes,

00:02:19.760 | "once flavor is gone, it's not coming back."

00:02:23.260 | - Yeah, but doesn't Folgers grind them for you too?

00:02:26.340 | - Well, yeah, but I mean,

00:02:27.180 | it starts to lose flavor quickly.

00:02:29.580 | So if you grind them every morning,

00:02:30.860 | right before you make it, you're getting more--

00:02:32.540 | - Okay, that sounded like the difference

00:02:33.860 | between me getting a drink

00:02:35.140 | and a mixologist pouring a drink for me.

00:02:38.340 | All I said was it's pretentious

00:02:40.100 | and you just made my point for me.

00:02:42.200 | - Fair enough, fair enough, okay.

00:02:45.900 | - Well, I guess I got a lot of hate on that one.

00:02:47.940 | As a non-coffee drinker, I'm fine throwing bombs

00:02:51.380 | into that department 'cause I don't drink coffee.

00:02:53.340 | - So while you're making your bed,

00:02:54.700 | we're grinding our coffee beans, you know what I mean?

00:02:56.460 | - Yes, you're a coffee mixologist.

00:02:58.380 | - My God, okay. - Let's do a question.

00:03:01.620 | - Up first today, we have a question from Salem.

00:03:04.700 | "I'm looking to purchase a new home in the coming months

00:03:08.920 | "as I'm in need of additional space.

00:03:11.040 | "I'm trying to decide whether to rent

00:03:12.500 | "or sell my existing home,

00:03:14.020 | "which has a 3% interest rate and $200,000 in equity

00:03:17.620 | "since I purchased it in 2016.

00:03:19.740 | "My real estate agent and many pundits

00:03:21.600 | "seem to default to renting it out as a no-brainer approach

00:03:24.860 | "because of the 3% interest rate.

00:03:26.760 | "However, if I took the $200,000 profit from the sale

00:03:30.620 | "and invested in the S&P 500, over 30 years,

00:03:33.260 | "it would surpass the monthly rental profit, $600,

00:03:36.440 | "and eventual sale of the home.

00:03:38.400 | "This includes investing the $600 profit

00:03:41.020 | "into the S&P each month over the same period.

00:03:43.540 | "Finding quality tenants,

00:03:44.780 | "keeping the place rented at all times,

00:03:46.460 | "and covering maintenance as the home ages

00:03:48.580 | "seems riskier than investing in something like VTI.

00:03:52.100 | "I'm a long-term investor and volatility doesn't rattle me,

00:03:54.700 | "so outside of diversification,

00:03:56.100 | "doesn't selling the home yield the greatest return?"

00:03:59.500 | - I really like this question

00:04:00.540 | because most financial questions

00:04:02.620 | are equal parts spreadsheet and behavioral psychology,

00:04:05.360 | but this one is kind of like a heavyweight fight

00:04:06.980 | between spreadsheet and spreadsheet.

00:04:08.820 | So John, let's do the tail of the tape,

00:04:10.480 | Tyson and Holyfield style.

00:04:12.380 | Rental properties versus index funds.

00:04:13.940 | You can find pros and cons for each of these, right?

00:04:17.180 | There's a lot less volatility in owning real estate

00:04:19.780 | because you don't have a daily update of the price

00:04:21.660 | and people aren't trading it on a second-by-second basis.

00:04:24.100 | You can increase the rental over time.

00:04:25.860 | I think we've seen, especially in this latest cycle,

00:04:29.220 | real estate is a great hedge

00:04:30.500 | against short-term and long-term inflation.

00:04:32.540 | You can build equity when you have a rental property.

00:04:34.820 | Obviously, Saleem pointed out some of the problems

00:04:37.940 | with it, the maintenance, the property taxes,

00:04:39.620 | the management of the property.

00:04:41.380 | There's idiosyncratic risk because it's a single holding.

00:04:43.940 | So I think they're looking at it the right way here.

00:04:46.500 | And he's already run the numbers to kind of see here.

00:04:50.140 | I understand why, and I'm sure I left a few things off.

00:04:53.140 | Johnny can do chart off here.

00:04:54.700 | Let me first say there's no right or wrong answers here.

00:04:57.020 | There are people who have built wealth

00:04:58.500 | investing in real estate.

00:04:59.340 | There's people who've lost money investing in real estate.

00:05:01.060 | There's people who've built wealth in the stock market.

00:05:02.820 | People who've lost money in the stock market.

00:05:05.060 | Like that, get that out of the way right now.

00:05:07.260 | You could run all the numbers you want,

00:05:08.420 | but I think personal preference is what wins here.

00:05:10.260 | I understand why the real estate agent

00:05:11.980 | and some of the pundits are pushing you

00:05:13.580 | to turn your place into a rental.

00:05:14.740 | I think a lot of people did that in the 2021 time.

00:05:18.020 | It's like, if I'm gonna get a 3% mortgage at a new place,

00:05:20.740 | why would I not just keep the old 3% one and rent it out?

00:05:22.860 | And it's one of the reasons that I think housing prices

00:05:24.620 | went up a little bit, 'cause people weren't putting

00:05:26.580 | as much housing as their supply on the market.

00:05:29.700 | That 3% mortgage is one of the best financial assets

00:05:32.580 | you can carry in your personal balance sheet right now.

00:05:33.860 | I've been pounding the table on that for a while, but.

00:05:36.700 | So let's do a quick example.

00:05:37.780 | Let's say you bought your house for 300,000 in 2016

00:05:40.180 | and are now selling it for 500.

00:05:41.380 | That's the 200,000 discount or difference for your equity.

00:05:45.100 | If you put 20% down at the time with a 3% mortgage,

00:05:47.580 | we're talking a $1,000 monthly payment, right?

00:05:50.100 | Now let's say you wanted to buy your house at going rates.

00:05:52.940 | That $500,000 house at 7% is more like a $2,700

00:05:57.940 | a month payment, just a huge,

00:06:00.500 | plus your down payment would be $40,000 higher

00:06:02.660 | if we did 20% down for that.

00:06:04.140 | But holding that 3% mortgage

00:06:06.780 | and turning into a rental property

00:06:08.180 | while appealing the fact that you get to grow equity,

00:06:11.600 | if that's not your thing, it's not your thing.

00:06:16.620 | Like, I don't think you wanna be peer pressured

00:06:18.140 | into doing something just because of that 3% mortgage.

00:06:20.620 | And if it's gonna cause you sleepless nights

00:06:22.460 | and give you a headache, I don't see what's the point.

00:06:24.940 | Like, the point about finding tenants is one for me.

00:06:27.140 | Like, if a tenant leaves and you have to find a new one

00:06:29.940 | and you have a few months

00:06:30.780 | where you're not earning that income,

00:06:31.900 | that can eat into your profit in a big way, right?

00:06:34.420 | He mentioned that this, I think his house was built in 2000

00:06:36.940 | and he realized, like, I'm gonna have to do some upgrades

00:06:38.940 | on this relatively quickly.

00:06:41.420 | One new roof or a new air conditioner

00:06:42.940 | or a new heater or something,

00:06:43.940 | and there goes your profit for a few months, maybe a year.

00:06:46.100 | So I think some people are more equipped than others

00:06:49.220 | to deal with the realities of being a landlord.

00:06:52.920 | And I think you have to figure out

00:06:53.760 | what your tolerance for inconvenience is.

00:06:56.180 | And so there is a good case to be made

00:06:58.020 | for taking your money, your equity off the table,

00:07:00.220 | investing it in the stock market.

00:07:02.380 | But there could be scenarios where the rental income

00:07:04.500 | and the equity you build in the house

00:07:06.620 | puts you in a better place financially over the years.

00:07:08.220 | You really don't know.

00:07:09.220 | So this is the type of decision, as usual,

00:07:11.580 | I would make completely outside of this spreadsheet.

00:07:13.820 | If you don't want to be a landlord,

00:07:15.280 | owning a rental property is not for you

00:07:16.420 | no matter how good the economics of it are,

00:07:18.700 | even if it works out.

00:07:19.580 | Like, what's the point of giving yourself a headache?

00:07:21.700 | So I don't think all financial decisions

00:07:24.060 | have to be made based on levels of interest rates or ROI.

00:07:27.540 | I think you have to focus

00:07:28.380 | on the potential headaches involved here.

00:07:29.660 | And if you don't want to,

00:07:30.500 | I personally would not have the heart

00:07:32.460 | to own a rental property.

00:07:34.100 | I just, I wouldn't be able to have other people

00:07:36.140 | be in my house or in my place that I own

00:07:39.380 | or apartment or whatever it is,

00:07:40.460 | and potentially trash it and not know who the tenants are.

00:07:43.780 | I wouldn't be able to psychologically

00:07:45.700 | sleep at night with that.

00:07:47.300 | So, I mean, I know-

00:07:48.220 | - Yeah, it's like you can't care too much about it, right?

00:07:50.180 | But I mean, but then you want to make sure

00:07:52.180 | it's a nice place, but-

00:07:53.660 | - Yeah, and other people are just fine with that.

00:07:56.140 | And they hire a property manager and they vet the tenants

00:07:58.940 | and it works out fine and they make money.

00:08:00.380 | But for me, I wouldn't do it just 'cause someone says

00:08:02.940 | you can't get rid of that 3% mortgage.

00:08:04.780 | 'Cause then what if you hold onto it

00:08:06.940 | and in two years, rates go down?

00:08:08.740 | You know, it's just do whatever works for you.

00:08:11.100 | And it sounds like you don't want to be a landlord,

00:08:12.740 | so don't be a landlord.

00:08:14.460 | - Yeah.

00:08:15.500 | - I'm fine with that.

00:08:16.420 | - Yeah, I don't think I'd want to be a landlord.

00:08:18.940 | - No, it's a lot of work.

00:08:19.780 | - You know what I would rather invest in?

00:08:20.700 | I would rather buy a parking lot.

00:08:22.860 | You know, what do you have to do to a parking lot?

00:08:25.380 | - That's true, paint the lines.

00:08:26.860 | - Yeah.

00:08:27.700 | - All right, next question. - Good business idea.

00:08:30.460 | Okay, up next, we have a question from James.

00:08:33.300 | "I love the idea of set it and forget it target date funds.

00:08:37.180 | "You guys recently talked about a Wall Street Journal

00:08:39.420 | "article that showed boomers are hooked on equities.

00:08:42.560 | "I agree with Ben that more and more older people

00:08:44.660 | "are going to up their equity holdings.

00:08:47.420 | "Can you guys explain why target date funds,

00:08:49.420 | "especially long horizon ones,

00:08:51.060 | "have a bond allocation at all?

00:08:52.900 | "Vanguard's 2065 target date fund holds 54% US stocks,

00:08:56.980 | "36% international stocks, 6.7% US bonds,

00:09:01.620 | "and 2.8% international bonds.

00:09:04.140 | "Why would anybody with a 42-year time horizon

00:09:06.800 | "want an allocation to bonds?"

00:09:09.200 | - As a target date aficionado,

00:09:10.620 | I'm well-suited to answer this question.

00:09:12.180 | I've looked into this before.

00:09:13.680 | Basically, every target date fund you have,

00:09:15.460 | maybe there's a provider somewhere,

00:09:16.580 | but most of them have at least like a eight to 10%

00:09:19.100 | allocation to bonds, no matter how far out you look, right?

00:09:22.520 | This person's saying 2065, 2070,

00:09:25.420 | any of those will have a little bit of bonds.

00:09:27.120 | And I mean, the great thing about target date funds

00:09:30.560 | is that it's broadly diversified.

00:09:32.060 | You automatically get to rebalance it.

00:09:33.620 | It's run by a portfolio manager, a team of managers.

00:09:35.980 | It's low cost.

00:09:36.820 | It's like simplicity at its finest.

00:09:38.580 | That's what I love about it.

00:09:39.740 | There are some drawbacks to these funds, of course.

00:09:41.380 | Like you don't get to pick the asset allocation

00:09:42.900 | of the funds that are involved.

00:09:44.500 | There's no customization beyond picking a fund

00:09:47.240 | that's more or less growth oriented,

00:09:48.580 | depending on what year you pick, right?

00:09:50.140 | 2060 or 2065 or 2050.

00:09:52.300 | So the bond piece is a fair question.

00:09:55.060 | "Why would anyone with a multi-decade time horizon

00:09:57.340 | "want to own bonds?"

00:09:58.260 | First off, bonds are not forever.

00:09:59.940 | We've had a handful of questions this year

00:10:01.720 | on the show alone about keeping 100%

00:10:03.260 | of your retirement portfolio in stocks.

00:10:05.780 | And there are people who have the ability to stomach that.

00:10:08.480 | I've mentioned my retirement portfolio is all equity.

00:10:10.960 | I do keep cash in an online savings account,

00:10:13.100 | even some T-bills, money markets,

00:10:14.400 | but no bonds for me at the moment in retirement.

00:10:16.100 | That will likely change as I get closer to retirement,

00:10:18.220 | but all stock portfolios aren't for everyone.

00:10:20.720 | So even if bonds don't have the same expected returns

00:10:24.360 | as stocks over the long run,

00:10:25.880 | I think investing in bonds could be a hedge

00:10:27.480 | against bad investment decisions.

00:10:28.900 | For people who just can't stomach the ups and downs

00:10:31.420 | of the stock market.

00:10:32.500 | So they can dampen the volatility,

00:10:33.960 | they can dampen the volatility of your portfolio,

00:10:36.620 | but also your emotions.

00:10:38.380 | I think bond yields are much higher now than they have been,

00:10:40.260 | but even if bond yields go back down,

00:10:41.700 | I think they can still help people,

00:10:43.660 | certain investors from making the wrong move

00:10:46.260 | at the wrong time.

00:10:47.520 | And it didn't happen last year,

00:10:49.260 | but high quality bonds will do the trick

00:10:50.620 | in the majority of market crashes, right?

00:10:52.260 | The bond market essentially causes

00:10:53.500 | the stock market crash last year.

00:10:55.100 | So if keeping 10% or 20% in bonds

00:10:57.700 | allows you to stay invested in the other 90 or 80% of stocks,

00:11:00.660 | I think that's a worthy allocation.

00:11:02.820 | I think that's the thinking,

00:11:04.100 | that they want broad diversification.

00:11:06.100 | And if you want to just supplement the target date fund,

00:11:08.940 | own the target date fund,

00:11:09.980 | and then buy an index fund of the rest of it,

00:11:12.480 | or just take the funds in that target date fund,

00:11:15.100 | get rid of the bond funds and just buy the stock funds

00:11:17.060 | and set an automatic rebalance, and you're fine.

00:11:20.260 | I understand you want to take the simplicity

00:11:22.140 | of the target date fund,

00:11:23.860 | but there's enough fund providers out there

00:11:25.140 | that will do an automatic rebalance for you,

00:11:27.100 | where you can create your own if you want.

00:11:29.060 | - Yeah, I think that's key for young people

00:11:31.380 | that are new to all of this to understand,

00:11:33.580 | is that, yeah, the idea traditionally is

00:11:35.860 | stocks are going down, bonds are going up,

00:11:38.320 | so then you can rebalance.

00:11:39.700 | And so you're using that bond money

00:11:41.740 | to buy more stocks at a lower price.

00:11:42.580 | - Yeah, that's the big part of it is the dry powder.

00:11:44.740 | Like if you want to buy stocks

00:11:46.020 | and you don't have new savings coming in

00:11:47.700 | during a bear market,

00:11:48.540 | those bonds can act as not only a stabilizer,

00:11:51.000 | but also dry powder for rebalancing into the pain.

00:11:53.600 | That's part of it too.

00:11:54.720 | Even if they have lower expected returns.

00:11:56.480 | I get it.

00:11:57.320 | If you want to be 100% in stocks,

00:11:58.820 | you're probably just gonna have to build that yourself though.

00:12:01.300 | - Right.

00:12:02.660 | - Which isn't that hard either.

00:12:03.680 | You could, again, you could buy a target date fund

00:12:05.140 | and just buy more stocks.

00:12:06.900 | So it takes it from 10% to 5%,

00:12:09.340 | depending on how you utilize it.

00:12:11.940 | - Yeah.

00:12:12.780 | I'm waiting for the leveraged target date funds

00:12:15.540 | to come online.

00:12:16.380 | - Okay, the T target date funds.

00:12:18.940 | All right.

00:12:20.500 | - Okay.

00:12:21.900 | Up next, we have a question from Chad.

00:12:24.540 | I'm actually surprised no academic has done that yet.

00:12:28.160 | Because a lot of the academic studies say,

00:12:29.680 | if you're a young person,

00:12:30.520 | you should leverage your stock portfolio.

00:12:32.640 | 'Cause you have the ability to wait out bear markets

00:12:34.600 | and save more if you blow yourself up.

00:12:36.200 | I'm surprised no one's tried that yet.

00:12:37.820 | - Well that's, I mean, Sean called me out

00:12:39.840 | and let you guys know,

00:12:41.160 | but I was asking him a while back about like,

00:12:43.280 | what's stopping you from having a portfolio

00:12:45.240 | that's basically like triple, you know, triple Q's

00:12:48.760 | and then like hedged with some short triple Q's

00:12:52.920 | and like doing it kind of like a hedge fund.

00:12:54.320 | I was trying to piece it together.

00:12:55.820 | I was talking with Sean about this.

00:12:57.960 | (laughing)

00:12:58.940 | - I'm not even gonna talk.

00:12:59.780 | That sounds way too complicated.

00:13:01.540 | Just take the leverage off and keep it at a hundred

00:13:04.340 | instead of trying to leverage and then hedge the leverage.

00:13:07.540 | - Yeah. - Keep it simple.

00:13:08.380 | Occam's razor here, Duncan.

00:13:10.240 | - It's true.

00:13:11.080 | I'm reading that hedge fund book of, you know,

00:13:13.020 | more money than God right now.

00:13:14.340 | So it's on my mind.

00:13:15.380 | - All right.

00:13:17.580 | - Okay.

00:13:18.420 | Up next, we have a question from Chad.

00:13:20.140 | How do you decide between a traditional 401k

00:13:22.940 | and a Roth 401k when you have no idea

00:13:25.360 | whether you'll end up in the 22, 24, 32, 35

00:13:29.380 | or 37% tax bracket?

00:13:31.740 | I'm 43, married, filing jointly with two kids,

00:13:36.740 | two young kids with a not to brag base salary

00:13:39.580 | of $175,000 in the 22% MFJ.

00:13:43.900 | So married, filing jointly bracket.

00:13:46.180 | In 2022 bonuses jumped my salary all the way

00:13:49.100 | into the 35% bracket.

00:13:50.860 | How do you factor in things like the larger take-home

00:13:53.140 | paycheck with traditional versus Roth

00:13:55.340 | or the fact that when kids get older,

00:13:57.300 | I won't have those tax credits reducing my taxable income

00:14:00.780 | or the fact that RMDs for whichever one of us

00:14:03.900 | survives longer might be taxed as single rather than MFJ?

00:14:07.780 | - Well, there's a lot going on.

00:14:09.860 | I'm tapping out on this one.

00:14:11.020 | There's way too much tax stuff going on.

00:14:12.900 | Let's bring in our tech expert here.

00:14:14.620 | - Get in here, Bill.

00:14:15.460 | - Bill Sweet.

00:14:16.860 | - Hey, Bill.

00:14:17.700 | Oh, nice.

00:14:18.540 | - He's ground some coffee beans.

00:14:19.360 | - Isn't that Chemex?

00:14:21.260 | - It was, yes, when I got started.

00:14:22.940 | But are we going to take coffee advice

00:14:25.020 | from a guy that, A, doesn't drink coffee

00:14:27.020 | and recommended Folgers?

00:14:28.500 | Speaking about more money than God.

00:14:30.460 | I mean, come on, live a little, Ben.

00:14:32.980 | - How else are you going to retire, Bill,

00:14:34.140 | if you don't drink Folgers?

00:14:35.540 | - And avocado toast.

00:14:37.140 | But no, great, great question from Chaz, my guy Chaz.

00:14:40.220 | - Let's start off this, though.

00:14:41.180 | - Yeah, what's up?

00:14:42.100 | - Has Chad not already won the game

00:14:44.440 | if he's getting this in the weeds?

00:14:45.620 | - I mean, I was going to say it's double not to brag

00:14:48.500 | on Chaz's original question.

00:14:49.900 | You know, his base hour, he gets him at 22%,

00:14:51.900 | but the 35% bracket starts at $490,000 of gross income.

00:14:55.620 | - Oh, so he's getting a pretty good bonus.

00:14:57.100 | - Yeah, wow, that's quite a year for Chaz.

00:14:59.180 | And looking back, I mean, the way I would frame it, though,

00:15:03.020 | we've talked a lot about Roth versus traditional.

00:15:05.280 | The answer is both, right?

00:15:06.680 | So the way to answer Chaz's multiple questions here

00:15:09.420 | is to look back from age 63.

00:15:11.580 | What do you want to have in retirement?

00:15:13.300 | And Ben, if we knew what the best performing asset class

00:15:16.720 | would be over the next 20 years,

00:15:17.820 | we would obviously invest there, but we don't.

00:15:19.420 | So what do we do instead?

00:15:21.340 | - Right, diversify.

00:15:22.180 | - We diversify.

00:15:23.140 | And so diversification works for tax planning, too.

00:15:26.100 | What I would recommend to Chaz is,

00:15:27.540 | in a year in the 35% bracket,

00:15:29.500 | that to me would go full tilt for traditional, right?

00:15:31.940 | 'Cause there's only one more step you can go into 37%,

00:15:35.420 | but maybe in years that are not so great, you know, 24%.

00:15:38.500 | Because if we fast forward, Chaz,

00:15:40.100 | if you're looking at age 63 backwards,

00:15:41.820 | let's say you have Social Security

00:15:42.940 | pumping out $3,000 a month,

00:15:44.900 | you can then distribute another $80,000 or so

00:15:47.660 | at today's current tax brackets and tax rates,

00:15:49.900 | ignoring inflation for a moment,

00:15:51.660 | at the 12% tax rate, right?

00:15:53.500 | So I think you do have to do a little arbitrage

00:15:55.980 | and think ahead,

00:15:56.980 | and do that financial planning exercise looking backwards.

00:16:00.020 | But ultimately, I don't think the answer is either/or.

00:16:02.320 | I think it's how much and when.

00:16:04.100 | And if you're 43

00:16:05.420 | and you're earning a half million dollars a year,

00:16:07.060 | I think you're full tilt traditional at that point,

00:16:09.020 | because your tax rate is probably

00:16:10.280 | gonna not be much higher.

00:16:11.620 | 37% is as high as it goes,

00:16:13.660 | but in years that you can skirt under that 22% range,

00:16:16.660 | or let's say 10 years ago,

00:16:18.420 | if you're young, if you're starting out,

00:16:19.900 | that's when Roth makes more sense.

00:16:21.300 | - My thought was, with a question this complex,

00:16:24.820 | it does seem relatively complex

00:16:26.260 | because there's so many paths you can take,

00:16:27.780 | it's very path-dependent.

00:16:29.020 | Like, what's the simplest solution?

00:16:30.340 | I think the simplest solution, as you said,

00:16:31.820 | is do a little bit of each

00:16:33.500 | and don't try to get too cute with it.

00:16:34.800 | Because if you try to say,

00:16:35.980 | this year I'm gonna do this,

00:16:37.180 | but then at the end of the year,

00:16:38.260 | I figured I can't do it anymore and then I'm gonna do this,

00:16:39.940 | so I feel like, just make it easy on yourself.

00:16:43.020 | - Sorry, Cliff is cracking me up in the chat.

00:16:45.420 | He said, "I would quit the job to save on taxes."

00:16:47.540 | (laughing)

00:16:48.500 | - That's it, and that's, Duncan,

00:16:49.980 | I say that to clients a lot.

00:16:50.940 | There's a very easy way to save on taxes.

00:16:52.420 | - Then you don't have to pay for a CPA either.

00:16:54.140 | So yeah, that's all your solution.

00:16:56.300 | - No, that's it.

00:16:57.140 | But just a couple of other things that Chad brings up.

00:16:58.640 | I mean, the tax credits for having kids

00:17:00.700 | are gonna be there regardless.

00:17:01.820 | Like, that all happens after your taxable income

00:17:03.860 | gets calculated.

00:17:04.700 | - Hey, wait, when does that go away?

00:17:06.220 | - Ooh, that goes, yeah.

00:17:07.060 | - So when are my three tax credits going away?

00:17:08.420 | - The year your kids turn 16, actually.

00:17:10.500 | - 16?

00:17:11.340 | - Yep, 16. - Oh, man.

00:17:12.260 | - Yeah, so that happens pretty quickly,

00:17:13.940 | depending on where you are. - I should boot 'em

00:17:14.780 | out of the house then.

00:17:15.600 | - Yeah, you could.

00:17:16.440 | I mean, that's my rule for my kids.

00:17:17.820 | Once you're 18, you're out of the house.

00:17:19.300 | (laughing)

00:17:20.140 | You're not my problem anymore, good luck.

00:17:20.960 | - At 16, they need a job.

00:17:21.800 | - Yeah, more or less. - You have to book credit.

00:17:23.660 | - But yeah, but I think the basic rule of thumb here

00:17:25.700 | is 12% or around there, or if you have a long time horizon,

00:17:29.500 | Roth IRAs make a lot of sense,

00:17:31.060 | especially if you expect your future tax rate

00:17:33.060 | to be higher than your current tax rate.

00:17:35.020 | The other factor is mid-career,

00:17:36.940 | when you're starting to pump up,

00:17:38.140 | if you're hitting that 32, that 35, that 37% bracket,

00:17:42.380 | that's when I go traditional.

00:17:43.700 | That, I think, is a good rule of thumb.

00:17:45.940 | - Fair, see, it's not always Roth for Bill.

00:17:47.740 | - Nope, it's not.

00:17:48.580 | - The one guy, a couple months ago,

00:17:49.800 | said you were too far into the Roth.

00:17:51.780 | - A lot of the listeners, yeah, have called me out,

00:17:53.540 | and I think that's it,

00:17:54.460 | but when I look at people's portfolio spend,

00:17:57.300 | I don't see enough Roth IRA assets,

00:17:58.820 | so that's what's led me to be the acolyte that I am.

00:18:01.420 | - That makes sense.

00:18:03.380 | - And about coffee beans, too, grind your own coffee.

00:18:05.100 | How hard is this?

00:18:06.020 | It's not that hard.

00:18:07.060 | - Can we get a silent coffee grinder, please?

00:18:09.440 | - That's great, that's great.

00:18:10.280 | - Like, you know how Duncan put the soundproof stuff

00:18:12.060 | on the walls in the podcast booth there?

00:18:14.140 | Just do some soundproofing, that's all I'm asking.

00:18:15.500 | - There are some that are a lot quieter, yeah.

00:18:17.220 | - Yeah, it's true, and we have dustless brake pads for cars.

00:18:20.700 | Why can't we get a quiet coffee grinder?

00:18:21.540 | - I think I'm just a little bitter

00:18:22.660 | because my wife had a roommate in college,

00:18:24.940 | and she would get up every day at 5.30 a.m.

00:18:26.900 | to go to her internship,

00:18:27.780 | and she'd grind her coffee beans and wake us up,

00:18:29.260 | and it just--

00:18:30.380 | - Wow.

00:18:31.220 | - Since then, it's just--

00:18:32.100 | - So, it would have been more respectful

00:18:33.880 | for her to grind them the night before.

00:18:35.220 | You lose a little bit of flavor, but, you know.

00:18:36.900 | - Right.

00:18:37.720 | - Come on, like, you could have done that.

00:18:38.800 | - That's what I'm saying, disrespectful.

00:18:40.400 | All right, let's do another question.

00:18:41.480 | - Oh, also, before we move on from that question,

00:18:43.960 | we just had Adam, Adam, a long-time listener

00:18:47.080 | of all the pods, just stop by the office,

00:18:49.600 | and he was telling me the top tax rate in Canada,

00:18:52.840 | he's from Toronto, is, I think he said 55%.

00:18:55.600 | - Yeah, yeah.

00:18:56.440 | - So, he was asking for us to do some

00:18:57.640 | Canadian-specific tax questions at some point.

00:19:00.880 | - Yeah, it's something nobody believes in me,

00:19:02.360 | but yeah, U.S. taxes are actually very, very favorable

00:19:04.720 | compared to OECD countries, in the lower third,

00:19:07.080 | but it doesn't feel that way,

00:19:08.480 | so I try not to convince people of what they already know.

00:19:11.000 | - Yeah.

00:19:11.840 | All right, up next, we have a question from David.

00:19:15.960 | I will take my first RMD in 2024,

00:19:19.240 | and I'm considering a backdoor Roth.

00:19:21.240 | I will not need the majority of the RMD in 2024,

00:19:23.720 | or subsequent years.

00:19:25.280 | I was not able to contribute to a Roth IRA

00:19:27.280 | during my working years due to income limitations.

00:19:30.320 | My thinking is that it may make sense

00:19:32.280 | to do a backdoor Roth on the RMD

00:19:34.360 | after having paid the income taxes on the RMD.

00:19:37.620 | My time horizon is approximately 20 years.

00:19:40.080 | I understand that there is a five-year rule

00:19:41.680 | for withdrawing money from a Roth.

00:19:43.960 | Does the five-year rule clock apply

00:19:46.020 | only starting with my first Roth deposit in 2024,

00:19:49.620 | or to subsequent contributions in 2025 and beyond?

00:19:52.800 | My taxable brokerage account is direct index for tax alpha,

00:19:57.200 | so it would seem that tax-free growth in a Roth

00:19:59.600 | would provide better long-term returns.

00:20:01.840 | I gotta be honest, I don't understand a lot of this question.

00:20:03.680 | - Okay, so the idea is-- - I need to break this down.

00:20:06.940 | - It sounds to me like they're taking

00:20:08.360 | their required minimum distributions,

00:20:10.980 | but they're not going to need to spend them right away,

00:20:13.940 | so they want to reinvest them

00:20:15.640 | and maybe get some tax deferral benefits

00:20:18.500 | by putting them in a backdoor Roth.

00:20:19.960 | - Right, right, yep.

00:20:21.600 | Duncan, I don't think it's your fault.

00:20:23.040 | There's a lot going on.

00:20:24.080 | First off, RMD started at age 73,

00:20:26.280 | so I give our questioner a lot of credit

00:20:29.280 | for thinking in a long time horizon.

00:20:31.120 | 20 years, that's great,

00:20:31.960 | and God willing, we all make it that far.

00:20:34.640 | But yeah, a lot going on here.

00:20:35.520 | But number one is you cannot take an RMD

00:20:38.080 | if you're receiving one-- - And for new people,

00:20:39.760 | an RMD is a required minimum distribution.

00:20:41.540 | - Required minimum distribution, right.

00:20:43.160 | Exactly, Duncan, and as those build up,

00:20:45.360 | as your assets build up, at some point,

00:20:46.920 | the government says, look, you gotta spend the money.

00:20:49.520 | Yeah, you can't just have this build up forever,

00:20:51.280 | and as I said before, that starts at age 73

00:20:53.420 | here in the year 2023.

00:20:56.040 | But you cannot take an RMD

00:20:57.320 | and just move it from one traditional into a Roth.

00:20:59.840 | It doesn't happen quite that way.

00:21:01.400 | You do need to have earned income

00:21:03.600 | in order to contribute to any IRA.

00:21:05.640 | So that's the first kind of nuanced point here

00:21:08.360 | is that you can't just take assets from traditional,

00:21:10.440 | roll them into Roth.

00:21:12.280 | - Social security doesn't count, huh?

00:21:13.520 | - Social security neither, but that's it.

00:21:16.040 | But to move on, again, 20 years

00:21:18.200 | is a pretty favorable time horizon,

00:21:19.720 | and what the listener is comparing

00:21:21.400 | a backdoor Roth contribution to

00:21:23.780 | is a direct indexed account, right,

00:21:25.440 | something that's taxable.

00:21:26.760 | And Ben, if I could give you the choice,

00:21:28.400 | would you want your investment earnings tax-free

00:21:30.680 | or would you want them taxed as capital gains?

00:21:32.840 | Which would you choose?

00:21:34.160 | - Tax-free. - You want them tax-free.

00:21:36.840 | - So what, you're saying move it right from the,

00:21:38.780 | so take the RMD and then put it

00:21:40.000 | into the direct index account?

00:21:41.400 | - No, I'm saying do this backdoor Roth solution.

00:21:44.280 | You do need to have earned income.

00:21:45.860 | And so if you're comparing it to an investment

00:21:48.120 | that's going to be taxed,

00:21:49.240 | the backdoor Roth is gonna make sense

00:21:51.040 | because you've already paid tax on that income.

00:21:52.800 | You've already taken that required distribution.

00:21:55.000 | So assuming you have the other earned income,

00:21:57.160 | you can put $7,500 into a Roth IRA up to any age

00:22:01.960 | as long as you have the income to support it.

00:22:04.080 | So that's an important question to focus on.

00:22:06.640 | - Okay. - Next.

00:22:09.560 | There are two five-year rules

00:22:11.080 | when it comes to Roth IRAs that we can go into.

00:22:12.800 | - I didn't get the five-year rule thing, what's that?

00:22:14.400 | - Yeah, okay, so there are two.

00:22:15.840 | The five-year rule number one,

00:22:17.840 | you cannot take a qualified Roth distribution

00:22:21.000 | from any Roth IRA until you've had

00:22:23.520 | any Roth IRA for five years.

00:22:25.260 | And so it is literally,

00:22:26.480 | you just have to have a Roth IRA in place for five years.

00:22:29.480 | Any distributions that happen in year two,

00:22:31.400 | year three, year four are not qualified.

00:22:33.840 | And so that's one of the reasons I apostolized it.

00:22:36.040 | Like, look guys, just fund a Roth IRA now in your 20s,

00:22:39.280 | because then that five-year clock is done and over with.

00:22:41.760 | So that's five-year clock number one.

00:22:43.260 | If we're starting at age 73

00:22:44.760 | and we've never made a Roth IRA contribution--

00:22:46.600 | - Wait, what's the reason for the five-year clock?

00:22:48.200 | I don't get that.

00:22:49.040 | - I think the idea is that they don't want people

00:22:51.680 | just putting money into Roth, into IRAs,

00:22:54.000 | and then taking them out the next year.

00:22:55.320 | I don't really fully understand it, Ben, to be honest,

00:22:57.360 | but I think the intent was that,

00:22:58.520 | look, these are long-term retirement accounts.

00:23:00.440 | These are not meant to be, like,

00:23:01.640 | someplace to park cash for a year or two.

00:23:03.840 | Now, it doesn't make a lot of sense to me,

00:23:05.240 | because once you do that once,

00:23:07.040 | then the one first five-year rule no longer applies.

00:23:11.320 | But the second five-year rule is relating to rollovers.

00:23:14.720 | And if you take assets out of a Roth IRA

00:23:17.960 | after you've done a Roth IRA conversion,

00:23:21.760 | then that could be subject to penalties and interest, too,

00:23:25.220 | if you take it out in the five years after a conversion.

00:23:28.440 | However, the Roth IRA ordering rules

00:23:30.560 | are super funky and complex.

00:23:31.840 | I don't wanna get into them.

00:23:33.040 | But it's very unlikely that if you have a balance

00:23:35.400 | in a Roth IRA, that's gonna be a problem for you.

00:23:37.720 | But one thing that we know about this listener

00:23:39.880 | is they're 73, and no penalties apply

00:23:43.340 | for any type of distribution,

00:23:45.280 | unless it's that first five-year clock.

00:23:47.680 | So backdoor Roths are fine

00:23:49.080 | if you're over the retirement age of 59 1/2,

00:23:51.840 | which this listener is.

00:23:53.200 | So it's really complex.

00:23:54.240 | I don't think we need to go into the nuance of it,

00:23:55.960 | but ultimately, I think it's probably a good idea

00:23:58.640 | as long as you have earned income

00:23:59.800 | to support the Roth IRA contribution.

00:24:01.680 | - So once again, job security for Bill Sweet

00:24:03.320 | and other CPAs around the country.

00:24:05.120 | - And it gets more and more complex.

00:24:06.520 | The SECURE Act, as you know, Ben,

00:24:07.800 | just changed the rules on inherited IRAs,

00:24:10.000 | and boy, we could do a whole asset compound on that.

00:24:13.560 | But we won't. - Oh, good.

00:24:14.400 | See, I was afraid it was getting too boring.

00:24:16.160 | - Okay, so if anyone has questions on inherited IRAs,

00:24:18.520 | ask for the next one. - Bring 'em on.

00:24:20.240 | Bring 'em on. - All right.

00:24:21.080 | One more question.

00:24:22.320 | This is a good one. - Okay.

00:24:23.160 | - Good one for Bill, too.

00:24:24.120 | - Yeah. - It is.

00:24:24.960 | Last but not least, we have a question from Chris.

00:24:27.240 | How do you factor a pension

00:24:28.520 | into your retirement savings rate?

00:24:30.320 | I'm a 36-year-old Army officer

00:24:33.360 | and will be eligible to retire from the service

00:24:35.440 | at the age of 42 with a pension that equates

00:24:37.880 | to about 42% of my annual income,

00:24:40.160 | adjusted annually for inflation.

00:24:42.280 | I'll continue to work in another industry

00:24:44.260 | until at least 55 to replace the lost income.

00:24:47.720 | My wife and I are first-time homebuyers

00:24:49.700 | and closing on a house this week.

00:24:51.920 | We'll be stretching a bit on payments

00:24:53.460 | for the first three years until my promotion in 2026,

00:24:57.400 | and I plan to pause retirement contributions

00:24:59.800 | to build our savings account back up.

00:25:01.600 | Not to brag, but we currently have about $450,000

00:25:05.040 | in our 401(k) and IRA.

00:25:07.520 | Am I foolish for thinking that a 5% to 7%

00:25:09.960 | retirement savings rate is sufficient for folks

00:25:12.640 | with a good head start on retirement savings

00:25:14.760 | and a government-backed pension on the horizon?

00:25:17.680 | - A lot going on in this one, too.

00:25:18.800 | Bill, correct me if I'm wrong. - This is a good place

00:25:19.840 | for you to mention, Ben, too,

00:25:20.920 | like you said on Animal Spirits,

00:25:22.140 | how many people ever had pensions.

00:25:24.960 | It's not as many as people think.

00:25:26.020 | - Yes, yes, yeah, I was gonna, yeah, that's interesting.

00:25:29.180 | I'm writing a piece about that right now, actually.

00:25:30.580 | It wasn't as prevalent as people think.

00:25:32.340 | 40-some percent was as high as it got in the '70s,

00:25:34.620 | and that's the peak.

00:25:35.540 | Bill, correct me if I'm wrong here,

00:25:36.500 | but your origin story of getting into the world of finance

00:25:38.500 | was you were in a leadership position in the Army,

00:25:41.380 | and all the young people in your platoon

00:25:43.040 | were finally making decent money

00:25:44.380 | for the first time in their lives,

00:25:45.340 | and they were coming to you for advice.

00:25:46.580 | Is that right, pretty much?

00:25:47.860 | - Yeah, kind of, kind of.

00:25:48.900 | So what happens is, when you reach a certain level

00:25:51.600 | of staff officer, they start assigning additional duties,

00:25:54.880 | and when you get volunteered, you do not volunteer,

00:25:57.480 | you get volunteered to take a position.

00:25:59.920 | Mine happened to be tax assistance officer,

00:26:02.320 | and so it was my job to help soldiers

00:26:04.340 | that were coming from Missouri or Idaho or whatever,

00:26:07.000 | and they had a tax question.

00:26:08.040 | It was my job to get them resources to solve that,

00:26:10.600 | and yes, that's part of how I got into this crazy business.

00:26:14.100 | - So the pension adjusted for inflation

00:26:17.920 | sounds like a pretty darn good deal,

00:26:19.160 | 'cause most pensions for a private employee

00:26:22.080 | do not get adjusted for inflation.

00:26:23.480 | Social Security is one of the only ones I know

00:26:24.960 | that actually gets adjusted for inflation.

00:26:26.320 | So we try to never say never or always here,

00:26:30.240 | but I would assume most government pensions are pretty safe.

00:26:33.200 | So I think planning on that is,

00:26:35.440 | Chris is probably gonna be pretty good.

00:26:36.620 | So the idea is, listen,

00:26:37.840 | we've already built up a pretty good nest egg,

00:26:39.240 | mid 30s and already have almost half a million dollars saved.

00:26:42.200 | Can we do a lower than Ben sets as target for savings rate

00:26:47.160 | because I have this pension?

00:26:48.360 | Like if you did a present value,

00:26:50.840 | it'd be worth, a pension is worth a lot more money

00:26:54.520 | than people assume.

00:26:56.020 | So he's probably in a pretty good position

00:26:58.960 | because they blew through their savings for this house

00:27:01.760 | and they might not need to.

00:27:03.320 | Does that make sense to you?

00:27:04.280 | And I think it kind of does, right?

00:27:05.680 | - Yeah, it definitely does.

00:27:06.600 | So Defense Finance Accounting Service

00:27:08.680 | runs the military pension system,

00:27:10.400 | and ultimately it is indexed for inflation.

00:27:13.080 | The same cost of living adjustment

00:27:14.520 | that rolls out for Social Security every year

00:27:16.200 | would apply to a military pension too.

00:27:18.160 | And so as the listener points out,

00:27:20.160 | hey, this is gonna cover 40% of my spending

00:27:22.840 | when I get to retirement, which is great.

00:27:24.520 | State income tax free, right?

00:27:26.000 | So if you move to New York, California,

00:27:27.540 | they can't touch your pension.

00:27:29.260 | It's always federally taxable.

00:27:30.840 | But yeah, I'd say it's a great deal.

00:27:32.120 | And Ben, what is really the difference?

00:27:33.540 | A government pension, a government bond,

00:27:35.600 | like these are all things that are guaranteed

00:27:37.340 | by the full faith and credit

00:27:38.360 | of the United States of America.

00:27:39.840 | I'd say, yeah, go for it.

00:27:41.000 | And so Ben, sometimes in my formulation,

00:27:42.920 | it really unfortunately all depends,

00:27:44.640 | but sometimes I will treat this like a bond, right?

00:27:46.740 | And that's my fixed income

00:27:47.860 | because I know that's gonna support my lifestyle.

00:27:49.920 | I know that's gonna hit my paycheck,

00:27:51.280 | my bank account every month.

00:27:53.040 | I think it's an excellent way to plan.

00:27:54.680 | And yes, if you'd like to, I think so.

00:27:57.200 | Is it more or less you've funded part of your retirement,

00:27:59.780 | not through your savings,

00:28:00.820 | but through the work that you've been doing

00:28:02.540 | to defend our nation.

00:28:03.500 | So I think that's a really neat thing to think about.

00:28:05.840 | That's another good point is that they could also

00:28:07.720 | probably take more risk in their 401k and IRA in stocks

00:28:11.840 | because that pension is going to act like a bond,

00:28:14.160 | even though it doesn't have some of the same characteristics

00:28:16.240 | as a bond fund would.

00:28:17.320 | - I think so too.

00:28:18.160 | And ultimately, when you sit down to sort of do the planning

00:28:21.320 | that can continue on with your surviving spouse,

00:28:23.160 | I think it's 50% of the default.

00:28:24.680 | So there's a couple of elections that you do need to make.

00:28:27.040 | You can think about life insurance

00:28:28.180 | to cover the balance otherwise.

00:28:29.800 | But I would totally agree.

00:28:30.920 | And I think that does more or less de-risk

00:28:33.520 | some of your retirement spending

00:28:34.780 | because you have that ace in the hole

00:28:37.380 | with the federal government.

00:28:38.680 | - And that's the way to think about retirement too,

00:28:40.240 | planning from a withdrawal perspective is,

00:28:42.640 | if I have income that's going to be covering

00:28:44.680 | a certain percentage of what I'm going to be spending,

00:28:47.040 | I don't need to take as much from my portfolio each year.

00:28:49.140 | So maybe the nest egg doesn't have to be quite as big.

00:28:51.720 | So yeah, they could spend more now in the house

00:28:53.840 | or whatever it is that they're doing and not save as much.

00:28:56.140 | And they'll probably be just fine.

00:28:57.400 | - Precisely.

00:28:58.240 | And it connects directly, Ben,

00:28:59.400 | with the conversation we had a couple of minutes ago

00:29:01.120 | about traditional versus Roth.

00:29:02.800 | Fast forward a couple of years, fast forward 20, 30 years,

00:29:05.360 | what would you like your portfolio to look like then?

00:29:07.660 | I want to take this amount of distributions here.

00:29:09.920 | I want to have this bucket of, let's say, Roth assets

00:29:12.040 | in case I want to buy a house, take my kids to Paris,

00:29:14.520 | something like that, have fun, one-time spend,

00:29:17.200 | but backwards plan and decide,

00:29:18.720 | what do I need to do at this point to fund it?

00:29:21.040 | But ultimately, really, what they're saying is,

00:29:23.320 | I'm going to divert some of my retirement savings

00:29:25.560 | into this real estate project, right?

00:29:27.400 | And I think that's great.

00:29:28.680 | I mean, that's a use asset,

00:29:29.960 | and then it'll be there when you do retire

00:29:31.920 | and you can head on.

00:29:33.720 | - Yeah, thinking through this stuff at age 36,

00:29:35.800 | I think they're in a pretty good position.

00:29:37.240 | - I would agree.

00:29:38.080 | And thank you very much for serving our country,

00:29:39.900 | keeping it safe out there

00:29:40.940 | so we can sleep safe in our beds at night.

00:29:42.620 | Thank you.

00:29:43.460 | - Yeah, thank you.

00:29:44.280 | And yeah, good job.

00:29:45.420 | - Good job.

00:29:46.260 | - Yeah, nicely.

00:29:47.080 | Yeah, good job.

00:29:47.920 | - Great question.

00:29:48.760 | - That's great.

00:29:49.580 | And we didn't even get to not to brag there,

00:29:50.420 | even though they deserved one.

00:29:51.240 | - Yeah.

00:29:52.340 | - All right, we want to thank Bill

00:29:53.380 | for getting back five minutes before the show

00:29:55.380 | from vacation to help us out.

00:29:57.780 | - Neither rain nor sleet nor the Pocono Mountains

00:30:00.020 | will keep me from my appointed rounds.

00:30:01.800 | - Yes, next week.

00:30:03.900 | I know I angered a lot of people who drink coffee.

00:30:06.940 | Next week, I'm going to talk about how I hate IPAs,

00:30:09.180 | and I also don't like "Star Wars."

00:30:10.460 | - Sponsored by Folgers.

00:30:12.000 | - Wants to email me.

00:30:13.860 | - Ben, his elitist tower there in Michigan

00:30:15.940 | looking down on us humble New Yorkers.

00:30:16.780 | - You're going to be here in person.

00:30:18.020 | We're going to hold you down

00:30:18.860 | and make you drink coffee live on the show.

00:30:20.540 | - That's right.

00:30:21.380 | I will be live in New York City next week,

00:30:22.900 | sitting next to Duncan.

00:30:24.340 | Email us if you want.

00:30:25.220 | We're going to have a bunch of different people

00:30:26.580 | on the show next week

00:30:27.420 | because we have a lot of people coming to New York.

00:30:28.860 | Askthecompancho@gmail.com

00:30:30.500 | or leave us a comment on YouTube.

00:30:32.820 | We appreciate everyone who comes in for the live chat,

00:30:34.760 | as always.

00:30:35.780 | Thanks to Duncan and Bill,

00:30:36.620 | and we'll see you guys next week.

00:30:38.660 | - See you, everyone.

00:30:39.660 | (upbeat music)

00:30:43.800 | (upbeat music)

00:30:46.380 | (upbeat music)

00:30:48.980 | (upbeat music)

00:30:51.560 | (upbeat music)

00:30:54.180 | (upbeat music)

00:30:56.760 | (upbeat music)

00:30:59.340 | you

00:31:01.400 | you

Should I Own a Rental Property?

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