Bogleheads® 2022 Conference – Financial Planning – A panel Discussion with the Bogleheads Experts
00:00:00.000 | (audience applauding)
00:00:03.160 | - Welcome to our financial planning panel.
00:00:08.320 | I'm going to very briefly introduce our panelists
00:00:13.560 | because you know them all very well.
00:00:16.200 | They're all prolific writers and speakers.
00:00:19.360 | They have long ties to the Bogle heads.
00:00:22.900 | All are current or past Bogle Center board members.
00:00:27.160 | They've been frequent, much appreciated speakers
00:00:31.120 | at multiple Bogle heads conferences.
00:00:34.160 | And you've seen them a lot over the past two days
00:00:37.920 | at multiple sessions,
00:00:39.040 | including Bogle heads university on Wednesday.
00:00:43.060 | So one sentence each, Christine Benz,
00:00:45.200 | director of personal finance
00:00:47.120 | and retirement planning at Morningstar.
00:00:50.580 | Alan Roth is founder of WealthLogic,
00:00:53.380 | an hourly based investment advisory
00:00:55.960 | and financial planning firm.
00:00:57.340 | I'm obviously jumping around
00:00:58.900 | 'cause I didn't look over before I started doing that.
00:01:02.300 | Mike Piper is a CPA, financial advisor,
00:01:06.760 | and among his many contributions
00:01:09.340 | is the creator of the Open Social Security Calculator.
00:01:12.640 | I thought it was interesting that in the Vanguard session,
00:01:19.020 | the point that Joel made about a lot of what can contribute
00:01:24.700 | so much to outcomes for individuals
00:01:28.140 | is on the personal financial planning side,
00:01:32.000 | not the investment side.
00:01:33.500 | As Mike was also saying,
00:01:34.700 | we talk a lot in this audience about portfolio strategies
00:01:39.700 | and allocations in different portfolios,
00:01:42.540 | but when it comes down to our individual lives,
00:01:46.140 | there's a lot more to that.
00:01:47.740 | So to start off, one of the things I wanted to ask you is,
00:01:53.980 | this is our first in-person annual meeting in a few years
00:01:58.100 | since the COVID pandemic.
00:02:00.620 | It was a global phenomenon that affected all of us
00:02:04.100 | in ways from the tragic to the trivial,
00:02:07.620 | led a lot of people to make changes in their lives
00:02:10.540 | and how they thought about their lives,
00:02:12.520 | where they wanted to live, their jobs,
00:02:15.640 | their work-life balance.
00:02:17.220 | And I'm just wondering if the past few years
00:02:20.860 | led you to change any of your thinking
00:02:24.420 | about financial planning topics
00:02:26.860 | and how you approach questions
00:02:29.980 | either in your own lives or for clients.
00:02:32.400 | - Sure, I can start.
00:02:35.820 | A couple of areas where I think the pandemic
00:02:38.740 | and the experience of the past few years
00:02:40.500 | has changed the way I think about things.
00:02:42.780 | One is in the realm of,
00:02:44.640 | I guess you could kind of call it mindful spending,
00:02:48.140 | which Nick Mazzulli touched on
00:02:50.020 | in his conversation with Jeff,
00:02:53.020 | this idea of being really thoughtful
00:02:55.940 | about how you spend your money.
00:02:59.140 | And I do think that the pandemic gave us all a good chance
00:03:02.480 | to reflect on, especially the things that we missed
00:03:06.340 | in that sort of year from March, 2020
00:03:10.500 | until the vaccines came online
00:03:12.660 | and things came back to some version of normalcy.
00:03:15.860 | But I know in our own household,
00:03:17.640 | my husband and I walked and talked a ton during that time
00:03:20.980 | about the things that we missed
00:03:22.260 | and frankly, the things that we didn't miss.
00:03:24.980 | So it was just a really great opportunity
00:03:28.620 | to reflect on spending.
00:03:31.660 | I love that people like Ramit Sethi
00:03:34.900 | spend a lot of time talking about
00:03:37.160 | this mindful spending idea
00:03:39.660 | where you're being really thoughtful
00:03:42.100 | about how you're deploying your capital on an ongoing basis.
00:03:46.700 | And his point is like, if you're into getting the appetizer,
00:03:50.040 | get the appetizer every time.
00:03:52.440 | It's not gonna make a difference.
00:03:54.140 | You just have to make some cuts elsewhere
00:03:57.040 | to accommodate that.
00:03:59.220 | So mindful spending.
00:04:00.640 | And then another thing that I've been talking about,
00:04:04.000 | thinking about, encouraged mainly by Carl Richards,
00:04:07.280 | I would say is time on earth allocation.
00:04:10.960 | That there's no more precious
00:04:12.920 | or finite resource in our lives.
00:04:15.400 | Forget money for a second.
00:04:17.740 | Think about the one thing that we have
00:04:19.980 | that is just a non-renewable resource
00:04:24.320 | and it is our time on earth allocation.
00:04:26.360 | So how are we deploying that time?
00:04:28.560 | Carl has created a simple mantra.
00:04:30.800 | He spoke to this group via video.
00:04:34.160 | But his time spent with family, preferably outdoors.
00:04:39.160 | That's like his focus.
00:04:41.080 | That's his compass.
00:04:43.240 | That's what he loves.
00:04:44.680 | And that is how he tries to figure out his life
00:04:47.280 | so he can do more of that.
00:04:49.080 | So those are just a couple of deep thoughts
00:04:52.800 | early in the morning.
00:04:53.840 | - For me, it's mostly been just a reminder
00:04:59.720 | that it is impossible to predict
00:05:03.060 | what's actually going to happen.
00:05:04.280 | I mean, legislation, inflation, pandemics,
00:05:09.280 | no one I knew saw that coming.
00:05:12.800 | We were not talking about that the summer beforehand.
00:05:15.460 | And it changed everything.
00:05:18.760 | And despite changing everything,
00:05:21.220 | as far as personal finance and investing,
00:05:25.280 | all of the same principles applied.
00:05:27.240 | Everything is still the same, personal finance-wise,
00:05:29.880 | even though it upended our lives
00:05:32.720 | in the most serious of ways.
00:05:34.160 | But the things that you go back to,
00:05:35.720 | okay, how do we respond?
00:05:36.840 | What do we do?
00:05:37.680 | How do we plan?
00:05:38.600 | It's the exact same thing it's always been.
00:05:40.400 | We still need the same types of insurance coverage.
00:05:43.600 | You need to make sure you have a level of spending
00:05:45.800 | that's appropriate.
00:05:47.040 | Asset allocations should match your risk tolerance.
00:05:49.700 | Nothing changes, even though, boy, the world changed.
00:05:53.420 | - I'm a pessimist by nature.
00:05:58.960 | But the pandemic is one of the few things
00:06:02.040 | that I was way too optimistic.
00:06:04.320 | I mean, it changed our lives.
00:06:07.360 | It reminded me that health is far more important than wealth.
00:06:12.320 | And it also, bringing it to the market, makes us humble.
00:06:17.320 | I mean, sure, the market is down this year.
00:06:20.960 | We're in a bear market.
00:06:22.520 | But if I had a partial crystal ball going into 2020,
00:06:26.280 | knew this pandemic was coming,
00:06:28.120 | Putin was gonna invade, complete political dysfunction,
00:06:33.120 | weather catastrophes,
00:06:35.380 | I would have thought the market would be way down.
00:06:37.400 | But the market is up since the pandemic.
00:06:39.740 | So think three years is short term.
00:06:44.540 | But certainly this year is incredibly short term.
00:06:47.060 | So think long term and yeah, be humble.
00:06:51.700 | - Thank you all.
00:06:54.500 | So this is an audience of people who care a lot
00:06:57.260 | about investing and personal finance,
00:06:59.500 | who think about those topics a lot,
00:07:02.540 | who are largely committed to Boglehead principles
00:07:06.120 | of diversification, simplification, low cost investing.
00:07:11.120 | So what might be some blind spots for this group of people,
00:07:16.300 | things that we could be doing better or in a smarter way?
00:07:22.180 | Oh, nothing.
00:07:25.580 | - That's why I was asking Nick earlier.
00:07:29.000 | Yeah, that's a trick question.
00:07:31.660 | - Well, Mike, you were just talking about
00:07:33.660 | some things that we don't talk about enough.
00:07:38.620 | - Okay, thank you for the prompt.
00:07:41.060 | Yeah, so we spend all of our time.
00:07:42.780 | Well, not all of our time,
00:07:43.780 | but a lot of time on the forum
00:07:46.580 | talking about small cap value tilting
00:07:49.120 | and exactly what's the right percent in international stocks
00:07:52.500 | and international bonds and should you own tips
00:07:54.560 | and all of these things that are not even in the top 100
00:07:58.660 | most important financial decisions you need to make.
00:08:01.160 | And that's because a lot of the most important
00:08:03.540 | financial decisions you need to make
00:08:05.400 | are kind of terrible topics to talk about.
00:08:08.620 | You know, it's you dying, you're becoming disabled,
00:08:12.420 | your spouse dying, your kids dying,
00:08:14.380 | all like horrible things, right?
00:08:15.660 | 'Cause you were talking about insurance coverage,
00:08:17.500 | we're talking about estate planning
00:08:18.900 | and they're not happy topics,
00:08:21.020 | but they're so important
00:08:22.420 | to make sure you have those boxes checked off.
00:08:24.660 | And the other reason we don't talk about them very often
00:08:26.300 | is because there's not a whole lot to say.
00:08:28.940 | Like if someone came up and asked,
00:08:31.240 | I'm 36, I'm working, do I need disability insurance?
00:08:35.160 | Yes, I mean, that's the end of the discussion.
00:08:37.720 | And so there's just, whereas we can talk forever
00:08:40.840 | about whether you could, should small cap value tilt
00:08:44.120 | because it's not a clear answer.
00:08:46.160 | That's the reason we talk about it
00:08:48.260 | because there's really strong arguments on each side
00:08:50.520 | and it's not obvious at all.
00:08:51.640 | And that's why we can go around in circles for 15 years,
00:08:54.600 | whereas we don't do that about disability insurance.
00:08:58.480 | But disability insurance is more important.
00:09:00.840 | - I'll just hop in really quick
00:09:04.980 | if we're talking about hard things,
00:09:07.620 | the topic of hard things.
00:09:08.820 | One thing that came up at a Bogleheads conference
00:09:11.540 | probably three or four years ago
00:09:13.820 | was the topic of elder care,
00:09:16.140 | caring for older adults in your lives,
00:09:19.140 | parents thinking about your own self as an older adult
00:09:22.580 | and the various issues that might accompany that.
00:09:25.900 | So I would say that that's sort of the softer dimension
00:09:30.760 | of long-term care and elder care planning
00:09:33.380 | is probably something that we don't discuss enough
00:09:35.900 | as a community.
00:09:36.860 | And I think we need to discuss all of those dimensions.
00:09:40.680 | And I would give my family's experience
00:09:43.540 | as kind of a, I think a good reminder
00:09:46.180 | of why it's not just financial.
00:09:48.380 | So I think of my parents as in a lot of ways
00:09:51.380 | came into their later senior years,
00:09:53.820 | very well equipped financially.
00:09:56.300 | They could handle long-term care expenses
00:10:00.060 | out of their own coffers
00:10:01.940 | and were able to die with funds left
00:10:05.100 | besides those which they wanted.
00:10:07.940 | And they had adult children living close by
00:10:11.540 | to help ensure that the long-term care delivery
00:10:14.660 | happened as they had envisioned.
00:10:16.340 | So we had caregivers in the house.
00:10:18.480 | So a lot of that was pretty perfect.
00:10:21.300 | I lived about two and a half minutes away.
00:10:23.780 | And so what I would say is if that's your plan
00:10:27.420 | and if you're well-situated with long-term care,
00:10:30.220 | just think through sort of the side aspects
00:10:35.220 | of that long-term care.
00:10:36.960 | Don't just dwell on the financial.
00:10:38.580 | Think about the actual delivery of the long-term care.
00:10:42.980 | Because I would say from my own family situation,
00:10:46.100 | even though it all lined up on paper, it was awful.
00:10:49.980 | Those were the worst years of my life.
00:10:53.100 | And my parents went into it thinking
00:10:56.700 | that they had everything all lined up,
00:10:58.900 | but still super hard on the family.
00:11:01.980 | So whatever you can do to kind of think through
00:11:05.460 | all of the possible contingencies on that front
00:11:09.740 | I think will go a long way.
00:11:10.860 | And one resource I would throw out on this front
00:11:13.240 | is Carolyn McClanahan, who is an MD
00:11:16.740 | and also a financial planner.
00:11:18.580 | She talks about all of this stuff in her work,
00:11:21.580 | the things that you might never think of.
00:11:23.500 | So if the plan is for the children to be involved
00:11:27.020 | in managing the house that the parents wanna stay in,
00:11:30.780 | well, they need to sign a contract
00:11:32.880 | to ensure that they're actually committed,
00:11:35.840 | that the parents aren't just thinking they're committed.
00:11:38.440 | So all that stuff I would say is a blind spot
00:11:41.140 | for a lot of us, even if we feel like
00:11:43.420 | we have everything all lined up on paper.
00:11:47.860 | - I just wanna echo the same thing.
00:11:49.540 | The investing part is incredibly simple.
00:11:52.060 | The only complication, admittedly,
00:11:54.020 | it's a big complication, are taxes.
00:11:56.420 | Boy, do you make it simple.
00:11:58.660 | I don't like talking about estate planning, that's death.
00:12:01.860 | It's not fun, but it's incredibly important.
00:12:05.500 | Long-term care, very, very difficult.
00:12:10.500 | And the information out there, whenever I write about it,
00:12:13.820 | I get a lot of hate mail 'cause the data's all over the map
00:12:16.680 | on your probability of needing long-term care.
00:12:20.380 | And by the way, it's usually lopsided.
00:12:25.180 | Don't forget, if one spouse becomes the caregiver,
00:12:28.620 | the other spouse eventually needs long-term care,
00:12:31.560 | they no longer need a house.
00:12:32.820 | They're not traveling, they're not eating out.
00:12:34.740 | They're saving a lot of money elsewhere.
00:12:37.940 | So yes, financial planning is less about investments
00:12:42.700 | and more about planning for our lives.
00:12:47.700 | We will get older, we will die.
00:12:49.560 | Did I say I'm a pessimist by nature?
00:12:51.520 | (audience laughing)
00:12:53.040 | - Okay, so now that we've stepped into some
00:12:58.040 | of those really painful topics,
00:13:00.080 | let's take a step back into some of our safe space,
00:13:03.400 | talk about investing.
00:13:05.040 | At our investing panel yesterday,
00:13:09.600 | one of the topics that came up was ESG funds,
00:13:12.900 | which elicited some very strong,
00:13:15.780 | consistently negative reactions.
00:13:18.780 | So just a very quick question to the panel here.
00:13:22.060 | Anyone own ESG funds or wanna make a case
00:13:25.900 | for why that's something that people should consider?
00:13:28.620 | (audience laughing)
00:13:32.820 | - I do not own ESG investments.
00:13:35.140 | I will say Morningstar has made a huge investment
00:13:37.980 | in the ESG space.
00:13:39.820 | We acquired a company called Sustainalytics
00:13:41.860 | that does a lot of research in ESG matters
00:13:44.180 | and have some of our team focused on ESG matters.
00:13:47.780 | I do not own ESG.
00:13:50.900 | It's not that I don't think that there are valid ways
00:13:55.020 | to ESG, but I think that there might be better uses
00:13:59.160 | of my principles or better ways to deploy my principles.
00:14:05.540 | In terms of the landscape, I do find it terribly confusing.
00:14:09.340 | In fact, I was attempting to help do these portfolio
00:14:13.020 | makeovers every year, and I was attempting to help a woman
00:14:15.500 | who did want to have an ESG portfolio sort out
00:14:19.180 | her tangle of funds that she had assembled,
00:14:21.860 | and she had about 25 different holdings
00:14:24.300 | with a portfolio of about $100,000.
00:14:26.420 | So a terribly complicated portfolio.
00:14:29.620 | And I found it really difficult to sort among
00:14:33.260 | the various ESG options.
00:14:35.700 | I think that there's a need for transparency
00:14:38.500 | to help people ESG if they want to.
00:14:40.940 | The one thing that tantalizes me in the ESG space
00:14:44.540 | is behavioral.
00:14:45.820 | I have a feeling that if people have a portfolio
00:14:49.020 | that is aligned with their values,
00:14:53.340 | that potentially they might be more likely
00:14:56.340 | to stick with that plan, and that's not nothing.
00:14:59.300 | The idea that someone, we have seen all this data
00:15:03.340 | about dollar-weighted returns.
00:15:04.780 | We know that people, a lot of times,
00:15:06.420 | don't stick around when they buy something.
00:15:09.260 | So that's the one thing.
00:15:10.460 | I'll be intrigued to see how the data unfold on that front,
00:15:14.860 | because that's the one thing that really compels me
00:15:17.620 | in the ESG space.
00:15:19.500 | If someone has that alignment, are they more likely
00:15:22.340 | to stick with the program?
00:15:23.780 | I think that that's worth watching.
00:15:28.320 | I own a business.
00:15:29.440 | Alan owns a business.
00:15:31.080 | I have control over that business because I own it.
00:15:34.520 | Alan has control over his business because he owns it.
00:15:37.800 | To me, it has always seemed just on-its-face bananas
00:15:41.960 | that the way you could best influence a company
00:15:45.360 | is to choose to not be a shareholder.
00:15:48.000 | It's backwards.
00:15:52.080 | That's what it's always seemed to me.
00:15:53.400 | You're doing exactly the opposite
00:15:54.880 | of what you want to be doing.
00:15:55.960 | You're giving up a major potential source of influence
00:16:00.020 | over this company by excluding it from your portfolio.
00:16:02.920 | So it's always seemed not just unhelpful, but detrimental.
00:16:07.920 | What I do feel differently about is,
00:16:14.040 | and so I asked this yesterday to Ben from Morningstar,
00:16:17.740 | is engine number one or other similar companies
00:16:23.720 | that have a different approach to ESG.
00:16:25.580 | They say, "We're gonna own everything.
00:16:26.940 | "It's a low-cost indexed portfolio."
00:16:29.480 | So they're gonna get similar investment returns
00:16:31.840 | to what you would get.
00:16:32.840 | And they vote the shares in a particular way.
00:16:36.880 | And maybe that way is in keeping with your values,
00:16:39.280 | maybe it's not, but I like the idea of having options.
00:16:42.220 | This fund company is gonna vote their shares this way.
00:16:44.720 | That fund company is gonna vote their shares that way.
00:16:47.260 | And they're still boring, simple index portfolios,
00:16:51.760 | but they're actually exercising the source of control
00:16:55.020 | and influence that we have.
00:16:56.600 | And to me, I'm much more optimistic
00:16:59.400 | about that version of ESG.
00:17:01.920 | Whether it's gonna be super impactful, I don't know.
00:17:05.340 | Do I still think, just like Jim said yesterday,
00:17:07.360 | there are better and more impactful ways
00:17:09.840 | to change the world, yes.
00:17:11.720 | But I'm more optimistic about that
00:17:14.920 | than the traditional version of ESG by a huge margin.
00:17:19.400 | - Okay.
00:17:20.240 | Christine, when you were saying about the makeovers
00:17:22.880 | and someone who has 25 funds,
00:17:26.100 | and I will admit to there have been periods in my life
00:17:28.740 | when I have had more than 20 funds
00:17:30.620 | for no justifiable reason.
00:17:32.380 | So I wanted to ask you about simplicity, radical simplicity
00:17:37.380 | and complexity in portfolios.
00:17:40.460 | We had a question from the audience
00:17:43.320 | about a couple who had opted for a very simple approach
00:17:47.340 | with a three fund portfolio.
00:17:49.300 | And then more recently had augmented that with I-bonds
00:17:53.140 | and laddered CDs and tips.
00:17:55.820 | And so the question was,
00:17:57.700 | so we are drifting from what was once a simple
00:18:02.300 | and easy to manage portfolio
00:18:04.380 | into something that might be safer, but more complex.
00:18:07.780 | Is it a mistake to abandon our commitment
00:18:10.900 | to simplicity in this manner?
00:18:13.100 | And I just wonder just how much of a,
00:18:16.880 | how far do you feel people should go in simplicity?
00:18:20.300 | - Right, it's a great question.
00:18:21.780 | And I often evangelize about the value of simplicity,
00:18:24.740 | but I do think specifically what this couple has done
00:18:28.540 | makes a lot of sense to me.
00:18:30.100 | So in retirement,
00:18:31.580 | as you kind of think about a retirement portfolio,
00:18:34.340 | I just like the idea of stair-stepping it by risk level.
00:18:37.740 | So you've got your liquid reserves
00:18:40.580 | that you're drawing upon on an ongoing basis.
00:18:42.900 | You've got some short-term bonds,
00:18:45.200 | which you can't ask total bond market
00:18:48.860 | just to give you your short-term bond piece.
00:18:51.260 | If you need to take some money
00:18:52.340 | out of your in-retirement portfolio,
00:18:55.700 | I think it's wise to have some short-term bonds
00:18:58.260 | as kind of next line reserves
00:19:00.840 | in case the cash is depleted in a year like 2022,
00:19:04.420 | for example, and you still need additional funds.
00:19:06.900 | And then maybe moving into intermediate term bonds,
00:19:10.460 | and you'd also want to have I-bonds
00:19:12.580 | in that portion of the portfolio.
00:19:15.080 | The other thing I would say is to me,
00:19:17.500 | it's fine for accumulators to manage their portfolios
00:19:21.620 | as kind of a unified whole.
00:19:23.980 | So as long as if someone has
00:19:26.880 | the really great low-cost index fund in their 401k,
00:19:30.540 | they can put all their funds there,
00:19:32.400 | but in other parts of the portfolio,
00:19:35.380 | they may want to hold fixed income
00:19:37.480 | where perhaps they can obtain more favorable pricing.
00:19:40.860 | So I think it's fine to sort of use
00:19:43.300 | that unified portfolio model in the accumulation years.
00:19:47.500 | In the decumulation years,
00:19:49.320 | Mike showed the value of being a little bit flexible
00:19:53.700 | about where you're pulling your assets from
00:19:57.060 | on a year-to-year basis.
00:19:58.540 | And at that point, as you move into retirement,
00:20:00.900 | I think it makes sense to internally diversify
00:20:04.540 | each of those silos across asset classes.
00:20:07.700 | You might use different asset allocations within them,
00:20:11.500 | but there may be years, for example,
00:20:14.300 | where it is a slam dunk to pull all of your allocation
00:20:18.820 | from your traditional tax-deferred IRA,
00:20:22.340 | and you'd want to make sure that that withdrawal comes from
00:20:27.340 | whatever is the right part of the portfolio for picking.
00:20:32.260 | So I do think that you can oversimplify in draw-down mode.
00:20:37.260 | And so I think, to me, the sound of the changes,
00:20:40.780 | the couple made, it seems like they're exactly
00:20:43.060 | on the right track.
00:20:44.060 | - Investing is simple, but taxes aren't,
00:20:52.900 | although I know somebody that makes it
00:20:54.460 | as simple as possible.
00:20:55.980 | So when I started investing,
00:20:59.300 | there was no Vanguard Total Stock Index Fund,
00:21:03.300 | Total International.
00:21:04.940 | And I have unrealized capital gains,
00:21:07.700 | and that creates some complexities.
00:21:10.980 | A really simple plan, by the way,
00:21:12.820 | is when somebody comes to me,
00:21:14.020 | they've just sold their business for $100 million.
00:21:18.100 | There's no tax implications.
00:21:20.260 | So generally speaking, I believe in simplicity,
00:21:23.980 | and I'm gonna sneak one other thing in on the ESG.
00:21:27.580 | I own a Chevy Volt, getting over 10 years old,
00:21:30.660 | getting over 250 miles per gallon.
00:21:33.100 | I believe in being socially responsible,
00:21:36.500 | but buy VTI and take the savings
00:21:39.780 | and donate it to whatever cause you believe in.
00:21:43.100 | - Okay, talking about the investment environment,
00:21:46.940 | a number of speakers, starting with Bill Bernstein,
00:21:50.820 | said this is a great market for accumulators to be buying,
00:21:54.620 | but it's a really tough market for people
00:21:56.540 | who are approaching or just in retirement,
00:21:59.860 | who are hit by those losses early on.
00:22:02.700 | So what are some strategies or approaches
00:22:06.180 | that people should think about
00:22:07.740 | to limit the pain of these losses
00:22:12.260 | as they go into the drawdown period?
00:22:14.820 | You wanna give that to Alan?
00:22:17.820 | - Well, I don't know how to limit the pain.
00:22:20.780 | I don't even know how not to look
00:22:22.020 | at the market 10 times a day.
00:22:23.780 | But in terms of, there's a lot of strategies
00:22:31.060 | like buy an income ladder, buy a SPIA.
00:22:35.900 | You know, cash right now is--
00:22:37.700 | - Immediate annuity just to get that--
00:22:39.460 | - Yeah, yeah, let's get the annuity out there.
00:22:42.020 | And by the way, there's a great annuity out there,
00:22:44.380 | and that is delaying social security.
00:22:46.460 | That's one annuity I very much believe in.
00:22:49.540 | As somebody who failed retirement,
00:22:51.220 | I believe in retiring slowly.
00:22:54.100 | Maybe that person with the high stress job
00:22:57.460 | that Joel pointed out, you know, hated his boss,
00:23:00.300 | but maybe he could do something that's more fun
00:23:02.340 | that, you know, brings healthcare insurance.
00:23:05.260 | And, you know, there are things like that.
00:23:07.380 | You know, the cash now might be the exception,
00:23:12.020 | might feel as good as eating that steak I ate
00:23:14.180 | a couple of nights ago, but in the long run,
00:23:16.140 | that cash is a drag.
00:23:18.260 | And, you know, we can't count on two or three years
00:23:21.100 | worth of cash getting us through the market turnaround.
00:23:25.540 | We've had teddy bears so far this year.
00:23:28.260 | I think that was Jason's term.
00:23:31.500 | And, you know, I was in Japan in 1989.
00:23:35.260 | The market today is still below that.
00:23:38.140 | Yes, I'm a pessimist.
00:23:39.820 | (audience laughing)
00:23:42.820 | - Sure, I would echo Alan's point
00:23:45.620 | about the series of incremental steps
00:23:48.260 | versus like one giant sort of leap to help make a save
00:23:53.020 | if a portfolio is looking shaky
00:23:55.420 | in the years leading up to retirement
00:23:57.140 | to explore multiple levers.
00:23:59.580 | Maybe that's working a year or two longer.
00:24:01.820 | Maybe that's having a part-time job.
00:24:04.380 | Maybe it's delaying social security.
00:24:06.300 | I think all of the levers can work together,
00:24:09.460 | that it's not one big asset allocation change, for example.
00:24:14.460 | One thing I would say is I don't think there's any shame
00:24:17.940 | in de-risking a portfolio that's overly risky,
00:24:21.140 | that's overly stacked towards stocks.
00:24:24.900 | Ideally, you would have done that in 2020 or 2021
00:24:28.180 | rather than doing it in this market.
00:24:32.100 | But I think we all have to remember,
00:24:34.620 | if you look at the 10-year return on stocks,
00:24:38.220 | still really strong.
00:24:39.380 | I think still double-digit 10-year annualized return.
00:24:43.500 | So if you've been along for that ride,
00:24:45.300 | you've had a good experience in equities,
00:24:48.100 | you didn't catch the absolute top,
00:24:51.100 | but there's no shame in de-risking a portfolio
00:24:53.980 | appropriately given your proximity to retirement.
00:24:59.740 | I'm a big believer, and I know Alan and I differ on this,
00:25:02.980 | but I'm a big believer in the bucket approach
00:25:05.540 | to retirement portfolio planning,
00:25:07.780 | mainly because I see and I hear from people
00:25:10.260 | that it really works behaviorally,
00:25:12.900 | that it keeps them on board
00:25:15.180 | with the long-term assets in their plan.
00:25:17.540 | And that's really the point is, yes,
00:25:20.900 | you want to grow and maximize the portfolio,
00:25:23.500 | but peace of mind is really important.
00:25:26.900 | So I like that idea of structuring the portfolio
00:25:30.900 | by sort of using your portfolio spending
00:25:34.180 | as kind of the yardstick to determine
00:25:36.420 | how much to drop into each of the buckets.
00:25:39.300 | And we can talk about that,
00:25:40.780 | or I talk a lot about it in my work on Morningstar.com.
00:25:47.460 | -Christine was talking about de-risking,
00:25:50.580 | making your portfolio slightly less risky.
00:25:54.900 | In my opinion, the very best post ever on the forum
00:25:58.740 | is by the anonymous Nissy Prius,
00:26:00.900 | and it is "Evaluate Your Jitters."
00:26:04.740 | Look it up if you haven't read it.
00:26:06.500 | And the principle is basically,
00:26:09.700 | so any time that the market has gone down significantly,
00:26:14.700 | take note of how you're feeling.
00:26:16.300 | And if you are really not feeling well about it,
00:26:21.180 | then it can make sense to scale back that stock allocation.
00:26:26.060 | Would it have been better to do that
00:26:27.220 | before the market went down?
00:26:28.300 | Yes, obviously, duh.
00:26:29.900 | But it still might be better than never doing it.
00:26:34.180 | But the key point, the really, really key point,
00:26:36.420 | is that if you do that now,
00:26:37.860 | you scale back that stock allocation,
00:26:40.300 | write it down, write down how you're feeling,
00:26:42.460 | write down that you made this decision.
00:26:44.260 | Because two years from now, when the market's doing great,
00:26:47.020 | and you're tempted to go back to a higher stock allocation,
00:26:50.700 | you don't wanna be bitten again.
00:26:52.500 | Make this mistake once, okay, fine, but don't make it twice.
00:26:55.740 | - So let me ask a question for all of you, I guess.
00:27:03.460 | If you were talking to someone, a neighbor,
00:27:06.940 | a young relative, someone who wants to start investing
00:27:10.740 | along with Boglehead's philosophy,
00:27:14.340 | would you suggest that person open account at Vanguard,
00:27:17.900 | or would you suggest they invest at a different platform,
00:27:21.420 | potentially using Vanguard products, or other products?
00:27:26.420 | - Yeah, I'm surprised Joel didn't mention
00:27:29.180 | our conversation last night.
00:27:30.820 | I think I gave him an earful, and by the way,
00:27:34.540 | I still have a flagship advisor who can't overcome
00:27:37.140 | some of the customer service issues at Vanguard.
00:27:40.540 | You know, on one hand, for somebody starting saving,
00:27:44.020 | by the way, I probably would recommend Vanguard,
00:27:46.140 | 'cause automating it is really important,
00:27:48.580 | and one can automate mutual funds.
00:27:51.980 | And I still believe that the Vanguard funds
00:27:55.620 | are better than Fidelity, or the Fidelity Zero,
00:28:00.180 | or other low-cost.
00:28:01.460 | I trust Vanguard more.
00:28:04.220 | So, you know, it's a tough call.
00:28:06.740 | And Schwab, by the way, I argue,
00:28:08.980 | is no longer in the investment advisory business.
00:28:11.420 | They make about 120% of their profit
00:28:16.060 | from paying people virtually nothing on cash,
00:28:20.540 | and reinvesting that cash in short-term T-bills.
00:28:23.900 | So I trust Vanguard more.
00:28:25.900 | I probably would recommend Vanguard still,
00:28:30.420 | but I am more than a little bit concerned
00:28:33.220 | that some of the philosophies of Jack Bogle
00:28:36.620 | are not as prominent as they used to be.
00:28:38.900 | - I would certainly recommend Vanguard
00:28:44.500 | to young people in my life.
00:28:46.740 | I have had a good experience with the firm.
00:28:48.660 | I also have a Schwab account.
00:28:50.340 | And I would say, from a technology standpoint,
00:28:53.720 | I don't see a big difference.
00:28:55.480 | On the other hand, I'm not a big user of either website.
00:28:59.480 | I spend as little time as possible
00:29:01.680 | interacting with my financial matters.
00:29:04.660 | I see it as one of my luxury goods,
00:29:07.300 | that I feel like things are on track,
00:29:09.200 | and I just don't have time,
00:29:11.040 | and I don't spend much time at all.
00:29:13.020 | And I would also say, from the standpoint of young people,
00:29:15.900 | generally speaking, they'll do anything
00:29:18.560 | to avoid getting on the phone with someone.
00:29:20.780 | So that is not, right? (audience laughing)
00:29:23.580 | And I'm one of those people.
00:29:25.860 | In fact, and I'm not young, but my husband,
00:29:27.900 | I'll call him, and he'll pick up his phone,
00:29:29.900 | and he'll be like, "What's wrong?
00:29:31.020 | "Why are you calling me?"
00:29:33.800 | So anyway, I don't see the customer service,
00:29:38.800 | the phone customer service,
00:29:40.380 | as being a big impediment for young folks,
00:29:42.260 | but certainly have been observing,
00:29:45.480 | there's a level of dissatisfaction,
00:29:47.420 | and that's not nothing,
00:29:48.820 | but it wouldn't deter me from recommending the firm.
00:29:51.420 | - I had this conversation recently
00:29:55.500 | with a neighbor and a good friend,
00:29:56.780 | and in both cases, I did recommend Vanguard.
00:29:59.620 | Targeted fund, it's so straightforward, it's so easy.
00:30:03.780 | Are there all of these concerns?
00:30:04.980 | Yes, absolutely.
00:30:06.100 | Is Schwab a totally fine place, or E-Trade, or Fidelity,
00:30:09.300 | or any place where you could build
00:30:10.380 | a simple three-fund ETF portfolio?
00:30:12.500 | Sure, go for it.
00:30:13.700 | But I still trust Vanguard
00:30:16.340 | more than I trust any other company.
00:30:18.140 | - Thank you, I know that's a difficult question,
00:30:21.060 | and I think you've all given really interesting
00:30:23.300 | and nuanced answers to a question
00:30:25.820 | I think a lot of people have struggled with.
00:30:28.740 | So Mike, while you're there holding the mic,
00:30:30.740 | let's talk a bit about favorite tax strategies
00:30:35.340 | or opportunities that you wanna flag for people.
00:30:39.380 | - Gosh.
00:30:40.500 | - Or not.
00:30:41.340 | - That's a challenging one,
00:30:43.980 | 'cause it varies so much
00:30:45.760 | depending on what stage of life you're in.
00:30:48.100 | - I have a specific question for you.
00:30:51.260 | Go for it.
00:30:52.220 | So we've heard a little bit about direct indexing
00:30:55.620 | during this conference,
00:30:57.900 | and Ben Johnson was talking about the tax benefits,
00:31:01.140 | but I'd like to hear Mike's thoughts
00:31:04.500 | on tax loss harvesting.
00:31:07.340 | We've been hearing a lot about that in this market.
00:31:10.740 | And so one of the criticisms
00:31:15.740 | of really aggressive tax loss harvesting
00:31:18.560 | from Michael Kitsis and his team
00:31:20.340 | is that it has the potential to lower your cost basis.
00:31:24.300 | So the benefits are not as great as are being touted
00:31:29.300 | from these direct indexing platforms.
00:31:32.220 | So I'd love to hear you talk about that.
00:31:34.220 | - Tax loss harvesting is when you sell something.
00:31:38.700 | So it's currently worth less than what you paid for it.
00:31:40.820 | It's in a taxable account, not an IRA or a 401k.
00:31:43.420 | And the idea is you sell it right now.
00:31:45.620 | So you have a capital loss,
00:31:46.820 | which is gonna save you some money on your taxes.
00:31:48.620 | And at the same time,
00:31:49.840 | you buy something that's not exactly the same thing,
00:31:52.500 | but it's gonna fill a similar role
00:31:54.340 | in your asset allocation.
00:31:55.940 | And so you haven't had to mess up your portfolio,
00:31:58.180 | but now you have some tax savings.
00:31:59.460 | That's the idea.
00:32:00.540 | And the tax savings, it comes from a few things.
00:32:03.540 | Number one is, well, so just like Christine said
00:32:07.900 | and other people have pointed out,
00:32:09.700 | when you do this, the downside is that
00:32:12.940 | this replacement investment that you purchased
00:32:15.820 | has a lower cost basis.
00:32:17.980 | So when you sell that replacement investment,
00:32:20.460 | the gain is now going to be larger.
00:32:22.220 | So someone was asking me yesterday,
00:32:24.100 | well, what's the point?
00:32:25.660 | There's three points.
00:32:27.420 | Point number one is that
00:32:29.140 | you can use up to $3,000 of net capital losses every year
00:32:35.620 | to offset ordinary income.
00:32:37.900 | And ordinary income is taxed at a higher tax rate
00:32:40.180 | than capital gains.
00:32:41.460 | So if you create later capital gain income,
00:32:45.440 | but you're offsetting ordinary income right now,
00:32:48.300 | that's advantageous
00:32:49.300 | 'cause you're offsetting higher tax rate income
00:32:51.660 | and creating lower tax rate income.
00:32:53.940 | So that's thing number one.
00:32:55.900 | Thing number two, and this is not,
00:32:59.020 | this is the least important one,
00:33:00.860 | is that there's simply some tax deferral, right?
00:33:03.500 | Even if you have to pay tax on a gain later,
00:33:06.480 | well, it's gonna be later.
00:33:07.700 | And so that extra money that you have right now
00:33:11.000 | from that tax savings,
00:33:11.940 | you can invest it and get some earnings.
00:33:14.660 | That's the least important piece.
00:33:16.220 | The third piece is that
00:33:18.940 | maybe this new thing that you bought,
00:33:21.900 | maybe you never sell it.
00:33:23.660 | Maybe you donate it to charity.
00:33:25.660 | Maybe you leave it to your kids.
00:33:27.300 | And so that lower cost basis
00:33:29.620 | that results in a higher capital gain,
00:33:31.380 | you're never paying tax on that higher capital gain anyway.
00:33:34.260 | Because if you donate it to charity,
00:33:36.060 | you get a deduction for the current market value
00:33:38.120 | and you don't have to pay tax on the gain.
00:33:39.940 | If you leave it to somebody,
00:33:40.900 | they get a step up in cost basis
00:33:42.380 | and they don't have to pay tax on the gain.
00:33:44.140 | So there's three things that the tax savings comes from.
00:33:47.140 | And there's some studies that are ambitious
00:33:52.140 | with what they estimate as the value
00:33:56.820 | of that tax deferral piece.
00:33:58.780 | Most of it, in my opinion,
00:33:59.880 | comes from that $3,000 deduction against ordinary income
00:34:04.020 | and the fact that
00:34:05.140 | maybe you never have to pay tax on this gain.
00:34:07.380 | - You get the quick tax savings,
00:34:11.500 | but then assuming the market goes up in the long run,
00:34:15.100 | you get less and less of the harvesting
00:34:18.460 | and the fees and complexities stay.
00:34:20.840 | With that said, 40 bips is not outrageous.
00:34:25.840 | And you stole my point, darn it.
00:34:28.420 | If you're gonna, in a few years,
00:34:30.860 | give it to a donor advised fund, that's wonderful.
00:34:33.740 | If you're 98 years old
00:34:35.300 | and you're not gonna be paying those fees for 40 years,
00:34:40.300 | that could work as well.
00:34:43.840 | Or if you're in a really high tax bracket this year
00:34:47.360 | in a high tax state
00:34:48.940 | and you're gonna retire a year or two later,
00:34:51.140 | then you could be in a much lower bracket.
00:34:53.860 | So there are some small cases
00:34:55.900 | where direct indexing can work.
00:34:58.260 | - Thank you.
00:35:00.700 | I think while we still have a few minutes left,
00:35:04.900 | let's give you out there a chance to ask some questions.
00:35:08.340 | So Lady Geek, would you put this or somebody else?
00:35:12.460 | Just share one mic.
00:35:13.700 | Oh, wow, responsibility.
00:35:16.640 | Very quick.
00:35:24.540 | Okay, first thing on tax loss,
00:35:26.040 | Bogleheads Wiki, tax loss harvesting.
00:35:29.240 | And again, taxes are complicated.
00:35:31.720 | If you're not sure what Mike and Christine
00:35:33.920 | are talking about, please stop and ask.
00:35:37.100 | 'Cause if you buy, if you sell something
00:35:38.880 | in your taxable account and you take a loss,
00:35:41.040 | you can buy something.
00:35:41.880 | If you're not sure what that's for, please stop.
00:35:44.560 | And it's better to do nothing than the wrong thing.
00:35:47.600 | That's my perennial thing.
00:35:49.280 | Okay, next, let me back up a bit
00:35:51.480 | about buying confidence in Vanguard.
00:35:53.800 | I've posted in the, well, let me just say
00:35:57.400 | that don't confuse owning the Vanguard fund
00:36:01.220 | with your trading platform.
00:36:02.760 | I own Vanguard funds at Fidelity.
00:36:06.080 | I've moved my mother's accounts to Fidelity
00:36:09.080 | because of, well, so as I say,
00:36:11.160 | you can own Vanguard.
00:36:12.560 | Vanguard funds are fantastic.
00:36:15.120 | But I am doing that from Fidelity right now.
00:36:17.480 | The reasons are that website errors,
00:36:21.400 | customer, lack of customer service.
00:36:23.640 | And the main thing that drove me
00:36:25.400 | to move my mom's account under POA
00:36:27.080 | was because of their transfer to the brokerage platform.
00:36:30.120 | They required a new power of attorney.
00:36:32.200 | My mom can't sign that.
00:36:33.520 | That's why I have a POA.
00:36:34.640 | So I just basically had an off and left.
00:36:37.120 | That's my situation.
00:36:38.340 | But the confidence in Vanguard personal advisor service
00:36:41.280 | is different.
00:36:42.560 | So if people have confidence in the people
00:36:45.080 | who are offering the service, that's fine.
00:36:47.240 | I just wanna make sure there's a differentiation
00:36:49.200 | between the website issues.
00:36:52.680 | I say you can find Vanguard.
00:36:54.680 | So it comes to the Fisher Price UI design.
00:36:57.920 | That's our long running thread on their website.
00:37:01.040 | And I express my opinion in there.
00:37:04.440 | But I say, please don't confuse their service
00:37:07.000 | with the website and their phone support.
00:37:09.600 | So, okay.
00:37:10.420 | - Excellent point.
00:37:11.260 | - Wanna get some of your thoughts on longevity.
00:37:15.680 | Financial planners and demographers
00:37:18.600 | are telling young folks like me,
00:37:21.220 | anticipate still being alive when you're close to 100,
00:37:24.800 | 95, 100.
00:37:26.240 | And even others are saying,
00:37:28.440 | there may be advances in nutrition,
00:37:31.220 | in endocrinology and medicine
00:37:33.440 | that may have us living even longer
00:37:36.680 | as we advance in the coming decades with technology.
00:37:40.000 | So any thoughts on how that might affect asset allocation
00:37:44.400 | or in the case of target date funds,
00:37:46.640 | setting your target date, any other implications?
00:37:50.000 | - Well, I suppose if you are forecasting a very long life,
00:37:57.000 | you'd want to have more in growth assets.
00:37:59.980 | On the other hand, bonds are finally looking
00:38:03.520 | like a halfway compelling thing.
00:38:06.860 | One broader point I would make is just how I think
00:38:10.500 | the traditional concept of retirement in our mid 60s
00:38:14.820 | is pretty flawed from a lot of standpoints financially,
00:38:18.940 | there's that dimension for sure.
00:38:21.060 | But also, it's like how much more data do we need to see
00:38:25.180 | to show that engagement with others, physical activity,
00:38:30.180 | all of those things confer wellness and happiness
00:38:35.500 | later in life.
00:38:36.660 | And how do many of us get those things?
00:38:39.220 | We get them through working.
00:38:40.720 | So I wish, especially younger people
00:38:44.180 | would be less kind of one dimensional about retirement,
00:38:49.100 | that they'd be thinking about,
00:38:50.580 | well, maybe I transfer to something
00:38:53.240 | that's less remunerative,
00:38:54.780 | but more rewarding later in life,
00:38:57.260 | just to keep active.
00:38:58.460 | And there's also a financial side benefit of that as well.
00:39:02.300 | So that's the main way I'd like to see people address
00:39:05.860 | concerns about longevity.
00:39:07.220 | But I would also say one thing I think a lot about
00:39:10.860 | is how health and longevity are not at all
00:39:15.020 | equally distributed in our society,
00:39:17.260 | it very much aligns with wealth,
00:39:19.940 | unfortunately, in my opinion.
00:39:21.500 | And so I always exhort wealthy
00:39:24.540 | or certainly people with investment assets
00:39:27.240 | to push toward the further end
00:39:30.260 | when they're thinking about longevity,
00:39:31.780 | because you see the data
00:39:33.020 | and there's a very clear correlation.
00:39:35.340 | If you have assets,
00:39:36.620 | you're probably going to be more toward
00:39:39.140 | the longer lived side of the actuarial tables.
00:39:43.140 | - We talk about safe spin rates.
00:39:50.060 | I guess one of the good things about the pandemic
00:39:52.240 | is life expectancy is shortened.
00:39:54.440 | But we talk about a 90% safe spin rate,
00:40:00.440 | and especially for younger people.
00:40:02.980 | If you look at the history of governments,
00:40:04.740 | Bill Bernstein educated me on this,
00:40:07.180 | I'm not 90% sure the US government's
00:40:09.380 | going to survive that long.
00:40:12.060 | Mike, your chart on social security
00:40:21.060 | with that two by two grid,
00:40:24.060 | the biggest predictor of life expectancy is wealth,
00:40:27.900 | especially for men, by the way,
00:40:30.180 | because wealthy people are better educated,
00:40:32.080 | take better care of themselves, et cetera.
00:40:35.000 | So I would plan on a very long life
00:40:38.060 | if you can stay aggressively invested.
00:40:42.080 | And the last piece I wrote for Money Magazine
00:40:44.500 | was the 2009 financial crisis,
00:40:47.220 | write down how you feel now and pull it out
00:40:50.000 | the next time stocks recover and you suddenly feel brave.
00:40:53.680 | So stick to an asset allocation,
00:40:56.600 | go for the long run,
00:40:58.280 | try to do what I can't do,
00:41:00.640 | ignore what the market's doing every day
00:41:02.720 | or every 10 minutes.
00:41:04.020 | - I don't think I have anything to add particularly.
00:41:09.360 | Sorry.
00:41:10.200 | - Thank you.
00:41:11.020 | - My question is,
00:41:14.760 | obviously there's the difficult things to talk about
00:41:16.800 | with estate planning and some of those topics
00:41:19.840 | are just not really a topic of conversation amongst families.
00:41:24.380 | For those families that have businesses
00:41:26.240 | that need to be passed down to their children or whatnot,
00:41:29.260 | what are your guys' strategies
00:41:31.440 | in speaking about these things
00:41:33.440 | as I'm sure the ones that are owning that business
00:41:36.880 | or owning their portfolio,
00:41:37.960 | they don't think that time is there
00:41:40.840 | for them to do those things.
00:41:42.520 | So what are your guys' strategies
00:41:44.200 | to account and handle those conversations?
00:41:47.600 | - Okay, so we're talking strategies for the conversations,
00:41:51.440 | the interpersonal strategies rather than--
00:41:53.080 | - Right. - Okay.
00:41:54.040 | - Right.
00:41:55.000 | - Christine.
00:41:56.280 | - Sorry.
00:41:57.120 | (audience laughing)
00:41:59.760 | Yeah, no.
00:42:00.600 | - It's not a fun thing to do,
00:42:03.720 | but we just started and not as early as I should have
00:42:07.620 | sharing our financials with our son.
00:42:09.520 | We only have one son so that he understands.
00:42:13.920 | If he had any inclination in taking over my business,
00:42:17.960 | we would work on that,
00:42:19.000 | but my exit strategy is to eventually shut it down.
00:42:24.600 | I think there's some difficult conversations.
00:42:27.240 | We haven't had this yet,
00:42:28.720 | but if I start having cognitive impairment,
00:42:33.840 | when does he need to start taking things over?
00:42:36.800 | And will I resist it?
00:42:38.860 | Those are very difficult conversations to have.
00:42:42.760 | - I would also throw out one resource
00:42:48.320 | in the realm of thinking about your finances as you age.
00:42:54.200 | Cameron Holston wrote a really great book.
00:42:56.480 | I think it's called "Mom and Dad,
00:42:57.520 | "We Need to Talk About Your Money" or something like that.
00:42:59.760 | It's written from the standpoint of someone
00:43:01.760 | who is in her 30s or 40s and was thrust into the role
00:43:05.380 | of kind of the main decision maker for her mother.
00:43:08.400 | But it's very well done and includes a lot of concrete ideas
00:43:12.840 | for managing these issues.
00:43:15.160 | And Jeff and I had a great conversation with Cameron.
00:43:18.360 | So I would recommend that book.
00:43:20.100 | And I think she's also got a website.
00:43:23.440 | Sorry, that's exactly what I was thinking of
00:43:25.520 | when I handed it to you.
00:43:26.560 | Sorry about that.
00:43:27.400 | Yes, it's an excellent long view episode.
00:43:29.080 | It's recent within the last few weeks.
00:43:30.840 | Yeah, it's super good.
00:43:31.940 | - Great, thanks as always for sharing.
00:43:35.260 | So I'm one of the organizers
00:43:36.920 | for the New York City Bogleheads chapter
00:43:38.720 | as well as one of the Life Stage chapters.
00:43:41.240 | In speaking with folks here,
00:43:42.440 | we thought a good future meeting topic
00:43:44.560 | would be couples and personal finance.
00:43:47.440 | Are there any top tips you have for couples
00:43:50.000 | and any specific authors you like on the topic?
00:43:52.860 | - As far as my spouse and I, we've been pretty lucky.
00:44:02.080 | We've been mostly on the same page.
00:44:03.880 | It's not the case where either one of us is the big spender
00:44:06.100 | and the other one isn't and there's been any conflict.
00:44:08.800 | I think one thing that is something
00:44:13.760 | that I don't necessarily wanna say that we struggle with it,
00:44:16.320 | but clearly of the two of us,
00:44:18.600 | you might guess who is more involved in the finances.
00:44:21.200 | But we do, every month, sit down,
00:44:25.760 | got a spreadsheet, obviously,
00:44:27.460 | and it shows us. (audience laughing)
00:44:30.840 | And we go over it.
00:44:31.860 | And it's not the portfolio stuff
00:44:33.840 | 'cause that doesn't need to be looked at every month,
00:44:35.880 | but okay, let's talk about spending.
00:44:38.040 | Let's talk about just where we are
00:44:40.080 | and whether anything needs to be adjusted.
00:44:41.720 | So trying to get the other person involved
00:44:44.560 | and making it as easy for them as possible,
00:44:46.880 | I think is helpful.
00:44:47.720 | So that they don't have to do any of the analysis.
00:44:50.120 | You're just showing them, okay, here's where we are.
00:44:52.620 | - I have a thought on that, too.
00:44:55.920 | One thought is, and I think this is the case
00:44:58.440 | with a lot of couples, one spouse is simply not into it,
00:45:02.400 | will never be into it.
00:45:04.160 | So I would say, do not spend a lot of time
00:45:08.080 | trying to get them engaged with books.
00:45:10.200 | And I love that there are couples who are here
00:45:13.040 | because the other spouse is not that into it,
00:45:14.840 | and that's great.
00:45:15.720 | But in some cases, I mean,
00:45:16.680 | you've got a spouse who is truly not into it.
00:45:18.960 | The best thing you can do in that case
00:45:20.720 | is pre-identify an appropriate financial advisor,
00:45:25.400 | make sure that that person knows the person.
00:45:28.640 | Rick Ferry once made the great comment
00:45:30.520 | that he had had so many guys come up to him and say,
00:45:33.840 | "I told my spouse that if ever something happens with me,
00:45:37.740 | "to check in with you."
00:45:39.880 | And Rick said, because they hadn't made the introduction
00:45:43.680 | to Rick, he hadn't heard from these people.
00:45:46.520 | So go through that step of introducing your spouse
00:45:49.800 | once you've found someone who ticks the right boxes for you,
00:45:54.000 | get that introduction in place.
00:45:56.880 | You may have to pay for a meeting, you may not,
00:45:59.080 | but identify the right type of person.
00:46:01.760 | And then if your spouse isn't comfortable
00:46:04.080 | on sort of an emotional interpersonal level,
00:46:07.520 | that's great feedback, move on to the next person.
00:46:10.660 | So I guess my bias would be if someone's just not into it,
00:46:15.360 | yes, leave the good details,
00:46:17.760 | leave what they need to hand it off to someone else,
00:46:21.760 | but don't overdo the education
00:46:23.520 | if it's just gonna waste everyone's time.
00:46:25.800 | - I won't even take on a client if they're married
00:46:30.600 | and the spouse isn't going to participate
00:46:33.220 | 'cause it's important that both be involved,
00:46:35.640 | understand the game plan.
00:46:37.640 | And my strategy when I kick the bucket,
00:46:40.680 | my wife Patty knows to call Mike Piper.
00:46:43.760 | (audience laughing)
00:46:46.760 | - I was gonna say the other advantage
00:46:50.880 | of making that connection with an advisor,
00:46:55.120 | could be a Vanguard type service,
00:46:56.600 | it could be a local individual,
00:46:58.960 | is if you put it on your calendar,
00:47:00.720 | okay, we're gonna have this conversation next Thursday
00:47:03.680 | at 11 with this advisor
00:47:05.540 | and I will show you some spreadsheets in advance
00:47:08.040 | so you know the things I'm talking, I'm looking at,
00:47:11.500 | but let's have a conversation in advance
00:47:13.840 | about what are some of the important questions
00:47:16.580 | that we wanna take up with this person.
00:47:19.360 | And it's actually very liberating
00:47:21.600 | because then you're not the expert,
00:47:25.000 | quasi expert in this conversation with your spouse,
00:47:28.840 | you're bringing in somebody else as a neutral party
00:47:33.120 | and you are also laying the groundwork
00:47:36.000 | for if you're not around your spouse
00:47:38.680 | that has somebody already that they have a connection to
00:47:42.240 | that they can take things up with.
00:47:44.520 | - Hello, my question is regarding
00:47:49.720 | tax loss harvesting strategy.
00:47:53.060 | I have a simple three-fold portfolio across the board,
00:47:59.160 | retirement, HSA and my brokerage account.
00:48:03.420 | I was thinking to apply the strategy
00:48:06.760 | in my brokerage account,
00:48:08.360 | will it trigger a wash rule
00:48:11.120 | if I have the same funds in retirement or HSA?
00:48:15.800 | - It can, if you buy them in those accounts
00:48:20.480 | during the wash sale period,
00:48:21.720 | so 30 days in either direction, yes is the answer.
00:48:25.160 | Similarly, if your spouse does for what it's worth.
00:48:28.160 | - And if I already have them 30 days prior for years,
00:48:32.720 | will it still--
00:48:34.200 | - Just owning it, not a problem,
00:48:35.960 | it's only if purchase transactions happen
00:48:38.040 | during those windows.
00:48:39.320 | - Thank you.
00:48:40.160 | - Thank you all for the excellent questions.
00:48:44.780 | We're gonna wrap it up now.
00:48:46.120 | Thank you so much, Christine, Mike and Alan.
00:48:49.000 | (audience applauding)
00:48:52.160 | [BLANK_AUDIO]