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♪ Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to lead a rich and meaningful life now, while building a plan for financial freedom in 10 years or less. My name is Joshua Sheets. Today is Friday, October 13, 2023.

And on this Friday, as we do on every Friday, in which I can arrange the microphone, we record a live Q&A. Call in, talk about anything you want. ♪ Each and every Friday here at Radical Personal Finance, we have an internet connection in front of a microphone and plug all the wires together.

We record a live Friday Q&A show. Works just like call-and-talk radio. Call in, ask, talk about anything you want. Ask any question you want. Bring up any topic you want. It is your chance to set the agenda. If you would like to gain access to one of these Friday Q&A shows, you can do that by becoming a patron of the show at patreon.com/radicalpersonalfinance.

patreon.com/radicalpersonalfinance and that will gain access for you to one of these Friday Q&A shows. I do that to help limit the flow of callers to a manageable amount. Usually we have somewhere between five and ten different callers and it works out well. Today we begin with Adele in Texas.

Adele, welcome to the show. How can I serve you today? Hi, Joshua. Thanks for having me. My pleasure. I bought your international skate plan. I bought your international skate plan. Of course, it's excellent. I'm working on level two right now. Great. The course has raised some questions for me, mainly about citizenship and residency.

If you don't mind, I'd like to give you a little bit of background and then ask you a couple questions. Sure. First of all, I'm a Canadian citizen. I'm married to an American. We're both in our very early 50s. We would like to retire within the next year. On the last part.

My husband has an adult daughter from a previous marriage. Last seven years. I make it back to Canada twice a year to visit family and friends. I have a couple of Canadian bank accounts, but no other ties to Canada. My mother, my father, my sibling have all passed, so they are no dependent for me and really no one to look after back in Canada.

With every passing year, I become more disenchanted with the situation in Canada. More oppression, higher cost of living. I can't believe I'm saying this, but I doubt I would ever move back. This is my question. After living in the States for the last 10 years, I'm wondering if I should become a US citizen.

There's downsides. I'm trying to think of the upsides. For me, the upsides are that I have a business in the US and so does my husband who's in real estate. It's my impression that citizenship may provide some security that residency doesn't because I have to renew my residency every decade.

One is an uninterrupted income. This might just be an assumption. It's my sense that we can continue to operate in the United States, make US dollars, and live abroad. I don't know that if we are earning our US dollars in Idaho, would we still be taxed because that's American earned income, even though we're living abroad.

Another one is -- I guess I should break it down into some manageable questions, but freedom. I like to travel. This is probably the big push for me is that it's my understanding if I'm out of the country more than six months of the year, I lose my residency status.

My goal is to be able to travel frequently and a lot and not be encumbered by these rules. Okay. That's the benefits to me, the big benefits of getting citizenship. Also, if my husband passes away, he's American, and there's no sign of that happening. But I've always felt a little insecure, like would I be able to continue to live in the US?

What if they didn't renew my residency? We have a home here. We have pets. We have -- you know, he has pension and Social Security benefits, and we have assets here. So I just feel like my -- it would be more tenuous if he were to pass away, and I weren't a citizen.

So those are -- those are I guess are my big concerns right now. But becoming a citizen means taxation for the rest of my life. And, you know, I don't really like that idea. I mean, right now we both have to file taxes together. But just if he were to pass away and I decided I didn't want to live in the US anymore, now I'm still filing a tax return for the rest of my life.

So are there any other downsides you can think of? Let me ask the question, and you just started to lead into it. There are many people around the world who would dearly love to be US citizens. Why would you not want to be a US citizen? Yeah, I think for me it's a big thing is the tax thing.

And it's really just -- I mean, not like I'm expecting him to pass away, but I really don't like the idea of having to file a tax return for the rest of my life if I chose not to live in the US. We are like currently pursuing residency in Mexico, part-time only at the moment.

But maybe one day we might want to be full-time. You know, anyway. So at the moment you don't have any clear plans or any strong dreams, you and he, to live outside the United States. But you do enjoy traveling abroad, but you don't have any plans to move abroad.

Is that right? Not at this time. But I should say he is pursuing his Greek citizenship through his mother, who was born in Athens. We've always enjoyed Europe. Great. But we don't have any plans to move to Europe at this point. Right. And at the beginning of your call, the connection wasn't great.

It may be on my end, but I didn't want to mess it up just in case in the call. What is the nature of your business or income? So he currently is employed, and he also gets income from rental properties. I am self-employed with an escort in Idaho. I work online as a health coach, and I've been in business since 2018 here.

Okay. And about just Ballpark, what is your household income? And Ballpark, what is your current net worth? Our current net worth is about $700,000, and the Ballpark -- my business hasn't done great this year. So I would say it has fluctuated with his income between $200,000 and $280,000 a year.

Okay. So all of the benefits that you mentioned of becoming a U.S. citizen are true. While you are a long-term resident of the United States, you don't have the same security of being able to stay in the United States forever, no matter what, as you would have if you were a citizen.

And of particular import is what you said about being gone a lot, is that if you wanted to maintain the United States as your home forever, that was your clear plan, but you also wanted to go and travel abroad continually for the next five years, you would have probably a problem with your residency visa and your ability to renew it, because there are not insignificant physical presence requirements of you in the United States.

It's not as clear-cut as the Canadian physical presence requirements are for people with a Canadian residence permit, but there are physical presence requirements. Whereas if you were a citizen, you could acquire your citizenship, you could move abroad for 20 years, and you don't even need to keep anything current, you don't even need to do anything.

If you want to prove I'm a citizen, when you come back, get yourself back to the border, then by law you are required to be allowed in. And so that, for many people, can be a significant factor, and that does affect quite a lot of people. Where I've seen this the most is, you know, I worked with a client of mine one time who was from Brazil, and his mother had a Brazilian residency visa, and she had moved abroad for a number of years and then wanted to move back to the United States.

And so she had a visa, and yet just when she left, she just left, and then in her case she was able to go back, but that's where you don't always have that security, is that if you're a resident, you always have to go through some formalities to maintain that permission, whereas a citizen does not have that.

And it sounds to me like that would be a very valuable piece of mind. I also think that many people underappreciate the value of U.S. citizenship as an incredible plan B, especially in the internationalization space. As I have wrestled with this myself over the years, wrestling with the idea of, "Would I renounce my citizenship?

Could I? Would I? Should I?" etc. Where I came to more confidence in the fact that I probably will never renounce my citizenship was when I realized how much time and money I was spending wandering around the world, putting in place all these other things. And basically every other flag that I have, while I've worked hard to put in place some of the best ones, and I've spent a lot of money and a lot of time to do it, they all pale in comparison compared to the value of my American flags, of all the things that I have.

The United States has so many benefits going for it. Everything from just the fact that if I'm an American citizen, I have the right legally to work in the United States. It's basically impossible for me to consider, unless I were disabled and unable to work, or incarcerated, or something like that.

It's basically impossible for me to consider being impoverished. And that is a tremendous thing, to know that I could access the U.S. job market with no problem and be able to support my family. What an incredible foundation for my financial life and my confidence. Every other aspect of it, the food security of the United States, the agricultural productivity, the general diversity of the society, the fact that there are so many corners where I can go and I can fit in, and I can find my people, and I can live a quiet and happy and safe and peaceful life, etc.

The United States is the world's greatest plan B. If there were one nation, only one nation, that I could spend time in and be in for the rest of my life, it would be the United States. To me, there's no question about that. And so, as I've looked at that, I've realized, "Well, if I'm going to spend thousands of dollars each year to maintain this other residency, why would I not be willing to maintain the United States stuff as a great backup plan, even if it is a hassle?" Yes, it's a hassle for me to fill out a tax return every year.

Of course it's a hassle. It's a hassle for me to maintain all the data, etc. Of course it's a hassle. But why would I not be willing to do that? And you mentioned the taxation issue. The taxation issue is true, but it is really only true for those who have very high levels of income, and that income is the kind of income that can't most effectively...

It's the kind of income that can be done from any marketplace. So, if you have a household income of $200,000 or $300,000 and you want to live completely income tax-free, you can do that easily with a household income of a few hundred thousand dollars with the foreign earned income exclusion.

It's easy to do that. And beyond that, you can cut your tax rates massively, just even far beyond that. Now, on the other hand, if you're making, say, $10 million a year, and that $10 million a year is something that's generated with earned income, and it's something that you can easily do from anywhere in the world, now all of a sudden writing a check every year for a couple million dollars to a country that you don't particularly feel all that enthusiastic about, to me that's a much bigger ask.

Now it becomes much more probable that you would want to move abroad-- sorry, excuse me, that you would want to lower your income. And similarly with investments, since you cannot eliminate your investment taxes by moving outside of the United States for U.S. citizens, if you had substantial investment income and that investment income couldn't be sheltered using some of the other systems that are out there, then certainly you would consider not being a U.S.

citizen. But with what you've described, with about a $700,000 net worth, and the nature of the income that you described, with a W-2 employee plus rental income-- your taxation on the rental income doesn't change by being abroad-- the W-2 employee, you could change some income taxes for your husband, depending on what he could negotiate with his company.

You could change taxes, but you're not-- unless you saw your income going to a million dollars a year, to me this doesn't seem like a big concern. I also don't think that any of this is permanent. So if you wanted to become a U.S. citizen, and you became a U.S.

citizen, and then five years from now you chose to renounce your U.S. citizenship, you would have slightly more hassle-- I'm thinking for a moment-- no, you wouldn't have any more hassle because permanent residents are still subject to the exit taxes. So it basically would be the same. So in your situation, from what you're describing to me, I would see many more benefits to your being a U.S.

citizen rather than significant downsides. And then if the downsides approached, you're not stuck. You would have all the same exit possibilities that a U.S. citizen would have, and more. So let's fast forward. Let's say it's five years in the future. Your business has taken off massively, and you just get tired of the paperwork.

And now you and your husband are Greek citizens, you're Canadian citizens, you're American citizens, and you've set up a beautiful little house wherever you happen to want to be. And you're living in a tax haven, or you're doing something that's a very tax-efficient lifestyle, and you decide, "We're done with it." Well, in that situation, you could just easily renounce your citizenship.

And by the way, I would say you probably could go either way. So in my thinking--and I've had a very hard time verifying some of this legally, because I haven't spent a lot of money for lawyers on this, and my ability to do legal research is limited-- but I've always thought of it basically like this.

First of all, the benefit of your not being a U.S. citizen-- to flip around to the other perspective and make sure you understand it clearly-- your benefit of your not being a U.S. citizen from a tax perspective is that you and your husband could have a business together. He could maintain his citizenship.

You, being a Canadian citizen, could do business in a tax haven, and all of your income for you as a non-citizen could be structured to be tax-free. And as the spouse of a non-U.S. citizen person, you have an unlimited ability to transfer your money between the two of you.

And so that structure, with one spouse being a U.S. citizen and one spouse not being a U.S. citizen, can be simultaneously a fantastic tax structure if there's trust and confidence and you're not getting divorced, while also giving you easily the ability to access the United States in the future if you wanted to, because he could always apply for you for a spousal visa, and you could move to the United States and again enroll in the U.S.

tax system. So that's always how I've thought about it, is that if I renounced my citizenship at some point, I would be the one who would do it. My wife would keep hers, my children would keep theirs, and now I can earn as much money as I want, my family can have all their things covered, but they have the choice to choose in the future.

But I just don't see that as, unless there's something that you would expect to change with your own situation, I don't see that as being of primary importance, and I don't see any of this as irrevocable. So as far as I can tell, and this question bugged me for years, as far as I can tell, there's no law that would say that if you became a citizen, and then you renounced your citizenship, and then five years later you wanted to apply for a spousal visa, there's no law in place that would say that you couldn't apply for a spousal visa and go through the whole process again.

I don't know if there's discrimination, I would guess there probably is some discrimination for that kind of situation. - Yes, I would tell. - But I can't find any law that would say that that can't be done. And if anyone knows differently, just let me know. So I guess the point is that from what you described, unless there's some reason why you think your financial situation would change and justify it, I think having full and unfettered access to the United States as a world-class backup plan, and also the fact that it's your home, and having that security for you if your husband did die or something like that, to me sounds like worth having.

- I appreciate that, Joshua. I think one of my values is freedom, so the idea of just being beholden for taxes for the rest of my life, but you make it an option to be able to renounce, although I hear it's getting harder to renounce. They change the fee from $1,000 to $5,000, and it's getting harder, but then it may get harder again in the future.

But right now, it feels like the best course of action to get citizenship, pros and cons to everything. - There are, and it's an infuriating decision. And I have many times been jealous of people like Canadians because it feels that the whole world of getting U.S. citizenship or renouncing U.S.

citizenship feels like such an all-encompassing decision. And it's like, why should a country have this much control over you? Why can't you just say, "I really value this country and this connection," and then make my choice based upon what the country has to offer to me at that particular time?

But I can't see any hope of that changing within my lifetime. - Do you have time for a quick question about the foreign income? Go ahead. - So I work remotely and entirely online, so I can work anywhere in the world. But if I am registered as an S-Corp, and I'm based in the LSU, Idaho, and I'm earning this income, if at the point where we're no longer living in the United States, would that qualify for the exemption?

Or do I still have to pay because I'm still earning dollars in the U.S. technically? - So a lawyer would always say it's complicated, because it is, because there's all kinds of connections as far as what kind of work are you doing, etc. But because of the way the foreign earned income exclusion is structured, it's much, much simpler than any other country's tests.

For example, it doesn't matter where you sell your products. So you could have all of your customers could be in the United States, and that would be no problem. The foreign earned income exclusion is based upon where--so there's two tests. So number one, it's that your tax home must be in a foreign country.

That word "tax home," what does that mean? Well, basically, as best I can tell, a tax home is your main place of business or employment or where you conduct your work. And so that's the fuzzy one, but as far as I can tell, there's not much testing on that.

And then when you get to the foreign earned income exclusion, how you qualify, there's two tests. There's the bona fide residence test, and then there's the physical presence test. So let's just keep it simple and say that you qualify for the physical presence test. And let's pretend you spend zero days inside the United States.

Well, your qualification is easy and automatic in that circumstance. So now you can exempt your first $120,000 from the taxes. The only wrinkle comes is that's only for your income taxes. So you could have your Idaho corporation, and that Idaho corporation will pay you your salary. But because you yourself qualify for the foreign earned income exclusion, your Idaho salary is exempt from taxation because you're under the foreign earned income exclusion.

It's excluded from taxation. It doesn't matter where your customers are. It doesn't matter where your clients are. It doesn't matter where even your business is. It's you yourself are abroad. That wouldn't be the case for things like dividends. So this is for earned income only. So if you had a lot of dividends or royalties or some other form of income, that is not affected by the foreign earned income exclusion.

Now, the second component of it involves your wage taxes, your self-employment taxes or your employment taxes. And that for most people at the levels that we're talking about is usually a bigger factor. Your income taxes, your federal income taxes on $120,000 of income are generally pretty modest if you have any deductions or exclusions whatsoever.

It's just pretty modest for many people. Not if you don't have children or not if you have other income sources, but there's so much that you can be done. So at that level of income, it's actually your employment taxes that become a bigger deal. So on $100,000, it's 15.3%.

So $15,300 on $100,000. Now, you can get rid of that by then putting in place a foreign corporation. And so the normal structure is that you would have a foreign corporation that you own, and then your foreign corporation would own in the United States a single-member LLC. And for the IRS, a single-member LLC is a disregarded entity.

It doesn't exist from a tax perspective, but it still allows you to run all your business through that entity in the United States. And then you yourself are an employee of the foreign corporation. So that's a simple structure that works well, but it does add cost and complexity. You have to file some extra tax returns every year, and you have several thousand dollars of just maintenance costs of maintaining the structure.

And you lose out on your contributions to the Social Security system. So that also in many cases is not a great idea because you might want to collect those credits, and they may be very helpful for you in your overall planning, especially if you yourself came in late into that system.

Then you might want to accumulate those credits so that you have full coverage in the Medicare system and that you have a Social Security benefit that can help protect for your financial security. But did I answer your question? I think I did. You did, yeah. So obviously there's a tipping point because on $100,000, $15,000, it could be a wash with the extra taxation and filing and accounting help, and then you lose out on Medicare and all that stuff.

So yeah, I think there'd be a tipping point. I need – it sounds like I need a tax accountant for this type of thing when the time comes. I guess if I had to say what I have learned over the years, I have been a very enthusiastic tax researcher.

I have enjoyed doing everything I can to get taxes to zero, et cetera. Over the years, I've realized that I just don't think it's wise for anybody to put taxes as a primary reason for doing anything. If you move from a place that you love where you pay high taxes and you move to a place that you hate just so you can pay zero taxes, that is not a recipe for success, especially when we're talking about income taxes.

Income taxes in the United States are generally low for people who are low and modest income earners. If you're a high income earner, then income taxes are high. But then you have to ask yourself the question, did I get rich and start making a high income so that I could make all my decisions about taxes, or do I want the freedom to live how and where I want?

I think it's ironic that a lot of people who are the most enthusiastic – or excuse me, the most vocal pursuers of freedom, of saying, "I want to live free, I want to live free," et cetera, often wind up having their decision choices made by a dogged pursuit of zero taxes or something like that.

It doesn't seem really free to me. So I look at taxes as an important secondary criteria. It's primarily best to think about how and where do I want to live, and then let me be aware of the tax system and ask myself, would I rather make certain trade-offs based upon this tax jurisdiction or that tax jurisdiction, et cetera?

Are there low tax jurisdictions that are attractive to me? Can I structure my affairs in a way that without too much frustration, I live a relatively low tax lifestyle? And I think that there are many cases in which it can be done. So taxes are a very important secondary consideration, or maybe like a lower tier primary, but I don't think they should in any way ever be the primary consideration that drives your life decisions.

And if they are, then I think you wind up being unhappy with that after a few years. I 100% agree. I was just wondering if there's any other drawbacks to becoming a U.S. citizen that I'm missing other than the fact that I could be taxed for the rest of my life unless I went out.

But you didn't bring any other drawbacks up. So I appreciate your analysis of the situation very much, and I know what to do now. So thank you for your time, Joshua. My pleasure. The other drawbacks that I didn't mention there or the things that I think about is, number one, I worry about conscription a lot.

That's a frustration, but that probably is not a concern for you at this point in time. I worry about conscription for my children, things like that. That was a big motivator for me of going abroad. Legal, there are some other things that are important. Your business opportunities can be constrained in certain markets based upon being an American citizen.

International banking becomes very complicated if you are an American citizen. If you are one who wants to have access to the world's best banking system outside of the United States, it's really nice not to be a U.S. person. However, you already are a U.S. person as a permanent resident.

And so for you, I'm not mentioning that a lot. And if somebody doesn't like the United States, so they don't want to see themselves living there, then I think that those are good reasons not to set up a permanent relationship. In your situation, after listening to you and the factors that you said, to me it seems like being a U.S.

citizen is probably a good idea. But there have been several other times when in almost an exact conversation like this, I've given the opposite advice. But for you, it does seem like a good thing. So good luck to you. I hope it works out. And then back it up with the Greek one as soon as you're able to get that done as well.

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Don't lose out on your chance to get a Maverick X3. Visit Del Amo Motorsports in Redondo Beach and get yours. Offer in soon. See dealer for details. Nick in New York. Nick, welcome to the show. How can I serve you today? Hi, Joshua. I have a question regarding stocks versus bonds.

In the past, in past episodes, you've said how owners make more money than lenders. And there is a fraction of Twitter of the bowtie variety that I believe you're familiar with that seems to be advocating now 20 to 30 year bonds at 4 or 5% as the ideal, let's say, at the moment vehicle.

And while I do understand if someone is already, let's say, at the fire setting where they have 25 times their yearly needs, you can lock that in 20 years and then benefit from the current interest rates. I don't really know how this applies to someone in the building wealth phase.

So what I'm essentially asking is for someone still building, is the traditional DCA advice into stock market, is it applicable today or have these very large interest rates changed the calculus that we're supposed to be following? I wish I was smart enough to answer that. Honestly, I wish I were.

I never feel dumber than when I listen to smart, persuasive people talk about investing and investing advice because it always just makes me feel like everyone else knows more than I do. Everyone else has more insight, better history, experience, etc. And I just, it often makes me feel dumb.

And so the best I can do for you is do what I do for myself, which is try to say, number one, I should do what I understand and I should try to create an argument for myself and try to create a fairly simple and focused approach to answer, so to know why I'm doing what I'm doing.

So let me lay out how I think about it because I'm not a good prognosticator. I don't have any experience on Wall Street. I don't have any particularly unique investment insight. And so I'm not that smart, but I think this approach makes sense. Number one, the most important thing is to have an investment strategy that you yourself understand and that you yourself are committed to.

And so if you have that, then you can gain fully and reap the rewards of your investment strategy. When I was a young green financial advisor, I was very enthusiastic about stocks and mutual funds and I'd read all my favorite books and I couldn't understand why anybody wouldn't want to invest in the stock market.

And as I have grown older, I have interacted with many people who didn't want to invest in the stock market because they said, "I don't trust the stock market," things like that. And I no longer make fun of those people. I don't criticize them. I don't say that they're wrong.

I encourage them to invest into something that they know and feel confident in. Because stocks are not the only investment. T-bonds are not, treasuries are not the only investment. And the most important thing is that you invest into something that you know and are confident in. Many people have gotten rich investing in the weirdest things that you and I would never be involved in, but they knew it and they were interested in it and it worked for them.

So if there is a strategy that you know well and are confident in and believe in, that's the strategy for you. In the same way that I think just about any diet plan can help somebody to lose weight, I think just about any investment plan can help somebody to invest effectively and successfully.

It is a worthy argument to say, "Is one diet better than another?" But in order to qualify a diet as better than another, you have to do some intense qualification. You have to say the factors upon which you're going to rank a diet and how you're going to compare one to another, etc.

And so it becomes very complex. At the end of the day, simplicity works. And some of the most effective dieters are those who have a very simple diet. It may not be the ultimate perfect one, but it's simple. And it's because they apply it consistently, it works for them.

And investment strategies are the same way. The guy who comes home from work every day and takes his pocket change out of his pocket, or probably better is I knew a guy one time who anytime he had a $5 bill, he always saved it. That was it. So somebody gave him $5 change, at the end of the day it went aside.

He always saved his $5 bills. And every year he took a great vacation on his $5 bills. And that was his little trick that worked for him. So the advice of dollar cost average into a high-quality mutual fund, of course it works. Buying an index fund, of course it works.

Buying a great actively managed fund, of course it works, because you're engaging in behaviors that work over time. Is it going to work better than buying a portfolio of treasuries because interest rates are high? Well, how would you define better? And I'm not ignorant of Bowtied Bull as the primary leader of the Bowtied community and the conversation happening right now.

I'm coming to that. But I'm trying to lay some ground rules that I can understand that I think most people can understand. Do what you know, and almost any plan will work fine. Because the nuts and bolts of building wealth are really simple. It's earn as much money as you can, spend less than you earn so you create investment capital, invest that capital as wisely as you can at the highest possible rate of return that you can in a way that's in accordance with your goals.

That's it. It's not any more complicated than that. And if you're a believer in your current strategy, then you should be very skeptical of changing for any reason. So understand what you do and a plan that you know and understand, even though that plan is suboptimal, is that to someone else's plan, it's better for you because you know it and you believe it and it's a behavioral thing.

And money is primarily a behavioral thing, not a knowledge thing. Next, a lot of investment advice or investment strategies are very cyclical. So the focus right now on high interest rates is important, but it's a cyclical thing. And so if you're the kind of person who is so involved in your investments that on a monthly, quarterly, several-year basis, you're making changes to your portfolio, then you should follow those changes.

But if you're not that involved and you don't want to learn enough to be involved and to be that engaged with what you're doing, then you shouldn't do that. And it's a matter of perspective on yourself. So a guy like Bull, who comes from Wall Street and who's highly involved in stuff and who's built an enormous business and platform doing this stuff, he cares deeply about investing.

And of course, he's changing all the time. And so that kind of response and adapting to the markets is a natural part of his mentality, and I think it's the right thing for him. But that doesn't invalidate somebody who's not so interested just simply buying shares of companies and holding them for the long term.

Make fun of that guy all you want. Some years, one guy will look like a genius. Some years, the other guy looks like a genius. But at its core, accumulating shares of high-quality companies at low prices, getting them at a low average share price because your dollar cost averaging, I can't find any flaws in that logic.

It's interesting to talk about whether and what may or may not happen because of this, but I can't find any flaws in that fundamental logic. And if you buy into that thesis that the greatest companies in the United States and the world are going to continue to work hard to make money, there's going to be setbacks and trouble, etc., but at its core, professional businessmen are going to find ways to make money and expand their markets, etc.

The world's not going to disappear in a giant mushroom cloud. Everywhere, all at once, then I think it works. Now, the third level that I go to is level of goals. What are your goals? So if today you took all of your money and you could start making 5% interest income on it this year, what would that do for you in terms of your personal scenario?

Well, if you got $10 million in the bank, which is bull's point, if you got $10 million in the bank and you can just sit back and take $500,000 of straight zero-risk income from treasuries, then obviously that's a great move. And it's probably a much smarter move than sitting back and trying to sell shares and trade and do dividends, etc.

I mean, 5% risk-free from treasuries? That's incredible. You take zero risk with your money and you continue to have an enormous cash flow. But if you've got $25,000 in the bank, as you described, you didn't say you had that, but I'm saying if you're still in the accumulation phase and you have a modest amount, then 5%?

Who cares? It doesn't do anything for you. You need the long-term growth. And so accumulating money in treasuries might be okay if you're averse to stock market investing, but to me, I would see that as a much more appropriate for you to be in an accumulation phase, hoping for excess market returns.

But then I would steer you in the direction I always do of saying, "Are you investing in your income? Are you growing a business? Is there a better investment?" etc., rather than just doing it in an entirely abstract perspective. So in summary, I don't see anything fundamentally wrong with the standard advice of save money, buy good quality investments in companies, and dollar-cost averaging over time.

I do believe that owners are always going to get richer than lenders in the fullness of time. But I do also note that it's times like this that make the appeal of broader strategies, such as the permanent portfolio, a little bit more appealing. Whereas if not all of your money were invested in stocks, then you wouldn't feel like you were missing out.

If you had 25% of your money in long-term treasuries, like something like the permanent portfolio would encourage you to do, then you gain through the various cycles. So if you don't like this current structure, instead don't necessarily think about going all your money into treasuries. Look around and see if there's some other alternative strategy that might give you more of the exposure that you're looking for, and be something that you can understand and commit to that makes sense.

Having the perfect strategy is not necessary. I couldn't tell you what the perfect strategy is. Maybe someone else can. But having a strategy that you understand and believe in is fine. And whatever that happens to be for you, that's what you should do. Right. Yeah. So, I mean, this is...

It's not my area of expertise, right? I'm probably following what 99 out of the 100 personal finance books say regarding the DCA in the stock market with appropriate level of risks. So, yeah, I was wondering, again, if a new book would be written today, if that book would say something different because of the current situation, I guess, that we live in.

But your point is understood, that many strategies will work, and you don't have a crystal ball to necessarily encourage someone to go more of the bond route than the stock market route today. Yeah. So, this is where you get into the area of personal financial advice, meaning that here is where you have to look at the level of your goals.

Why are you investing in the first place? What is a successful investment? And then bring that back and say, "What should I do?" And so, I think if you were asking this question directly to Bull, I think what he would say is probably something like, "What are your goals?

What are you trying to do?" And if you are in the accumulation phase, I don't think he would tell you to put your money into treasuries. I think he would tell you to start a business and have your own thing and start making Wi-Fi money. That would be his advice because that's going to be a much better approach for you over the long term.

It's only when you have made it, meaning you have a huge amount of money in your investments and you're thinking about then, "How do I create income from this?" that I think you would then seriously consider that question. And so, for somebody who's sitting with a portfolio of millions of dollars and who's sitting down and looking at a risk-free rate of return-- risk-free rate of income, more than 5%, and then looking at all the uncertainty of the stock market, now I would give a different set of advice and I would seriously consider pursuing something like that.

But you have to match that to a set of goals. And so, someone in that situation has to say, "How much money do I need? Do I need to grow my portfolio? Do I not?" And what you discover is that while your risk tolerance might increase as your wealth grows, your need to take risk decreases.

And so, it's just not necessary anymore. You don't need to take risk. And so, why take unnecessary market risk if there is an alternative? - Right. Okay, I understand. - This is the problem with basically all advice and with all people who speak generally, is you have to filter the advice through where you are at the time and what your overall goals are.

And I do my best to make that clear every time I answer one of these questions. You have to say where you are. But let me give a non-financial example to drive this point home. I have young children. I do not allow my children to-- Generally speaking, I don't allow my children to use computers or digital devices with a few limited exceptions.

We use digital devices for a lot of audio books. I use several apps specifically for a few components of their education. But it's very, very limited. I don't do that because I'm opposed to the use of devices. I make a living from a computer screen. And my computer is on all the time.

My phone is very rarely out of reach. I do that because from a developmental perspective, I want them to first have the gift of a quiet mind, an active imagination, and an undistractable character. And I don't believe that inserting those devices at an early age is an appropriate way of helping them to develop those character qualities.

So if somebody just heard me say, "I don't allow my children to use computers or to spend a lot of time on screens," they might draw a very erroneous conclusion that I don't think that your children should use those devices. It has to do with age, development, and purpose.

So the same thing-- When my children are 15, I want them to be spending quite a lot of time on computer screens. I'm hoping that they're not spending all their time gaming. I'm hoping that they're programming. I'm hoping that they're editing videos and making money and learning how to set up funnels or whatever the running accounting software, etc.

That's going to be very different at 15 versus at 7. So the same thing with investment advice. In order to understand what advice is correct, that's where you have to say, "Where is somebody in the stages of wealth building? Where is somebody in terms of the goals, etc.? Then apply the investment strategy that fits the goals.

A content creator like me or like Bull, we can't do that in public without a whole lot of contextualization. That contextualization can be done in a podcast, maybe, where I may take 30 minutes to talk about something. In 280 characters, Bull's not doing it. You have to do that and you have to say, "Does this advice make sense for me right now?

If I did this, would this get me closer towards my long-term goal or farther away?" That's for you to decide. - Right. Got it. - Make sense? - Okay. I have a quick comment, if I may. I only caught this part of the previous caller talking about Greece and Canada.

I spent a good chunk of my life in Greece. I think there is a certain romanticizing that can happen from the outside. I think it's a beautiful country. Probably, today, it's more socially conservative than the US, perhaps. But I think that the freedom that you have within the United States where you don't like something that your state does and you go to another state, that doesn't exist anywhere else as far as I know.

If you're in Europe, changing really means changing country. And then you don't achieve all that much because there is a top-down push from the EU for anything really important. So I would consider long and hard for someone who's in the US and has so many degrees of freedom, giving that up, not just adding an option, but giving that up to go in a setting that's more constrained.

- Yeah. Absolutely. Your advice and your comments are exactly correct. That caller, I don't think, was interested in moving to Greece. Her husband was pursuing claiming Greek citizenship by ancestry. So having Greek citizenship would give them another passport, would give them the ability to live anywhere in the EU that they wanted to live, but it wouldn't involve them specifically moving to Greece.

And I think your point is well taken, though, which is why I try not to be a US hater. And I think that many people become very... just out of whack when they leave the United States and they build their entire brand on hating on the United States. The United States has much higher levels of freedom for the average resident or citizen because you can find your people much more broadly.

And in a nation of 330 million people who are all united by a common language and a broadly common culture, the subcultures in the United States are so enormous that you can be surrounded, even if you're a part of a very small subculture, you can be surrounded by many, many, many of your community members and live various lifestyles with those community members.

And that's not the same with Europe. The European Union may represent something like 450 million people across Europe, but those cultures from the 26, 27, I don't remember, from the member nations are much, much smaller. And then because they're broadly divided by intense linguistic variation, intense cultural differentiation, etc., when you go into a place...

If I went into Greece and I wanted to live there, I could certainly live there and I could be part of the expat community, but to acculturate and to learn the language and to be accepted, it's going to be several generations before I'm accepted. And then even then, my own subgroup, my peer group or whatever, the small community that I'm a part of, it's just tiny compared to a place like the United States.

So your point, I think, is absolutely correct. Yeah, and I think you experienced this yourself with COVID, but the restrictions in Greece during COVID were much, much stricter than even a state like New York, where I live. And things that Americans take for granted, like homeschooling your kids, that's unheard of in Greece and in most of the EU.

So I think there is a certain, you know, the grass is greener on the other side that's going on. And so I just, you know, because I heard that last part of your, the previous caller, I thought that I would just, I would just mention this in case, you know, she hasn't heard this already from someone else.

Absolutely. There's a long list. COVID definitely increased my appreciation of the United States, as I have stated publicly otherwise. Because for all of the issues in the United States, there were tens of millions and more than that, of people who pretty much think kind of what I think and agreed with me.

And so they weren't a minor group in any way. And other things, First Amendment issues, freedom of speech, the United States is one of the most robust places. And you watch right now where many nations, England, other places that are prosecuting people for saying things that they disagree with.

There's no legalized freedom of speech. The United States is important. I have beef with two people, two groups of people. I have beef with Americans who have a blind adherence or a blind commitment to the idea that the United States is superior in every way, on every issue. That seems crazy to me, because we can make a long list where it's not.

On the other hand, then there's the opposite, where people try to paint the United States as behind or inferior on every issue. And that's also wrong. And so I see that the best way to approach it is to say, there is a buffet of options across 50 United States, across the territories and possessions of the United States where I could live.

People don't talk a lot about moving to Saipan or to Puerto Rico or to Guam, etc., even though there's some interesting reasons to consider those options. And then the world is a buffet. And for each person, there may be options that are uniquely best for that person. And you don't have to have a commitment to one nation.

And I see this as kind of a broad application of the principle of federalism that works so well in the United States, the competition among the states. My hope is that over the coming years, there'll be more competition among the states and also among the countries of the world, and more and more countries will prosper because of that.

So, great question, Nick. Thank you so much for calling in. Now for a limited time until Alamo Motorsports. Get financing as low as 1.99% for 36 months on Select 2023 Can-Am Maverick X3. Considering the Mavericks taking home trophies everywhere, from King of the Hammers to Uncle Ned's Backcountry Rally, you're not going to find a better deal on front row seats to a championship winner.

Don't lose out on your chance to get a Maverick X3. Visit Del Amo Motorsports in Redondo Beach and get yours. Offer in soon. See dealer for details. I had a couple of other callers that were on the line, but they have jumped off, so let me deal with a couple of written questions that I have not gotten to yet.

I have a long list here that has not been done. Kevin says, "Joshua, what books are you currently reading?" I am currently reading that new book I mentioned on the show. What's the title? The Two-Parent Privilege. That's kind of the most interesting book. As it's probably clearly become obvious by Melissa Kearney, who is the author, as it's probably become obvious in some of my content, I've become much more interested in some of the societal things that affect people and some of the research and whatnot than money at the current scenario.

So I'm reading The Two-Parent Privilege. I'm reading a book called Boys Adrift by Leonard Sachs that a listener begged me to read and I hadn't gotten around to it. I've been aware of it for a while, but I'm reading that. So those are my personal reading right now. I have some novels that I'm reading and then a lot of stuff with my children I have been really enjoying going through and kind of trying to shore up the errors in my own reading, things I've never read.

For example, this coming month I'm going to be reading through The Iliad with my eldest child. I'm excited because I've never read The Iliad or The Odyssey. So those are my next projects, to read some of the classics. I'm kind of trying to fix some of my education. That has been a big focus for me at the moment.

Next question. Some of these questions I'm going to take and expand them. Jordan writes in and says, "Hi Joshua. My wife and I are expecting a baby and the pregnancy is high risk with a necessary planned c-section. The baby is due in March. We have no other children. I also expect to have minor surgery for kidney stones in the next 12 months.

Should I change my health care plan, currently in open enrollment, to the highest cost and lowest deductible plan where I would not be eligible for an HSA for the next year? Currently I'm on a plan where I am eligible for the HSA and I max out that contribution. I would plan to max it out again if I stay on this plan.

If helpful I could send a screenshot." No need for a screenshot, Jordan. What you do need to do is create a spreadsheet. This is a simple exercise and you can do it. It will answer your question directly. The answer is probably. You probably should make that switch. If you know that you are going to go through your entire deductible, you know that you are going to have a $30,000 c-section, you know that you are going to have your own surgery that is going to go through as well, then that is the great thing about pregnancy.

It is planned. You know you are pregnant. You know the delivery is coming one way or the other. The baby is not going to be in there 11 months from now no matter what. Probably yes, but just set it up with a spreadsheet. Put in there the cost of the premium for the different options.

Put in there the cost of the deductible for the different options. Then put in there any potential tax savings for making your contributions to the HSA and see what the numbers are. In most cases I think it will be-- It is not always a huge savings. When I have done these spreadsheets in the past, they often--it is like, okay, well, it is either I pay more in premiums and less in deductible or less in premiums and more in deductible.

Okay, if it is close, I do not know what to tell you. I would say probably option one would be that it may be easier to plan for higher premiums with a lower deductible thing, so that works out. On the other hand, the baby may miscarry and you may not have the C-section, so maybe you should go with the other option.

But you are going to have to create your own spreadsheet for that, and that will answer it for you. Next, Jared writes, "We have about 12 months until my wife's parents move in with us. We are likely to add on a space for them to include their own living area.

What actions should we and my in-laws be taking to prepare?" Good question. Hopefully this is a planned event, obviously, about 12 months. This does not sound like anything acute where their home got blown away in a hurricane or something. Excellent. This is a planned event. It sounds also like this is going to be a long-term event.

What actions should we and my in-laws be taking to prepare? The most recent episode I released was talking about this specifically, but in the context of a different question. I would say you just want to focus on your relationship, and you want to focus on how to have healthy, good communication among you or between you.

Then, obviously, you want to put in place appropriate boundaries for good living. If this is a planned event, they're moving in, and undoubtedly you have a good relationship with them. It's wonderful, then, that you can be closer and get the good things out of that relationship. Every good relationship revolves around good communication.

Good communication doesn't just mean smiling at each other and waving as we go by. Good communication means developing healthy communication styles, especially the ability to handle conflict. Hopefully there's no basic fundamental expectation of conflict, but in human relationships we always have conflict. We want to have the ability to communicate about conflict.

How do you do that? It depends on the relationship. I think it's wonderful if you actually talk about communication and you actually put in place-- if you don't naturally have good communication skills, then I think it's useful in many cases to talk about good communication skills. There are certain things that you can do that can create that ability.

One thing you might do would just be to have a conversation and say, "What are the kinds of conflicts that we're likely to have in being in close quarters, living together? What are some of the issues that we're likely to face?" Let's talk about those before we are emotionally involved in them.

I think this is one thing that often works out well in business advice for people who are starting companies together. Let's say there's two business partners who are planning to work together and they're in the early stages of their enterprise and they're basically trying to figure out what to do.

If they can come together with an experienced consultant who will ask them a list of hard questions, then in talking about them it'll open up to them the world. "What are you guys going to do if you disagree on a marketing strategy?" "What are you guys going to do if partner A gets divorced and now you've got a three-way partnership with partner A's ex-spouse?" "What are you guys going to do if partner B wants to do X, Y, and Z?" Talking about the problems that could come and then seeing how those conversations come is a really helpful thing.

I think this is, when it's done well, this is probably one of the big benefits of marriage counseling. You have a couple that comes together and they start talking about issues. I don't think that marriage counseling is particularly relevant for helping people make decisions about what they would or wouldn't do in any particular situation.

To me, after 12 years of being married, the idea that my wife and I, prior to marriage, could have sat down and said, "Who's going to vacuum the floor and create a contract between us about who does the vacuuming and who does the dishes and who mows the lawn?" To me, that's asinine.

Marriage is a relationship and it changes all the time based upon who can and should do different things. Yet, talking about those things is probably really healthy because it exposes our communication style and our ability to communicate and accept one another. If I find out that my wife has this idea about what marriage is going to be like and I have the other idea about what marriage is going to be like, then the way that we talk about our disagreements is pretty useful to see do we have the ability to resolve these disagreements.

I think one thing that can often be helpful is establishing rules for communication. I don't know necessarily how this would work with in-laws, but if I imagine being in this situation, I would want to have some kind of structure or some kind of ground rules for communication. I don't know the application because I haven't faced this in terms of in-laws, but I use the example to inspire your creativity.

I use the example of something that my wife and I did before we were married or engaged. I just simply said to her, "We're never going to play games, we're going to play communications games." The rule was around calling and texting. I said to her, "If you call me, I will answer the phone if I'm available and I will never play games with you.

If I don't answer the phone, it's because I'm busy. It's not because I'm ignoring you. If I'm in a meeting or I'm working or I can't talk on the phone, then I'm not going to answer the phone. You don't ever have to worry about the fact that you called me and I saw your name on the screen and I was mad at you and I didn't pick up." I said the same thing both ways, "Don't ever not pick up the phone because there's some kind of game going on." To me, having that established at a very early age, excuse me, early point in our relationship was a tremendous blessing because we were young and young people played so many dumb games about, "I'm mad at him.

I don't want to talk to him right now." "It rang twice and then she hit end. What does that mean? What's going on?" Just have a rock solid knowledge that if you don't pick up the phone, it's because you're busy and you can't talk on the phone. I don't have to worry about it.

It's never been any other way and it has eliminated a huge point of stress. Having regular times to connect and to communicate. In the context of a relationship with a husband and a wife, having a time where you sit down for tea every night is really important because then you can iron things out on a small basis.

With in-laws, I think some expectations such as, "We're going to have a meal together every week." "We're going to have two meals together every week." We can iron out, we can establish the basis that we're the kind of people who share a couple meals together every week. That will allow us to have a natural format for resolving conflict rather than an unnatural format.

On the other hand, setting some expectations about, "We're going to have two meals together a week." "That seems really healthy." Or whatever the version is that you're going to do. "We're not going to be together all the time." "We're not going to be each other's living space all the time." "There's going to be boundaries and separation." Just simply establishing those things.

The fact that we're not inviting you in at 6 o'clock on Tuesday night to come in and chat doesn't mean we don't love you. It's that this is our family time and we need to be for dinner. Those kinds of ground rules are useful. I don't think this would be appropriate with in-laws because it would be a difficult thing to work.

But I do share as another example of something that I benefited from and my wife benefited from. Early in our relationship, we mutually read through a book on communication. It wasn't a structured thing. Nobody said to do it. I had read a book called Crucial Conversations that was recommended to me.

I liked it. I shared it with her. She read it. It became something really useful. I think it's a really good book. I still recommend it, although I haven't read it in a decade. But basically, it laid out the idea that when you are having conversations with people and there's intensity behind it, here is how you use that intensity for a positive end.

To this day, I think we still use some of the language for that. If there's something we disagree about or something like that, then it works out well to have some context. You can always create safety in the conversation. That's all I remember from the book at this point.

Safety not meaning physical safety, but you just want to create an environment where somebody feels safe to share how he or she really feels. That takes practice. If it comes to that, again, I would have a hard time imagining doing this within laws, but reading through a book on communication or talking about communication itself is probably useful.

Beyond that, I think that you want to think about the space, obviously. It's wonderful for somebody to have their own living area and to be close to you. It's much more difficult if you're living in the same space. I'm not sure two women can share a house with peace for an extended period of time without some kind of really superhuman ability to just resolve things.

I thought I would be a wonderful husband and hire a housekeeper for my wife. So I hired a housekeeper that came in and worked in our house and helped out and whatnot. Finally, after, I don't know, it was a year, year and a half, my wife put up with it.

She's like, "I don't want a housekeeper in my house. I don't want her here." So we went with her from five days a week to one day a week. It sounds silly, I think, but I'm also not a woman, and my wife is not into that. I watched my mom and my sisters over the years.

In the most positive relationship, it just seems very hard for two women to share a house, two women to share a kitchen, two women to share a common living space. But each of them, if your wife can have her space and her mother can have her own space, that's really ideal.

That should be, I think, the ideal structure. It doesn't need to be a big space, but it needs to be a clearly separate space where each of them are in charge of their own space, and there's some expectations set around that. Beyond that, I think the practicalities can work their way out.

I'm sure you wouldn't be doing this and inserting potential conflict into your family unless you had a high degree of confidence that this was going to be a win. I think in most cases, when you have that degree of confidence, then it can be a win-win. It'll be a blessing for you, it'll be a blessing for your wife to have her parents close, and it'll be a blessing for them to be with their daughter and, who knows, grandchildren, whatever else your family looks like.

I think that it is wonderful, but you do need to pay careful attention to those specific details. That's it for today. I think that's enough. Thank you so much for listening to today's show. I'll be back with you very soon with another great show. If you'd like to join me on next week's Q&A show, go to patreon.com/radicalpersonalfinance.

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