Welcome back to our show, Portfolio Rescue. This is a show where you, the viewers, hand out the topics through your questions. Our inbox is overflowing. Duncan and I don't have enough time to get to all of them. We're trying. If you have a question, email us askthecompoundshow@gmail.com. Reminder, quick disclaimer, this show is for informational purposes only.

It should not be relied upon for investment decisions. We're filming one day early today because tomorrow's obviously Thanksgiving. Duncan, any big plans? Just getting together with some family and eating some good food. All right. Biggest bar night of the year. Yes for you, no? No. It's amateur hour, right?

Yeah, no. I'm actually running a 5K tomorrow morning. Okay, nice. Turkey run, is that what they call it? Yeah, something like that, yeah. All right. Remember, it's not just going to be me answering these questions. I'm going to answer some of them on my own, but I also have an expert waiting in the wings who's going to help me.

Duncan, let's do it. Okay. First up today, Brett writes, "I'm 64 and my wife is 53. Due to good fortune and patience, our savings and investments have appreciated quite a bit over the years. We have $2.1 million in a rollover IRA, that is 75% stocks and 25% cash, $1.65 million in pre-tax accounts held more than a year, and $500,000 of post-tax cash.

We also have about $1.4 million in home equity with a $175,000 mortgage debt at 2.99%, and neither of us works anymore. The reason I'm writing is that we don't have much in the way of income from our investments, just a lot of capital appreciation primarily from tech stocks. I'd like some advice on ways to reapportion these investments into a portfolio that provides more dividends, but in a tax-efficient way." First off, nicely done here.

This is a nice-looking portfolio, financial plan. I do want to mention, we got a few comments last week about the guy who said, "Hey, I'm selling my house. I'm probably going to make half a million bucks on it, but that's not a lot of money." Don't get caught up in the numbers on these questions.

This person here, obviously, is doing very well for themselves. They've retired early. They have more than $4 million. They're doing great. I'm more concerned about the decision-making framework here. First of all, this person has a tech-heavy portfolio, and it makes sense that they have lower dividends in their portfolio income, because tech stocks tend to have lower dividend yields than more blue-chip stocks.

For instance, the Nasdaq 100 currently has a dividend yield of about 50 basis points, 0.5, 0.5%. If you look at the Dow Jones Industrial Average, that's closer to 2%. Those are more blue-chip stocks. They've been around longer. They're a little more stable. They pay out higher dividends, because most of these tech stocks are reinvesting, because they're such fast-growing companies.

I think there's two questions you need to ask yourself about this, when you want to go from capital appreciation and growth to more income. Number one, am I looking to add more income to my portfolio because I want to diversify away from tech stocks? That makes sense to me.

You've made a lot of gains here. You want to get away. Or, two, am I looking to add more income to my portfolio because I don't want to touch the principal balance? That I don't think makes as much sense. Let me show you why. So, John, let's do a chart on here of AT&T's dividend yield over time.

This is AT&T's dividend yield over the past 10 years. It's really high right now, mainly because the stock has gotten crushed. But the average dividend yield for AT&T stock for the past 10 years is 5.7%. You're getting almost 6% dividend yield for 10 years. Now, let's do another chart on.

This is the return of AT&T stock versus the S&P 500 over 10 years. The S&P is up nearly 400%, and this is total return. So, AT&T, they're up about 60%, a little less than 60%, with dividends. Basically, that entire return is dividends, because their price is actually down over that time.

And so, I just want to make sure that people aren't too caught up in just earning income, because total return is really the only thing that matters. Right? And so, if you're doing this because you think you need more income, that's not always the best answer. Income can play an important role in your portfolio, but total return is the only thing that matters.

And I know some people have an aversion to dipping into their principal balance, because they think that something bad is going to happen if they all of a sudden sell. But you can always create your own dividend stream by simply selling shares in stocks or the funds that you own.

Now, if you want to diversify from tech stocks, that's a different story. Obviously, the simple answer here is just to take some gains from your tax-deferred accounts. You don't pay the capital gains taxes. If you're going to do a portfolio rebalance, do it in the tax-deferred way. Don't take the gains and pay the taxes on them, and then put it into income-producing assets that you're paying taxes on again.

So, finding reliable income sources is another story. So, you're looking at, okay, dividend-paying stocks, potentially REITs, high-yield bonds, preferred stocks, convertibles maybe. All these things. We've looked into all this stuff. Anything with higher yield right now comes with higher return. That's period, end of story. There's more risk. Most of these other asset classes that have high income also have high drawdowns, like the stock market.

So, in March 2020, you look at anything that had a high yield, it got crushed, just like the stock market. So, I don't know. If you're really going to look into some of these different income streams and you want to have a more income portfolio, that's fine. Just diversify those streams, probably, because some of them are going to get crushed as well.

But also, remember, you can make your own dividends. Just sell some shares of your stock. If you're happy with your current strategy, that's fine. You don't have to have dividends in income just because you don't want to touch the principal balance. O'Reilly: Yeah. AT&T looks painful when you're looking at it like that.

Lewis: I think the price is back to 1996 levels. It's tough. It's basically all dividends. O'Reilly: Yeah. That fat dividend. Lewis: Yeah, that's the thing that brings people in. "Oh, you're getting 8%!" But, also, the stock is highly volatile and it's been going down. Okay, let's do the next one.

O'Reilly: Alright. Up next. "I've worked in financial due diligence at a Big Four accounting firm for the past 11 months and just signed an offer to move to a firm that is growing their own in-house due diligence team very quickly. They offer the same base pay, but the VC opportunity is two to four times what is possible at a Big Four.

What is your take on making a move so early in my career?" This is a lot of questions, but I think they're good, so we'll go through them all. "To what extent do you think this type of churn in the financial services industry will continue, given the hot job market?

Am I buying high in this cycle and putting myself at risk of being one of the newest employees at a publicly traded firm that could cut labor if things go south? Is the move I'm making worth giving up a more favorable work-life balance in the short term for better long-term earnings potential?" That last one's a big one, right?

Lewis: First of all, don't look a gift horse in the mouth here. Don't worry about the hot job market. When I came out of college, the job market was awful. So, if you're in a hot job market, don't worry about that. That's a good thing. Also, most career advice is basically useless.

Follow your passion, do what I did. Most people don't understand how much of their actual career path was based on luck. Sorry. I couldn't have planned out my career path the way it went. If I would have, after college, said, "I'm going to do this, and then I'm going to do this, and then I'm going to do this.

I'm going to start a blog, and then a podcast comes, and a YouTube channel, all this stuff. I'm going to work for this RIA in New York, and I'm going to live in Grand Rapids." All this stuff that happened in my career was happenstance and luck and hard work.

Basically, most of the stuff you get, just follow your passion, says the guy who got a job from his dad, and he's going to take over his manufacturing cram or whatever. The good thing is, you don't have to have it all figured out in your 20s. There's a lot of career paths, especially in the finance field.

I think diversifying your opportunity set, first of all, makes a lot of sense. That's number one. I think taking new jobs and diversifying your opportunity set is a good thing. I think it's good to have diversification on your resume. I also think now is the time in your 20s to take a little risk.

If you're worried about this company that, well, it could go under, and it's not going to work out, I think now is the time you want to do this. When you're in your 30s and you're more settled down, and you have bigger responsibilities, that's the time where you can't take as many risks.

I also think there's this idea between learning and earning early in your career. My first boss at the internship I had complained about or talked about how he worked at an investment banking shop. In the first 18 months, he said he had three days off total. He was working all these nights and weekends.

He had three total days off in the first 18 months, and he wore that as a badge of honor. He thought it was awesome. Me, not being the type A personality like he was, thought, "That sounds awful. I am certainly not going into investment banking." Now, that could also have been because of my GPA, and they probably wouldn't have taken me.

He said it was basically his MBA. It helped boost his career. I took a different route. I decided to go to a job that paid me basically nothing. All of my friends after college were earning way more money than me. I got to do a job for three years where I learned a ton.

I still go back to stuff that I learned in my very first job. I think this idea between learning and earning is important. This question is worried about the work-life balance. I think a lot of it depends on your personality. Do you want to be one of these people that's attached to your job?

I'm not saying there's a right or wrong answer here, but are you a type A personality that your job and your salary, that's everything to you in your 20s? Some people are like that. That's fine. That wasn't me, but some people are like that. I think it depends on what you want to get out of your career and what you want to get out of your youth.

Do you want to look back in 10 years and realize, "Geez, I could have had so much more fun in my 20s. Now I'm settling down. I have a family. I think I really wasted those years by working all the time." Or you could say, "Listen, I wanted to work hard in my 20s so I could bump up the baseline of my salary.

That way in future years, it's compounded on top of each other in any future job I get. It's starting from a higher baseline because I earn more money." I think it depends what you want to get out of it. I've personally never worked a job before where I'm working past 5 o'clock and I'm working on the weekends unless I really wanted to, writing and reading and that sort of stuff.

I think it really depends on your personality type and if you're that type that really needs to have that. What do you think, Duncan? Yeah. It kind of reminds me of what you guys talk about a lot with retirement in general, like doing things today for a day far into the future but trying to make the best balance of your current life with your future life.

I also think work-life balance is basically bullshit. No one actually has that balance in life because if you spend too much time at work, you're like, "I'm missing out on friends and family and hobbies." If you spend more time with friends and family and hobbies, then you're like, "Oh, jeez.

I could be working and increasing my career and doing better." There really is no balance for most people. I think most of the time, you just have to kind of vary between each of them. Yeah. I agree. All right. What's the next one? Next up, question three. Oh, by the way, that last one was from Nick.

I didn't mention. Next up, we have a question from Glent who writes, "I work in the arts and just lost my job. I'm trying to figure out what to do next. I've saved a decent amount of cash and want to figure out what to do with it. I will be debt-free soon and have saved up with the intention of taking some time off to fund my own film projects.

I have about $350,000 in personal cash, $300,000 in a business account, and $100,000 in my 401(k). During the pandemic, I put it all into high-interest savings account at about 1.5%, which was good for cash flow, but I understand this isn't the best thing, especially with higher inflation. I'm a very light spender, so I can live on about $30,000 a year.

Now that I'm unemployed, what should I do with this cash? Ideally, I would like to give myself a bit of income and cash flow during unemployment, as well as invest for the future." By the way, someone in the comments said this must be an NFT artist, which is pretty good.

This seems like an investment question. It's probably really a personal finance and financial planning question, so I'm actually going to bring in an expert here. Dina Isola, who is a rockstar financial planner for us, is going to help me answer this one because she works with clients of varying financial circumstances.

Dina? Isola: Hello. Lewis: How's it going? Isola: Good! Good to be here. Lewis: So, this is a person who has a pretty good financial nut, right? They have a good amount of money set aside. They're out of a job. It sounds like they probably could get another if they wanted to.

What are you thinking here? This is almost like they're retired in some way. How do you think about this from a financial planning perspective, and also a portfolio management perspective, from keeping this money safe? What do you think? Isola: Well, first of all, I just want to say he's done a really good job because for him the value of money is the freedom it's going to afford him to do these projects that he wants to do.

He was very cognizant of that, and in doing that, he stockpiled a lot of cash, which is a very good thing. That being said, he does raise an interesting point, which is the whole inflation component. He's got a lot in cash. I'm hoping he didn't mean his 401(k) is in cash as well, because that should be invested differently, obviously.

The key here is he's still going to need quite a bit of cash, because if he expects to be out of the full-time working world doing his project for one to three years, and he's spending about $30,000 a year, I would probably keep about $100,000 in cash. Lewis: I was going to ask that.

Do you think the best way to go about this is, how many years' worth of spending do I want to keep safe? That gives you an idea of how you can invest the rest of it, right? Maxfield: Correct. He needs that cushion, because if he's working on a film and he's not earning income otherwise, he's going to need that money.

I'm assuming the business account is paying for the project itself, so there's not too much he's going to be doing with the business account. But I will say this, if he is self-employed, if he doesn't end up working other than doing freelance stuff, he could set up a single K, and the business can certainly do some sort of profit sharing with him, a bonus of 25%, and he could contribute pre-tax dollars to a solo 401(k).

That would be a good thing to do with some of the money as well. Lewis: If the film starts making some money, they could still potentially keep saving for retirement along the way in a tax-deferred route. Maxfield: Exactly. And I would do a Roth. He doesn't say how old he is, but if he's under 50, it's $6,000.

If he's over 50, it's $7,000. He could fund for this year and next year. That would be a good way to deploy some of that cash. I think IBONZ actually makes a lot of sense. He can do $10,000 in IBONZ if he does it quickly. Lewis: Yeah, earning 7% annualized right now, right?

Maxfield: Exactly. I think that changes in April, so you have to pay attention to the rates, obviously. You'd want to hold it for at least 12 months. You would also realize that if you forfeit before five years is up, you're going to forfeit three months' worth of interest. Not a steep price to pay, but just to be aware of.

He does that before year end, puts in $10,000, does another $10,000 in the new year, that accounts for $20,000. With the rest of the money, I think what I would do there would be, depending upon his risk tolerance, I would put it into some sort of balanced and/or more bond-heavy portfolio.

Lewis: Duncan is a former film professor, right? Duncan went to film school. How risky is this, Duncan, going out of a film project like this? Maxfield: Oh, yeah. Most people don't make indie films for money, because it's not a reliable thing to do. Lewis: Is it kind of like a kitchen remodel, where you go in budgeting a certain amount and you end up spending 20% more every time?

Maxfield: 100%. Except instead of 20%, it's usually double. It's risky, but again, it's an art. People are doing it for the art, generally speaking. If it makes money, then great. I'd say most people are just happy if they cover their costs. Lewis: And Duncan would be happy to publicize it on The Compound if you give him an executive producer credit, right?

Maxfield: Yeah, sure. There you go. Lewis: Alright, one more question. Maxfield: Next up, we have a fun one from Oliver, who writes, "I have two teenage boys and I want to show them the basics of financial literacy. For example, compound interest, stocks, bonds, target date funds, etc. Any pointers?" Lewis: "Like myself, Dina is a parent of twins.

My twins are four. Her twins are now in college. I also have a seven-year-old. Dina, the question I'm trying to ask myself too, like Oliver who has teenage boys, is, what do you think is a good age to start this?" Then we can talk about some of the things that we want to teach these kids.

When do you think is a good age to start this? My daughter is seven. The only thing she knows about money now is that she's got some from the Tooth Fairy and she hoards it, so she's a saver like me, which is good. She's hoarding all of her money.

She sits there and counts it every day. But when is a good time to start with some of these topics? What are the best topics to start with? I'll be honest with you. I probably started talking to children about money maybe prior to even speaking to my own kids about money.

I've been going into elementary schools on career day and doing personal finance with third graders. The truth of the matter is kids are curious about money. They may not realize that they're curious about money, but once you start talking to them about it, time and time again, I watch them light up over it.

Because they realize that, A, if they have some money and they know what to do with it, they're 10 steps ahead of their friends. Not only their friends, but sometimes adults, quite frankly. It's a great topic to introduce. When a child is young, like your daughter, it could be allowance.

They need to know what things cost, what the trade-off is. Suddenly, they become more attentive to how they're spending, why they're spending, what they're spending it on, whether there's a better price to be had. They become just more aware. For teenagers, the real takeaway here is they have to earn money.

I cannot emphasize that enough. If you think of money like driving a car, you wouldn't tell your teenager, "Here are the keys. I gave you a book to read about driving and you've watched a few movies about driving. Now you're ready to go." No. You've got to actually instruct the driving part.

The same thing happens with money. Earning it is first and foremost the most important thing because they will treat the money differently when it's something that they've actually put some sweat equity in for. I think personal finance probably is more applicable than teaching them about stocks and bonds and saving and investing.

Stuff like budgeting and spending and debt and spending-wise. Like you said, how much stuff costs? My kids ask me, "How much does a car cost?" Numbers don't mean anything to them yet. The size of numbers. They don't really get it yet. I do think that simply starting an allowance...

Now here's a question for you, Deena, as a parent. Do you automatically give kids allowance or do you make them work for it and do some chores for it? Me personally, I think it's important that they do something for it so that they understand that it took them X amount of hours to get X amount of money and then it makes them treat that money very differently.

I do. I feel like when you're given money, it's different than if you've earned it. I've seen it with my own children. They're less likely to spend money that they've earned than what has been given to them. I think I'm going to give my daughter an allowance and I'm going to make her respond to all the trolls on Twitter that try to actually me.

Then she's going to really learn about how people can be in the real world. That's not bad, right? Maybe just set her up on Axie Infinity, right? She can be earning income from playing the game. All right. Deena, you have a few compound interest charts here. I do think learning about compound interest is helpful too.

So John, why don't we do a chart on here? Yeah. So we go into the schools and I watch the eyes just open up really wide when we go through this example. So it's an exaggerated example, albeit, okay, because we're compounding it a hundred percent a day and that's just not reasonable.

But if you're given a penny every day and it doubles every day over the course of 31 days, we ask the kids, how many pennies do you think you'd have at the end of that timeframe? And the staggering answer, I only had one student actually calculate the number, but it's over $10 million.

And you say, well, how the heck is that possible? And that is the miracle of compounding. And what I like to point out, and that's why I like to show the numbers that you have here, is that there's a good chunk of time where it's not exciting at all.

It's boring as hell and it would probably be very tempting for somebody to say, I'm not going to do this anymore. This is just a waste of my time. And meanwhile, you get to about day 16, 17, that's when it really starts to take off. And so if we did this experiment in a 28 day month, it would be worth significantly less.

I think it's a little over 1 million versus the 10. So that highlights a few things that are very key basic fundamentals to good investing that children need to know. One is it requires discipline. You've got to stick with it. That requires patience. It's going to seem like nothing's going on, but that's actually, it's percolating.

Be patient. The other thing is their biggest advantage is not their earning potential at this point, it's their time, their youth. And they feel kind of disempowered at that age. They're not old enough to do certain things and they can't earn a lot of money. But when you tell them, no, no, no, the biggest thing that you have going for you is time.

And here's the evidence. And you show them that chart, it's very, very powerful. Yeah. The idea that my daughter always asks, Dad, what do you actually do? And I tell her I help people invest their money and trying to explain that you can make money on money. And she's just kind of sitting there, right?

That is a concept that is kind of mind blowing. If you think about it, I totally agree. All right. I have one more important question before we get out of here. So last year for Thanksgiving, we didn't meet with family because COVID and all that stuff was a big worry.

And I talked my wife into making steaks instead of turkey because we weren't going to make a turkey for just us and my kids. Dina, I'm trying to convince my family to go full-time steaks and no turkey for Thanksgiving. What do you think? Is that against the rules or can I pull this off someday?

I think you can pull it off. My husband despises turkey to be perfectly honest. Thank you. I'm with Tony. So yeah. And I'm not a huge turkey fan myself, but I'll do it for tradition. I think people should eat what they want to eat. Yes. It's tradition. People do it because they've always done it, right?

Duncan, I know you don't eat meat. You can be an impartial observer here. Tim Turkey, I guess, yeah. Hopefully. All right. If you want to have it with family, enjoy and have your blessings and be grateful, right? All right. Yep. Have some thoughts today. Let me know what you think about my steak versus turkey thing.

I'm going to try to make it happen. Leave us a comment below. I'll read every one of them. Question for the show, email us, askthecompoundshow@gmail.com. Subscribe, like, all that good stuff. I want to thank Dina again for joining us. Check out idontshop.com for all your compound merch needs. I want to thank Duncan as well for always being here and happy Thanksgiving, everyone.

We will see you next time. See you.