(beeping) - Welcome back to Ask the Compound, where each week our inbox fills up with more and more questions from our extremely intelligent audience. Duncan, I'm always pleasantly surprised with the breadth and depth of the questions we receive. Remember our email here, askthecompoundshow@gmail.com. Today's show presented by Tropical Bros.

I love Tropical Bros. Been wearing the shirts for years. I always get a comment from someone when I'm wearing it. People love these shirts. It's the designs, the material, the look, the comfort. If you're coming to Future Proof, you have to get one of these. It's the shirt everyone will be wearing, including me, because we'll be on the beach, it'll be hot.

Duncan will have one, John will have one, Michael will have one. If you're not coming to Future Proof, pick one up in time for Labor Day. And we still have, what, three sizes for Animal Spirits, Tropical Bros. collab? - I believe that's right. - I think we have XL, XX, and XXX, right?

No more larges for Michael. We'll link to that one in the show notes. The other thing is, they don't just have Hawaiian shirts. These quarter zips are amazing when it gets cold. It's 60 degrees here in Michigan today. And also the polo shirts. I love the polos. - Wow, look at you, doubled up with the Tropical Bros?

- Yeah, it goes well. This is like, I don't want, I'm wearing long sleeves, but it's still a summer shirt, 'cause it's got the pineapples on it. They got a few new designs, too. I'm gonna have to pick up another one of those. Go to tropicalbros.com for more. All right.

- Do it. - Let's do a question. - Okay, so before we get started, I actually, I wanted to take a moment for a little happy birthday. It's Ben's birthday, everyone. - Thank you. - So let's switch this way out. So yeah, everyone's here to say happy birthday. (cheering) - Hey, thanks, guys.

(cheering) - Happy birthday. - Much appreciated. All right. - All right, get out of here. Be quiet. Cool, but yeah, for real, happy birthday. - Yeah, thank you. They, I was just having a conversation with someone. At a certain point, they lose their luster a little bit. I used to be a big birthday guy, but you know, this is being a human being, I guess.

- Just another day now, right? - Let's do it, yep, hi. - All right, up first. - I do wanna say, I always talk about how I never get carded at the store, because I have three, but I have, you know, or I used to get carded all the time, and now I have three kids, I still get carded.

And I bought some booze last weekend, some beer, Coronalite something, and the lady looks at my ID and she goes, "You're probably, what, 20 years from being 21?" And I'm like, "Yes, I am. "You didn't need to say it like that. "She nailed it." All right. - That's rough.

- I must be looking old, all right. - Up first, we have a question from Xerxes, Xerxes? - Xerxes. - Oh, Xerxes, okay, there we go. This is a difficult question to ask. My wife and I make about $220,000 combined and max out our 401(k) and 457(b), and she'll get a pension if she stays in the job for eight years.

We're both 40 and have a three-year-old daughter. Expensive, he has in parentheses. My parents are 72 and 70 and have a net worth of over $4 million. They're both fit, and of course, I want them to live a long, healthy life, and we have a wonderful relationship. But purely mathematically speaking, how much can I expect to inherit?

They are retired but relatively frugal, and I'm an only child. - I think Xerxes was like some Persian ruler back in the day, do you remember that from history? - I remember a South Park or something, I think. Loaded question here, but I like it. I heard a quote somewhere that said like, you know you're winning in life if you're asking uncomfortable questions from time to time.

So this is definitely an uncomfortable question, but death and taxes, right? We can't outrun it. So it feels weird to even ask it. Fortune had this article a couple weeks ago that pegged the wealth transfer from boomers to millennials at $73 trillion until 2045. An additional 12 trillion will go to charity, they said.

So how much can people plan to get? I found some research from University of Pennsylvania, researchers, they looked at inheritance by age and income groups. John, let's do a chart on for the first one. This is average inheritance received by age and then income group, and it breaks it down by, you can see here, the average is pretty tiny.

It's probably in the five to $10,000 range for everyone who's below the 5%. If you're in the top 5%, by wealth, it's more, it's a little higher, closer to $50,000, but it's probably lower than most people would think. And interestingly enough, based on the research, it's only something like one of the 10 people actually receiving inheritance.

Most people, I guess, spend it down or don't save enough. So unfortunately, this is a situation where the rich stay rich by just passing along their money. So one of my least favorite stock market inequality stats is that the top 10% owns like 90% of the stock market. The inheritance picture looks the same.

So households in the top 5% of the income distribution receive inheritances that are like four to 12 times larger than households in the bottom 80%. So basically this high net worth and high alternate net worth. I think people with $5 million and up make up like 1.5% of all households, but they constitute 42% of the volume of money that's gonna be passed down.

So John, do the next chart on here. This next graphic shows the people who actually get an inheritance, what is their average? So taking out all those people who don't get one. And now we see the bottom 90% get something between 90 and 100 to 60,000. The top 5%, it's more like $425,000.

But look at where most of the money gets handed down, Duncan. They break the age group here. You're 66 to 75 years old. That's when you get it because people are living longer, right? So I think the stat is that a couple today that retires today faces a 50% chance of at least one of the people living to their mid 90s.

So people living longer, that means that inheritance when you get it, it's not gonna come that soon. So I think, when do you need money, especially this person asking, right now they have a young child. They probably have a mortgage, saving for retirement, saving for college, emergencies, daycare, all that stuff.

It's a lot. So I think obviously the amount you're gonna receive depends on how long your parents live and what financial market returns are gonna be, how much they spend, all this stuff. And you just don't know how, all this stuff. But with $4 million in the early 70s, I'm guessing you're gonna receive a pretty healthy chunk, especially since you're an only child.

I do think if there were multiple siblings here, it'd be a little trickier. But since you are an only child, and obviously you know how much your parents are worth, unless you're just checking statements when they're not looking, you guys have talked finances, which is a good thing. So I would ask them about this, ask about their retirement plans, talk to them about the finances and let them know, it can be expensive to raise a family and talk about maybe having some of that inheritance come while they're still alive so they can watch you enjoy it and watch their grandchild enjoy it.

And so I think it's at least worth asking what the plan is. So you kind of, I guess one of the questions here would be, if I'm gonna receive a big chunk at some point in my life, do I need to save less for retirement and these sorts of things so I can spend more now?

So I don't think you make it all about you. I think you wanna tell them you want to enjoy it with them, maybe take some trips, help save for 529 for the grandkid, whatever it is. That way you don't have to wait for it until you're 60s or 70s or whatever.

It's certainly a morbid conversation to have, but I think it's worthwhile to get a sense of their plans and see what, it'll help you plan better as well. - Yeah, and just don't piss them off. You don't want them going and weaving it to the cat or something like that.

- Yes, the human fund, yeah. No, in my family, we're worried that my dad is gonna leave it all in the name of his dog because we're pretty sure he loves her more than us, but him more than us, but yes. - I mean, dogs are my favorite people.

- That's true. So yeah, a weird, I love how they preface this with like it's a hard thing to have, but like, yeah, I mean, if you wanna just get it out in the open, it could be bizarre or awkward, but I think you just do it. Rip the van down.

- What do you think though about this versus the like surprise scenario? Because the surprise is like, you're sad about the deaths, but then that's like some consolation. Like, oh wow, look, there's a surprise windfall of a bunch of money. You know what I mean? - Okay, yeah, again, another morbid kind of thought, but sure, this is what happens.

We cannot run it, right? - You're hedging, you know, emotional hedging. - Just be happy that your parents aren't the Brian Johnson guy who's trying to live to 150. Right? - Sure, sure. - Got that going for you. All right, next question. - Okay, up next we have a question from Scott.

You've discussed Canadians that are looking down a barrel to a much higher interest rate once their mortgage comes up. Unfortunately, I'm one of them. I'm currently locked into a 1.6% rate for another three and a half years. My concern is that when we renew, our rate will be much higher.

My wife and I have been debating the merits of using this time to aggressively pay down the mortgage so we have a smaller mortgage to renew or saving the difference to give ourselves a cushion once that time comes. We're in a fortunate situation and we'll be all right either way, but just trying to see how we can put ourselves in the best position.

Any thoughts or insights would be greatly appreciated. - We have a geographical diverse audience here at the compound, right? We receive questions all the time from people who say, geez, the mortgage market you're describing in the United States is nothing like we have here. And so people are always either confused or maybe a little jealous because the fact that we have 15 and 30 year fixed rate mortgages here is pretty rare.

So John, do a chart on here. This just shows the number of mortgages by variable and fixed rates. You can see countries like Norway and Australia and Canada and Sweden and Finland are way more vulnerable to changes in rates because they have variable rates. And this was a great thing for the past, I don't know, 20 or 30 years because you would lock something in.

These variable rate mortgages had five-year terms and then your rate would go down and then it'd go down again the next term. So it was a great thing until now that people are looking, again, looking down the barrel, as they said. So I think a lot of these European, Canadian, Australian listeners are like, what am I gonna do?

They see this train coming, right? They know their rate is gonna reset. I never really knew how this all worked until a Canadian listener sent me an article that explains how the resets work. So they basically have two types of variable mortgages. One of them is like you would think it's an adjustable rate mortgage.

It changes, your payment goes up. But another one is called in a variable fixed amount mortgage where your payment stays the same but the amortization period gets longer. So essentially you're paying a more towards interest when your rate goes up and less towards principal, like essentially extending the loan.

So it would go from like a 30-year loan to like a 45-year loan or something because you're paying back lower principal amounts. I don't know how many people actually have these, but learning, reading about this kind of blew my mind. It's that the payment doesn't change, but you'd be paying it off.

So obviously, you have five years. And so you know if you got one of these teaser rates that was effectively low, and I guess it's not a teaser rate, it's just what the market rates are. I did a quick Google search and Canadian mortgage rates now around 7%, which is pretty similar to United States.

So for years I've been telling people to avoid paying off that 3% mortgages. Well, this is a whole totally different ballgame, right? So Scott has a much higher hurdle right now with his Canadian mortgage. He's seeing it coming down. I guess the only question I have is can you do a big principal pay down at renewal?

So when this renewal happens in a year or two, can you just do it all at once? So you can save now and earn some interest at least on those higher short-term savings rates. So you're not paying it down sequentially. I think you can pay it off all in one big fell swoop, I think.

So the math should be pretty easy to figure out in terms of like how much you pay down and how that impact your payment and any amortization and interest. I have no problem making this priority. 7% rates, I think that's a good idea at the time of renewal to pay it down a little bit and try to keep your payoff steady or your payment steady.

I would love to hear how many people actually have these variable amount mortgages, but yeah, I do consider us lucky to have 30-year fixed rates because it's not like that in every country. - Do you think that at some point, you guys have talked about this before, but do you think at some point we'll have traveling mortgages?

Or I don't know the way to state it, but where it stays with the house so like you can move into the previous owner's mortgage? - The longer rates stay higher, the higher the likelihood of that happening. I think some bank trying it, right? I don't know how they would do it if you pay some sort of upfront fee, but it would make sense to just sort of loosen up things up and add more supply to the market because yeah, those loan departments there, it's gotta be tumbleweeds for them right now because there's such a low supply of houses being sold and there's no refinancing going on.

They need something to grease the wheels a little bit, but I like the idea. - Okay, oh, before we move on to the next one, actually, you mentioned our geographic area of viewership. Look at what Dave sent today, a new brew called Compound Interest. It's not exposing for some reason, but yeah, it's called Compound Interest.

- I like it, 424, right? Nice. - Also some cool little bottle opener, coasters. I don't know, I thought that was cool. Thanks, Dave. - I like it. - Okay, up next, we have a question. - Holland, Michigan, not to be confused with Holland in the Netherlands. - Right, people get that confused all the time, right?

- It's true. - Okay, up next, we have a question from Brennan. I'm a recent university graduate looking to break into the finance world. I'm starting to realize how many of the sought after jobs like research and investment analysts are few and far between. I'm trying to build skills and knowledge that are reflective of the real world and looking for suggestions on how to go about this.

I also want Ben's opinion on CFA versus CFP and how someone might choose which path suits them best. Now, this is very much out of my ballpark. I don't know that much about this, but those are very different designations, right? They're not even kind of similar, right? - Right, CFA is more for investment analysis and portfolio management, and CFP is more for financial advice and financial planning.

So let's bring in someone who actually has both of these. I've got the CFA, not to brag, Blair Duquene. She went through both. Blair, which one did you do first, CFA or CFP? - CFA, actually, yeah. - Okay, I did the CFA. The level two was the hardest one for me.

I'm guessing they're both similar in terms of it's a self-study program, you pay some money, but it's not nearly as much as like a master's degree. And then you have to take some tests, and if you pass the test and sign off on some ethical stuff and have enough hours worked or whatever in a certain job, you get each of them, right?

That's how it worked for you? - That is how it worked. It's still the same formula. And I'm so glad you guys asked me this question. Happy birthday, by the way. Thanks for having me on your birthday. I am sponsored by Christian Dior, if anybody's interested in that, in a different kind of apparel.

But anyway, I digress. I'm so glad somebody has finally asked me this question because this has been debated online and on Reddit threads for years and years and years. And so I'm here to tell you, officially, that the CFA is better than the CFP. - Really? - Sorry. Please don't take away my CFP.

However- - I was gonna recommend the other way. So why do you, I'm curious why you say that. - No, that's different than what I recommend, right? So which one is better? Obviously the CFA. It's the hardest test that there is. It's the gold standard. If you wanna prove that you belong in this club and are willing to go through the grueling tests, CFA all the way.

However- - The pass rate goes down every year, it seems like. And the tests are hard. I mean, it's not necessarily the depth of the information, is what I remember, it's the breadth of it, right? It's not, what do they say, a mile wide and an inch deep or whatever.

It's so much information. And the way that they write those tests, especially the second one, I think, the multiple choice questions, it makes you think three out of the five answers could be correct. So it's not like you have to be the smartest person in the world, you just have to study a ton.

I think they say for each test, the average person studies 300 hours or something, right? - Do they make you open up your books and show your portfolio history? Anything like that? - Yeah, I wish. - Show you how your performance has been? - No, they're grueling tests though.

And I would say it's deep and wide, Ben. So it's broad, there's all these topics that you have to learn from financial statement analysis to foreign currency translation, to wealth management- - Remembering all the ratios and stuff, right? - Yeah. - So you think the CFA is way harder than the CFP in terms of the test?

- 100%. And not only that, when you are in your CFA charter, you're joining a global organization of professionals committed to raising the standards in the industry for the betterment of society. So it is absolutely worth the effort, but it's not for everybody because, especially somebody who specifically wants to be a financial advisor, not every financial advisor needs their CFA charter.

CFP is the gold standard for financial planning. So if you wanna be a financial planner, 100%, the CFP is the way to go. You're gonna study all of the topics that you need to study to have the skills to become a financial planner. It is also broad. It's not as deep or as grueling, but I'm not here to tell you that those tests are easy either.

But getting back to the original crux of this question is, it is hard to break into the financial industry. And it's one of the things that's been irking me for a long, long time. There's no clear path to a profession. You kind of have to scrap your way into it.

And so some other suggestions I would have is figure out what area of finance you wanna be in, right? Do you wanna be a financial advisor? Do you wanna be a research analyst? The buy side, the sell side, investment banking, insurance. There are a lot of different subsets of that.

And if you're not sure, there's nothing wrong with going and working in a big firm to get some experience under your belt. - Yeah, that's true. There's so many different routes you can go. And a lot of people will dunk on the CFA saying, well, Warren Buffett doesn't have a CFA, and neither does Howard Marks and all these legendary investors.

And so what makes you so great to be a CFA? For me, it was I needed the education, and I also needed it as a foot in the door. I didn't have a great resume coming out of college. And I actually got an interview at my second job that I worked at because I was just studying for the first level.

'Cause they saw it as, oh, he's putting in the work here. He cares about the profession. He's doing it. So I think that's part of it, too, is some places will, if you wanna be in portfolio management or an analyst or whatever, they will make you go through the, or just the only interview people who have it.

And so I think that's part of it, too, is you're showing that you have dedication to the craft, even if it's not gonna make you the world's greatest investor. So for me, it was helpful in actually landing a job, I think. - Now, do you have to have a college degree in something business or finance related, or can anyone that trains up and studies take these designation tests?

- It doesn't have to be related to finance, but you do have to have an undergraduate degree in something. That's one of the basics of the requirements, but a lot of kids are now starting in their undergrad classes taking these tests. - Yeah, that's new. That didn't exist when I was around.

But you do have to have a certain amount, you did when I, a certain amount of hours before you can get the designation. - In the profession, yeah. So you can pass all three tests, but then you have the hours worked in the industry to use the letters and to be a charter holder.

- I still have nightmares about taking those tests. I will say, if I was coming out now and looking for opportunities, you mentioned, do you know which path you wanna go? I would think the CFP would be a better route for having employment because I just think there's gonna be so many opportunities with all the boomers retiring in the coming decade.

The need for financial advice and the millennials getting that wealth transfer eventually, the need for financial advice is gonna grow and grow and grow. I don't think it's going away. I think the introduction of ETFs and index funds makes it a lot harder for a portfolio manager or analyst to, I don't think there's gonna be the need as much for those positions.

If that's what you really wanna do and you wanna be a stock picker or a portfolio manager, the CFA makes more sense. But I think if you're unsure about what to do, I think the CFP is probably more helpful these days for a young person trying to break into finance.

- And I think it all depends on what you really wanna do, but you're absolutely right. Portfolio manager, buy side, research analyst, those are the jobs that are going away as technology makes us more efficient, but there's a real need for financial advisors on the other side. So there's definitely more opportunity to make a career as a financial advisor.

- I still remember, I finished the third CFA test and I felt like I passed it. And my wife and I went to Chili's and I had a whole bucket of beer because I'd been studying for six months straight. So I had like a bacon cheeseburger and a bucket of Coronas.

And that's how I celebrated being done with the CFA. - Well, when I walked out of the Javits Center in New York after level one, somebody, I think it was the local society was handing out t-shirts. I passed or I survived level one of the CFA and I definitely did not feel like I had passed it that time 'cause I almost ran out of time.

So it is really, really tough and grueling. They did move it to the computer so it's a little less of an experience now, but just as hard of a test. The pass rates remain just as low. - Yeah, not great. All right, Duncan, next one. - Okay, up next we have, we start off with a quote from A Great Mind to Finance.

"The only thing that matters is you come up with a plan "ahead of time and stick to it." Do you know who said that? - Sounds familiar. That was one of my blog posts, I believe. - Yeah, it's Ben Carlson. Ben Carlson's who said that. "How do you know if your financial plan is working "or if you need to pivot?" That's the question.

- Great question because it is difficult. There's not much black or white. You don't know what the financial market returns are gonna be, you don't know what your circumstances are gonna be or how your mind is gonna change about things like spending and savings. So Blair, when you work with clients, how do you assess their financial plans along the way?

'Cause it is more of a process than an event. It's not like it's here's your financial plan, we're gonna follow it exactly like this and life is gonna work out great just how we plan it here. So how do you assess whether someone is on the way to achieving their goals?

'Cause it is kind of hard for people to understand that and figure out wait, am I actually doing this right? Am I on the right path? 'Cause a lot of people just don't know. - Yeah, and for people with black and white brains, you know, engineers, accountants, people who think in certainties, it can be a really nebulous process, right?

Because what we're taking is a lot of unknowns. We don't know how long you're gonna live. We don't know what your health will be. You may not even know what your financial goals are. The ones you have today may change in 10 years. And we certainly don't know the order of the years of what the stock market returns are gonna be or what inflation.

So there we go. Everything is unknown. We're trying to make a best guess about whether we're on track. But the things you can focus on are making sure you understand what your goals are and that they're clear and objective. And it's okay to change your mind, but you've gotta have a goal first before you can try to make progress towards it.

The second is you have to have reasonable assumptions, right? I'm sorry, Dave Ramsey, but you're not gonna get 12% average annual returns in your portfolio. You have to have reasonable assumptions for average annual returns and for inflation. So those are the two kickers. And it's really figuring out what do we think returns are gonna average over the next 10, 20, 30 years?

What are our expenses gonna be? You really need four things to put together a financial plan. Your assets, your liabilities, your income, and your expenses, both now and in the future. And then if you're sticking to the plan, it's not about your recent investment performance. That is not going to be the gauge as to whether your plan is working or not, because we know there's going to be downturns in the market.

So your financial plan success is not your recent investment performance success. Those two things are not the same, but it takes a leap of faith. It takes believing, okay, returns are going to average out to something around what my expectation is gonna be. But the questioner may be mixing up investment philosophy and performance versus financial plan performance, 'cause those are two very different things.

- Yeah, the point of setting expectations is you want to build into the fact that there's going to be bear markets, there's going to be higher rates and lower rates and higher inflation and lower inflation, all these things. You want to make your plan durable enough to survive all those things.

To your point about changing goals, we had a conversation with a client this week who wanted to make a huge purchase that was gonna totally change their financial plan. And it changed their goals because of it. So I'm gonna buy this huge thing, and now it's going to mean I'm not gonna retire for five to seven more years.

And they were happy making that trade off, but they would have never known that when they created their financial plan 10 years ago or whatever, right? So I think part of it is making those course corrections. And to your point in the expectations, then when reality comes along and five or 10 years down the line, you kind of can gauge how close were we to those expectations, and do we need to make an adjustment up or down or based on where we're sitting now?

- Exactly, I mean, it's just the future is unknown. And so the most important thing is knowing your goals. But my favorite call to get is plans have changed. Can we rework the plan with a new goal in mind? I love doing that. And I also say a financial plan is not something that we do once and print out a 100-page report and put it in a desk and let it collect dust.

It's a garden. We have to continually tend and weed that garden and update it. So you're right. What you said in the very beginning is it's a process, and it's just making reasonable guesses about an unknown future. - Right, okay, one more question, Duncan. - I'd be checking that balance daily.

You know, I'm just kidding. - It's not good for your financial health. - Okay, last but not least, we have a question from Igor. We have no children and no need to leave anything behind. Our current financial forecast shows that we're on track to retire 10 years from now when I'm 60.

We have 20 years of mortgage left at 3.25% interest. In 10 years, we will have, assuming property value is the same as now, about $350,000 in equity, with $60,000 left to pay on mortgage. If in 10 years we have enough in savings to retire, mostly 401(k), does it make sense to think about a reverse mortgage since we have no heirs to think about?

This is one I'm interested to hear you guys discuss because I've heard of these before, but I've never actually really understood what they are. - Yes, the funny thing about this question is, before we get into reverse mortgages, I think it used to be the rule of thumb was you want your mortgage paid off before you retire.

Now I think with 3% mortgages, people are starting to change that tune and rethinking it, but it does make sense. Why not bleed that home equity dry if there's no one to leave the house to and you're not gonna sell and downsize or move to Florida or whatever? Wade Fowler has a book on these things that I've read and it's more complicated than you think.

So Blair, thoughts on reverse mortgages and to Igor's point, why leave the equity there when they wanna stay in the house? Why not do something with it? What are your thoughts here? - Yeah, and you actually hit on one of the stats in the first chart, if you wanna throw that up, John, earlier in the show, which is that you were talking about the number of Americans owning stocks, right?

And it's very concentrated in the higher incomes and that's what you're seeing at the top of this chart. But on the flip side, for the majority of Americans, their home equity is their biggest asset, right? So, you know, those in the bottom 50%, you know, 13%, you know, is in their home equity.

They're gonna need it, but most people are kind of in the middle there, right? It's, they have a lot of home equity and very few people are using it, heirs or not, right? This is a big lever that people can pull. So just to get to some of the specifics, you don't have to pay off your mortgage to apply for a reverse mortgage.

Most people don't know that. You have to have a certain amount of equity in the home, but a reverse mortgage can be put on even though you haven't paid off that 3% mortgage. - I guess I never thought about that. That makes sense. You just have to have a certain loan to value to do it, right?

- To have equity, yeah. And I think the minimum is something like 15%, so they're gonna be well within the range of being able to put on a reverse mortgage. The other thing is, you don't have to take money out. You can open it like a credit line. And John, if you wanna throw up the second chart, our colleague Tony Isola had these two charts in a recent blog post that maybe we can reference.

You apply, you can't apply 'til you're 62. So there was the mention of age 60 retirement. You gotta wait 'til you're 62, but you can apply for a reverse mortgage line of credit and not even pull on it. And that line of credit is gonna grow with the assumed growth in the value of your house.

So your line of credit that you could tap into at any time is gonna grow as you age. And you can use the reverse mortgage basically as needed. If it's a year where the stock market is down and you don't wanna pull out of your investment returns, use the reverse mortgage.

You'll never have foreclosure of the house. You can actually, because there's a federal insurance program, end up taking out more on the reverse mortgage than your home is actually worth, and that's fine. That's covered by insurance. They're never gonna throw you out of your house. I think it's a huge asset that gets a bad rap because the original home reverse mortgages were frauds.

They were expensive. Before the government stepped in and started regulating these, it wasn't a great thing to use. But I think whether you have people to leave the asset to or not, it's a benefit that most people should be looking into. - And to your point, with the middle class, that being by far their biggest financial asset, people are gonna have to tap that equity somehow, whether it's selling a house.

And a lot of people, frankly, probably aren't gonna wanna sell their house, right? I'm sure there's some people who will wanna downsize or move to be closer to the kids and the grandkids, but some people just wanna stay in their house or will want to, and I agree. There's gonna have to be simpler ways of tapping that.

And this, to me, at that stage in life, probably makes more sense than a home equity line of credit where the rate can fluctuate and move up and down and change, and now those are very high. So I think it makes a lot of sense. - I do too, and unlike a home equity line of credit, which when credit gets tight, like in 2008, 2009, a lot of those were pulled away.

A reverse mortgage isn't gonna be pulled away, and you can't be foreclosed on as you would with a second lien on your house with a home equity line. So it is an asset, it's an underutilized asset that I think a lot more people should be looking at. - Yeah, that makes sense.

And this is one of the questions too, where it's a different thing where the first question was about leaving an inheritance. This person and his wife know they don't have to leave an inheritance, so they're in a totally different ballgame too. And yeah, I would ring out all that home equity I could.

- Absolutely, it's certainly worth looking at. And now to even apply for a reverse mortgage, you have to talk to a third party counselor to make sure that you are a good candidate. And it sounds like based on the basic information that Igor provided that they will be, but it's nice to know that there's a third party involved even before you go to apply for the reverse mortgage.

- See, there should be a third party involved before Duncan can buy futures on Oatly stock, right? - Indeed, an arbiter. - I would much rather have a money therapist for that kind of decision than a reverse mortgage. Sorry, Duncan. - Hey, keep your hands off my portfolio. (laughing) - All right, we want to thank Blair for coming on today and helping out.

- Thanks for having me. - Email us, askthecompoundshow@gmail.com. Leave a comment for us on YouTube, on Twitter, anywhere you're watching or listening to this. We appreciate it. Subscribe to The Compound and we will see you next time. - See you, everyone. (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) you