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That's FijiAirways.com. From here to happy. Flying direct with Fiji Airways. It's Friday, that means it's time for live Q&A. Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge, skills, insight and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less.

On Fridays we do Q&A so hopefully you get a little bit of that in-call encouragement and insight. You call up and ask questions and I do my best to come up with answers. Here we go. Friday Q&A shows are open to patrons of the show. If you'd like to become a supporting patron of the show, you can do that at RadicalPersonalFinance.com/patron.

Basically, the way it works is I do my best to seek to keep you, the listener, as my fundamental customer in the business. One of the ways that I have worked out to be able to do that has been to build and focus on the Patreon program. Probably the best reward that I've come up with for those of you who sign up to support the show each and every month financially has been access to these live Q&A calls.

It works. It's a win for you and a win for me. It's a win for me because it keeps the number of callers down to three, four, five, six, seven calls which I can handle in an hour. It's a win for you because you get pretty much guaranteed access.

Every single caller who called in today is able to get online. That can sometimes be good and sometimes can be bad, but let's get right to it. To start with, Heather from Tennessee, welcome to Radical Personal Finance. How can I serve you today, please? Yes, sir. Both my husband and I are self-employed and we have traditional IRA that we have already maxed out for this year.

We are considering opening a simple 401(k) and was just wondering if the IRA contributions we've already made count toward the amount we can place in that simple 401(k). No. They don't. Traditional IRAs and any kind of employer-sponsored plan function on two different measurement scales and they are unrelated measurement scales.

Literally anybody who has any kind of plan, who makes any kind of money, anybody can contribute to a traditional IRA. The difference comes down to the deductibility of those contributions. So no matter your income, no matter whether you have 401(k)s, a simple 401(k) in your business or any of those things, it comes down to – it's a totally different scale.

Anybody can contribute to an IRA. If your income is over a certain amount, then you may not be able to actually deduct your IRA contributions. And that income amount goes based upon essentially a chart that says first and foremost, are you covered by an employer plan? So if you are not covered by an employer plan, there's no income limit on the ability to deduct an IRA contribution.

So in this context, both you and your husband are able to contribute to a traditional IRA up to the maximum and you are allowed to deduct that on your taxes, no matter what, no matter how much income is covered. So if you are not covered by a retirement plan at work, then – and as long as neither of you, since both of you work in the same business, then neither of you are covered by a retirement plan at work.

You can make a full contribution and you're entitled to take a full deduction. However, if one of you or both of you is covered by a retirement plan at work, then your ability to deduct your IRA contributions will be based upon your income. So in this context, if both of you are covered by a retirement plan at work and you're filing your taxes as married filing jointly, if your modified adjusted gross income is more than in 2017, about $100,000, I think it's $99,000, then you will not be able to deduct your contributions to the IRA.

So basically, there are two different scales. You can participate in both, but depending on your actual income, you may or may not be able to deduct your IRA contributions. Are both of you – if you were to set up a retirement plan at work, are you in danger of losing your deductions because you are earning more than $99,000, Heather?

Yes. Okay. So in that context, you need to sit down and calculate what the benefits are, what the costs are. Is it worth it to you to be able to get more money in? Do you want to deal with the hassle of it? Describe to me a little bit about the nature of your business, please.

Well, I have a business where I refurbish jewelry and sell it. And my husband is a realtor and an auctioneer. Do either of you have employees? No. We have contract – temporary day laborers. Great. So that makes it really simple. If you don't have any employees and you're simply hiring a little bit of contract labor here and there, then you don't have to go through the hassle and the expense of setting up a plan that covers all of your employees.

The major cost to you as an employer for setting up a group plan is going to be that you have to cover all of your employees. And so as an employer, this can be very, very expensive to do. It may be worth it to do but that worth always depends – usually depends on number one, if you can afford it.

Do you have enough income to cover it? Number two, if your employees will actually value it and participate. So in white-collar professions, most – I believe most is an accurate word. Many if not most employees will value their ability to participate in the company's 401(k) plan. So it's pretty standard that if you're going to work in a white-collar corporate entity that you're going to participate in – that you need to have one set up to be able to attract to you quality employees.

If your employees are earning 60, 80, 100, $150,000 a year, they're going to value the ability to defer some of that income into a 401(k). Where you get into challenges would be businesses like your husband's. If he had employees or if he were running a construction company or a small business of some kind and he had a few staff members who were earning 25, 30, $40,000 per year, often that type of employee doesn't value their ability to participate in a 401(k) very much.

So they find it very difficult to get enough enrollment so that everybody can participate. The business owner is often in great danger. If they can't get enough enrollment by the people, then the business owner themself is not able to participate in that 401(k) plan because it will be considered to be a plan that's too heavily skewed towards the interest of the business owner and not appropriately oriented towards the employees.

So all that to say that because you and your husband don't have employees, that's great. Now you're in a situation where you just can look and say, "What's going to be the best for us?" And so a simple IRA could be simple to set up. A SEP IRA could also work for you or a solo 401(k) which I outlined in last week's Q&A for you and you can go back and listen to that for details on that.

But if you earn more than $99,000 and if you participate in your group plan, then you will not be able to take your deduction for your traditional IRA. Remember however that that doesn't necessarily mean that you can't contribute to a Roth IRA. And so the Roth IRA works on a different scale and the Roth IRA works on simply the scale of your income and it doesn't matter whether you are or are not covered by an employer plan.

So the scale for a Roth IRA for a married couple filing jointly in 2017 is $186,000. Do you think that your modified adjusted gross income would be lower than $186,000 or higher than that? It will be lower. Okay. So what you can do is probably the best of both worlds is establish some kind of plan at work.

A simple plan would work fine or a SEP or whatever you choose to do and then go ahead and just make contributions to a Roth IRA. You won't get the upfront tax deduction but you will get the benefits of a Roth IRA and as long as your modified adjusted gross income is less than $186,000, you can make that contribution.

Good for now. Any other follow-up questions? So I listened that the call last week is how we found out about the simple IRA or the simple 401(k) excuse me. We have a SEP set up but we've never contributed to it because our accountant says that it wouldn't benefit us.

So we've just never put any money in it. So with the $18,000 that you can put in the 401(k) plus the other that's the formula-based, does the $5,500 that I've already put into my IRA take away from that $18,000? The scale for your contribution to the IRA and the amounts that you're going to contribute to an employer plan of any kind are unrelated.

Okay. They are unrelated. They're completely unrelated. Okay. So that does answer my question. Great. Awesome. Thank you so much for calling in. Thank you. All right. Next up we've got Tim in Alabama. We got the South. I got Tennessee, Tennessee, Alabama and one caller from Iowa. Tim in Alabama, welcome to the show.

Hey Joshua. Thanks for letting us call in. I really appreciate your show and one of the parts I appreciate about it is hearing about books on different topics and it's really opened my eyes to books on financial planning, investing and personal finance. I was wondering if you had a list of the top books that you recommend in these subjects or where you would start, that kind of thing.

I get asked this question. I've had so many people say, "Joshua, can you recommend a reading list?" And I'll tell you why I struggle with it and then I will try to give you a couple of answers. And I'll tell you a little bit about my story and why I struggle with it.

When I grew up, I didn't have anybody that came alongside to try to teach me about money. I really didn't. I didn't have – my parents were – did a great job and were excellent parents. But they weren't particularly all that interested in business. My dad is an engineer.

He's not a businessman. He doesn't particularly care that much about money in the context of being rich was never one of his goals. And similarly with my mom. So neither of them was a big influence for me like some parents are to talk about here is everything you need to know about money.

I really didn't have any experience in – with people in my life that would come and do that. So most of my exposure to finance just simply came because I was always interested in the subject and I'd go down to the bookstore and my favorite sections seemed to be the business section and the personal finance section.

And so I started my path in with personal finance. For example, I can remember reading a book like David Bach, well-known author of the – I'm blanking on his series. Yes, automatic – thank you. I remember reading The Automatic Millionaire and it just blew my mind and I was exposed to the simple concept that if you just don't buy a latte a day and you just save the money and put it into a mutual fund, then wow, I can be rich and it can happen automatically and this is so great.

And it's just a simple personal finance book but it opened my eyes and it kind of blew my mind. It's like, wow, this can be – this is fantastic. I remember the first book I ever read on index investing. I think it was called The Lazy Man's Guide to Investing, something like that.

It was talking about the portfolio of buy a stock index fund and a bond index fund and boom, you're done and you get great results and I just thought, wow, how cool is that? And I basically kind of read my way through what I consider to be the standard bibliography for mainstream personal finance.

Rich dad, poor dad, check. That was the book that all of my friends were reading and Millionaire Next Door, check, and Dave Ramsey, check. These books were all very influential on me and they had a big impact on my life. And so I would encourage others to read them and I would share them with other people, et cetera.

But then I moved and over time – and of course there were others that were more technical that are not bestsellers. To create a bestselling book that everyone is going to know, it's got to be light. It's got to be a narrative basically and it's got to be non-boring.

So some of the more technical – technically valuable ones with comprehensive discussions are generally don't get nearly the airtime that a simple book does. But then I moved into the world of professional finance and in professional finance, I thought that I had all of the – I thought I had figured everything out.

All I got to do is just get other people to do the automatic millionaire approach or to get out of debt a la Dave Ramsey, et cetera. I grew to learn that there was kind of a little bit more to it. I looked around and basically the most challenging thing for me was noticing that nobody – that my clients didn't necessarily look like the people that I thought they would look like because they were – they had followed the automatic millionaire plan.

I realized that it wasn't that it didn't work. Of course, most of us have – most of us who were professional financial advisors, we'd have some clients that worked a job and saved money in their 401(k), et cetera. But I just looked around and realized that often there were other paths.

There was a high percentage of entrepreneurs. There was a high percentage of very high-paid, highly paid people, highly paid professionals. Many people had unique investment ideas. I remember how strange it was when I was sitting and be sitting in front of someone who was super rich and they would say, "I don't invest in stocks.

I don't trust the stock market." Here I was completely convinced of the stability of stocks because that was what every one of these books said and it was religious heresy to say, "I don't trust the stock market." I was trained to undo that. I was trained to overcome those objections and with good backing to some degree.

But over time, I just grew to look at things a little bit differently. I started to look and then I started to understand how in essence most of the people – I started to look at how people got rich, not how they said to get rich. Then I looked at David Bach and I studied his history a little bit and I understood that, wait a second, it's a valuable story to tell about him being a Merrill Lynch financial advisor and sitting there and talking about how you can become an automatic millionaire over time.

But in reality, he built this mega huge powerful information publishing business and that was how he got rich. Then I would sit and I looked at Dave Ramsey's business and I thought to myself and I kind of analyzed it and I said, "Wait a second. There's a difference here between the advice that he gives to a listener who's earning a little bit of money and saving money versus the type of business that he chose and the type of business he was able to do." I went in my local area and I talked to some of my rich clients and rich friends and people and I all of a sudden realized that even me as a financial advisor, I was working to get rich not by saving 10% of my 401(k) but rather by using the power of synthetic equity, synthetic leverage by using other people's money for me to earn my own money off of, by using and taking a fee for the control of other people's money.

Then I started to realize that, well, wait a second, I could do that in just about any business. I can go and I don't necessarily need to own the real estate. I can go and start a real estate management company and take advantage by providing a service, et cetera.

I started to look at the world a little different. Over time, I became deeply – I guess I just became attracted to a different philosophy, to trying to understand things a little bit deeper. I've never known or understood if it's necessary to go down the path that I went, reading the simple books, reading a powerful allegory like The Richest Man in Babylon and dropping all these names as just hopefully useful things to consider.

I never have figured out if it's necessary to go that way or if it's possible to come a different way. I struggle to recommend books because so much of it is – I look at it and say, "Where is this person at this point in time?" I generally don't recommend Rich Dad, Poor Dad.

I don't recommend it. But there are times in which I would recommend it. I don't just hand out Total Money Makeover like I used to, but there are times in which I would recommend it. I have struggled and struggled to come up with that reading list because I don't particularly see any value of somebody reading through 10 or 15 or 20 books unless they're reading for the meta-narrative of those books.

It's my hope that I can kind of suss out the meta-narrative, the philosophy. Unfortunately, I found it hard to articulate it in print myself. I've done it more here on the show, but I've taken kind of all the books and I've categorized what I've learned from them in terms of these differing approaches.

What I'm trying to figure out how I can get out and get into educational format that's accessible to people is the underlying truths that are the same no matter whose approach or no matter which book. So long roundabout way of saying I struggle to answer that question unless you give me a specific scenario that I may be able to recommend the book.

So tell me about your situation and I'll try to make a book recommendation specific to you. I think I'm pretty similar to you. I used to be a big Dave Ramsey fan. I don't dislike him now, but I think I have very similar views to you and went through all the books that you were describing.

I guess I'm not sure if there was a particular topic I was interested in hearing your opinion on just generally. One thing I've gotten into recently is different equity investing strategies like index versus dividend value investing. Do you have any recommendations in that arena? I don't have anything there.

It's out of my area of interest, so I don't have anything there. But I will give you two book recommendations that are books that I'm reading right now that are deeply affecting my thinking. So literally I'm almost finished with both of these books, reading them simultaneously. One is a recent book by Tyler Cohen called The Complacent Class and this is a recently published in the last year or so.

And basically it's a discussion of the changing nature of the American culture and what's happening in the US American – I don't know a better way to say it, the culture. It's called The Self-Defeating Quest for the American Dream. This book is giving me really good – it's more of a book, a sociological book, not a finance book, but it's giving me a lot of insight into things I've kind of felt but didn't have any data on.

That's been really interesting. And simultaneously, I'm reading it with a – reading it – reading also a book by an author named R.G. Letourneau and it's called Mover of Men and Mountains. Let me find it. It's in the other room. I can't get the title correctly. In just a moment, I'll give you the exact title.

But this – yeah, it's called Mover of Men and Mountains and it's the biography – or I think – sorry, autobiography of a man named R.G. Letourneau who made his – built his business in the early 1900s, came of age basically around the turn of the century in about 1900.

And he went on to become just this mega wealthy and hugely influential construction – man who constructed heavy equipment. He single-handedly designed and developed all kinds of heavy machinery which is just really, really an incredible story. And what has been fascinating is reading these two books simultaneously has showed me a culture that I have never experienced, a culture of American dynamism that has basically fallen off the scene before I arrived in the United States of America, a culture – an American culture that shifted – that is just constantly growing and kind of stretching at the seams and then moving on to build bigger machines and move faster and just this incredible cultural dynamism that today is long gone.

And what's been so fascinating is reading Tyler Cohen's book, a modern book written by a sociologist looking back and saying, "Hey, look. This is all dead and gone and what's the future hold when essentially we're so comfortable and so complacent that we don't really go out and strive for anything difficult now?" And then I go back and read this insight, this firsthand account of just fascinating stories of what life was like back at the turn of the century with this man who had this just incredible business story, went broke, deep in debt, went broke, deep in debt, went broke, deep in debt, and then ultimately down the way made a massive, massive fortune.

So there are two book recommendations that are just simply current books that I have found fascinating and I'll be done with them probably by the end of the weekend and you might enjoy both of those books. That's the best I got for you. Great. Thank you very much. You're very welcome.

I've gotten that email from so many listeners about what book and whatnot. So now you know why I struggle to answer it. All right, Matthew in Tennessee, let's stay in the South. Welcome back to the show. Thank you, Joshua. Good afternoon. My question right now is around your website design and I was just curious of what your overall experience of working with Silly Grasshopper.

Did they complete the design of your website and also do they offer any back-end support on like an hourly basis to customers? Can you kind of go over that relationship that you have and kind of your experience with it? Absolutely. So Silly Grasshopper is the company name for the company that handles my website and they built it.

The owner of the company was a longtime friend of mine and so I've known him for a long time. So my review is biased because of the personal relationship. But in a professional capacity, Jonathan does an amazing job. He's done a great job. He does a very good job with design.

He's excellent. He does a good job and I can't do more than that. I've done some ads for him and given him various accommodations. I have several listeners who have sought him out for his design work. What I do and what he does for me is he built my site.

I wrote a good amount of it but he built it and he hosts it and he also does everything – he and his team. It's not just him. But he and his team do everything on the site for me. So I actually don't – the only thing I do on the site is essentially approve comments.

That's something I do just to make sure that I get a chance to read all the comments that all of you listeners put on there. But one of the most frustrating things to me about my business is having to deal with WordPress and having to deal with web design and all of that.

If I were going to go back and do it again, I probably would not build a WordPress site which is heresy simply because basically the majority of the internet is built on WordPress and WordPress is definitely the common language of the online world. But I have found just the process of learning WordPress to be so frustrating.

It's not that you can't do the basics. It's that to do something well, it needs to be well-designed. Yes, you can get – when you set up a WordPress site and I've set up a couple more on my own. But when you go and set up a WordPress site, you can set it up and there's about a bazillion free themes you can use and there are all kinds of great themes.

But it's not intuitive. You got to learn the language. I've always been frustrated by that aspect of web work. One thing I would always seriously consider is I would seriously consider using a platform like Squarespace instead of WordPress. A friend of mine who is a real techie explained it to me in this way and it made a lot of sense to me.

And so they said to me – he said in essence, Squarespace is similar to what an Apple iPhone is where Apple – one of the secrets that makes the iOS platform, the Apple iPhone platform so powerful is Apple creates both the hardware and the software. And as such, the software is written for the hardware and it's very, very standardized which means it's consistently excellent.

It's not – doesn't have as many options as the open source Android platform but it's consistently excellent. So when Android pushes out – excuse me, when Apple pushes out an update to the iPhones, they do that regularly and there are only a certain limited number of iPhones and so they can keep the software patched.

And so because of that, iOS is inherently more secure and inherently more stable than the Android platform. And so Squarespace is a platform where you go to them and you purchase their website services. They set up the server for you. They handle the hosting of your content. They have a limited number of themes that you can choose from and then you have a limited number of modules that you can put on those themes.

But most people could put and get their website exactly as they need it on Squarespace. The great thing is when Squarespace is updating the module, they're updating that module and they've got the hosting, they've got the themes. Everything is done really, really well on that context. It's not as cheap as a WordPress site can be but it's a really good value.

And so I reached out to Squarespace. I wanted them to sponsor the show because I have this opinion of that that I just shared with you. I've never been able to set up a sponsorship with them sponsoring the show but I really think that that's worth your looking into.

WordPress on the other hand is definitely far more powerful and there are so many more powerful things that can be built on WordPress and it's really, really good. But to get its best, you're probably going to wind up with a designer, somebody handling your site. I think that that's where Silly Grasshopper comes in.

That's where Jonathan and his team do a good job for me and it's freed me of a tremendous energy to be able to just not worry about it. So I have a standing arrangement with them. I pay them a not insignificant fee and we have a business arrangement. I'm not sure if it's custom to me or if it's – I think he offers that to some other people as well.

But it handles – hosting handles a bunch of other stuff. So I wholeheartedly endorse and recommend if you need help with WordPress or if you need help setting up a website and you're intimidated by doing it by yourself, sillygrasshopper.com. I sent you. Yeah, I definitely will. I agree with what you were saying about kind of trying to take on the whole WordPress world and it's just things just – in an early stage of trying to get a business off the ground, it just seems like a waste of time.

So I understand exactly what you're saying. Thank you for that. You're welcome. Anything else? Yes. So that's kind of a boring question. Maybe something that will be a little bit more exciting for you and your audience. So say that you and your family are going on a trip for a decade and during this trip you will have no access to phone or the internet.

But you also care about – and you also have a pot of money and you care very much about keeping up with inflation. So I'm only going to give you the option of selecting three investments that you could put capital into but you can't control them because you're going to be gone for a decade and you can't really have any day-to-day reaction.

Do you have any idea of what those three investments would be and why? Permanent portfolio. I mean, that's the question. That's what Harry – what was his name? That's what they tried to solve with the permanent portfolio was to say that we have no idea which of these things are going to really turn out and so how can we just simply buy the market.

So the basic outline of the permanent portfolio was the simplified version. Put 25% of your money into essentially a cash fund. Put 25% into long-term bonds. 25% into stock – broad-based stocks. Index funds work great. And 25% in gold. And if you go through the whole theory of it, I've always just found it to be powerful.

And basically, I've never seen a good refutation of the permanent portfolio that didn't say it fundamentally was flawed. But what happens is people are flawed. And so what's frustrating about the permanent portfolio in my observation is that usually the returns will lag almost constantly. And so you always feel like I'm behind everybody else.

And so because of that, very – many people have a hard time sticking with the permanent portfolio. But I think I would basically do that. I would – and the constraints that you've given me, the best answer is find a steward of the money and find somebody who can – who you trust and who is trustworthy.

But absent that, I would buy – put a third of the money in gold. I put a third of the money into stocks. I just buy a broad-based index fund and I put a third of the money in bonds and I'd come back in a decade and probably be far richer than I am today.

Got it. That makes sense. I didn't know if you were going to go toward the route of just buying three homes or maybe trying to pick three companies that you know would be bigger in a decade no matter what they kind of do. But I completely understand that. No, basically – no, basically what's funny about this question over the years, I've become so cavalier about what's a good investment because at its core, investment is not – good investing is more about a process of investing than it is about a specific investment.

The other thing that I've seen is that you can find thousands of strategies that are powerful and will work really well if the investor will stay with the actual strategy. I've read books over the years on talking about a portfolio of a few stocks that you could put together that's just a great portfolio.

I break it down to one, even if you just pick one company. My wife was given years ago by her grandparents I think one share of Coca-Cola as a birthday present one year. It was the most annoying thing where you get this 27-cent dividend check that comes in. But I've always thought of that as kind of – as an analogy.

You can beat up a company like Coca-Cola from an investment perspective if you want to make your portfolio shine. You can talk about, well, it's a single stock. It's far too risky. It's going to be volatile and it's going to be all over the place. But if you gave me the option, if you said, "Joshua, you can buy – I'm going to put $100,000 if I would be happy to buy $33,000 of Coca-Cola stock, $33,000 of Walmart stock and $33,000 of insert whatever well-known company you want here, GE or it doesn't even matter, Apple.

I don't care." The reality is these companies, a large company like Coca-Cola is constantly changing and adapting. Hold on one second. My coworkers are wanting to have their voices heard. A company like a Coca-Cola is constantly adapting to the marketplace. So when fizzy soft drinks fall out of favor because people don't want to drink that much sugar, Coca-Cola just goes out and buys a fruit beverage company or water companies, et cetera.

If you actually look at the asset base of a giant company like Coca-Cola, they have such stability in their business and any company that's – any publicly traded company that's like that is so stable that I would be perfectly happy just to own three stocks. You always run a risk that any one company could go bankrupt.

That is always the risk of company. You may have picked GM because GM was the number one greatest company ever. But if you go and read – who was it? Joshua Kennan did a bunch of great case studies. Kennan is K-E-N-N-O-N. He's a value investor, excellent writer. He recently started a hedge fund or mutual fund and so he delisted about a thousand articles from his website.

So I don't know what's there these days. But Joshua Kennan did a bunch of case studies of individual companies and he wrote through some case studies of even a couple of companies that had gone bankrupt. If you had invested $10,000 with this company and then just simply held it over the course of years and decades, how much money would you have?

I forget the company that he used as his example of a company that went totally bankrupt. I think it was Kodak. Actually, that's what – it was Eastman Kodak. If you had invested in Kodak, you would have been so wealthy even though the company ended in bankruptcy just by owning it and staying put.

So in reality, almost any investment plan is fine as long as you just simply own it and stay put. If you could – you could buy three houses. You need someone to take care of them. But if you – as part of my deal, you say you can have someone take care of them, that's fine.

You just wisely choose three houses in a kind of a town that's on the growth, on the increase and neighborhoods that are on the increase and you leave them alone for ten years, come back. You're probably going to be richer than you are today. Buy three companies. Buy three asset classes.

The key in almost every single investment success is that the investor sticks with their strategy. The key in almost every single failure is that the investor bails due to fear or due to greed. If you can control for fear and greed, which is how you controlled it by walking out for ten years, then you can almost assuredly account for success.

All right. Last, Ms. Lori in Iowa. Welcome to the show. Lori Cudone, CFO Alphabet and Google Hi, Joshua. I listened to your podcast since you started and I have kind of been a way late for lately. But not too long ago, I took a note when you were talking about a charitable remainder trust and the note I wrote myself was, "Can I buy a house with one of these?" And I don't remember exactly a lot about the podcast and this discussion at the time, but I've always had a belief that the upper class in the US use trust to their advantage and is something like that a way to shelter a pool of money from taxes and enjoy it and maybe have a really nice coastal property or international property and then give a gift at the end.

I'm desperately struggling to remember the specifics on this and I knew the question was going and I meant to research it during the call. I'll give you an answer and I'm caught flat footed. If I had a phone screener, you wouldn't have gotten through because it causes me to do it.

I don't believe there's any reason why – it caused me to feel silly because I can't remember the answer at all. I don't believe there's any reason why you can't own real estate in a charitable remainder trust. A charitable remainder trust, yeah, I don't see any reason why you wouldn't be able to own real estate in a charitable remainder trust.

Taxes in the future are going to probably skyrocket and the estate tax is probably going to lower. Just in your professional financial life, if you ran across maybe some high earners or wealthy people and what they might have done in their lifestyle, those of us that are workers wouldn't know about or would have availability to.

All right. So let's do this. I don't want to be – I don't want to – in the last year I've done – the last couple of years, I've done zero estate planning. So as such, I don't want to get this wrong in terms of going through and explaining it accurately especially with the benefits of it.

So I'm long overdue on talking about charitable remainder trust, a charitable lead trust, a charitable remainder annuity trust and how to set – basically set some of them up and some of the benefits. So instead of my talking through it ad hoc and spontaneously and getting stuff wrong, I'm going to table this and come back to it.

I'll try to answer the question in a specific way that will be better for you instead of me doing it off the top of my head. But do you have a bonus question so I can redeem myself? Anything else? The other thing, I do know that you're quite interested in investing in real estate as a landlord and I'm not at all at my stage in life.

But have you ever found a way or have you heard of a way to invest in real estate in a crowd source or group way when you don't personally want to be a landlord of property? Yes. There are a number of companies who are doing that. I can't list any names off the top of my head.

But many people are taking the crowd sourcing model, the crowd funding model and trying to apply it to real estate. Then of course there's also the fundamental way of doing it in the context of a real estate investment trust or mutual fund or some kind of entity like that.

My answer to that is always you have to ask yourself the question, "Why am I trying to invest in real estate in the first place?" Just for diversity. Well, so let's talk about diversity. So number one, most companies will own real estate. A moment ago we were talking about Coca-Cola.

Coca-Cola owns plenty of real estate. Many companies own lots of real estate. So there's always some real estate exposure that's fundamental in the ownership of stock in a certain company. So that right there leads to some diversification. Number two is depending on the type of real estate that you're going to invest in, there needs to be a specific strategy for it.

In general, real estate in general is, in my opinion and in my research, I believe real estate is basically going to always mirror inflation, especially when we're talking about residential real estate. People are always going to pay in rents and in prices what they can afford based upon their wages.

Real estate is fundamentally a commodity that's based upon somebody's income. And so it over time will match the rate of inflation. As income goes up, then the rate of inflation will increase. As wages inflate, then somebody's buying power to buy and pay a certain mortgage rate or to pay a certain rental rate, that will change based upon their wages.

You can't fake it for the long term. Right now where I live in Palm Beach County, Florida, recently they had a big real estate conference here in town in Palm Beach County because the median rent in Palm Beach County right now is $1,900 a month and the median home price is something like $350,000 a month.

I do not see how the local economy supports that. I just don't see it. And that's actually what some of the elected city officials and some of the local people were trying to solve. And they're talking about all kinds of things to try to bring in housing, new housing and try to improve things.

And this is actually a major problem in many of the largest, most productive cities that many of the cities have basically outlawed new development. And the development cycle is so slow because we don't want new development. This has led to massively high prices, which all this coming earlier in the show, we talked about the complacent class.

He does a great job. Tyler Cohen in that book does a great job of laying it out, how some of this is just really damaging people's ability to move and destroying the vibrancy of our national economy. So real estate in a city is going to be driven based upon the wage growth in that city.

The reason that Los Angeles, California has such higher or San Diego, California has such higher, San Francisco has such higher real estate prices than Palm Beach County, Florida is because there's a wage base there that supposedly can protect that, can affect that. So the fundamental – all of this to say, the fundamental advantage of real estate is often that it's a very inefficient market.

That's why individual real estate investors can do so well. But you lose some of that if you go to a fund. It's one thing for you as an individual to see another house on your block that you think is fairly priced to go and work out a deal with somebody and to buy the house from them and rent it out because you can see and possibly find a good investment.

It's one thing for a local real estate investor to see a property that's underutilized and try to come in and say, "Hey, you know what? Let's see if we can improve this a little bit." But funds have a much harder time with that because as soon as you bureaucratize it and have your employees doing it, that's going to be a much harder time.

So here where I live, back in the last ten years, Blackstone, the hedge fund, came in and bought up scores and scores of houses. They were doing it not because they could see an individual way for any individual house to necessarily grow, but they hired local people to find them deals.

But they basically were betting on the undervaluation of the market in general. So forgive me if I'm being a little bit – I'm not being as clear in my answer as possible. What I'm saying is I don't see a huge benefit of – to say we have to invest in real estate in the context of a fund just for diversification.

Sure, a few percent, that's fine. Most of the large – if you're buying – if you're working with a large mainstream financial advisor, they'll put a few percent in real estate and some kind of real estate fund. But I don't think it's that big of a deal. I think it's easier for you just to look at your own life and say I own a $200,000 house in Iowa.

That's $200,000 in my portfolio that's exposed to real estate and to take it on a much simpler basis. OK. I don't personally own any real estate. So that's why I'm kind of looking for some options. I would like that answer. Thank you very much. I mean it's imprecise because I don't see it as a – well, how do you answer – I don't know how to answer the question.

The analyst can probably answer it in terms of a perfect portfolio and they can stretch it out and say exactly how it should be. But I don't know how to do that in the context of an individual. I think real estate is probably better owned just where you can see it locally and I personally wouldn't worry too much about a fund.

I'd go online. There are a bunch of other crowdfunded platforms. I got one more caller who just joined us, slipped in. I forgot to lock the phone lines. Welcome to the show. You got a question to ask? Hey Joshua. First of all, thanks again so much for the show and no small part thanks to you.

I sat for my CFP at the end of last year and I got it. Congratulations. Thank you so much. Thank you, sir. I appreciate you. Hey, quick question for you in regards to long-term care planning and that is do you have any kind of rule of thumb or guidelines that you used when you worked in that area in terms of either the asset level, someone is in between say $300,000 and $800,000 or something like that or a percentage of their income allocated toward the insurance in that regard.

Did you again have any kind of working rules of thumb or guidelines for that? I did. I don't know if these rules of thumb are still valid. There have been a lot of changes in long-term care and I'm getting rusty. I probably need to get some policies and get some quotes and actually if any of you listeners are insurance agents who can run some quotes with different long-term care insurance companies under a few different scenarios and email them to me, joshua@radicalpersonalfinance.com, I'd be indebted to you.

I'm getting a little bit rusty now with being out of the day-to-day for the last couple of years in terms of current prices. There were a lot of changes that were happening when I left to start Radical Personal Finance. But my rule of thumb was basically this and this is just a rule of thumb.

Before I do it, let me talk about how to actually plan it properly. The best way to plan it properly is to pull it into some software and actually model the scenario and you have to model the scenario for the actual person. Big difference between a married couple versus an individual person and the biggest benefit of long-term care insurance is that it will allow – when well-designed, it will allow a spouse who's sick to receive the care that they need while the spouse who is not sick can maintain the lifestyle or close to the lifestyle that together as a healthy couple, the couple was enjoying.

It will basically help to keep from impoverishing the healthy spouse. In my opinion, it's kind of the fundamental role of long-term care insurance. It has other uses as well but it allows a couple to get needed medical care for a long-term care need without impoverishing the healthy spouse. My rule of thumb was this.

If somebody had less than – and we're talking here people in their 40s, 50s, 60s, kind of people who are serious retirement plan, not someone who's 30 years old but 50s and 60s. If somebody has or expects to have less than a few hundred thousand dollars saved for retirement, let's call it $200,000 or $300,000, I really don't see how such a person can afford long-term care insurance.

Unless there's some unknown scenario, they have a very high income or something, I just don't see how somebody with a few hundred thousand dollars – with less than a few hundred thousand dollars saved for retirement can afford long-term care insurance. From the $300,000 range of assets up through let's call it $2 or $3 or $4 million, that's what I consider to be the sweet spot for where long-term care insurance can save a financial plan.

Obviously with somebody with fewer assets, maybe a more minimal policy versus a big giant policy but that's where the long-term care can really save the plan. So that was kind of the sweet spot, a million, a couple of million bucks saved, long-term care insurance makes a big difference there.

Beyond somewhere like $3, $4, $5 million of assets, I don't think it's really needed in terms of – it's hard to make the case to me that if you've got $5 million of assets that you really have to have long-term care insurance. Certainly you could get early onset Alzheimer's and spend 20 years needing care but statistically that's improbable.

So I really shy away from trying to convince someone that you have to have it. But I do think there's a really compelling case for somebody who's very wealthy that there's a significant risk and that risk can be mitigated with a little bit of money. And by allocating a little bit of money, small, relative to the overall portfolio, that has a substantial insurance effect on the overall portfolio and it's probably a pretty good idea.

But that was kind of – those were my rules of thumb and that was how I talked about it with actual clients. If someone didn't have it, I would say, "Listen, let's talk about some Medicaid planning or let's talk about making sure that you – someone with $200,000, they need to do Medicaid planning, good Medicaid planning." But those were my rules of thumb.

Is that about kind of what you're feeling at this point in your financial planning career? Yeah, definitely. However, also from like a budgetary perspective, would you use any guidelines as far as how much of their income to spend on premium or vice versa, how much coverage to purchase as like a percentage of their asset level, for example?

Yeah, I don't know the answer to that. I think that good fact-finding will help it to emerge. I don't like spending money on insurance premiums. I've found that there are people who worry about everything and love spending all kinds of money on insurance premiums and there are people who just don't want to spend anything on insurance premiums.

I personally am more towards the, "I don't want to spend money on insurance premiums." So with regard to the budget, I don't know how to do that with a rule of thumb or a percentage basis. There's a big difference between somebody with a $2,000 monthly retirement budget and somebody with a $10,000 monthly retirement budget.

I don't see that – I don't know a rule of thumb there that would be helpful. What I would talk through is the person's risk and their goals because different people have different goals with their income. If I ran into somebody who had a $10,000 monthly retirement income, was living on $3,000, which is not that uncommon in terms of somebody who has a very high income that they don't need, and their number one goal is to preserve their assets for the benefit of their children, their grandchildren or a favorite charitable bequest they want to make or something like that, then long-term care insurance can be a really valuable tool.

But I don't know how to bring that into a rule of thumb. I think good fact-finding will emerge. Is this a real concern for somebody? Is this something that they're worried about? Model the scenarios. Model it and run the premiums and see. There's a difference in premiums for somebody who's – this is the other thing.

By the time people actually start planning for long-term care, I never sold anybody who was in their 60s a long-term care insurance policy because when I actually – when I ran the math, the premiums were so expensive that it just didn't ever seem to make sense. I sold dozens and dozens of policies to people in their 50s, handfuls to people in their 40s and 30s.

But by the time people reach 60 years old, in my experience, they could almost never swing that monthly nut. Marc Thiessen: Gotcha. Okay. Very good. Thank you so much. Appreciate it. Ted Galen Carpenter: I don't know of another subject other than long-term care insurance that will cause so many people to do it.

There's been huge – it caused so many arguments over things. The best way to do it is put it in the financial planning software and model the scenarios and ask the client what scenarios they'd like to model and the answers usually will be pretty self-evident. November is long-term care insurance month in terms of what I'm intending to do with radical personal finance is to kind of move to a monthly themed approach to the show.

And so I've sketched out my topics for the coming year and a half and I may or may not do long-term care this November. I might push it to next November. But long-term care insurance month that the industry does, so lots of resources out there. Market's changing. It's funny.

I actually own a long-term care policy on me and my wife has one on her that I bought when I was an agent and you could still get lifetime benefit. It's super cheap. The nice thing about it, you can write it off in your business, the premiums. And mine is super cheap but I actually have one of the few lifetime benefit policies right when Northwestern Mutual was closing that out and ending that.

I'm not aware of any companies who are still offering lifetime unlimited benefits. Same thing happened with the disability marketplace a couple decades ago. You used to be able to get massive disability policies that would come in for your entire life and the risk exposure was too high for the insurance companies and they lowered them out.

So there are times at which insurance products are mispriced and you can jump on them. I had run out of music here but when I was selling long-term care insurance, there was one month where Northwestern Mutual was canceling the lifetime benefit policy and I called dozens and dozens of clients who had been interested in long-term care and I said, "Listen, this is the deal." And thankfully I had several dozen of them that actually went ahead and bought policies.

So sometimes when your insurance agent calls you up and says, "Company's canceling this benefit. You got to go now. It's the real deal." Been there, done that in the long-term care marketplace. That's enough for closing announcements. If you'd like to call into a show next week, become a patron of the show, radicalpersonalfinance.com/patron.

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