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♪ Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less. My name is Joshua, I am your host, and today we feature a live Q&A show.

Open to the public all this week, beginning today, Monday, December 17, continuing on through Friday, December 21. You know what? Let's just call it a Christmas present. Merry Christmas to you. ♪ All during this week of episodes on the podcast here, we are featuring live Q&A. They'll probably not all be released between the 17th and the 21st, but they will all be recorded between the 17th and the 21st.

And if you would like to join for a live Q&A call, you can do that each day at noon Eastern time on Monday, December 17th through Friday, December 21 by calling into this phone number, 561-440-7362. Again, 561-440-7362. That phone number will get you in at noon on Eastern time for the recording of the show.

We begin with Ben in Minnesota. Ben, welcome to the show. How can I serve you today, sir? -Hi, Josh. Thanks for having me. Hey, my question is, as I'm currently actively investing in my 401(k) and have recently started doing some Roth IRAs, my question would be, do you ever consider or advise stockpiling money in, say, a Roth IRA and waiting for a major market downturn to deploy that money, or would your advice be just to deploy it every month when I put the funds in the account?

-Would having cash reserves benefit you, or do you have other cash reserves? -So, I do have a six-month emergency fund. -Okay. -It's not in any retirement account. -So, the statistically correct answer -- How old are you? -I'm 25. -Okay. So, the academically correct answer is this -- you shouldn't try to time the market.

That's what all of the experts say. That is what all of the research says, and I have no compelling arguments to go against that. So, the academically correct answer that I should give you is you should just put the money in each month as you earn it. And so, that's the best course of action for you.

And let me explain the reasons for it. Especially given your age, the chances of your ability -- the chances of your being able to successfully predict what happens in the coming months, in the coming years, unless you're actively involved in the business of investing, are very low. Most people don't know.

They aren't going to be able to judge what's happening. And so, you just dollar-cost average the money in. Each month, you invest a set amount, and when the markets are high, then you buy fewer shares. When the markets are low, you buy more shares. It basically works that way.

So, in general, when you're in the accumulation phase, you should just simply invest each month on an ongoing basis. Now, I want to give two caveats to that. One of the great benefits of a Roth IRA, and for clarity -- so, that certainly applies to your 401(k) -- because it's too hard with a 401(k) to change those amounts each month.

And so, with your 401(k), you should just put the money in regularly every month. And the only exception to that plan would be if you are choosing to front-load your 401(k) with your contributions early in the year to max it out early in the year. But let's skip that for now.

So, with a Roth IRA, however, I think there are two caveats. One, one of the benefits of the Roth IRA is that you can take the money out, the contributions out, and use them for other things. And so, if you don't have a lot of other money, you don't have a lot of other investments, you don't have other forms of cash, savings, emergency fund, things like that, then I think the Roth IRA is a really nice place for some of those funds.

Because if you put in your contribution each year, your $5,000, and you just keep it there, not invest it in a stock market fund, then if you needed to use the money for something, some kind of opportunity, young people often do things like buy houses or move to get a better job, or some kind of emergency, you lost a job, you needed money, anything that you might need emergency funds for, then a Roth IRA is a really nice place to take that money out, as long as you're only taking your contributions out.

And so, if you were going to use it in that way, then you wouldn't want it all to be invested. And so, I think that that's not a bad use of the money. And the second thing is, I think that when we're young, there are chances for there to be substantial market declines within a reasonable future.

Now, you will have to look at a market to say, "Well, where are we? Are we overvalued? Are we undervalued?" But there's a good chance, in our investing lifetimes, being young, that there will be major corrections, major recession, major changes. And it'd be really nice to have a big stockpile of cash to be able to take advantage of that when there's blood in the streets.

So, if any of that applies to you, then I think you could make an argument for keeping the money on the sideline in a Roth IRA. So, two answers. One, academically, you're supposed to just dollar-cost average the money in, because all the data shows that you and I are stupid and aren't able to predict reliably when the market will correct and by how much it corrects.

But I think there's a little bit of an adjustment that can be useful with regard to our own practical personal finances. - Perfect, thanks so much. I really appreciate your time. - My pleasure. At the moment, that seems to be the only call on the line. The next call that was lined up dropped off.

So, I'm gonna answer a couple of questions that have come into my email inbox. Tim writes in, says, "Joshua, I enjoy your podcasts and your credit card debt lectures are helping me on my personal path to financial freedom. I would like your opinion on setting up custodial Roth IRAs for our children.

Maybe we start a modeling company just to contribute to them. I'm not sure that I would want my child to have a job so early in life. Just throwing ideas at you. Thank you for all that you do and keep up the good work." Regards, Tim. Well, Tim, I think that Roth IRAs for children are a wonderful idea.

So, let me set a little bit of background information for those who are new to the concept. If a child has an earned income, that child is eligible to establish a Roth IRA. Now, generally, Roth IRAs are some of the most well-loved retirement accounts because when you pay the income tax now, you can let the money grow into the long-term for retirement and not pay income tax when the money is distributed.

And so, if somebody invests $10,000 into a Roth IRA today and then the money grows to be $100,000, they can take out the $100,000 income tax-free when they choose to end retirement. Roth IRAs have a number of other things that make them really, really useful. As I just mentioned, you can take out your contributions, income tax-free.

So, if you need the money back out, you can get it out, which is useful, and there's no penalty tax on those taking the contributions out. One of the other big benefits of Roth IRAs is they don't have any required minimum distributions. So, unlike traditional IRAs, which require you to start taking money out at the age of 70 and a half, a Roth IRA can be left alone until death.

And then, even on death, under current tax law, that Roth IRA could be rolled over to the beneficiary of the account under what's called a stretch IRA, and the distributions can be stretched out over another lifetime, possibly your child or your grandchild's grandchildren. And so, we could get a tremendous tax savings here with the use of a Roth IRA.

The downside to Roth IRAs for most adults is you pay the income tax currently, and that's why we have to do an analysis between contributing to a Roth IRA or contributing to a traditional IRA. And it's my own opinion that most people will have a hard time having a higher income in retirement than they do while working.

So, in general, most people who are working, unless they're earning a small amount, most people should move in the direction of a traditional 401(k) contribution or perhaps a traditional IRA contribution rather than a Roth IRA. Of course, we need to be careful with the flexibility of the Roth IRA.

That distinction is mostly important for the difference between contributing to a traditional 401(k) or a Roth 401(k). However, for a child, generally, children aren't going to be earning enough money where they're going to owe any income tax on the money. It's not unusual for a child to be able to earn several thousand dollars per year, and at that rate, they're not going to be paying any income tax.

Now, even that problem is solved. And the benefits of this type of account are really, really incredible. Let's do a little math for scenario. Let's say that your child puts $5,000 this year into a Roth IRA, and they're five years old. Well, fast forward, let's give it a time horizon of, say, 80 years.

So, an 80-year time horizon. Let's say that they invest the money aggressively, and net of fees, 'cause there's no taxes here, net of fees, let's say they earn 8% on the money. And they start with, well, let's start them with $5,000 today, and no further contributions to the account.

Well, in 80 years, that $5,000 contribution could be worth $2,359,000 under those assumptions. 80 years invested at 8% is $2.3 million. And that $2.3 million, under current tax law, would be received income tax-free. Now, here's what's cool about it. Let's say that your child never spent that money themselves, and they just left the money in the Roth IRA, and pretend you had an additional 80 years for that initial $5,000 contribution.

So, let's change our timeframe now to 160 years. And theoretically, you could be talking about $1.1 billion with that simple $5,000 contribution if those assumptions continued. Now, there are a bunch of really big assumptions in that number. First of all, the investment rate of return. Number two would be that tax codes stay the same.

It's hard to imagine that tax law will stay the same for such an extended period of time. There's a good bet that by that time, the US American empire will have dissolved, and there'd be something entirely new. That'd be my guess, but who knows? You never know about these things.

So, the concept is there, and it's a really powerful concept for those who can take advantage of it. Well, how does a child make a Roth IRA contribution? The child has to have wages. They have to have earned income because your ability to contribute to a Roth IRA is based on your earned income.

That means they can't be the beneficiary of an account that's paying them money. They can't be the beneficiary of a trust that's paying them money. They have to have earned income, and then that income has to be reported on a tax return. So, what most parents will do is they will gift their child an amount equivalent to their earned income.

So, let's say a child can put together an income of three or four or $5,000 in a year. In 2019, the Roth IRA contribution limits are gonna go up to 6,000 bucks for anyone under 50 and a half. So, at 6,000 bucks, let's say they earn $6,000. Well, if you as a parent can give your child $6,000, then you can do two things.

They earn the $6,000, and you give them $6,000. Now, they have $12,000. They contribute $6,000 into their Roth IRA, and that allows them to have that account start to grow, start to build, and it is going to be available for them in the future, and then they spend the other $6,000 to do whatever has been agreed upon between you and them.

It's one of the more powerful solutions. And even as we've talked about asset protection, that account is protected from the claims of their creditors under their local state law. Some states better than others, but that's useful. It's flexible, and it has great tax benefits. So now the problem is this.

How do you get the five or $6,000 into the account? You gotta have the child earn wages. And here's where the trouble is, because how do you actually get wages for a one-year-old child? What can a one-year-old child actually do that could earn them wages? And that's where Tim mentions modeling.

It's probably one of the very few things that you could imagine a one-year-old doing and getting wages for is modeling. So I don't know exactly how to do this for a one-year-old. Let's talk about modeling. Is modeling legitimate? I think so. Of course, there are models everywhere, child models everywhere.

But remember, you're gonna have to actually have the child earn money. So it's not enough just to set up a modeling company. They have to actually get income from the modeling company, which means actually selling modeling contracts or signing business in some way. So you have to actually get income into the modeling company.

And here at Radical Personal Finance, we try to stay away from the shady stuff, try to stay away from the backhanded deals where you go to a friend and offer them money to hire your child as a model. There's no need for that. And so modeling is about the only thing that a one-year-old could conceivably do, at least that I have come up with.

But still, you have to actually legitimately come up with clients for that child. Now, I'm not aware of this area ever actually being driven very hard by the IRS. So it's probably a little bit looser than some other areas. The biggest concern by the IRS usually involves those who have their own business hiring their children.

And usually the concern is not the child's Roth IRA contribution, usually the concern is the deduction on behalf of the business. So if you hire your children in your business, you wanna make sure that you keep good books and records about their activities. You don't turn around and pay them $100 an hour for stuffing envelopes.

You pay them a reasonable wage that you would have to pay anybody for stuffing envelopes, and then you keep records on the number of hours that your child works. You have them fill out and submit a time card, and you keep good books and records if you want that deduction to stand under the scrutiny of an audit.

But even so, I'm not aware of any IRS scrutiny of these Roth IRA contributions, but it's still worth in your best interest to do it right. So in summary, these plans are a wonderful solution for transferring money from a high taxpayer to a low taxpayer, and setting something up that's really, really good for children.

I think all parents and grandparents should think about what can be done. And I think that Roth IRAs should be considered by anybody who has earned income. And you should look around within your family and your friends, and you should consider what can be done. How can we use an earned income and make sure that Roth IRA contributions are made?

If, for example, if you have a family member that you trust, let's say that you have a parent or a grandparent yourself, and you can't, and let's speak to Tim. Tim, here's an idea. So pause for a moment. First, if you can figure out how to pay money to your children, do it.

And then that helps them to have the earned income. And I think that's a really good idea. If you're self-employed, hire your children. Help your children to get businesses, get jobs. And I think it's also, I don't think a one-year-old necessarily needs to be put on the factory line, but I think it's really important for a seven-year-old, an eight-year-old, a nine-year-old, and a 10-year-old to earn income.

And so even if that means you start a little side business yourself, and you take on some clients mowing lawns, and they start to work with you, doing the raking or trimming the hedges or whatever those things are so they can earn money, that's really important for them to learn how to work and also to create that earned income.

Now, let's deal with a harder problem. Let's say you can't contribute that money to your child's Roth IRA. Here's something that's good. It's not as great, it's not the best, but it's still good. Look around in your family tree for a family member with earned income where that earned income is not currently being used for making Roth IRA contributions.

So let's say that you have a grandparent, that the child has a grandparent, you have a parent. And this can work out really beautifully sometimes, even in the phase of life that a grandparent might be. It's not unusual for a 50-year-old or a 60-year-old to be a grandparent. And if that grandparent can establish their own Roth IRA, but then have it earmarked for the child, with the child as a beneficiary, then now that grandparent can get, say, potentially 30, 40, maybe 50 years of investing done in that account, and then the child can be the beneficiary of it.

So if you're looking to fund an account for your brand new baby, you're not gonna be able to come up with earned income to be able to do it then. So until you can get earned income, you gotta go for another plan. So my suggestion is go to your parents, and if you trust your parents, make a deal with your parents.

Say, "Listen, Dad, Mom, you're over the age of 50, "so therefore I can give you 2019 $7,000." And just make your parents a $7,000 gift. Remember, that's a non-taxable gift. There's no tax consequences there. Anybody can give anybody else $7,000 without any records being created. Give your parents a $7,000 gift, and then have your parents open a Roth IRA for themselves, and then have them designate one of the children or as the beneficiary of the account.

Now, this will give you a good start on the tax benefits, because you'll have tax-free contributions and buildup until the date of your parents' death. And then at that point in time, the Roth IRA can be turned into a stretch IRA, and those distributions can be made over the expected lifespan of the child.

That's really, really good. The only risk here is that you don't have any control of the assets. So in this case, you still have your parents will have control of the account. So if you don't trust your dad or your mom, remember, they could just, when you give them the $7,000 gift, they could drain the Roth IRA and go and spend the money on themselves.

But as long as you have a trustworthy relationship there, then things will be good. And then you have to think also about how are those accounts protected from the claims of your parents' creditors, and that's where everything we've been talking about with an asset protection case here would be important.

So you'd wanna understand, let's say that your parents go bankrupt, or let's say that your parents die and have a lot of debt. How will those assets be treated by the creditors? In general, because that Roth IRA has the beneficiary designation, it will be able to pass simply to the parent's beneficiary, and in most states, it will have some form of asset protection on the account.

So I think this is a fairly safe approach. Not perfect, not bulletproof, you have to trust your parents, but most parents, most grandparents are not gonna raid their kids' Roth IRA accounts. So this is very useful. And always remember that, when you have to fund one of these accounts, you may not be able to contribute.

For example, your income might exceed the Roth IRA limits, but your parents might be able to contribute, as long as they have earned income, or an uncle might be able to contribute, or a family member, et cetera. So whenever you're trying to get money into an account, a Roth IRA account, an educational savings account, a 529 account, just look around the family tree and see where it might be able to be done.

529 accounts are another obvious example. There are many wealthy parents who can just simply give the contributions to their own parents, and then their own parents will establish the 529 account for the benefits of the children. 100% legal, perfectly reasonable, simple and easy to do, and with the exceptions of the risks that I pointed out, I think that goes a long way towards solving your problem, and doesn't leave you sitting in front of an IRS auditor trying to defend the idea that your one-year-old deserves $100 an hour for stuffing envelopes.

That's fine at six, that's not at one. So hopefully that'll get you through the first few years until your child can have their own earned income. And remember also, those ideas are not exclusive one to another. You can gift your child an amount of money equal to their earned income so that they can make Roth IRA contributions, and then you can also gift your parents an amount of money equal to the Roth IRA contribution limits so that your parents can contribute to a Roth IRA for the benefit of their children.

Now, I don't think the tax law is gonna stay the same as this, but think of if, this is the concept, meaning I think the tax laws will change at some point, and you won't be able to do this into perpetuity. But if each grandparent invested for 40 years, and then when they died, they left that account to their grandchild, there's a lot of tax-free growth and buildup that can happen in those accounts.

Now, finally, you could take that, and you could go even beyond, open up a checkbook LLC, have coordinated investing among their IRA accounts. Those of you who are in that world and kind of sophisticated you could search into that, but that's enough. Even if you just put it in stocks, it should work out well.

Next question comes in from Brett, Brett writes in and says, "Joshua, I recently discovered your podcast, "and I've really been enjoying your latest series "on asset protection. "As part of your deep dive, "would you mind looking into the role Bitcoin could play "in regards to asset protection? "After listening to your podcast, "I thought that a perfectly logical option "would be to liquidate all non-exempt attachable assets, "source Bitcoin from an OTC desk, "and self-custody in a hardware wallet.

"There's a learning curve and some technical challenges, "but I'm wondering what the legal ramifications "of taking an action like that might be. "The benefits appear hard to ignore. "Something to think about. "Thanks for a great podcast, Brett." I thought this was a really interesting question. Now at the core of the question, it's simply a matter of secrecy.

The question is, can I use tools such as the modern cryptocurrency tools, can I use those tools to generate secrecy around my actions? Now if you were to go back a few decades, you would find that secrecy was much easier to find in your banking affairs. You had the whole idea and concept of a numbered bank account, a numbered Swiss bank account.

You know, this idea, and it was real, that somehow maybe a Swiss banker might show up at your house and you hand over a briefcase full of cash, and then they go and put that in your account, and there's no way to trace the money. Unfortunately in the modern era, bank secrecy seems virtually impossible to find.

There've been a number of really problematic issues, and I'm particularly bitter about this, which you hear in the tone of voice, but the first major wrecking ball that happened to bank secrecy was the Patriot Act. In the wake of the September 11, 2001 attacks against the United States, the United States government passed the so-called Patriot Act.

And I consider this one of the worst things I ever in my life supported. I was a fool in those days, and I kind of had this idea, rah, rah, patriot, blah, blah, blah, and I didn't know what was in it, and I didn't listen to anybody who talked about how awful it was.

And today I'm just so embarrassed of that because Patriot Act is one of the worst pieces of legislation that has ever been passed in the United States of America. Because basically what it did was it caused the US government to enroll or enlist or to hire without pay the entire financial industry to be unpaid spies for the US government.

So when I became a financial advisor, I was trained on the know your customer laws and all of the anti-money laundering laws, et cetera. And so basically the US government, again, recruited anybody in the financial industry and forces everyone who is in the financial industry to work as unpaid spies for the US government.

It got worse in 2010 with the Foreign Account Tax Compliance Act that was passed, FATCA, where now not only did the US government require all the banks and financial institutions and insurance companies in the United States to be their unpaid spies, but now the US government forces all global bankers who wish to do extensive business within the United States to be their unpaid spies.

And so all bankers are required around the world to find out somebody's country of origin, where they're from, and if that person is a US citizen, then those bankers are required to send to the US government all of the information about the accounts that are held by that US citizen, and then all of the transactions and the information in those accounts.

And this was one of the problems where it became very difficult to open an offshore bank account, because many banks, rightly so, said, "Listen, the cost of complying with this law "is utterly ridiculous. "We're not gonna do your dirty work for you without pay." And they just simply stopped accepting US citizens as their customers.

Many US citizens lost their accounts, or basically had their accounts closed, and the bank said, "Come get your money. "We're done with you." And it became much harder for US citizens around the world to open their bank accounts, open bank accounts. Now, I find that entire thing unfortunate, but the problem is there is, as best I can determine, zero public support for changing any of those laws.

All a US elected representative has to do is wave the flag of terrorism or safety and/or money laundering, or we gotta fight the drug war, and people will give up every bit of their civil liberties and just happily trade it all in for some esoteric idea that somehow we're besting the drug war.

It's absurd, but that's the world we live in, so bitter rant over. Now, in the modern world, what do you do? It's very tough, if not impossible, to open a purely, actually secret foreign bank account, but yet the world of cryptocurrency does offer some really intriguing opportunities here, and that's what Brett's talking about.

And in essence, he's profiled a way to purchase Bitcoin with an anonymity, and then simply you can hold it in a physical hardware wallet that is designed simply to hold the Bitcoin. And so the idea is you're not doing business within the banking system. As long as you can make that transfer into the cryptocurrency system in an anonymous and private way, then now you have all your assets held secretly.

That's the basis of his idea. So let's talk about that. Is secrecy valuable? Absolutely, yes. As I've discussed, secrecy is a very useful primary defense in asset protection planning. In bringing privacy and secrecy around your financial affairs will protect you massively from the claims of your creditors. It really will, because it will help you to be, no one will know your wealth.

It helps you to be a smaller target. So is secrecy valuable? Is secrecy legal? Yes, as long as you don't falsify information, and that's where Bitcoin or other cryptocurrency transactions could be helpful, because the idea or concept behind Bitcoin is you can verify the transaction externally, so you don't have to prove who you are to a certain institution.

It is possible to buy Bitcoin anonymously, secretly. And have you broken any laws? No, there's no laws broken by doing that secretly. So the legal answer to Brett's question here, when he says, "I'm wondering what the legal ramifications "of taking an action like that might be," there are no legal ramifications for taking that action.

There are some significant potential risks, such as Bitcoin price collapsing, or such as Bitcoin becoming technologically outdated, what's the word that means? Obsolete, technologically obsolete. Bitcoin in many ways is technologically obsolete compared to some of the newer cryptocurrencies that have been developed to solve specific problems. Who knows how this market will shake out?

That's a hard question to answer, and I don't wanna get down that sidetrack, but there's no legal problem for doing what you've done. You can put your assets into anything, just like you can take all of your assets out of the bank, you can go and buy lottery tickets with them.

It's perfectly legal to do, lot of risk there. Now, where does the legal problem come in? Well, first, of course, if you don't pay taxes on your Bitcoin transactions, now you have a significant potential problem. And this is where it's really a problem if you are a US citizen.

It probably wouldn't be such a big problem if you were a citizen of Iceland, or if you're a citizen of Sweden. Iceland, or if you're a citizen of Kenya. Iceland and Sweden and Kenya don't spend billions of dollars maintaining a global police presence. Iceland and Sweden and Kenya, to my knowledge, don't read every email in the world, don't record every cell phone call that's made in the world, don't read every text message in the world.

They're not the world's bullies 'cause they're not the world's superpower. And so Iceland and Kenya and Sweden, their taxing authorities wouldn't necessarily have access to all that information. The US government does. And so you play a very dangerous game when you start to deal in that world and not report taxes.

Now, I don't think that the NSA actively sends information over to the IRS necessarily. I haven't seen evidence of that. But I would not be at all surprised to read in the newspaper next week that that did happen, that that does happen. So you're dealing with a very dangerous game if you go up against the US government.

And that's not a game that I would want to play. I try to play nice with bullies and follow their rules unless I think I can defeat them. And since there's no chance of my defeating the US government, I'm gonna play by their rules. They are the world's police force.

So you gotta think of that. The second problem you face is you don't have any legal protection in a court of law with what you have decided. And for all of its faults and for all of the problems, the US court system does work somewhat predictably. And the laws that are erected, as long as you're operating within those laws, they're fairly stout.

And so you don't want to run the risk of perjuring yourself by denying the existence of all of your assets in your hardware wallet. Now, that secrecy will help you to stay out of court. But if you're ever in court, if that secrecy is ever pierced, and you're ever in court, and if you lose a lawsuit, well, now, under penalty of perjury, you are required to undergo a debtor's examination.

You're required to answer all of the information asked about you and about your financial affairs so that your creditor can know where to go and look for the information. And so at that point in time, if you do what you've done here, and if you lie about it, there's a good chance that you'll go to prison.

Now, you say, well, if they prove it, yes. But to do that without any history, without any train of affairs, would either have to be, number one, very swift, done with very small assets. You can't put $10 million without stretching it out into multiple transactions, et cetera. And it would have to be perfect, absolutely perfect with covering your technological tracks.

It's not a risk that I would take. No, maybe you would. It's not a risk that I would take. And more importantly, it's not necessary, in my opinion. All of the tools and strategies that I have been talking about are entirely legal. And as long as you do things in advance, the court will respect, under the proper law, the court will respect the constraints of those, their actions will be constrained by the legal process that you followed.

And so your solution would be cheaper, but it's not nearly as good as an offshore trust. Properly documented, properly put in place. Because an offshore trust, a good offshore trust, built well, gives you the ability to fully and truthfully answer that debtors examination and avoid going to jail. Which is one of my number one goals in life, is avoid going to jail.

And secondarily, it will stand up to the courts. So you have to make your decisions as you see fit. And I think your plan is entirely appropriate for a good way for you to hold your crypto, if that's what you wanna do. It's just as appropriate as the average person taking out cash and keeping cash out of the bank.

It's just as appropriate as the average person going out and buying gold coins. You can buy gold coins anonymously and you can bury them in a coffee can in somebody's backyard. And it gives you tremendous safety and tremendous privacy. But just always be careful that you don't transgress against that law and potentially perjure yourself.

Because especially if you were a high profile person, it's not a game that I would wanna play. It just doesn't make sense to me to take those legal risks. I think you're better served, leave the United States, go get another citizenship or announce your US citizenship. That gets you out from underneath the thumb of the US government.

Choose a country that's not gonna chase you around the world and spy on all your emails. Choose a better country and then go ahead and you'll enjoy certain benefits there. So your mileage may vary, but I hope that's helpful in terms of thinking about the problem and considering some different ways to solve it.

Let's do one more today. Christina writes in with some questions about becoming a certified financial planner. She writes this and says this. I've been thinking over the last year or so that I wanna move into the world of finance and I pretty much decided that I wanna be a certified financial planner.

But I'm not sure exactly how to make the transition. I currently work in data analysis doing marketing and our company is very small. Three people plus a couple of developers. So it'd be kind of terrible if I just up and quit. But I've been helping a few friends with their finances all year and it's really fun.

And I know I'd rather be doing that all day. So I guess I have a few questions if you don't mind. Can I get started as a financial planner officially without the certification and how would I go about that? Is it possible or probable that I could find work part time?

Should I just do the courses first while I transition out of my current job or wait till I start working in the industry? I do have a bachelor's degree so I just need a certified financial planner specific courses. If I wanna move abroad for two years in the next three years, does it even make sense to start now?

Thanks so much, love your show, Christina. Christina, thank you for the nice words. To begin, yes, you can work as a financial planner without being a certified financial planner. I am currently talking about financial planning. I am a financial planner, but I no longer hold the certified financial planner designation.

I just quit paying them their dues. I got it, it was useful for me at a time. I quit paying them their dues. I didn't wanna deal with them anymore. And so I dropped, I'm no longer a CFP certificate. Now, the certified financial planner board is obsessive about protecting their trademark.

They would really, really love to own everything having to do with the words financial planner. I'm not gonna give 'em that. I'll give 'em certified financial planner. It's not on my business card. I don't use it anywhere, et cetera. I'm gonna respect their trademark on that term. But they can't own the words financial planner.

And a financial planner is simply somebody who helps people plan their finances. That's what it is. That's what a financial planner does. They help somebody plan their finances. And when I'm sitting here helping you plan your finances, I am engaging in financial planning. But I'm no longer a CFP certificate.

Those are the words that they would like me to say. And again, I'm happy to work with them. CFP organization does a great job. I have no problem whatsoever with what they're doing. But don't think that you have to be a CFP certificate in order to be a financial planner.

You can be a financial planner and never in your life become a CFP certificate. So don't let a credential or a designation keep you from pursuing the type of career that you would like to do. There are many people who engage in financial planning activities. We've been talking about asset protection planning.

If you were a lawyer doing asset protection planning, you're engaging in a form of financial planning. If you're an accountant helping people prepare their tax returns and giving them advice on their taxes, you're engaging in a form of financial planning. If you sell life insurance and you are helping people to buy life insurance policies, you're engaging in a form of financial planning.

If you sell mortgages, you're engaging in a form of financial planning. Now, those things are not usually the type of personal finance, comprehensive financial planning that covers insurance and investment planning, a little bit of state planning and tax planning. Well, that's the market that the CFP certification goes after.

But don't connect these words automatically. You can do financial planning without becoming a CFP certificate. Now, on that basis, the answer should be clear. Yes, you can get started as a financial planner officially without certification. Many financial advisors, and here again, my same little rant about financial advisor, most people engage in financial advice, but that is a term that usually goes behind a license, a government license.

Many financial advisors give financial advice and do financial planning without ever becoming CFP certificates. And so you could go that route. If you wished to become a financial advisor, you could go and do so. You can sign up with a brokerage firm, you can sit for your Series 6 or Series 7 exam.

You could go and become a registered investment advisor. You sit for your Series 65 exam and open your own firm. You could do that and never become a CFP certificate. So the problem here is not figuring out how to become a CFP certificate. The problem is figuring out what model of financial advice or financial planning would you like to engage in.

That's the challenge. So you could write a blog. You could help people plan their finances. You could create a podcast. You could create a YouTube channel. You could write books and help people to plan their finances. That route wouldn't involve any kind of insurance licenses. It doesn't involve any kind of investment licenses, just you giving out personal financial information.

You could be the next Gene Chotsky. You could also move in a direction where you sold some kind of financial product. And that's usually the most profitable way to be a financial advisor, selling some version of a financial product. You could sell insurance policies. You could sell investment products.

And you could sell those investment products with commissions. You could sell them and charge fees on the management of assets. Those are normal paths in the financial advice industry. And those are more profitable ways for people to give financial advice and yet be able to make a living and build a business.

Now, if you don't wanna sell financial products, and if you want to do pure financial planning, then in that case, you are going to be looking at a fee-for-service model where you're going to be delivering some form of hourly advice. You're gonna charge people $200 an hour or $4,000 for a package financial plan.

And in that situation, it's in my opinion, the hardest business model in the business. But if that's the route you wanna go, then in that case, you will be well served by becoming a CFP certificate, but you don't necessarily have to wait to be one. You've gotta become appropriately licensed, but you don't necessarily have to wait to be one.

Frankly, from what you're describing, I would probably look in the world of accounting. Because if you became some form of accountant or tax preparer, you could use that as a foundation to allow you to work part-time. That's a big challenge. It's how can you, you said, can you work part-time?

Yeah, you could do tax prep. Become an enrolled agent and do tax prep for people. And then with that foundation of clients, then you can start to add on those other comprehensive financial planning services. Can you do it going abroad? Yes, depends on what you mean by go abroad.

If you're gonna move to France and live in France for the next two years, you certainly can just simply work a stable business. If you're gonna go and spend the next two years backpacking around Europe and Africa, then it's gonna be challenging for you to run a business while you're constantly moving.

Now, you can always along the way educate yourself. You can build a plan. If you're actually going abroad, what I would focus on is trying to build up a marketing plan, a marketing arm. If you analyze the problem with a financial planning business, you usually have the problem of marketing.

And if you can solve the problem of marketing by having people seeking you out for advice, then you can figure out what business model works best on the backside. Regardless of what path you choose, you'll need to first solve the problem of what's your business model, and then you can figure out when and how and where to become a CFP certificate or to become a chartered financial consultant or to become a certified public accountant or any of the bazillion financial industry credentials that you wish to pursue.

CFP board won't pay you a dime because you get their credential. In fact, they'll charge you several hundred dollars every year if you wanna keep their credential. So don't think that having the CFP credential is gonna make you money. It's not. It might make you more hireable when you go to apply for a financial planning job, and it could be worth pursuing for that.

It might make you more likely to be hired by your clients because you've demonstrated your ability to gain a broad swath of knowledge and to help them solve their problems. They might appreciate your dedication to formal credentialization, but the CFP board will not pay you any money. So solve your business model problem first and then figure out the CFP model.

Beyond that, I would simply refer you, if you're interested in the business, go and read Michael Kitz's work, kitzes.com. Friend of mine is probably, I think, the most, one of the more popular financial advisor blogs, if not the most popular financial advisor blogs, and he is unbelievably prolific. So in reading his archives, you will find plenty of discussions of business models, et cetera.

Check out he and my friend Alan Moore built a platform called XY Planning Network that is specifically trying to change many of the business models and allow people to start independent financial planning businesses on their own fee-based businesses. They walk you through the appropriate licensure requirements. They'll help you write your Form ADV and all of the requirements.

I just say this, it's not easy, and you probably will need some experience. I think there are financial advisors who start with nothing and start with their own firm. I wouldn't have been smart enough or competent enough to do that. I think you need some experience. What I'd recommend is just change from your job now and go get a job in the financial industry.

And then once you've had a job or a couple of jobs in the financial industry, you'll have a better idea of the direction that you want to go. And you could do it with traveling. And there are a couple of people that I was friendly with XY Planning Network that do travel quite a bit.

So it certainly can be done, and it's increasingly easy to do, but it's not an easy business. It's a tough one. So hopefully that points you in the right direction, and thank you for writing in. Let's see another of the questions that I will take. Close with today's show.

Let me just simply ask you for one favor. If you don't mind, I would love it if you would leave a review for my show in whatever platform you enjoy using. If you listen on iTunes, leave a review in the Apple Podcasts app. If you listen on Stitcher, leave a review there.

If you listen to Google Podcasts, just whatever platform you're currently listening to me on. If you wouldn't mind leaving a quick review, I would be so grateful for that. I haven't really focused much on reviews recently, but I would really love to increase the numbers because that helps more people to find the show when they leave a quick review.

And just a word, many times people choose not to leave a review for a podcast because it takes effort. If you feel like you gotta sit down and write a paragraph of honest analysis, well, here are all the things that Joshua does well, and here's all of his annoying little quirks, et cetera.

That's great if you have the time to do that, but even just one sentence is really useful because at this point in the stage, the life cycle of Radical Personal Finance, the most important number is just the number of reviews. Five stars is awesome. I hope that the show is five stars for you, but when somebody's looking to subscribe to a podcast, usually they just simply look to see, oh, the number of reviews, and that helps my show to look like it's fairly well-established, which it is.

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Thank you for listening, and remember, if you'd like to call in for a Q&A, shall call in tomorrow, Tuesday, December 18th. Call in with that phone number, which I'll repeat it again for you here, 561-440-7362, 561-440-7362 at noon Eastern time tomorrow, Tuesday, December 18th, if you'd like to join the Q&A show.

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