Hey parents, join the LA Kings on Saturday, November 25th for an unforgettable kids day presented by Pear Deck. Family fun, giveaways, and exciting Kings hockey awaits. Get your tickets now at lakings.com/promotions and create lasting memories with your little ones. Today on Radical Personal Finance is live Q&A. 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 it's Friday, and every single Friday when I can arrange the internet connection and a semi-private recording environment, and my schedule, and my family, and all of the details, every Friday that I can do that, I record a live Q&A show with my patrons.

The patrons of Radical Personal Finance is of course a long-running support program for the show, people who appreciate the show, who enjoy it, and who say, "Joshua, you're doing a good job, and let me just send you some money." It is a much better program for me than going out and spending all my time chasing down advertisers, because it allows me to just spend my time serving you.

And so it's a long-running program. So if you'd like to support the show, and if you would like access to a Friday Q&A call, I would love it if you would do that, go to patreon.com/radicalpersonalfinance. Patreon.com/radicalpersonalfinance. We begin today with James in New York. James, welcome to the show.

How can I serve you today? I am a low to mid-60 years earning engineer in New York City, and I'm looking at moving my wife and I to travel the U.S. a little bit and get out of the city. We're looking at setting up our residency in Florida, and have made some moves in that direction, but wanted your advice on some of the specifics, or if you have any resources.

So to start, we've been in New York for a couple years, and we're looking to get out. My wife has a business with a partner who's in New York. However, we have been thinking about this for a while. So we actually set up the business as a Florida LLC, that is foreign incorporated in New York, in case that makes a difference.

And we are looking to, basically, we want to know what we need to do to sever any ties to New York. It looks like it'll save us about $15,000 a year, conservatively. So I will say my patron membership is going to have about a 30,000% ROI, which is not bad in my book.

Indeed, I like it. That's the kind of ROI that I like to deliver. When you leave New York, will you be able to not have any real property in there anymore? You'll be able to completely leave? Or are you still going to have any kind of connection at all with New York?

So we will not have any real property in New York. We will still probably be traveling to New York for my wife's business to meet her partner. We won't have any real estate or vehicles or anything there. It would just be maybe a couple months, a year we might visit.

Okay. So I would say the first thing that you want to do, just a general principle, and I'm not an expert on this, but I've read a lot on it and I've just tried to learn about it. So you should do the same thing, but I'll just tell you what I have learned.

The first principle is when you leave one place to go to somewhere else, you want to make sure that you completely cut any ties with that old place, especially if you are trying to make sure that you're a clear non-resident for tax purposes. Now, this is really important for those jurisdictions like New York or like California that are extremely high tax and are extremely aggressive about collecting that tax.

Right now, New York has had so many people who are leaving that they're really pursuing heavily people who are leaving and saying, "We've got to get those taxes." So I've seen several news stories about this, specifically about New York. So they're doing a lot of audits and they're doing a lot of things to try to make sure that people are actually leaving.

I think there was a recent court case, I can't remember the name of it, but there was a guy who was in the financial industry and moved to Texas and he was a New Yorker, etc. And it was all the way through to say, "What is the level of exposure to a place?

What's actually happening? Are people actually fully leaving?" So be prepared to go above and beyond so that you don't wind up in court on this stuff and be prepared to make sure that you fully leave. You want to make sure that you fully leave. So if you're in a situation where you won't need to own any real property, that will go a long ways.

Because there is no, to my knowledge, there's no clear-cut line. "Well, if you do this, then you've left. If you don't do this, then you haven't left." I don't know of any clear line on any of those things. So it's rather a cumulative test. And I think, if my memory is right, on the court case that was just settled, the key thing that the judge looked at that wound up being the case for the Texas guy to say, "No, he had actually successfully moved to Texas," was the fact that his dog, he took his dog to Texas, if memory is right.

And that was almost a linchpin. "Okay, yes, this set of facts shows that Texas was actually the residence and New York no longer was the residence." So you're dealing with fuzzy areas, and your goal is to stack up as much evidence as possible that you have fully left New York and you've fully moved to another place.

Now, in your situation, because you're going to become a nomad, it sounds like traveling around the United States, that's going to be a little bit questionable. But the first thing you want to do is you want to look at New York and you want to say, "How do I sever all of my ties with this place?" So if you own real estate, you sell the real estate.

And if you had a lot of -- for some people, that's something they don't want to do. And I don't think it's strictly necessary, but I'm just mentioning it for you because you're clearly going on and traveling. So here are some things that are often pointed to by attorneys as factors that they need to consider in figuring out where you live.

Things like the location of your permanent home, the location of your family, the location of all of your personal belongings, such as your automobiles and your furniture, your clothing and your jewelry. So you want to make sure that you don't leave any personal belongings in New York. The location of any social or political or cultural or professional or religious organizations that you have a current relationship with.

The location where you conduct your personal banking activities. The place where you conduct business activities is important. The location of the jurisdiction in which you hold a driver's license. The location of the jurisdiction in which you vote. The location of charitable organizations to which you contribute. All of those things are an important signifier of where your residence actually is.

So you are seeking to move to Florida, but then you're going to be a nomad. And the reason you're choosing Florida, of course, is Florida is one of the three states that allows nomad residency. So because, and the three states are Florida, Texas, and South Dakota. And so because these states are not income tax charging states, they have an incentive to allow this officially.

It's officially recognized. So the first thing that I would recommend to you is that you choose a location that you will use to signify your home address. And your best solution here is to look for the organizations that serve RVers. I'm not going to list any specific names because that would just become too time bound.

But if you just search the organizations that serve full-time RVers, you will find about a half a dozen of them. And there are many of them that are very big and that they're very good. And all of those organizations will have basically a mail drop service. So some of the big ones serve specific RVers.

Some of them are just mail drop services. There are several that advertise their services directly targeting full-time cruisers, people who live on sailboats, and full-time RVers. And all of those organizations, those companies that allow you to use their address information, will tell you how to become an official resident of that state.

In general, you will open an account with one of those companies. You will fund your account. Then you will fill out, and to do that you'll fill out some U.S. Postal Mail, the official U.S. Postal Service forms because you're establishing a mailbox. Then you will designate yourself as a resident of that state.

They'll usually give you an affidavit that you'll file with the local court system. In Florida, that's how it works in Florida. If you're going to use Florida and Texas, etc. So you'll file that affidavit with the county, with the state in Florida. And then with that, you will properly establish your residency.

So what you want to do is you want to move your car insurance policies to Florida. You want to make sure that you get a driver's license, get a Florida driver's license. If you want to be registered to vote, then register to vote in Florida. And then you can use that address and change that address as on all of your documents.

So that should be the address that you change on your banking information. That should be the address that you change on your credit cards. That should be the address that you change on your investment accounts, things like that. So the first thing I would do is I would make sure that I moved everything, I would move all of those things to Florida.

You'll have a Florida driver's license, cancel your New York driver's license. You'll have a Florida voter ID card, cancel your New York voter registration, and move all those things to Florida. Now if you're not going to be spending a lot of time in Florida, then I think it's a little bit questionable in terms of how do you set up those other locations.

How do you set up your social or political or religious organizations and things like that. But if you can, I would go ahead and spend a little bit of time in Florida. And if you're going to store your possessions, for example, if you're going to put personal property into storage, I would store it in Florida.

I would just try to create a nexus of location being in Florida. Then once you've done that, I think you have, as long as you stay out of New York enough to not trigger the New York residency issues, which shouldn't be a problem, then I think you've got a pretty strong case for your leaving New York.

File, of course, your final New York state and perhaps local income tax returns. Ask New York if they have some kind of final form. I don't know. I've never lived in New York. But see if there's any kind of final form. And then finally, to buttress this advice, I think you need to call a lawyer who specializes in working with Florida and New York residents, especially an estate lawyer, and just get a quick advice on anything that I'm missing, anything that you can do to further just make sure that you have an open and shut case.

But if I were you, that is how I would go about solving the problem. That's what I would do. That helpful, James? That enough to get you started? Yeah, that's great. And then one thing I have seen doing some research from RV sites, I saw that some make a distinction between, say, like a Mailboxes Plus or a UPS store that has mailboxes being different from, say, a campground that will also forward your mail because a campground or RV site can serve as your actual residence address.

Does that ring any bells to you, or do you know anything about that? Yeah, in general, so here's a little history on kind of the history of mail drops and mail businesses in the United States. I don't remember the exact year, but it was in the early 2000s. Prior to the early 2000s, you could basically set up any address anywhere.

And so anybody that wanted to offer a mailbox service could simply say, "Hey, I have some mailboxes," and they would sell that mailbox service. And you could use your address as whatever address you wanted. So if Joe, business owner on Main Street, USA, opened and put two dozen mailboxes in the front of his store and then said, "I'm going to be a local mailbox company," then your official address that was official for government documentation, etc., could be designated as Joe Business or the addresses of Joe Business, Main Street, USA, box number three.

And it was fairly simple. Well, then, as is generally common in the United States these days, the U.S. government officials decided that they were going to tighten everything up. And as part of this ongoing press towards national ID, this ongoing press towards removal of privacy, etc., that's just basically what feels sometimes like an inexorable pool, then they passed new laws regulating mail drop locations.

And so any business that is going to do that as a mailbox service has to officially register as a commercial mailbox agency, a commercial mail receiving agency. And the problem with that is that those databases now of post office addresses, mailbox addresses, UPS stores, etc., those databases are officially flagged as a commercial mail receiving agency.

And those companies who do that business are required by the postal service to file a whole bunch of official forms, just like when you--it's exactly the same whether you go and open a UPS box. It's exactly the same paperwork as you file when you open a post office box at your local USPS post office location.

And now the government computers have tags in them for all of those commercial mail receiving agencies. So, for example, if you want to go to your local post office, you can go, and now the post office, most locations will allow what's called street addressing. So you can have post office box 100, and you can say, "My address is 123 Main Street, number 100," and the mail will get delivered to your post office box.

That's new in the last few years. Previously, the business case for the UPS store was, "We allow street addressing so you don't look like a P.O. box," because the only way that they would put mail in your P.O. box was if it says, "P.O. box 100." Well, now the post office will do that, and the UPS store will do it.

But if you go down to your Division of Motor Vehicles, and you try to register that address as your home address for your driver's license, in general, the computer is going to reject it, or at least that's my understanding of it. I've heard that some people are able to successfully register that address, but in general, it's flagged.

And I have noticed more and more that those addresses are flagged in more and more databases. And so businesses are downloading those databases, and if you're required to say, "What's my home address?" you can't use a P.O. box. The only workaround I know of is to use some kind of temporary system.

So, for example, a campground would be one. I think that's kind of a gray area, but I think that if you're a longtime resident at 123 Maple Street Campground, then yes, you can use 123 Maple Street, number 12, meaning site 12, and that can work for many people, because those businesses are not designated as mail-receiving agencies.

It's a campground. And so I bet that would work. But then the only exception I know is those businesses that are specifically targeted towards RVers that are designated as commercial mail-receiving agencies, but because of that official NOMAD status, because of that certain thing, that specific thing, then those addresses will go through into the driver's license system, et cetera.

You can use them on government identification, et cetera. So that's my understanding of how those laws have developed over the last 15 years. And by the way, for anybody who is interested in that subject, just the way that I put that through is I went back and I was always curious about it.

So I read a bunch of old books that I found from books that were published, privacy books that were published in the '80s, the '90s, and then the 2000s, and then bringing them current. And I watched in those books how the techniques had to change as the laws changed.

So there's been this constant press against privacy, and I've observed even in the last year or two, I've seen how more and more the opportunities for privacy are being diminished. And the allusion that I made to National ID Card, which has long been a source of political contention in the United States, I was referring there to the Real ID Act, which in my opinion is basically a de facto National ID Card, that social security number.

As the Real ID Act has been implemented, it's accomplished what is basically with one or two holdout states, which I hope they hold out, become a National ID Card. But I don't have much confidence of them holding out. We go now to Anne in Maryland. Anne, welcome to the show.

How can I serve you today? Hello. Yes, I hear you now too. So I have a question about life insurance and disability insurance. We can start with life maybe and if we have time for disability. So it's just us, my husband and I, and he works at a university and I'm self-employed.

So our life insurance and disability insurance coverages are only through him, and we haven't done yet anything to supplement them beyond what's provided at his work. And so I don't understand a whole lot about this, but what I see from his paycheck and from the website of the university benefits side is that we pay basic life -- well, they pay basic life insurance that says $20,000, term life and accidental, and we also pay supplemental.

And then there is spouse-dependent life added on top of this. I don't know if it's enough information for you, but please let me know what question to be answering. So the way that most benefit programs like that work in the United States is a company will often offer a small amount of life insurance to all of their employees as what's called a fringe benefit.

You can exclude in the United States under the U.S. tax code, individuals can exclude up to $50,000 of insurance coverage, of term insurance coverage from their income as just a small fringe benefit. And so as part of an overall package, many companies will provide that for their employees. And then you also have the option of adding a spousal benefit, and so the insurance company will offer this policy, and it's a guaranteed issue policy where anybody who signs up can get the coverage.

Now it sounds like the amounts are quite small. $20,000 is not much, and then thus the amount for you would also be fairly small as well. Are you aware of how much total life insurance you can request and get through that particular policy? Yes, they're small. You're getting cut off, so I don't know if you're asking whether you want me to tell you what the monthly contributions are or what, but they look small to me.

Right. How much total insurance coverage can they provide for you? I think I can hear you now. Yeah. So we're having a little bit of audio problems due to a problem with my internet connection, so let me just give you a little lesson first and give you just generalized advice, and then we can follow up later in written form or something so I can give you more useful personal specifics.

So in general, the way that those programs work is they will provide a small amount of life insurance, a token amount of life insurance coverage, and the monthly premiums that are required are not much. They're only a few dollars usually. The reason is just simply because there's not much insurance coverage.

$50,000 of term life insurance for almost any person is only a few dollars per month. So I don't see any reason not to participate in those programs if they're available to you. The great thing is they're guaranteed issue policies, so you don't have to usually take a medical exam, or if you do have to answer any medical information, it's what's called simplified issue or simplified underwriting, where they don't send out a nurse to take your blood and see how much you weigh.

You just simply answer a few health questions. As long as you don't have cancer, don't have a heart attack, et cetera, then you can get the coverage. Now, if you're going to be very strict about what's the best deal, usually those policies aren't quite the best deal because of that guaranteed issue underwriting.

But the dollar amounts involved are usually so immaterial that it really doesn't matter. If you want the cheapest deal on insurance, the cheapest deal on insurance is going to be to apply for small, inexpensive term life insurance policies that are individually underwritten. And as long as you're healthy, that will give you large amounts of insurance at a very low cost.

So what you should do is figure out how much insurance you need, which if both of you are working and if you're in a good financial situation is probably not much, if any, and/or how much insurance you want. So you might look at it and say, you know what, I understand that if he died or if I died, the other spouse could continue on, but let's go ahead and just get $250,000 of term insurance coverage, and it's only going to cost us $15 or $20 a month, so why not?

It helps us to feel good and to make sure that our together financial plan will still be able to succeed, even if one of us dies. But in general, that's going to be the best buy, is to go out and buy an inexpensive term life insurance policy. It sounds like both of you would probably be well served by just something like a 10 or a 15-year level term insurance policy.

So that would be the cheapest way to get some life insurance in force and to protect one another from an early death, and I think the most efficient way to approach it in your situation. So I had some Internet issues on my end here today, so I'm not going to be able to get the second part of Ann's call for today's Q&A call.

Let me move on to a couple of questions that were asked by some patrons in written form. The first one comes from a patron, and he writes in and talks with this question. It says, "How do you advise someone to develop an overarching investment strategy or philosophy?" I'm wrestling with questions like these.

One, active versus passively managed mutual funds. Two, how much in retirement versus non-retirement accounts. Three, how much in traditional stock markets versus less traditional. Four, how much in mutual funds versus single stocks. I love stock trading, and I do better there than with my mutual funds. Four, what mix of stocks and index funds do you choose?

I'm not looking for answers to each individual question, but rather a framework by which I can build or elevate an overarching philosophy or approach. I give this question a crack with just a few thoughts to consider, not hoping to give a complete answer, but a few thoughts to consider.

In general, I think that we should focus on our best returning activities. We should focus on our highest returning activities and understand that the people who really win big time are those who make a lot out of an opportunity that they have. Those are the ones who wind up winning the most.

If you look at the mega wealthy, you very rarely will find somebody who is mega wealthy who became that way with a scattershot approach. You want to focus on what your best opportunity is. The trouble is that in the employee paradigm, in general, the best opportunity that an employee has is in getting a better job.

So I think the first question you need to ask yourself is, are you the type of person who is well suited to employment? Or are you the type of person who is well suited to entrepreneurship? If you're well suited to employment, then I think the bulk of your time and energy should go into enhancing your career and your career potential.

The bulk of your time and energy should go into figuring out how do I increase my income by a thousand percent? How do I go from a low or middle tier employee to an upper tier employee? I always like the example of the guy, I forget his name, but the guy who's the CEO of Walmart.

And it's a little bit true, but it's also a little bit apocryphal that he started on the loading dock at Walmart, but now he's the CEO. Now, that is true that technically he did start on the loading dock, but clearly he was not your average loading dock worker. He was clearly a motivated and focused and very intelligent person to make that career transition.

But if you're the CEO of Walmart, making tens of millions of dollars per year in salary, stock options, retirement programs, etc., you don't need to really worry about wealth because it's coming as a component of your job. So it would be very silly for the CEO of Walmart to spend his time focusing on how can he perfectly perfect his investment portfolio.

His most blindingly obvious financial opportunity is to improve the performance of Walmart so that the board of directors will give him more and more and better bonus compensation. That's his obvious financial opportunity. And so he should focus all of his time and attention on figuring out how to enhance the profitability of Walmart.

That's where his time and attention should be, not on perfecting his portfolio. That man's best investment solution is to hire a highly qualified team of financial advisors who are going to invest in an intelligent way. And then with their advice and their input, he should choose what portion of his money he wants in absolutely safe and secure investments and what portion of his money he wants in more speculative investments.

And he'll probably have a number of different approaches. But the point is his economic engine is not his investment allocation. He might take a speculative jump and say I'm going to buy an apartment building in Brazil or I'm going to buy a company in the Ukraine or something like that.

He might speculate on stuff, but he should never be advised that that's his primary focus. His primary focus is on his income. Now most of us are not either interested in or ever going to be the CEO of Walmart. And so you say, well, where should I focus? Well, if you don't have an opportunity like that in your career where you can go up, you're working in a small company, and there's not a big opportunity for you to massively improve your career, then you want to look at it and say, well, is there some other way that I can do something else?

And so you should consider entrepreneurship. There are so many benefits to being an entrepreneur and also many, many hardships. But from a purely financial perspective, entrepreneurship probably provides one of the best returns on investment for somebody who is oriented in that direction. You can get so much benefit by taking $100,000 or $200,000.

And instead of putting that money in your 401(k) and a mutual fund, you can get so much benefit if you go and open a subway franchise or go and open a carpet cleaning franchise or go and start your own thing or do something that appeals to you. And so in general, I think you have to do an assessment of what are my interests, what am I actually interested in.

I don't love what has happened as a result of the financial advice industry. And I don't think this is necessarily intentional. I just think it is. And whether it's intentional, whether it's some evil conspiracy or not, you can judge. But in general, most people are so conditioned by the financial advice industry that when they think investment, they automatically think 401(k) and they automatically think about funding that 401(k) with a mutual fund or with a stock portfolio.

Well, that's great. But the problem is that may not necessarily be the best thing for most people. And the reason people are conditioned to think that way is because the mainstream professional financial advisor community, that's what we can sell to. So I can go in and I can make a very handsome business selling 401(k) plans and 401(k) plan management and 401(k) asset management to companies.

And the average company likes it because it removes, it allows them to offer a retirement program for their employees without the same burdensome funding requirements of a defined benefit pension. The average employee likes it because most people like their jobs. They like working. They like their employment opportunity. And they like a little bit of retirement savings.

And it works really well for the financial advisor. And the reason that stocks, especially publicly traded stocks, are so popular is not necessarily because they're the best investment, but because they're the most easily sold investment. So I can come and I can sell you, if I were a licensed financial advisor, a stock broker, I could sell you stocks and I could take a commission.

I can sell you mutual funds and I could take a commission. So are those effective? Sure. They're not ineffective, but are they the most effective? Well, all I can say is when I did that work and I did that business, one of the things I kind of came to realize was I couldn't point to many of my clients that I had actually helped to get rich.

Rather, all of my wealthy clients seemed to have one of two things in common. Either number one, they earned quite a lot of money and they exercised frugality and they saved a lot of money. Or number two, they made a lot of money starting a business of some kind.

Or they become excellent investors, usually in real estate, where they're the most leverageable returns. Now, you don't have to do it with those things. You can become a wealthy investor speculating in stocks. You can do it. But those are just so specialized, they're just tiny percentages of people who do it.

So my practical observation shows me that you either need a high income or you need your own business, which will probably make a high income, to build wealth. And basically, when I worked through it all, I realized that even in the financial advice business, the reason that I was going to get rich as a financial advisor was not because the stocks that I sold were the world's best thing or because the insurance policies were going to make people super rich.

It was because I had created a platform of leveraged equity, of synthetic equity, basically, where I could use other people's money to profit. And it's a great business model. And I don't think there's anything wrong with it. I think there's a real ability to serve people. I don't think it's unethical.

I don't think it's immoral. But I do think it needs to be clarified for people that they recognize that's not necessarily their first and best approach. Now, today, as an entrepreneur, I'd never go back to that because as an entrepreneur, I have unlimited options. And the options that I have are far more potentially productive than is investing in big stocks.

Now, I have no interest whatsoever in the stock market. I don't. You almost never hear me do shows about it other than fairly cursory discussions of it because I'm just not interested in it. I consider it to be the most fraught, dangerous place where I'm competing against the most brilliant people in the world who have the biggest research budgets, who have the world's biggest computers.

And what little advantage do I bring to the table when I'm not even actually that interested in it? I do think there is an opportunity for people who enjoy stock trading, who are into it, who spend their time thinking about it. Who enjoy the analysis. I think it can be done.

And I actually think it can be done very efficiently by individuals who don't have all the same problems that big money managers do. I've talked to enough of them. I've read enough of their stories. I'm convinced there's an opportunity if you're into that. I'm not into that. Every time I talk to a trader or an investor who sits around and does charting and they got to sit in front of their charts for three hours a day or four hours a day, I convince myself yet again that this is the worst way I would ever want to earn a living.

It's not for me. I don't enjoy it. I'm not interested in it. I'd go and be a college professor before I would do charting. But that might not be you. So the point is, do you actually -- are you into charting? Are you into that kind of thing? And so I think you follow your interests first.

And then you try to figure out how can I most effectively and efficiently deploy these interests. Since I don't enjoy charting and since I don't enjoy that stuff, what I've realized for me is that mutual funds and publicly traded stocks, et cetera, in addition to all of the ethical quandaries that I have with what I label as the immoral behavior of many of these companies' principles on a variety of issues, but it's just not very efficient.

I don't have any ability to make the tax code work for me in that world. Yeah, I can do a 401(k), but why would I not take my 401(k) and turn it into a self-directed 401(k) and get the same leverage of the 401(k) and yet be able to apply my own individual investment acumen?

Why would I not go to an -- why would I work to deal in the world's most efficient market when the world is full of inefficient markets just waiting for an intelligent, thoughtful person with a little bit of cash to come along and exploit some opportunity? It just doesn't make any sense.

And it especially doesn't make any sense when I don't have any stocks to sell. So hope that's coming through clearly is that basically I don't think there's anything wrong with it. I just don't think it's all that great. So unless you are an employee and your best opportunity is in your job and you don't have time or you don't have interest in something else, that's the people that I think should buy publicly traded mutual funds.

Those are the people that I think should just focus on their jobs and live a happy life, go home at night and hang out with their wife, hang out with their kids and not worry about it. But for other people, I think it's really silly to pursue that stuff because it's just -- it's too slow and it doesn't give you any benefits along the way.

I gave advice to a guy the other day. And while skipping several of the details, he had left his job and he had put in place several businesses. One was a real estate investment business. I encouraged him to start a media business. He had several other businesses associated. And so he was in the place where he was running about four or five businesses.

I think that's a far more fun life and it has far bigger opportunities, financial opportunities. There's much more leverage with him with his ability to use other people's money, with his ability to use marketing, with his ability to use the market, one of the many ways to multiply your efforts in your marketing message, in your customer base, et cetera.

That's much more interesting to me. And along the way, it's a much more efficient way to live because now significant portions of his expenses are business deductions, significant portions of his travel are business deductions, significant portions of his life can move from earned income, which is highly taxed, into capital gains income and dividend income, which is more lightly taxed.

It's just a far better solution for somebody who is interested in that. So I see no reason whatsoever for that kind of guy to stick money into mutual funds that he can't control, can't affect, can't do anything, other than as perhaps just an ultimate backup insurance policy in case you screw everything up.

And I always think about that. I always think, "Okay, what happens if I become a total failure? I make bad errors in judgment. I make bad investments. I make bad moves. I've made a ton of those. I'll probably make a ton of those in the future. So how do I make sure I never get wiped out?" That's how I start with developing an investment strategy or philosophy.

I try to help someone analyze, "What are your opportunities? What opportunities do you have?" And then follow those interests, follow those opportunities. And then all the other stuff just kind of naturally comes into play. Active versus managed mutual funds? I don't know. I find that question difficult. I find it hard to argue against the arguments of the passively managed mutual funds.

But at the end of the day, I don't really believe it. I have seen enough excellent investors, and I'm convinced that some individuals are able to get outsized returns, enough to compensate for the risk and the cost, and yet I don't know how to tell people to do that.

So how do I? I don't know. And that's the problem. You have to ask the question, "Are we dealing with the mainstream? Everybody?" Well, I could never get up and publicly say that everybody should go out and try to pick active mutual fund managers. But I don't believe for an instant that some intelligent, thoughtful, expert people can't do that.

I don't buy it. So I don't know how to tell you that, because if you're asking the question, you probably should just go with the normal tried approach and buy some index funds and not do it. But if you're asking the question, you might be able to adjust it.

I don't know. I don't know how to answer that. How much in retirement versus non-retirement accounts? It depends on what you want to do with the money. If you need money to start a business because you've got a business idea, you're going to develop an app, or you're going to open a store, etc.

Well, you can't do that with money in your retirement accounts. But if you're going to do some, I don't know, buy real estate, and you have a lot of money in a 401(k), and you can put more, put together a couple of accounts and do a self-directed IRA, then put a lot in retirement accounts.

I've proven that retirement accounts are very efficient. And especially if you have a lot of earned income, about the only way that you have to shelter earned income is business losses, possibly real estate depreciation, but primarily investment, retirement accounts. So if you have a lot of earned income, you need the retirement accounts in order to keep your income down so that you can accumulate money more efficiently till you get it over to capital gains and dividend income.

How much in traditional stock markets versus less traditional? Well, what kind of returns do you have? If you can get 7% in a stock market, but your own opportunities to get more are 8%, well, go get the stock market, right? Buy an index fund and get 7% if you can't find an opportunity to do better than that.

But if you've got an opportunity to deploy money at 40%, or at 20%, or at 100%, then why would anybody choose to invest in the stock market when they have those opportunities? And those opportunities are out there. They're just usually not able to accept tons of money. Warren Buffett can't get those opportunities because he's got too many billions that he's got to put into it.

But there are things left and right. You can have 100%, 200% returns with $20 all day long, every day, through frugality, through lowering expenses, through bulk buying, through discount programs, through couponing, through credit card rewards, etc. You can have possibilities for thousands of dollars all the time, hundreds of thousands of dollars.

There are massive ways to multiply the money. It just gets harder when your money gets bigger. So I say, "How much money do you have? How do you find that?" And that's where we start with traditional stock markets versus less traditional. And then how much time are you willing to devote to it?

It's very hard for somebody who's a stressed out middle manager, making 50 hours a week to come home and spend their time researching an investment opportunity. But it's very easy for an entrepreneur to come in and spend three days researching an investment opportunity. That's what I love about being an entrepreneur, is I can come in on Monday morning, I can sit down at my computer, I can look at my goals, I can look at what I'm doing, I sit down with a cup of coffee and I can say, "Where's my best opportunity to maximize things?" And so if somebody calls me and says, "Hey Joshua, there's this opportunity," I can get in a car and go look at it.

I can get on a plane and go look at it. I can get on the internet and go look at it. And I don't have to deal with that 50-hour-a-week workweek thing to do that. But I'll just tell you this, it's been brutal to get here. And I don't think most people would do it.

If you asked me today how to become an entrepreneur, I'd say, "Probably don't do it. It's too much work." Because there have been a lot of late nights and a lot of tears and a lot of work and a lot of frustration along the way. But once you get there, it's pretty cool.

So what mix of stocks versus index funds do you choose? I think it comes down to your confidence and your skills. I think that stocks are fundamentally strong if it's well chosen. Just think about this. Let's say that you only invested in one company. Just one. But one big company.

You invested in a Walmart. You just bought stock in Walmart. Now, I don't know if Walmart stock is a good buy or not a good buy. I have no idea. But I do know this. If I had an entire portfolio of Walmart stock, I had $2 million of Walmart stock, I would sleep very well at night.

Even if that were my only investment. Because if you actually stop to think about what that individual stock represents, that is an incredibly robust business. Walmart owns billions of dollars of real estate. Walmart has income from all across the world. Walmart has hundreds of thousands of employees. Walmart has incredibly brilliant managers, incredibly loyal business people.

Walmart has a very interested inside people, inside investors, the Walton family and all the other big investors in the company. The board of directors is very involved. They've got excellent management. Are you telling me that I should not sleep well at night when I own a business that earns money from all over the world, that has incredible lines of revenue, everything from the sale of products to the sale of intellectual property to financing arms?

When you look and say there's hundreds of thousands of people working together in this business, you're telling me I shouldn't sleep well at night because I'm supposedly not diversified? That's absurd. It's absolutely absurd. The same person that will say, oh, you shouldn't sleep well at night because you're not diversified owning $2 million of Walmart stock is the same person that doesn't have any money and has one job that they live on.

Well, that's scary to me. The chances of a person with one job and no money to back them up but just earning their income from one job, the chances of them facing problems versus the chances of me facing problems with $2 million of Walmart stock, they're the ones in a tough bind when they lose their job.

Walmart goes down 20%. So what? I turn my budget 20%. There's no chance in the world that Walmart will go from $100 in value to $0 of value. Not going to happen. Now, in theory it's possible but there will be so many telegraphed indications of that that there would be warning signs, etc.

Now, does that mean that the Walmart portfolio is without risk? No, of course not. It absolutely has risk. And so risk such as them being unpopular, the risk such as inside dealing. I mean, there's a reason we talk about names like Enron, these big things where the company managers were corrupt and there is risk.

And so I'm not against diversification. What I am against is the idea that somehow owning one company is not diversified. You can't make that argument and not at least discuss how diversified that is. Now, if your one company that you own is a shell corporation that owns one patent or one drug patent or something like that, then yeah, that's not diversified.

The drug doesn't work out, everything falls apart. But you could just own Walmart and you've got incredible diversification. Now, what about index funds? I think the index fund argument is strong. You can sit back and, you know, my friend Jim Collins recommends people just own the Vanguard Total Stock Market Index Fund.

I don't have a bit of a problem with this approach because if you look at what an index is, this representative sampling of thousands of companies, it takes what I said about Walmart and puts it through the roof. And it's that times everything. I mean, that's the most robust.

I would sleep great at night having just a portfolio with $2 million in Vanguard Total Stock Market Index Fund in it. I would never lose sleep over that. I would never even bother buying a bond fund. I just buy the stock fund because I would sleep great at night.

And you look into the self-pruning aspect of the index. You look and consider the argument how strong the scrutiny is, the regulation on all those companies, the government regulators, et cetera, the open accounting records. I think it's a wonderful way to invest. Now, what's better for you? How do I know?

Frankly, I'm not interested in either of those because I want to make more money and I have better and more productive opportunities than either of those. And I think you probably do too if you're interested in it. But if you're interested in stock investing, no argument. So those are some ways of basically talking around the comment to say, "I think you should start by looking at what's your most productive opportunity and then focus there." If you have a lot of money, then you have to look and say, "How can I deploy the money?" If you have a lot of opportunity, then use your opportunity.

If you don't have an opportunity, then figure out, "Is there a way that I can create opportunity?" et cetera. But I don't know how beyond that answer of looking for your best opportunities while protecting your downside. I don't know how anyone would answer that question. What I do know is this.

You don't have to just take the standard Money Magazine approach. It's not that it doesn't work. But the reason the standard CFP Money Magazine approach works is if you have a high income and a high job -- high income. And it works if you have a high income. You compare somebody who is a successful attorney making half a million dollars a year.

They can live great. They can put 20% aside in investments. Their big focus is just on their law practice. They're doing well. They're going to be rich. And the value to them of buying an index fund or buying a mutual fund or buying some stocks is through the roof.

Because it would be silly for that attorney earning half a million dollars a year to go and take their time looking at a $50,000 rental property that they can buy at the tax lien sale or something funny like that. There's just -- there's not enough opportunity for growth in the rental property versus the opportunity they have in their career.

So that's how I think you look at it. Mutual funds, index funds are very well suited for people who have stable careers, who can have big career opportunity. They're not suited to people who don't like that kind of lifestyle and who want something else and who want to put their money to work some other way.

Those are my thoughts. John writes in with this question. He says, "Joshua, I'm interested in 529 plans. Currently, I'm active duty military and have given my GI Bill to my daughter and her grandfather has started a 529 for her as well. We plan to have at least one more child and hopefully two more and I will divide the GI Bill amongst those children.

One, is it wise to open another 529 for my daughter? Two, if she doesn't need or use that money, can I change that to another child at a later time?" Well, John, I'm not super familiar with the GI Bill so you'll have to be the expert on that. What I will say is that certainly if saving for your children's and your future children's college education is important to you and if you can start at this early age, then yes, a 529 plan is an excellent way for you to do it.

It's of course even more valuable to you if you live in a state where you can receive a deduction on your state income taxes for the 529 plan. The 529 plan is kind of a mixed bag of benefits in my opinion. In general, it's my opinion that it's oversold because the people who use them usually start too late and they don't put enough money into them for the tax deferral to matter.

Remember how the tax deferral works. What a 529 plan allows you to do is to avoid paying income tax on the gain in the account as long as the funds are used for qualified educational expenses. Now, I think in general, for the average family that says I've got a 10-year-old or a 12-year-old, for them to open a 529 plan and put $10,000 in it for their 12-year-old, it's probably not going to make a difference because there's only six years for the money to grow.

We don't know if the money will grow much and it's basically a feel-good kind of token idea that isn't going to make that big of a difference just in terms of the actual dollars and cents. Now, that's not the case for you. For you, your children are young enough in that they are not yet conceived.

Your children are young enough that you could really benefit from the tax deferral. So, if you put money in and you can have the money sit there and grow tax deferred for 20 years, then yes, that's plenty of time for the tax-free nature of those gains when used for qualified educational expenses to be really, really substantial.

And if you have the money now and/or your parents have the money now, I think a 529 plan is really valuable. Now, you can't open a 529 plan for children who are not yet born, but what you can do is fund the 529 plan for your oldest to the maximum amount, which is huge.

You can get a lot of money into a 529 plan. And then just simply change the beneficiary designation in the future as you have more children. And so, there's very little danger in funding the account. And I think that there are really good reasons to fund it more and more.

One of the biggest reasons is that 529 plans now allow you to use the money for qualified primary and secondary school education expenses. Previously, if you wanted to pay prior to the 2017 Tax Cuts and Jobs Act, anyway, a year or two ago, the only account that you could use to pay for private school expenses, for primary and secondary school expenses, was a Coverdell Educational Savings Account.

But in the recent tax reform bills, the 529 account was updated so that that would include now primary and secondary school expenses. So, you can now use 529 plans to pay for private school tuition. That can be a big, big deal. What I'm hoping happens, as thank you to a listener who brought it to my attention, this week, there is a new bill called HR 1994 that was passed out of the House Committee Ways and Means Committee.

The HR 1994, the working title is the Setting Every Community Up for Retirement Enhancement Act of 2019, which will be known as the SECURE Act. But this bill was passed out of committee in the House Ways and Means Committee with good bipartisan support. And it's my not very learned opinion that it's the kind of bill that could possibly be signed into law by Congress.

Now, it's got a bunch of things in it. Some of them I like, some of them I don't love. But there are a couple of things that will be very useful for personal finance aficionados. One of them being that if this bill becomes law, that 529 plans will be expanded to be able to pay for costs associated with registered apprenticeships and homeschooling and up to $10,000 of qualified student loan repayments, including those for siblings.

I really hope that comes through because if it does go through, then I will become a huge fan of 529 plans. Because first, I'm already a fan as long as people recognize the limitations that the tax deduction, if you start late and don't put much money into it, or sorry, the tax deferral is not that valuable.

But if you start early and put a lot of money into it, the 529 plan does have a lot of benefits. In Florida especially and in the vast majority of states, it's a creditor protected entity account. It's considered to be a completed gift for estate tax purposes, which is extremely useful.

It's a completed gift for estate tax purposes. But even though it's a completed gift, you can still exercise control over it, which means that you can fund it for your oldest child. But if your oldest child becomes a deadbeat, you cannot give it out to that oldest child. You can make massive contributions to it up front.

You can split your gifts into it. So you can open an account. If you have $100,000 windfall, you can put $100,000 into that account, splitting the gift between you and your wife. So huge, huge flexibility. And you can get pretty decent investments. You're going to be limited to mainstream mutual funds, but you can get good mainstream mutual funds in the 529 plan, low-cost mainstream mutual funds.

And if those funds can now pay for homeschool, I'm sold. I'm a bigger fan when it comes to private school. If you are a wealthy person, you think you'll have children in the future, you know you'll spend private school expenses, then I definitely think that you should be funding a 529 plan.

I think as long as you can get the money in early enough, this is a good, good solution for you. And it's even a good solution in creditor protection and asset protection planning because the funds that go into the 529 plan, they can cover something. Even if you're not getting a big tax deduction, because you're not generating much income in it, you can move.

Let's say you've calculated that you're going to pay $100,000 in private school tuition for your children. You can go ahead and move that from an unprotected account to a protected account if your state exempts 529 plans from the claims of creditors. So I do really like them, and I think that you're in a good situation.

It's relatively easy to get the money out of 529 plans because of the flexibility on the beneficiary. You can adjust the beneficiary for a very long period of time. You can get the money out, and then at the end of the day, if you need to take it out and you can't figure out a way to spend it on qualified education expenses, you can get it out and it doesn't cost much.

It's a good thing to do. So don't put too much, but definitely. I think that you should fund them, and I think that you especially should fund them because it can provide you with the opportunity to pay for your expenses for not only college, but also primary and secondary school expenses.

Now, I need to look into what a registered apprenticeship program is. I don't know what that is. But man, if this thing can come to the point of doing homeschooling, I'm going to be a big fan because my bias against college is that college is the easiest thing for your kids themselves to pay with.

And so if these plans can expand opportunities for the things that your kids can't pay for, your eight-year-old can't be expected to pay for a comprehensive, wonderful education. That's your job. Your 18-year-old, they can pay for their own education. It's easy. Any person who wants to go to college, United States of America, can go to school, get a high-quality accredited degree, working part-time at a fast food restaurant.

There are so many cheap options there. It's great. And I don't think the expensive options of college are worth it. But your eight-year-old can't pay for that themselves. And so now that 529 plans are expanded for private schools, that opens up huge opportunities. And remember this, I haven't dug into the IRS publication since I did the big, huge series on 529s for the show a couple years ago.

But remember this, your 529 plan can be used for any institution that qualifies for federal loans, for federal loan use, which includes institutions abroad. So the ultimate thing is if you -- let's say that you're in the military and you put money in a 529 plan and your child dies and you and your wife can't have any more children.

What do you do with it? Well, use it for your education. Go sign up for school in Paris and use the 529 account to pay for your classes in Paris and your housing to cover you while you're in Paris. And that's an entirely legitimate, appropriate use for the 529 funds.

And the same thing opens up opportunities for children because now that these cover -- and again, I need to dig into the IRS documents. But where my head goes immediately is put the money in the 529 account and then now you have an opportunity to use the money for neat educational opportunities for your kids, even if they don't ever cover homeschooling.

It'll cover neat educational opportunities for your kids like dual enrollment, but foreign exchange student programs, things like that. I bet you that we can figure out a way, following all the rules, to send your kid to China for the summer and pay for the tuition for that using 529 funds, things like that.

So there are so many ways, there are so many different kinds of private school tuition. Sign up for the semester at sea and put your kids through the semester at sea or the year at sea or whatever it's called where they spend the time traveling around the world in a big cruise ship studying as well.

All that stuff can be paid for out of these accounts. And so as long as we can keep those rules going and pay for legitimate but actually interesting and useful educational opportunities, then I think it's worth doing. So that's my answer. My answer is yes. But just put the money in for your daughter that you have now.

And then as you have more children, you can adjust the beneficiaries when you need to. There's no reason to worry about that right now. There's no reason not to do it if you have the money and it fits your personal goals. So that's my thoughts for you, John. Hope it's helpful to you.

That's it for today's show. Sorry about the kind of difficult internet connection for some reason. I thought I had great internet, but for some reason it didn't work out very well with these callers. So if you'd like to join me for the very next time that I can record one of these shows with a stable internet connection, come on by patreon.com/radicalpersonalfinance.

I'm going to support the show there. I just want to thank you. I haven't promoted the Patreon program a lot. I've struggled with whether I should just cancel the program because I don't like Patreon censorship and their anti-free speech status. It's kind of just the same problem we all face, or at least I face, if you are like me, an advocate for liberty and people's ability to express themselves.

I think that dangerous ideas should be argued over, not tried to be suppressed. All you do if you try to suppress things is give them more weight. Unfortunately, in today's world, most of the big businesses, the big Silicon Valley businesses, the Facebook, the Twitter, Google, YouTube, Patreon, all these businesses basically have chosen to say, "We're going to police the world.

We're going to police the opinions of the world." And my general bias is to say, "I'm just going to be done with this and stage my protest against it because I don't like it." And that's certainly my general impulse and my bias. I'm trying to learn to be less principled, not to make so many just principled arguments, and try to be a little bit more practical.

It's the reason I haven't deleted my Facebook account yet. I mean, I don't like the thing. I haven't been on it months and months, but do I really need to join this revolt? Is this the best thing? And so with Patreon, I've struggled to know, do I promote it to you or do I not promote it to you?

And I've never known what to do with it because I have a hard time continuing to want to be in bed with them. But on the other hand, they've built a really good platform. And although I don't like what they've done to some people, I understand why they've done it, and it's just very frustrating.

So I look at it this way. If you don't want to buy anything that I'm selling, but you want to say, "Joshua, hey, here's a couple bucks a month," I don't know of a better platform than Patreon that makes it simple for me. And the thing that I do with it, which is using it to meter these calls so I can just have four or five callers, etc., I think works out really, really well.

So I appreciate those of you who support me on Patreon. I really do. And I would invite you, if you gain value from this show and you'd like to send some money to me, you can just send me money, of course, without Patreon. I'll give you my address. But you can also join me on Patreon, patreon.com/radicalpersonalfinance.

And my favorite thing is using it in this way for these calls. I love to do that because it allows me to publish it to you, and you know, "Hey, Joshua's got a call." I love the conversations with you. So I'd love to talk to you next time I can do one of these calls, patreon.com/radicalpersonalfinance.

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