Welcome back to Portfolio Rescue. Finance can be a complex place. There usually is no black and white. A lot of times there are shades of gray. That's why a lot of people have questions. They email us, askthecompoundshow@gmail.com, and we try to answer them. Today our sponsor of the show is Liftoff Invest.

Our automated investing platform runs through Betterment's technology. Duncan, on the show today we're going to answer a question about dividends. Every week from Liftoff I get an email saying, "We reinvested the dividends in your portfolio." I'm going to talk on the show today about why this is important for your long-run returns.

Check out LiftoffInvest.com. We have an advisor who can ask questions there. Automated investing, financing, tax-loss harvesting, pretty great program. I see in the chat, David Wysocki. I know he loves a good dividend. We have some dividend investors. InsideJerk, he emailed us. He had a pretty good 2022 probably. Dividend blue chips did okay.

Let's get into the first question. We've got a bunch of questions today. First up today we have, "I've been sitting on $450,000 in cash for 18 months. I have a house that's paid off and no debt. It feels like no matter what decision I make, it's going to be the wrong one.

I can't even bring myself to buy Treasuries paying 4.5%. My income is steady enough to pay the bills for the foreseeable future. What do you guys think I should do?" This is kind of a not to brag, but also a cry for help. I could offer you a bunch of different investing options, stocks, bonds, alternatives, whatever, real estate, give you their yields, historical returns, a range of expected outcomes, but that data would be less than useless.

Because this question has nothing to do with numbers or spreadsheets and everything to do with the psychology of getting invested in the first place. I think you need to figure out why you're having such a difficult time making a decision about what to do with your money. Is it the fear of loss?

Is it the fear that you're making the wrong decision at the wrong time? Are you scared you're going to miss out on another opportunity? Maybe some people are just convinced that markets are going to continue to go down. Maybe rates will continue to go up, and stocks will come down, and you're going to miss out on a better buying opportunity.

So, whatever the reason, there's some psychological variable that's keeping you in quicksand. You know you should put that cash to work, but there's some combination of fear and inertia that's just making you stand pat. So, it's kind of like I could give you the world's greatest workout plan, right?

I could tell you exactly when to work out, what gym to go to, here's your diet, here's your exercise routine, but if you can't make yourself go to the gym or prepare the food, it's essentially useless for you, right? So, I get it. We're all dealing with this level of uncertainty about the future that's totally irreducible, right?

The craziest thing to me is people actually assume that when there's a bull market and things are going up, things are more certain. And when there's a bear market and things are going down, they're actually less certain. But it's the same in both scenarios, right? No one knows what's going to happen in the future, and there's nothing we can do about that.

So, whether there's inflation, deflation, booms, busts, you never know. So, my only advice is, whatever you choose to invest in, stocks, bonds, treasuries, something else, just create a plan, stick with it, put that money to work. And I think you're probably going to have to do our old dollar cost averaging thing here.

That's kind of automated and rules-based. Invest on a set schedule, don't worry about timing things perfectly, and just make an investment you can live with regardless of the outcome. I think that's the whole thing, is thinking in terms of process over outcomes. You could make a really good investing decision and have a poor outcome over the short term that you kind of regret and kick yourself about.

But if you made it for the right reasons, then who cares? It's about making good decisions over and over again, and eventually you just want a good batting average. So, you're not going to be able to control what the markets are going to do, but you can control how you react to them.

So, I think you just make a plan with the understanding that it's never going to be perfect, there's no optimized portfolio, there's no perfect time to get in or out. I think, for a lot of investors, perfect is usually the enemy of good. So, I think, as I like to say, even a suboptimal plan is better than no plan at all.

So, just come up with something that you can live with, and just do it, instead of worrying all the time. Bonds are down, stocks are down, they could go down further, but this is a pretty good entry point for someone sitting on cash for 18 months. You've already made it through the storm this much.

Get to work. You have to invest in something, because the alternative is, you're not going to have enough money someday, and you're going to fall behind on your standard of living. Right. And yeah, they say they feel like they're going to make the wrong decision no matter what. I mean, it seems like they've made a lot of good decisions, if they have that much already.

So, yeah, I feel like they're maybe second-guessing themselves too much. Because yeah, that's a pretty impressive cash flow there. Yeah, that's the thing. If you narrow it down to a point where you've got six figures of cash saved, and you've got no debt, and your house is paid off and all that stuff, again, you've made some good decisions somewhere along the way.

So, don't let the idea that you have to have the perfect portfolio or the perfect investment at the perfect time. Just doing something is better than doing nothing. Because again, doing nothing means you're for sure going to fall behind. You know, you could have a poor outcome if you invest, but there is one way to guarantee you have a bad outcome, and that's never invest in anything.

Right. Inflation. #inflation. Right? Yes. Burying your money in the backyard or under a mattress is not going to help much. So again, come up with some sort of plan. Write it down. Stick with it no matter what. And maybe this is a good time for a journaling thing. You write down the reasons for your investment ahead of time.

And that way, even if the outcome is worse, you put your money into stocks and dividend-paying stocks or something, and they go down 10% this year. If you kind of had a good reason for investing them in the first place, and you're going to have a time horizon that's more than a year, then it doesn't matter what happens in that short period of time.

Something is always going to go wrong. I think it's just, yeah, you just have to get to work. That's it. Yeah. Good advice. Let's do another one. Okay. And that was Joe. So up next, we have a question from Nick. "My wife is interviewing this winter for a long-term job starting in the fall.

She's applying all over the U.S., so there's a good chance we'll be moving soon. When moving to a city you don't know deeply, do you think it's a good idea to immediately buy a home?" Ben, one of our places that I could pan out is Ann Arbor. How's Ann Arbor?

What should we expect coming from Philadelphia? It seems like a very personal email. First of all, congrats. It's very exciting moving to a new place. I'll start with the second part first. Ann Arbor is an awesome college town. I think especially for young people moving to a college town, there's pretty much always going to be something to do.

So great food there, great downtown area, lots of job opportunities. If you're a Michigan fan, you can go see some games potentially. Ann Arbor is a great place to live. Google even opened up a huge campus there like five or six years ago. So again, there's a lot of opportunities there.

Coming from Philadelphia, the weather shouldn't be that much different. Actually, they get some snow in the winter, but not nearly as much as we do on the west side of the Michigan here because of the lake effect stuff. So Ann Arbor's also a pretty good location in terms of getting into their places.

Detroit is 45 minutes away. You want to come over here and check out some brews in Grand Rapids. We're talking two hours maybe. Three, three and a half hours to Northern Michigan, which is one of the most beautiful places in the world in the summer. And if you like skiing, pretty good skiing in there in the winter too.

So I would definitely sign off on Ann Arbor as a potential place to go. As far as the housing part goes, I think there's probably some questions you need to ask yourself since we didn't get all the information here. So first one for me is always how long do you plan on staying there?

My general rule of thumb is you probably shouldn't buy a house if you don't plan on owning it for at least five to seven years. Why? Switching costs eat into any price appreciation you might have in that amount of time. So closing costs, realtor fees, moving costs, all this stuff adds up.

There's a lot of frictions involved. Plus the majority of the payments you're making early on in a mortgage go more towards interest than principal. So you're not probably, unless you have a housing boom like we had in the last 18 to 24 months, you're probably not going to make much headway in way of building any equity in that short of a time.

So obviously life can always get in the way, but I think maybe you get another job opportunity. Your wife's got to move somewhere. But if you can't really plant that flag and move in there for five to seven years minimum, I don't think it really makes sense to buy a house.

Now the other one is do you have a family? Do you have children? Right? Because there are many reasons to buy a house, but if you have a family, a big one for most people is buying into a good school district. So is that important to you? Does that matter?

We have really good public schools in my area and it wasn't the only thing that made us buy here, but it's certainly one of the things that helps keep us here. It's a good ROI on my tax dollars that I'm not having to send my kids to private school.

I think it also depends on how quickly you can make these types of decisions. My wife and I can make this kind of decision in an afternoon. We see a house or we see a piece of furniture or we see a car and we immediately can make a decision because we put a little thought and research into it.

Other people could take weeks, maybe months sometimes to understand, is this the right neighborhood for us? Is this the right house? Some people are happy to poke around on the internet and discover neighborhoods they might like. Other people need to live in the actual area. Duncan, I don't know how you ended up in Brooklyn, but I'm sure you had put a little research in there, right?

Yeah, it was like three flights to New York from DC at the time and just wandering around and trying to find places, looking on Zillow. You probably asked like, do 50% of the guys in the area have a beard? Check. I'm moving there. Yeah. Right. And we learned what was important to us, that we didn't want to have a hole in the floor, you know, stuff like that, which is some of the places we looked at.

Next time you should probably figure out a place that doesn't have neighbors that let their pipes burst. That'd be a good thing. So I think it comes down to how picky you and your wife are about choosing a place to live. It's obviously can be a nerve wracking decision moving to a new place and it's exciting, but I think in terms of buying a house, unless you really can say, we for sure know where we want to live and we for sure know this is the place.

I think it's okay to rent for a while and see, plus now is not a bad time. I don't think you need to be in a rush to buy a house at this moment. If we're trying to put a macro spin on this, I think you still have a little time to think through things and housing prices could still come in a little bit.

So actually the timing might work out for you. Also keep us posted on where you end up. If it's Ann Arbor, enjoy Zingerman's Deli. That's the place everyone always is told to go when they go there. So you're saying you still have a short position in the housing market?

Is that what I'm hearing? If I was buying a house right now, I would not be in a hurry. I think if mortgage rates are going to stay up, I think we still have time for housing prices to come in a little bit. That would be my general stance.

If mortgage rates go back to 4 or 5%, maybe we'd take that off the table pretty quickly and it goes back up. So that's my thinking there. Makes sense. Everyone in the chat is calling out Traverse City as a good place for northern Michigan. Good call. That's my hometown.

Parents still live there. Honestly, the waters there look like Caribbean in the summer. Three months out of the year, it's one of those beautiful places in the world. Nine months out of the year, weather's not great. Take up snowshoeing. Quarter of the year is not bad, I guess. Yeah.

Let's do another one. Up next, we have a question from George. "Should most investors reinvest their dividends? My initial thought is that it makes sense to reinvest while still accumulating wealth. What about after retirement? I've read stats that say a large percentage of compound returns come from reinvesting dividends, so it seems like a good move and another way to dollar cost average on a smaller scale, but maybe I'm missing something." Before we get to this one, someone in the chat did say, "Treasuries vs.

Treasuries. Do you spell it with a Y or an IE?" Were you doing a survey there, Duncan? I did. I did a survey, yeah. I've never seen it spelled with a Y before, but we did a little internet sleuthing and you can spell Treasuries with a Y, even though it looks really bizarre to me and it kind of hurts my brain.

Yeah. It definitely looks weird, but I knew I'd seen it somewhere. All right. George asks a good question about dividends. And it's a question that seems basic on the surface, but I think is one a lot of investors probably don't put enough thought into. So let's look at the history of stock and market returns to show how important they have been over time.

John, do a chart on. This is the S&P 500 price-only index. So this is 1928 to 2022. This is price-only. This is the index you see every day when it opens and closes. Total return, more than 21,000%. Annual return, about 5.8%. So again, this is price-return only, no dividends reinvested.

So that's not bad, right? Now what if we factor dividends reinvested for a total return number? Now we're talking that 5.8%. Take this one off for a sec, John. Now we're talking 5.8 jumps to 9.9. So that's 70% higher when you reinvest the cash flows back into the market.

But total returns aren't just 70% higher because compounding works exponentially, not linearly, right? So the total return with dividends included goes from over 21,000% at a 5.8% annual return to more than 750,000% at a 9.9% return. So that's around 35 times higher. So $1 invested in the US stock market in 1928 with reinvested dividends is like $7,500 by the end of 2022.

Not bad. It should be noted, this doesn't take into account things like taxes or fees or the fact that it was basically impossible to reinvest your dividends for the '30s and '40s and '50s and '60s, but that's a pretty good bump, right? So, Jad, you can do the chart off for a sec here.

Does this mean dividends are the main source of returns? Not necessarily, because part of this is just the fact that even a small increase in returns can lead to massive amounts of compounding over 95 years. Obviously most of us don't have the luxury of having a 95-year time horizon, so this is kind of just for instructional purposes only.

But even over more realistic time horizons, reinvesting dividends can play a huge role. So, I have like 95 years of good stock market data, which is good enough for three non-overlapping 30-year periods, right? The returns don't, or the years don't overlap. So, most investors should have a 30-year time horizon if they're saving for retirement, and maybe even some people who are retired, as we discussed on last week's show.

So, John, now I'll throw up this table. I broke up three periods, 1933 to 1962, 1963 to 1992, 1993 to 2022. Three non-overlapping 30-year periods. I looked at the price returns. You can see they range from 6% to 8%. Then I looked at the total returns. They range from 9.5% to almost 13%.

Obviously, investing towards the bottom of the Great Depression in 1933 was a pretty good entry point, after stocks fell something like 85%. So, I show the growth of $10,000 for each of these, with just price returns than just reinvesting dividends. And you can see that the growth is like anywhere from two to three times higher by reinvesting your dividends, even though the annual returns are much less than two to three times higher.

So, reinvesting your dividends can have a huge impact on your long-term results if you diligently reinvest them. Now, back to the original question, it probably does make sense for some people in retirement, if they want that income, to use their dividends or bond income or whatever else their sources of income are to spend when they move into withdrawal mode.

I think you just have to be smart about the timing of those cash flows. Maybe be kind of flexible. So, maybe you're reinvesting dividends when stocks are down like they are now, and taking money out from elsewhere. And then, maybe when stocks are going gangbusters, you actually take that money from dividends.

Maybe you can be a little smarter about that. The point here is not that dividends are some magical source of returns. I think that even slight edges in your portfolio, compounded over long timeframes, can really add a ton of value to your portfolio. So, that's setting a reasonable asset allocation, rebalancing, keeping your fees low, not turning your portfolio over a ton of times, keeping turnover to a minimum, and not doing a ton of portfolio overhaul.

So, I think it's hard to wrap your head around the idea of investing for 10, 20, 30 years when all we hear is the minute-by-minute and week-to-week economic data. But, compounding really is a beautiful thing as long as you just stay out of your own way and allow it to work in your favor.

That's the point here. Muckerman: Yeah, there's something nice about CIMU's dividends coming in every quarter. Lewis: And, people look at the dividend rate, and we talked about this before, they think it's not that much. But, even adding just a little bit to your long-term, especially over multi-decade periods, it really can add huge returns over time, especially from a dollar value.

Muckerman: I've wondered before how much advantage there is to companies that pay a monthly dividend versus quarterly, just because it's even more averaging in. Lewis: I guess the market goes up over time, so that's kind of a dollar-cost averaging lump sum thing. It makes sense to invest your money earlier, usually.

Tell your oat milk company to start paying on a weekly basis. Muckerman: Hey, you made fun of me for that last week. But, hey, they're up a lot over the last two weeks. I'm still cut in half, but if you got in two weeks ago, you're doing pretty well.

Lewis: I'm talking about 30-year periods, and Duncan's talking about two weeks. Muckerman: Up next, we have a question from Anne. "Trying to wrap my head around all the changes to the tax code and retirement contributions for the new year. These things always confuse me because it's hard to tell the stuff that's actually in play versus political talking points for future legislation.

My husband and I are in our 60s, and we hope to retire in a few years. We're still saving for retirement and don't necessarily feel like we're quite there yet in terms of how much money we have saved. Thoughts on how we can save money either in our retirement accounts or through tax returns?" This is a tax question.

Interesting. Lewis: It is. So, the only thing I really pay attention to in this regard is retirement contributions. The tax stuff, I go to the experts. So, we have a person just in mind to answer this question. Let's bring on Bill Otzeroni in. Hey, Bill. Otzeroni: Hey, Bill. Lewis: I think just last week on one of our Slack channels, you put together this handy one-pager for all of our advisors and said, "Hey, guys, here are the tax changes for 2023." And there was a lot of stuff on there, which kind of surprised me.

It's not just a minimal amount of things, right? So, let's start. What are some of the big differences in terms of tax rates or retirement contributions or qualified dividend taxes that people can think about for 2023? Otzeroni: Yeah. Can we take a step back and talk about moving from Philly to Ann Arbor?

I'm a little concerned about that individual. As a Philly guy, I'm not feeling that one. Anyway, if it's a career move, I get it. New year, new taxes. Ann, thanks for the question. I want to do a general rundown of different contribution limits and some changes from '22 to '23.

These are changes that happen annually, but some of the increases this year were a little larger than normal, given the inflationary environment. Lewis: So, they do take inflation into account for this stuff? Otzeroni: Yeah. It's almost a cost-of-living adjustment. Not all, but some of the changes this year were larger than they have been in the past.

Here's our chart. Thanks, John. For IRA and Roth IRA contributions, the increase was only $500, which is pretty standard. Because of the dollar amounts, it's a smaller increase. So, in '23, you can now contribute up to $6,500 to a traditional or a Roth IRA. And if you're over the age of 50 at the end of the year, you can add an extra $1,000 on top of that.

Now, Roth contributions and deductible IRA contributions may be limited on your income, so not everybody's eligible, and we're going to touch on that in a little bit. The big changes are really the 401(k)s and employer plans. If you're covered by a 401(k) at work, you can contribute up to $22,500 in 2023.

Lewis: That's a pretty big bump. Yeah, it's a $2,000 increase. And then the catch-up was also increased last year. The catch-up contribution for folks over the age of 50 has now increased to $7,500. So, if you're 50 years of age or older at the end of 2023, you can now do $30,000 to your 401(k).

Same with any defined contribution plan, which 401(k)s fall in that bucket. So, if you're over the age of 50, the total limit between employee contribution and employer contribution is now $66,000, or $73,500 if you're over 50. That includes the catch-up. And if you're self-employed, if you have a SEP IRA, you can do $66,000 as well.

Unfortunately, for SEP IRAs, there's no catch-up, so you can't do the extra $7,500 if you're over the age of 50. But the good news is, people can defer more taxes now. Yeah. Yeah. So, these are the annual changes to help you defer more and more taxes or put away more in retirement.

Some of that could be tax-free if you feel like a Roth is more appropriate for you. And we also had some tax policy change with the Secure Act 2.0, which just passed a few weeks ago. Again, a lot of changes to the retirement savings game. So, speaking of Roth contributions, we're big fans around here of the Roth contribution.

Employers, historically, have been only able to contribute pre-tax money, like traditional 401(k) contributions. But starting in 2023, employees can now designate their employers' contributions as Roth. Self-employed people, for a SEP IRA, a simple IRA... I actually didn't know this. So, the match before only went into traditional, not Roth?

Correct. And starting this year, we can, as an employee, myself, I'm 31 years old, I'm going to elect the Ritholtz contribution to be a Roth contribution now. Okay. I got to tell HR to change mine, too, because I make my Roth 401(k) because Bill told me to. That's right.

Also, we have some tax bill jokes in the comments here. Not bad. Another tax bill. Get it? There are two of us. We multiply. And not to plug ourselves, but we are looking for another tax associate. And if your name is Bill, you get put right to the top of that list.

Shoot your shot, people. Yeah. Yeah. Send him those applications. Though, I don't know, how does it look this time of year right before, you know, filing for someone? It's a weird time to make a job change. We honestly don't expect to find somebody until the springtime. Okay. Yeah. After April, probably, right?

Yeah. Exactly. All right. Got another one? Okay. Up next, we have a question from Matt. My wife and I will have our first year married for tax treatment in 2023. We have both contributed to our Roth IRAs up to the max for our working years. We are 27 now.

I, humblebrag, am probably starting a new job that will have our combined income above the Roth IRA contribution limits of $218,000 to $228,000 in 2023. I'm a little confused. Y'all can talk about this, maybe, about why it's a range and not just a number. But what is the MAGI?

What is in the, hold on, what's MAGI? Modified Adjusted Gross Income. We'll just, we'll call it MAGI. Okay, MAGI. For now. What is in MAGI has never been that straightforward to me. So, I wanted to reach out and see what deductions we can take to try to lower our MAGI so we can contribute to our Roth IRAs.

Can we take the standard deduction and 401(k) deductions to lower our MAGI? We have no student loan or housing debt to potentially subtract. Are there other common deductions we can take, or is our best bet to do a backdoor Roth conversion? MAGI's a new one for me. But lowering your tax bill is one of the reasons you get married in the first place, right?

Right. Not really, but what, so this is their first time doing it. They're trying to look through this. What are some simple ones they can do if they want to get in that lower tax bracket and maybe do the, get in the Roth, unless the backdoor's just their easiest route?

Right. So, I want to answer Duncan's question first, because I think that helps. So, there is a range to be eligible for a Roth contribution. Our guy, Matt, here has it right. For 2023, if his modified adjusted gross income as a married couple is north of $218,000, he starts to get phased out.

And by $228,000 of income, he can't make a Roth contribution at all. So, that's the range you get into, Duncan. So, we're, obviously, Bill Sweet and myself, we're big fans of Roth money around here. Let's talk about that modified adjusted gross income, that MAGI first. John, can you put up that chart?

Thank you. So, this is like an order of operations for how taxes work. So, you take all your sources of income, all your gross income, wages, dividends, interests, capital gains, whatever else you have. The good old US of A basically doesn't exclude any of your income. So, almost assume all of your income is in that first bucket there.

And then, important to note that in that gross income bucket, your pre-tax payroll contributions, like if you're doing traditional 401(k), if you're paying medical premiums out of your paycheck, that's netted against your wages. So, if you're maxing out your 401(k) and you're also paying medical premiums, that might be $20,000 to $30,000 that you're knocking off of your income.

And then, you're allowed to take, we call these above the line deductions. That's where you see these adjustments here. Most of these are related to self-employed people. So, it sounds like our guy, Matt, here may not be eligible to really reduce his income. One of the deductions he may be eligible for is a health savings account contribution.

You have to have a high deductible health plan. But if he does, and he's on a family plan, he could contribute and deduct up to $77.50 in 2023. So, I don't know that we have a ton of options for Matt here to reduce his adjusted gross income. - Well, the biggest one to me would just be max out your 401(k).

Right off the bat, that's the biggest one you can probably take, correct? Unless you can do a SEP IRA with, like you said, your own business. But max out your 401(k) at 27. If you're maxing out your 401(k) from 27 on, you're going to be a millionaire someday. And it's probably not going to take that long.

So, do it. That's what I would say. Max out your 401(k). - Right. And Matt's talking about how can you get more into the Roth bucket. And if he's above this income, his thought was, "Let's go back to a Roth." And I'm not going to go into every way that can work, but basically, a backdoor Roth is a way for folks who have high income to contribute to an IRA or a 401(k) and then convert it tax-free to Roth.

It can get messy. So, consult a tax advisor, specifically a tax advisor named Bill, if you want to make a backdoor Roth contribution. But if you can, and John, let's do that last chart up here. If he has a backdoor Roth 401(k) eligibility, and more and more employers are offering this now, basically, your total limit from Matt is going to be $66,000 this year.

Let's say he contributes the full maximum $22,500. Let's say the employer kicks in $10,000. If he has the backdoor Roth 401(k) eligibility, he could do another $33,500 after tax and then convert it to Roth. They're very specific steps to take to make sure you don't screw this up. But there is a way for Matt, if he's eligible, to put away $66,000 in a Roth bucket this year.

So, Matt, if you don't have a side hustle, create one and then turn it into a business. Put more money away. He's got to have at least two side hustles. All right. Everyone under the age of 30 does. All right. Let's do another one. Last question. Okay. Up next, or last but not least, we have a question from Mason.

"I'm curious about your thoughts on when to hire a personal accountant. I'm asking as someone who's never had one or known the benefit of my parents using one, but what are things to consider? Is there an income at which it becomes materially more valuable? My taxes are pretty straightforward.

W-2 employee. I don't own any real estate or have overly complicated capital gains or losses. My income is creeping higher into the six-figure range and not sure if it's worth hiring someone to help optimize taxes." I have just a personal anecdote here. For me, it's just really important that the person that helps with my taxes can dunk on a regulation basketball goal.

But that's just a personal thing. That's why I'm your guy, Duncan. I got you. I don't know. He's a dad now. You can't dunk in white New Balance shoes. It's impossible. Okay. So how complex do things have to get before bringing a professional in? Is it income levels? Is it sort of other financial obligations?

What do you think? And how does someone... We talked to Bill Sweet about this, about figuring out which CPA to hire, but how do you get to the point where you know that, okay, it's time to talk to someone? I think there's three factors here. Number one is just opportunity cost.

We pay people for different services for different purposes. Mason, if you don't like doing your taxes and you want to outsource that and you're willing to pay for it, it's like, Ben, you pay somebody to mow your lawn. Michael Badnik pays somebody to fold his laundry. We do stuff like this to outsource stuff we don't want to do.

I have the plow come do my driveway because that way I don't have to get out in the morning in 30-degree weather and turn the snow plow on. It's okay to outsource. Exactly. It's okay to outsource. Number two is when things get complicated. I don't know if this is an income thing or an investment thing, but when you're worried that...

When you want peace of mind that this is being done correctly, that's the time to pay somebody to do this for you. It could be real estate investments, small business ownership. It could be crypto. It could be as the dollars increase, as your wealth increases, the numbers get bigger, so do the risks of doing something incorrectly.

And then number three is when you're in need of advanced tax planning. What we do here in our tax group, it coincides with the work our investment advisors do is we do a lot of planning. We consider the tax prep to be kind of table stakes. And what we're doing is we're meeting with clients throughout the year for short and long-term tax planning.

And that's proved to be extremely valuable to the folks that we're working with. And so if you're looking longer term, rather than just saying, "Hey, do this tax return for me," if you have longer-term goals, taxes may play a large part in that. And that's when you can bring somebody in with a niche in tax planning.

I think if you're also someone who's willing to A/B test a little bit, you could try to do them yourself and then have a CPA do them for you and see how much value they actually add and how many things they find that you maybe couldn't have found yourself.

And then kind of run a cost-benefit in terms of, well, I'm paying them $500 or however much you pay them and figure out whether that's worth it or not for the stuff that they're helping you do and how much easier they can make your life. And you can always go back if you just find there's not enough value there.

When Sam Bateman Freed did his own taxes for FTX, right? So, I mean, you're never too big, I guess. TurboTax, right? No, you said QuickBooks, right? He was in QuickBooks. I don't know who did the actual tax return, but they were doing their bookkeeping and it was comical. All right, Bill, one more question for you since you're a new-ish father.

Any big changes to your family finance now that you have a dependent? So Alex Palumbo, who's been on the show, makes fun of me for this all the time, but not really because five years ago, I opened a 529 for our future children. And I've been saving for five years before the kid was even here.

So that's maintained itself pretty regularly. I thought I got ahead of the game by opening a 529 the day our kids were born, basically. But you got ahead of the game a little bit. Yeah, that was a little loophole that I got through. The biggest change right now is we're just not, my wife and I, we don't buy ourselves anything.

All our money goes to the kid. And rightfully so, she's adorable. But my wardrobe is going to get pretty worn out in a short matter of time. My one piece of advice, find yourself a good vacuum once they start eating, okay? Because you're going to put like 100,000 miles on that thing.

Do you have a recommendation? Maybe we can get a sponsor, a vacuum sponsor? I use the Dyson. The Dyson cordless handheld, I probably use it five times a day. Kids produce millions and millions of crumbs a year. Good to know. Good to know. Okay. All right. Any questions for us, leave them in the chat here on YouTube on the side.

Send us an email, askthecompoundshow@gmail.com. I want to thank Bill for his tax advice. Remember, if your name is Bill, reach out to us and let us know if you want to work on our tax team or if your name's not Bill. If you're listening to this podcast, leave us a review.

We have a new Compounded Friends tomorrow, right, Duncan? That's correct. New Compounded Friends tomorrow. Hit that like and subscribe button. Keep those comments and questions coming, and we'll see you next week. See you, everyone.