(beeping) (upbeat music) - Welcome back to Portfolio Rescue. We had a week off last week, 'cause I was on spring break, and so we have a ton of questions built up. Today's Portfolio Rescue is sponsored by Bird Dogs. Duncan, when I was away in my office, I got a new shipment of these bad boys, right?

- Nice. - Now, I was in Florida for a week, and all I wore all week was Bird Dogs, because they're comfortable, they have this nice little side pocket, they have the liner in here, right? You tried it for the first time. I've been wearing these for years, but especially in the summer, they're great, because you can wear them for working out, you can wear them for walking, you can wear them in the water, it's great.

They really are the sort of short for everything you can do in the summer. I have two main things I look for when I'm thinking of fashion. One is style, I gotta be a little stylish, and the other one is comfort, right? I've gotta be comfortable, and these things are very comfortable.

You can wear them on a lot of different occasions. And if you go to birddogs.com, what's our promo code? Promo code Rescue. - Rescue. - You get a free Tumblr, right? Coffee, I don't drink coffee, but I know there's people who do. Get a free one for promo code Rescue.

- Yeah, and you weren't lying about the side pocket. It's much more comfortable for your wallet. - Right, yes, and it's not gonna fall out, and if you're not sitting on it, yeah, that can lead to problems down the line. You get into middle age, right? That's tough. - Yeah, yeah.

- All right. One of the features we've been talking about a lot on Portfolio Rescue is iBonds. Got a ton of questions on these. The rate topped out at 9.6%. The new rate comes every six months. The next one down, inflation came in a little bit, it was down to 6.9%.

Now today, Bloomberg tells us 3.8%. So we had this huge rush into iBonds. Maybe it could go back up if inflation rises again, but it seems like the really great returns on iBonds and the great yields is, that time has passed. It's over. - Yeah, yeah, I went ahead and redeemed.

I told you it felt like a Winnie the Pooh meme thing. It seems like it should just say withdraw, but instead of withdrawing your money, it's redeeming. So I went ahead and redeemed mine. Not just because I'm a great market timer and that kind of thing, but also because we just moved into a new place, and so there was a lot of cash needed for deposits and that kind of thing.

- So using the Treasury Direct website was fine? It wasn't a problem? - It actually, yeah, it was like a couple of clicks, and yeah, in like two or three days, I saw the redemptions hitting my account. - I have a feeling now that rates are lower, we're not gonna hear anything else about these for a long, long time.

- Yeah, I feel like they're probably gonna lose a lot of their shine now. - All right, let's do a question. - All right. Up first today, we have, hey, lads. - This has gotta be from someone either-- - It's a lad rush. - This has gotta be someone from Australia or England, right?

- Yeah, it makes me feel cool. - I can't pull off lads. - No. Hey, lads, I'm a huge fan of the pod and one of the knife catchers who purchased a house in Q1. As someone with a 6 1/8% mortgage from a recent home purchase, I'm weighing my allocation to stocks versus early mortgage payoff.

I have a long time horizon as someone in my mid-20s and a needlessly large savings account, not to brag, I've been waiting to deploy. Do I look at early mortgage payments like a 6% or so tax-free bond or should I ignore the idea and just buy equity indices as usual?

Their background is $200,000 income, which they say is about $47,000 in New York dollars, very high risk tolerance, they own another home, and five-figure 401(k) in their mid-20s. Wow. - Very, yeah, this is a not to brag and also a very nicely, they got a lot of inside jokes here.

From a hurdle rate perspective, yes, early mortgage payments these days can compete with bonds again, right? If you're talking 6 1/8, they're using fractions because that's what Michael likes to do. I'm a decimal point guy. You know, U.S. Treasury yields as of this week are in the 3 1/2 to 5% range, depending on the maturity, so you probably get a little higher yields than the corporate bonds or junk bonds maybe, but six and change is a pretty high hurdle rate now.

So, but I'm not a huge, that's on a rate thing, but I'm not a huge fan of comparing early mortgage rates to bonds. Here's why. Bonds are a financial asset. They have liquidity. If you own a bond ETF, you can trade it pretty easily. It's very liquid. It costs you pennies on the dollar.

I guess you can use bonds to rebalance your portfolio. You can use them for spending purposes. You can't spend your house. So yes, you can borrow against it, I guess, in a pinch, but there's not nearly as much liquidity from early mortgage payments as there is from bonds or a bond fund.

I guess you could look at paying down your mortgage as a form of personal balance sheet rebalancing, but I just don't see it. I mentioned this before, I think, but we lived in our first house for 10 years and I made extra payments. Every time we refinanced, I just kept paying the same exact amount as I paid before.

By the end, I was making double payments. And after 10 years in the house, we moved on because we needed a bigger place 'cause we had twins. And I looked at that, those early payments, and I thought, what good were those? I guess it helped me make a little bit of a bigger down payment on the new place 'cause they had some equity, but it felt kind of useless in my 20s and early 30s to be making those extra payments.

So obviously we've talked about the personal preference angle here on many occasions. Some people simply hate debt with a passion, just wanna get rid of it, no matter the opportunity cost. And that opportunity cost equation is different now. It's a lot different at 6% mortgage rates than 3% mortgage rates.

I do think you need to consider the impact of inflation over time, too, when it comes to holding an asset like this, right? If you can get comfortable holding a mortgage and you're not so averse to debt, which is something that took some time for me, it can work in your favor.

So this person talked about being in Brooklyn, and so I guess they're not, unless maybe they're from England. If they have an accent, they can say it loud. I don't know, otherwise I just can't do it. - Yeah, I don't think you can just be walking around Brooklyn saying lads.

- Duncan, you moved out of Brooklyn recently, and I looked up the median home sale, just Google, and they had it pegged at like anywhere in the 7.30 to 7.50 range, right? So New York is kind of an expensive place to live, you know, newsflash. So let's say you put 10% down in a 7.50 place, 30-year fixed rate mortgage at six and change, like this person has.

We're talking payments around $4,100 a month, right? And that's before taxes, which is kind of tough. I don't want to rub it in here, but that same 7.50K price tag at 3% rates would be a monthly payment of $2,800. So $1,300 more just because rates are higher, which is tough.

- Also keeping in mind that average Manhattan rent now I think is $4,500 a month. - Yeah, that's tough. So people always say location is everything in housing, but I think in this cycle it's more about timing and luck than anything else in rates, obviously. Hopefully those people locked in the 6% mortgage rates or 7% will be able to refinance in the coming years.

And I think they will, but maybe next time we have a mom, we can ask Bill if the government would consider raising the mortgage interest rate deduction for people who have six and 7% mortgage rates, because that's ridiculous. So let's say inflation averages 3% over the life of that loan, right?

Which is the average inflation rate, give or take, over the last a hundred years or so. On an inflation adjusted basis, that $4,100 payment will be worth the equivalent of roughly $1,650 in 30 years time, right? Just using that 3% inflation to eat it up. Add in some tax benefits from the mortgage interest deduction and that's even more savings over time, right?

I'm not saying that holding mortgage debt is always the right thing to do, but I think for someone in their 20s, unless you have a real aversion to debt, having that payment locked in and having the ability to have it as, not only housing as an inflation hedge, but having that fixed rate mortgage and knowing what the payment's gonna be, and having the ability to refinance over time, I just think that in your 20s, the benefits of compounding in the stock market far outweigh the benefits of paying down your mortgage.

That's where I stand. Not everyone agrees with me, that's personal preference. - Yeah, yeah, I mean, that makes sense to me. I think for a lot of people, they just have an aversion to having any debt, even in a case like that, where it seems to make sense. Also, keeping in mind, I realize a lot of people don't know this.

In New York City, to rent a place, you have to, the standard is, you have to make 40 times your monthly rent in salary to be able to be qualified. Most landlords won't let you move into a place unless you make 40 times monthly rent. So for that $4,500 average rent, that's what, $180,000 a year that you have to make?

And if you need a guarantor, it goes up to 80 times. If you have a guarantor, they have to make 80 times your monthly rent in annual salary. Isn't that insane? - Yeah, but the benefit is, you get to live in a place that's 300 square feet. So-- - It's true.

It's true. - I mean, all right. Let's do another one. - Okay, up next, we have a question from Sam. I have a question about what to do in a very specific black swan event, or in the event of this situation. And they think that this is gonna happen.

It's just a question of when. Let's say one day there's breaking news that China is invading Taiwan, which probably means our stock market is going to crash. How should an investor react to news of the invasion? A, take all their money out of the stock market. B, take some of their money out of the stock market.

C, wait and see what happens. Or D, don't do anything and write it out. They're saying it like it's a done deal, that the market would definitely crash in that case. - Yeah, I mean, it certainly seems like China's been circling Taiwan for some time now. I'm no geopolitical expert.

I read a lot of people that are. Maybe it is a question of when, not if here. But the assumption would be, well, the algos would immediately sell off, and this would be bad for the stock market. But the stock market has a very counterintuitive relationship with war and geopolitical conflict over the years.

There's this wonderful book on the stock market and how it reacted to World War II by Barton Biggs called Wealth, War, and Wisdom. And for any market geeks out there, market historian geeks, I highly recommend this one. I read it in the last couple years. I know it's a cliche at this point to be a middle-aged guy who's into studying World War II, but I'm totally there.

And to be fair, I got into it in college. I was traveling Europe in college, and after being in Europe and seeing some of the things there, I read every book I could get my hands on. I still think Band of Brothers is my favorite book I've ever read of all time.

For some reason, that book just resonated with me. So Biggs uses the stock market to describe what was happening in the war years. I wanna read this one part from the book. So he says, "By 1942, a map of the world showed Germany in control of most of Europe with its fierce hegemony and stretching from the North Sea to the very gates of Moscow and Leningrad.

At the peaks of expansion across Asia, Japan controlled 10% of the land mass of the world and much of its most precious natural resources." Now, his point was 1942, at this point, was like, this was like the worst of the worst. It seemed like all the allies were teetering on the edge and Germany and Japan were sort of, it's a done deal.

And he wanted to describe just how bleak things were. And guess when the stock market bottomed? 1942, John, show this chart here. This is the Dow in 1942. Now, after the Great Depression, the stock market kind of just went along. There was a couple other crashes. It didn't really come close.

And then in 1942, the stock market bottomed and just took off. It doubled off the lows from 1942. The war didn't end until 1945. And by then, the Dow had almost already doubled. I've written a lot about this over the years. There's tons of other examples where the stock market didn't really react how you'd think in the face of geopolitical conflict.

So in the six month following the onset of World War I in 1914, the Dow fell 30%. And then they actually had to close the market for like six months because their liquidity just dried up across the globe. And then in 1915, it reopened and the Dow had its best year ever.

The Dow was up, I think, 88% in 1915. That's a year that's never been topped. So during the war, I think throughout the entirety of World War I, the Dow was up 43%, around 9% in total, or annually, I should say. Same thing in World War II. I think the Dow rose, let's see, the Dow was up 50% throughout World War II from 1939 to 1945, 7% per year.

So during the two worst wars in modern history, US stock market was up a combined 115% throughout those wars. Now, maybe you can say, well, it was different back then. There was wartime spending and this would be different. Sure, US troops were sent to Vietnam in March of 1965.

The Dow was up 10% the rest of that year. By 1973, when we pulled the last troops out, the stock market was up 5% per year through Vietnam. Cuban Missile Crisis, this is one of my favorite ones. 13 days in October. I think that was a Kevin Costner movie, "13 Days." Does that sound about right?

- I actually don't remember who was in it. Good movie, though. - In that two-week span, the Dow lost 1.2% for the rest of the year. It was over the Dow gain 10%. This one's kind of crazy. John F. Kennedy was assassinated in the early 1960s. The stock market opened up 5% the day after he was assassinated.

Stocks finished up the next year, up 15%. - So wait, what's the rationale for that? What possible reason would the market be up the day after a presidential assassination? - Well, US invaded Iraq March, 2003. The stock market was up 2.3% the next day. Finished up the year more than 30% from that point.

That was from the depths of a pretty bad bear market, but still. Sure, if China invades Taiwan, it would seem to be bad news for the markets and the global economy, but it's not a foregone conclusion. I mean, like, should you have a strategy in place to deal with potential geopolitical crises?

My contention is you should have a strategy in place to deal for all sorts of crises, right? Even things we can't think of right now, 'cause splitting hairs here, but calling this a black swan, black swans are things that we don't think are gonna happen, or don't know are gonna happen, or come out of left field.

If you're already planning- - This is more like a gray swan. - Yeah, I'm just simply not sold on the idea that anyone has A, the ability to predict such a conflict occurring, B, predict the timing of such a conflict, and C, predict what the market's reaction is gonna be.

Right, so bad things can and will happen in the markets. Like, you can't get away from that fact that the risk assets is going to happen. I've yet to meet a single person who can sidestep this kind of event and then figure out when to get back in because of the market's reaction or whatever, what the response is gonna be.

So, I think trying to plan ahead for something like this. I think you make your portfolio durable enough to handle something like this without trying to plan for it in advance. - Yeah, I have kind of a broad question for you. Would it be a sign to you that someone probably should not be in the market to begin with if they are considering whether or not they would pull all their money out of the market if some kind of macro event happened?

- Yeah, that's the point. - Yeah. - I think your asset allocation should take into effect, like, you should own enough stocks that you'd be more than willing to own them in a bull market or a bear market. - Right. - If you can't, yeah. Because otherwise, you're gonna be hopping out and hopping in and that's a game that just no one can win.

Even if you're right once, you're not gonna be right on a consistent basis. - Right, right. Also, remember, you and Michael have talked a lot on "Animal Spirits" about Ukraine and the Russian invasion of Ukraine. People thought that it was gonna lead to all these macro events in Europe that just have not happened.

- I'm still shocked at how much lower energy prices are than they were after the spike from the war. It still doesn't, everyone thought Europe was toast in terms of their economy. - Yeah, the reaction is always much different than you probably expect. - Yeah, humans are hard. - Absolutely.

Yeah, so events like this, even if you know it's gonna happen. - So up next, we have a question from Eric. I'm a 30-year-old living in Brooklyn, making $175,000 a year. I'm maxing out my 401(k), Roth IRA, and have $45,000 in a brokerage account. Being my company's ESOP, my company's stock has become-- - Duncan, what's ESOP mean?

You know it? - Company Stock Option Plan? - Got it, nailed it. - Is that it? Okay, yeah. My company's stock has become 20% of my brokerage, even after selling a good chunk over the past several years. I also have an RSU grant that we'll begin investing this year.

RSU, what's that one? I don't remember. I've known it at one point. - Restricted Stock Unit, I guess. Yeah, it's a restricted stock, basically. - It's considered a stable dividend growth stock, which I have a question about that phrase, but not one that I have extremely high conviction for long-term.

My plan is to sell significant portions to tax-loss harvest over the next two years and reallocate those funds to broad-market ETFs. When I view my portfolio collectively, I feel like I'm well-diversified, with broad ETFs making up about 80% of my holdings. But when I view my brokerage in isolation, over 50% is allocated to individual stocks.

Should I be viewing these buckets, retirement and brokerage, as separate, given the relative time horizons, or collectively as my overall asset allocation, or as a mix of both? - Good question. Touches on a lot of Ben topics here, asset allocation and behavioral finance, and all of these things. The simple answer is yes.

You wanna view your portfolio from the perspective of an overall portfolio. Like, the parts should be moving differently at different times. The whole point of putting an asset allocation together in the first place is that you'll have different pieces of the portfolio performing differently at different times during different market and economic environments, right?

One of the biggest benefits of diversification is that it allows you to prepare for a wide range of outcomes without having to predict those outcomes in advance. So I think to do this successfully, you have to size your allocations such that certain asset classes or strategies, you'll be willing and able to stick with them even at their worst times.

So this is like a summarizing a Cliff Asness statement, but he says that like the greatest investment strategy in the world is pointless if you put too much of your portfolio in it and bail out the first sign of trouble. So I do, however, believe that there are some benefits to a potential bucketing approach, right?

So the behavioral bias Eric is explaining here is called mental accounting. It's just the idea that we have a tendency to mentally sort our money into separate buckets when it comes to spending or saving. So my favorite example of this, I think this was from a DVD extra or an interview for some movie they were in together, Gene Hackman and Dustin Hoffman talking about back in the day when they lived together, a struggling actors and didn't have a lot of money.

So John, cue this one up for me. I love this clip here. I go over to Dusty's little apartment in Pasadena one time and he says, "Hey, can you loan me some money?" I said, "Yeah." My wife was working. I wasn't working, but my wife was working. So I said, "How much do you need?" He said, "I don't know, five bucks or whatever." - More than that.

- So I go into his kitchen and he has these Mason jars up on a ledge. And one of them says rent. One of them says entertainment. One says books. One says, about five of them. - Full on electric. - And they all had money in it except the one that said food.

And that didn't happen to have any money. So I said, "Dude, you don't need any money. You got money." He says, "I can't take the money out of the other jars." (laughing) - I love it. It is crazy that these two legendary actors live together, right? Especially when Hackman was married.

- It is, yeah. - I actually think there are some benefits when you're thinking of budgeting to separating and giving each of your dollars. It's one pile of money, but giving each of your dollars a job. This one is for rent. This is for saving. This is for food, whatever.

This is for utilities. My savings account is one big pool of money in the same account, but I have different goals labeled in that account, right? There's a travel one. There's a general savings. That's just kind of for unexpected events. There could be other things that come up like big events for the kids coming up or holidays or whatever it is, wedding trips.

So I also think that there's benefits of bucketing in things like retirement. We've talked before about something like the four-year rule where you take your relatively safe assets, whether that's cash or highly liquid securities, and you put them in a certain percentage and you figure out, let's say I'm gonna spend 4% of my portfolio.

If you have 40% of your assets in something that's relatively safe, you can think, well, that's 10 years worth of current spending needs in something that's relatively safe that I could get access to pretty quickly. And I think that can help retirees figure out the balance between risk assets and then other assets that are relatively safe in the short term.

So I do think this specific scenario that we're talking about here for Eric with his company stock options, you have to look at this from a portfolio perspective. I don't think you can just look at your brokerage account. So if those shares were 50% of your entire portfolio, that's way over-concentrated.

I'd be really nervous. 20% might be high in individual shares for certain people, but I think this guy still has a right idea in terms of he's already trying to sell. And I don't know how great of a thing it is that he doesn't really have a lot of faith in his company's stock.

He said it's a stable dividend. So I'm guessing that means it's more of a-- - Well, I was gonna ask you, what do you think it is? What's a stable dividend growth stock? - Okay, like a Procter & Gamble or one of these consumer staples. So I guess it's not a great-- - You call them a growth stock though?

That's what I was thrown off by, is the growth and the dividend. - I guess I'm thinking growth in terms of the dividend is growing, not the company. - Oh, oh, oh, gotcha, gotcha. - So it's not a great thing, I guess, that you're not feeling great about the prospects of your company's stock.

Maybe that could be just because it's in the midst of a drawdown. But yeah, the fact that he already has a plan to diversify it, that's great. I still think 20% or so might be high for some people, but I think 80% of your portfolio are pretty diversified in index ETFs, that sort of thing.

But I do think that the overall portfolio is the only thing that matters when it comes to managing risk or setting expected returns, all that stuff. I would only use the bucketing approach when it helps you from a psychological perspective, but it seems like in this case, it's probably gonna hurt you.

But if you still feel like you're more concentrated than you need to be, then stick with your plan of getting rid of some of the individual shares and diversify more. But it sounds like he's on the right path here. - Yeah, yeah, they seem to, yeah. Again, probably isn't a great feeling working for a company where you're like, "I feel like I have too much stock "in the company I work for." But I know that's also a common financial planning thing, right, you don't wanna have all your eggs in one basket.

- And that is a question we get from a lot of people, "Hey, I have 20, 30, 40% in my company's shares. "How should I feel about this? "How do I diversify it? "How do I deal with taxes?" It's a question, it's like, for a lot of people to think, well, that's a good problem to deal with, but it's a problem nonetheless, because the company that's paying your salary is the same one that you're dealing with for retirement.

You don't wanna have a situation where Enron goes out of business and your retirement is gone just like your paycheck. - Right. Dave in the chat just said it could be Apple. I didn't think about that. - That's a stable dividend growth stock. - I'd feel okay about Apple.

- Yeah. All right, so up next we have a question from Guy. "Nicely done on your debunking of random stats "that make the news and scare everyone. "I would like to see you do an overview "on using trust in estate planning. "Can one save on taxes using trust? "Where does one even begin "when thinking about this decision?" - Good one, okay.

I can't do a lot of debunking here, 'cause I don't have a lot of expertise in trust, but we do have someone with more experience using them. So let's bring in Taylor Hollis, who's an advisor with us at Riddles Wealth. - Hi. - Taylor, welcome back to the show.

You've worked with trust a lot over the years. I wish I had the ability to explain these things simply, but it is a question that's come up, and we've had a lot of specific questions, but I like the idea that this one is just saying, what are they for?

Who should think about them? What are the situations? Maybe you could help simplify this for us here. - Yeah, I liked his question, too, about specific tax benefits, because I think that has been thrown around a lot when it comes to trust. I'll just say off the bat, if you're thinking saving on income taxes, trusts typically don't really help you out very much with that.

They're more for potentially saving on estate and gift taxes. So those savings come for people that have taxable estates, and those kinds of concerns. Now, typically, the most common trusts that we see are what's called a revocable trust, which is what people set up while they're alive. Revocable, meaning they can change it at any point, and it's basically a will substitute.

And the main benefits that we see to that are it affords you some privacy, you can avoid some probate fees when you pass and your estate's settling. So those are typically the most common if you want to get into more of those estate and gift tax savings, you'd be looking at making some gifts to a revocable trust during your lifetime.

- Sorry to cut in here. So is the idea basically, people with a decent chunk of change that know that it might be kind of tricky when they're giving up the money for their kids or their spouse or whoever, or charities when they pass, and they wanna make sure that everything is buttoned up and ready to go, and there's not gonna be a big mess after they pass.

Is that the idea? - Yes, that's a good way to put it. And I think there's room for using trust in estate planning for people that have a lot of assets and maybe people on the lower end, because again, you can use revocable trust really no matter what your asset size is for those same benefits of privacy, avoiding probate, just makes it easier on whoever's settling your estate.

There's a lot of benefits to doing that. But then I think the real power behind them and a lot of that tax savings that I think he's asking about come with when you have a taxable estate and you're using trust and planning for those things, whether it be during your lifetime, which you can do, or once you're gone.

- Do you look at it more in terms of how complicated the scenario is or how much money they have? In terms of figuring out-- - Typically they go hand in hand. - Okay, true. More money, more, yeah, okay. That makes sense. - More money, more problems, that's right.

- I feel like there was a song written about that. - Okay, so I guess as you kind of move up the scale and you have seven figures in assets, eight figures as assets, that's when you start thinking, okay, it's worth it for me to talk to an expert on this matter, basically.

- Sure, yeah, yeah. And I think, too, it's important to remember that while you might not technically qualify as having a taxable estate today, you take into account future growth of assets. It could be that hopefully by the time that you or your spouse passes away, you might have a taxable estate, and so there's a lot of planning that you can do ahead of that to try to mitigate that.

- Perfect, okay. Duncan, let's do another one. One more. - Okay, last but not least, we have a Tennessee-specific question just for you, Taylor. My wife and I want to buy a bigger house in a few years. I'm a high school teacher and football coach in Tennessee, making $60,000, but I just got a new job that will pay $70,000.

Congratulations. My wife is going to take off work for the next three to four years with our first baby. I'm 33 and she's 29, and we have $380,000 saved up for retirement. We have about $100,000 in equity in our current townhome and $35,000 in savings. It will be tough for us to afford the mortgage payment on a larger home without a significant down payment.

Is it okay to pause contributing to our Roth IRAs for three to four years as we continue to save for a larger down payment? We usually try to max them out every year, so it feels wrong to stop. This is similar to what I was asking you recently, Ben, about whether it made sense to quit contributing to your retirement to save up.

- It sounds like they're in a very nice place here. Taylor is our resident Tennessee expert here, so that can help. But it sounds like they're really good savers. They're working on increasing their income. That's great. First child on the way, that's going to be more complexity and maybe expenses.

But I do think there's a psychological thing where if you've been a saver, we've dealt with this with retirees before, right? It's hard to go from decades of savings and then flip the switch and then turn into a spender. But I think for some people too, it's the same thing with life goals.

When life gets in the way and it causes you to save less, people feel like they're doing something wrong. When in reality, this is what happens in financial planning. So Taylor, how do you help clients see through this from a psychological perspective to help to give them the shove, I guess, to say that it's okay to do this as long as you're still saving and planning ahead and sometimes you just have to do this kind of thing and put things on hold.

- Yeah, yeah, agreed. I mean, there's the textbook answer and then there's the real life answer. And like you said, real life happens, first kid on the way, you need a bigger house, all these things that I think make putting those things on pause very worthwhile. It's your quality of life.

It's where you're gonna raise your family. These are all important factors that we can't really quantify the way that we can quantify contributing to Roth every year. So I think giving yourself the peace of mind and the okay to pause is good. And also remember, you're not pausing to throw money away.

You're still technically investing in an asset. It's just a little different, right? You're saving for a home that you're gonna buy and that's still an asset on your balance sheet. So I think that, like I said, taking into account those personal factors, far outweigh whatever the textbook answer would be.

- That's a great point. You're not putting your retirement savings on hold so you can go to Hawaii for a five month vacation. You're doing it for a good reason and it's still a financial asset. It's just gonna, like I said, it's gonna shift your personal balance sheet a little bit and now you have a bigger investment in that house.

But then as, I think one of the best parts about having a fixed payment for your house is if your income grows and most people do see their income grow over time, then you grow into that payment a little more and then eventually, now that that payment is fixed, you have the ability to save a little more each year as you get used to living in that house and it's gonna feel more affordable over time, hopefully.

And I think that's the idea here, to your point. Yeah, you're still making an investment. It's just in something else. - Right, right. And at their age, there's plenty of time to catch up. I mean, they're already, I think, well ahead of the curve and they've done a great job.

- Totally, yeah. You're in a good place already. It's not like they're starting from zero. They're in a good place. - And they're insuring that they don't have a Brooklyn landlord who's gonna raise their rent 25% year over year. - Yep, probably a little cheaper in Tennessee. A little more space, more area for the kids.

- Depends where they are in Tennessee. - That's true. Nashville is the new Brooklyn, I think. We do love our audience. Questions, comments, feedback. We actually, I think we heard from this person before, I think a year ago, Brett asked us, "Hey, I work in tech. "I have a bunch of money saved.

"I'm never gonna be able to get this opportunity again. "I wanna take off for a year and go backpacking in Europe." And I think we said, "If you have your money saved, "you're in a good profession to do it." Just got a follow-up from him. Said he wanted to follow up and say he completed one year of backpacking and traveling throughout Europe.

Best decision I ever made. If anyone has the opportunity to do the same, I highly recommend it. I was able to land a job for a new tech startup and start next week very quickly. Even able to keep up with a show while traveling. Thanks for the update. We appreciate it.

- Wow, that's awesome. - It's funny because anytime you make these types of financial decisions, you're always dealing with the same level of irreducible uncertainty, right? No one ever knows how these things are gonna work out. It's typically, especially something like that. But it's always nice to hear when someone makes a decision for the right reasons and it works out for them.

So kudos. - Yeah, great to hear it. - We always appreciate the feedback. - That's awesome. - Thanks, as usual, to everyone in the chat. We always appreciate it. Someone says I need to get a CFP designation like Taylor, but that's why we have experts that I can bring on the show.

I don't need one. If you have a question for us, askthecompoundshow@gmail.com. Leave a question or comment for us on YouTube. Hit that subscribe button. Duncan, what are we up to now? - Subscribers, 119,000, we're approaching. - All right, nice, 120,000, all right. If you're listening to a podcast, forum, leave us a review, all our compound merch, idontshop.com, and we will see you next time.

- Thanks, everyone. (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) you