Dollars and Hops

By Dollars and HopsBusiness Investing

Dollars and Hops episodes

March 22, 2021 020 | Protect Yourself and Your Family with the RIGHT Insurance | What Kind of Insurance Do You Need?
In this episode we are going to be doing a deep dive on insurance. What insurance you need, why you need it, and how to best protect yourself, your family, and the assets you own.
Headline of the week:
More than 1 in 3 cryptocurrency investors know little to nothing about it, survey finds.
Websites mentioned during the podcast:
https://www.policygenius.com/
Insurance Overview
What’s the point of having insurance in the first place? It’s to protect your nest egg. Protect the assets you own from various things happening. You don’t want to over insure, but you do want to ensure you have coverage for things that have at least a decent probability of happening.
Types of insurance we like:
Auto Insurance: This is obviously the law that you have to have this, but it’s also just smart to have. The average insurance claim is nearly 5,000… and nobody wants to have to come out of pocket with that type of money in the event of an accident.
Homeowners and Renters Insurance - Normally flood and earthquake insurance is not included as part of a homeowners/renters policy - so make sure to ask about it.
Health Insurance - Save $ by doing a high deductible health plan and a Health Savings Account (where you can invest the money in your HSA)
Long Term Disability Insurance: According to the Social Security Administration, just over one in four of today’s 20-year-olds will become disabled before reaching age 67. A 35-year-old has a 50 percent chance of becoming disabled for a 90-day period or longer before age 65. About 30 percent of Americans ages 35-65 will suffer a disability lasting at least 90 days during their working careers. About one in seven people ages 35-65 can expect to become disabled for five years or longer.
Term Life Insurance: If you have someone who DEPENDS on your income - consider getting term life insurance. It’s very cheap if you’re in good health. If you have an increasing net worth year over year (not living paycheck to paycheck).... Consider that when purchasing . You may not need a 30 year policy.
Long Term Care insurance: This protects your retirement savings from the expenses of long term care (assisted living/nursing home care). This really is the number one threat to your retirement nest egg that you may have built up over the years. Try to purchase long term care insurance in your late 50’s early 60’s.
Umbrella Insurance: Extra layer of insurance - usually for high net worth individuals (500k +) that provides an extra layer of insurance on top of your home/auto policies. Can help if you’re in a multiple vehicle accident and are at fault, medical bills, property damage, etc. It kicks in if you get sued for more than one of your insurance policies covers. It’s also VERY cheap insurance (usually just a couple hundred dollars per year for the first million in coverage). Coverage is sold by the millions.
Things you don’t need insurance on:
Rental Car Insurance (often covered by your primary policy or credit card you book with)
Private Mortgage Insurance
Extended Warranties on cars, appliances and electronics
Life Insurance for Children
Universal Life
Whole life insurance
46 min
March 14, 2021019 | What the Heck is an NFT? | NBA Top Shot | Should You Dive in?
This pod is all about NFT’s - what they are, how they can be used, and whether or not we think NFT’s could be a good investment opportunity.
What is an NFT?
NFT stands for non-fungible token - which is a special type of cryptographic token which represents something specific and unique.

Using blockchain technology, NFT’s designate an official copy of digital media, which can then be sold by artists, musicians, or sports entities to make money on content.

What does it mean to be non-fungible? Non-fungible means it’s specific and unique.

Examples non-fungible assets:
House, painting, trademark

Tokens designate that it’s something digital in nature that’s traded with the blockchain technology - like how bitcoin operates.
Examples of NFT’s:
NBA Top Shot
Partnership w/ Dapper labs to make digital trading cards or “moments” - short highlight videos that you can own pieces of. Each moment is serialized and some are more rare to own than others.

“Packs” sell for as low as $9

100’s of thousands of people line up for packs

Currently - people who get a “pack” are making 10-15x their money per pack

This won’t last forever- but it could be a good short term speculative investment opportunity.

Supply will eventually increase enough to meet demand - which will likely drive prices lower. We don’t know when the supply will match the demand - it clearly has not yet as it’s estimated that each pack of top shots are worth 10-20x what you pay for them.

These are collectibles - just in a digital format, and they’re on fire right now.

NBA Top shot has generated over 230M in revenue so far. They just went live in mid-2020.

Crypto Punks - Collection of 10,000 unique characters with proof of ownership on the Ethereum Blockchain. No two are exactly alike. These digital pictures (32 bit) are selling for tens of thousands, if not hundreds of thousands of dollars. This whole thing sounds to me like it’s out of hand.

Twitter- Jack Dorsey - is selling his first ever twitter tweet for over 2.5M as an NFT

Digital Art - Artists can now sell their art online in a digital format… and people are buying it!

Concert/Sporting Event Tickets
Useful utility - eliminates fraud in second hand ticket sales

Allows for owners to actually know who’s at a game vs. who they sold their tickets to

Allows for venues to capture revenue they wouldn’t normally get in the second hand market (they get a cut of every secondary transaction)

Nike - Crypto Kicks

Louis Vuitton - Using NFT’s as a way of tracking provenance of luxury goods

MLB, NFL, NHL, MLS - All watching and will be jumping into this SOON
Security of NFT’s
Previously did an episode on bitcoin - we said we didn’t like it as an investment. But the underlying technology of the blockchain we did like.

NFT’s run on this same technology - blockchain technology.

Blockchain technology is a series of interconnected computers that all have a general ledger. Transactions are recorded on multiple computers, thus verifying the authenticity of the assets it’s tracking.
NFT’s as investments
Not a long term investment, stick to index funds and real estate
43 min
March 03, 2021018 | College Savings in 529 Instead of Student Debt | Sports Cards are Hot?
On this episode we talk about everything related to college, college savings, 529’s, scholarships and student loans
Whether you’re in college now, about to attend, or are thinking about starting college for your kids, this is the episode for you.
Headline of the week: How the coronavirus, the internet and tons of money unexpectedly fueled sports cards' biggest boom
How much it costs for college:
The average cost of attendance for a student living on campus at a public 4-year in-state institution is $25,864 per year, or $103,456 over 4 years.

Out-of-state students pay $43,721 per year or $174,885 over 4 years; traditional private university students pay $53,949 per year or $215,796 over 4 years

Community College
Huge savings over 1st two years, bachelor's degree

The average annual tuition for in-district community college attendance is about $4,00 in 2020
Avg student debt: 30,062 coming out of college
Sit down with your kids and let them know what school costs in real dollars in their budget once they graduate. Go through a budget with them and show them how that student loan payment is going to impact the money they have available to spend.

Always consider in state schools over out of state schools. Generally about a 60-70% savings by staying in the state.
**SAVE FOR YOUR RETIREMENT BEFORE YOUR CHILD’S COLLEGE IN A 529** CAN’T GET A LOAN ON YOUR RETIREMENT, BUT CAN GET A LOAN FOR COLLEGE.
How to save for college: 529’s
What is a 529? Tax advantaged account that allows you to save for a child’s college. Money can be used for tuition and expenses as well as room and board.

Tax deferred money going into account in many cases. Check your state laws. Some states allow for a tax break on a certain amount of contributions per year.

Money is tax free if spent on eligible college expenses - room/board/tuition/textbooks

How to start a 529 - Each state has state sponsored 529 plans. Clark Howard has THE BEST 529 plan guide we have seen online. We would recommend checking the 529’s he’s rated on his website to see if he likes them (deans list or honor roll). If he doesn’t, the highest rated plan in the country is the Utah Plan. Has super low fees.
Link to 529 plan guide on Clark’s website: https://clark.com/education/clarks-529-plan-guide/
What investments to do within a 529 - Age based portfolio. Pick the year closest to childs expected college start date. Money gets invested based upon how many years until you need it. Find the funds with the lowest expense ratios just like you do when investing for yourself
Start saving BEFORE you have kids - change beneficiary
Money leftover? study abroad
529 Money can also be used for private school - new law
Ways to get scholarships
Fastweb - great scholarship search engine. Can be overwhelming, but search for scholarships LOCALLY.
Look up your state representatives (house/senate) and look up their websites.
47 min
February 23, 2021017 | Why You Can't Beat the Market | Index Fund Investing for the Longterm
Headline of the week: How A 1% Investment Fee Can Wreck Your Retirement
Why you cannot beat the market
Last few shows we have talked about Gamestop, AMC, Blackberry, Bitcoin. A bunch of different assets that people have hopped into in hopes of striking it rich.
Things you have to get right when “trading the market”
Time the buy right - need to find a stock that’s undervalued - purchase at the right time

Time the sell right - How do you know when we have reached the top?

How are you going to determine that it’s time to buy more when you’re down 20% in a week on something?

It’s probably a safe bet that you won’t be able to beat the market.
It’s probably a SAFE assumption that over time, you won’t be able to outperform a financial professional….. BUT …. Can they beat the market??
What is an active fund? These are funds that are MANAGED by financial professionals who pick and choose what stocks to buy, when to buy, and what to sell.
What is a passive fund? A passive fund is a fund that tracks an index (think s&p 500 - tracking 500 largest US equities) and the fund just buys and holds for the most part all of the companies within the fund. It doesn’t try to pick winners and losers, it just owns a little bit of everything.
What does better? The active funds where the advisors are buying and selling or the passive fund who just buys and holds?
Morningstar's Active/Passive Barometer August 2020
The Morningstar Active/Passive Barometer is a semiannual report that measures the performance of U.S. active funds against passive peers. The Active/Passive Barometer spans nearly 4,400 unique funds that account for approximately $13.1 trillion in assets, or about 66% of the U.S. fund market.
The Active/Passive Barometer measures active managers’ success in several unique ways:
It evaluates active funds against passive funds. In this way, the “benchmark” reflects the actual, net-of-fees performance of passive funds

It considers how the average dollar invested in various types of active funds has fared versus the average dollar in the passive composite.

The Active/Passive Barometer is a useful measuring stick that helps investors figure out the odds of succeeding with active funds in different areas.
Summary from the report: In general, actively managed funds have failed to survive and beat their benchmarks, especially over longer time horizons; only 24% of all active funds topped the average of their passive rivals over the 10-year period ended June 2020
If there's one near-certainty in investing, it is "you get what you don't pay for," as the Vanguard's late founder Jack Bogle said.
If the pros can’t pick the winners and losers better than the index - why do you think you can?

Remember - keeping fees low is key to investment returns

Buying and holding index funds is the way to build wealth over long periods of time.
We know this doesn’t sound as fun as buying the latest and greatest HOT stock, but it’s a more sure way to achieve your goals.
40 min
February 16, 2021016 | How to Raise Your Credit Score | Picking Investments Inside a Roth IRA
On this show we did a deep dive on credit scores, how the credit scoring model works.
Headline of the week:
Here’s a budget breakdown of a couple that makes $500,000 a year and still feels average
What is a Credit Score?
Credit Scores help lenders to make decisions about risk as it relates to how YOU handle YOUR money. Scores can range from 300 - 850 on the FICO scale.
This show is not intended to make you obsess about your credit score, it’s more to educate you, so you don’t make a huge mistake as it relates to your credit.
Some common myths about credit scores:
Having less credit accounts is a good thing for your credit score

If you have a lot of money you will have a good credit score

Each person only has 1 credit score

Closing a credit card or line of credit will improve your credit score

If I pay down my debt faster - it will improve my credit score.
Things that actually impact your credit score:
Payment History - Have you paid your past credit accounts on time? 35% - To maximize this - make all of your payments on time.

Accounts Owned / Utilization rate - How much of your available credit are you using? 30%. To maximize this portion of your score - use 10% or less of your open credit lines.

Length of credit history - How long have you been using credit? 15% - To maximize this - 7-9 years plus is what they want to see.

Types of credit history (10%) - What is your mix of credit (mortgages, credit cards, student loans, retail credit (store specific cards), etc.. Showing lenders that you can handle different types of loans (installment -mortgage or student loan and revolving - credit cards) can also improve your score.

New Credit - (10%) - How much of your credit is new? The higher % of your credit that is new - the lower this portion of your score goes.
Favorite ways to monitor credit:
www.creditkarma.com - gives you 2 credit scores for free from Transunion and Equifax
-Also shows you what credit accounts you have open and is a good way to passively “monitor” your credit
For anyone who wants to see their full credit report (but does not have a score): go to www.annualcreditreport.com
What to do if you find an error on your credit profile:
Contact the business who reported the error - ask them to remove it in writing

Contact the credit bureau reporting the error and dispute the item on your credit report

Follow up with the business reporting and the credit card company until it has been removed.
Scott:
Brewery: Trillium Brewing
City: Boston, MA
Beer: Vicinity Double IPA
Type: 92
Score:
Notes: Heavy citrus aromas of pineapple, orange flesh and mango
Trillium Brewing (Boston, MA) - Vicinity IPA - Episode 016: 92 Points
Lance:
Brewery: Sierra Nevada
City: Mills River, NC
Beer: Hop Bullet Double IPA
Type: Double IPA
Score: 91
Sierra Nevada (Mills River, NC) - Hop Bullet Double IPA - Episode 016: 91 Points
34 min
February 01, 2021015 | Gamestop | AMC | Why We HATE Bonds
Intro: In this episode we discuss why we hate bonds so much. We teased this in an episode prior and I’m excited to take a deep dive and talk about our rationale behind the show title.
Headline of the week:
https://www.cnet.com/personal-finance/reddit-and-elon-musk-sent-gamestop-stock-soaring-why-amc-and-blackberry-are-next/
Reddit and Elon Musk sent GameStop stock soaring. Why AMC and BlackBerry are next
Recording this on Wednesday, 1/27

AMC up 301%, Gamestop up 134%, blackberry up 32%

What’s happening?
Reddit users are piling into Gamestop and other companies because they noticed there is a heavy short interest in the stock by institutional investors. Obviously there are only a certain number of shares outstanding in these companies, so the reddit users themselves are artificially inflating the stock price… but...

Shorting a stock essentially just means you’re betting the price will go down.

If the price of the stock goes up too quickly and you’re shorting it, the people betting against the stock are forced to buy stock at the higher prices to essentially cover their losses.

It’s sending these near bankrupt companies to the moon

Long story short - some of you may be thinking - should I be buying Game Stop, or Blackberry, or AMC?
It’s like playing with FIRE… don’t do it. Eventually - as with all of these get rich quick ideas… people get hurt. We don’t want that to be you.

Main Topic
Bonds
What is a bond? A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments.
Bonds are issued by governments and corporations when they want to raise money. By buying a bond, you're giving the issuer a loan, and they agree to pay you back the face value of the loan on a specific date, and to pay you periodic interest payments along the way, usually twice a year.
Unlike stocks, bonds issued by companies give you no ownership rights.
So you don't necessarily benefit from the company's growth, but you won't see as much impact when the company isn't doing as well, either—as long as it still has the resources to stay current on its loans.
Risks of bonds:
Although bonds are considered safe, there are pitfalls like interest rate risk—one of the primary risks associated with the bond market.

Reinvestment risk means a bond or future cash flows will need to be reinvested in a security with a lower yield.

Callable bonds have provisions that allow the bond issuer to purchase the bond back and retire the issue when interest rates fall.

Default risk occurs when the issuer can't pay the interest or principal in a timely manner or at all.

Inflation risk occurs when the rate of price increases in the economy deteriorates the returns associated with the bond.
Biggest risk of all?
OPPORTUNITY COST!
You could be selling yourself short of reaching your retirement goals by investing in bonds.
32 min
January 17, 2021014 | Bitcoin - Time to Jump In?
Episode 14: Bitcoin - Time to Jump In?
The guys discuss Bitcoin and Cryptocurrency. Should you be investing in bitcoin? What you need to know to make smart decisions with cryptocurrency.
Headline of the week: Comcast to impose home internet data cap of 1.2 TB in more than a dozen US States next year
Check www.highspeedinternet.com to see what other options you have for broadband in your area.
Websites mentioned during the podcast:
https://clark.com/credit/credit-freeze-and-thaw-guide/
Main Topic
As of this recording- Bitcoin has gone from 24k at Christmas to now almost 38k per coin. Everyone is wanting in on the action…. But before you hop in - let’s talk about what it is.
What is bitcoin? - A cryptocurrency that was invented in 2008 by someone going by the name of Satoshi Nakamoto.
Decentralized digital currency where there is no central bank where the currency can be sent from user to user on a peer to peer platform.

Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.

Bitcoins are created as a reward for a process known as mining.
Bitcoin’s Usefulness:
Bitcoin runs on blockchain technology. This is a revolutionary technology that allows for a group of computers to independently verify millions of transactions.

The ledger is a very secure way to account for transactions as there are thousands of computers verifying transactions and verifying them.
Bitcoin as an investment
Everyone wants to know - should they be INVESTING in bitcoin?

Obviously it’s gone from 24k per coin to ~38k as of this recording.

Well - let’s think about what we just said - what is bitcoin? It’s a type of currency - and not a normal type of currency - it’s a crypto currency.

Does Currency normally fluctuate in value this much? No- when you go to buy a loaf of bread it’s pretty consistent in price.

Bitcoin is something that’s new - it’s exciting and SPECULATORS are driving the price of bitcoin higher. While bitcoin has utility as a currency - it’s not really a true investment, or should not be seen as one.

Should you invest in bitcoin- We would recommend not to as it has a lot of the signs of a bubble.
Dangers of bitcoin
No regulation

Fraud/Theft

No Tangible Valuation

Hops Showdown

Scott:
Brewery: Warwick Farm Brewing
City: Jamison, PA
Beer: Double Dry Hopped Expressions
Type: Hazy IPA
Score: 94

Lance:
Brewery: Highland Brewing
City: Asheville, NC
Beer: Cold Mountain Spiced Winter Ale
Type: Winter Ale
Score: 89
43 min
January 05, 2021013 | Set Goals and Set Yourself Up for Success | What's Your Desired Future State?
Episode 13: Goal Setting and Tracking
On this show we discuss goal setting and tracking as we head into the new year. Some tools and tips we use in our own lives that will hopefully help each of you to optimize your financial future.
Dollars and Hops goals sheet:
2021 Dollars and Hops Goals Sheet
Goal setting and tracking:
Why is this important?
Many of us have big goals, but we don’t know how we’re going to accomplish them.

Goals don’t just have to be financial in nature, they can be spiritual, intellectual, career oriented, family oriented, etc..

The key is to think big and set goals for yourself EVERY year

Make this a FUN thing - do it with your spouse. Your goals don’t have to be the same as your spouses, but each of you should have goals
Goals should be written on paper - ACTUAL paper
Big goals - can get their own sheet of paper
Highlight milestones as you get closer to accomplishing your goals

You can do this with my net worth, my goals sheet in its entirety, and my retirement savings goals
Scott’s “Goal Night Ritual”
Night at end of year, bottle of wine, goals sheet

Do reflection of current year - What did we accomplish vs not accomplish on our goals sheet

Set goals for the next year.
Goal sheet should be visible every single day - near where you work. In your office so you see it every day and you know what’s driving you to do what you’re doing
Highlight your accomplishments as they happen
Websites mentioned during the podcast:
Headline: Here’s how much money Americans in their 50s have in their 401(k)s
41 min
December 15, 2020012 | Why You Should Fire Your Financial Advisor | Introducing Favorite Life Hacks
Episode 12: Why You Should FIRE Your Financial Advisor | Money Saving Life Hacks
In this episode we will be discussing why we think most people should FIRE their financial advisors.
Why do we say to fire your financial advisor?
Well, oftentimes financial advisors are holding you back from achieving financial success faster.
What do we mean by this?
Financial advisors typically charge anywhere from 1-2% of AUM (Assets under management) to have you as a client.

In addition to the AUM fee you’re paying with your advisor - you also have to pay “hidden” fees for the investments they put you in. Sometimes the advisors get a kick back from the funds they recommend or put their clients in.

What do we mean by this?

If they put you in a mutual fund, that fund could charge an annual expense ratio anywhere from 0 to 1% or more.

They could be using front end load or back end load mutual funds
Explanation on front end and back end load mutual funds
Front end load mutual funds are mutual funds that charge a fee upon investing in them.

Back end load mutual funds are mutual funds that charge a fee upon redeeming or selling the mutual fund.

Selling point is that they will have LESS ongoing fees than a traditional fund that may charge 1% or so.

Obviously we know at D&H - that you can buy no-load mutual funds/etf’s with no or extremely low fees.

AVOID front end/back end load funds that some advisors recommend

This can be a HUGE drag on your overall investment success.
What should you do instead of hiring a financial advisor?
Invest in broadly diversified low cost ETF’s and mutual funds.

We have a full episode of some of our favorites- check out episode 005
If you do want to have an advisor:
Make sure to hire someone who is held to the fiduciary standard AND who is FEE only
What is a fiduciary?
Someone who is bound by law to put your interests ahead of their own interests

One would think anyone giving investment
Who is a fiduciary:
Any investment advisor who is registered with the SEC (Securities and Exchange Commission)
Who does not have to be a fiduciary?
Insurance agents, stock brokers, and broker dealers - They only have to adhere to the “suitability standard” - which lacks teeth
Two types of financial planners: Fee only and Fee Based
Fee Based financial planners - Charge you a fee based upon assets under management. As your portfolio grows, so does the raw dollar amount that they’re being paid for their services.
This fee can often get out of control as you accumulate a large sum of money.

$2m portfolio becomes 20k in fees at 1% and 40k in fees at 2%

Websites mentioned on the podcast:
Headline: How to invest money based on advice from Warren Buffet
How to find a fee only financial planner: www.NAPFA.com
Clark howard credit freeze guide: https://clark.com/credit/credit-freeze-and-thaw-guide/
45 min
December 07, 2020011 | What Can 4% Do for You? | The 4% Rule of Thumb
Episode 11: What can 4% do for you? | The 4% rule
On this show the guys discuss the 4% rule and what it means as it relates to your retirement planning.
Websites mentioned on the podcast:
From Fox Business: 5 Student Loan Refinancing mistakes to avoid
Main Topic - 4% Rule
Introduction to the 4% rule:
So you have worked hard, saved a bunch of money for retirement. How can you figure out who much you can spend without spending down all your money?
Obviously don’t want to spend too little - you earned it after all

You don’t want to spend too much as you don’t want to deplete it all.

This where the 4 percent rule comes in…..

What is the 4% rule and why is it important?
The 4% rule is a rule of thumb for retirement spending. If you spend only 4% of what you have in investment accounts, annually, when you start out in retirement, you will likely never run out of money.
Add up all of your investment accounts and withdraw 4% in your first year of retirement. You’re able to adjust for inflation each year.

This rule was created by someone by the name of William Bill Bengen. Made popular by the Trinity Study from 1998
Bengen wanted to know how much you could safely withdraw in retirement without ever running out of money. His final conclusion: you can safely withdraw 4% of your money in year one and increase by the rate of inflation every year.

Assumptions under the 4% rule:
It assumes you spend exactly 4% in year one and adjust for inflation in future years, so every year you spend more and more. If you overspend or underspend it can change the likelihood that you run out of money or never run out of money.

Inflation found here: https://www.usinflationcalculator.com/inflation/current-inflation-rates/

It applies to a 50/50 portfolio. 50% bonds, 50% stocks. As you adjust your stock to bond ratio - it can adjust the likelihood that your money will last longer.

Example
Reverse engineering the 4% rule:
Let’s say you’re not in retirement, but you want to use the 4% rule to figure out what your retirement number is. Let’s say you expect you want to be able to Spend and Give $125,000 annually in retirement. You expect social security to provide $3,000 per month in retirement. How much do you need to save in investment accounts to be able to fund your retirement lifestyle?
Annualize the social security and subtract it out of your annual spend. =36,000 per year is being provided by social security, so you will only need 89,000 annually.

Take your 89,000 / .04 = 2,225,000
Now, how can you tell if you’re on track to have 2,225,000?
Use a compound interest calculator.

Plug in your current investment account balance, annual contribution (plus 3% increase year over year), expected interest rate (we recommend 8.5%), and hit the calculate button.

It will show you how much you’re on track to have when you’re looking to retire.
We encourage you to play around with the compound interest calculator to see if you’re on track!
36 min

About Dollars and Hops

From the publisher's feed

Two best friends since the 6th grade who have grown to share a passion for craft beer and personal finance. Scott and Lance share what they have learned and what they are continuing to learn in the world of personal finance to help you optimize your financial future. From methods and philosophy on money, investing, tools used, strategies, headlines, tackling listener questions, and the craft beer Hops Showdown each episode - The Dollars and Hops Podcast keeps it educational, relevant, engaging and fun.

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