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Financial Hot Takes Under the Microscope
Everyone’s got an opinion about money (especially the people with a book deal or a TV show). Some of that advice is useful. Some of it sounds better on a stage than it works in real life. Let’s break it down.
Important Links: Website: http://www.yourplanningpros.com
Call: 844-707-7381
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Transcript:
Marc:
Everyone has got an opinion about money, especially people pushing a book deal or a TV show. And sometimes maybe that advice is useful and sometimes it's not, it works better on a sound stage than in real life. Let's break it down and have Tony react to some controversial financial takes here on Plan With The Tax Man.
Hey, everybody. Welcome into the podcast. This is Plan With The Tax Man with Tony Mauro, here in Des Moines professional alternative at Tax Doctor, Inc. Hanging out with me to do a little reaction type podcast this week, Tony, we'll get your take on some interesting hot takes from some financial talking heads out there and see what you think about it and practice in the real world. Because you see clients and help people every day and of course are governed and have rules that you have to follow where a lot of these talking heads don't, they can say whatever they want. We'll talk about that a little bit this week.
How are you doing, buddy?
Tony Mauro:
I've been doing good. As were taping this, we're getting into our tax season so getting busy with a lot of new tax changes and whatnot that's hitting everybody.
Marc:
Yeah, a lot of changes with the OBBBA. You got to be on your toes, right?
Tony Mauro:
Mm-hmm.
Marc:
And we talked a lot about that on some of the prior podcasts.
Tony Mauro:
We did, yeah.
Marc:
Yeah. If you guys aren't a little sure about some of those things, make sure you go check those out and you can find us at whatever podcasting app you like, Plan With The Tax Man. Just type that in the search box or just go to yourplanningpros.com. But if you need some help, of course, reach out to Tony as tax season is upon us again at yourplanningpros.com.
All right. My friend, let's dive in and have some fun with these.
Tony Mauro:
Sure.
Marc:
All right. You're probably familiar, maybe a lot of our listening audience is with Robert Kiyosaki. A number of years back, he wrote Rich Dad, Poor Dad. Really good book, actually. Quite helpful.
Tony Mauro:
[inaudible 00:01:51] yes.
Marc:
Yeah, quite helpful for a lot of people. But he's since gotten a lot more aggressive and interesting in some of his stances and takes. And again, a lot of that is the demographic I think he's marketing himself to and pushing and things of that nature. But let's talk about this take here more recently. He said people shouldn't work for a company and save in that retirement plan, instead should launch their own startups or maybe buy gold, silver, and Bitcoin, or all of the above. At the time we're talking, Tony, it's early February and gold and silver and Bitcoin, we're doing pretty good last year and earlier into the year this year, but not so great right this minute. At the time we're talking, there was a recent 30% downturn in gold and silver so that didn't age so well.
Tony Mauro:
No. And I think it's interesting you pick this one because I have read his books and I think by and large the Rich Dad, Poor Dad, especially the Rich Dad, Poor Dad Cashflow Quadrant are great books for people. And this strikes me because... Don't get me wrong, I like people being in business for themselves. We serve a lot of those businesses.
Marc:
Absolutely.
Tony Mauro:
And the tax planning and accounting capacity and the financial end as well.
Marc:
But I bet they got their own SEPs and things, they've got their own retirement accounts they're doing.
Tony Mauro:
We've got them in almost anybody that will listen and take us up on it, whether it's through us or somebody else. Yes, they have their own retirement plan of some kind.
Marc:
Yeah. Not saving in a retirement plan just seems crazy, especially if you are working for somebody else, Tony. Because if nothing else, take the free money.
Tony Mauro:
It's free money. And that's exactly it, it's free money if you're working for somebody else. I think depending on who he's trying to market this measures to, not everybody is cut out for having a business for themselves. They may be good at it but they don't... A lot of them tend to get themselves into trouble, whether it's tax-wise or lack of planning, lack of cash flow, that kind of thing, let alone the headaches. Again, I love small business. It's my favorite thing so it's somewhere deep in me. I say, I get it. I get what you're saying. Yeah, I think everybody should work for themselves but not...
Marc:
Everybody doesn't have the right temperament though.
Tony Mauro:
They don't. They don't. They don't have the right temperament. And I definitely think if they're working for themselves or if they're working for a company, they should be in a retirement plan of some kind.
Marc:
Yeah. And to just invest in gold, silver, and Bitcoin, come on, that's crazy. Have some if you want but...
Tony Mauro:
I agree. That goes against every financial prudent planning aspect that I know of, that's some diversification...
Marc:
150 years?
Tony Mauro:
Yeah.
Marc:
Right.
Tony Mauro:
Like you say, you can have some but I think you've got to have some diversification, you got to have a plan. I'd love to hear what his rationale for that.
Marc:
Well, I've watched some shorts and some reels he's had out there recently. And I do think he's targeting the younger generation right now, this kind of mindset of we're not going to work 50 years for somebody and then retire, we want to make all our money in our 20s by being aggressive in technology and this, that, and the other. I think he's pandering a little bit to that crowd. Maybe not. Maybe he's totally on board with it. But it just seems like a big departure from some of his previous stuff.
Tony Mauro:
It does. Yeah, it's a real departure from his books.
Marc:
Yeah. Anyway, interesting hot take there. Look, if you want some gold and some silver and some Bitcoin, hey, cool. Talk with your advisor about that, make sure being prudent though to Tony's point. Don't get crazy.
We were joking the other day. I was talking with an advisor, Tony. The Dow just hit 50,000 at the end of last week at the time we're taping this for the first time ever, right? And the comment was, "Hey, the Dow hit 50,000." And somebody goes, "Yeah, so did Bitcoin." Of course, it started at 100,000.
Tony Mauro:
Right. Right.
Marc:
Because it's not had a very good couple of weeks.
Tony Mauro:
No. And that just goes to show you the volatility there.
Marc:
Massive, yeah.
Tony Mauro:
Yeah. Having all your eggs in those three baskets, definitely very aggressive.
Marc:
It could be, for sure. Yeah. All right. Let's go to a different take here from Suze Orman, host of Women and Money, recently suggested and this is... If Robert was getting a little crazy and aggressive, Suze is maybe getting a little too conservative. Tell me what you think about this, Tony. She suggests retirees set aside three to five years worth of living expenses. Not six months, right? Not three to five months. Just in case bank accounts crash or stock market crashes, things of that nature. Three to five years, a little too conservative? What do you think?
Tony Mauro:
In my opinion, yes. I think that's far, far too conservative because assuming, again, if you're a retiree and you have a diversified portfolio, hopefully if you are in stocks that are high yielding, good quality individual companies. But most people don't have that, they have mutual funds and a variety of things. And even in a market downturn, if you look at 3, 5, 10-year periods, there's not very many that last very long. And if you take it in 10-year periods, there never is over the entire period so that seems very, very conservative.
And who in their right mind is going to take a large chunk of their portfolio and stick it in a 2%, 3% yielding vehicle when they're trying to live off of the income? I don't know where she's coming from with that at all. And again, these people sell a lot of books and whatnot. But keep in mind, I always like to point out that... And they have a lot of followers, they've made a lot of money. But sometimes if you're listening to some of this stuff, you might want to bounce it off your financial advisor as well, just see what they think because I don't agree with that one at all.
Marc:
Yeah, it's a little too... And again, if you got... I don't know. I guess if you're worth $100 million, putting aside three years worth of money is a little easier than most folks, right?
Tony Mauro:
Right. Right.
Marc:
It's three years. I can hardly put side six or eight months, let alone three years worth. And again, interesting takes. And of course, these folks are talking heads out there in the landscape and pushing their books or their programs or things. And while technically, Tony, doing a podcast makes us a talking head, we're a smaller talking head.
Tony Mauro:
True.
Marc:
But again, you're in the trenches. You're a CPA, a CFP, an EA, you work with clients day in and day out. These folks don't do that so that's a little different there.
Tony Mauro:
No. Yeah.
Marc:
Kevin O'Leary and his amazing suits, his very colorful, interesting suits he wears. This one might be the most realistic, Tony, of everything on my list today. And this one is still a little bit too much, I think. But what do you think? He insists that if you don't know your net worth at all times, you're being irresponsible with money. He promotes constant tracking, optimization, and performance measurement.
Tony Mauro:
Somewhat I agree with him because I do think you need to know your net worth.
Marc:
Indeed.
Tony Mauro:
Now, at all times and if you don't know it, you're irresponsible.
Marc:
Constant?
Tony Mauro:
I think that's a little extreme.
Marc:
A little much. Yeah.
Tony Mauro:
Yeah. But I think the point he's trying to make, if I'm reading it right, is you need to track your spending and what you own and what you owe so you do know your net worth because it is an important number. I wouldn't get so hung up on it day to day because you're just not going to be able to make significant changes to it. I think it's worth looking at with your financial advisor to see where it's headed on a yearly basis for sure. We do it with our clients. Every one of our clients, we go over that net worth. Did we grow it? Did it go backwards and why? And it's good to have that because at the end of the day, a large portion of that net worth is going to be your retirement portfolio, your investments. And so that's going to be what we're focusing on mostly.
But also in that net worth, we see a lot of times where we start to become almost a financial personal coach in that, "Hey, your net worth is not growing because you're spending more than you're making." That kind of thing. I think he has some good points there but I wouldn't focus on it. I would focus more with your advisor on the month to month, the bigger plan, and I think you'd be fine.
Marc:
Yeah. And I think a lot of times people do hire a professional, Tony, because they don't want to track it every day and keep an eye on it and it stresses them out. But I think most people, we should know our baseline numbers, we should have a good idea of what's going on, our total net worth, what's coming in, what's going out. You want a good understanding. Even if you do have a financial professional in your pocket helping you out, you still want to have a good... What is it? A 10,000-foot view kind of thing. But I think micromanaging it down to that small of a level, maybe at some point in life. But I think as we get a little older, we're like, "Okay, I need to turn this over to somebody else to handle this because it's too stressful."
Tony Mauro:
Right. Agreed.
Marc:
All right. I got two more I'm going to do and it would not be complete doing this list without old Dave Ramsey. Dave is not shy and no stranger to controversial takes like cutting up credit cards or paying exclusively in cash. And obviously, Dave has got a huge empire, helps a lot of people, and actually has a lot of good things that do seem to work on the debt side. However, on this side, Tony, this might be a little crazy. He's challenging the rule of thumb, the 4% rule. He's advocating for 8% annual withdrawal for retirees who invest 100% in the market. If over time the S&P 500 yields a 10% rate of return, he says the money should then last you throughout retirement. And while on the surface, that makes sense, 100% in stocks for retirees alone just seems like way more nausea and sleepless nights than most people probably want.
Tony Mauro:
I would agree with you. I've read Dave Ramsey's books, I think one of his best is the Total Money Makeover. As far as getting yourself started with planning, I think that's a great book for everybody.
Marc:
And the snowball thing works great.
Tony Mauro:
It works great. This, I would agree with you too. I don't agree with him at all there. I do like a little bit more aggressive withdrawal percentage than 4%, I like to use 5% with most of my clients unless they're very conservative. But 8% and all in stocks, that would be... I think as a fiduciary, that would just be wrong of us to even assume that unless the client comes and says, "This is what I want. I want nothing else." And it's up to us to say, "Wait a minute, that's too much." Because what he doesn't say here is, yes, over time it yields 10%. I would agree with that but that time period is a long time period. What happens if you've got all of your retirement portfolio, S&P 500 index, let's say, and we have an eight-year prolonged downturn? Will you run out of money? Probably not, but you will have significantly less. And if you're living off the income, well, then you either have to take less or get into the principal.
Marc:
And he doesn't really talk about, "Hey, are you willing to cut that back on the down years and things of that nature?" Because adding a little context to that, Tony, to your point, somebody could be listening and go, "Hey, man, the market last year finished at 18%. The year before that, 20 something. The year before that, 20 something. The year before that, 20 something. Making 10 back and only pulling out 8 totally seems doable the last four or five years. Why not?" Sure, you're right. But what about the 10 years where we made nothing? What about a few decades back when there was what? 15 or 18 years where it made nothing, right?
Tony Mauro:
Made nothing, right. I remember through 2000 to 2000 almost 10.
Marc:
Oh, the lost decade. Yeah.
Tony Mauro:
Oh, just a whole decade was gone. Let's say you were following this strategy then and that wouldn't have been too good for you.
Marc:
You're pulling 8% out of a million dollars, you're pulling 80 grand out year over year, and it's not making anything back. Again, it's a little too much, I think.
Tony Mauro:
I think so too. I think he might be just trying to generate a conversation there but I think he definitely got to put some context to that.
Marc:
Yeah, for sure. And again, while technically the numbers technically do make sense, can you sleep at night with that much risk? And it flies in the face of everything for people... And again, the fact that he even mentioned it for retirees is what kind of... If he would have said people in their 30s or 40s, I could have maybe rolled with that. But people in their 60s up, that's a little too crazy.
Tony Mauro:
I agree.
Marc:
All right. Final one. You might have thought that might have been the wildest take but I'll save this one for last. The world's richest man, Mr. Musk, predicts that advances in AI, energy, and robotics will generate such an abundance of resources, Tony, that all individual retirement savings will become irrelevant in the future. On a recent podcast, he said, "Don't worry about squirreling away money for retirement. In another 10 or 20 years, it won't matter anyway." There's going to be this boom that is going to just bring riches to everyone and the thing is I actually think he believes it. I will give him the credit and the benefit of the doubt saying I think that he thinks these things are true, that he can make these things happen or they're going to happen or whatever. And kudos for feeling about that. But man, there is so many holes I can punch into this. First of all, Tony, what is your thought on will it even generate that sort of money? And then who allocates it? Who doles it out?
Tony Mauro:
Well, that's what I was just thinking [inaudible 00:15:10]
Marc:
And who do you trust to make sure they don't take it and give it to you?
Tony Mauro:
Yeah, this is nirvana. I'm thinking, "Well, boy, if that's the case, sign me up."
Marc:
Heck, yeah, sign us all up.
Tony Mauro:
[inaudible 00:15:21]
Marc:
But the history of human beings have... Is there any company, person, government, anything that you would trust to say, "Oh, send me my universal check every month so I don't have to do anything." I know that's the world keeps thinking we're moving towards that but we have to be on it. Who is going to really trust someone to do that first and foremost, right?
Tony Mauro:
I agree. I just think that's... I didn't even know where he's coming from with that. I do think he believes it because I heard...
Marc:
I do. I really do. Yeah.
Tony Mauro:
But I just don't see how that's possible. Everybody that either... Let's say AI and energy and robotics have taken over everything, those are the people that are going to have... Who create that I would think are going to have the money and I don't know how that's going to be doled out to the rest of the people and why.
Marc:
Well, you're talking about what? They've been kicking around that universal income for everyone kind of thing, right?
Tony Mauro:
Yeah.
Marc:
And if you're having a computer, if you're having AI dole out the money where so therefore humans aren't touching it, therefore it's deemed fair. I guess you could make those arguments. But at some point, it just seems... All right, 20 years from now he's talking. If you're 60 years old right now listening to this and you stop, right? You stop, saying, "You know what? Elon is totally right. He's going to pull this off. This is going to happen. I'm 60. I'm not going to save another dime for retirement for the next 20 years." And 20 years comes by and you're 80 and none of this came to fruition. Well, you're screwed.
Tony Mauro:
You're screwed. Yeah, you're in real trouble.
Marc:
And he's not on the hook for it.
Tony Mauro:
No. I would say to everybody, you keep doing what you're doing, you plan like we're in this world right now.
Marc:
Exactly.
Tony Mauro:
And if something like this in your lifetime ever comes to happen, well then all the better. But I wouldn't bank anything on something like this.
Marc:
And that's where I think the questions and the interesting thing comes into the speculation of investing, right Tony? That's where it comes back to, "Hey, look, if you want to get in crypto, if you want to have some AI properties, if you want to do some of these different things because you believe in this interesting future possibility. Cool, do that. But don't risk the tried and true things that have also worked for 150 years just in case you're wrong because there's you, there's your spouse, there's your heirs to think about." And so I think that's where we... We're in this interesting space where it's like, "I want to take some chances maybe." Or, "I want to be on some cutting edges." But let's still keep it within that speculative portion I guess, Tony, of our finances.
Tony Mauro:
Yeah, very small. Very small speculative portion because that's exactly what it is. And you certainly don't want to, just like you said, risk your future on some of the speculation. Because some of it is out there and...
Marc:
And it may be possible. It may absolutely be possible but it also may not.
Tony Mauro:
It may be possible.
Marc:
[inaudible 00:18:16] I'm still waiting on my flying car. I ain't got it yet.
Tony Mauro:
I've got a client here locally, tax only, that has... He's the same way. He is invested in some Iraqi Dinari that he keeps saying that it's going to take off, it's going to be... He's been telling me this for 20 years and it's basically worth 3/10 of one cent. You don't want to get into that. I think it was a little flyer for him, I don't even know. But anyway, please consult with advisors before you do any of these kind of things and [inaudible 00:18:53]
Marc:
And again, it's easy for the world's richest man to be like, "Well, if it doesn't work, well, whatever."
Tony Mauro:
Yeah, whatever.
Marc:
Well, he's going to fly off to Mars and not be responsible anyway.
Tony Mauro:
That's right.
Marc:
But look, good stuff, fun for conversation. And I think that's a piece too, I think as humans, we're always looking to try to move forward and do some things. And of course, sometimes we're trying to sell some stuff. And of course, even in Elon's case, he's trying to promote his robotics and his AI and get people on board. And the more people that are interested and on board, the better the chances of things happening and generating.
You always have to take stuff with a grain of salt and you could simply say, "Well, Mark, you're constantly saying, Hey, call Tony." Yeah, I am. I'm saying call Tony to get a strategy and a plan in place that works for your situation based on the things you've got going on in your life, and also they're backed by years of research and data. And there's no plan that's perfect but having a plan is better than having no plan.
Tony Mauro:
That's right. I agree totally.
Marc:
Yeah. Get yourself onto the calendar, have a consultation and a conversation with licensed professionals, CPA, CFP, EA. It's what Tony is for 30 plus years. If you need some help, find him online at yourplanningpros.com. That's your planningpros.com. We're going to wrap it up this week so thanks for hanging out with us here on Plan With The Tax Man, with Tony Mauro.
Tony, thanks for engaging and having some fun with me on this.
Tony Mauro:
All right. We'll see you next time.
Marc:
We'll see you next time here on the podcast.
Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.
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By Tony Mauro
5
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Everyone’s got an opinion about money (especially the people with a book deal or a TV show). Some of that advice is useful. Some of it sounds better on a stage than it works in real life. Let’s break it down.
Important Links: Website: http://www.yourplanningpros.com
Call: 844-707-7381
----more----
Transcript:
Marc:
Everyone has got an opinion about money, especially people pushing a book deal or a TV show. And sometimes maybe that advice is useful and sometimes it's not, it works better on a sound stage than in real life. Let's break it down and have Tony react to some controversial financial takes here on Plan With The Tax Man.
Hey, everybody. Welcome into the podcast. This is Plan With The Tax Man with Tony Mauro, here in Des Moines professional alternative at Tax Doctor, Inc. Hanging out with me to do a little reaction type podcast this week, Tony, we'll get your take on some interesting hot takes from some financial talking heads out there and see what you think about it and practice in the real world. Because you see clients and help people every day and of course are governed and have rules that you have to follow where a lot of these talking heads don't, they can say whatever they want. We'll talk about that a little bit this week.
How are you doing, buddy?
Tony Mauro:
I've been doing good. As were taping this, we're getting into our tax season so getting busy with a lot of new tax changes and whatnot that's hitting everybody.
Marc:
Yeah, a lot of changes with the OBBBA. You got to be on your toes, right?
Tony Mauro:
Mm-hmm.
Marc:
And we talked a lot about that on some of the prior podcasts.
Tony Mauro:
We did, yeah.
Marc:
Yeah. If you guys aren't a little sure about some of those things, make sure you go check those out and you can find us at whatever podcasting app you like, Plan With The Tax Man. Just type that in the search box or just go to yourplanningpros.com. But if you need some help, of course, reach out to Tony as tax season is upon us again at yourplanningpros.com.
All right. My friend, let's dive in and have some fun with these.
Tony Mauro:
Sure.
Marc:
All right. You're probably familiar, maybe a lot of our listening audience is with Robert Kiyosaki. A number of years back, he wrote Rich Dad, Poor Dad. Really good book, actually. Quite helpful.
Tony Mauro:
[inaudible 00:01:51] yes.
Marc:
Yeah, quite helpful for a lot of people. But he's since gotten a lot more aggressive and interesting in some of his stances and takes. And again, a lot of that is the demographic I think he's marketing himself to and pushing and things of that nature. But let's talk about this take here more recently. He said people shouldn't work for a company and save in that retirement plan, instead should launch their own startups or maybe buy gold, silver, and Bitcoin, or all of the above. At the time we're talking, Tony, it's early February and gold and silver and Bitcoin, we're doing pretty good last year and earlier into the year this year, but not so great right this minute. At the time we're talking, there was a recent 30% downturn in gold and silver so that didn't age so well.
Tony Mauro:
No. And I think it's interesting you pick this one because I have read his books and I think by and large the Rich Dad, Poor Dad, especially the Rich Dad, Poor Dad Cashflow Quadrant are great books for people. And this strikes me because... Don't get me wrong, I like people being in business for themselves. We serve a lot of those businesses.
Marc:
Absolutely.
Tony Mauro:
And the tax planning and accounting capacity and the financial end as well.
Marc:
But I bet they got their own SEPs and things, they've got their own retirement accounts they're doing.
Tony Mauro:
We've got them in almost anybody that will listen and take us up on it, whether it's through us or somebody else. Yes, they have their own retirement plan of some kind.
Marc:
Yeah. Not saving in a retirement plan just seems crazy, especially if you are working for somebody else, Tony. Because if nothing else, take the free money.
Tony Mauro:
It's free money. And that's exactly it, it's free money if you're working for somebody else. I think depending on who he's trying to market this measures to, not everybody is cut out for having a business for themselves. They may be good at it but they don't... A lot of them tend to get themselves into trouble, whether it's tax-wise or lack of planning, lack of cash flow, that kind of thing, let alone the headaches. Again, I love small business. It's my favorite thing so it's somewhere deep in me. I say, I get it. I get what you're saying. Yeah, I think everybody should work for themselves but not...
Marc:
Everybody doesn't have the right temperament though.
Tony Mauro:
They don't. They don't. They don't have the right temperament. And I definitely think if they're working for themselves or if they're working for a company, they should be in a retirement plan of some kind.
Marc:
Yeah. And to just invest in gold, silver, and Bitcoin, come on, that's crazy. Have some if you want but...
Tony Mauro:
I agree. That goes against every financial prudent planning aspect that I know of, that's some diversification...
Marc:
150 years?
Tony Mauro:
Yeah.
Marc:
Right.
Tony Mauro:
Like you say, you can have some but I think you've got to have some diversification, you got to have a plan. I'd love to hear what his rationale for that.
Marc:
Well, I've watched some shorts and some reels he's had out there recently. And I do think he's targeting the younger generation right now, this kind of mindset of we're not going to work 50 years for somebody and then retire, we want to make all our money in our 20s by being aggressive in technology and this, that, and the other. I think he's pandering a little bit to that crowd. Maybe not. Maybe he's totally on board with it. But it just seems like a big departure from some of his previous stuff.
Tony Mauro:
It does. Yeah, it's a real departure from his books.
Marc:
Yeah. Anyway, interesting hot take there. Look, if you want some gold and some silver and some Bitcoin, hey, cool. Talk with your advisor about that, make sure being prudent though to Tony's point. Don't get crazy.
We were joking the other day. I was talking with an advisor, Tony. The Dow just hit 50,000 at the end of last week at the time we're taping this for the first time ever, right? And the comment was, "Hey, the Dow hit 50,000." And somebody goes, "Yeah, so did Bitcoin." Of course, it started at 100,000.
Tony Mauro:
Right. Right.
Marc:
Because it's not had a very good couple of weeks.
Tony Mauro:
No. And that just goes to show you the volatility there.
Marc:
Massive, yeah.
Tony Mauro:
Yeah. Having all your eggs in those three baskets, definitely very aggressive.
Marc:
It could be, for sure. Yeah. All right. Let's go to a different take here from Suze Orman, host of Women and Money, recently suggested and this is... If Robert was getting a little crazy and aggressive, Suze is maybe getting a little too conservative. Tell me what you think about this, Tony. She suggests retirees set aside three to five years worth of living expenses. Not six months, right? Not three to five months. Just in case bank accounts crash or stock market crashes, things of that nature. Three to five years, a little too conservative? What do you think?
Tony Mauro:
In my opinion, yes. I think that's far, far too conservative because assuming, again, if you're a retiree and you have a diversified portfolio, hopefully if you are in stocks that are high yielding, good quality individual companies. But most people don't have that, they have mutual funds and a variety of things. And even in a market downturn, if you look at 3, 5, 10-year periods, there's not very many that last very long. And if you take it in 10-year periods, there never is over the entire period so that seems very, very conservative.
And who in their right mind is going to take a large chunk of their portfolio and stick it in a 2%, 3% yielding vehicle when they're trying to live off of the income? I don't know where she's coming from with that at all. And again, these people sell a lot of books and whatnot. But keep in mind, I always like to point out that... And they have a lot of followers, they've made a lot of money. But sometimes if you're listening to some of this stuff, you might want to bounce it off your financial advisor as well, just see what they think because I don't agree with that one at all.
Marc:
Yeah, it's a little too... And again, if you got... I don't know. I guess if you're worth $100 million, putting aside three years worth of money is a little easier than most folks, right?
Tony Mauro:
Right. Right.
Marc:
It's three years. I can hardly put side six or eight months, let alone three years worth. And again, interesting takes. And of course, these folks are talking heads out there in the landscape and pushing their books or their programs or things. And while technically, Tony, doing a podcast makes us a talking head, we're a smaller talking head.
Tony Mauro:
True.
Marc:
But again, you're in the trenches. You're a CPA, a CFP, an EA, you work with clients day in and day out. These folks don't do that so that's a little different there.
Tony Mauro:
No. Yeah.
Marc:
Kevin O'Leary and his amazing suits, his very colorful, interesting suits he wears. This one might be the most realistic, Tony, of everything on my list today. And this one is still a little bit too much, I think. But what do you think? He insists that if you don't know your net worth at all times, you're being irresponsible with money. He promotes constant tracking, optimization, and performance measurement.
Tony Mauro:
Somewhat I agree with him because I do think you need to know your net worth.
Marc:
Indeed.
Tony Mauro:
Now, at all times and if you don't know it, you're irresponsible.
Marc:
Constant?
Tony Mauro:
I think that's a little extreme.
Marc:
A little much. Yeah.
Tony Mauro:
Yeah. But I think the point he's trying to make, if I'm reading it right, is you need to track your spending and what you own and what you owe so you do know your net worth because it is an important number. I wouldn't get so hung up on it day to day because you're just not going to be able to make significant changes to it. I think it's worth looking at with your financial advisor to see where it's headed on a yearly basis for sure. We do it with our clients. Every one of our clients, we go over that net worth. Did we grow it? Did it go backwards and why? And it's good to have that because at the end of the day, a large portion of that net worth is going to be your retirement portfolio, your investments. And so that's going to be what we're focusing on mostly.
But also in that net worth, we see a lot of times where we start to become almost a financial personal coach in that, "Hey, your net worth is not growing because you're spending more than you're making." That kind of thing. I think he has some good points there but I wouldn't focus on it. I would focus more with your advisor on the month to month, the bigger plan, and I think you'd be fine.
Marc:
Yeah. And I think a lot of times people do hire a professional, Tony, because they don't want to track it every day and keep an eye on it and it stresses them out. But I think most people, we should know our baseline numbers, we should have a good idea of what's going on, our total net worth, what's coming in, what's going out. You want a good understanding. Even if you do have a financial professional in your pocket helping you out, you still want to have a good... What is it? A 10,000-foot view kind of thing. But I think micromanaging it down to that small of a level, maybe at some point in life. But I think as we get a little older, we're like, "Okay, I need to turn this over to somebody else to handle this because it's too stressful."
Tony Mauro:
Right. Agreed.
Marc:
All right. I got two more I'm going to do and it would not be complete doing this list without old Dave Ramsey. Dave is not shy and no stranger to controversial takes like cutting up credit cards or paying exclusively in cash. And obviously, Dave has got a huge empire, helps a lot of people, and actually has a lot of good things that do seem to work on the debt side. However, on this side, Tony, this might be a little crazy. He's challenging the rule of thumb, the 4% rule. He's advocating for 8% annual withdrawal for retirees who invest 100% in the market. If over time the S&P 500 yields a 10% rate of return, he says the money should then last you throughout retirement. And while on the surface, that makes sense, 100% in stocks for retirees alone just seems like way more nausea and sleepless nights than most people probably want.
Tony Mauro:
I would agree with you. I've read Dave Ramsey's books, I think one of his best is the Total Money Makeover. As far as getting yourself started with planning, I think that's a great book for everybody.
Marc:
And the snowball thing works great.
Tony Mauro:
It works great. This, I would agree with you too. I don't agree with him at all there. I do like a little bit more aggressive withdrawal percentage than 4%, I like to use 5% with most of my clients unless they're very conservative. But 8% and all in stocks, that would be... I think as a fiduciary, that would just be wrong of us to even assume that unless the client comes and says, "This is what I want. I want nothing else." And it's up to us to say, "Wait a minute, that's too much." Because what he doesn't say here is, yes, over time it yields 10%. I would agree with that but that time period is a long time period. What happens if you've got all of your retirement portfolio, S&P 500 index, let's say, and we have an eight-year prolonged downturn? Will you run out of money? Probably not, but you will have significantly less. And if you're living off the income, well, then you either have to take less or get into the principal.
Marc:
And he doesn't really talk about, "Hey, are you willing to cut that back on the down years and things of that nature?" Because adding a little context to that, Tony, to your point, somebody could be listening and go, "Hey, man, the market last year finished at 18%. The year before that, 20 something. The year before that, 20 something. The year before that, 20 something. Making 10 back and only pulling out 8 totally seems doable the last four or five years. Why not?" Sure, you're right. But what about the 10 years where we made nothing? What about a few decades back when there was what? 15 or 18 years where it made nothing, right?
Tony Mauro:
Made nothing, right. I remember through 2000 to 2000 almost 10.
Marc:
Oh, the lost decade. Yeah.
Tony Mauro:
Oh, just a whole decade was gone. Let's say you were following this strategy then and that wouldn't have been too good for you.
Marc:
You're pulling 8% out of a million dollars, you're pulling 80 grand out year over year, and it's not making anything back. Again, it's a little too much, I think.
Tony Mauro:
I think so too. I think he might be just trying to generate a conversation there but I think he definitely got to put some context to that.
Marc:
Yeah, for sure. And again, while technically the numbers technically do make sense, can you sleep at night with that much risk? And it flies in the face of everything for people... And again, the fact that he even mentioned it for retirees is what kind of... If he would have said people in their 30s or 40s, I could have maybe rolled with that. But people in their 60s up, that's a little too crazy.
Tony Mauro:
I agree.
Marc:
All right. Final one. You might have thought that might have been the wildest take but I'll save this one for last. The world's richest man, Mr. Musk, predicts that advances in AI, energy, and robotics will generate such an abundance of resources, Tony, that all individual retirement savings will become irrelevant in the future. On a recent podcast, he said, "Don't worry about squirreling away money for retirement. In another 10 or 20 years, it won't matter anyway." There's going to be this boom that is going to just bring riches to everyone and the thing is I actually think he believes it. I will give him the credit and the benefit of the doubt saying I think that he thinks these things are true, that he can make these things happen or they're going to happen or whatever. And kudos for feeling about that. But man, there is so many holes I can punch into this. First of all, Tony, what is your thought on will it even generate that sort of money? And then who allocates it? Who doles it out?
Tony Mauro:
Well, that's what I was just thinking [inaudible 00:15:10]
Marc:
And who do you trust to make sure they don't take it and give it to you?
Tony Mauro:
Yeah, this is nirvana. I'm thinking, "Well, boy, if that's the case, sign me up."
Marc:
Heck, yeah, sign us all up.
Tony Mauro:
[inaudible 00:15:21]
Marc:
But the history of human beings have... Is there any company, person, government, anything that you would trust to say, "Oh, send me my universal check every month so I don't have to do anything." I know that's the world keeps thinking we're moving towards that but we have to be on it. Who is going to really trust someone to do that first and foremost, right?
Tony Mauro:
I agree. I just think that's... I didn't even know where he's coming from with that. I do think he believes it because I heard...
Marc:
I do. I really do. Yeah.
Tony Mauro:
But I just don't see how that's possible. Everybody that either... Let's say AI and energy and robotics have taken over everything, those are the people that are going to have... Who create that I would think are going to have the money and I don't know how that's going to be doled out to the rest of the people and why.
Marc:
Well, you're talking about what? They've been kicking around that universal income for everyone kind of thing, right?
Tony Mauro:
Yeah.
Marc:
And if you're having a computer, if you're having AI dole out the money where so therefore humans aren't touching it, therefore it's deemed fair. I guess you could make those arguments. But at some point, it just seems... All right, 20 years from now he's talking. If you're 60 years old right now listening to this and you stop, right? You stop, saying, "You know what? Elon is totally right. He's going to pull this off. This is going to happen. I'm 60. I'm not going to save another dime for retirement for the next 20 years." And 20 years comes by and you're 80 and none of this came to fruition. Well, you're screwed.
Tony Mauro:
You're screwed. Yeah, you're in real trouble.
Marc:
And he's not on the hook for it.
Tony Mauro:
No. I would say to everybody, you keep doing what you're doing, you plan like we're in this world right now.
Marc:
Exactly.
Tony Mauro:
And if something like this in your lifetime ever comes to happen, well then all the better. But I wouldn't bank anything on something like this.
Marc:
And that's where I think the questions and the interesting thing comes into the speculation of investing, right Tony? That's where it comes back to, "Hey, look, if you want to get in crypto, if you want to have some AI properties, if you want to do some of these different things because you believe in this interesting future possibility. Cool, do that. But don't risk the tried and true things that have also worked for 150 years just in case you're wrong because there's you, there's your spouse, there's your heirs to think about." And so I think that's where we... We're in this interesting space where it's like, "I want to take some chances maybe." Or, "I want to be on some cutting edges." But let's still keep it within that speculative portion I guess, Tony, of our finances.
Tony Mauro:
Yeah, very small. Very small speculative portion because that's exactly what it is. And you certainly don't want to, just like you said, risk your future on some of the speculation. Because some of it is out there and...
Marc:
And it may be possible. It may absolutely be possible but it also may not.
Tony Mauro:
It may be possible.
Marc:
[inaudible 00:18:16] I'm still waiting on my flying car. I ain't got it yet.
Tony Mauro:
I've got a client here locally, tax only, that has... He's the same way. He is invested in some Iraqi Dinari that he keeps saying that it's going to take off, it's going to be... He's been telling me this for 20 years and it's basically worth 3/10 of one cent. You don't want to get into that. I think it was a little flyer for him, I don't even know. But anyway, please consult with advisors before you do any of these kind of things and [inaudible 00:18:53]
Marc:
And again, it's easy for the world's richest man to be like, "Well, if it doesn't work, well, whatever."
Tony Mauro:
Yeah, whatever.
Marc:
Well, he's going to fly off to Mars and not be responsible anyway.
Tony Mauro:
That's right.
Marc:
But look, good stuff, fun for conversation. And I think that's a piece too, I think as humans, we're always looking to try to move forward and do some things. And of course, sometimes we're trying to sell some stuff. And of course, even in Elon's case, he's trying to promote his robotics and his AI and get people on board. And the more people that are interested and on board, the better the chances of things happening and generating.
You always have to take stuff with a grain of salt and you could simply say, "Well, Mark, you're constantly saying, Hey, call Tony." Yeah, I am. I'm saying call Tony to get a strategy and a plan in place that works for your situation based on the things you've got going on in your life, and also they're backed by years of research and data. And there's no plan that's perfect but having a plan is better than having no plan.
Tony Mauro:
That's right. I agree totally.
Marc:
Yeah. Get yourself onto the calendar, have a consultation and a conversation with licensed professionals, CPA, CFP, EA. It's what Tony is for 30 plus years. If you need some help, find him online at yourplanningpros.com. That's your planningpros.com. We're going to wrap it up this week so thanks for hanging out with us here on Plan With The Tax Man, with Tony Mauro.
Tony, thanks for engaging and having some fun with me on this.
Tony Mauro:
All right. We'll see you next time.
Marc:
We'll see you next time here on the podcast.
Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.