Josh Tirado: [00:00:00] welcome to the making smart decisions podcast. I am your host, Josh Tirado. And for today, we're going to be discussing the concept of: I already have a broker. I already have an advisor. I already have a financial coach. I'm all set. Congratulations. Truth be told [00:01:00] more than half of my current clients said to me, oh, I already work with someone when they came to me.

Okay. I appreciate that. If you come to me and we work together later in life, chances are you have some. Now that's a broad category. Some people refer to the person that sold the life insurance 20 years ago, or the person that set the Roth IRA 15 years ago, and some mutual funds they never heard from, again, as their person, some people have a broker who calls them.

Maybe they have a little bit of money invested, or they're doing some fun stock picks, but they have somebody, perhaps it's a brother-in-law who's in the business and, or a sister-in-law, they run ideas. They have our questions, pass them from. If you are successful and ever reached a certain age, chances are, you've worked with some financial professional in some capacity, someone referred you in, you met somebody, somebody and you have someone, you have an advisor, you have a broker, you have someone who does something like along those lines. But what I always find interesting is the [00:02:00] clients first, and they tell me. But we're having a discussion already about what they're doing.

So there must be something lacking, or some question in the back of their mind sums for interests that they're willing to talk to me about it. Maybe they think they're missing out. Perhaps their grass is always greener, people. Maybe they just want to be well-educated to make the smartest decisions they can, and that's all well and good, but know that a vast majority of people who work with advisers already came from someone else who had an advisor.

You either needed something more from that relationship. And you wanted someone who was a trustworthy advisor, who did planning with you, who had a holistic approach, who put together all your needs. I heard someone a long time ago. Their favorite phrase was. We help clients crystallize their objectives. And that's a great way of putting it, allowing people to understand where am I am going from, where I am, how do I get there?

And I am then putting that together. It's not the. I have this great investment. It might be a great investment, but it's a great free view. Does it help you accomplish your goals [00:03:00], or is it better for Susie down the street to help her reach her goals? Is it a great investment, but it's designed for someone who's 30, and you're 60, or someone who's 80.

And you're 52. It would be best if you had something specific for you. So people come to me and say, Hey, I've worked with somebody, but maybe we don't have an ongoing relationship. Perhaps they were a commissioned person. They were a salesperson, or I haven't spoken to them in a while, and they're looking for something more.

That's why we worked together. Also, maybe you've worked with an advisor for a long time. That person has retired. That person has passed. You disagreed, or you just felt you needed a different. You're comfortable working with an advisor. You see the benefits. You want to find someone or a company to work with that fits in better with your set of values, your personality, and that you can work with.

There's a financial magazine for my industry, they've started a section an article in the front of the magazine every month. And it discusses my life as a., And they [00:04:00] interview different clients, advisors, and different walks of life, all over the country and the people that relay their experiences.

Sadly, the majority of the articles that people are relaying a negative experience may have positive returns on the investments with the people. Still, the relationship and the service weren't there. Something happened. And most of these stories involve those people saying, I know I need a professional. Still, I needed to move to a different professional.

So they were the right fit. That happens time and time again. So if you already have somebody that's terrific, if they are not providing for all of your needs and you think there might be, and this isn't being worried about, the grass is always greener. This is seriously. I think I could be doing something better or having a better experience.

I know I should talk to somebody. I should have spoken with me now. I have my specialties. If you're not a good fit, I'll refer you to somebody else if you are. Terrific. We'll talk through that. Every client starts with a 20-minute meeting where we discuss what they're looking to get off the relationship and what my company offers, [00:05:00] and we call it the right fit meeting.

Cause we're looking to see, are we a good fit? Should we move on together, or are we not? That's very important that meeting is like the equivalent of the dating stage, where you figure out if the two you're a good fit and whether you should pursue a relationship or not. So just because you have a broker or an advisor or somebody, that's awesome, but make sure it's the right relationship for you, that you're getting the most out of it that you possibly can.

Thank you, and go forth and make some smart decisions.

Josh Tirado: [00:00:00] Welcome to the making smart decisions podcast. I'm your host, Josh Toronto, and today's title. I'm going to affectionately call when life smacks you in the face. I did a podcast a long time ago, where I referenced a quote from Mike Tyson about being punched in the [00:01:00] face. But this is a little different.

This is more about you're minding your business on a mundane Tuesday afternoon, and all of a sudden, something major in your life happens. Are you prepared? Are you ready? This was brought to mind. I was on a call with a client this morning. She mentioned that her husband, also a client of mine, had been in a car accident not doing anything reckless, literally sitting stopped at a stop sign, other person driving incredibly fast through a residential area, being careless blows her stop sign, loses control of the vehicle, T-bones my client.

And now. Several days in the hospital, several weeks later, several surgeries has a couple of months of rehab ahead of him. He will be okay. Thank God. He will be okay. But several months of recovery needed to get a wheelchair, need to outfit his house. Again, as I said, he didn't see that after several surgeries and a long road, several months of recovery, and several months more to leave back to a hundred percent.

He was going to the store it happened he [00:02:00] has a job with flexible time. They are very understanding. They're working around it. These clients well-prepared. They have savings through the job. They have good health insurance, and things will be okay.

But their life has been majorly impacted for the next several months. And we both know him getting T-boned like that. Yes, he had several broken bones and torn things and multiple surgeries, but it could have been much, much worse. So that just really affected me this morning and brought to light how quickly life can change in the blink of an eye.

This is not some avail attempt to encourage you to buy more insurance. This is just a fact of life. Do you have savings? Do you have insurance? Do you have a plan? Do you have yours? Do you have a healthcare power of attorney? You have your wishes drawn out if you are incapacitated. What do you want to have happened?

If things go south and something terrible happens to you and you pass, [00:03:00] what do you want to happen at your funeral? COVID is brought to light when you start hearing more and more about people that have passed away, not just from COVID, but I'm telling you. The famous people that young and old to make the headlines, right?

Because they're famous people for one reason or another, you hear about the passing. And so many times you hear, wow, that person was still so young. And a lot of times young people ignore the need to put together the will and their final wishes and that sort of thing. But it's necessary. So if you take a little time and it's not.

It's not, but it's more affordable than you think. If you take the time to address that, and you take the time to work as a professional to draft that, and you work with a professional like myself to make sure your finances are in order in case something happens. We can't protect against everything.

It's life happens, but we can still protect against many things and prepare and hedge our bets and be in a good position. Should something happen? Devastating things happen all the time [00:04:00], and everyone thinks, oh, it never happens to me right up until it does. So this may sound a little more somber.

I want to get the energy up a little bit, but be aware of things that happen. And this is just a quick little reminder. Do your annual physical with your doctor. You shouldn't have to pay for it. Most insurance covers. And you get some blood work done. You see your doctor. A lot of people are like; I want to know what's wrong with me.

When I say many people, I'm referring to actual family members that I know that say things like that, but you should know if there's something wrong so you can correct it. You can amend it. You can cut off the past. Take your health seriously. Take your finances seriously. And in doing that, think about this.

You take care of the finances. You're working on your health. Even if you're not perfect, you're working on it. You take her to the finances. You take care of the legal side. It should help you sleep better. That is your permission to have fun, enjoy [00:05:00] your life. Go do fun things and not be so worried about, oh, what could happen?

Cause if something happens, you've done at least, you've done everything you possibly can. And then go live your life. It's an excellent permission slip, and you're doing the right thing. And it, and thinking about this too, if something happens to you and people I've heard this from clients, I'm not worried about it because if something happens to me, I'm dead, and that's a hundred percent true.

But if there's anyone that you love or care for in your life, those people are left behind in dealing with it. So realistically, you're doing it for them. And the other thing is what if something negative happens to you, but you don't die. You're now alive, and you're currently dealing with it. So some of you and your loved ones are dealing with it. I know this is heavy stuff but plan to take your precautions and then live your life without that fear and go forth and enjoy.

But random Tuesday afternoon, bad stuff can happen. be [00:06:00] prepared. Shameless plug. As you know, we do the podcast, and I'm here to help with a lot of that. I can refer other professionals to you. They can help with a lot of that. You can talk to your family and friends. See if you had a positive response with somebody, and they can probably refer you to somebody that can help with these different topics.

But seek it out, make it a priority. Please don't wait until January 1st or January 2nd to say, oh, it's a new year. I'm going to take care of these items. Now start it now because it can take a while to get these items set up with how slowly things are moving in a post-pandemic world. So start it now. So we can be done by the first of the year.

It can be done in January but take the first steps. That's my public service announcement for today. Please be. Thanks, go forth and make some smart decisions.

Josh Tirado: [00:00:00] Welcome to the making smart decisions podcast. I'm your host, Josh Tirado. And for this episode, we are going to launch into some myth-busting. In media currently, it seems as though there is a plethora of misinformation, and it seems that being [00:01:00] first or having your topic be popular is more important than being correct.

There are a lot of common myths out there surrounding finances, and I want to debunk several of them. My goal is to provide you with a little bit of background information on it. So you can make your own smart decision about whether it's a myth or whether it applies to you.

So the first one is some advice that I, when new clients come in, that they've received from the HR department or that they've heard and it's maxed out your 401k. I hear that day in, and day out to me that's a myth. I don't think that's a right fit for everyone. To maximize your 401k, the total amount you can put in ends up being a significant amount of money, or it could be a significant percentage.

My, this is a rule of thumb. My rule of thumb is to contribute enough to get the employer match. So maybe be very clear about this. Also, if there is no employer match or legally, there needs to be one, but it's minimal, not every year. You may have better options outside of a 401k,[00:02:00]. The main advantage of your 401k is to max out your employer match, not max out the 401k plan.

I say that because if you put in a dollar and your employer matches it with a dollar, you immediately have a hundred percent return on your money without taking any risk. And there are also tax advantages to it. However, if your employer only matches say up to the. 3% or $3 that you're putting in, and they don't match above that.

And you're putting in 9%, 12%, 15%, something really large. And they're only matching that first piece. The rest of it is still an address. But there may be other better options. Often the investment options inside your 401k plan are pretty limited as to what's in there. The fees can be high. They changed rules several years ago to make fee disclosure more prominent and make fee disclosure clearer.

However, in many cases, you still don't get the complete picture unless you really dig into the numbers with all the fees are so your 401k. [00:03:00] It Can be more expensive than it needs to be. Your options can be limited. And the rules concerning 401k versus other types of investments are different. So depending on your situation, it could be advantageous because you can take a loan.

It might not be advantageous because it's very locked up, and there might be. A vesting period before that money is all yours to take with you. So there's a lot of pros and cons here, but what I want to say is the maximum foreign case, not always the best option. You want to put it enough to get the employer match.

So you get an immediate return on your money. And then, above that, take a serious look at, should I do a different IRA on my own and have control over it? Should I do a Roth IRA? Should I do a brokerage account, so it's not necessarily tied up until I reach age 59 and a half, and I could use the money sooner for something else?

Maybe I have short and intermediate-term goals where this money doesn't have to go towards retirement, but instead, I have a goal that's coming up in the next two years, five years, ten years that I need to save for, to reach instead [00:04:00] than have it be tied up for. The tax advantages are significant, but they're tied to retirement.

So what I'm saying is that whole max out your 401k, not always the best solution. The second myth I want to go over is that all debt is bad debt, and don't get me wrong. I have several clients who, at one point in their life were in substantial debt. And they managed to get it all paid off, and they're pretty successful.

And sometimes, the debt is for education. Sometimes the debt was for launching a business. There are a million different reasons to have debt. It's not always credit card debt, or somebody made poor decisions. They might have a lot of debt. They worked very hard to get out of the debt, and now they're very debt-averse.

They don't want to go back into debt. And they make that conscious decision. When I say, okay, you could leverage someday. Versus paying it all off and long-term, here are the numbers that work out better for you. If you did not pay all cash and were to use some debt, they understand that, and they're willing to forgo that to sleep soundly at night, [00:05:00] they don't want to have any debt.

So they make that decision. Other people understand it and leverage debt. For instance, in a business, it's very hard in many cases to start a business without taking on some debt, or you start the business, but to grow and reach next. You need more money and often, rather than using your cash reserves, if you're lucky enough to have any borrowing some money, especially at very low-interest rates, is a much smarter decision where you keep your cash on hand for any needed.

Some people call it dry powder. You can borrow the money and leverage it. And then you can also, on top of it, get tax advantages or write-offs for that debt. So leveraging that debt and what other people would many people referred to as OPM other people's. Utilizing that debt is a really smart choice.

And in the end, we'll put you further ahead. There's, of course, bad debt. You don't want to run up credit cards at 20%, 25% interest, especially to buy consumer goods that you don't need. But all that's not bad. I recently got a new car used, but new to me on the used car, the [00:06:00] financing was right around 2% and made a lot more sense to me rather than buying the car to finance it at 2% interest and use my money for other things, invest it, grow the business.

Do what have you that provides a return, same thing for a mortgage. Some people are blessed to put down a large amount of money to buy their house, or you can buy. And this market is so crazy. Sometimes that's what you have to do to win the bid, to get the house. If you do that, I still have as you take a mortgage out afterward, because when you can get a mortgage that is around 2% or 3% with positive tax implications on it, that's amazing.

You can borrow the money at 2% or 3% and do something else with your cash, where it stays liquid. It remains available to you, and you can get a better return on it elsewhere. So paying off the house earlier, putting down a huge, down payment, long-term when you have your advisor run the next.

You may be behind by doing that rather than putting down less and using your other money for other purposes. [00:07:00] So when I say all debt is bad, all that is not bad, you can finance a car, you can finance a house. Those you can finance your business. Those options can work out well.

If you are one of those people, though, that needs. Be debt-free to be comfortable. Then we do that and work around it. Just know that in many cases, if you can deal with a bit of discomfort and go with some debt, it can benefit you. I have some older clients the house has paid off, but we'd looked at again.

Each house like house mountain, home, insert, whatever home you, you think of where you'd want to spend some time. They're able to refinance their house and use some of those proceeds to buy the second property. And that property gives them a lot of joy and helps them achieve their goals of where they want to be and where they want to spend their time.

That results in a mortgage. But they're trading off that mortgage, a very low-interest rate for an asset that will most likely appreciate, and they get to enjoy it for a lot of years. So it's a good trade-off. So all I'm going to [00:08:00] say is approach debt. All debt is not bad. There's another thing.

A...

Josh:  This is Josh Tirado. And thank you for joining the Making Smart Decisions podcast. What is the true cost of pet ownership in 2021? let's dive into the dog dilemma. In some reasons studies, some data showed that the initial purchase of a dog in the United States is ranging anywhere from roughly $600 to $2,300.

[00:01:58] It's also showing that annual care and maintenance of that dog is running between $600-$2300 a year. In fact, one survey shows that 40% of Americans are spending an excess of $3,000 a year on their dog, but in reality, they're budgeting a hundred dollars or less per month towards that same expense. Now, I love dogs.

[00:02:23]I own two doodles, two Ozzy doodles, half Australian shepherd has standard poodle they're brother and sister. They're great. My kids love them. My wife and I love them. They bring a lot of joy to our family. I will say this though. They are designer doodles. They were not inexpensive to purchase.

[00:02:41]And because of allergies in my family, I had to go with a dog similar to them. So adopting a dog will be searched and cannot find anything. So we had to go down that route. So let me just preface that with, I love my dogs. Buying a dog is not cheap. Giving the dog good food, good vet care is not cheap.

[00:03:01] As a matter of fact, I have in many people do have health insurance on their dogs. And my pet insurance is now $68 a month. But if you'd look at the cost of something going wrong and incurring vet bills, those bills can be very expensive. So the pet insurance, I think is a useful hedge against that.

[00:03:22] Between Christmas and New Year of 2020 more dogs were put up for adoption and were abandoned or turned into the shelter than any other time during the year. And that's true year over year, I think 2020, was worse because of the pandemic.

[00:03:38] People are out of work. People cannot afford their animals. People's living situations are changing and they cannot afford it or are unable to take their dog with them. And they're putting their dog up for adoption or trying to give it away. But also when you look at that initial cost, if you're paying a couple hundred, a couple of thousand dollars to buy the dog and that same amount of money every year to maintain a healthy lifestyle for your dog, as well as the time commitment to having the animal in your life or multiple animals.

[00:04:06] I think a lot of people quickly realize how expensive and what a commitment it is. And it is a true commitment. I just want to say, this is almost a cautionary tale, and I feel very badly that a number of people got dogs over the summer when it was cute and to get them in your outside and the puppy stage, and you come into the winter and suddenly the dogs inside a lot more.

[00:04:25] And the dog is now at that age where they can tend to start chewing and be destructive. And a lot of people want to get rid of the dog. So for some, it's a cost issue for some, it's a personality issue. I just want to caution people going to 2021, and beyond to please seriously consider your family situation.

[00:04:45] If you can have a dog if you should have a dog, and then also what breed and what is the right setup for the dog. Now, this can be applied to cats and other animals as well, but generally speaking. The dog is the more expensive of the common household pets, but please take a serious look at it, make sure it's a smart decision and a long-term decision that you can go with.

[00:05:08] I know the animals bring a lot of love and joy to people, but if you can't keep your animal that love and joy are going to go, and isn't worth it because then you're going to be heartbroken and so will the animal. So let's make smart decisions looking forward when we are picking out a household pet and a new best friend.

Josh:  This is Josh Tirado, welcome to the Making Smart Decisions Podcast. Today's title is going to be Buyer Beware and is going to be a Storytime. When you picture this, we have changed the names, of the hypothetical clients to the Smiths and the other advisor. We'll call him John.  Just imagine that we can peer in and see everything that is going on with that situation and what we can learn from this situation.

[00:02:02]John had some very nice clients. They were friends, they're friends of the family for a number of years. They became clients. They were very happy clients. Then one day John is in his office and he gets a phone call from a new advisor. That's sitting with his clients of Smith's and they inform him that they are switching to this other advisor.

[00:02:20]John's professional. John keeps his composure, handles the phone call, cause whatever information they need to help facilitate the transfer of the accounts. And then afterward, John follows up to see what is going on. Try to do a little quality control. Maybe you want to call it an exit interview and see how to see if he can further assist those clients.

[00:02:39] During the phone call, the clients reveal that they are leaving because of the information given to them by the other advisor. Now here's where we need to start to learn a few things and we can glean some knowledge from this story. The other advisor told the clients that if there'd been another major market meltdown like there was an in 08', 09' and the market had gone down another 30 or 35%.

[00:03:05] The client's money would not last long enough. They were new in retirement- a year, maybe two years in, and this advisor said, if the market goes down 30 to 35, we have another 08' or 09', you will not have enough money. You will outlive your money and your money will not last.  The client got very scared and very concerned about that.

[00:03:28] And was obviously very worried. The other advisor proceeded to recommend to put them into a product that would give them a guaranteed lifetime income that they could not outlive. However, later on, we come to find out that is a contract they're locked into now for life. And the amount of income they have is really not enough.

[00:03:50] To support their needs and their goals now nevermind in the future, once you account for the cost of living and inflation increases. as John was speaking with him, he thought that was pretty interesting, but they were very scared because of what the advisor told them. And the advisor also told them that she had run their numbers and it looks at their situation and the investments they were in that they would definitely run out of money.

[00:04:15] John inquired and said, Oh, okay. Did she provide you with a report? Could I see the report? I want to take a look at it, make sure the numbers going in there accurate. No, the other advisor never gave them a report. Never let them see the report, never give them a copy of it. John then says to his clients that is true.

[00:04:31] If there was another Oh eight Oh nine. And if the market was down by 30 or 35%, you would not be able to recover from that. And you would run out of money. However only a third of your portfolio is actually in the market, not the entire thing. And out of that third, they had used investments that had saved the nets and safeguards in involved in place seem if the market started to drop, their investments would have some sort of protection or guarantees or moved into cash.

[00:05:02] So there was no way the investments could go down 30 to 35%. So the client got more irritated, I believe at that. But John was just trying to explain to them, yes, it is true. If you lost a third of your portfolio, you would not have enough money, but only 30% of your money is in the market. And there are safeguards in place at the most you could lose is only 10 or 15% of that 30%.

[00:05:24] So really you were in no danger of ever running out of money. The client did not like that. Did not heed that advice. Thanked John, for his input and said, they're going with the other advisor. They felt better about the other advisor and trust the other advisor more because he felt the other advisor was being more honest with the data.

[00:05:46] Fast forward several months, John gets a call back from that client and says, Hey, I know there's still an account left with you. I need some cash. I want to close out the account. John happily obliges and asked why do you need the cash? The client says to John I've been unable to get ahold of our new advisor via phone or email for the past several months.

[00:06:09] In fact, the only way I can get a response from the new adviser was to threaten to file a complaint with the state department of insurance. They are now very stuck. Is it this advisor? It turns out did not have the appropriate licensure. To do what they were doing to comment on what they're commenting on.

[00:06:28] Never really ran the numbers, never provided a report, basically just operated out of fear to take advantage of the Smiths and the Smiths. And in a very sad, heartfelt moment said to John, we really should have spoken with you before jumping the gun and moving to the other advisor. We probably could have avoided all of this and have been in a better position than jumping at it.

[00:06:53] But we were scared and we felt we needed to act.  This is a sad situation because now they're contractually obligated to do some of the other things they're doing. And it's hard to unring that bell,  yes, this is a hypothetical. But this happens.

[00:07:09] This happens in every town and every city and every state across the country on a regular basis. And there are many laws out there to protect seniors and to protect investors. And they're adding more and more laws and rules all the time. But if people do not heed common sense and purely act on emotion, No amount of laws and disclosures are going to protect them because they will ignore them and move forward because you're driven by your emotion, especially fear.

[00:07:41] So if anyone is considering making a drastic move, Please take a step back, take a breath, review, all sides. Talk to everyone. Again. Most professionals are very good people. If you're considering doing something else or leaving them or working with someone else, they're more than happy to work with you. You, give you the pros and cons and you know what, if they don't take the news while you're going someplace else and they become mean or belligerent, or they don't want to work through, they're not nice.

[00:08:07] Then they're lost. You probably shouldn't have worked with them in the first place, but anyone who's a professional. , especially if they're licensed as I am and they're a fiduciary, they will listen to you. They will work with you and help you make a smart decision. So please buyer beware.

[00:08:24] When it comes to making major moves with your money. The other thing I heard this acronym recently was called halt H A L T. And what it stood for was hungry, angry, lonely, or tired. You should never make any major life decision when you are hungry, angry, feeling lonely, or you're very tired, any major life decision, whether that is calling somebody up, who you perhaps should not reach out to, whether that's making a financial decision, whether that's going in and buying something off late-night television, whatever it is.

[00:09:02] Make sure you are in a good mental place before you make any sort of life decision. And don't be motivated by spur of the moment and fear of something encouragin...

Josh:  This is Josh Tirado, and welcome to the Making Smart Decisions podcast. Today, we are going to touch on the most common traditional types of investments. That may sound very boring, but it is not. We will cover it quickly and you will be very well informed moving forward.

[00:01:55] So when I say the four types of traditional investments, one is newer than the others, but we're talking stocks, bonds, mutual funds ETFs. Now I do understand there are other things. There's cash, there's gold. There can be real estate. There are precious metals, there's currency. There's a lot of things out there, but when clients come to me and I look over their portfolios of what they have before they've come to me, or they're asking me questions on investing, or they're doing some investing on their own.

[00:02:21] What I see time and again, are stocks, bonds, mutual funds, ETFs. The reason being mutual funds are what is in everyone's 401k. And 403Bs. People like to buy mutual funds. It's easier. ETFs have become more popular year over year. Because they follow an index and they are usually a more cost-effective method of getting into investing than mutual funds.

[00:02:48] And then you have traditional stocks and bonds where instead of painting with such a broad brush, covering an index, you can be very specific with individual stocks and bonds. So those four things are what I see. Day-in and day-out most often stocks, bonds, mutual funds ETFs. So let's start with the basic stock at its core.

[00:03:06] You own a share of stock. You're owning a share or a piece of that company that you're investing in. And that is how you had company ownership. You bought a share of stock. Usually, you're buying multiple shares of stock. It's a company as well. Ideally, the company grows. People think the company's more valuable.

[00:03:24] The perceived value of the company goes up. Your share of stock becomes worth more than what you paid for it. You bought it for $10 a share. The company does well and grows that share becomes more valuable because, from $10 to $20, that is a growth stock. There's also a value stock. That is where the company is giving a dividend.

[00:03:43] So the company really might, and this usually falls into line with larger, more established companies. Not always, but often this company is doing very well. They're not trying to necessarily grow larger. They have a dominant share of the market throughout there, but they're doing well and they're continuing to try to grow their profits.

[00:04:01] And they're passing that along in the form of the dividend. So every year for every share of stock you own, you might get 1%, 2%, 3%. The highest I usually see is four or five, but usually, three, three to 4% is a good dividend. So if you own a hundred dollars worth of stock and it's paying a 3% dividend, you will receive a check for $3.

[00:04:23] You can take that money and run. You can reinvest it. And that 3% goes across whatever you own, whether you want a hundred dollars of that shit that stock a thousand dollars of that stock, a hundred thousand dollars that stock you're getting that 3% dividend. So you're making your money on your return by them.

[00:04:38] Giving money to you in the form of a dividend, that's really how they're sharing their profits. Or do you have a stock that is going up because the company's value is going up and the value of your share is going up? So at its core, a stock is a piece of that company. Now, things have changed quite a bit in the economy and it is not always based on is this the best company making their product your stock is not necessarily directly tied to how the company is doing. Sometimes it's affected by the industry that the company is in, it's affected by the market cycle. What's popular right now. Is that a popular industry? Is it a popular company? Are they making a popular product or not?

[00:05:18] Is it something in demand they're at different times of the year, different things are more in demand. So a lot of those outside forces now coming into play. Or it's not just the core of the company. It's the, it's what that company represents and how it fits into the greater economy. A bond. Is what they consider to be a debt instrument.

[00:05:39] So basically the company needs to, or the government or whoever is issuing the bond, the raising money to accomplish something, whether it's growth, whether it's some sort of initiative with governments, municipalities that usually they're building a bridge, they're building roads with a company they're trying to expand.

[00:05:57]They're running on a new product line, they're doing something. And instead of borrowing the money, they're raising the money. So you offer a bond. So you're giving the company money in exchange for shares of the bond. Now, again, it depends on what type of bond, but sometimes the value and the prices of the bonds fluctuate too, depending on how popular and how in-demand the bond from that company is.

[00:06:16] So the value of your share of the bond can go up or down. But the basic reason you're buying a bond is to get the interest off the bond. Similar. To a dividend being paid to a stock interest, being paid to the bond, yearly basis. So when you buy the bond, you say, okay, I'm going to buy this bond.

[00:06:35] And this bond is paying me 5%. So again, you want a hundred dollars. You're going to get a check for $5. Now bond interest is usually paid out quarterly, not annually like stock dividend is, but it's the same general concept. So stock. Piece of the company bond, you're essentially loaning money to the company in exchange for them promising to pay you interest.

[00:06:57] The values can change on both.

[00:06:59] A mutual fund is a collection of stocks or bonds or a mixture of both and sometimes cash and some other things. But generally speaking, mutual funds hold at least 30 to 50 individual stocks. Usually, more usually a couple of hundred individual stocks, usually at least a couple of hundred.

[00:07:19]Individual different types of bonds. So collectively you are saying, okay, I don't have the money to buy all these different stocks or all these different bonds. But if I give my money to the mutual fund, my money is pooled with other investors. They have a big enough pot of money that they can go buy these different stocks, these different bonds.

[00:07:36] And then they're being professionally managed. Many mutual funds are managed where they're buying or selling the stocks or bonds. Towards a common goal of either a certain risk level or a certain return. There are some mutual funds where they're very passive or they just buy and hold those stocks or bonds for a year.

[00:07:53] And then at some point they might re rebalance it.  Basically, you're collectively adding your money together to get broader exposure to stocks and bonds or some sort of custom portfolio within the mutual fund. That is why they're so popular inside 401k plans. There tend to be additional fees on the mutual fund because you have someone managing it and the day-to-day costs of buying it, as opposed to you just buying a stock or buying a bond and potentially paying a small commission to do that.

[00:08:19] The mutual plan has an extra layer of fees, but you are receiving benefits for those fees. Now, this product ETF or exchange-traded fund came out a number of years ago.  It's becoming more and more popular every year. The exchange-traded fund trades in real-time, every day, like it's a stock. There can be managed, but oftentimes there's little to no manage...

Josh:  This is Josh Tirado, and this is the making smart decisions podcast. Today, we are going to dive into ESG investing. So ESG investing stands for environmental, social, and governance investing. It refers to a class investing that is also often called sustainable investing. This is more of an umbrella term for investments to seek positive returns while having longterm positive impacts on society, the environment, or the performance of ethical businesses at the same time, oftentimes in the past, this was just called socially responsible investing.

[00:02:13] A lot of times people see the term SRI or sustainable investing. In its early years, it was mostly focused on green companies and green energy companies back in the day. what that meant was while this was a worthwhile noble investment in a noble cause. The performance was not very good.

[00:02:35] The problem is when you just want to focus on nothing but green companies, you are really narrowing your pool of investment companies, investment choices. So they tended to be smaller companies, startups, riskier companies because of their size and their relative youth in business. And also they're all focused on the same industry.

[00:02:53] So you were really into this one niche. And if that niche didn't go well because of the current economic cycle or news, all of your green investments would suffer.

[00:03:04]So it became a problem. And this was early on when I started trying to use these investments with my clients that cared about this was we had to put aside a certain pocket of their investments to say, okay, this is going to be more aggressive, and this is going to be focused on green. And we still are well-diversified with the rest of the portfolio.

[00:03:25] That has evolved substantially over time. Things are just no longer just green investing. Now can have sustainable investing, which happens in a myriad of ways, not just energy. Okay. You can look at energy. You can look at forestry. You can look at waste management. There's a number of things. Also, this gave rise to

[00:03:41]a level of investing that oftentimes had social moral or religious filters attached to it. So you're investing with certain principles from the Bible, certain principles from the Koran, or just things you didn't want to get into. There was a category of investments where they did not invest in anything that touched:

[00:04:02] firearms, tobacco, alcohol gambling, and some cases even nuclear energy. So there are all these different filters and different ways of investing that you can do now to have your investments being in line with your core beliefs. Things have become easier over time. Things have become more diverse over time and the returns have become better.

[00:04:23] But in general, this type of investing, let me just caution you, I've seen work best for some of my older clients who have more money or clients in general who have more money because oftentimes once you narrow the focus down. So tightly to your chosen area of sustainable or social or governance or whatever you want to do within the ESG world

[00:04:50] you're limiting the scope of what you can invest in as far as different size companies, different types of companies. And it becomes very niche-focused. So when I see people doing this, even to this day, they're more concerned about, yes, I want to return, but I want to have a positive social impact, but it will not necessarily maximize the return on their money.

[00:05:10] So we had to make sure they have enough money to accomplish their goals or enough of their money is invested aggressively enough or appropriately enough to get them the overall return they need. And then this is a piece of money. That is in line with their beliefs and makes them feel good. And we still try and get a return, but generally speaking, the return on investment in this category will trail.

[00:05:32]Other investments and protect and potentially more, more traditional type investments. This will trail, this has been changing over time. It's going in the right direction, covering more and more investment options, more and more money managers or doing it. They're offering more ETFs based on this more mutual funds based on this.

[00:05:48] So it is very interesting, but I think it's a very important decision and discussion to have. With your financial professional as to how this complained to your portfolio. I do not think that this should be your entire portfolio, and I don't want to rub anyone the wrong way, because I don't think you should invest going against your beliefs.

[00:06:08] But at the end of the day, there very well may be a trade-off between your beliefs and the performance of the investments. And you just need to know that going in. And take proper precautions and do some proper planning around it. So it's a great niche of investing, but again, you have to be, you have to be careful,

[00:06:25]

Josh Tirado:  I'm Josh Tirado. And you're listening to making smart decisions. 

[00:01:47]When choosing a financial advisor, there are many different ways that they can charge you today. We are going to go more in-depth and unpack the different options that are available out there, and which option is best for you.

[00:01:58]I'm going to do three broad categories. There's a person who is paid on commission. There is a person who is what they call fee only. And the last option is an advisor that is fee-based. I'm going to save fee-based for last because I admittedly I am biased because I am fee-based.

[00:02:18] And from a compliance standpoint, let me say right now, I don't know which one of these is right for you.  they are very individual decisions, and each one of these options has different pros and cons. And you have to decide which one is right for you and your situation.

[00:02:36]Let's start with, somebody gets paid via commission. They are a sales person inherently. There is nothing wrong with salespeople. The world does not go round unless things are sold, and people buy, but understand that person's responsibility first and foremost, lies to the company whose product they're selling.

[00:02:55] secondarily; their responsibility lies with you. But first and foremost, they're a commissioned salesperson representing a certain company or a certain product or a family of products.  

[00:03:09] When you're doing your due diligence and looking to hire somebody,  look on their website, but not just on the first page, dig down a little deeper. There's usually a lot of extra disclaimers around commission saying that they are a commission, and they are selling certain products.

[00:03:24] Just know that certain things pay more than others. And the responsibility, first and foremost, is the company that they're representing, not to you as the consumer. Next is the complete opposite end of the spectrum and advisors that are fee only. This is often viewed as best for the client or taking the high road.

[00:03:47] So some fee-only advisors. Charge a fee for giving advice; whether that be an hourly or annual retainer, they're purely giving advice. They're charging you a fee. They do not handle the investments in the insurance or anything in any way, shape, or form.  Then there are fee-only advisors who charge a percentage of the assets that they manage for you.

[00:04:11] Generally speaking, they have higher minimums because you need to bring over a certain level of assets for them to charge enough for it to be worth. their time as business personnel manage the assets. So fee-only can be a fee for the advice. It can be. I'm just charging a fee for the assets that I manage, or it could be both.

[00:04:29] It could be a separate fee for advice. And if you need the asset management, they switch over and put that hat on. And there's a fee for the separate skills and time that goes into managing those assets. Most fee only people I've met are very proud of being feeling, so they do not handle anything.

[00:04:47]that is commission-based whatsoever. It's purely a fee that is cut and dry. That is easily disclosed. And that is option number two. Now we're gonna go to option number three fee-based, which is what I personally am. And what I mentioned before, I'm biased towards. Over the past 20 plus years, I've come to the conclusion that I feel fee-based at this point in time is the best and offers the best outcome and the most options to my clients.

[00:05:19] I am charging a fee for the financial plan for the retirement plan, for the advice and the 401k for the advice on insurance, for the advice on whatever we do. And we always start with the plan because I don't know what to suggest to you as a course of action until we have a plan.

[00:05:38] And that plan is the client's plan. That's your plan. You're telling me your goals, your dreams, what you want to accomplish. We are then taking them and backing into them. How can we achieve those financially? And then we discuss what the options are and the different strategies we can take. To achieve those goals.

[00:05:57] And if those goals are achievable or if they have to be edited, but we are looking at your plan to achieve your goals. From there, we can look at what do we have to do strategy-wise to accomplish those goals and strategy-wise, what works best for you? What makes the most sense? What investments are right for you?

[00:06:14] What insurance do you need in place to backstop your plan? What level of savings things do you need? What is the biggest? Threat factors that could derail your plan that we have to look at them and plan for whether that's 401k, social security investments, whatever it is we put together.

[00:06:33] The plan first, you are paying a fee to get that plan. If one of the recommendations is that we should have some actively managed money, and you want me to manage the money then again, just like fee-only, there's a fee there to manage the money. There's a fee there to put together the plan.

[00:06:52] Cause you're basically paying for the time and the set of skills to put all that together. But then I'm also still able to do commission-based products. Now I do not lead with commission-based products. I don't use them that often, but I feel that I would be doing a disservice to my clients if I completely excluded that set of investment options that are commission-based because.

[00:07:16] There are some investments out there that the structure and they're normally insurance-based investments. The structure, those investments do not allow them to be fee only. They're set up to charge a commission. There is no way to waive the commission and to just charge a fee. In some cases, I can waive the commission.

[00:07:37] However, the company that's providing that product does not change the cost to the end consumer. They just simply. Keep the commission instead of paying it to me,  life insurance, for instance, and there's a commission on term care.

[00:07:52] There's a commission. There are certain annuities that provide guaranteed income that you can outlive that are part of your liquidation strategy. To provide income and retirement. There are certain other investments that are set up as on a commission basis. Now some of them are now at a spot where they can be fee-based instead of commission-based and I'm gravitating towards that.

[00:08:16] But there's a whole category of products out there that are structured for a commission, and there is no fee option. I don't want to exclude them and say that the clients do not have access to all these products because of their compensation.

[00:08:30]it is disclosed in advance that if we do these certain products or I'm recommending these to you as part of your plan if you move forward with it, these certain products or these certain strategies, There's a commission that will be paid. And here's what the commission is versus the fee. So it is disclosed.

[00:08:49]. And oftentimes, the reason we go with the commission versus the fee is the commission is a onetime payment. At the same time, the fee may be ongoing for five, 10, 15 years. And the fee option actually becomes more expensive over time than the commission option. That's also something that I'm very proud of.

[00:09:07] The industry is working to correct where they're saying, okay, if you charge a fee, you can only charge a fee for a certain amount of time until it reaches what the commission option would ...

Josh:  This is Josh Tirado. And on this episode of making smart decisions, we are going to touch on umbrella insurance. So let me dive into the ever-exciting fun world of property and casualty insurance said no one ever. Auto insurance, homeowners, insurance,  renter's insurance. These are things that are necessities.

[00:01:54]And oftentimes people overlook umbrella insurance. So let me just quickly touch on this because this might actually be the coolest, most useful insurance item that you don't have or never heard of.  Umbrella insurance,  the reason I call it that is it's an umbrella of protection over you.

[00:02:09] It's a personal liability insurance policy for protection. And this comes into play. Let's say someone is injured at your home. Let's say you're in a car accident, someone's injured and somebody wants to Sue you there. There are certain limits and they're very low limits on your homeowners on your auto policy.

[00:02:27] And they're suing you personally. So this personal liability protection kicks in and covers you in case of an unfortunate incident that requires someone taking legal action against you. Now that being said, the reason I think underutilized is it provides a great value for $1 million of coverage.

[00:02:46] Most companies charge under $300 for the year. oftentimes some around $200, you can get a million dollars of liability coverage for the year. And I think that is that's an outstanding value and many people do not have it. And I have this coverage. As a matter of fact, there was a period of time when I was recommending this to every one of my clients.

[00:03:06] And it got to the point where my clients were so aggravated that their insurance person had not recommended this, that they came back to me and asked if I could sell it to them. I said, no, I don't do property and casualty, but it did lead to a thought where I did take on a partner. And we started a property and casualty insurance agency.

[00:03:25]We started one week. We grew it and we sold it. So despite the fact that my, my practice as a financial advisor is what I enjoy the most. And that's why I've continued with it for 20 plus years. There was a period in time where I did have a partner and we also did insurance. So I'm pretty well versed in property and casualty.

[00:03:44]And trust me on the umbrella thing. It is very useful.  Here are the common triggers and the people that most likely should look into it. If you have children, especially if you have children and you have a pool or a trampoline, because if you have children and your children have friends and people are playing, oftentimes somebody can get hurt.

[00:04:02] Trampoline just increases that risk and a pool, whether your children or not exponentially increases that risk. So if you have a pool, trampoline, or children, umbrella insurance is a very good idea. If you have teenage or early twenties drivers in your household. So someone who just got their license up to say the early to mid-twenties, who's driving and still lives at home, or is on your policy.

[00:04:25] Very oftentimes there when leading causes of accidents and they're one of the leading causes of lawsuits stemming from those accidents, and this can help cover you and your household as well.  Young drivers. Children a pool, a trampoline. And then lastly, I'm going to say a business owner depending on your business structure, you can have some liability protection and coverage there, but there's no law stopping people from attempting to Sue you personally, as well as professionally.

[00:04:52] And having this coverage in place it is a really nice backstop that has a really nice safety net. So again, children, business owners, or just extra peace of mind for anybody out there for a very small amount for the year can provide a lot of coverage. So my recommendation is that most, if not all people at least look into getting umbrella coverage, if not securing it, because I think it's a real value, especially in this society today.

[00:05:18] That is as litigious as we are.

Josh Tirado: [00:00:20] Welcome to the making smart decisions podcast. I'm your host, Josh Toronto. And today, we're gonna touch on the importance of a financial advisor. If you're getting divorced now, this advice applies equally to both men and women, but in my 22 years of experience, I believe that men need to heed this advice even more.

[00:01:25]So the divorce process is often awful and draining and takes too long. Whether that takes too long, the six months, or whether that takes too long is three years until everything is resolved. Whatever it is, it generally takes too long and feels way too long, and is draining at that point. You have many other things going on, and you may not be making the smartest decisions.

[00:01:45] I'm talking about one for your current money and investments and to whatever's going to happen with assets being divided up through the divorce. I've personally worked with some people where there's a big discussion about what they're gonna do with the house. And it really came down to one person, loved the house, one of the house, the person didn't want it, which is great.

[00:02:03]But the person that wants to stay in the house was like, okay, I where'd, I get the money from, to pay off the equity in the house to the other person. They thought they were gonna have to sell the house individually assets. I asked them. Do you really like the house? Their response was yes. I love the house.

[00:02:16] I want to stay here. Bearing in mind that this is the man in the relationship, I showed him a way to use money from a different source to give the property the proper amount of equity. To his wife so she could get a different property. And he was able to maintain the house, and it was affordable. He was thrilled because he thought he had to sell the house and lose the house that he works so hard to remodel and get the way he wanted, and he loved it, and she did not, and she wanted to move on, and he thought he was gonna have to lose it.

[00:02:43]He did not. I've also run into people that through the divorce, if I'm divorced, the decree said one partner or the other partner, a set amount of money. It never said where that money had to come from or what form it was in. And in talking to partner one, they just wanted to write a check from the first available thing to give it to partner, to make the whole thing go away.

[00:02:59]But in hindsight, that would have cost them a lot of money in taxes and penalties and put them in an inferior position. So we were able to discuss, okay, here's where we should pull the money from. And we did it in a systematic, intelligent way. And it's saved partner, number one, quite a bit of money in taxes and potential penalties partner.

[00:03:18] Number two, they got everything they were owed and in a timely fashion. And we're happy with getting the money, and partner one realized that if they'd done the way they were going to do it without first consulting with me, it would have cost them far more in taxes and penalties. And we were able to avoid that.

[00:03:33]really. Work with a financial advisor. It could be that depending on the relationship, both parties may want to keep the same financial advisor, or you might want to find somebody else. I see pros and cons to both or the past several years of my clients. Some clients have gotten a divorce.

[00:03:47]They both retained me. We had a relationship, though. Going back to the prior one case, 10 years, the other case, 15 years, we worked together before the divorce. And they both knew that no one knew the situations better than I did. And they both hired me separately. And we split up the relationship and the contract so that each in our separate contracts, I couldn't divulge Anthony on either side.

[00:04:07]And I worked with both sides. I knew the kids. I knew the husband and wife. I knew what they wanted to accomplish, and we worked together, which helped make it more amicable, and everyone got what they needed. And we were able to work with both sides. Now, the attorneys, still two separate attorneys, got their fees.

[00:04:22]And it still dragged on longer than it needed to. But when the rubber met the road of where money was coming from, what was going here, what was going there, we were able to work together, sorted out, and it worked very well. I spoke to the clients that have also divorced the same thing I worked with both sides.

[00:04:35] And some of them were a couple of years removed from divorce now, and both sides continue to work with me. And it goes smoothly. If the divorce is much more contentious or much angrier, it doesn't hurt that one side. It's a different advisor, but I really think that both people should have some advice.

[00:04:51] So it's handled properly. And honestly, especially when the divorce decree comes down from the court and says, X number of dollars needs to change hands. And it doesn't say where it's from. It gives us a great amount of planning to do to protect both parties. And oftentimes, to the divorce decree, we need to get X number of dollars in insurance.

[00:05:08]Life insurance in place to support the divorce decree. At that point, we take a look at, okay, what sort of insurance do we already have? What sort of insurance do we have from work? And what are the most cost-effective options? If we have to add more in what type of insurance do we have to add to the portfolio to fulfill those obligations w we can set that up and make that happen as well, instead of the person who's trying to.

[00:05:28]Shop around on their own online. We were able to do it in a much more systematic, intelligent, and cost-saving manner. The reason I want to focus on men is this isn't necessarily reflective of my client base. But nationally, the number I see is that oftentimes the man leads the financial discussions with the advisor.

[00:05:47]when the divorce occurs, the wife will often get thrown adviser, but the men tend to circle the wagons and internalize and don't reach out to their advisor for help. And I think they really need to reach out to their advisor for help, or if they're advisory to someone who helps them manage some money or make some investments.

[00:06:03] And I don't have a true relationship where they're meeting with the person several times a year and doing the planning. They need to start that you need to find someone who can do true planning and work with them to help them through that process. So men don't. If you're going through a divorce, please don't ignore that.

[00:06:16]Take care of your own mental health and take care of your financial health. And consults and professionals. And anybody going through a divorce should have a professional. I see it where the men often neglect that aspect, and it's not good financially for anyone involved. So that's my 2 cents on the divorce.