Real Personal Finance

Scott and James discuss the tradeoffs between investing in real estate and the stock market.

Listener Question

My wife and I just purchased our first home (30-yr fixed, low interest rate, strong housing market in suburbs of a major city).  As we start a family, we realize we'll likely need a larger home in 5-8 years.  Should we plan to purchase a second, larger home, while maintaining our current home as a rental property (which I assume requires less risky investments today), OR invest more aggressively today and plan to sell our current home when we upgrade (have only one house, no rental).  Hoping you can provide a framework to help think through potential returns/tradeoffs of each scenario.  For example, how to compare the return on a rental property (appreciation of property value and eventual sale) vs returns if the same money was invested in the market.  Also, imagine there is tradeoffs between liquidity of owning a rental vs investing in market.

Our home is worth between $650-700k, interest rate 2.6%.  Unclear what rent we could expect, maybe around $3k/month.

Planning Points Discussed

• Retirement Planning
• Utilizing Time Efficiently
• Capital Appreciation
• Purchasing Power
• Other issues (IRAs, Inflation, Financial Goals, etc.)

Timestamps:

3:07 - Liquidity For a Purchase

6:27 - Multiple Mortgages

9:55 - Tax-Writeoffs

12:05 - Home Prices

16:17 - Comparing Stock Market v. Real Estate

18:22 - Net Worth 

21:08 - Desire For Simplicity

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James

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Scott

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Scott and James discuss how to rebalance when tax implications are involved.

Listener Question

I'm 30 years old and have close to 1/2 million in taxable brokerage accounts.  While I was investing, I was not targeting a specific asset allocation, and now realize my portfolio is very heavily concentrated in domestic large cap stock funds.  My question is, how do I go about rebalancing to achieve a more diversified portfolio while considering the implications of taxes and market cycles?

Planning Points Discussed

• Retirement Planning
• Utilizing Time Efficiently
• Capital Appreciation
• Purchasing Power
• Other issues (IRAs, Inflation, Financial Goals, etc.)

Timestamps:

3:07 - Tax Planning 

6:05 - Volatility Concerns

8:11 - Creative Planning

10:57 - When To Sell

13:30 - Example of Tax Implications

15:48 - Taxable Accounts

17:22 - Gifting For Tax Planning

LET'S CONNECT!

James

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Scott

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Scott and James discuss what to do when you receive a large windfall.

Listener Question

Can you provide (hypothetical) advice on how to handle a financial windfall? My wife and I are in our mid-thirties with one young child. She is a stay-at-home mom while I work in tech. My salary of approximately $130k covers all of our annual expenses in addition to 401k contributions (up to the amount needed to receive full employer matching). We also started contributing to a 529 plan for our son.

We recently came into possession of $2.3M in concentrated stocks and bonds with unrealized capital gains of around $1.5M. Are there any no-brainer moves to make given our new financial position.

Timestamps:

3:08 - Windfall Introduction

5:16 - Cost Basis Impact

7:21 - What Matters Most?

9:48 - Life Goals

12:22 - It's Not About Perfect

16:02 - Value of Diversification

17:18 - Aligning Your Values With Your Goals

LET'S CONNECT!

James

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Scott

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Listener Question

I was wondering if you could talk about the career path of a financial planner, more specifically a CFP who is an independent RIA. I am a college student studying finance looking to become a CFP, there seems to be many paths to take and it is a little confusing. Any tips on how to get valuable experience whether through summer internships or part time work in school?

Planning Points Discussed

• Retirement Planning
• Utilizing Time Efficiently
• Capital Appreciation
• Purchasing Power
• Other issues (IRAs, Inflation, Financial Goals, etc.)

Timestamps:

3:07 - Various Advisor Industries

4:40 - Scott's Introduction To Finance

7:02 - James Introduction To Finance

10:33 - It's More Than The Money

13:30 - Understanding The Textbook

16:05 - What Is An Associate Advisor?

19:51 - Who's The Right Fit?

24:30 - Transparency

27:28 - Aligining Your Financial Goals

LET'S CONNECT!

James

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Scott

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Listener Question

I'm 36 years old with a wife, a 2.5 year old and hopefully a second child in the near future. I currently have a job with a non-matched 403b but it also currently offers a pension (and hopefully still will when I retire in 25-30 years). My wife's employer offers a matching 403b. I currently contribute 15% per pay period into my 403b and my wife about 11%. I’ve been working a few years longer than her and excluding my current 403b account, I have about $75k in an IRA from previous 401k rollovers (post-college thru taking my current job in the summer of 2018). I still have about $45k remaining in principle student loans at 4.35% fixed (8 years left on a 10-year refi loan). I graduated college in 2007 and have been paying my student loans every month since then. My current min monthly payment is $575. Does it make sense to cash out my IRA/rollover account and finally just payoff my student loan, pay off a small amount of credit card debt from a trip we took to Hawaii a few years ago, and ultimately free up some cash to increase my monthly 403b contribution, and build our emergency fund back up to a healthy level, especially as the cost of living increases and we plan to add another child to our family? Or is it absolutely insane to throw away $75k saved over the previous 10 years of my career?

Planning Points Discussed

• Retirement Planning
• Utilizing Time Efficiently
• Capital Appreciation
• Purchasing Power
• Other issues (IRAs, Inflation, Financial Goals, etc.)

Timestamps:

3:57 - Listener Question

4:56 - Pension Income

7:28 - Tax Implications

11:29- Paying Down Debt

14:18 - Refinancing Knowledge

16:22 - Unknown Expenses

19:08 - Aligning Your Financial Goals

LET'S CONNECT!

James

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Scott

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Listener Question

I'm a 48 year old single woman who wants to retire in my mid 50's (or sooner) I have about $400,000 in investments of which only about 12% is in after tax savings I just started a new job making with bonus about $105,000 a year previously only made 55,000 my plan is to live on half my new income. I now max out my 401k, hsa, & Roth IRa and put the rest in my after tax brokerage (which was unable to do in the past). My FIRE # is 1.5 million my question is do you feel I have good plan and what do people do for health insurance if they retire in there mid 50's?

Planning Points Discussed

• Retirement Planning
• Utilizing Time Efficiently
• Capital Appreciation
• Purchasing Power
• Other issues (IRAs, Inflation, Financial Goals, etc.)

Timestamps:

3:57 - FIRE #

6:02 - Financial Planning Expenses

8:04 - Balancing Goals

10:25 - Early Retirement

16:54 - Time & Freedom

19:28 - Health Subsidies

22:05 - Aligning Your Financial Goals

LET'S CONNECT!

James

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Scott

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Scott and James discuss if you should save to a Deferred Compensation Plan after maxing out everything else.

Listener Question

My question is about non-qualified deferred compensation plans. I already max out my 401(k), megaback door (while we still can), Roth backdoor conversations, HSA, FSA, ESPP plan and my wife's SEP IRA and Roth. For the remaining cash I've typically invested in taxable accounts in dividend stocks for future income, but most recently have started using my company NCDC plan for part of salary and bonus. We are 50 YO and plan to retire in 10 years and elected a 10 year payout to minimize taxes in these remaining high earning years. There is also a likely chance that I change jobs every 2-3 years at this point which would potential trigger early distributions.

What are your thoughts on NCDC plans and the distributions?

Planning Points Discussed

• Retirement Planning
• Utilizing Time Efficiently
• Capital Appreciation
• Purchasing Power
• Other issues (IRAs, Inflation, Financial Goals, etc.)

Timestamps:

3:13 - Listener Question

7:40 - Lifestyle Goals

10:46 - Retirement Planning

14:11 - Non-Qualified Deferred Compensation 

17:36 - Job Changes

20:50 - Aligning Your Financial Goals

LET'S CONNECT!

James

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Scott

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Scott and James discuss what to expect when you're expecting.

Listener Question

My wife and I are expecting, and I want to start planning from a financial perspective. I'm considering a 529; if I remember from a previous episode, you guys said you can start funding that before the child is born? I'm also looking into dependent care FSAs for child care expenses. If a kid is due in July, does it make sense to wait and enroll in the dependent care FSA then? Are there any other investment vehicle options to consider? Or general suggestions on cash to have on hand once a child is in the picture?

Planning Points Discussed

• Retirement Planning
• Utilizing Time Efficiently
• Capital Appreciation
• Purchasing Power
• Other issues (IRAs, Inflation, Financial Goals, etc.)

Timestamps:

3:40 - Income Changes

6:02 - Family Updates

10:18 - Lifestyle Changes

14:02 - 529 Plans

18:12 - HSA Benefits

19:29 - Aligning Your Financial Goals

LET'S CONNECT!

James

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Scott

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Scott and James discuss how to know if you're on track to retire.

Listener Question

I am 26 years old and have a TSP account valued at 20k, and a variety of stock/bold portfolios that are earmarked for different priorities that total to about 40k. I get a company match of up to 5% which I utilize up to that. I currently contribute 300 in addition to maxing out my Roth IRA that is valued around 12k. Now, assuming I continue this pace what would you say is the likelihood that I’ll be able to retire off of 60-70k a year? I have hesitations with blindly trusting a “4%” rule since when the study was done it was with the 5% safe rate of return from bonds back in the 90s. Thanks for your time!

Planning Points Discussed

• Retirement Planning
• Utilizing Time Efficiently
• Capital Appreciation
• Purchasing Power
• Other issues (IRAs, Inflation, Financial Goals, etc.)

Timestamps:

3:57 - Listener Question

6:02 - Inflation

9:30 - Employer Matching

11:40 - Time Horizon

14:18 - Lifestyle Changes

17:50 - Retirement Rules

23:22 - Aligning Your Financial Goals

LET'S CONNECT!

James

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Scott

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Scott and James discuss how to start the new year right.

Planning Points Discussed

• Retirement Planning
• Utilizing Time Efficiently
• Capital Appreciation
• Purchasing Power
• Other issues (IRAs, Inflation, Financial Goals, etc.)

Timestamps:

3:57 - Life's Considerations

6:02 - Intentional Living

9:30 - Retirement Goals

15:01 - Dream Lifestyle

16:55 - Assets

19:24 - Saving & Investing

21:22 - Aligning Your Financial Goals

LET'S CONNECT!

James

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Scott

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ENJOY THE SHOW?

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Have a money question you want us to answer? Submit one here