Fear Sells

You're gonna do a really great fundamental future. Dumb and dumb are talking real money.

Oh man, I hate most of the advice out there.

These people who give this advice are just Hey Maury, take your finger off the Maury Povitch show or something there for a minute. Crazy.

Man. Okay, I got it out of my system now. There is so

Seriously.

The rest of them, no. Some of these major publications that have been around, many of them since a hundred years ago. Yeah. Over a hundred years ago. They are just terrible. And this all started when I read an article from the used to be part of Time Life, used to be good, used to give great advice, used to be really interesting. Money magazine, which is just now money. Money. And it's an article by some. Yeah, but that was eight? 2008, dude. That was a long time ago.

They had actual reporters and stuff.

That was a long, long time ago. This is a piece written at money.com by a guy named Andrew Hardy. I don't know anything about Andrew Hardy. I don't know Andrew Hardy, but I don't like Andrew Hardy's writing. I think that this is sensationalist. That uh he's young. He's young. He's young.

He can be 27 years old. I can see his picture. He's young. Yeah, of course.

But his headline, and this is one of those headlines designed to suck you in and scare the living daylights out of you. Yeah, clickbait. How the 4% and 6040 rules are failing modern retirees.

What? Wait, if you're if you're if you're a retiree, are you really modern? I don't know. I read that up.

Yeah.

It's like I don't think I'm that modern, actually. Well, I'm not a retiree, but anyway, close. Uh yeah. This is really good.

It's a quibble, too, by the way. It's these are quibbles. They're quibbles.

Total, total, total. Um He says research shows both are outdated. Um that they don't work for everyone. Trevor Burrus, Jr.

Yeah. Well, let's talk about the research, though. He says the 4% rule, which came about like, I don't know, 30 years ago. Trevor Burrus, Jr. No, more than like 50. Trevor Burrus, Jr.

No, it was 94. It's in the 70s. I thought it was 19.

William Bengan. He calls it the financial 4 percent rule. And uh he says it doesn't work anymore because Morningstar did a new study that found that yeah, f a 3.7 percent rate would be better. Trevor Burrus, Jr.

I gotta ask you, 8.7 percent a lot to like four? To me, it does. It would in my place it would be four. That's a a quibble. That's a good word for it. Silly, silly separation. The the much maligned 64. I won't use the Rasputin joke, even though I'm loving the new book by Anthony Beaver right now about Rasputin. Fascinating look at the Rush, the world.

Is that Justin Bieber's little brother or dad?

He's one of my favorite writers, so don't pick on him. I'm sorry. Fascinating look at uh Russia and the early 20th century. Anyway, the 6040, really? It's and by the way, it's always that it's not working. And then I always go like I just go look at like now you can look at a hundred years of returns of the sixty-forty.

Yeah, it's about eight percent a year.

Does that sound like it's not working with almost half your money in bonds?

Well, what's this it what what's this argument for why it doesn't work? This is what really bothers me. His argument is so spurious. His argument. Listen to this. You'd make more money if you had a hundred percent in stocks. Yeah. Really? Oh, please save me from the and what else would you get if you were 100 percent in stocks?

Heart failure in 2008, you know, a minor stroke in 2001, probably a meltdown in a certain day in 1987. I mean, sure, we should all all be in stocks. Yep. Yeah.

Yeah. The study that he quoted found that an all-equity strategy would allow you to save less of your income before retiring since your returns would be la larger.

Yeah.

You couldn't see my eyes on that one, but they rolled as did my head.

There's very few people, very few, because I've talked to so many of you over the last 30 years, very few that can take the downturns, like the 55% you may remember in 2008 if you're old enough, or the whatever it was in 2022 or 2020. All those things are really hard to take, especially if you're in retirement.

Here's the thing the headline, he could have written a different headline, but it wouldn't have gotten as many views. He could have actually written the 4% rule still comes pretty close to working, and 6040 is better for most people because in this article he says, he quotes from the study, when they said that stocks are very volatile and a 100% stock portfolio, quote, can inflict intense psychological pain. Oh, well then we want that. Let's just go 100 percent equities.

This is very uh as you said, it's it's pornography. Can we say that? No, we're supposed to say cheesecake, right?

Yeah, we're not in the radio anymore. Oh, yeah. You know what? We can't do that.

No, because it was a guy in his car. I guess it was a radio listener who got mad at the same time.

It was a radio listener on a Saturday, and and and I'm sorry. Pornography's not one of the words we never say the words we can't say. We do this. That's what we do.

I thought you were sending more code to the ship off the top or something.

To all the ships at sea. That's the Titanic. S O S. Isn't it it's SOS is I know V. What?

I know V.

You know V? What is V?

D di di da, right? Did di- did da, right?

No, wait, I didn't do that right.

Because that's from World War II, right? Anyway.

Okay.

We're strong.

I can't believe we're doing a Morris Code episode now.

What is that? I only know the one letter. It's gonna be a short message.

We are so childish sometimes for old people.

You want childish now?

I'm really very Benjamin Button-y.

We're moving backwards. Um I'm calmly reading my Seattle Times on a Sunday morning. You're not trying to be the good citizen I am being informed.

Are you reading it on paper, Tom?

That's got the paper right here. Um it's I get that on Sunday, and then as you Don already knows, I get the Wall Street Journal Monday through Saturday, which I really enjoy. But I really did not enjoy this. And my blood pressure is supposed to be lower on the weekends, but it shot right. I should have tested

Don't forget it funds. These that would be target dates?

Target date funds. Now, I have from time to time criticized them, but only unless you have, like you criticize cash. I have only done that because they make you have an asset allocation. So you tell them am I going to retire next year? They're gonna tell you, here's how much you have in stocks, here how much you have in bonds. I it it I think it it could lead to a problem.

But not a serious problem. Not a serious problem. Just not the perfect portfolio.

Yeah. Okay.

But when people say completely stupid, idiotic, inflammatory things as I'm about to read you. I know why the New York Times runs the quote, because it's wow, you read that. I read it to Paul Merriman, he didn't think it was right. He said, No, they didn't say that. I said they did. Here's what they said baby boomers and target date funds are in jeopardy of losing their lifetime savings.

Okay, wait, wait, hold it a minute. They are in jeopardy of losing their lifetime savings.

That's the quote from Ron Sears, who's president of the pension consultancy Target Date Solutions of San Clemente, California. He says the typical fund is mostly invested in risky assets at retirement, and he added, people in those funds won't know that until the stock market crashes.

Wait a minute.

They get less risky as time goes by, right? I looked up the 2035, the Vanguard 20, no, 2025, pardon me. 2025, because wouldn't that be the people that just retired? Yeah. Yeah. Yeah. Half of the money is in riskier assets. Right. That would be stocks because you want to have some growth when you're retired. Half is in bonds, which not perfect. Yeah, they have some volatility from time to time, but they've been kind of the calm during the storm. I find this quote to be outrageous.

We all have a book we wrote years ago.

Oh, you I have a quote about that coming up about your book. Um target date funds have operated too long without clear benchmarks, leaving both fiduciaries and investors guessing. Well, that that's not really true. Right. You can go online and find out exactly what the asset allocation is. That's not a guess. And he he calls this exposing near retirees to dangerous levels of risk.

Yeah, and the thing about the uh the the the lit lengthy bear markets is, for example, 2000 to 2010, 2001-2010, that was a lengthy U.S. bear market. It was. That was a lengthy one. That was like, you know, ten years of losses. But if you had the international stocks in that portfolio, you would have had gains over that entire time. That horrible, scary when you lost a lot of money time, you would have made money over that period of time.

Yes, that doesn't imply it. He says it straight out. Um and and to have half of it in fixed income. So even if the other half went away, you'd still have fifty percent of your money. That would be a blow. But it wouldn't be gone.

No, no, no. If the other half went away, the both halves are gone. You might as well not have either half. I say Because if all twelve thousand companies in this portfolio, in essence the global economy, you won't have anything to buy anyway. Zero value. We have no money left in the world. We are in a barter system, and I'm telling you, most of us are gonna be dead. So it's not gonna matter. Trevor Burrus, Jr.

Other than me, because they won't find me. I'm so far away from anything that it'd take them years or you can be out there sipping water out

Eating raw fish. Eating raw fish. Yeah. Well no, you got trees. You can cut them down and burn them. Ooh, burning trees.

You know, you see me cutting one of those trees down, I'd be dead for sure. That thing would kill me in a those 120-foot. Anyway, not gonna happen. Ron, Ron, Ron, Ron. You know, I get it. You're doing this because it's like everybody else, right? That's what we're saying about the financial media. It is about getting people excited. It is about getting eyeballs, right? It is about saying the most outrageous thing you can to get. We could do that here, too, by the way.

If we did that, we would pass stacking Benjamin's in popularity.

We could do that. We could make outrageous we could say outrageous things, but it's not doesn't serve the purpose of which education should be.

Bitcoin and insurance. Or annuities.

Yeah, we're we're 50-50 on insurance, because you know I'm overinsured, so Okay, on annuities.

We're like uh 1090 on annuities.

Oh, yeah, for sure. Well, we're we're okay with we've I don't want to go back into it, but we're a couple of annuities or one we're okay with, but the rest of them don't.

So you have anybody else you're mad at, or shall we move on?

This is the Tom I'm go get angry show. Yeah, I'm okay now. Uh I do have a nice comment. It comes from John in Cleveland, Ohio.

He writes lovely rock and roll hall of fame uh subtle Cleveland Clinic Place.

Oh, yeah. He writes about Don's paperback book on Amazon. I just typed your name, Don, and your books popped up. Thought you'd like to know. I bought the Kindle version. Now he doesn't say which book.

That was nice. Because it's funny. Um if anybody thinks that uh writing a book and putting it up online is uh is a way to make money. Um you're not rich yet from that? I just pulled up my my my royalties on financial physics in May so far. Yes? You want to you want to hazard a guess? $1.72. 35 cents. Okay. Well I this uh last month I think I got like $25.

Whoa. Oh, maybe because the mention at retirement or something?

I think no, I think because we mentioned it on the show. Uh-huh. And and I got a few downloads.

And is your other is the the Civil War book available for purchase now?

Uh let's see. When does this show air? Um, in two days. Or three days. On the 22nd on Friday. And when am I getting my copy? I still haven't seen the book. Well, by the time this airs, you will have it. It's coming today. So that'll tell people. Yeah, it's it's coming today. It's I looked up its tracking number. You're the I sent you I sent it to you priority mail.

Whoa.

You were chomping at the bit.

Well, I want to read it. I'm stopping every I am stopping Rasputin. You're giving up close to death for you. I'm moving right. I'm excited to read it. This is exactly the kind of stuff I love. You know I love history. And I love when you when you you fix the fictionalized history. It's to me it's fantastic.

Did you like the the the the Shara books? Yeah. Jeff Sherra and it's yeah, those were so good. Well, this is kind of in that it's not as much war as it is the life.

Right, no.

It's a book that is based on, based on, loosely based on what my grandfather, great-great-grandfather went through in the Civil War when he enlisted in the Union Army at age fourteen and ended up imprisoned at Andersonville.

And is it true? Because I just read this yesterday, I think it was on Instagram, that John Ham is gonna play him in the movie.

I would hope not. No?

Okay. That's what I thought I read.

Oh, okay. Anyway, it's called The Line Uncrossed. And it's gonna be available online at I think all the major booksellers online, uh, either in a uh ebook, Apple, Amazon, Kobo, Nook, uh, or a hardcover at Amazon or Barnes and Noble.

What's it gonna be hardcover cost?

$28.99.

Wow.

I know. Crazy. I know. Paperback $16.99.

You'd be proud now pretty much every I read everything on my Kindle with rare exceptions.

And then this is where I I have room to keep the price down because of the there's no physical costs. And that's in the Kindle or the Nook or the uh Apple Book version, which is $4.99.

No, that makes total sense.

I was gonna do Kindle Unlimited, where you people could get it free, but I didn't know. I wanted to let people be uh get it in you have to give Amazon exclusivity.

You didn't you wanted to have other people uh be able to read it otherwise?

I wanted to uh you know other people who have different readers to be able to read it, not just Kindles.

Aaron Ross Powell How many more fancy galas can Jeff Bezos go to?

Oh yeah, look at that. He sponsored the Met.

I saw that.

Did you see any of the pictures from the I don't know why I'm doing this? Oh, yes. How could you miss it? Is it like Halloween?

Yeah, it's a little out there. Trevor Burrus, Jr.

It's a high-end Halloween. Anyway, uh we gotta get to questions. These questions, all of our questions come in to us from Talking Real Money on the ask a question button or contact us button. And if you type them up, then uh Tom either reads them on the show or he actually picks up the phone and calls people.

And we go to Pat, who's calling us from beautiful Liberty Lake, Washington. Hey Pat, how are you? Really good, Tom. How are you doing today? I'm doing fantastic. Love this time of year, love these longer days. Because you know, one of these days, when I drive to work, it's going to be light outside, but uh it's still still a few weeks away, but there's that period of time in the summer, which I absolutely love. So thank you for asking.

So, what's up? Well, my question is I've been hearing, you know, little blurbs here or there about Robinhood and how they'll give you a 2% transfer bonus. And I've never done anything with Robinhood, don't really know much about them other than the whole meme stock thing back a few years ago. And I was just wondering, well, I had a couple specific questions.

Yeah, there's no that would be a direct transfer, and then the bonus is not going to be a taxable event either. I mean, the so Robinhood's just decided to buy people's business. Yeah, we've talked to people who've done this, who had sizable IRAs, for example, and uh they moved it over and got that 2% bonus. So there's no tax. There'd be no tax, obviously, to moving the Vanguard money to Robinhood.

Well, I I appreciate the info. I actually wanted to call. We're meeting with our financial planner, and she is a true fiduciaire. We just pay her a quarterly fee. You meet with her quarterly next Monday, and I wanted to get your opinion. And then, of course, my wife, I always say I'm married up both in looks and brains. She always has she always has lots of questions.

Yeah, so I mean, with obviously, if you move the money to Robinhood, then that person who's managing your money probably can't do it or can. I don't know. Can they can they keep an eye on what they're doing at Robinhood too and get paid on that?

Well, actually, I manage it. All we do is we consult with her and she tells me where to rebalance because we're currently well, target 60, 40, but we're currently 68. But would that be 42? Yeah. So we need or 32. So we need to do some rebalancing that. But um, I do all of that with her with

Yeah, no, I mean, so I mean, she could very well, of course, then look at your accounts at Robinhood very much the same. So yeah, I mean, and I think that's good to have kind of the second chair on all that. There's somebody else that's looking at the rebalancing. Yeah, it's amazing how much I just looked today, actually, at my account, and how much the markets have gone up here in the last few months. It's insane or a month and a half. It's kind of crazy.

Okay. Very good. You've answered my question.

Thank you very much for your time and appreciate you listening.

So we got that, and then we've got this. This is the different version of the same questions, kinda, but Tom just reads them. And then I get stumped by some of them. Thanks, Tom.

Yeah, this one you're not going to get stumped by because we already looked into it, because it came up and you and I discussed it, and I was like, never heard of that. Um I lost track of who sent the question, but the question goes like this. I just noticed that Vanguard charges an SEC fee. Now I think that refers to the Securities and Exchange Commission, not the conference in the South.

Yeah, it's a football fee. I I didn't know. Um to help pay for those big stadiums.

The players. I think you've got to play a lot for the players now. Um he said Vanguard charges an SEC fee when you sell any ETF exchange traded fund. I assume everyone does, but there's no fee to sell mutual funds. I've never heard this fee discussed here. Please explain.

Yeah.

Um The SEC charges a very small fee on sell transactions as well.

Ladies and gentlemen, it is such a small fee that I don't even know why we're talking about it.

Trevor Burrus, Jr. $8 per million sold, it's right.

$8 per million or eight cents on $10,000. Or on a thousand dollars, less than a penny.

Yeah.

On a thousand dollar transaction, less than one penny.

Again, why do we just really nothing to worry about?

Um Classic nothing burger with nothing on it.

From Bainbridge Bain Brain Brainbridge Island where uh Paul Merriman writes resides, yeah. And by the way, there was a kid from there uh who pitched uh Major League Baseball the other night from Bainbridge. Don't remember his name, but there you go. So it's famous for two things now.

Paul Merriman and sometimes you get the dumbest facts on talking real money.

The most least important fact. At least I'm not talking about my new model. Oh, no, no, no, no, no.

Such criticism for talking about the model airplane thing.

Oh, somebody said they're never listen again. Oh, okay. Then I'm I'm stopping it right there. Okay. Stop. John writes us uh I'm really excited about the H E seven seven H E 177. Really gonna be grateful. Very hard to find.

A Heckler, uh uh Hemelhoff, uh H. E. What does that stand for?

That should be easy. That part's easy. H. E? Yeah. Four-engine German bomber. Hard to find the model, too. Um John from Bainbridge. Okay. Ron and Don. He says Ron and Tom.

I guess that's a little uh I think that's funny. That's a joke. I think that's funny, yes.

As a longtime listener, I found you both to be entertaining and informative. A bit of background. He says she is in her late 70s and I am in my early 70s. No, late 60s.

I think he's referring to his spouse, but I may be wrong.

Okay, he says she's in her late 60s and I'm in my early 70s. Okay. Have plenty of equity in our home. I work part-time and she is still full-time. Well, first of all, I'm going to congratulate you, John, for making that happen. I've never made it work. Uh we have not touched our other two iris, self-directed, and see no reason until required by law. I assume there you're referring to the required minimum of distributions. My question. Right? Wouldn't that be the required by law part?

Um, it's an IRS rule, so that that has the force of law.

Okay. They're gonna come and shake you down if you don't do it. My question in my wife's company 401k account, she has both a traditional and a Roth IRA. Taking money out is a couple of weeks process. So my wife would like to take some out, 30,000 from her Roth account, since it's post-tax, and move it to a local bank CD for better ease of use if needed. Ease of access, pardon me. Would you consider this a prudent move as there should not be any tax ramifications? She is concerned.

I was gonna say there must be more to the story coming.

Yeah, she is concerned about the market. Guess what she's concerned regarding?

The market.

The world political political. She may need to have more liquidity to elevate her and thus her need to have more liquidity to he says elevate her concerns, I think he means decrease her concerns.

Okay. Wait, okay, hold

Yeah.

Did they talk about any other accounts that they have?

No.

So it's an IRA, by the way. So if your money's in an IRA, first of all, in terms of access, pretty easy to access an IRA.

Yeah.

Especially if you're self-directing. I mean, you don't have to call for our clients, you call us, we get you the money. That's pretty easy. But for you, pretty easy to go online, say, send it here. You should have a bank that's hooked up right to it. It should be pretty direct. Um if you take money from a Roth and move it to your bank, no, there's no tax ramification to that. But why not just in your Roth at wherever brokerage you held put it in a money market?

You don't think I'm not sure what you're doing? No, I'm not buying the logic because your portfolio should have been already set up. Oh, yeah. Already established, uh invested in the proper assets for your tolerance for risk. Sure. Um so you don't adjust it based on how the world feels at any given time, because let me tell you, when the world feels really good is when we we make mistakes of getting in too much, and when the world feels bad, we get out too much.

And in your portfolio, if you kind of have it sounds like you have the money you need for retirement. Yeah. Maybe it's just scaling back the risk, but staying there. You wouldn't get next year when something else happens and makes, as Don said, the world looks like it's great again, you wouldn't go more into stocks. You have a fixed asset allocation. It could change a little bit over time to less risk.

I would not say go into money market unless you need liquidity, though. And you don't because you said you don't want to use that money.

I think that's spot on. So don't market.

If you lose your jobs and now you need to draw some income from your IRAs, then you do it.

Yeah. I think that's it right on. We were just talking about that at dinner the other night about how life would change for me if I were to lose my job. I have a meeting with the head of HR or the chief people person, they call him now, in a couple of days. So I was what's next. I don't know. Oh, did they call a meeting? Yeah. Uh-oh. You're not on the Is it on Friday? Yeah, and there was a big moving van outside the door. I'm looking at the phone.

Oh no, you don't want to meet you don't want a meeting with the head of HR on a Friday. That's a bad omen. Hi, I'm Don McDonald, and I'm Don McDonald. Welcome to Talking Real Money. Thanks for watching. I'll be seeing you. You're welcome, Don.

The the good news is the nice weather's coming to the lake now, so see ya.

So if you get laid off for the summer, you don't care.

That's good. Yeah.

All right. We're done. Are we done? Did you have a few minutes? We're done.

Thank

If you want uh a little more help than we can provide in the short time we have on the show, go to talkingrealmoney.com and meet with one of our fiduciary advisors for free for nothing with no obligation and no high pressure sales pitch, period. None. And uh please tell friends, two or three or four of them. Oh, and Tom, when you get the book after you're done reading it, I want you to leave an honest review on Amazon. You know you're getting five stars. Well, no, you gotta be honest.

It's gonna be a great book. I already know it. I already you already sent me some of the the galley or whatever it was to read.

Okay. So whatever. You'll have it. You'll have it before the general public, so congratulations. It's exciting for me. So all right, everybody, thanks for being a part of the program. We really appreciate you being there. And remember, in addition to pretty much everything else that we ramble on about, what we're what we're here supposedly doing is talking real money.

The opinions and views expressed on this podcast were current on the date recorded. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice, including any forward-looking estimates or statements which are based on certain expectations and assumptions.