Afford Anything - Ask Paula: I’m Three Years from Retirement. How Should I Invest?

Episode Date: August 24, 2020

#272: “Anonymous Moving-Back-home” and her partner earn $150,000 per year after taxes. They’re currently saving 80 percent by living with family. What should they do with their savings? Leigh and her husband are three years away from retirement. They have an extra $50,000 in income this year and plenty of options for where to invest this money. Which one is the best? Kelsey doesn’t feel comfortable investing in total stock market index funds and would rather invest in ESG funds. How can she tell if she has the necessary $2,000 invested in a company to submit a proposal to participate in a proxy voting? Also, Vanguard has a poor history of supporting shareholder resolutions. What can we do about this? Dylan and his wife rolled her 401k into a rollover IRA with pre-tax contributions. They’ve continued contributing to this IRA with post-tax contributions. Should they separate the accounts, or can they worry about this when they’re ready to retire? Anonymous wants to buy and househack one duplex every year to achieve financial independence and leave his office job within the next three to four years. Is his plan realistic? Former financial planner Joe Saul-Sehy joins me to answer these questions on today’s episode. Enjoy! For more information, visit the show notes at https://affordanything.com/episode272 Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every choice that you make is a trade-off against something else, and that doesn't just apply to your money. That applies to any limited resource that you have to manage, whether it's your time, your energy, your attention, your focus. Saying yes to one thing means implicitly saying no to competing opportunities. The concept of afford anything is the concept of those trade-offs, those values, that opportunity cost.

And that leads to two questions. Number one, what matters? most to you. And number two, how do you make daily decisions in your life that reflect those priorities? Answering these two questions is a lifetime practice, and that's what this podcast is here to explore. My name is Paula Pant. I am the host of the Afford Anything podcast. Every other episode, I answer questions that come from you, the community. And today, my friend, former financial planner, Joe Saul Seahy, is here to help me answer those questions. What's up, Joe? I have nothing better to do.

So I thought that I would just jump on the internet and see if my friend Paula needed some more help. I sure. I always need help. I seriously doubt that. Absolutely. I constantly constantly. Speaking of, in fact, do you remember the September sabbatical from last year? Yes.

So last year, for those of you who are listening, who are brand new listeners, last year, 2019, I took the month of September off. Last year in 2019, we produced 64 episodes that year, so more than one episode a week. This year, including the PSA Thursday episodes, were on track to produce somewhere around 80-ish episodes over the span of this year. So I've decided I'm going to take the month of September to plan out the next year. Take some time to do some deep thinking and planning and be creative and go into a September sabbatical. I think I'm going to make this an annual thing. Yeah, when your PSA Thursday shows become PSA Thursday-ish, and you've got the ish at the end of the title, might be time. Exactly. And you know what? Last year, the 2019 September sabbatical was pure vacation. I went to Croatia. I went to Slovenia, went to Washington, D.C., spent two weeks in Japan. I traveled for five weeks. This year, my September sabbatical is going to be the exact opposite. I'm going to stay locked down, quarantined in one place and read a bunch of books and catch up on emails and catch up on messages and do some deep planning and thinking for a successful year ahead.

Doesn't sound great, though? Yeah, it does. It does. Yes. You know, last year's September sabbatical was a vacation. This year, September sabbatical is, I guess, truly a sabbatical in the deep work sense of the word. Yeah, that's cool. You know, but both of them work. I remember there's a guy that I've learned a lot from named Austin Cleon, and he's kind of at the intersection of art and business and talks about how that time away really informs your business. It isn't really a distraction. Like a lot of people think, if I work more hours, I'm going to be better. I'm going to be, and he says no.

The fact that he plays guitar, which has absolutely nothing to do with the work he does writing books, guitar informs his book writing because his subconscious mind works more readily when he's not sitting there in the trenches, so to speak. The book Originals by Adam Grant says something very similar, where Adam Grant takes a look at some of the most successful CEOs, the ones who have presided over companies that perform very well. And he notices this pattern where many successful CEOs have some type of creative hobby that seems to be completely unrelated to their primary work. So some people are musicians, they play musical instrument, maybe they paint or do some type of sculpture art, some people are performing artists or improv artists. It's quite common to have some type of interest or hobby.

that allows you the space to do the deep thinking, where you then are able to synthesize ideas about the primary work that you do. Essentially, your mind has that time to fuse ideas together that may not have occurred to you when you're in the thick of the go, go, go. I think Adam Grant ripped that off from Austin Cleon. Well, and what's funny about that for people that don't know Austin's work, Austin's number one best-selling book was steal like an artist. So in itself, that's kind of a funny joke. Because Austin says, go steal it and make it your own. Don't plagiarize. Remix. Don't rip off pay homage to, you know, but steal like an artist is a fantastic book.

Take inspiration. So that's what I'll be doing this September sabbatical. I will be hunkered down in my apartment, trying to think and journal and take inspiration and hopefully have. even stronger episodes in the year ahead. Oh, man. The bars, hi, Paula. Oh, well, thank you. Thank you. We can answer some questions? I think so. I think we should answer some questions today. And our first question today comes from Kelsey. Hi, Paula. First of all, thank you for everything you do and for inspiring us all to reach our goals. My name is Kelsey and I first discovered the fire movement exactly a year and a half ago. Only 18 months later, I'm on track to hit a huge milestone. That's 100,000 invested by age 30. That being said, I have some questions related specifically to investing in the stock market. I've always felt a pestering moral dilemma in the back

of my mind, and recent events have inspired me to act on it. While a total stock market index fund is a tried and true way to reach FI, I don't feel totally comfortable building my wealth by investing in companies who are not committed to meeting ESG standards, particularly when it comes to climate change or having a diverse executive team. I found a Vanguard ESG ETF with low expense ratios and broad market diversification, and I think I'm ready to take the plunge and see a fire can be achieved through ESG investing. However, I'm not confident that many of the large cap companies within these funds are truly committed to the things that ESG funds advertise. On episode 250, John Hale mentioned that shareholders could submit proposals to participate in proxy voting if they

own at least $2,000 in a company. So here are my questions for you. One, if you own an or index fund with over 1,000 companies, is there a way to know exactly how much money you have invested in each company? How do you know once you've met that $2,000 threshold? And two, after further inspection, I found that Vanguard has poor record when it comes to voting against ESG-related shareholder resolutions, and that they have a history of blocking initiatives that would have otherwise had majority support, and they aren't the only one. Do you believe there's a way to participate in some form of activism to move our fiduciaries towards a culture of supporting their shareholders. Do you have any ideas for how this might work? I know a large portion of the

fire community is invested in Vanguard, and I'm hopeful that people would be interested in taking action to influence this change. I know it sounds crazy, but I can't help but wonder if it's possible to move towards a more ethical and responsible corporate America without sacrificing our own financial gains. Thank you for your input. Bye. Hey, thanks, Kelsey, for that question. And it's actually very, very easy to find out what percentage of your money is going into each company in an exchange traded fund. You know, we all get that thing called a prospectus when it comes to investments. Inside of that prospectus, it will tell you what percentage of each company you own.

And you can also, by the way, go to morningstar.com. And if you just put in whatever the ticker symbol is that you're using, doesn't even have to be your ESG fund. It can be any fund for anybody listening. just put that ticker symbol in at the top at Morning Star and then flip through the pages and you'll find a page that shows you the holdings. In fact, I think the tab is holdings. Click that tab and it will tell you what percentage of your money is in the top funds. There are so many in some of them like, you know, the Wilshire 5,000, 5,000 different companies.

But I think what you're really interested in is maybe the top 20, the top 30, maybe even the top 100. you can easily get those either at Morningstar, which is what I would do, or actually open up that prospectus that they send you electronically and flip through the PDF of the prospectus and it will give you what percentage of your money is in each fund. As you are reading the prospectus, basically every Vanguard Index Fund prospectus has a page on it that says, this page intentionally left blank. And just yesterday on Twitter, Morgan Housel, who's a previous guest on the podcast, posted a photo of that and said, hey, can someone explain this to me? What is this all about?

And I took a look at it. And I wrote him back and I said, it's the title of my memoir. And he said? Oh, he liked it. He gave it the little Twitter like symbol. A little heart. Yeah, the little heart. Just a little heart. Do you like the heart or do you get disappointed by the heart? I get kind of disappointed. I'm like, really, that's the best you can do. Yeah. Yeah. Yeah. Well, I mean, it's an easy, you know, for something that demands a lot of scrolling, for something where that's designed to make you scroll rather than spend a lot of time on a thing. I understand why Twitter would do that. I agree because there's times that I'm flitting fast and I just want to let people know that I saw their thing. So I try to heart as many as I can and don't even sometimes get that done. But yeah, when somebody hearts, it's totally a double standard. When I hurt somebody stuff, I'm like, oh, that should be good enough for you. But if somebody just hurts my stuff, I'm like, oh, come on, that was genius. Right. Where is like, where's the gif with applause? I know. Come on. Every single time. But anyway, Kelsey, that is number one is just look at either the prospectus with a page intentionally blank at the back or go to Morning Star.

But the second question I think is the more important one to you, which is I may not even use an index if I'm you. I mean, I may look at the holdings that some of the top ESG indexes use, and I may create just my own portfolio of maybe 15 stocks. There's been a lot of studies that show that once you get past 15 to 20 stocks that you're bang for the buck, so to speak, becomes less and less when you diversify more than that. So I think if you put together a list of 15 or 20 positions, used a brokerage account that will let you put money into those funds at the, the same time. So you put $100 in and it breaks it up among all of them. Currently, by the way, there's only one that I know that actually does that. There probably are other ones, so I'll apologize. But I know M1 finance, that's specifically the type of thing that that's built for is that type of investing. So you could do that. Now, realize though, no matter what I said about

diversification a moment ago, when you have 20 stocks versus 1,500 stocks, you could see what's called more standard deviation, which means your portfolio is going to wiggle more. You have to be comfortable with that. You also have to be comfortable with about once a quarter, I would say, instead of once a year. Once a quarter, I would go in and look at all these companies. I wouldn't make any moves. I would just go read the news on all of them. Find out what's going on with the management of the company. What are they doing market-wise? How are they adhering to what you expect of them as an investor in that company? So I think you have to be a little more active, But from the sound of your voice, I think that's what you want.

I think you want to be more active. And I find that pretty exciting. So I don't know, Paula. I think for somebody like her, I would build my own index. Really? So that surprises me because when I think about investing in an index fund, I mean, the diversification, as you said, that comes from investing in something like the S&P 500, where you own a small share of more than 500 companies is certainly much bigger than. what effectively amounts to individual stock picking. And I understand, Kelsey, that the benefit of that individual stock picking is that then you can

deeply research each company that you're holding and decide whether or not that company's practices aligned with your values. And so you could then construct a portfolio of companies that represent the values that you hold. And by custom building this, you hold companies and invest in companies that specifically that you support and not that some fund manager decided would qualify for an ESG credential. And so in that regard, your holdings are more true to yourself. So with regard to building a portfolio that represents your values, I certainly see how that solves that. My

concern is simply that there wouldn't be enough diversification, that you would essentially be individual stock picking plus. It's interesting, though, when you look at indexing, you know, there's two different types of indexes. There's the traditional index where it's the S&P 500, and then there is equal weight investing, which is a different thing. Equal weight investing actually gives you much more diversification than the index gives you. As you know very well, Paula, when you buy the S&P 500, you're buying a crap load of Apple. You're just buying, you're buying a bunch of Apple stock.

It's a large cap bias. Yeah, you're buying a small amount of everything else. So I'm not sure how much worse this really is doing an equal weight of 20 different companies versus using the S&P 500 where you're largely going to go where Apple goes, Apple, Amazon, Facebook, Microsoft, and a few others. Would it be possible with a custom-built portfolio comprised of, say, 20 or 30 or 40 individual stocks, would it be possible to plug that into Morning Stars X-ray tool to see what the standard deviation would have been with historic performance over the last 10 or 20 years.

Yes. In that case, Kelsey, that's exactly what I would do. I would plug all of that into the Morning Stars X-ray tool so that you can get a sense of the type of volatility that you would have experienced had you built this type of custom portfolio a decade ago or two decades ago. And I suppose inherent within that recommendation, that recommendation sort of presupposes that you're only investing in companies that are at least one to two decades old? I like doing that anyway with any position.

I like looking at there's a page on Morningstar called MPT Statistics, which shows, which is modern portfolio theory statistics. And it gives you a lot of the measures on risk versus reward, if it's a mutual fund, if it's an individual position, whatever it might be. So you can see, and especially standard deviation, you can see how much it wiggles versus the S&P 500. So you can get a good feeling about how choppy is this sea going to be as I'm riding this boat toward my goals. I guess that's probably the best analogy I could come up with.

And I like knowing that ahead of time. It's like the weather, right? I mean, I go and I look at the weather and I say, okay, what's the weather going to be today? Especially if I'm traveling, how's the weather going to be? Is it going to be a difficult day for my travel? I feel like looking at things that show me historically how up and down these positions have been. gives me a good idea ahead of time about where it is so that when it gets choppy, I'm not that worried about it. I'm like, oh, this is just normal.

Kelsey, you also made the observation that many people in the fire movement, many of the people who are listening to this do invest in Vanguard. And you'd asked if it was possible for a group of people who invest in Vanguard to organize together and encourage Vanguard to make different decisions. if a Vanguard is casting votes or making choices that many people believe they should not be. I say if that's what you want to do, absolutely. Jump into the Afford Anythingcom slash community and gather people together who are investors in Vanguard who want to make their voices heard and influence the decisions that Vanguard makes. The great thing about the structure of Vanguard as opposed to any other major brokerage like TD Ameritrade

or Schwab or Fidelity, is that Vanguard is a co-op, meaning it is member-owned. It, unlike all of the other brokerages, which have private ownership and then a bunch of clients or customers, Vanguard is owned by its members. So every person who invests in Vanguard is, in that regard, a part owner of Vanguard. Vanguard is, if you're familiar with the outdoor clothing store, REI, it is the REI of brokerages. And so I would think that particularly for an institution like Vanguard that is, a co-op that is member owned, if you want to organize a group of people and encourage Vanguard to

start making different choices, do so. I mean, absolutely do so. So go into afford anything.com slash community, go into other fire communities online and see if there are other people who are interested in doing this. And if so, it would be awesome for people to be speaking up more and influencing decisions that major institutions, including major financial institutions, make. So thank you, Kelsey, for asking that question. And for the sake of everyone who's listening, if you did not catch episode 250 with Dr. John Hale, absolutely listened to that episode. Dr. John Hale is the Director of Sustainability Research at Morningstar, and he has a wealth

of information about sustainable investing, ESG funds. If you are at all interested in this topic, definitely, definitely listen to that episode. You can listen to it at Affordainthing.com slash episode 250. Our next question comes from an anonymous caller, and Joe, we give every anonymous caller a nickname. What should we call this person, this guy? I'm watching this really campy show on Netflix right now called The Order. and I'm on season two. And for people who like Sabrina the teenage witch,

which is also very campy, you'll also probably like the order. But it is incredibly stupid. But the main character is Jack. And Jack is a guy who, yeah, has a lot of problems. But I think we call him Jack. Are you implying he has a lot of problems? I'm actually, I shouldn't have said that.

Should I? No, no, Jack, you don't have me. any problems at all. You're good. Actually, what's funny is we're going to help Jack solve his problem today. So I think we will be good. All right. Great. Well, I mean, I don't know, Jack, but... Oh, hey-oh. Steve, can I get a but him... Thank you. Well, I think that he's got a great new name now. Like, how can you forget that? Jack from Belgrave University. There's this fake university, I think it's fake, called Belgrave University that he goes to. Okay. the guy in the show. The guy in the show. Jack from Belgrave University. Great. Well, our next question

comes from Jack from Belgrave. Hey, Paula. I'm about 38 years old. I make around $80,000 per year in state government, and that should go up to about 85 in the next year. I have 15,000 in my emergency fund, trying to keep that between about 15 and 20. I just started investing in the Vanguard total stock index, so I have 3,000 in there right now, and I'm adding about $500 per month. I have $10,000 in my Roth, so I'm going to be fully funding that for the second year in a row through Vanguard. I have about $100,000 between a 401k and a $457 plan, putting in 8% on each of those. I do get a 3% match on the 401k. Then the other thing is I bought a duplex back in February 2019 for $135,000.

The rent that I have coming in is about $1,100, which covers the mortgage. And then I also pay a little extra on top of that. So I pay up to what equates to a $1,500 payment. So I'm getting a little extra off the principal there. My goal is to buy another duplex, house hack another time, and really to continue to buy one duplex or one new property each year. and really get out of my office job in the next three to four years so I can travel. I'm learning photography.

I'd like to pursue a second career in photography and real estate. So I'm just wondering, you know, based on what I've laid out, how did you suggest adjusting my savings and investing plan to meet my goals? How realistic is it? Would you reduce what you're putting into the retirement accounts? and really just what else should I be thinking about. I really appreciate your show and everything you do, and I think you're awesome. Thanks.

Jack, first of all, congratulations on saving so much on everything that you've done. You've built a great emergency fund. You are saving a bunch of money for retirement. You have a great duplex. And I love your plan of buying another duplex each year until you've acquired four duplexes and have some passive income coming in in order to be able to quit your job and pursue a second career. So here are some of the top ideas that came into my mind when I heard your situation. First of all, you mentioned that you're paying extra, you're paying what equates to $1,500

so that you are reducing the principal portion of your mortgage payment. You are reducing the amount of money that you owe. I would, and I know this sounds antithetical to what you might hear on a lot of personal finance podcasts, I would not do that. And the reason for that is because your goal is to buy three more houses and potentially even three more duplexes in the span of the next three years. Given that goal, your priority is right now to save money for the down payment for each of those successive duplexes that you purchase, as well as save additional money so that

you have cash reserves for each of those properties such that if there is a period of vacancy for a while, if there are repairs, maintenance, cap-ex that you need to deal with, you have a sufficient down payment and you have sufficient cash reserves. So paying down the mortgage balance on any given property is not what you want to be doing at a time in which you are acquiring. If you think about two different phases of growing a real estate portfolio, there's the acquisition phase and then there's the pay-down phase. And those two phases do not happen simultaneously. You'll want to basically bulk up and then cut, acquire first, and then pay down the balance. But when you do buy that fourth duplex, if your goal is to buy three more so that you have a total of four, after you buy that fourth duplex and you're done acquiring properties, that's the time in which you want to flip your strategy, make the minimum payment on three out of those four duplexes, and then put every spare penny into paying down one out of those four.

so that that way you can start very rapidly making progress towards holding these duplexes free and clear. Yeah, it's interesting because I totally agree that he has to have cash, right? Everything he's talking about, Paula, means that he needs cash right now, which is why I really like his question about, do I slow down or stop my retirement savings? Here's what I would do. And this is why I also like thinking about our personal goals in terms of, of businesses. And I also think that business, like studying businesses and how they work and how they make business decisions is so important when we're doing a financial plan. There is a way that

companies bring new products to market, which applies here, Paula, which is called minimum viable product. And this is what I would do with his retirement. I would look at the minimum retirement he'd be okay with, figure out how. how much retirement that is, then present value that number to today, knowing that he's got the match and that he can probably reduce it a bunch. But he doesn't want to ruin his retirement completely. He wants to make sure he's at least putting the minimum viable amount away while he's working on these short term goals. So I would use this minimum viable product thing to figure out minimum viable retirement, what we call MVR. I just made that up.

I like that. I like that framework a lot. Figure out his MVR. and then back it down to there and save every other dollar into a place where he can get at it to pursue these short-term goals. Because he also needs a big, you know, he has a decent cash reserve. He's going to need more because especially if he's going into real estate, he didn't say how he's going into real estate.

I presume buying it, but if he's going to work in the industry, even as a real estate pro as a realtor, he's going to have up and down income all the time. And he needs to have a bigger cash reserve because of that. Absolutely. Yeah, I like the framework of middle. minimum viable retirement. So step one is, of course, make sure that you're getting your full match, any match that you're eligible for. That is a non-negotiable. No matter what else is going on in your life, always, always, always get the full match. But yes, and then beyond that, save as much as is needed

for that minimum viable retirement and then put every penny into, to mix metaphors here, bulk up and then cut down. So bulk up in terms of acquire all of the properties that you plan to acquire, and then after you're done doing that, flip the script, cut down, and hold them all free and clear. Once you have those properties held free and clear, I mean, essentially that is a supplement to your retirement. You know, you don't think of it necessarily in your retirement bucket because it's not a tax-advantaged retirement account, but owning four duplexes free and clear is pretty darn useful for anyone who wants to retire or start a second career. And so, you know, you can begin to pay off the debts on those properties after you've reached your acquisition goal. The faster that you

pay down those debts, the faster you will continue to pay down those debts, because once that first house is held free and clear, then all of the positive cash flow from that first property can be used to pay off the second property. And it becomes a debt snowball method for, you know, duplex after duplex. The more that are paid off, the easier paying off subsequent properties becomes. Yeah. Apply all that cash flow to the next thing. Yeah, which is all the more reason that you don't necessarily want a huge amount of cash tied up in tax advantaged retirement accounts because that'll be great when you're in your 60s, but not really helpful for you right now and for this real estate goal right now. I love Paul how individual this is because we just gave somebody

advice that is exactly, I think, the opposite advice that I'm going to advise somebody later on in the show today, which shows that, you know, people that go online asking in a Facebook group for a one-size-fits-all answer, rarely, rarely the right solution. Ooh, foreshadowing for later in the show. Dun-da-da-da-ton. Yes. Coming up next, we tell somebody the opposite of what we just told Jack. Your head's going to flip around.

You won't believe what they say at minute whatever. Right. Right. Or those stupid blog post. You're going to LOL at solution number five. No. Are people still writing those headlines? I hope not.

You know, the reason that we gave, that Joe and I both gave you that answer is because you've clearly outlined what your goal is. Like, fundamentally your question was, these are my goals. These are my current circumstances. How do I align my limited resources in such a way that those resources will help me reach my goals? So thank you, Jack, for asking that question. Now, before we get to the caller who we're going to give the opposite answer that we gave Jack, but we're going to make you wait for that one, like any good show.

We'll make you wait for that one. I learned that from you, Joe. And so before we get to that one, we will first talk to Dylan from Chicago. Hi, Paula. This is Dylan in the Shytown, Chicago. Before I got to my question, wanted to let you know that your podcast has the absolute best music to start the podcast and in and out of breaks. It's a great jam to get everything started. In essence, wanted some guidance on how to sort out a particular issue regarding a spousal IRA. So my wife previously worked when she stopped working to, be a stay-at-home mom, we took her 401K and rolled it over into a rollover IRA. Since then, we have been contributing to this particular IRA. We didn't open up a separate spousal IRA, but we've been making contributions, which, as you know, are post-tech contributions.

And the original rollover was pre-tax contribution. So I wanted to find out from you and Joe if there's anything at this particular point that I need to do separate the accounts or is this just something that needs to be worked out at the time of retirement, which wouldn't be for several more years. Certainly appreciate any guidance that you can provide. Thank you. Dylan, first of all, I'm glad that you love the music so much. You're actually the first person who has complimented me on the music. So thank you. Thank you.

it too. As to your question, well, I hate to be the bearer of bad news, but pre-tax and after-tax contributions in the same account is a bit of a yikes. That's a slightly bad newsbears. Is that a technical term? Yikes? It's a bad news bears and a yikes, all in one. And for people that don't know what's going on here, why this is yikes, to use Paula's term, it's because Dylan's spouse has this money that is all pre-tax. It's all been written off already. And because of that, when she pulls money out, whether it's the principle that she put in or any money that it earns, that money is all going to be taxed when you pull it out.

When you add in contributions later that are after-tax contributions that you didn't write off, And we're going to get back to that concept in a second because that may save Dylan's bacon, but we're about to find out. If he hasn't written that off and he puts that money in there, well, then that money earns money. And now you have some money that's already been taxed that won't be taxed again, but the earnings are going to be taxed. And the way that money is taxed, if I know my stuff correctly, and I'm 90% sure I do. and CPAs will let us know, it's LIFO,

last in first out, which means I can't get at this money that I put in after tax until I take out all the gains. But now I have to separate the gains from the after tax money year by year from the gains from the pre-tax money.

And so what we have here then, because of this mathematical nightmare, we have what's called a yikes. Now, if, and this is the saving grace, Dillian, tell me that you did it. If on your tax forms, you claimed the fact that she put that money in and got the tax deduction for it, essentially making it pre-tax again, you saved your bacon, buddy. And now you don't have to go meet with a professional to help you sort out this year-by-year stuff.

Otherwise, I think that having somebody who's dealt with this before is going to pay for itself over and over and over and over and over again. You could try to sort out what interest that money made and then how the compounding on that money that it made is separate from the other money. But if you invested in the same fund that you had pre-tax money for, now you have an issue. By the way, Dylan may have a question here, Paula, which is a very interesting question. Dylan right now might be screaming at his device. Why the hell didn't the investment company, my IRA company, tell me this when I made the contribution?

And the quick answer is, I don't know. And it frustrates me too, Dylan. It very much frustrates me. But they don't. And so not just for Dylan. I think Dylan's story is kind of a cautionary tale for all of us. You really, if you're, number one, don't make after-tax. contributions without immediately turning it into a Roth. If you're going to do this as part of a

Roth backdoor Roth strategy, do it. But leaving after tax money separate, I'm just not a fan of that. Even by itself, I'm not a fan of it, but mixing the two. Right. Yeah. Anytime you have pre-tax and after-tax in the same account, anytime you have tax deferred and tax exempt in the same account. It's like letting your peas touch your potatoes. I don't know if you've had that problem before, Paula. on the plate if your peas touch your potatoes, you've got a huge problem. Just a huge, huge problem. Well, see, Nepalese food, which is what I grew up eating, is designed to all be mixed together. Well, see, that's perfect. We need more food like that. Because, as you know, peas and potatoes touching is, that's, they start, it's not good. But Dylan, I hate to say, go see a professional. It is what it is.

should Dylan see so well certainly he should see a CPA should he also see a financial planner in addition to that or should he specifically seek out somebody who is both a CFP and CPA? No, I think that the CFP part is for holistic planning, much more like we talked about with Jack from Belgrave where he's looking at the short-term goals versus the long-term goals. That's the CFP world. This is a very specific, very technical question

and the CFP might know the answer But you know what? The CFP is a cover your butt still going to send you to a CPA. It's just a one-time technical get me out of jail card. Right, right. So thank you, Dylan, for asking that question. And best of luck with meeting with the CPA, untangling the after tax from the pre-tax, and with moving forward with what will be excellent retirement savings, both now and in the many years to come. And you know what might be cool, Dylan, if you don't mind, send us a note later and tell us what the CPA did.

Because if you could share that with us, that would be, I think, a worthwhile thing to hear. Wouldn't you want to hear that, Paula? Yeah, absolutely, absolutely. Yeah, we can nerd out about how they did that. That would be fascinating. So again, Dylan, thank you for asking that question. Now, since Joe and I have foreshadowed that we will later in this episode be giving somebody an answer that's the opposite. of the answer that we gave to Jack from Belgrave,

let's keep this foreshadowing going. Like any good show, we're going to make you wait until the end. So, before we get to that question, we will first take this break to listen to a message from our sponsors, and after that, we will hear from another anonymous caller whom we are yet to name. Stay tuned. Fifth Third Bank's commercial payments are fast and efficient, but they're not. not just fast and efficient.

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Friday deals. Head to Wayfair.com now to shop Wayfair's Black Friday deals for up to 70% off. That's W-A-Y-F-A-I-R.com. Sale ends December 7th. And we're back. Joe, you and I have to name this next anonymous caller. What name comes to mind? Well, in the last episode of The Order. Uh-oh. The Order on Netflix. Jack actually saves everybody, but mostly saves this. woman Alyssa. And Alyssa, by the way, just so, you know, people don't roll their eyes and go,

oh, dude saves a woman, just stereotypical BS. Nope, Alyssa has saved Jack's bacon like 15 times. But in the latest episode, Jack saved Alyssa. So I think that we should go Alyssa from Belgrave. Alyssa from Belgrave. All right. Well, then, our next caller is Alyssa from Belgrave. Hey Paula, I'm a huge fan of your show, and I love the work that you do. My partner and I have recently moved back in with family due to COVID-19 and are currently working from home to the end of the year. We originally were paying a large amount of pay towards our rent in New York City, but since our lease ended, our expenses have been cut significantly. We both work in tech and have relative job stability and bring in about $150k a year after taxes, and we'll be saving 80% for the rest of the year since we are not paying rent, and our only expenses are food and few bills. We currently have a very robo investing account, our own investments on Robin Hood, and around 40k in cash. So my question is, we are currently sitting on a lot of cash right now, but we don't plan on buying a lot of property at least until our mid-20s, which is in three to four years, since we live in New York City, which is very high cost of living, and just in case we make a decision to move overseas to work

for a couple of years. Since this is a relatively short term in the stock market, do you think it's viable to just continue keeping this money and all our future savings since we're living with our parents for the time being in a high-interest savings account, or should we put into some kind of security, even if it's a relatively short term. Thanks in advance for all your help. Thank you, Alyssa, for asking that question. Now, first of all, huge congratulations on what you've done so far. You and your partner are in your early 20s and you're making $150,000, which is incredibly impressive because to make that much at that age is, I mean, I cannot even imagine I cannot even relate, like, huge congrats to you for having great jobs with a great

income, starting early in life, and you're saving 80% of that income. So big congratulations for having such an enormous savings rate, particularly at the start of your career, because having that type of early advantage, having an 80% savings rate on a six-figure income when you're in your 20s is a huge early advantage that will have compounding growth and compounding gains throughout your life. So what you're doing right now, future you will 100% be happy for the moves that you're making right now. Now, as to your question, where should you put that money? I mean, let's just go through so personal finance 101 fundamentals. First and foremost, make sure that you have an emergency fund that represents at least six months of your

living expenses. And I may, given that you have such a high savings rate, I may even stretch that to include six months' worth of living expenses if you had to pay for your own housing as well. So that that way, in the event that you were living in a city or a state that was away from family, at some point in the future, maybe your job might move you there. Maybe you might pivot into different roles. If you couldn't live with your family, what would six months' worth of expenses be? Make sure that you have that saved in an emergency fund. If you want to up level your emergency fund savings a little bit more, I would also then add into that the deductible on your health insurance policy. So make sure that you have enough saved that you would be able to cover that as well.

Once you have those emergency fund savings taken care of, a lot of what happens next is largely going to depend on your goals. In addition to the emergency fund, which we just talked about, I hope it goes without saying that if you qualify, for any type of matching contribution to any retirement accounts, always, always, always get the match. Beyond that, you know, it sounds as though you're debt-free. And so beyond that, what you do, once you have an adequate emergency fund and once you are getting your retirement match, beyond that, what you do with your money is going to largely depend on your goals. And so you talked about potentially buying property in the next three to four years, but also potentially not doing that. I think having some clarity around what your goals are going to be.

be will be informative in terms of how you want to save or deploy that money. But as a broad rule, since you asked about cash versus some type of short-term security or short-term investment, if you think that you are going to spend this money in the relatively short-term future, like the next three or four years, you will want to bias towards liquidity, bias to towards lack of volatility because your timeline to use, timeline to withdrawal, is so near term. If you are not going to be tapping this money in the near future, then you have the ability to put it into more volatile assets. And so clarity around your goals, clarity around what you're going to do with this money is, I think, the fundamental question before answering

precisely what types of assets this money should go into. Yeah, I'm glad you brought that up because that was specifically what I was the part of the question that I was going to address, Paula, which is you look at where I'm at here right now in Vermont. Cheryl and I just did something really cool today. We did a corn maze, which is incredible, but you can only do a corn maze when the corn is really tall, right? And so you think about farmers, they have a growing season. They have a certain time when they put the corn in the ground, full well knowing when they're going to harvest it. And because they're clear about the growing season, that's how they can get the highest yield from their crop. And it's such a great analogy for this question.

When are you going to need the money? Then answers the question about whether you can deviate from cash or not. Now, this goal is tough because if it's in that four or five year time frame, you start to go, man, cash. Right now, the Fed with interest rates really low. you're sitting money in cash, you're probably going to lose out to inflation by sitting money there, but everything else looks worse. We have an economy that who knows what's going to happen around COVID. So we have no idea where the economy's headed. We also have no idea about interest rates and when they're going to go up. The next place you might go would be toward bonds, right?

because you start off with cash is lowest risk and other types of ways to hold cash might be CDs, but CDs aren't paying anything. Money markets, another form of cash. So you start looking for these higher yield cash equivalent type places. But then you go into bonds. And the problem with bonds is bonds work on this teeter totter. We used to call it when I was in the business. Let's talk about another professional term. Teeter totter. Yes. And you actually called that as a financial advisor when you were in the business. Yes, very, very complex term, the teeter-totter. Most people think when they first are starting out as an investor that stocks and bonds are the two sides of the teeter-totter, one goes up, the other goes down. Nope, not true. Stocks and bonds go up and

down sometimes at the same time, often at the same time. However, interest rates and bond prices are the two sides of the teeter-totter. Right now we have interest rates very low, so bond prices would be on the upside of the teeter-totter. We know if bond prices go high, oop, the other side of the teeter-totter goes down. So most of us are sitting here looking at bonds going, there's no place for bond prices to go but down. So if you go into a bond fund right now, you're asking to lose money. Right. That said, that said, in a normal environment, you know, when you're looking at bonds, a four-year, five-year time frame beating cash, I'm making a big grimace. Nobody can see me, but I'm really grimacing like, I don't know or not, but I'm going to mention this. My favorite place to start beyond cash

is not for a lot of financial planners that I worked with. It was treasuries and some sort of treasury related ETF or mutual fund. So with that, you're loaning money to the U.S. government. U.S. government best credit anywhere on earth. So the chance of that going under is considered to be low by investors, which is why you don't get a very high return and you don't get much volatility. And here, Paula, what I'm looking at is volatility much more than return. Can I get a little bit higher return and not have much volatility? I'll tell you a place that I like is the next step up, which are government-related agencies.

and I specifically like Ginny Mays. I knew you were going to say Ginny May. I knew it. I was waiting for it. Yeah, and I've said this to you before that I really like Jenny Mays because they're implicitly backed by the faith and trust of the government. And yet because of the fact that it's one step removed theoretically, and we can walk through that on another episode, because of that, you'll get risk that is very similar to a treasury,

but you get a little higher return. So it's just this little, you get this little Cajun sauce on your stuff. we look at this fund, if the price just stays the same, and it's not going to stay the same, by the way, we think it's going to go down. But if the price stays the same, taking a look at, I'm looking at the I shares Ginnie Mae Bond ETF, ticker symbol, GnMA. And by the way, there's a billion ways to buy. So please don't write to me and tell me that there's a better one. We get a lot of emails. It's just an example. The 12-month yield on this, though, is 2.18 right which you're like, okay, that's pretty attractive.

So if the share price just stays the same, it's 2.18. So if the share price goes down, you know, if it drops by 1%, then you still have a positive performance out of your fund because of the yield. But if we look at the last several years, this year so far, 3.42, last year, 5.85. I would never expect this fund to do 5.85, by the way. Never expect it. Might happen once in a while. Everybody who was in a Ginny Mae last year,

high five yourself and then realize that ain't happening again. 2018.85, 2017, 1.75. 2016, 1% 2015, half a percent. 2014, 5.93. 2013, though, Paula's the year I want to get to. Negative 2.5%. But if you're just a lot of you. but if she's in there for four years, negative two and a half plus six, we'll call a little less than six, half a percent and one percent, she beat the heck out of cash because of the fact that she was in there for four years.

Risky? Yes. Would I do it now? I don't know. I'm bringing it up because I think that it's an option that is enticing if you know what you're getting into. I don't think it's a big real. though, to go into Ginny Mays with a four-year or five-year time horizon. Yeah, and zooming out fundamentally, her question is, what is the best place to put cash with a four to five-year time horizon, or a three-to-five-year time horizon? You know, if we step away from her goals, if we assume that that is not a question that she is reasonably able to answer right now because she doesn't know what her career prospects are going to be

in the next three to four to five years, what types of job opportunities she will have in Europe or overseas, what the real estate market in New York is going to be. I mean, heck, we can't predict the next three to four months with all of the peculiarities of the year 2020. So we certainly, in terms of real estate, in terms of career, in terms of opportunities, in terms of life planning, yet it's certainly hard to predict what will be in front of you in the next three to four years. And so if the answer is that she cannot reasonably predict her goals at that time, then the question does become, all right, assuming a three to five year holding period, what are the best types of assets to put that money into?

Yeah. And I think knowing that you could lose money here, but you probably won't, and there is a high degree of probability that you'll beat cash without taking an inordinate amount of risk, maybe. I'd be happier, she says, the earliest that I'm going to do this is four years, but it's probably not going to be exactly four years, maybe five, maybe six. And if for some reason my fund is just okay, I can wait six months or 12 months. Then I'd say I would use the Gini Mae over cash all day long. Right. The other option, so we've talked a bit about bond prices and about how right now

interest rates are at a record low, which means they have nowhere to go but up. And when those interest rates rise, bond prices will fall. And that sucks for anybody who is not holding a bond to maturity. But the way to get around this issue of bond prices falling is to buy bonds directly, rather than buying a bond index fund or a bond ETF, buy bonds directly and hold them to maturity. Because if you do that, then it doesn't matter how that bond price fluctuates over the term in which you hold it, as long as, and this is absolutely key, as long as you hold the bond to maturity. And maturity, by the way, for people that don't know, it's like your CD coming due. It's the day, it's the drop dead date that the company's going to pay you back the money that they borrowed from

you. A bond is a loan. And so you're right. It's a contract. A bond is a contract. They only fluctuate on the open market. So go buy an individual. Now, I wouldn't buy an individual bond of a company. Yeah, absolutely not. I do a government bond. But buying an individual treasury, yeah, individual treasury or individual Jenny Mae could be very attractive. So thank you, Alyssa, for asking that question. Our final question today, and the one that you have been waiting for, we're going to give this caller the opposite answer of what we gave to Jack from Belgrave. But like any good show, and Joe, I learned this from you. We're going to make you wait for one last word from our sponsors.

And when we return, we'll discover why this next caller wants maximum viable retirement, not minimum viable. Stay tuned. We're back with the question you've been waiting for. Our final question today comes from Lee. Hi, Paula. I find myself in an enviable position. COVID has been horrible for humankind, but good for me professionally. I'm in the PPE business and stand to make an extra 50K this year.

I'm wondering what to do with it. Here is our picture. We are both 57 and hoping to retire at 60. We already contribute, sorry, I already contribute 195 annually to my 401k, and my husband contributes 15% of his $80,000 income. We also both contribute $7,500 to our Roths annually when we qualify income-wise. We are both sales reps or income does vary. My question is, should we bump up our 401K contributions to the max of $26,000?

or add to our after-tax investment account or some combination of the two. Not looking to market time, but we are close to retirement with any luck, and the world in the market is so volatile right now. Just for a little background, our normal income is 170 to 195. On-hand cash is $250,000. After-tax investment account, $600K, 401K is $100K, IRA, $1.2 million, Roth's $110K,000, and last a 529 plan for 150K. Thanks for your thoughts on your show. Lee, the much anticipated question of the episode. Well, first of all, congratulations on everything that you have built. You are

three years away from retirement. You have a fantastic balance in your IRAs, in your 401k accounts. You've got an amazing amount of cash. You've got a strong amount of money in a 529 plan. You've done a great job of using various tax-advantaged accounts to your benefit. You've done a great job of saving money and keeping a significant portion of what you make. And you have put yourself in a great position to be able to retire in the next three years. On the topic, since you mentioned that COVID, of course, has been terrible for the world, but has had a financial benefit for you personally. This is a bit of a random thought, but Netflix, when they put out their letter to shareholders in the first quarter after the pandemic began and the shutdown started, it was a

marvel. If anybody wants to read this, it was a marvel of great writing because Netflix had to simultaneously communicate that they were making huge revenue and huge profits and that they were really sad about it. They pulled it off. It was like just such mastery in the writing. It's amazing. When I was a financial planner, I had clients that were in PR for the auto companies. I would see the writing these people would have in the annual reports. They were in charge of, by the way, writing like the CEO's annual report. Of course, the CEO would make sure it was exactly what they wanted to say, but they had a PR person who really gave it some life. and just the genius, Paula, that some of these writers have, as a person who sometimes has to write for a living, I read that stuff and I'm like, I am not worthy.

Yeah, the Netflix report was so well done. The way that they would talk to their shareholders about, you know, we anticipate that our revenues are going to decline when the shutdowns end. And we hope that that happens. Yeah, we hope our revenues decline. We hope our profits are not as good as they currently. Like, you know, like, I mean, that's what they had to communicate. Because of course, they would sound like jerk wads if they were like, yeah, heck yeah, there's a pandemic. Woo! But that shows you the heartbeat to the company. I remember one time reading two, back in the 90s, early 90s, reading two annual reports back to back. I looked at the one for Circus Circus, which at the time was independent. And Circus, Circus during the early 90s, their annual report started off with blaming everybody else. It was, listen, the economy stinks. Nobody's coming to Vegas. This is around the time when they tried to make Vegas more family friendly.

and then they decided that they would change it from what happens in Vegas, stays in Vegas during that kind of time frame. So Vegas is struggling, the economy is struggling, our workers have all these problems going on. It was just everything but the management. And then I read General Electric's annual report right after that, which was Jack Welch, right, who ran that company for a long time and just always made things happen.

And the accountability he had during that same time period, he said, you know, what? Things aren't great in the economy. Things aren't great with what's going on now, but we could have done so much better. And I'm going to lay this at the feet of our team, and we need to buckle down as a team, and we need to do better at his team. And he went through team by team about what they could do and about the personal accountability, Pete. It was so amazing. And you could see from that annual report why one company was struggling and why the other I didn't even need to look at the numbers. Like I did, because that's what I did. But even before I got to the numbers. I could read what the head of that company said and get such a feel for

why that company was doing as well as they were. And you wonder, because people all the time, back to Netflix, people over and over have said that, hey, there's this competitor and they're going to get Netflix. Netflix will never last because you got Blockbuster, right? You know, Blockbuster had all those great things, all those things joking about Netflix. And, you know, Blockbuster's gone and Netflix is still around. And I think it's partly because of what you're talking about. Right. They know how to put their priorities in the right place, and they know how to communicate

it well. Yeah. So why don't we communicate? Speaking of communicating. Lee's like, what are you going to answer my question? At some point, we might do that, Lee, but hold on. We're pontificating. Lee, sometimes we just go off on tangents.

Here's where, Paul, I think we give Lee, the opposite advice that we gave Jack. And the interesting thing is it's all based on the time frame of the goal. Jack wants money right now and needs more right now. So he's looking for minimum viable retirement. Lee's looking for maximum viable retirement. How do I get the most that I can? And the finish line is right here. And so for Lee, the key here is, and her direct question was, do I put more money in my

retirement accounts, my tax advantage retirement accounts? because she's three years away and three years away is 60 years old, put it all in retirement accounts, especially since she's, she has a bunch of money. She did a great job of saving into flexible accounts. She has accounts that aren't tax advantage that she can get at for opportunities whenever she wants. So at this point, because she has so much money in those types of accounts already, if she didn't have that, I would answer to this differently. but because she has money in these flexible accounts, my feeling put every dollar you can possibly

shove into a tax shelter into a tax shelter. Yep, I agree. I completely agree. And Lee, what I love about your situation, you said that you have $250,000 in cash, which when I first heard that, I was like, whoa, that's a lot of cash. And then that was my knee-jerk reaction. Then I paused to think about it. And particularly, I thought about it in the context of the interview that we did with Wade Fow, which was in episode 271 of this show, in which he talks about the importance of having a flexible amount of money that you can tap into in the first few years of your retirement in order to minimize sequence of return risk. And in the context of that, in the context of, hey, this big bucket of cash, which certainly

sounds like a lot of cash, is there to save you for. from needing to draw down on a depressed portfolio in the event that sequence of returns risk does not work in your favor, in that context, that $250,000 in cash makes a lot of sense. Yeah. So keep the $250,000 in cash, or as we just said to the previous caller, you know, if you want to take some risk so that you can maybe put a portion of it into Ginny Mays, but keeping it in cash or cash equivalence gives you the ability to tap that money. in the first few years of retirement, if three years from now when you're 60, the economy

completely craters and stocks totally crater and sequence of returns risk ends up not being your friend. In the event that that happens, that $250,000 that you're holding in low volatility assets is going to be a godsend. So the fact that you have that gives me a lot of confidence for the first few years of your retirement. And so you've got that nailed. And so Joe, why I agree with you. Given that you already have that flexibility built in, yeah, shove everything you can into tax advantage retirement accounts. And that, by the way, Lee, is the way to avoid a yikes. Yes. Or a bad news bears. I can't believe that you have such a limited repertoire of cultural references. And yet, yet you can throw around bad news bears like it's nothing.

You know, every time I say that, in my head, I imagine this mix between the Bernstein bears and gummy bears. I love the Berstein bears. Yeah. My doctor's office has a bunch of Bernstein Bears books in the waiting room. And they also have like, you know, reading material for grownups too. But I go straight to the Berenstein Bears books. I totally wouldn't. Yeah, yeah.

I don't know if I like Berenstein Bears or have you read Little Critter? No, I've never read that one. Oh, yeah, Little Critter Books are also really good. And Little Critter Books, little known fact, probably big known fact, little critter books have a spider hidden somewhere in the book. So my kids, after we read it, these books like five million times, my kids would just go through the little critter books looking for the spider. Like, where's the spider?

It's almost like Where's Waldo in every picture? the spider's hidden somewhere on every page. Oh, cool. Yes. You're welcome, people. Nice. Have you seen the new? There's a Where's Waldo Social Distancing Edition?

It's like this giant green field with three people on it, very spaced out, and one of those three is obviously Waldo? No. The memes that for such a crappy time, some of the memes that this has created are great. One I woke up to this morning that a friend had, they said, you know what? I think I'm about ready to just put a tree up and call it a year. And at first I had to think about that. And I'm like, oh, Christmas. Let's just put the damn tree up.

Fast forward. I'm done with 2020. Let's put up the New Year's decorations. But it does make sense. You know, people say it was a good year or it was a bad year. It's all a construct. But there also has something good about a bad year because we don't know which years are the, you know, the good things for me about this construct is this.

we wouldn't know what great years are without the bad years. And so being able to encapsulate 2020 and say, what a shi-l this was. And then put a lid on it at the end of the year and hope for better next year, I think is a fine thing. Oh, that's a nice, that's a warm and fuzzy message. Well, you. What an optimistic message to end the show on. That's great. You're like, who are you, Joe?

Wow. Yes. Yeah. Well, I can bring it, Paula. We wouldn't know what a good year is if it weren't for the bad ones. That's excellent. I like that. Well, that is our show for today.

Thank you to everyone who called in. Thank you for all of you for listening to the Afford Anything podcast and for being part of the community. If you want to chat about today's show, head to Afford Anything.com slash community, where you can interact with other people in our community. We're having a 30-day plank challenge in our health accountability group that you can join. We have a book club where. you can decide what book you want to read next and read it and chat about it with other people in our

community. We have all kinds of groups that gather around shared interests, such as paying off debt or saving for an early retirement or traveling once the pandemic is over so you can connect with people based on those interests, all of that's that afford anything.com slash community. Joe, thank you for returning to this show once again. Where can people find you if they want to know more about you? Well, you can find you and I together this season on our show called Money with Friends, which is a show that is six days a week. And my co-host, Bobby Rebell and I have a team of thought leaders that join us for a four-month period of time. And Paula was nice enough to be one of those thought leaders. But we try to have just a diverse group of people to make sure that every episode is way different than the last one.

So Paula will be on with her genius for a couple days. And then after that, we'll have somebody like comedian Lindsay Goldworth, who also wrote the book Bow Down, which was an interesting book about lessons you can learn from Dominatrix's. Also, Tate Frazier, who is one of the leading voices in sports right now with his pushing through podcast with BJ Armstrong. So he talks about comparing sports to money. We'll have people like Lynette Celfani Cox have been on. Jamila Sufrant has been on Harlan Landis, the head of the Plutus Foundation, and Paul Ollinger, comedian Paul Ollinger, has been with us too. So a lot of great voices at Money with Friends, six days a week, very short episodes.

Excellent. And you can download it wherever finer podcasts are found. Only the finest like this one. Exactly, exactly. And speaking of finding podcasts on your favorite podcast playing app, make sure that you hit subscribe or follow on. whatever app you're using to listen to this show so that you don't miss any of our awesome upcoming episodes. Speaking of upcoming episodes, I will be, as I mentioned at the start of the show, taking a

September sabbatical, meaning in the month of September, we will be replaying some of our favorite episodes from our archives. So during the month of September, I have the lineup. Here's who you're going to hear. You're going to be hearing our interviews with Mark Manson, the author of the subtle art of not giving an F. Jill Schlesinger, who is from CBS News, Dr. Cal Newport, who wrote the book about deep work

and the importance of maintaining focus, Michelle Singletary from the Washington Post, and Gretchen Rubin. I am particularly excited about re-airing the Gretchen Rubin episode because she originally came on the show in episode 40, which was so long ago that many of the people who are listening to this right now, you were not listening to us back when we were a brand new podcast back when we were airing episode 40. So I am really excited to re-air the interview that we did with her because it was a

fantastic interview. Gretchen Rubin is this New York Times bestselling author who writes a lot about habits and productivity and happiness. She's very insightful, very wise, and not a whole lot of people heard her interview the first time around. So I'm really glad that we get to share it again. So all of that's coming up in the September sabbatical. Thank you so much for tuning in. My name is Paula Pant. This is the Afford Anything podcast. I want to say thanks to our sponsors who allow us to make this podcast possible.

You can get a list of all of our sponsors and the deals and discounts that they offer at affordanithing.com slash sponsors. If you would like to subscribe to the show notes, you can do so at Affordainthing.com slash show notes. And you will get a synopsis of these episodes. delivered hot and fresh to your inbox. Thanks again for tuning in. This is the Afford Anything podcast and I will catch you in the next episode. So it occurred to me recently that I might be underutilizing this disclaimer portion that needs to come at the end of each episode. I've been in the past trying to keep it light, keep it cute, make a joke out of it, but in the interest of thinking about how to think, which is truly what this podcast is about, it's a podcast about

developing out frameworks of thinking, and it's disguised as a money podcast. And in the interest of that, and in the interest of a framework and perspective and lifelong learning, let me take another go at the disclaimer. And let me know whether or not you like it. So you can find me on Twitter. I'm on Twitter at Afford Anything. Or you can find me on Instagram at Paula Pant, P-A-U-L-A-P-A-N-T. Let me know what you think of this new disclaimer. All right? Here we go. You ready? You know what, Steve, this requires a drum roll. Can we drum roll this disclaimer? Thank you, Steve. All right.

Here we go. Three to one. There is a distinction between financial media and financial advice. Financial media is characterized by mass communication to a large audience on any media platform, whether it's televised like CNBC or in print like Money Magazine or Kiplinger or on the radio and in podcasts like the Dave Ramsey show or Bigger Pockets or, yes, the Afford Anything podcast, the one that you're listening to right now. And financial media is an unregulated. industry. We have no prerequisite curriculum or qualifications, no specific set of standards and protocols to meet and maintain, and no licensure requirements. Financial advisors, by contrast,

operate inside of a highly regulated industry. They must have specific and rigorous training. They must meet and maintain licensure requirements. And when you meet with a certified financial planner or a certified public accountant or an attorney who passed a bar exam and is licensed in a given state, you know you're talking to someone who successfully completed very specific education and training and who had a higher bar to entry to their occupation. So anytime that you encounter anything in the media, including the financial media, which includes this show, please know that you should never, ever, ever take what you hear in the media as a substitute for professional advice.

This podcast and all the material created by Afford Anything is not a substitute for seeking out financial planning advice, tax advice, and legal advice from certified licensed professionals. The financial media in general and the Afford Anything podcast in particular, both exist for entertainment and educational purposes only. Nothing that we say on here has been vetted by a licensed professional, and you should always consult with a licensed professional before making any decision. Okay. Cool. Okay. So that, wow, that's a lengthy new disclaimer. Yeah, that might be a little bit too long. But what you think? Tweet me. Let me know what you thought. I know. I know. It's long. It's long. Maybe I'll need a workshop that.

I guess the takeaway is don't trust the media, and that includes myself, and that includes this show. So there's my new disclaimer. My name is Paula Pant. I am the host of the Afford Anything podcast. Every other episode, I don't turn off my phone before I record. Like studying businesses and how they work and how they make business decisions is so important when we're doing a financial plan.

Sorry, I'm still laughing at my I don't know Jack joke. You're very proud of yourself. I totally am. I'm like, what the hell does she laugh about? All right. I'm like, none of this is funny. Here we go. All right.

Bam. We did more with that. I thought we were. Wow, yeah. That was good. We're geniuses. Toots.