Afford Anything - Ask Paula: Thinking about Money from First Principles

Episode Date: June 4, 2021

#320: Rob is hoping to retire at age 60, but he has a pesky mortgage balance he wants to eliminate beforehand. He and his wife expect to inherit $300,000. Should they use this money to pay off their mortgage or should they bulk up their retirement accounts? Another anonymous caller has two separate questions. One is about the tax efficiencies of ETFs vs. mutual funds, while the other is about Ginny Mae funds and whether there are bond funds that have an inverse relationship with equities. Priya is looking for information on home equity loans: where can you get the best terms, and what are the disadvantages? Additionally, she’d like to know which city is best for rental investing: Atlanta, Dallas, or Raleigh? My friend and former financial planner, Joe Saul-Sehy, joins me on the show to answer your questions. Let’s dive in! For more information, visit the show notes at https://affordanything.com/episode320 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 need to manage, like your time, your focus, your energy, and your attention. Saying yes to something implicitly means that you're saying no to other opportunities. And that opens up two questions. First, what matters most?

And second, how do you align your decision-making around? That which matters most. Answering these two questions is a lifetime practice, and that is what this podcast is here to explore and facilitate. My name is Paula Pant. I am the host of the Afford Anything podcast. We're normally a weekly show, but once a month on the first Friday of the month, we air a first Friday bonus episode. So welcome to the June 2021 first Friday bonus episode.

Every other episode, I answer questions that come from you, the community. and Joe Saul Seahyai, a former financial planner and the host of the Stacking Benjamin's podcast, joins me to answer these questions. Hey, Joe. Paula, what's going on today? Joe, we're going to do something different with today's episode. We are only answering three questions. Three. Instead of our usual five.

I have goosebumps. This is so different. You've got a kid's book by R. L. Stein? I do. Not anymore. Lame joke. Sadly. But I'm pump.

And if you want to hear more. lame jokes, just wait until you hear the rest of this episode. It's going to get crazy, dead joky. So our first two questions relate to bonds and ETFs and Ginny Mays. They relate to investing in the overall market. And then our last question relates to real estate, but we zoom out and answer the question in a way that the caller really does not expect. So that's what's in store in today's episode. It's going to be a fun one. We're going to tackle all of these questions right now, starting with Anonymous. And Joe, you and I always give Anonymous Callers a nickname. The last Anonymous Caller was named Olivia because you named her after a character on Broad Church,

which you say is your favorite show. I did. What's your least favorite show? I'm my least favorite show. I have no idea. Second favorite? No, I just saw a good movie. How about that? All right. Let's go with it. It's a little too mushy, but I thought that Billy Crystal and Tiffany Haddish in here today was a lot of fun.

It's been a long time since I've watched a heartfelt character-driven comedy. So I think because this is a male, we'll go with Billy. How about Billy? Great. Well, our first question comes from Billy. Hi, Paula. two unrelated questions. Question one, ETF versus mutual funds tax liabilities.

How are ETFs more tax efficient than mutual funds? I've heard this before, but I do not understand. Would indexed mutual funds have the same tax liabilities as their ETF equivalence? Obviously discussing a taxable account when owning these. An example would be what are the difference in tax liability? between VFIAX and V-O-O. Question two. Ginny May funds.

Are Jenny-May funds correlated with interest rates? A common warning voiced in our financial community is when interest rates rise, bonds will lose value. Is this also true for Ginny May funds? If not, are there any types of bond funds that do not have that correlation? Side note, I've heard other states. their bond funds went down during the Great Recession and during March 2020. Here say, as I had remained 100% equities. So having a portfolio that drops in equities and bonds at the same time does not sound appealing.

Are there types of bond funds that actually have an inverse relationship with equities and what types and why would be very beneficial? Love the advice. Love the show. Thank you very much. and have a great day. Billy, thank you so much for making a movie that I really enjoyed and also for these great questions. And by the way, I love these questions because there's also some interesting things going on in

the world of ETFs and exactly what you're talking about right now, in fact. So exchange traded funds are sold like individual stocks. You purchase them at a set price during the day. they fluctuate just like a stock reflecting the underlying value of everything that's inside of it. So let's just take the S&P 500 as an example, Paula. If I buy it as an exchange traded fund, I'm buying the 500 biggest companies in America. That's the S&P 500. And as those stocks fluctuate, I can buy the collection of them plus a little tiny sliver more,

which is the management fee for that, which is generally going to be a lot. little lower than it is for a mutual fund. And I can purchase it immediately. Attractively, then, to some investors, I can then also place stop losses on these because they trade like a stock. I can sell them and immediately have liquidity, maybe not into my pocket, but I can see a sale happen. Usually within a second or two, I will find that my money's out of that position. To be clear, when you say mutual fund, you're referring specifically to index mutual funds. So for the people who are listening, oftentimes in popular culture, we hear about mutual funds versus index funds. And while that is the way that that's often

written about on the internet, technically that is inaccurate. So all index funds are mutual funds. they are index mutual funds. And so online, when somebody talks about a mutual fund versus an index fund, what they're actually talking about are actively managed mutual funds versus passively managed index funds. So I just want to kind of clear up the vocabulary that we're using. Yes. In this context, when we're talking about mutual funds, we're talking about. Yeah, really, all mutual funds. Index funds are actively managed funds. But in ETF, in exchange traded fund, the nice thing about it, different than a mutual fund, which I'll explain in a different, whether it's an index fund or an actively managed fund, an exchange traded fund you can get into at any point in the day, you get out of at any point in the day, and the cost that you're paying is the value at that moment of the underlying securities plus a little tiny extra for the management fee. Right.

And that's it. That's the way that it works. Exactly. Now, we'll go into in a second how this is tax efficient, but I think you've got to understand the difference before we get there. a mutual fund is a little bit like taking the subway. The doors on the subway open up at the close of business every day. New people get on, new people get off.

So if at 11 o'clock in the morning, Paula, I decide to buy a mutual fund. I stand, my money sits at the subway station until 4 p.m. That's when the New York Stock Exchange closes. The mutual fund opens up its doors. New people get on. Old people get off. Conversely, what that also means is if I'm selling the fund, I see something bad's happening at 11 o'clock in the morning, I will not exit that mutual fund until the close of business. So I'm riding the rest of the day because I can't just open up the doors and get off where there's no stop, right?

So that's why I like the subway analogy. So for long-term investors, that difference, that difference between those two products, not that big a deal. But for shorter term traders and people looking at just the heartbeat, those can be big differences to, let's say, a day trader. Right, right. So in other words, if you are a long-term investor, you can use ETFs or mutual funds interchangeably. Because for your purposes, you're holding for years or decades, you don't care when you're going to exit out of a given position. So you can substitute one for another. And it doesn't matter to you because your objective.

to hold for a very long time. The only people who would have a strong preference for ETFs over mutual funds are those short-term traders. And I will say in my own experience, there are many times that I've looked at the expense ratio between an index fund and its equivalent ETF, and I've noticed that the expense ratio for the ETF is a little bit lower for equivalent assets. And so I will buy the ETF as a proxy for an index fund. in order to capture that slightly lower expense ratio. Absolutely. And until a year and a half ago now,

when we saw capitulation among all the major brokerages when it came to trading fees, we used to say that because you'd have to pay maybe, let's say, eight bucks to buy the ETF versus a free trade for a mutual fund. For a long-term investor, buying the mutual fund was going to be cheaper over the short run, but the ETF, the longer you held it,

you'd work off that $8 fee. You know, there'd be some crossover point where you work off the $8 fee. Now it's clearly with no trading fee. Now the ETF is clearly a little bit less expensive. So if you have both, Paula, you're right on. You're going to buy the ETF over the mutual fund. Now, that gets to what happens inside the guts of a mutual fund. And I'm going to start off with why mutual funds are not that tax efficient.

Then we'll talk about how exchange traded funds get around it. Mutual funds, if you think about it, you're in this pool of money with a bunch of other people that are on this subway with you, right? Some people got on way at the beginning. Other people just got on a stop ago. And so mutual fund people a long time ago put their heads together and they said there's no way we can make this fair. Because what happens inside of this fund? Let's say that General Electric was 15% at one time of the S&P 500.

I remember in the 90s, General Electric under Jack Welch was this phenomenal company, right? It struggled more lately while Apple was this little computer company that was not doing all that great. And now Apple's dominant. So as a company becomes a bigger, smaller part of the S&P 500 and as people are getting on and they invest their money and other investors are getting off, they need to buy and sell these shares to keep corresponding percentages. So at one point, Apple was maybe 2% of the S&P 500. Later on, it's maybe 20%. So they're buying more and more and more. But then as General Electric becomes a smaller percentage, they have to sell shares.

Well, you and I know that whenever you sell shares, there's taxes that have to be paid. Right. How do you fairly keep track of all the stops, all these people got on it? Well, this person's been on forever. They own this person. Back, I'm sure somebody could do it today. But back when all this stuff was created, there was no way to do it. So what mutual funds decided to do was we're just going to make a date once a year

and everybody's going to share the tax. And if you got on, so let's say you're driving down the subway and we know that when you get to Broadway stop, there's the tax to pay at Broadway. You know, if you're driving on a toll road and there's the toll step, everybody, doesn't matter if you got on a stop ago or whatever, you're going to pay for this stretch of highway. Right. Because the toll gate is here. So once a year for most of these mutual funds, they just declare a capital gain and a dividend for everybody for that year.

And the worst thing ever. And I used to see this. People would come to me and they would go, Joe, the reason I'm here to tell you is because I think that I think I'm getting ripped off. And I'd say why? Because well, my advisor two months ago recommended I get into this mutual fund. I've lost money in this fund and I just paid a big capital games tax. This company is ripping me off.

Well, guess what really happened? They'd own this Apple stock for a long time in this fund. They sold some of it for a big capital gain and you got stuck holding the capital gain even though you never got all that profit because there's really, there really was never any real fair way to do it. So mutual funds can be a little tax in a fit

and you really want to watch out when you buy. If you go to a place like Morningstar.com, you will see every year, or Yahoo Finance will show it also. The date that they're going to declare that once a year dividend, I would not get into a fund, let's say, if I'm putting a lot of money in at one time, I would not get into a fund in November. It's usually end of November, early December in a year that they'll declare that once a year dividend. I would just watch out for when that is.

Now, if you're putting money in every month, who cares? It really doesn't matter because it's not going to be that big a deal. But if you're popping a big percentage of money into one fund, you could get stuck with a big tax that doesn't belong to you. So that's mutual funds. So exchange traded funds a lot younger. And because they are traded inside of the exchange and to try to keep this light, what happens is exchange traded funds are allowed to through a loophole in the system to swap out

shares for other shares. So when they get rid of general electric shares, like we used in our last example, instead of selling them, Paula, they get to exchange them for the Apple shares, meaning that they didn't actually sell anything. They just swapped out the shares and nobody pays the capital gains. How does that work? I have no idea. It's magic. But because of that, you will not have that capital gains tax that is implicit in the buying and selling that happens with a mutual fund inside of an ETF. So you don't have to worry about that. You still have to worry about dividends because what they will do is as these individual

stocks inside of the ETF pay dividends, they will declare dividends. So there might be a dividend tax coming on. So I still want to look and see when those dividends get paid and see if I want to wait until after the dividend or before. Obviously, if it's before, then I'm still going to. reap the benefit of whatever the dividend might be. Right. But that's the main way that ETFs are more tax efficient than mutual funds. So ETFs both have a lower expense ratio and also are more tax efficient. Third thing, you can also choose, you can kind of do this with mutual

funds, but it's a little harder. You can choose the lots that you sell if you decide to. So there's different ways to declare what you're going to sell. You've got, let's say, 100 shares and you want to sell 20 of them. If it's a mutual fund, it's all kind of together. It's part of your net asset value and you just sell part of the fund. Because exchange traded funds are sold like stocks, I can say I want to sell 10 shares that have the highest capital gains tax. And I'm going to pair those with 10 shares that where I actually have a loss right now to minimize my tax loss. Now, if I do that and I declare individual shares, I have to be able to show that, but I also have to continue to do that with the rest of my accounting throughout owning that particular thing. Right. You need to be consistent. Like if you choose first in, first out. Exactly. For example, you need to consistently apply the first and first out. Yeah. Or if you choose last in first out, you need to consistently apply that. Yeah. FIFO and LIFO, as the cool people call them.

That's right. We stand on the same. on the street corner and throw the lingo around the cool stuff happening here paula there are some asset managers now who have figured out how to do what ets have done with swapping out shares doing that through brokerage accounts so i'll give you an example if somebody has what's called a separately managed account they have a they have a set of let's say a hundred different stocks and they also have an IRA position. Instead of selling these shares and moving them over to the IRA and paying a tax bill on that sale and then putting them inside the IRA,

they have figured out and some brokerages are working on this about just, hey, take the shares and put them wholesale, and at the time that they go into the IRA, valuing them. So if you can put $6,000 into your IRA, I take $6,000 worth of highly appreciated stock, move it into my IRA, and then I sell it. That's the cool stuff happening, innovation happening right now.

I think it's fascinating. I'm sure there's people that are driving off the road. They're so asleep. That's really fascinating to me. Afford anything is not responsible for traffic accidents caused through the description of financial innovation. Yeah, I think it's really cool. Because I've wondered for a long time why we can't do that already, right?

If I've got some sandbox account and I've got some highly appreciated stock, why couldn't I just move $6,000 of that stock into my Roth that's at the same place? They're both at Vanguard. Why couldn't I just move $6,000 worth of stuff in there and then sell it? Does that be cash? Apparently it doesn't have to be. All right. Ready for Ginny Mays? Yeah.

And bond? So, Billy, that was, you've asked three questions. Your first question was about the tax efficiencies. of ETFs versus mutual funds. And we have now addressed that first question. You've got two more questions. One is about Ginny Mae funds and if they are correlated with interest rates. And then you also, the side note at the end of your question, that's really a third question.

And that third question relates to the inverse relationship between bonds and equities. So let's tackle the second of your questions, Billy, Ginny Mays. We're going to start off wide and then we'll narrow it down. Billy generally asked, are there any bond funds? which do not correlate with interest rates? No. Period. No.

Bonds and interest rates have a negative correlation. Here's the key, though. That correlation is magnified, much like the ripples in stock market gains and losses are magnified by the size of the asset. So as an example, a mega cap stock, stock in a very big company when the market goes down, will generally not go down a ton versus a small cap or small company stock will go down percentage-wise a lot more when the market goes down. So there's much more volatility with small companies than there is with absolutely huge companies.

It's the same thing with bonds. When you start off with treasuries and tips as an example, which is a type of treasury, inflation protected, government bonds are so secure and backed by the, the U.S. government that there is very little fluctuation in their price because of interest rates. There's some on the open market, but it's not pronounced. It's very boring. You can very safely get into a treasury and know that two years from now, you're going to be okay. A Ginnie Mae is not a government agency. It's a government-sponsored agency, meaning that instead of explicitly being backed by the U.S. government, they're implicitly backed by.

the U.S. government. So is that kind of like Freddie May and Fannie Mac? Absolutely. You are loaning money to low-income housing projects is really what Jiddy Mae does. And because of that, you've got the backing of the federal government, but not like a treasury. So because of that, you're going to have a little more wiggle than you will with treasuries. But you'll also get a higher interest rate because the risk of that loan is more. So when you look at bonds, bonds are loans. And it's just like if you and I went to take out a loan, we would have our credit examined. Well, the U.S. government has great credit. If I walk in and they say, are you the U.S. government? I go, no, but I'm backed by the U.S. government, which is what Ginny May gets to say.

They go, well, okay, you're great. You're maybe not 820, but you're 800. So the cool thing is, is, and this is this is my bent my bent is that i still get that implicit backing but i get a much higher interest rate with jinny mays which is why i personally prefer jinny mays to treasuries whenever i whenever i think i want a treasury i go into a jinny may how often do you have this thought joe i like a treasury right now really like some tips you know what i could go for yeah so the uh the risk reward into jini may from where i it is fine for my particular risk tolerance. But there's going to be a little more wiggle when you have these interest rate issues. And what's interesting about your question is, and you said that this is in the community,

is totally true, that when interest rates move, bond prices fall. When interest rates move up, bond prices fall. It doesn't actually work like that. It's actually, Paula, the threat of interest rates moving up, make bond prices fall. because everybody knows that it's coming. And so there's this, let's say that there was a new type of smoke alarm in a theater that could tell you a fire's going to start in five minutes. If that's the case, people start running for the door five minutes before the fire, right?

Right. The alarm goes off. People's, but there's no fire yet. That is kind of where we're at right now with interest rates. Right. Anticipatory behavior. Right. Ginny Mays right now are down, the category is down, one and a half.

As Paul and I record this, depending on the day, it may be up or down, but as we record this, it's down. And why, as we record this, the Fed has done nothing. But when you look at all the stimulus in the economy, you look at where things are headed, the threat of inflation, what even people like Janet Yellen have said, everybody thinks they have to do something. So people have started running for the exits, even though we haven't seen anything happen yet.

Right, right. Well, and with interest rates being so low, there's nowhere for them to go but up. I mean, technically they could go down further, but realistically, the most likely direction is up. From there, Paula, when we look at credit, we then look at a credit scale, which then goes to munis, municipal bonds, where you're loaning money to cities. Beyond the agencies, that's the next level of risk. Some cities are less risky than others. Some cities have declared bankruptcy. Other cities have a fine financial footing.

Beyond that, then we go to corporate bonds. And corporate bonds have a whole scale of their own from short-term corporate bonds where maybe you only need money for a year or two. It's pretty easy to predict that this company is or isn't going to pay me back if it's only a year or two loan or even shorter than that, right? Some of these ultra-short funds, really some people use them like a money market versus we're going to have a question about this later. High-yield funds used to be called before Wall Street decided to

paint over the bad words that everybody hated used to be called junk bond funds right right i remember those days junk bonds are bonds that you're loaning money to companies you are paula the the loan shark and you carry around your baseball bat because you're loaning money to companies that have a lot of debt and because they have a lot of debt they've got to jack up the interest rate to get you to loan the money what's interesting is when you get that far down the bond scale they actually act more like equities and stocks, the high yield market acts more like stocks than it does like bonds. Because if a stock price goes up, that gives high yield bond companies the ability to maybe renegotiate their rate based on the fact that they now have a better looking balance sheet

because every share of their company's public stock is worth more. I don't know if that makes any sense to anybody but me. But that in a nutshell, is why they're more like stocks. But they still, more than any other bond, respond more to interest rates, interest rate fluctuation negatively than a Ginny Mae. So lastly, I will answer specifically the question about the Great Recession in Ginny Mays, because I have that here. You know, we're looking at what, 2007, 2008, 2009.

Jenny, I've got the fidelity Ginny May Fund in front of me. And, well, you know, I don't have to do that. I can do the category. The category in 2007 did 6.09% Ginny Mays had a positive year. 2008, 4.76, 2009, 4.74. 2010, 5.66. In fact, over the last 20 years, we've had one negative year. 2013 negative 2.73.

And so what? What is the conclusion of that when it comes to the diversification that Ginny Mays provide in a portfolio? For goals that are maybe between two and five years, I think there's a really nice risk-reward profile for conservative investors. And I've had people, Paula, email me, and I don't know if you have, too, saying, oh, I don't like Ginny Mays because in most markets, you can take more risk than that with a four-year time. Yes, you can. But you can be pretty conservative and still get a

nice return better than a high-yield savings account and not have a big threat of loss of principle during that time frame. And the nice thing about it, Ginny Mae, is if I need the money before that time frame hits. So if somebody says, I want to buy a house, I want to do it three years from now, but I want to have the ability to get at the money without too much risk a year and a half from now. A jinnee Mae has some risk on the one and a half year mark, but not that much. And it's the type of risk that I personally would take. Where a high-yield bond fund, also a bond. So with Billy's asking about bonds, I wouldn't take that risk in a million years. Right. Because a high-yield bond fund is a junk bond fund, which means you're giving it to a not credit-worthy company. But even a credit-worthy company, as I think about this, Paula, I wouldn't get into just a general intermediate term bond fund loaning money to companies with a three-year time frame.

I got, yeah, that's still too interest rate sensitive. Ginny May, much like a treasury, not so much. Right. And to what you said earlier, I want to circle back to a comment that you made earlier when you said that bond prices don't fall as a result of rising interest rates. they follow as a result of the anticipation of rising interest rates. Right now, investors are anticipating inflation in the near future. And whether or not we enter into a period of inflation, what we are seeing are that asset classes that historically have been good inflation hedges

have seen an inflow of money. They've seen an inflow of investors as people, bulk up on inflation-friendly assets in anticipation of inflation that may or may not come. And that anticipatory behavior, what's a little liberating about it is that you don't have to be right about any projections about what might happen in the overall economy or in the overall market. You simply have to know what investors as an aggregate think will happen, and that will inform how the assets move, whether or not their predictions come to pass.

Yeah. Billy also asked if there are bond funds that don't have an inverse relationship with equities, and he noted that during the Great Recession, for example, he heard anecdotally that bond investments sank at the same time that equity values also sank. And anecdotally, he says that he's heard the same thing about March 2020.

Well, the question is interesting because the premise really, Paula, is going to be frustrating for Billy because talking about the bond market in general and what the bond market did in the Great Recession versus 2020 is going to be difficult. And in fact, Paula, you may want to add this to your show notes page. But I've got a nice piece from a website, Darrell Wealth Management. it's written by Kristen McKenna. And it shows during the Great Recession the huge variability of returns depending on what bonds we're talking about, whether it's municipal bonds, treasury bonds, the different corporate bonds, the high yield bonds that we talked about. She's got six different types of bonds. And you guys can't see this.

But Paula, you're seeing this. You can't really talk about one bond type. They all are responding all over the place during the Great Recession. Right. So I'm looking at this chart right now, and the chart, you know, it's color-coded, corporate bonds, treasury bonds, corporate high-yield bonds, municipal bonds. And the variation in performance during 2008 is massive. And so it really underscores the point that you just made, Joe, which is that if we talk broadly about the quote-unquote bond market, we're painting the entire market with such a, one size fits all paintbrush that we lose the substance of the conversation because the bond market does not behave as a monolith. The bond market behaves very differently depending on whether

you're talking about treasuries versus corporate bonds versus muni bonds. Well, and it's also the stimulus, right? What stimulus is causing the reaction. And as you can imagine, loans to companies are going to be triggered negatively and positively by different things than loans to cities or federal government loans or in the case of Ginny May's housing loans. So different things are going to happen to these different types of bonds. It's just like you were just talking about with the rotation happening now in stocks, right? You had tech stocks were flying high. Tech stocks get clobber by inflation. So what have you seen lately? This rotation away from tech stocks. as everybody's running toward the door in anticipation of inflation hitting the tech sector.

And so tech's gotten beaten up where railroads, not the same thing. It's a totally different thing. So talking about stocks as what's going on in the total stock market also frustrating. Right, right. It's almost like asking how do equities behave when there's inflation? Well, okay, what type of equities are we talking about? Or my pet peeve is, you know, when people say, how much do homes cost in Atlanta?

Well, what neighborhood are we talking about? I mean, the range is anywhere from 50,000 to 5 million. Sure. Yeah, Detroit, where I lived for a long time. Same thing. So the major takeaway is that if we want to truly understand these asset classes, we can't speak about either equities or bonds as though they are monoliths, because different sectors of equities,

perform differently in different market conditions, and similarly, different types of bonds perform differently in different market conditions. And so to the question of what happens if I don't believe that there's an inverse relationship, well, the answer is, A, dig more granularly through historic data, and B, in anticipation of the next event, diversifying among a range of different types of bonds and a range of different types of equities helps buffer the performance of an entire portfolio. Billy, that was a big question, but it was a very, it prompted a very good conversation. And hopefully everyone who is listening now has a deeper understanding of how the markets work. So thank you, Billy, for asking that question. We'll come back to this episode

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Our next question comes from Rob. Hello, Paula. This is Rob from Minnesota. Thank you for everything you do in the financial world. I recently turned 52 and worked full-time, and my wife will soon be 53 and works part-time. Our combined gross income is about $100,000 a year, and we are empty nesters.

We currently have about $75,000 in cash, $760,000 in Roth and traditional retirement accounts, that's 401K and IRAs, and we have $80,000 in the mainstay high-yield corporate bond fund that pays monthly dividends that represents a 5% annual return based on the current bond fund price. These dividends are reinvested monthly, and this is a taxable account. Our annual contribution towards our retirement counts is currently $30,000 a year. In 2020, I also received a 4% 401k match and another 10% in the company ESOP. Usually, the ESOP contribution is 5%. My wife does not receive any retirement benefits. Our only debt is a mortgage balance of $127,000 on a property currently worth about $350,000. The principal and interest portion on this mortgage is $965 a month.

If we don't pay any additional amount towards the principal, our mortgage will be paid off in September of 2034, when I will be 65 and my wife will be 66. However, if we can figure out the health insurance puzzle, I would like to retire from full-time work at age 60 and plan to pay off the mortgage by then. We expect to be receiving an inheritance of $300,000. My original plan was to pay off the mortgage balance and free up that $965 a month in principal and interest payment. Here are the three main financial scenarios I can think of. Which one do you think could be the best option? Pay off the mortgage balance of $127,000 and invest some or all of the $965 a month that has been freed up in retirement and or taxable accounts. Don't pay off the mortgage.

Invest the $127,000 in equities, and then pay off the $965,000 in equities, and then pay off. the mortgage at age 60. Without any extra principal payments, we would have a balance of about $60,000 when I reach age 60. Or invest the $127,000 into the mainstay high-yield corporate bond fund, redeem $500 a month in dividends, and put that towards our mortgage principle. I realize the dividends and share price can fluctuate in the future, and the yield may be under 5%. We can write out any share price decreased before we cash it in, so I'm not concerned about its value at age 60. With this scenario, the mortgage would be paid off on June 1st, 2029, so a few months after I turned 60. Thank you, Paula, and I would appreciate any insight you would have.

Rob, thank you so much for asking that question. First of all, congratulations on how well you are managing your money. I notice that you mentioned that your combined gross income is about $100,000 a year, and your annual contribution towards retirement accounts is $30,000 per year. So you're saving about 30% of your income for retirement. That's fantastic. That's an excellent, excellent savings rate. So huge congratulations to you for having such a high savings rate, for being forward thinking about your retirement and for all of the careful planning

that you are doing. Of the three options that you mentioned, you said option, One, pay off the mortgage, which your mortgage balance is $127,000. Option two, don't pay off the mortgage and invest that $127,000 into equities and then pay off that mortgage at the age of 60. Or option three, invest that $127,000 into a high-yield corporate bond fund and put the dividends from that bond fund towards your mortgage principle. Now, what I like about all three of the options is that no matter which one you choose, your mortgage. is paid off by age 60 or at the latest a few months after you turn 60. So regardless of which choice you make, that is a timeline that is aligned with your goals. You mentioned that you

want to retire at 60 and you want to be mortgage free at the time that you retire. And all three of those options marry your timeline with your goals. And so that's what I like about all three of them. That being said, options number two and number three are my favorites. I don't have a strong preference between option two or three, but investing that 127,000 into either equities or bonds will allow that money to grow and perform while you are still in the workforce. And given that you have an eight-year time horizon, that's not a huge runway, but that's enough of a time horizon that you could achieve a bit of growth. So if you want to be more conservative about how you handle that money,

option three, putting it into a bond fund, is that more conservative route? If you want to be a little riskier, option two would work as well. My hesitation around option two is the question of whether or not that level of risk is appropriate for your age and your retirement timeline. So if you were to choose option two, it would be a bit aggressive. I think option three is as risky as option two. Tell me about that, Joe. Well, the reason is this gets back to high-yield bond funds. He's talking about taking even more money than the 80.

When I heard he is $80,000 in a high-yield bond fund, that's a lot of money to loan to companies with a horrible track record of paying you back. The cool thing, and don't get me wrong, because I love me some high-yield bonds, but I think that there's a risk level there. What I like about it is that because it's in a mutual fund, He's loaning money to a lot of companies that have bad risk profiles. So the management of this mainstay fund that he has, by the way, Morningstar rates it four stars on a scale of one to five. It has above average fees, but it also has an above average track record.

So you're going to pay a little more than you will for many of these funds, but you've also historically had good performance in that area. but I think I think loaning even more money a bigger percentage into one type of asset is under diversification and even if he doesn't look at the bottom line so here's what I like about it if he doesn't look at the bottom line of that mutual fund I think he's going to be fine but I think that he's already on a roller coaster ride because these high yield bond funds fluctuate and value a ton I think putting even more of your money into that roller coaster ride is going to make your net worth statement just go crazy. With volatility, you mean.

Yeah, yeah, I think putting all that money into one sector of the market and not even just one sector, one fund is scary. But if you don't look at it and you don't feel the gyrations up and down that cause a lot of people to wreck their own plan because they look too often, I agree, I agree with him that it's going to throw off a nice big dividend. it's apples off the tree. It's going to throw these huge apples off the tree. You can pick those apples up and you can use that to make the mortgage payment. I just see so many people wreck their plan when they see the type of volatility he's getting himself into. What do you think about, you know, when I regard these three options, what appeals to me about both option two and option three is that he is accepting risk in order to have a higher likelihood of some returns in the final eight years of.

his working career. Do you think that that is an appropriate approach to risk given his age and timeline? Or would you recommend the most conservative approach, which is pay off the mortgage? This is not going to, my answer won't surprise you at all, which is that I would, I would look at first, can he get away with option number one? If you can reach all of your goals and not have the risk of a mortgage and you can get rid of that completely, then I'm all for that just because it's the least risky option. But the question is, can you do that? Can you devote the money to be able to do that? Or do you need to take a chance with interest rate arbitrage, really, is what you're talking about with option two and option three to make sure this money makes more money.

But definitely, if you can pay off that loan and have freedom from worry, even though it's a super low interest rate. There's something to be said for that, Paula. So on one hand, there's the argument of why take on more risk than you need. On the other hand, there's the argument of why leave money on the table during the last decade of your working career? Because you are going to want to invest far more conservatively once you're retired. So these next eight years might be your last shot at comfortably and responsibly taking on some risk. But people, I'm glad you brought that up because I think people when they retire get too conservative. They look at it as this is retirement is an event, not a new period of my life that will

often last 25, 30, maybe more years than that. With a 30 year time horizon, there's a significant amount of my money that should stay in a growth position, right? But what do most people do? They roll over their 401k to an IRA. They sit it in something that's very boring because that's what you do when you retire is you put it in a spot where you could have all this money available right now. With all the money that Rob has here, what's the chance he's going to spend that in the first

couple of years? I mean, I want to go to that party. I totally, if he doesn't invite me to that party, I will be so upset. But he's not going to do it. That's where I think people leave money on the table is by getting conservative with the rest of it. So if I can put together a responsible timeline of when I'm going to need this money as fuel, and I can still pay the house office.

at the same time. Then that minimizes even further my threat that some black swan event happens to either the bond market on one hand, option three, or the stock market in option two or both, right? Maybe it's a combination of stocks and bonds in option two. And you don't have to worry about it at all. I don't even know if that's possible. So before I answer, because my answer really is I don't know. But I would love to see if option one is even on the table, basically.

based on what his goals are, how much money does he want to spend during his retirement years? And we build in some assumptions there and then make a decision once we know that's on the table. Because then I think it also comes to your point. I think it comes down to him. What do you want more? Do you want more money? And are you comfortable with taking a little bit of extra risk? Like you, I think he probably is.

But on the other side, if I could pay off my house and I don't have to worry about any of this stuff. Right. Does the psychological peace of mind outweigh the potential difference in returns? I also, Paula, I've messed a lot of stuff up, but I predicted when I was 30 that I would feel differently about this when I'm in my 50s. I'm in my 50s. I feel much different about this than I did when I was 30. When I was 30 years old, option 2 would have been my favorite. Option 3 would have definitely been on the table because I really do like high yield bonds, but I've been in that market for a long time. And I like them and I'm comfortable with that concentrated risk. So I like that. But man, that freedom from worry right now at 53 years old. If I could just take that exit off

off the table, don't have to worry about it. And I can still get all my goals. Let's do that one. Because I've got plenty of stuff to worry about without worrying about that. Right. Which to your point, it then ceases to be a mathematical question and turns into a, the Venn diagram of math and psychology. So to wrap up Rob's question, all three of those options are good options. And the question that he needs to consider is, does he want to prioritize the psychological satisfaction of having that mortgage paid off, in which case he would go with option number one? or does he not want to leave potential returns on the table, in which case he would go with either number two or number three, knowing that there are risks associated with both?

So thank you, Rob, for asking that question and best of luck with whichever decision you end up making. We'll return to the show in just a moment. Our final question today comes from Priya. Hi, my name is Priya, and I actually was wondering what are some of the things I can, do to take out a homeowner's equity and what are the disadvantages or like where can I look where I can get good rates and where they will give me a good amount to borrow. So I was looking into that.

And I also wanted to know what's a good place, like which city, like Atlanta, North Carolina, or Dallas or even Florida, which are the good places to buy for rental income where there are not many vacancies because right now with COVID, a lot of places are not being able to rent. And I live in Boston. So I'm seeing that a lot here in the city where the rental market has sort of like plummeted. So I wanted to get your take on Atlanta, North Carolina, especially near Raleigh, Morris will carry those areas. And then also Dallas, especially Atlanta, because I don't know the area well. and I wanted to know what cities or neighborhoods to look for and which ones to avoid.

And then the he lock, the homeowners equity, like more information on that, what to look for, how to shop around, basically for that. That'll be very helpful. Thank you. Priya, thank you for that question. There's a lot to unpack here. So let's begin. First, when you ask about cities, you mentioned Atlanta, North Carolina, specifically around

the Raleigh area, Florida, and Dallas. Why those four? Perhaps you chose those four because you went on some investor forums and heard people chat about it, and now you're curious to learn more. Atlanta, Raleigh, Dallas, Florida, those all sound good. But what is the definition of good? When you're looking for a city to invest in, when you know that you're going to be a non-local investor and you can't invest in your own city, how do you begin the search? That is the fundamental question. The question isn't, what do I think of Atlanta? That's not, that's giving you a fish and not teaching you how to fish. The question is, if I am going to invest outside of where I live, how do I develop a strategy, a process, and a framework for evaluating

different cities or different locations. That's the real question. So let's address that. The first thing that you're going to want to do is get very clear about what your goals as an investor are. Any asset earns returns in a variety of ways. There's the capital appreciation on the asset, and then there's the dividend or income stream that that asset pays. In the case of a rental property, the capital appreciation is the potential rise in value of the cost of that home. And the dividend or income stream is the cash flow from that property measured through a metric that's referred to as the cap rate. The cap rate is a measure of the unleveraged cash flow. In other words, it's what the property would cash flow if it were paid free and clear.

As an investor, when you are developing your investor policy statement, which Joe is something that you talk about often, the importance of that investor policy statement, what you're doing at that beginning stage is deciding. what type of returns you want to get, and what risk profile you are willing to accept in order to give yourself a reasonable probability of obtaining those returns. So if your objective is to invest in areas that you think have a higher likelihood of market appreciation or capital appreciation, then you're going to be commencing your search in a very different way than you would if you were searching for properties that were optimized for cash flow or cap rate. Similarly, if your goal is to scale up very quickly and you want to diversify your risk by having a large number of doors, you know, because if you've got, for example, if you've got 12

doors, then you lower your vacancy risk by virtue of having 12 doors rather than one. So is your goal to diminish vacancy risk by scaling up the number of doors that you hold? Or by contrast, is your goal to create a style of investment that is optimized for passivity or for residual income. And the way that you would do that would be by owning fewer doors. So your vacancy risk is higher. But the residual character of that income is also likely to be greater because you've got fewer doors, which means fewer toilets, fewer windows, fewer tenants, fewer turnovers. So if you are optimizing for a rental port,

that's built for the purpose of making the income as residual as possible, you would want the greatest amount of cash flow from the fewest number of doors. If by contrast, you were designing a portfolio that you could manage part-time or full-time in retirement, you know, that would serve as a part-time job and you're willing to do a little bit more work or be a little bit more involved. In other words, you're willing to have it adopt a less residual character. In exchange, that means that your risk is diminished in these other dimensions. For example, you have less volatile occupancy metrics because of the fact that you have more doors. If that's what you're designing for, then you're going to pick very different types of investments.

And so being clear on precisely what you are designing for, what characteristics of returns you want, and what risk characteristics you want, that is the first step. And that's true for all investors, even if you're investing locally. So these questions that we're asking in this preliminary stage, this doesn't even relate to out-of-state investing. That comes later. Choosing a city comes later. What you're optimizing for in this first stage is what you're designing for is what's your investor policy statement? What characteristics do you want your portfolio to express? And if you don't have those characteristics clearly defined, then you can't answer what city or neighborhood is quote unquote best because best for what?

Which seems to me that the true question here, probably then, Paula, based on what you said is what are the right places for me to begin filtering, right? What are the right groups of people to be in? What are the right discussion staff so I can get more knowledge around these different places? Once I've decided what I want, because it seems like based on what you want, you're going to then look in other place. You're going to talk to different groups of people and share information with different people. Because even me, as I heard about Priya talking about these different cities,

I thought, man, I might be in different groups of people even asking these questions because those are such disparate markets. Right, right. But the problem with talking, sometimes it's garbage and garbage out. You know, sometimes when you're talking to investors, they haven't spent the time refining their strategy as an investor. For example, you go on Twitter and you read the garbage that's out there on FinTwit. I mean, there's some great stuff, but there's also a ton of garbage, right?

Same with Reddit, same with TikTok. There's dumb money and there's smart money. And there's thoughtful money and there's careless money. So where I would start, and this goes back to thinking from first principles, Take every dimension of risk and reward, draw a line on a piece of paper, draw a spectrum for each of these dimensions, and then ask yourself, in your ideal world, where do you want your investments to fall? So, for example, in rental properties, risk exists in multiple dimensions. There's leverage risk. If you, hypothetically, if you were to buy a home free and clear, your leverage risk would be zero. If you were to borrow 100% of that deal, no money down, then your leverage risk would be 100%. And then along that line in between, your leverage risk could fall anywhere along that spectrum.

So leverage risk is one dimension of risk. A different dimension of risk on a separate line relates to the age and the condition of the property. In fact, those are two separate lines. One line is age of the property. The other line is the condition of the property. where do you want your risk profile to fall? Are you willing to buy an older home? Are you willing to buy a home that is in poor condition or that's a fixer-upper? If so, how much of a fixer-upper are we talking a paint and carpet remodel or are we talking a full-gut reno job? And then there's yet another line where there's a risk characteristic that relates to the profile of the neighborhood. Is it a high crime area? Is it an area that has high vacancy rates or lots of turnover? Is it an area with population growth or population decline? And then there's yet another line where you have the risk dimension as it relates to the size of the city.

Is it a city that is, or town that is so small that there's only one electrician in town and there are only three property management companies in town and they're all bad, right? In those smaller towns, often you can get very cheap properties, but that comes with its own set of risks due to check. challenges that you may have in recruiting and hiring and maintaining relationships with a reliable team. So that's yet another risk dimension. And so you map out all of these different risk dimensions. And then you do the same thing with reward. We talked about how assets can offer rewards in the form of market appreciation. They offer the potential for rewards in the form of

forced appreciation, which is the rise in value that's a direct result of your active efforts. such as if you did a gut job on a property, or if you bought a single family home and turned it into a duplex, or you bought a duplex and turned it into a fourplex, right? Those are all examples of forced appreciation. So there's market appreciation. There's forced appreciation. There's cash flow. There are all of these different characteristics of reward.

And so you want to sketch out what your ideal scenario would be in the design of your ideal portfolio, where along all of these spectrums would you like to fall? And if you don't know the answer to that, I mean, broadly my recommendation would be that if you're going to dial up the risk in one dimension, dial it down in the others in order to counterbalance. And by the way, for the people who are listening who are not interested in rental investing, this applies to equity investing as well. I mean, this applies to portfolio design. You can dial up risks in certain ways by dialing down the risk in other ways. You know, if you're going heavy into a sector-specific bet, then you might want to dial down some of your risk in alternate ways.

Conversely, if you're dialing up, actually, if you really want to like zoom out and take this at the 30,000 foot level, you can apply this framework to your entire life. If you're dialing up the risk by being self-employed or by being an entrepreneur, then you might want to dial down the risk in your investment portfolio by having a heavier bond allocation, right? because you want more fixed income in your portfolio so that you can be more aggressive in the active business that you run. Or vice versa. Maybe you've got a super secure job, so you've got a lot of job security as someone who's tenured in their position, and so you can

then dial up your exposure to cryptocurrencies because of the fact that you know you've got consistent income coming in that's predictable and reliable, and you are unlikely to lose your profession or experience a job loss, right? So there are all of these ways in which dialing up risk in one dimension means dialing it down in other dimensions and vice versa. And what you want to do is take a holistic view of what you're designing for. What are you trying to construct? And it's only when you understand that, only when you've made that very clear that you can then go to the second order experience of searching for greater specificity. searching through Atlanta or Dallas or Raleigh or Florida to say, hey, are there pockets here,

are there neighborhoods here that fit the risk-reward profile that I'm specifically designing for? I think these are some important distinctions you bring up, Paula, because a lot of the time, new investors don't know where to begin. And I think we often find ourselves starting from the wrong spot, which is perfectly fine. I mean, I remember the first time that I thought about investing in retirement well before I became a financial planner. I had a little bit of extra money. I didn't have any knowledge of money at all. I had a bunch of student loan debt, fresh out of college, called up a broker that was recommended from a friend's dad, a broker, not a financial planner, and said to the broker, hey, I've got this money.

and he did this thorough review with me. And I said, well, my friend's dad said, I might want this thing where it could be like a guaranteed incomes. My friend's dad was telling me I wanted an annuity when I'm 22. And now that's what I know. So my friend's dad didn't know anything. But the cool point is the broker said, he's like, you know what,

you got a bunch of debt. I would put this money in a savings account. Some of it. I'd use the rest to pay off this debt, this debt, this debt. I would not use that type of investment. for you. You're much too young for that. You know, get your debt taken care of and call me back. It was fantastic. But I was starting from the wrong place. So it isn't Priya just thinking about, hey, which one of these places should I be invested in? I think we all start there. And hey,

we start from somewhere. Well, you know, the issue is, and I was just talking to my team about this. We just did an internal company retreat. And we were having this discussion. around how so many of the questions that we hear seem random or scattershot. And often that's because the financial media, the financial press, does not do a very good job, in fact, it does a terrible job of teaching people frameworks or structures for their thinking. And so in the absence of a mental model, then of course, your thinking is going to be scattershot because there's, there's there's no structure to the thought. There's no mental model. That's why I tweeted about a week or two ago that Afford Anything is a podcast about thinking from first principles told through

the lens of money. Because so much of what we try to do, what I'm trying every single one of these Ask Paula and Joe episodes where we attempt to get to the heart of the question that's being asked, even if that's not the overt question that's being asked, what we're going to, what we're doing when we're getting to that heart of the question is we are stepping back, we're zooming out, and taking a broader view and contextualizing this question into a wider landscape. You know, some of the frameworks, and this is what my team and I were discussing at our company retreat last weekend, some of the frameworks that we want to introduce and emphasize to our audience in the coming months and years include,

what we call the F-I-R-E framework, so financial basics, investing, real estate, and entrepreneurship. A framework like that, number one, it categorizes and classifies some of the different activities that are associated with financial management. Number two, it starts with the basics. And so you avoid the issue of people saying, hey, I want to grow a portfolio of 20 properties so that I pay off my credit card debt. No, no, no, no, no, no. We're going to start with the F. We're going to start with financial basics. You're going to get those basics in order first. You're going to pay off your credit card debt. You're going to build an emergency fund. You're going to get at least the company match on your 401k. You're going to get the basics nailed

down before you then move to the I, the R, and the E. And that R component, it's perfectly situated in between I investing and E entrepreneurship, because real estate, truly is a hybrid between the two. Real estate is a blend of both. So that framework, F-I-R-E, is, I think, a good framework that we can go back to whenever we're talking about crypto or stock investing or bonds or ETFs or rental properties. Like, if you pick something at random without contextualizing it into a framework, then it can be a little overwhelming. But if you put it into a structure, then there's a path. That's one of the mental models that we want to introduce.

And another mental model that we also want to introduce is what we call Triple H, head, heart, hands. Because so much of building wealth is mastery of head, meaning cognitive biases, mental models, thinking frameworks, heuristics, metacognition, thinking about how to think. A lot of what we cover on this podcast relates to that. Our interview with Julia Galeith, which was the previous episode. that's all about mental models and thinking frameworks.

Our interview with Annie Duke, a professional poker player, same thing, mental models and heuristics. So that's the head component. And then there's the heart component, which is your psychology. You know, we've had Dr. Brad Klont, a financial psychologist. We've had him on the show many times. We've had Dr. Dan Ariely, a behavioral economist, a leading behavioral economist, come on the show to talk about how we behave irrationally with money. We think that we operate from the head.

but in reality, we don't. And there's a lot of research that demonstrates this. And so a lot of the interviews that we do focus on the head, cognitive biases, the heart, financial psychology, and then the hands, which is taking action, those actionable steps that you can follow. And so that triple-H framework is yet another way of structuring the way in which you think about money. And so how this relates to Priya's question is that, Priya, I'd like to introduce. greater structure to the way that you're approaching the question of where should I invest? Because your first step is that investor policy statement, that guiding statement. It's a very

first thing that we have our students do when they enroll in our rental property course, your first rental property. First thing is we roll out their guiding statement. And then we reference that throughout the course because that's the backbone of everything that follows. And then, if you are going to invest out of state, we roll out yet another framework, which we call the hierarchy of boots on the ground. And that's a structured way of thinking about different cities and a structured way of evaluating. You know, step one, do they meet this criteria? If not, then go to step two, do they meet this criteria? If not, then go to step three, do they meet this criteria?

It prioritizes and ranks that structure. You know, Joe, you and I, in a previous episode, we were talking about, how people oftentimes don't structure the way that they think about designing their retirement portfolio. So I give the example of a friend of mine who's really worried about her asset allocation, even though her contributions are basically zero. And so the structured way of thinking about how to manage your retirement portfolio is, number one, making sure that you're making adequate contributions because your contributions are the single biggest determinant of your success. And so then those downstream conversations about asset allocation, asset location,

expense ratio, those are second, third, fourth order conversations that come after we've first established the foundation of contributions. So for everything that we talk about, whether it's retirement portfolio, whether it's hierarchy of boots on the ground, there's got to be order to it. Otherwise, it's random. And that argument changes depending how far along you are on the journey. Because for someone just starting out, the delta between plus 10% and minus 10%, if you haven't contributed any money, is very small.

You got $1,000 in the market. You're either adding 100 or you're losing 100, where if you're at the $2 million mark, then it's a whole different discussion. At that point, asset allocation becomes, depending on your goals, can be much. more important than contributions at that point. Depending on the size of the contributions that you can make, even at the 200,000 mark, you know, if you've got a $2 million portfolio, but you're still only capable of making the same amount of contributions that you could make back when your portfolio is 200,000,

then yeah, some of those downstream, second order, third order, fourth order exercises will help you optimize the portfolio that you have. At that point, paying attention to asset allocation gets bigger. But you're right. In the hierarchy of, you know, in Paula and Joe's hierarchy of investment needs, when you're just starting out, asset allocation is way down there versus putting some money away. Right. And then the more money you have put away, where you have it put becomes more and more analytical, which is why I personally think an approach that a lot of people in this community like,

which is using a single fund, like the Vanguard Total Stock Market Index, is a phenomenal place to start. I personally think that once you get a significant portfolio, there's definitely easy ways to beat that. But what's cool is you don't have to start there. You can become more sophisticated as you grow your wealth and how great is that. It's powerful thought. Right. Yeah, you know what I love about investing and entrepreneurship, both, is it teaches you to refine your mental models so that you can think more clearly. And that is, perhaps one of the most fundamental skill sets for life. So, Priya, to answer your question, and I realize we didn't even get to the home equity loan

portion of your question, but I think that can come later because right now, there are a lot of steps in between where you are now and when you're going to even consider what type of financing you're going to be taking out. First, you want to refine what the goal of your investments are, and only once you've refined the goal of your investments, can you then begin the question of what states, what cities, what neighborhoods might be a good match for the type of portfolio that I am trying to build. So thank you, Priya, for asking that question. Well, Joe, we did it.

We did already? Yeah, this is a quick one. We spent the normal amount of time and made it through just over half the questions. Perfect. But that was fascinating. I love, listen, I love talking about ETFs and mutual funds. I know you love talking real estate and where the basics are there. We both like talking about framework and how to think about these thoughts. And anytime we can geek out over this, that's time well spent. Absolutely. Well, Joe, where can people find you if they would like to spend more time listening to you? You want to spend more time. I would say a great thing to do, Paula, would be to pre-order. my new book that comes out December 28th because number one, you'll be one of the first to get it. Number two is pre-orders are important to me, even though I think it's going to be just a fantastic

book and you're going to love it, especially if you like, books that have funny and finance combined. The book is called Stacked. But it's important to me as an author because, you know, that's important for the various charts from the New York Times list to the Wall Street Journalist to the Amazon list, pre-eastern. order count is great. So Stack comes out December 28th. It's a phenomenal holiday gift. Birthdays, I recommend buying probably 100 each and giving them to as many friends as you can possibly stand. How about that? That is fantastic. And you go to stacking benjamins.com

forward slash stacked. And that'll give you all the different places, you know, depending on if you like Amazon or bookshop or your friend of the local bookstore, wherever it is, we've got links to all that stuff. Excellent. And I'm featured in the book in Chapter 1. Chapter 1. We begin with Paula, and it frankly is just all downhill from there. Ah, well, I'm glad I'm not Chapter 11. Finance joke. Nerd. When I was a financial planner, I was trying to get this guy to come meet with me. And I asked him, we're having this chat. He seemed like a very nice guy. I said, so what do you do? And he said, I'm an author. And I said, really? He goes, yeah, I'm writing a book. and I'm on chapter 11.

And I didn't get it. And I didn't get it, Paula. The guy's trying to tell me he's got no money and I didn't get it. I'm like, really? So how many chapters do you think there's going to be? Oops. Yes. But you're in good company.

Dan Ariely is in the book. Gene Chatsky's in the book for people that like stocks, Phil Town is in the book. Our friend Laura Adams, Tiffany Aliche, Paula Sukumby. You're in great company, Paula. Oh, fantastic, fantastic. Well, I'm excited to read it. All right. Well, thank you so much, Joe, and we will see you in two weeks for the next one of these.

It's a deal. Thank you so much for tuning in. If you enjoyed today's episode, please follow in whatever app you're using to listen to this show. While you are in that app, please leave us a review. These reviews are incredibly helpful for allowing us to bring amazing guests on the show. If you want to chat about today's episode with other members of the community, head to afford anything.com slash community. We have an online community that is away from the noise, a private space not on social media where you can go and focus on the conversations that you're having with other people in the

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and I will catch you next time. Here is an important disclaimer. There's a distinction between financial media and financial advice. Financial media, includes everything that you read on the internet, hear on a podcast, see on social media that relates to finance. All of this is financial media. That includes the Afford Anything podcast, this podcast, as well as everything Afford Anything produces. And financial media is not a regulated industry.

There are no licensure requirements. There are no mandatory credentials. There's no oversight board or review board. The financial media, including this show, is fundamentally part of the media. And the media is never a substitute for professional advice. That means any time you make a financial decision or a tax decision or a business decision, anytime you make any type of decision, you should be consulting with licensed credential experts, including but not limited to attorneys, tax professionals, certified financial planners

or certified financial advisors. Always, always, always, always consult with them before you make any decision. never use anything in the financial media, and that includes this show, and that includes everything that I say and do, never use the financial media as a substitute for actual professional advice. All right, there's your disclaimer. Have a great day. Yeah, Detroit, where I lived for a long time, same thing. Right.

I think that during inflationary periods, helium companies do nothing but go up. Oh. It was so stupid. Wow. All right. Sorry. Ladies and gentlemen, he'll be back next week.