Afford Anything - Q&A: Should You Keep Part of Your Money Outside the U.S.?

Episode Date: December 30, 2025

#676: Ally:How can I optimize my asset allocation and Roth contributions now that I’m over $1 million in assets? I’m 45, single, never married, with about $1.2 million in assets. Roughly $100,000 is in stocks, which might scare some people. Here’s my breakdown: Vanguard brokerage account: VTSAX $132,000, ISCV $5,000, VOO $5,000 Vanguard Rollover IRA: VTSAX $65,000, IVV $25,000, VOO $62,000 Vanguard Roth IRA: VTSAX $228,000, ISCV $6,000 Pre-tax 401(k): Active stock fund $218,000 (0.01% expense ratio), Equity dividend fund $55,000 (0.01% expense ratio) Russell 1000: $270,000 (0% expense ratio) HSA: $9,000 in the Russell 1000 and Russell 2000 ESPP: $90,000 Savings account: $12,000 I view my brokerage accounts as savings, where I can sell assets if I need cash, as well as sell my company shares. My questions: How far am I from the efficient frontier? How efficient is my asset allocation? I’ve mostly been a “VTSAX and chill” type. If I rebalance, what’s the best way to do it without incurring taxes? Next year, I’ll make more than $150,000, even after contributing $24,500 to my pre-tax 401(k) in 2026. Can I still do a backdoor Roth, given that I already have an IRA balance? I was told it could be complicated. Am I out of luck investing in a Roth next year? Also, should I roll over my 401(k) into my existing Rollover IRA to gain more investment options, even though the 401(k) fees are very low? I’ve reached over $1 million in assets, but I’m not confident my first million was invested efficiently. I want to correct it before reaching my next million. Emma: Can We Split a Dependent’s Tax Status Midyear to Maximize Health Insurance Subsidies? We’re a family of four with two adults and two children, ages 15 and 21. Our 21-year-old is a full-time university student and is expected to graduate in May 2026. The hope is that she’ll secure a full-time job after graduation. Our health care broker told us that we could claim her as a dependent for half of the year and then have her claim herself for the second half. According to the broker, this would allow her to stay on our health insurance and help us qualify for a larger premium subsidy. Is it actually possible to split a dependent’s tax status this way within a single year, or is this a misunderstanding? Anonymous: Is It Wise to Hold Some Investments Outside the U.S. for Geopolitical Diversification? I’ve always believed that “this time isn’t different,” but lately I’m feeling uneasy. I’m increasingly concerned about what seems like a slow erosion of institutional trust in the U.S., especially regarding agencies and structures that support our financial system. From leadership changes at key government institutions to growing political influence over economic policy, I’m starting to wonder if it’s prudent to hold a small portion of assets physically and legally outside the U.S. I’m not talking about exotic offshore schemes. I mean legitimate ways to invest in broad index funds or ETFs through a brokerage account based abroad—as a form of geopolitical diversification and personal contingency planning. I’d love to hear your perspective. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Joe, welcome to our last episode of 2025. I can't believe it. What a year. New Year's Eve coming up. Do you have any goals for the new year? I just want to be in the moment more as much as I possibly can. That is my sole goal. That was my goal in 2025.

And 2025 seemed to go very quickly, seemed to go by very, very quickly. And I just want to live less in the future and more in the now. And that means learning to divorce myself from my phone, to be in conversations, to get rid of notifications. That's my goal. Oh, Joe wants a Christmas present. Look at that. Look at that. But for the entire year.

Christmas all year long. That's beautiful. What about you? I think 2026 is going to be the year that I start putting a book in motion. What? Yeah. Oh, she said it out loud, everybody. For years, people have asked me, when's your book coming out?

When are you going to write a book? And I've always said, it's not the right time. It's not the right time. It's not going to come out in 2026, but I think that I think this, no, no, not even close. It's coming out in 2028. Yeah, at the earliest, maybe 2029. Sure. But I think the process begins in 2026.

I think it's finally time to shop the proposal. That is fantastic. Now, New Year's, do you have, you doing anything big for New Year's Eve? I'll be in Atlanta. By the time this airs, I will have just arrived in Atlanta. So, I'm hanging out with some old friends there. Actually, someone from the personal finance world, Letitia Stiles. Oh, cool.

I haven't seen her in forever. Yeah, yeah, yeah. That'll be great. We don't know exactly what we're doing, but we will be ringing in the new year together. This is getting a little personal, but I thought she was at Memphis. She's back in Atlanta? She's back in Atlanta. Fantastic.

Oh, that's great. Yes. Yeah, yeah. So she and I, for people who are wondering, had briefly, we had a podcast called the Wealthfast podcast. That's right. This was, ooh, maybe 2014. It was like the best three episodes ever. Yeah, yeah, exactly.

So that was my entry into podcasting was with her. So it'll be amazing to see her again. Well, that's good. So you have a New Year's Eve date. You know why Google Calendar is so. popular on New Year's Eve? Why is that? Because it has lots of dates.

Oh. And with that, we will turn to our first question. Oh, I never introed the show. Welcome to the Afford Anything podcast. Oh, is that what this is? The show that knows you can afford anything, not everything. Every other episode, we answer questions from you, and the first one today comes from Allie.

Hi, Paul and Joe, love the show and all that you do. I'm going to talk really fast because I only have three minutes. I'm 45 and about 1.2 million in assets, single, never married, and about 100 invested in stocks, which may scare a lot of people. Here's my breakdown. Vanguard brokerage account VTSAX 132K, ISCVV5K, VOO5K, my Vanguard rollover IRA at VTSAX-65K, IVVVVV-25K, VOO-62K, and my Vanguard Roth IRA at VTSAX, 228K, ISCVVVV66. K. And I have a pre-tax Maro 4.1K, which has active stock fund 218K, expense ratios 0.01%.

Equity dividend fund 55K, expense ratio is 0.01%. I have the Russell 1000, 270K, expense ratio is zero. I also have HSA 9K in the Russell 1000 and the Russell 2000. I have 90k in my ESPP. The same is account is only 12K, which is not a lot, but I see brokerage account as my savings where I can sell the assets if I need the money, as well as sell my company shares. My questions are, how far am I away from the efficient frontier, which you spoke a lot about, but I'm not grasping it yet. Also, how efficient am I with my asset allocations? I don't think I am in either case.

As you can see, I was mainly at V-T-S-A-X and chill type. If I rebalance, what's the best way without incurring any taxes? Also, next year, I'll be making more than $150K even after I fully invests the $24,500K and $2,026 in my pretext for $1K due to my salary and bonus. Can I still do it back to a Roth since I have an IRA account with a balance in it already? I was told it would be very complicated. Am I out of luck investing in the Roth next year? Also, should I roll over my phone 1K to my existing roll over A so I have more investment options? The fee is so low in my 401k though.

Please help as I've reached over a million and assets, but still feeling, you're not feeling confident that my first million was invested correctly or more efficiently, and I wanted to correct it before reaching my next million. Thank you in advance for taking my question and looking forward to hearing your insights and advice. I made it under three minutes. Thank you so much. Wow. Our speed talker, Ellie.

That was incredible. Nice job. I have a very thorough understanding of your assets now. I think, Paula, if you don't mind, because I'm the, person. Yeah, you're Mr. Efficient Frontier. I introduced the efficient frontier to the afford anything audience. So why don't I, why don't I dive into this one? Because I think there's a lot to chew on. And obviously, I know, Paula, you'll have good stuff too. There's a ton to unpack here, Allie. You did a great job of talking very fast. And so we need to break this down into digestible

pieces. And the first piece was the comment that you made that you're 100% in stocks, and that may scare a lot of people. 100% stocks, according to even recently, just three different groups that I've seen. I'm going to quote people that I've heard this from in the last two weeks. First of all, my co-host OG has said this the whole time that we've been doing the stacking Benjamin show. He's always been 100% stocks is the answer. With the caveat that I'll get to in a second, Alley. Second, there was a recent conference where a Vanguard researcher talked about how 100% equities is also the answer.

But then he talked about deviating from that for the same caveat I'm about to bring up. There's also a white paper that came out from a top research group that just happened, showing that historically 100% equities was the right answer. So it shouldn't scare people to be 100% equities that truly is. is or has been. We never know the future, right? But historically, it has been the key to getting where you want to go faster. That doesn't bother me. I'll tell you what does bother me about 100% equities. It bothers OG. It bothered the Vanguard researcher. It also in this white paper that was the big huge caveat. The problem is 100% equities is the biggest freaking roller coaster

ride ever. And the problem isn't that the equities won't make it. The problem is you will jump off the roller coaster while it's going down the hill. And you will mess everything up because of the fact that it's, it is going to be such a moody, moody portfolio that most people can't stay on. So start with 100% equities and work backward. How much risk can you actually take to not blow up your plan. My portfolio is not 100% equities because I don't have a gigantic risk tolerance. Mine is 100% equities, but I view rental properties as my bond allocation. Yeah. I view my rental properties as the income portion of my portfolio. Yeah, and mine, I have some reits that are, that are, but truly they're in equity form. So those are kind of, those are also equities. But I have a

small like 5% portion of my portfolio that's in other assets. Number one, don't be afraid of the fact. If you have the risk tolerance for 100% equities, that is fine. Now, there is a problem. And the problem, Paula, is that most people in their head when they're young, they can take the risk of 100% stocks because of the fact that in your brain, you kind of view your job as the bond portion of your portfolio, because you have this consistent income stream coming. Which means that researchers in this white paper talked about the fact that early in your career, you're probably not going to jump off the ship when you're on 100% equities. But as your career is winding down and in your brain, even if you're not going to spend the

dollar tomorrow, the fact that in your head you don't have that security of a paycheck anymore, the feeling of your portfolio going up and down. Number one, the portfolio is bigger, a lot bigger. So you see bigger changes. When you get a 1% change, it's a much, much bigger change than when you're 25, when you're 60 years old, it's much bigger. And then the second thing is your brain is constantly saying, what if I do need it? What if things change and I need it? So you're much more likely if you're 100% equities at 60 to make a mistake and blow up your portfolio than you are at 25.

your risk tolerance just naturally is going to be a little less because of the nature of life and the fact that you don't have that steady paycheck coming in, which I find just interesting psychologically. So it's behavior that's going to change things. So your main question here, though, Allie, is is my portfolio efficient? The answer is 100% no. It isn't efficient. Now, what you want us to do is help you get more efficient and I can't do that. And the reason I can't do that is really the same reason, you know, recently Starbucks fired their CEO who had been there less than a year. He was a McKinsey consultant. This guy, Paula, was an efficiency expert. And if you're solving just for this nebulous efficiency, but you really don't know what the end

goal is, even an efficiency expert isn't going to be able to write the ship. efficiency truly is based on something. And in this case, Allie, it's based on what your goal is. When are you going to spend the dollar? I don't know any of that. And with a portfolio, the size of yours, I think beginning with this is 100% Paula, a financial planner question. This is 100% a thing where, Ali, I'm happy to help. We can go over the efficient frontier a little bit, but where the efficient frontier should always start is where on the grid do you need to be based on your goals and working with an advisor on that goal setting and crystallizing and finding out what those goals cost, getting some pushback on them, and then, you know, your goals fight against each other,

which one is more important than the other one? Like having all of this kind of therapeutic stuff to get crystal clear in your mind about what you're efficient toward first, I think is where you're going to begin. I do not know. And this is maybe why you're not grasping the efficient frontier. And generally, when people don't grasp it, Paula, it's this issue. They're like, well, I don't know if I'm efficient or not. Well, efficiency begins with the end in mind. And so we start with the goal. We then point that goal toward a rate of return we need because your goal is going to have a very simple equation, alley. It's going to be my goal requires X amount of money times Y amount of return. And once I know what those two factors are that equal the goal,

then I go to that return on the efficient frontier and I go to reach that return with the least amount of risk, this is my asset allocation historically. This is where it's been. What if the goal is simply more? What if there isn't a specific goal, but it's just, hey, highest return possible. Yeah. Then go with the most volatile stuff you can find. And by the way, in financial planning, that was always the conundrum was when somebody would come into my office like, yeah, I don't care about any of the goal setting. I just want more. Just give me more. And the problem is somebody that says they want more, Paula, also nearly 100% of the time were the people that didn't accept less. Because when you say I want more, what happens? You're going further

out on the continuum on the efficient frontier line, which the efficient frontier line, Allie, being new to it, let me tell you what it is, it's return and standard deviation. So the further right you go, the more standard deviation. You get what does standard deviation mean? That's the ocean. That's the up and down. There is no such thing as more up without more down. And when somebody said, I just want more, I just want more, I just want more. And you go out on the standard deviation. And the first thing that happens is the market goes down and you get less, those people were always Paula the most upset because they weren't getting more. They're like, I told you I want to more. I don't want to cut it in a half. Volatility is a two-way street.

Volatility, people like, I don't like volatility. Well, sure you do. You 100% love volatility. Like when you're bragging to all your friends about how kick ass your 401K is done or the company you work for that company stock, that's because of volatility. Volatility is a, great thing. We just don't want the downside that comes with that, but there is no free lunch. So when somebody tells me they want more, my stomach immediately clenches. I'm like, do you really want more? Because if you really want more than go invest in a restaurant and be right. Ouch. Exactly. Just don't mess it up because you'll get a huge return or you'll blow all your cash. Right. Can I just say a couple of things that I noticed right off the bat when

I hear her numbers. One is that, and Ali, you mentioned this in your question. You have a lot of assets in large cap. That's the first and most obvious thing that I notice. And you, I think, are aware of that as well. As you mentioned, you're a bit of a VTSAX and chill person or historically you have been. And what that means is that you are over concentrated in large cap. And also, it's very easy to be over concentrated in large cap because large cap for the last couple of years have done the best. And so without something else to rebalance into, without small cap to rebalance into, I think a lot of people who are listening to this are probably over concentrated and large cap. I'm certainly, I was just reviewing my portfolio balances the other day. I'm also over

concentrated and large cap. Welcome to the club. The question is, what do you want to diversify into? I certainly think more small cap exposure could help. I think that one thing that you're doing really well is you have a lot of your highest growth assets in Roth accounts, which are great, because you want the biggest growth coming out of those Roth accounts. So that tax location, I think you're doing quite well. You do have a lot of money in your ESPP. That's always a little bit of a red flag because of the fact that you've got a lot of concentration in just one single employer. So that's the other piece of it. Those are sort of the most obvious pieces that I noticed.

Yeah. And just to be clear, too, Allie, because if somebody's new to the show and they haven't heard all the discussions we've had on this, you're going to be okay doing it the way you're doing it. It isn't the end of the world not being incredibly efficient. You can do much, much better, I believe. I feel like when I first brought this up,

a lot of people freaked out that, oh, my God, I'm doing it wrong. I'm like, no, J.L. Collins, simple path to wealth that was truly written for his daughter, and I think it helps people not freak out about the markets, the simple path to wealth will get you there. It won't get you as far as you could easily go with just a little bit more work, but it will get you there and you will be fine. So if you do nothing, Allie, you're going to be fine. I wanted to also comment about her tax question. Oh, yes. Yeah, yeah. How do I rebalance without incurring taxes? You can't. Well, well, hold on. Let me.

I'm going to play devil's advocate here. If she sells assets in tax-advantaged accounts and if she rebalances inside of a taxable brokerage account purely by purchasing more rather than by selling off gains than she could. I think if we begin with the attitude that that's not the goal and then we try to minimize taxes as much as possible, I think that's a much better headspace to be in. which is why I said you can't because I think that while there are some ways to get close or maybe get there, I think when you remember the goal is to have more money, the goal is not to pay less tax. I'm not going to be afraid of making the move to get rid of a position that's

problematic that also has a tax consequence as I see people get. I see people hang on to the wrong thing and have less money because they're so worried about the tax. I want my goal is to have Elon Musk's tax bill. I have no idea what this dude's tax bill is, but it's got to be bigger than mine by far. Assuming that I'm right, then my goal is more cash. And if I have to pay more tax to get that, then that is what it is. So I always want to be tax efficient.

But I think if I start with I want more money and not I want to avoid. tax. I think it's a healthier place to be. I will say, though, that if the goal is to avoid tax, I mean, I'll tell you what I do, the money that's in my taxable brokerage account, I stopped reinvesting dividends. And so rather than reinvesting dividends, all of those dividends turn into cash. And then I use that. And of course, I still have to pay taxes on it because that's the nature of a taxable brokerage account. But the cash that I use from those dividends, I then use to purchase other assets inside of the taxable brokerage account. And by doing that, plus if I've got, depending on my budget, if I've also got my own money

to make new contributions into taxable brokerage, I, through a combination of those two things, make new purchases in taxable brokerage that over time have the effect of rebalancing. Yeah. But not reinvesting dividends is a great start because oftentimes we can go too deep in a position by virtue of that dividend re-investment. I feel like if we begin with a goal of, I want to avoid taxes, what happens when we get to retirement is we don't change. We're still the same person.

And when it's time to start pulling money out and live and spend it, do the things that you want to do because that's your new income stream, I've seen people reticent to do that. No, I don't want to pay the tax, which means less life. I really don't want to be in that headspace. I want to be in the headspace of it's a necessary evil. Let's minimize it as much as we possibly can. Do everything we can. I have a strategy to hopefully pay none.

But if I know that the tax monster is going to sometimes get me, okay, so be it. Yeah. Well, and you've been investing, Allie, long enough that certainly at a minimum, make sure that you're paying long-term capital gains and not short-term capital gains. I think that'll be relatively easy to do, given how long it must have taken you to build that portfolio. Yeah, she's done a great job of saving. Yeah, absolutely fantastic. When I say make sure you're selling long-term capital gains, not short-term, check to see if the account is set up as FIFO or LIFO, first in, first out, or last in first out.

The difference between FIFO and LIFO, it's like this. FIFO is a dog. Oh, I was actually going to say a chipmunk, so you're close. Yeah. So imagine that you get three chipmunks, Alvin, Simon, and Theodore. But you don't get them all at the same time. You get Alvin first. You get Alvin in October. You get Simon in November. You get Theodore in December. And then the following year, you decide you're going to sell your chipmunks. If it's FIFO, the first in, first out, you're selling off. You're selling off. Alvin first, and if it's LIFO, you're selling off Theodore first. And the reason that I always use that example is because Alvin, Simon, and Theodore always go in that order. Like nobody's ever Simon, Theodore, and Alvin. That's just weird, right? We all understand it's Alvin first, then Simon, then Theodore. That's FIFO versus LIFO. Which Chipmunk are you getting rid of first? Is it going to be Alvin or is it going to be Theodore? The reason that matters is because

if it's Theodore, then you might be at risk of selling off some short-term capital gains. Plus, Theodore is the low-key one. You want to keep him around. Like, really? He's your favorite chipmunk? I just don't like the idea of giving away my chipmunks. Sounds like you're holding on to your assets to not pay the tax bill. Maybe.

So I got to have a little sadness in my life if I'm going to pay the tax bill. Goodbye, Alvin. Al, you're doing a lot of things right. You're in broad market funds, low fee funds. You have a variety of funds. You mentioned IVV and VTSAX. Even inside of the broad market category, you do have a variety there. I would just be aware of large-cap concentration,

be aware of domestic equities concentration. So think a little bit about how much exposure you want to have to small cap and to international. It could be worth exploring, potentially raising your allocation in those two areas. Reconsider how much stock you have in your own company. But overall, you have the framework of a very healthy portfolio. So congratulations on building it. And thank you for the question. By the way, if anybody wants to hear some of our previous discussion on the efficient front,

Because we, 2025 was our Efficient Frontier year. It was. It really was, where we deep dived across a series of episodes. We will link in the show notes to a handful of the episodes that we've produced this year on this topic. If anyone who's listening is like, wait a minute, what is the efficient frontier? We'll link to those episodes in the show notes, which you can access at afford anything.com slash episode 676. Well, thank you, Allie, for the question, and happy New Year's.

We're going to take a moment to hear from the sponsors who make the show possible. When we return, we'll hear from Emma, who has a question about health insurance. Welcome back. Our next question comes from Emma. Hi, Paula. This is Emma. I'm calling to ask about health care, since open enrollment is around the corner. We are a family of four, two adults and two kids, age 15 and 21. Our 21-year-old is a full-time student at a university. So here's the deal. She will be graduating in May of 2026. The hope is she will get a full-time job after she graduates.

Now, my health care broker said we can claim her for half the year on our taxes, and then she can claim herself on her own taxes. on the second half of the year. I would love to do this as it would allow her to be on our health insurance and qualify us for a better premium subsidy. My question is, can this be done since my health care broker seems to believe that it can? Thank you.

Emma, thank you for the question. We are in open enrollment season right now. There's a lag time between when we receive questions and when they air. So we are currently in open enrollment. If you haven't signed up for health insurance in 2026, you've got to go. It's time. Now, Emma, to your question, yes, a person can be a partial year dependent, but there are a variety of qualifications that they need to meet.

And we're going to discuss that in just a moment. Before we go into the qualifications that somebody needs to meet in order to be a partial year dependent, my first question to you is that I don't fully understand why it's necessary. given that a child under the age of 26 can remain on their parents' health insurance plan. That confused me as well. We maybe need more data. Is it something specific about this insurance policy? Yeah.

Which I wouldn't understand because if there's a law. If it's an ACA compliant plan, then I don't understand why. I mean, right, there's a law went into effect that allows children under 26 to remain on their parents' policy. And that child does not have to be a dependent. You know, so it's independent of whether or not the child is a dependent. It's independent of the child's marital status. Independent of whether they're dependent is a great sentence. Yeah, marital status, financial independence, job, you name it. Yeah, exactly. Like if you're a child under 26, you can stay on your parents' plan. So I don't, I don't get why this is necessary. But if for whatever

reason it is necessary. The IRS still has a few tests to make sure that they are a dependent. So you said graduating in May. The big one that's going to apply to you is the residency test. To be a dependent, the child has to have lived with you for more than half of the year. So if your daughter is going to be at home for the month of June until July 1st, you're good. If not, then maybe they don't meet the dependency credit. But again, that might all be moot because of the fact that until age 26, they should be allowed to be on your plan anyway. The other reasons, by the way, a child can be a dependent. If they don't live with you, they are either a full-time student. They're permanently and totally disabled. By the way, this is all right off the IRS website. And Paul, I can send you

the link so we can link to this. And also, of course, they are a child. child of yours and there is a bunch of different ways that a person could be classified as a child of yours and there's a ton of options that the IRS gives you that are acceptable as a quote child. So as long as you pass the relationship test, the age test. Now, the age test for dependency is 24 years old if they are a student and they're not permanently disabled. Otherwise, it's under age 19 if they're fully employed. Maybe what the health care broker and you are getting tripped up by is this dependency test that she will no longer be a student anymore. I don't know. But she doesn't have to be a dependent in order to stay on a parent's health insurance plan.

Yeah. So we are a little confused, but the good news is I think that if you're armed with all this data, you should, of course, talk to your tax expert, not just your favorite podcasters. about this one because this is very intimate and you want to make sure you get this right. If, however, for whatever reason, you do want her to be a partial year dependent, the nice thing about the residency requirement is, Joe, as you said, the time that a full-time student spends at school does not count against you for the residency requirement, which means that if she's going to be in school as a full-time student for the spring semester, then the number of months that she would need to live with you in order to meet that residency requirement would

be, you know, not too burdensome. Yeah, just the time she graduates until July 1st. Right. Well, it would need to be over 183 days. But to be clear, those days include the time that she is... Is in school. At school. As a full-time student, right.

As long as it totals over 183 days, then at least you'd meet the residency portion of that requirement. It takes a lot of fingers to count up to 183. Takes 183 fingers. Might have to bring a few friends over. Yeah, yeah. Yeah, you'll need 18.3 friends. Well, depending.

That's true. That's true. You can't assume all your friends have 10 fingers. Some friends have different numbers of digits. We don't know. Before we sign off from this question, since we're on the topic of health insurance, I do want to float some of the options that you have out. there for anybody who's trying to figure out what to do in 2026. Great time to do that. Yeah, exactly. So, of course, it's open enrollment. You can sign up for a health insurance plan

either through your employer, if one is offered, or through the marketplace. In the marketplace, there are ACA compliant plans, and there are also non-ACA compliant plans. Right now, for the sake of time, we won't go through the distinction between the two, but there are for anything that is ACA compliant must meet this list of 10 particular rules that are set out. So things like it's got to cover preventative care, it has to cover maternal care. There's a certain set of rules that define an ACA compliant plan. That's available, but you don't necessarily have to get it. And you can buy a non-ACA compliant plan, and those are often cheaper. Those are a couple of options that you have. There's also the option, and this is controversial, but there are some people particularly in the financial

independence community who choose to do this, there's also the option of enrolling in a direct primary care physician plan. So it's a direct primary care physician subscription, also sometimes known as concierge care. It gives you access to members only on-demand appointments with a general practitioner. So there's the option of enrolling. in something like that and then also enrolling in a health share and using that as a one-two strategy, the reason that is controversial is because if you enroll in a health share, you get access to a pooled bucket of money that might pay for your health care costs, but you do not have the same legal protections that you would get if you were to enroll in.

insurance, because insurance itself is a highly regulated industry. That regulation is why it's expensive, but that regulation also gives you a certain level of legal protection that you don't get from a health share. So if you do choose to go the health share plus concierge care route, it is a valid option. Many people in the fire community do it. You would save a lot of money by doing it. But there are tradeoffs. The point of the show is everything comes with tradeoffs. That discount does not come free. Yeah, people see these all the time. In fact, I've seen people in the personal finance community who signed up for these. And then I talked to them about what these share programs, these meta share programs really are. And it surprised a hell out of them.

Like these people are enthusiasts. They had no idea what type of risk they're taking on when something costs a lot, lot less. And you think that it's just this mispriced thing. It's not. It never is. Across the top, I think the thing you need to be aware of with these sharing programs is the fact that right across the top of every single one of them, it says the words not actuarially sound. They're required to say not actuarially sound. What does that mean? That means the actuaries figure out how big that pool of money needs to be for catastrophic conditions that come along and then everybody needs money at the same time. This says that if your MediShare program gets into a situation

where a ton of people need money at the same time, there's not enough money in that pool to handle everybody. That's the tradeoff is that when you need it. Now, have I seen that happen before? No, I have not. I can't think of a case. I'm sure there are because some of these are really small associations. So I'm sure that it has happened. I don't recall it ever happening, but I think I got to know that going in that, you know what, I'm in this thing that's not built on really a firm footing. It is built a little bit on sand, which is how you're getting away with the cheaper price. Right. The other thing is that many of these health shares, not all, but many have certain moral codes or moral requirements and will not pay for

something that might be the result of immorality. For example, if you, heaven forbid, drive drunk and get into a car accident, it may not pay for that. Yeah, if it's religious-based. A lot of these are religious-based. Right. I mean, and please don't drive drunk anyway. But know that there are certain ethical standards, behavioral standards, that a person must meet. And if you end up suffering a health consequence that the health shared determines is reflective of conduct that they do not approve of, then they may deny your claim because of that immoral conduct, drunk driving being one, one of many examples. I see this type of program, Paula, and the concierge service that you mentioned as kind of a field goal, like both ends. On one hand, the concierge service is freedom

from care. I've got a doctor. I'm on call. I can go get the stuff done, whatever I want. I don't have to worry about insurance paying for it. I'm just going to pay for it. Some of these programs are super expensive, like incredibly expensive, but you get great care. You get it right when you need it. You're not messing around. And then MetaShare is, I'm going to cut just about every corner. I'm going to get every single corner that I can and get where I need to go. I've seen some people, too, you know, this year especially looking more often at catastrophic care. And now that catastrophic care coverages can, some of them are eligible for HSA inclusion, which in the past they weren't. So that's a change in the legislation that happened last summer. You know, you can even cut a corner

that way where you're in a plan that's actually sound. It's not going to pay for much, but it's there if the worst case scenario happens, you know that it will be there. It would be interesting to run the numbers on direct primary care plus a health share plus a catastrophic care plan versus a PPO. Yeah, exactly. And then particularly if you factor for also the tax benefits that you get from a HSA contribution, it would be interesting to run the numbers to see if that one, two, three punch of those three, like how that would math out against conventional health insurance.

Speaking of running the numbers, one of a PPO or a POS. Yeah. Which is truly a POS. A person in our audience wrote me and said that even in 2025, Paula, the company they work for, which is a major top 50 employer in the United States, he could not do the math where the PPO versus the company's subsidization of the HSA. So they put some money in the HSA for you plus the major medical that they had. There was no way the PPO ever won.

He could not make the PPO beat the HSA. And he said, our company is driving us toward the HSA, which is great, which is fantastic, I think, for everybody. I used to think the HSA and the major medical policies were only for people that were super healthy. And I had a health care expert say, well, no, if you're not healthy at all, you will get to those maximums, you'll get to the amount that you need to spend very quickly. And now you have insurance for the rest of your, you know, the rest of your year, whatever that is. So if you go to the doctor a lot, the HSA still might win with the major medical. And if you don't go hardly at all, well, then it could be a,

a huge win and you save the money into the HSA and let that money accumulate. So either way, this health expert was like, don't rule out the HSA and major medical if you are somebody who has a history of needing to see a physician a lot. Yeah, November and December are always the most frustrating months to get medical bills because you're like, man, my deductible is about to reset. You're just the... Yeah. Yeah.

Yeah. Do I really have to get sick or injured in, like, Q4? Right. Can we just, can we defer this injury to Q1? Just hold it together, body. Yeah. Just hold it together. Just wait until January 1st.

Not the way life works. I swear to God, your body's like, oh, you're almost, okay, I'm going to do this one more time. Thanks, universe. Yeah, yeah. Your body's like, oh, you said it was December 15. Well, here we go. Hold my beer as I wrecked Paula's holiday.

I will say, so what I've done, and I, every year, am experimenting with what I'm doing with health insurance and health care. 2025, I did not have health insurance. I was a member of a health share. 26, I have changed my mind on that, and I've decided that I will enroll in ACA compliant health insurance. I am enrolled in an HMO, which is cheaper than a PPO or a POS, but I am certainly spending, even with an HMO policy, a lot more money in 2026 than I did in 2025. But I'm getting more coverage and taking on less risk exposure as a result of that spend.

More coverage, but a lot of HMO still find a way to be a POS. Yeah, yeah, exactly. All right. Well, thank you, Emma, for the question. Congratulations to your upcoming graduate. We're going to take one more break to hear from the sponsors who pay for my health insurance. So that you can be healthy enough to show up at the mic. And when we return, we will hear from an anonymous caller. Welcome back. Our final question today comes from Anonymous.

Hello, Paula, and Joe. You can call me Anonymous. I've been a long-time listener, and I really appreciate how you keep discussions grounded in evidence and timeless financial principles. That said, I have a question that's been on my mind recently. I've always believed that this time isn't different, but I'm increasingly convinced about what feels like

a slow erosion of instant. institutional trust in the U.S., especially around agencies and structures that underpin our financial system, from leadership changes at the key government institutions to growing political influence in economic policymaking. I'm starting to wonder if it's prudent to have a small portion of assets physically and legally outside the U.S. I'm not talking about exotic offshore schemes, just a legitimate way to invest in broad index funds or ETFs through a brokerage account based abroad as a form of geopolitical diversification and personal contingency planning. I'd love to hear your input here. Thank you very much for your time.

Anonymous, that was not where I thought your question was going to go. When I heard the initial premise of the question, before you mentioned assets outside of the U.S., I did not think you were going to go there. I thought what you were going to say was, I'm wondering if it's prudent to have physical assets such as gold bars, In my basement. Yeah, yeah, or buried in my backyard. Yeah, that's where I thought the question was going to go. About that.

But he's an international man. Yeah. We need a name, though, first, Paula. Yeah, we've got to name them before we tackle this anonymous. What should your name be? You know, he's talking about problems in the world, and some of those things are above my pay grade. But one thing that's not above my pay grade, Paula, is. problems in financial planning. And when we list top five things that are problems in financial

planning, it's kind of wild because right now on the top of everyone's mind, of course, has been inflation, right? Where five years ago, if you asked people about inflation, inflation didn't make the top five. But one that's always been on the top five, and we still haven't solved it, is the issue of long-term care. I think long-term care is a big issue. Well, Netflix just released season two of this awesome series that I absolutely loved. I can't wait to watch season two. It's called A Man on the Inside and it stars Ted Danson, who his wife has passed away. He's older. And this detective pretends she's his, quote, daughter. And they have him go into this assisted living facility to solve a crime, to solve a problem.

And so he's pretending that he is a resident of this assisted living facility. And you can just see the comedy, of course, because he goes in with one feeling about assisted living. And by the end of season one, he really likes it. And he makes great friends. So I think we call him Ted because of long-term care. Wow. That was such a long walk.

I had forgotten that we were giving him a name. by the time you got to it. Paul's like, what are we talking about? Yeah, yeah. I'm like, wow, he asked a question about where he should house his assets, but now we're talking about long-term care. I'm sitting here thinking that something related to long-term care is your answer to his question. All right, no.

Where we were going with that is that Anonymous's name is going to be Ted. That is exactly where we were going. Okay, the geopolitical premise of the question, erosion of trust in U.S. institutions, I'm making the inference that the reason that that is set up as the premise to the question is that the underlying motivation is the question, will my assets be protected? Is there sufficient rule of law such that my assets will be protected? Because, and I hope I'm understanding that premise correctly, there are many countries in the world in which your assets, could be at risk of seizure. There are many governments that will sometimes very arbitrarily seize a person's assets. It's a risk transfer not getting rid of the risk. You're trading one risk of one government for risk of another government.

Right. And so I think then the question becomes, which nation has the strongest rule of law when it comes to preservation of assets? Well, he didn't really ask us where, though, Paula. He didn't ask us what country. He just said, should I? So I don't know if we got a debate, whether it's the Bahamas or Switzerland, you know, that he goes to. I had two thoughts about this, just short ones while you're thinking about this.

Thought number one is if you're worried about companies in the U.S. And you're worried about institutions not playing fairly or whatever that may be, well, then you buy international positions, but I don't think that's the question, right? The question isn't buying international questions. The question is, I have my money, my Schwab account, and all of a sudden it's gone because some government official decided to take my money. So I want to have some money in a different spot. Like in an offshore account, Cayman Islands kind of a thing. I hope we're understanding that premise correctly. I think that is the premise. If you look at global capital flows, there is so much capital inflow to the United States.

I mean, there's also a ton of inflow to Dubai and the UAE, but there is tremendous inflow to the United States. Look at how many assets have come from Norway to the U.S. in 2025. It's incredible. And the reason so much global capital flows here is because of two things. number one, the opportunities here are so immense. And number two, in order for those opportunities to exist, the rule of law around property ownership is so strong. That risk of arbitrary

asset seizure, which a person might face in China, does not exist here in the way that it does in other nations. And for the U.S. to remain competitive as a nation that continues to attract global capital, which it must be, we must continue to attract global capital in order to thrive. Otherwise, China's going to eat our lunch. Those asset protections must remain in place. So I see, if you're worried about rule of law, I see the U.S. as one of the strongest places to keep your money. I think so, too. I think this is where the system historically has been self-cleansing. We have had scandals and changes where the United States was going down the wrong path in the past, and it corrected. It maybe didn't correct quickly. It didn't correct

in the time frame people wanted to, but it changed course. And so you look at this kind of back and fourth that the nation has gone through over, what, 250 years. And it hasn't been a steady ship. I think the feeling that has been a steady ship is kind of a feeling of what we wish that it have been. But you look at how turbulent different decades have been. I don't think there was been a time where there hasn't been a significant number of people the United States going, this is going nowhere good. This is going nowhere. So I think it's easy to worry about that. I think you can do whatever you want to do. I mean, you can definitely, Ted, do this. You could easily do it. And if it worries you enough, you could. The problem that I see is that you are changing the

set of problems that are in front of you for another set of problems that you may not recognize. You have double taxation, first of all. The U.S. is going to tax you on those assets outside of the U.S. and you're going to get taxed by the foreign country as well. So you're going to have that. You're also going to need to follow very carefully the rules of that country. There are financial advisors and institutions which handle that type of thing, which means you're going to have potentially some significant fees that'll be charged to help you do this correctly.

Either that or you're going to have to really dig into the knowledge base. And then I think, Paula, what you said up top, which is, you know, you're going to have to know the forfeiture and seizure rules, especially, you know, most countries have a two-tier system. So understanding the two-tier system, if you're not a citizen of whatever country that you're housing your assets in, I think it's really important to know before you go. Right. And of course, that's going to, you know, I'm thinking about Qatar right now. You look at the tremendous success across the UAE, the success that Dubai, Abu Dhabi, Doha, like you look at how successful they have been

in attracting foreign investors, foreign capital, and it is because, in part, international investors do have a certain level of security in knowing that their assets have a certain level of protection there. But is that level of security from the Qatari government significantly stronger than the level of security from the U.S. government such that it would be worth the cost of

asset transfer. I don't know that it is. I think the evidence behind that is the amount of global capital inflow that is coming into the U.S., which is enormous and actually is continuing to accelerate, particularly as we move into an AI future in which it looks very much like

the EU is going to be the big loser here because they have so overregulated that they are so far behind the AI curve that, and I am not an AI expert, but it would shock me if they, in the next five to 10 years, could even remotely keep up with the AI-fueled expansion that you're going to see coming out of the United States and out of China. There's a lot of evidence that points towards the U.S. and China being the two dominant players in the coming decade. And between the two, you certainly do not want to keep your money under the CCP.

My brain continues to think of other things to worry about, which are exchange rates, Forex exchange. Yeah, I don't think, Ted, I would tell you not to do it. I just know that you're trying to solve one problem by creating a bunch of other problems. And that's not always bad, right? I mean, that's, that's not always bad. You may get to 10 years from now and you're like, oh, thank God I did that. I don't know.

All right. Show of hands, Paula. Are you for it or against it? Are you for it? Raise your hand. Are you against it? Raise your hand. I am against it.

I'm against it. Yeah. Those of you watching YouTube could see the hands. Yeah. I like doing show of hands for an audio podcast to keep you guessing. Which hand went up. Somebody's walking their dog. Damn it.

Most of our YouTube views come on mobile, actually. Something like 70% are on mobile. There it is. So you get to look down. So they might be seeing the show of hands, even if they are walking their dog. And then because they're staring at the screen, they walk directly into a tree. Yes. Then they get injured right before the new year.

So it comes on their 2025 deductible. Damn it, Paula. You can tell Paula's having fun with comedy classes because that was, was a good callback. Oh, I thank you. It was a good callback. Thank you. A great comedy essential. I've been taking stand-up comedy for about a month now. Well, thank you, Ted, for the question. And thank you for sparking such a dynamic and thought-provoking conversation. And I hope that we understood your premise correctly. I'll admit there's still a lingering question in my mind. And I think the reason that question exists in my mind is because I was so surprised at the direction

that the question took. There is certainly a lack of faith in many institutions. Media, for example, there's a tremendous lack of faith in major media institutions and that has given rise to things like podcasting

where you can sit down and have a long-form conversation with somebody rather than getting a 15-second new soundbite, you get a two-hour deep dive and in the span of one or two hours with someone, and you get to see who they really are. I mean, that comes out in a two-hour interview

in a way that it just doesn't in a 10-second soundbite. To a certain extent, people will criticize the role of podcasts in today's society, but I do think that lack of faith in some standard institution, I'm thinking about media specifically, has given rise to something that I think is very positive, a development that is very positive, which is consumer demand for a two-hour conversation,

a one-to-two-hour conversation with officials, experts, decision-makers, thinkers. You know, you've taken what was once at a university lecture series and democratized it and made it free and available to the public. And on that note, universities as well, like there is a lack of faith in the standard university, system. And while that system must exist, I think what a lot of millennials were taught, we millennials grew up in an era where we were taught that if you don't go to college,

you won't have a future. And I think it is a very positive development that now there is a recognition that college is great for people who want to become dentists, doctors, engineers, lawyers. Absolutely, you need a college degree and then after that a graduate degree. But you can also have a wonderful career as an electrician, an HVAC technician, a plumber. And in an AI world, that is something that AI is unlikely to be able to replicate. That combination, you know, they say that jobs that are purely cognitive are likely to get replaced by AI much faster, but jobs that have some combination of cognitive ability plus physical dexterity, such as being an electrician, those are the jobs that are much more protected. So, you know, when we look at doubt

in institutions such as the media or the university system, there's certainly a lot of discord and tearing at the social fabric that has happened, but I think there are also positive developments such as the two that I just described that have come out of, the fact that we question things now that we did not question 30 years ago. Now, how that translates, you know, when we talk about media and higher ed, we're talking about private institutions or state schools as well. But that is a very different conversation than when we discuss public, purely public, you know, federal institutions. And then it becomes a question of how strong is our rule of law. And again, Is Qatar's rule of law any stronger? Is Oman's rule of law any stronger? Is Saudi Arabia's

rule of law any stronger? Do you think his question, though, is more about diversification, about sure, they may have risks, but they're different risks. It's almost like having different asset classes. He's talking about having different government entities. So while he's putting some money at risk under one regime, he's also deflecting some risk from another form. form of government. It could be, but there would be so many risks associated with transferring a sufficient quantity of assets. That was my next question to Ted was, how much money are we talking about?

Right. Because when I was a financial planner, you know, we need to be significant millions of dollars to really begin thinking about, to me, the risk of regimes versus all the other risks that we talk about. Right. exactly you know it's funny because when we talk about risk management which as you know paula is one of my favorite topics as well i mean that's really where my love of the efficient frontier comes from is risk management is just the idea that risk is made up of two things probability and magnitude right

so we are still you can look at all the systemic changes that ted talked about in his question and we are still a long long long long way like think about all the dominoes that would have to still turn. Now, could they turn quickly? Potentially, maybe. I just think that we've got a lot of dominoes to go before we get to the point that the probability of what Ted's talking about happens. Certainly, the magnitude would be huge. Unbelievably huge. So, gigantic magnitude. But probability doesn't put it on the map of my top 25 things I'm worried about, about Ted's portfolio. What would be in that list of top 25? Well, long-term care, which is why I brought up Ted.

What are you going to do about long-term care? Like, I would worry about that. And if you're still working, disability, like, what if you get disabled? All these things that could happen to you. What if you're unemployed? Unemployment risk, I think, is higher now than it was three years ago for a lot of people listening to us right now. The risk that you're unemployed is huge.

if we see the Fed reduce interest rates two more times in early 2026, we may see inflationary pressure again, right? Even though the inflationary numbers have been a little lower over the short run, I think that inflation rears its head again, right? As we're starting to get used to the fact that a Big Mac costs way more than it did just a couple of years ago. inflation could take off again. So I think that's a big risk. Yeah. And it's likely the Fed will reduce interest rates because employment, as we close out the year, the employment rate is now 4.6%, which is, you know, about half a percentage point higher than it's been for the last many years. You've heard me on the first Friday episode say, hey, unemployment is at 4.1%. Oh, it's ticked up a little bit. Now it's at 4.2%. Okay. Well, now we're at 4.6. Right. And that is, that is

uncomfortably close to how high, you know, the highest that we really want it to be. Well, and you can also then throw in what Ted was talking about, the political pressure from the executive branch to have a Fed that's going to lower interest rates. As we changed Fed chairman, I think we might get federal reserves that's a little friendlier toward lowering interest rates than maybe Jerome Powell. And those reduced interest rates could reduce unemployment and spur new jobs and spur the economy, it may or may not also lead to inflation. So yeah, that is, that is definitely a concern, right? There's no free lunch. That's why the Fed has that dual mandate. So that is going to be

one of the major macro stories to look for in, in 2026. So there's a handful, Paula. Yeah. I just went, well, bam, bam, bam, bam, bam. There's a bunch. I'm worried about all those. Yeah. And if you transfer assets to another nation or a portion of your assets to another nation, What's the inflation rate there? And how is that going to be controlled over the span of the next 40 years? Well, and the other question is already, and we've already seen this from federal officials, if the United States decides to seize your assets now, because he said legally move it to another country, if you legally move it to another country and the U.S. government decides to go after your assets,

could they repatriate it? Historically, you've seen. the FBI go after assets that are housed in other countries. I didn't even think about repatriation of assets. That's a great point, Joe. So you might not be reducing the risk as much as you think you are. So don't do it legally, Ted. That is not the takeaway. You heard this on afford anything.

I do not. I, Paula Pan, hereby, disavow Joe's statement. Paula, what are you doing? I want nothing to do with that statement. Yeah. And with that, Joe, we close out 2025 and go into the new year. I can't believe it. 2025, as we said at the top of the show, it just went too fast, Paula. It went too fast. I've enjoyed every minute of hanging out with you. I've enjoyed hanging out with the afford anything community. Thank you for all the nice notes people have had for me and for us. It has been truly a good year. It's been a really good year. It's been a really good year. Paula. Yeah. Yeah, it's been an incredible year for this community. I've loved hanging out with you, Joe. I'm excited to hang out more in 2026 to answer more of these questions and bring financial

knowledge to the world. That's really about the dad jokes, but I'll go with financial knowledge, too. Well, Joe, where can people find you as we head into 2026? Boy, Paula, we're kicking it off on January 2nd with the first time ever stacking Benjamins has released two episodes. in the same day. Wow. Yeah, we are going back to our number one episode of 2025 and we are replaying them on Friday. So if you missed it the first time around, you will get this. I flew out to Las Vegas and I interviewed a gentleman named Alex Hermose. And for people that don't know who he is, he teaches people how to make more money. And whether you work for somebody else or you work for yourself. The episode title is, was how to make $100 million in 2025. This works in

26. And there's a reason why it was one of our most downloaded, well, not even one of our most. It was our most downloaded up two episodes of the year. But we're kicking off 2026 with that. And then next week, we kick it off with new material from a woman you and I both love, Laura Vandercom, time management expert. Because if we're going to have the goal that I have of trying to be present more often and get more life out of 2026. Nobody I'd rather kick it off with than Laura Vandercambe, because as you know, Paula, she knows all that stuff. And that's at the Stacking Benjamin's podcast where finer podcast like Afford Anything can be found. Beautiful. Well, I'm looking forward to listening to all of that. Well, thank you, Joe. And thanks to all of you for

being part of the Afford Anything community for being with us in 2025 and for continuing this FAARE journey in 2026. As a member of this community, please do three things. First, join our newsletter. Affordanithing.com slash newsletter. Completely free. Affordanithing.com slash newsletter.

Second, chat with other members of the community. Affordanithing.com slash community. All of it totally free. Third, open up Spotify, Apple Podcasts, Pandora, open your favorite podcast playing app. Make sure that you've hit the follow button. And while you're there, please leave us up to a five-star review. These reviews are incredibly important in helping us bring amazing guests onto the show.

Thank you again for being part of this community, being an afforder. I'm Paula Pant. I'm Joe Solcii. And we'll meet you in 2026.