Afford Anything - Q&A: The Roth Decision at Every Income Level (And Why It Matters Now!)

Episode Date: January 21, 2025

#575: Apar’s income has more than doubled after he started his own business. His advisor recommends Roth contributions but he’s skeptical due to his high income. Who’s right? Keith is frustrated by the conflicting advice he’s heard about Roth conversions. Is it better to do it while he’s young and earning a lower income, or should he wait until closer to retirement? Krish is fascinated by cryptocurrency and its impact on global investing. What opportunities should he capitalize on, and how? Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode. Enjoy! P.S. Got a question? Leave it at https://affordanything.com/voicemail Learn more about your ad choices. Visit podcastchoices.com/adchoices

Joe, you know that famous Shakespeare line? To Roth or not to Roth? Oh, yes. Written so long ago. Exactly. It was prescient, in fact, that Shakespeare anticipated the creation of the Roth account. They say he was a genius, but people didn't know to what level. Exactly.

Well, that's what we're answering today, to Roth or not to Roth, particularly if you have a high income. David Lee Roth? No. Actually, the Roth account was named after William Roth, who was a senator who invented the account. I don't like that story. I want it to be named after David Lebroth. Well, I can't help you there. But you know what I can do? I can intro the show. Welcome to the Afford Anything podcast. The show that understands you can afford anything, but not everything. Every choice carries a trade-off. And that applies not just to your money, but to your time, your focus,

your energy to any limited resource you need to manage. And this is a show all about optimizing those limited resources. We cover five pillars, financial psychology, increasing your income, Investing, real estate, and entrepreneurship. It's double-eye fire. I'm your host, Paula Pant. I trained in economic reporting at Columbia. Every other episode, we answer questions that come from you, and I do so with my buddy, the former financial planner, Joe Sal C-high. What's up, Joe? What's up, Paula? Hey, Joe, do you want to hear some trivia about William Roth? Oh, God, you know that's what I live for. Of course. So he was a senator from Delaware, veteran of World War II. originally from Great Falls, Montana. His parents ran a brewery. I like him even more. Right? Served in the Army, went to Harvard, law school and business school, both.

Underachiever. And the reason that we love him is because he created the account that bears his name, the Roth IRA. And very humbly named it after himself. Exactly, exactly. So the Roth IRA, which for those of you who are new to the world of personal finance, it's a type of retirement account where you get the tax exemption right away. So in a traditional IRA, that contribution is tax deferred, meaning you don't have to pay taxes in the year that you make the money. You end up deferring those taxes until later in

life. But with a Roth IRA, you pay the taxes today, but then all your growth, all your gains, everything is tax exempt forever. And for our Canadian friends, friends, North of the border, you have a similar account. The rules are going to be a little different, but it's called a TFSA, a tax-free savings account. Oh, tax-free sounds even better. See, I think we should have done that. The Canadians nailed this one, Paula. A Roth IRA, what the hell is that? Right. I mean, don't get me wrong, the dude did a lot of good stuff. Yeah, serving in World War II. Wow. So naming it after him. Yeah, I'm for that. But tax-free savings account, I don't think you can misinterpret what that might be.

Exactly. And, you know, I have got to say there are two different types of Roth accounts. There's a Roth IRA. Good ones and bad ones. Oh. No, no. Great ones and great ones. The Roth IRA started in 1998 and then the Roth 401K started in 2006. Both are named after William Roth, Senator William Roth. There we go. And we're going to answer on the topic of two accounts. We're going to answer two questions, both of which are about the Roth, we'll start with a question from Apar. Hey, Paul and Joe. I'm calling about a question regarding whether I should be investing a solo 401k in Roth or just normal pre-tax dollars. Now, a little background, I've been listening to you since I was in residency my first year, and since then I've come a long way. It's been about seven

years since then. I'm now an attending physician. I've recently increased my income from about 300,000 to 700,000 via doing a business on my own. In this business, I do expect to do this for at least about five to 10 years. And recently, I was able to open a Pesola 401k and put a nice chunk of money in there. I was told by the advisor connected to this independent 401k that I should be doing all Roth versus pre-tax. Now, I was always under the assumption that in my peak earnings years, you should be pre-taxing as much as you can to build that bucket. In that bucket right now, between my wife and I, as they're about 400,000, and in my Roth bucket right now, since that's all I've been doing when I was a resident, and with my wife's as well, that's probably about 250,000.

Going forward, obviously, there will be more investments along the way, but I'm just wondering if I should really be doing much more Roth contributions, or should I be sticking to the pre-tax earnings in these upcoming large income years? Appreciate any thoughts on that. Thank you so much. Apar, thank you for the question. I'm going to make a couple of comments, and then we're actually going to play another question because we had another caller with a similar question, and we're going to do something a little bit unusual.

We're going to answer both of yours together as one big comprehensive discussion about the Roth. But before we play this next caller's question, apart, there are a few comments that I want to make that are specific to yours. Because what I hear inside of your question are two layers. There's your direct question about, your specific circumstance, and then there is the wider discussion that it opens. So to your

specific circumstance, I'm guessing that your question is going to become moot soon. And here's why. Right now you have the ability to contribute to a solo 401k because you have no employees within your business. Solo 401Ks are vehicles that cover a business owner with no employees. The exception is if your spouse is your employee, that's fine, but you cannot have any employees. other than your spouse. If you plan on being in business for the next five to 10 years, as you said in your voice note, it is highly unlikely that you will continue to operate a business with no employees for 10 years. I know a lot of entrepreneurs who might start with that intention, but at some point, you're likely to hire someone. And at that point, the solo 401k becomes moot,

because once you hire your first employee who is not your spouse, you will no longer be eligible to make that contribution. The broader question, though, really is what we're going to focus on and why we're going to tag team these, because it truly is about, do I go pre-tax or Roth? And that applies to a ton of people living in the United States. Right, exactly. So that's why I say there are two layers to this question. There's his specific question that applies to his specific circumstance. And then there's the much broader question, to Roth or not to Roth. Before we answer that, I want to play this second question because I think we'll be able to answer both questions together. This second question comes from Keith. Hey, Paul, I had a quick question about Roth conversions.

I'm currently 34 and I have some traditional money in my TSP and they're going to allow Roth conversions at a couple years. Would it make sense for someone my age to start doing Roth conversion? I currently make only around $60,000 gross income for tax purposes. I've heard some people say yes start early. I've heard, you know, so the broth of money can grow tax-free earlier. I've heard personal finance people say, don't do it until you retire or close to retirement. I was wondering to get your opinion and why or why not for either one. Is it difficult?

Do I need to hire somebody, et cetera? Basically, when's the best time? to do Roth conversions if there is one. Thank you. I hope to hear back. Bye. Well, Keith is lucky because he's hearing back right now, Paula. Yeah, exactly. The reason I wanted to play these two back to back is these two callers have a different order of magnitude in their income. And yet there's actually a lot of commonality and overlap when we talk about the strategy around their shared question, which is Roth or not, to Roth or not to Roth. Yeah, that's why I think it's so important. I love that Keith talked about, you know, I've, I've seen people online, maybe a TikTok video or whatever that have talked about do it this way, do this thing. You really kind of need more of a base level understanding of what you're trying to do here and why you would do things one way versus another. Not just what the tactic is, but the why behind the tactic. I think it's really important to know when you're deciding to do this Roth conversion.

Absolutely. So I'd love to hear your take on this, Paula. But the place that I start at is this. I am always going to bias toward the Roth. Same. And the reason for that is very simple. It's because I want to pay the tax one time and I want to get it behind me. Once I pay that tax, I never have to worry about the tax again unless they change the rule in past episodes, Paula, we've talked about the unlikely event that would be. They're just a. is very little precedent for that. I don't think that that would happen. I don't know anybody that thinks that that would happen. But I think it always needs to be on the table that it could. But I still just generally, I want to get that tax behind me. So being able to do that is great.

I think for two reasons. Number one, instead of this growth that we have, let's see you do a really good job of saving and a good job investing. And the account grows, you're going to always be sharing that money with the IRS. You're going to share part of that money as tax when you pull it out if it's pre-tax. So the money always is going to get taxed. I think the question is a little bit like those old Bugs Bunny episodes, Paula.

And I remember this episode where Bugs Bunny asks this lion, he said, where do you want to get hit with the mallet? The line says on the head. And I remember as a kid laughing at that. But as an adult, I think that's great because there's no way to not get hit by the mallet of taxes, right? You're going to get hit by the mallet, but do you want to get hit early or do you want to get hit on an ongoing basis? If the money isn't in a Roth at all, it's just in a brokerage account and it pays dividends or you get capital gains tax on something, but you're going to be hit on an ongoing basis. So there are going to be little taps all along the way.

If you go with the Roth, you're going to get hit up front with the tax low because you're using after tax money. If you go with pre-tax, you're going to get hit later. The other problem that I have with pre-tax is this. And this is going to be important as we dive into APR's question, which is, what are tax rates going to be in the future? If I can stay away from anything that requires a crystal ball, I want to do that too. I think the real question, Paula, is, do I accept the tax situation today and do the Roth? Or do I not accept the tax situation today? And I'm going to play for later. If I play for later, there is a little bit of the crystal ball thing going on. I got to go, well, I think because my income's high today and I expect it to be lower later, right, that I'm going to then do pretext.

And that doesn't mean I'm going to say that he shouldn't do pretext. We'll get back to that. But generally, Paula, that's my thinking for both of them. I'm going to bias toward the Roth. My thinking for both is that I'm also going to bias towards the Roth for the reasons that you described, but also for an additional reason, which is that Roth accounts allow you to make greater contributions than you otherwise could. And here's what I mean by that. Let's take a look at the solo 401K contribution limits for 2025. Now, this is for people who are 49 and under. In a solo 401k, there are two elements to how you make a contribution. There's the employer side, which is always pre-tax. And there's the employee side. The employee side is the side where you have a choice as to whether you want it to be traditional or Roth. So we're going to focus on the employee side. Now, if you're 49 or under in 2025, the maximum employee contribution that you can make to your solo 401k is 23,500. You have a choice. You can either make that $23,500 contribution as a traditional pre-tax contribution or as a Roth after-tax. contribution. If you make that contribution as a Roth contribution, what you are doing is you're effectively committing more of your paycheck towards retirement because of the fact that you have not downward adjusted that 23,500 to accommodate for the tax hit. What you're actually contributing is $23,500 of after-tax money.

which means you had to make even more than that. You had to make 23-5 plus the tax bill in order to generate the income that then went into your account. So even though the raw number of dollars that goes into your account is the same, the bite that it takes from what you've earned is bigger when you make a Roth contribution and you don't do a downward adjustment. Here's another way of saying that. There are some people who will try to even it out by not contributing the full 23,500 for a Roth.

What those people might do is they'll say, hey, I'm going to contribute 23,0005 for a trad. But if it's a Roth, I'm going to subtract out what I pay in taxes and then contribute a lesser amount to the Roth. When you do that, you lose a lot of the Roth benefit. You still get some other benefits, but you lose a big portion of the benefits. of the Roth. So one of the reasons that I like the Roth better is because you are effectively making a bigger contribution than you otherwise could as compared to a trad account, even though it doesn't look like that on the surface because the 23,500 number remains constant. And if we start with Apar, that is maybe part of the reason why the financial planner that he

met with said go Roth because of the fact that he can still put a lot more in. That counteracts. Part of the fact that he's making a ton of money and the lure of pre-tax is really strong when you make a lot of money. If I can avoid tax on 30 to 35% of my money, then I like that. But here's the thing, Paula, of the two between Keith and Apar, Apar also has better cash flow, right? So for him, that benefit of being able to sock more money into a Roth is a bigger benefit than it is for Keith who may have limited cash flow at $60,000. Right, exactly. A PAR can make that full $23,500 contribution and pay the tax bill, and it's all good. And apart, because of the fact that the employer side of your solo 401K has to be a pre-tax

contribution, there's no other option there. You are necessarily making both types of contributions anyway. You are your own employer. So the employer side of the contribution is going to be pre-tax. It's going to be traditional. And then the employee side is going to be Roth. So you're building out that tax diversification. You're building out that tax triangle inherently because the employer side has no choice associated with it. Pre-tax is the only way to go there. And I think we just want to dive into a paris situation now then? Yeah, absolutely. Because this Well, I think so many of us make a mistake. I think the mistake is we think this is an either or question. And I think the key here for a par is to think about what you referenced earlier,

this idea of the tax triangle. Let's, instead of optimized for future dollars, which we can never know because we don't know what his income is going to be in the future. Number one, even more difficult is we also don't know, Paula, what tax rates are going to be in the future. So because we have those unknowns doing a mathematical calculation is difficult. So what I like to optimize for much more is tax flexibility. What gives me the ability to pivot? And I think for a parse situation, it is much more of, this is not an either or question. Let's bias toward the Roth as much as you feel comfortable and then go pre-tax. So we take a little bit of that bird in the hand today, right? I know I'm getting a tax break. I'm part of it. Bam. So I get that pretext. Right. That's the employer side.

Yeah. But to the extent that he feels like he can go Roth with the rest, I'm with the financial advisor. But I really want to impress upon everybody that too often in life we make these either or decisions when it doesn't really have to be. Yeah. I want to break down the concept of the tax triangle for everyone who's listening. Picture a triangle with three points, right? You want one of those points to be. pre-tax dollars, which are traditional dollars. You want one of those points to be after-tax dollars, which are Roth dollars. And then you want one of those points to be dollars in a taxable brokerage account. So if you have all three points of the triangle, and they don't have to be equal. This is not an equilateral triangle. Those angles are not necessarily all the same, but you

want some money in all three of those types of points. Maybe. Maybe. Because if you are somebody that can just do the Roth and it makes sense to do the, which I think it makes total sense for Keith, right, as much as he can to do as much Roth as possible. Avoiding the pretext is fine to me. I think the triangle is something much more for high income people like a par where he's all, a lot of business owners think about and a lot of their tax advisors, frankly, think about because they get paid for you to keep them today. So they want you to save as much money on taxes right now. Many tax advisors, not all tax advisors, but transactional tax advisors and a lot of high income people think, I'll deal with the future later. Let's just save money on

Texas today. This is who the tax triangle really appeals to. And by the way, Paula, too, flesh out even more your triangle. Outside the triangle is as you're putting money in, inside is now you already have it in one of these three things. So we're moving money from the outside to the inside. And think about the three points on the triangle is a portal to get from one of the other. And I'm choosing pre-tax, tax-free, or I'm choosing brokerage. And the reason I use tax-free is because the Roth IRA is not the only option there. I mean, you know, Roth 401K Roth IRA. Also, cash value life insurance is there.

It's not appropriate for 99.9% of our audience, but the cash value can be taken out tax-free, if you use it correctly. And then third, municipal bonds to a large degree are also, there. Now, municipal bonds will affect your tax on social security. That'll bump it up a little bit. But besides that, that tax-free option has a few different choices besides the Roth. Yeah. And so, apart, for you, I'm in total agreement with your financial advisor. Joe and I both are. Max out the Roth portion of your solo 401k for as long as you can. Because number one, that's going to build out that tax triangle for you. The employee contributions will be Roth. The employer contributions necessarily by law have to be traditional.

And on top of that, I don't think you're going to have the opportunity to contribute to a solo 401K for as long as you think you are. I think that the probability that your business will have no employees other than you and your spouse for 10 years is pretty low. So one, two, three, four years from now at some point in the relatively near-ish future, You're probably going to hire an employee.

Therefore, you'll no longer be able to contribute to the solo 401k. You'll have to transition into a SEP IRA or a simple IRA, at which point this opportunity isn't even going to be there anymore. So you may as well take the opportunity while you've got it. Because at the end of the day, even if you want to build out as many Roth assets as possible, it's hard. There's a lot more opportunity, the way the tax code is written, there's a lot more opportunity for pre-tax contributions than there is for after-tax contributions. So snag the Roth

opportunity while you've got it. That actually is a different conversation, Paula, where I think we can peer into the crystal ball. I do think that the downsides of not contributing to the Roth IRA are even bigger when you consider the amount of debt the United States has. I have yet to talk to one tax expert who says they think tax rates are not going to have to go up at some point. They're going to have to find a way to take care of the debt or this doesn't end well. And if that's the case, I also have to look at threats in my SWAT analysis, right? If I'm looking at the threat that I might not be able to, and I don't want people freaking out going, oh, I might not be, Joe said I'm not going to be able to do the Roth. I'm not saying that at all. But the fact that we have this vehicle available today does not

mean it's going to be available forever. It doesn't mean that. And when I look at the possibility of, and you and I talked about this, what if the Roth goes away? What did you say when I mentioned that in a previous episode? You said, well, historically, your grandfathered in. Your grandfathered in, yeah. But new contributions get shut down. Right. And I want to put an asteris here. As anyone who's listened to me for more than a few episodes knows, I don't like to prognosticate. I don't like to make any guesses about what the future may hold. I think there's there's wisdom in thinking probabilistically, but I don't want to slippery slope that into speculation. Sure. And really not at all my point. Right. But what we know is that the Roth account exists today. And what we know is that nothing is

guaranteed to last forever. That definitely is the point. Apara, I want to make one more comment on why the tax triangle is beneficial, particularly for someone high income. And it's because when it comes time for you to draw down from your accounts, it is incredibly helpful to have accounts that have a variety of tax treatments so that you can strategize your withdrawal accordingly. For as much as we talk about accumulation strategies, withdrawal strategies are way harder. Because in financial planning, accumulation is the fun phase. That's where you're growing. That's where the possibilities are endless.

That's where the sky is infinite. Drawdown is the scary part. That's where you can't afford to make a misstep. Having flexibility when you're in that drawdown phase so that you can say, all right, the year is now 2050 or 2060 or 2070. And I've decided it's now time for me to start. withdrawing from my accounts, here is what the tax code is at this point in history. Here is what my assets are at this stage of my life. How am I going to strategize? That's not something, again,

on the theme of not prognosticating, because we don't know what your picture is going to look like in the year 2050. And we don't know what tax rates are going to be in 2050. Right. There's no way to really game that out right now. But by virtue of building out that tax triangle, you maximize your flexibility so that you can make the best choice for you at that time. Let me share how this works, Paula, because let's say in the future, tax rates below $100,000. You know, let's use inflated money, right? This is way in the future. We're going to try to live in $100,000. And tax rates below that, let's say are 22% and above it's 35%. Like, we don't know what they are. But let's say that it's 22 and 35. There's this big disparity right at this big

jump at $100,000. Well, I can take money out of that pre-tax account up to $100,000. And because I built in the flexibility of having the Roth money, I could live on 130, 140, 10050, whatever I want to live on and take it all out of the Roth. And I'm still in that lower tax bracket. So again, people also think, well, I'm going to take it out of this bucket or this bucket or this bucket. if I have a strategy that incorporates the different corners of the tax triangle, I can then live in the higher tax bracket while the IRS is taxing me in the lower tax bracket in the future. That's pretty powerful place to be if I just build in some flexibility versus just optimizing today.

You know, Joe, for most of our answer so far, we've addressed a PARs question, which is about how to make contributions. But how does this change when we talk not about Roth contributions, but rather about Roth conversions. We're going to discuss that next. Fifth Third Bank's commercial payments are fast and efficient, but they're not just fast and efficient. They're also powered by the latest in payments technology, built to evolve with your business.

Fifth Third Bank has the big bank muscle to handle payments for businesses of any size. But they also have the FinTech hustle that got them named one of America's most innovative companies by Fortune Magazine. That's what being a fifth-third better is all about. It's about not being just one thing, but many things for our customers. Big Bank Muscle, FinTech Hustle. That's your commercial payments of Fifth Third Better. The holidays are right around the corner and if you're hosting, you're going to need to get prepared. Maybe you need bedding, sheets, linens. Maybe you need serveware and cookware. And of course, holiday decor, all the stuff to make your home a great place to host during the holidays. You can get up to 70.

percent off during Wayfair's Black Friday sale. Wayfair has Can't Miss Black Friday deals all month long. I use Wayfair to get lots of storage type of items for my home, so I got tons of shelving that's in the entryway, in the bathroom, very space saving. I have a daybed from them that's multi-purpose. You can use it as a couch, but you can sleep on it as a bed. It's got shelving. It's got drawers underneath for storage.

But you can get whatever it is you want, no matter your style, no matter your budget. Wayfair has something for everyone, plus they have a loyalty program, 5% back on every item across Wayfair's family of brands, free shipping, members-only sales, and more. Terms apply. Don't miss out on early Black Friday deals. Head to Wayfair.com now to shop Wayfair's Black Friday deals for up to 70% off. That's W-A-F-A-I-R.com. Sale ends December 7th. You know, Joe, for most of our answer so far, we've addressed a PARs question, which is about how to make contributions. How does the game change when the question isn't about Roth contributions, but rather Roth conversions? Well, in many ways, there's a lot of shared commonality in the decision making. Keith, as you said, the longer money sits in a Roth account accumulating tax-free dividends and gains, the more tax-free money you'll be able to enjoy at retirement. So converting that money earlier and letting that money accumulate growth.

tax-free growth for as long as possible gives you the maximum benefit of that money being invested in a Roth account. Where does the difference come in? It largely comes into cash flow planning. Yeah. Because you've got to plan for the tax bill that comes with a conversion. And so that's got to come from your budget somewhere. This is a fairly simple calculation if you know approximately what the tax bill is going to be. And I want to address later on the bigger question of hiring someone. And I think we can talk about when it makes sense to hire someone and when it doesn't make sense. In this particular case, though, I think that as long as you know roughly what your after-tax income is going to be,

and you know what your tax rate then is, calculating how much money this is going to take, frankly, is not that hard. It is not that difficult. If your income is going to vary largely from year to year, it might be more difficult, Paula. But if your income's fairly consistent, not a hard thing to do. Take a look at your tax bill from last year. Just go to the line on your tax form, look that up online, where it says the tax that you paid, for most people to be at the bottom of the second page, the amount of tax that you paid,

divide that into the pre-tax income that you brought in, and then you'll find what your approximate percentage was of federal tax now in a state where you've got a state income tax, you're going to have to add that as well into the equation, but still very easy calculation to go, oh, that was 12% of my income, that was 15% of my income, that was 20% of my income. So then take that same amount and apply that. that to whatever amount you're going to convert. If I'm going to convert $5,000, multiply that by 0.12 if you think it's 12% or 0.15, if it's 15%, and you'll come up with what that number is that's going to be approximately what you should put away. Joe, other than cash flow planning,

do you see any other negatives to converting that money right away? Because I don't. No, it truly doesn't matter because there's no limit, which is why it's a good idea to do, and I like this, you know, a lot of people do this. Let's do a little bit every year. If I know approximately how much I'm making in that particular year, I just don't want to bump up into the next tax bracket accidentally with money that I converted because I'm declaring that this money was income this year. So I want to be careful with my income tax bracket. So the only calculation I want to make is where am I at with regard to tax bracket? How much, room do I have to the next tax bracket? And then how much pain can I withstand this this year to do it?

So to parcel it out a little bit at a time, I think is a great idea, Paula. Right. And in terms of pain that you withstand, you were just talking about being able to pay that tax bill. That's right. Yeah. Pain in your budget. Yeah, coming up with the money in your budget. The money out of your emergency fund. If it's going to take your emergency fund, I wouldn't do all that. Even bumping up into the next tax bracket, it's not ideal, but given that tax brackets are marginal, You know, it's only that top marginal portion that's being taxed. It's not going to adversely affect everything below it. You know, it's not the end of the world.

Yeah, you're right on. I mean, don't let perfect be the enemy of good. Yeah. However, you know, why pay this extra little bit of tax when I could just do it next year? I think it's going to take you five minutes longer to avoid debt, Paula. And I think, what's the efficacy of that five minutes? It could be a decent amount of money. Yeah.

I don't object to it. I just know that, well, it's, you know, know thyself. If you are the type of person for whom trying to game out staying in a given tax bracket is going to cause so much stress or friction that you're likely to just throw up your hands and ignore it, then I say, you know what, just heck, don't let perfect be the enemy a good. Bumping up into a higher tax bracket is not that big of a deal. And I want to emphasize this. some people mistakenly think that if you bump into a higher tax bracket, it means that all of your money gets taxed at that higher rate. That is not the case. Tax brackets are marginal, meaning only the dollar amount above a certain threshold is the amount that gets taxed at that higher rate. So your top marginal tax rate is different than your overall effective tax rate, meaning all of your money doesn't get taxed at your top marginal rate, only.

me a sliver. But in any event, other than tax planning and other than making sure that you can pay that bill, when it comes to Roth accounts, generally speaking, the more the merrier and the sooner the better. Those are the two rules when it comes to Roth accounts. Can we talk about hiring somebody? Absolutely. We began this entire journey around the Roth IRA today by talking about our bias and why we might go against our bias, but we're generally going to bias toward the Roth. I'm also going to bias around if I'm hiring somebody to help me. There are situations where I want to hire somebody to help me with tactics. But I think you get far greater bang for your buck if you have somebody that's going to help you with strategy.

Meaning, what's the bigger picture? Why would I do a Roth conversion versus just put money in pretext or in a PARs case? Why is this advisor telling him to do something that he thinks goes against this rule of thumb that he's had in his head? I think the value of somebody that will fight with you over questions like that, that's an invaluable person to have in your corner to question your strategy. Somebody who knows you, knows what you're trying to do and goes, yeah, thank Paula, you're thinking about that in a way that doesn't really help. Here's another way I think about that. And even if, by the way, you don't agree with them, having that person who will tell you,

that you should think a little bit more about that and maybe pump the brakes a little bit. I think that's valuable. Now, I do think that there is, there are sometimes when tactics make sense, but it's because you already firmly 100% know the strategy. And I'll give you an example. I know the strategy that I want my car to run. I know that I need to get from point A to point B. I also know my own limitations. And I know that the strategy is use my car for transportation. Isn't that the objective, not the strategy? Objective is you want your car to run. Well, okay, maybe.

There's a bigger strategy that involves my car, right? I still may hire the mechanic to fix my car in a spot where I don't understand how the engine runs. It makes a ton of sense to find a qualified person to help me with this tactical thing. I know that it's making the ur-uh-un-un-n-n-n-noise and I need that to go away. That's a tactical. So there are places. But when it comes to your money, I find those, Paula, a lot fewer and far. between than I do when it comes to my heating and cooling or my plumbing. You know what I mean?

When it comes to your money, I don't think I should hire somebody to pick a mutual fund for me. I don't think I should hire somebody to do the math, like we're talking about with Keith here, to do the math on my Roth IRA conversion. I think these tactical spots, can I hire somebody to do it? Yeah. I think it's much more likely you're going to overpay. You might get. suboptimal help because you still don't understand the bigger picture, I would much, much rather hire somebody on a strategic level than on a tactical level. And so in Keith's case, how would he go about looking for a good strategist? What would his steps be in terms of identifying that individual? Well, I think it has to be somebody who works with people that are like

him, number one. And I want someone who's going to be on my side of the table, meaning they're not selling me stuff. So the general first thing that I look for is actually a negative, not the positive. If I walk into your office, Paula, and you're an advisor in quotes, people can't see me doing the little air quotes. You're doing air quotes right now. Yes. Advisor and air quotes. If I woke into a quote, advisor office, I walk into Paula's office and I go, Paula, I need help with my taxes. And Paula goes, I have this phenomenal solution. And what it will do is not only help you with your taxes, it will also make sure you can participate in the upside of the stock market and get none of the downside, right? What they are doing is pointing me immediately toward a product. And if my air quotes advisor

leads with product, when I have a strategy question, I need to run. I like that, by the way, as job one. I also want, by the way, just in that scenario that I just presented, I also want my advisor to ask me what the problem is versus start off talking about what they offer. A great advisor is going to be an agent. And I think this is a great analogy, Paula. Taylor Swift, I'm sure, has a phenomenal agent. People that are in sports have phenomenal agents around them. The agent doesn't come in and go, oh, Paula, you're amazing. I'm going to do this, this, this, this, this. A great agent looks at what Paula needs in her life and goes, you know what, Paula? I really think that we could do this thing. I think this would be great for your career. I think this would be fantastic.

So if you walk into an office and you're expecting like an agent because you're a freaking rock star, and you know, I think if we treated ourselves like we're rock stars and we surrounded ourselves with rock star level people, we think about that, then we're going to get good help. So what I'm looking for is somebody that's going to have a conversation with me in the beginning. If I walk into Paula's office, Paula's not going to lead with a product. Paul's going to go, Joe, what are you trying to do? Tell me more about that. What's the exact problem? Why is that a problem for you and this other thing? Have you ever thought about this other thing? Because I see this might be a problem. Like if we get into a great conversation at the

beginning, then I think they're much more likely to be somebody who's going to be on my team as an agent helping me navigate life versus somebody who's just shoving stuff down my throat. Lead with philosophy and lead with process rather than product. After that, then I want to know what exactly it is that they offer that's going to help me achieve the thing. So I get this generally good feeling or bad feeling. I can decide based on that alone, right? Do I want this person or do I not want? If I want them, that's just step one of my filter. And this is a lot different, by the way, than a lot of the filtered garbage you'll hear online because I think most of those filters are garbage because number two then is Paula, what are you going to do for me then? What's the actual

system that you use? It's going to help me do these things that you just question. How are we going to work together? Am I going to hear from you once a year? Am I going to hear from you twice a year? Do I have permission to call you at no additional fee whenever I have a question? Like if I'm, if I'm buying a new to me car and I'm looking at car A and car B, is that the kind of thing that you handle, if I go get my taxes done or I do my taxes myself using software, can I send those to you for a second look, even though you're not a CPA and you might not even be an enrolled agent? You're just somebody that does this. Can you be the second set of eyes? What exactly do I get? And then once you know what you're going to get, the two questions, after those two things,

then we ask the questions that the stupidity online emphasizes, because these truly are question three and four. Question three then is what is that going to cost? And I think it's garbage starting off with, so how do you charge? What do you cost? I don't even know what the hell you're going to do for me. I don't even know if you're a fit. I don't even know if we're going to work together. Through that initial conversation, I'm going to know far more about whether I even want to ask you what you charge. There's a great chance that I'm going to walk out that door before I even get to that question. And yet online, all we talk about is, well, what do they charge? How do they charge? Forget that. until you find out if it might be a fit.

I will say, though, what do you charge and how do you charge? Are two very different questions? And how do you charge matters in terms of, are you going to make commissions? Are you going to be incentivized by the commissions? 100%. 100, yes. Because, you know, just go watch CNBC or Fox business any day. This is a fun thing for Money Nerds to do.

You will love doing this. This is one of my favorite pastimes. I will turn on CNBC and I will hear the next person we have coming up runs a growth mutual fund. Paula Pant is the manager of XYC growth mutual fund. Paula, what do you think about the market? Oh, Jim, I think it's a great time for growth. I think growth is going to be fantastic.

You know, growth doesn't look good right now. A lot of people are saying no, but I think that in the next six to 12 months, even if it's rocky the next six, I would hold in there with growth. Huh, that's weird. How do you get paid, Paula? And then the next person comes on and they're a bond manager. Paula Pant is a bond manager. She's with XYZ.

We just heard from the growth manager. Paula, what did you think about the growth manager? I'd be a little worried about growth, Bill. I think Bill might be, you know what? I think we've got to be safer. I think bonds are a great place. It is amazing. The number of people CBC have on,

and they all emphasize exactly how they're freaking paid, right? So know that. I don't think that's always a deal breaker, but it's a big time red flag, cautionary spot. I know a lot of good people that are paid commissions, and those people could be great people in my corner. But it's also a big red flag and I want to make sure that, you know, if Paula sells life insurance

and part of my plan involves permanent life, like, why does it permanently involve permanent life insurance when I'm single? Yeah. The green flag is you as the client pay them. You either pay them hourly or you pay a flat fee. Yes. But you as the client are their sole source of income, not other products, not commission. that they're getting, if you are their source of income, that's green flag territory. Let me tell you, though, Paula, this is why I do this as number three. And this is why this

question up front is garbage. Because I know people who are commissioned salespeople that I would still hire over a bunch of the garbage horrible. I can't stand them fee only financial planners out there. There is one guy in particular on the internet who talks about, I'm not going name him. But oh my, look at how animated. Paul can see how animated. I'm kidding. This guy sucks. This guy is horrible. And by the way, he thinks he's 100% right all the time and his peacock feathers are out and he's just so cool with his advice. I wouldn't hire this idiot in a million years. He will lead me the wrong way. And yet, because he's a fee only advisor, if I ask that question, it's number one, I'm making a huge mistake. But if I get further down

with this advisor, and I almost named him accidentally, if I get further, down the road and I ask a bunch of questions. I'm like, this guy's from the freaking moon. I want nothing to do. Why would I hire this moron? So ask that question, but start off with that conversation. And then what do I get? And then what is the fee? Does that make sense? And how do you get paid? Which, to your point are two separate questions. So, Joe, what you're saying is that just because you check all the boxes doesn't mean you necessarily have good judgment or wisdom. Yeah. How often have many of this had this romantically in our life, right? Where you're like, what is wrong with me? This person checks all these boxes that supposedly I should be completely attracted to them

and I'm not. You know, I'm just not. And I think it's the same. If this person truly is my agent, I got to see their name on my phone when they call me and go, oh, I definitely want to talk to Paula. But if I'm avoiding that call, like, how many questions have we had over the last few years, Paul, people are like, I don't really trust my financial advisor. If you got to advise you, in your corner that they're calling you and you don't want to take the call, you got to fire that person. You totally got to fire because you are a rock star. You want to be a high performance athlete who has people in their corner that helps you go faster, which by the way then brings up, once I get to that affordability question, Paula, and what do I get paid? If they check that box,

then I ask the next BS question, which isn't BS if you put these in the right order. The next one is, what are your qualifications and who have you helped and how long have you been doing this, right? Again, people ask this right up front. I do want to ask the question, but I want to find out how they work with me first and what can I learn? Because here's the deal. There's a good possibility that if I talk to you and you check all those boxes and then Paula's like, yeah, you're my third client ever. I might not hire you. I might not do that. Or I'm not a certified financial planner. If Paula's really smart but she hasn't proven it yet or she hasn't gotten the qualifications yet, I can still learn a lot of free information from that meeting about the

next person if I have the conversation first. There are a bunch of people I know that are just starting out in businesses who are pretty intelligent that I won't hire now, but I want to hire later on. And if you and I have that conversation, I learn some of the issues that Paula thinks about. I get to the bottom and I go, but if I lead with that, I miss out on this incredible opportunity to learn a bunch, even if I'm not going to hire you. Every professional who's worth you hiring is going to offer a free consultation. I'll take them up on it to learn a bunch from them. And at the end go, no, thank you. And you know what? As a guy who's done this before, I didn't mind that. That's part of the risk I take as a business owner is that I'm going to meet

with you. I'm going to give you a free hour of my time. And at the end, you might say no. Okay. And most of the time, I was I was very happy for them not doing it. There were a few times I'm like, damn, I would have helped them a ton. I hope they hire somebody good because I would have been great in that role. And you know what that did, Paula, when you didn't hire me as a guy that wanted to be good at? I went out and I learned more, which was absolutely phenomenal for the industry, for me as a person, frankly, for everybody. Because I feel like even though they didn't hire me, we had a very good hour together. And I was able to put a lot on the table for them. So I would ask those questions in that particular order. I like the question about qualifications coming

last because what you're doing is you're discerning whether or not they have good judgment before you're discerning whether or not they've checked some official box. Yeah. The good judgment is subjective. It's qualitative. It requires judgment on your part as well. You need to know enough to be able to recognize talent. You need to be able to know enough to be able to suss out good advice from mediocre advice.

from plain old bad or misleading advice. Like there's a certain amount of knowledge that it demands from you as the client. And I think that's why so many people gravitate immediately to what are your qualifications, because that doesn't require you as the client to make any independent assessment of your own. It's strictly binary. Yes, no, checkbox. Well, I agree with you. I do think that at a base level, even if you're new at this, and you're like, you know,

I really need to go interview advisors. If I have that conversation, I can see if they're leading me toward product without having any qualifications. I can see if they're leading me towards strategy. I can get a feeling about how they answer my questions. They treat me with dignity and respect versus talk down to me. Like the number of times I've talked to people and they've said, well, I like my advisor, but they're always talking down to me.

Like they know everything and stop asking so many questions. You know, stop questioning my judgment. Well, for me, that's not who. I hire. Maybe for you that is who you hire, but you know, you're going to get a much better feeling of how they work for you. And even if they're not the smartest person on the planet, if they work with you in a way that I can understand what the hell they're actually talking about. And if they get hit by a bus, I'm smarter than if they weren't. Like for me, that's why I want to hire people. I want to have enough knowledge about this that after I hire you, maybe I'm smarter at this topic

because you've got the heart of a teacher. Like for me, that's who I want to hire. I want to hire the person that two years from now, because I have this coach, man, I'm smarter at this. I have a diet coach. A lot of people listening know that because I talk about it all the time. And because of Jesse, I'm way more smart about what goes in my pie hole than I was two years ago, three years ago. Like Jesse has really helped me make some very smart choices about not just my food, but my

exercise and how the two of those relate to each other without fad diets. I truly value what she has brought to the table and what she continues to bring to the table every time we talk. And just the fact that even when she's not in the room, when I make the inevitable stop at Dunkin' Donuts, which I am prone to do, I can hear Jesse in my ear going, is that a good decision? And I am willfully, Paula, then saying, no, it's not, but I'm going to do it anyway, which I like. I truly like that I accept the consequences for this delicious Boston cream. that's a good thing she's bringing stuff to the table and I want those people in my corner I don't want the other people in my corner and I can feel that you know what I mean I don't have to have a lot of knowledge about diet and exercise to feel that Jesse's going to be a good

fit but I also have to have some balls and this is why I have to have some balls is because I have to have the balls that if I was wrong and you and I we've hired a lot of people right and I have to realize as a business owner this took me a while to realize I'm going to often still get it wrong in that initial meeting. And I'm going to go, oh, you're a good fit. Oh, you're perfect for me. I'm going to have the balls to fire them fairly quickly to six months from now go, you know what, I don't think that this is working the way that I thought. And I think it's better for you and for me if we just don't work together. I just fired somebody two days ago. I haven't gotten a letter yet. Ha ha ha ha ha ha ha ha ha ha ha he's going to find out about it tomorrow

yeah but once I made the decision I wanted to do it immediately this person had she'd worked for afford anything for a total of three weeks and by the end of week one I was already having my doubts by the end of week two those doubts were getting stronger. And then by week three, I was like, all right, this, it's, it's time. It's just, it's time. And can we pause on this note for a minute? Because it is hard to fire people. Yeah. And if you've never hired a consultant or fired somebody, at some point, we're all going to have say, you know what, it's time. Even in just relationships, we have to sometimes say, you know what, this isn't working. It's time to go. I read a great exchange that was written by the press.

president of 1-800 flowers. He was at a party in the 1990s, and infamous is a good word, infamous businessman Jack Welch, who was known for being very ruthless. Jack Welch was at the party, and he ended up talking to Jack. And he said, Jack, I just want to pick your brain if you don't mind. You know, I know we're at a party. And Jack's like, no, go for it. He goes, I got this vice president at 1-800 flowers. And he's really not working out, but he's a super guy. He's a family man. I just don't think that he is the fit. Like, what do I do? And Jack said, there has never been a time in my entire career that I thought, man, I should have waited another six months to do that thing that was right for me.

But also, and this is the key, Paula, right for them. He's like, if this is not the right thing for this person, why am I going to continue in this career that you know what deep down, they know it's not working? Right. know it's not working. Why am I going to waste my time, which is another precious resource. It's this precious resource that we often take for granted that we've got forever. You don't have forever. If I wait six months, that's six months that this person could have been on a career that was more suitable. I tend to believe that we're all suited for something. And if this isn't it, the quicker I tell you, this isn't it, the quicker you can get on with figuring out what that is

for yourself. So I think I'm actually doing them a favor and me a favor by ending it earlier. The relationship analogy is a good one. You know, you don't want to waste both of your times, even if one person doesn't see it right away or even if one person disagrees with it. At the end of the day, if you know that this isn't going anywhere, it's better to just end it and not waste either of your times, but not waste both of your times, right? Sure. I mean, I can think, of relationships I had back when I was single where I like them a lot, but it was very clear to me that they did not like me the same way for whatever reason, Paula, because I'm awesome. I can't figure that out. But even that, I'm like, yeah, we should probably just, you know,

stop. I got to find somebody that is maybe a little bit into me. Keith didn't expect that, did he? It's like, how do we get to relationships? To get back to Keith, I think Keith, you can figure this out. I think the math is not hard. I think if you know the line, to look at. And even if you don't, to struggle with it once, that's going to pay some dividends because you're going to look at your taxes and how they actually work a little bit. And it is figure outable. But if you're like, why should I do this? Where does this fit? Is this something that truly is important in my financial situation? Then I think somebody to fight with you about that is a much better person to hire. And to that note, this is why I like a PARS financial advisor.

Yes. Granted, I'm basing that statement off of one data point. Right? So, you know, I don't have the full picture. Turns out the advisor got lucky. No experience at all. The advisor was just throwing darts at a dartboard. And from now on, their qualification is Paula Pan agreed with me.

I mean, afford anything, show. Oh, yeah, there was this one time. But off of that one singular data point, Apar, I like that your financial advisor gave you a device. That wasn't necessarily the advice that you wanted to hear or was the advice that you expected to hear. And it wasn't the advice that would give you a short-term immediate win, right? It's advice that I think is great for your long-term future, but not necessarily great for this calendar year, which to your point, Joe, a lot of advisors are going to tell you what's good for this calendar year because that's when they get paid. So I like that this advisor told you what you weren't expecting to hear, told you what you may not have wanted to hear, and told you what was best to hear. and told you what was best for your long term,

even if it wasn't best for your short term. I like all three of those elements about the fact that your advisor told you to go Roth. So to both Apar and Keith, that is today's discussion on Roth accounts, the value and the beauty of Roth accounts, and why, you know, the reason that we wanted to answer these two questions together is to highlight that whether you're making $60,000 or whether you're making $700,000, or whether you're making $700,000, in both sets of circumstances, the Roth is often the better bet for different reasons, but also for a common set of reasons. Very fun. And while you can see the nuances in their situations, I hope that for everybody, because now you saw the connective tissue underneath that we're using to give them more information, I think makes us all more powerful consumers.

Right. Yeah, Keith and Apar have more in common than not. You know what they have in common most? What's that? They're badasses who called us. Duh. Right. And speaking of awesome people who call us, we're going to hear our final question, which comes from Crish up next. And before we do that, Paula, what is up would be in the Segway Ninja today? Oh, why, thank you, Joe. Thank you. Thank you. Thank you.

What is up with that? Speaking of awesome people. I saw what you did there. Thank you. Thank you. I've been working on my transition. Our final question today comes from Crish. Hi, Paula. I am Chris from Mauritius and would like to ask you the opportunities of investing in American, Indian, and Singaporean markets, the apps that can be used, and the future of cryptocurrency with blockchain technology. Thank you. Okay, Paula, can I just say? Yeah.

I listened to the beginning of Chris's message three times to make sure that is so badass. Right. Maricious. It is so badass. Maricious. What a beautiful place. I am so thrilled to hear that the Afford anything community includes Maricious. That's so cool.

Afforters. We're a global phenomenon. Chris, you've got two very different questions in there. So we'll talk about them separately, and I'll start with a short answer to the cryptocurrency question, because as you know, that's a deep subject that we could talk about for days. But broadly speaking, cryptocurrency is a speculative asset class. And what I mean by that is that all assets, every asset, makes money in one of two ways. there's the dividend or income stream that a given asset pays out, and then there's the appreciation in price. If you own a laundromat, for example, or if you own a car wash, then that laundromat or that car wash earns money and its net income, meaning its income after expenses, is a portion of the value of that business.

And then that laundromat or that car wash, ideally, also has some price appreciation. It goes up in price over time. And so the combination of those two things, the appreciation plus the income stream, is the total return on that business. Now, you take that model and you apply it to Coca-Cola or Nike or Tesla. You apply it to any business that makes money. And you now get the value on publicly traded equities or publicly traded equities or publicly traded companies, right? The value is twofold. It's the dividend or income stream that it pays out, and it's also the appreciation. Take that same model, apply it to rental properties. Same thing.

There's the appreciation on the property, and then there's also the dividend or income stream that that rental property pays. But there are certain assets that don't generate any income in and of themselves. These are assets whose only value is speculative, meaning the only value is the fact that other people are willing to pay for it, and other people think that its value will rise. Gold is an example of a speculative asset. Silver, same thing. Gold and silver have no intrinsic value. You can't eat it. You can't live in it. You can't wear it. Gold and silver have no utility other than the fact that we as a society collectively believe that these elements have some worse. And for as long as we all collectively continue to believe that, these elements will be traded as valuable. And gold in particular predates cash.

Gold in particular is historically the oldest unit of measurement and store of value. So with that basis established, we now turn our attention to cryptocurrency. There's a distinction between Bitcoin the network and Bitcoin as a, as a, unit of trade in terms of its dollar-denominated value. And of course, also there's a distinction between Bitcoin and all your question was not specific to Bitcoin, but all of cryptocurrency. Bitcoin, because it demands proof of work and because it is inherently limited and cannot be devalued through excess printing, the way that cash can, has become favored lately, in a world in which people are increasingly wary.

of currency devaluation. Many people are reassured by the fact that Bitcoin is programmed with limits such that the maximum total supply of Bitcoin is $21 million. And we know that there will never be more than $21 million, ever mind. And so unlike paper currency, unlike fiat currency, it can't just be printed infinitely. For people who are Bitcoin enthusiasts, that plus the proof of work protocol is a big part of the draw towards it. That said, when you think about what role, if any, cryptocurrency should have in your

portfolio, the thing to remember is that these are fundamentally speculative assets and that they will have value only as long as other people collectively agree that they have value. And so the broader question to ask is how big of a role should speculative assets generally get in your portfolio? How big of a role would you give to gold or silver? Cryptocurrency is in some ways digital silver. So that's my high-level 30,000-foot overview on a framework for how to think about cryptocurrency.

But we've done a few episodes and we'll link to them in the show notes that will give you a much deeper dive into this topic, including an episode that we did called Bitcoin for Beginners, which was episode 325. You can find it at afford anything.com slash episode 325. I think that was super thorough, Paula. So I have nothing to add, Your Honor. So what I'd like to address, though, is the second part of the question, which is these very specific economies, where do I invest in the United States, where do I invest in Singapore, and where do I invest in India? I'm going to address the question directly first.

And then I think we should address, do you really want to do this? But I think it's appropriate that we first answer the question. You know, Paul, my favorite place to go is an exchange trade of fund company called I shares for this. They have broad diversification. They have very low expenses. In most categories, I find it difficult to find one that is less expensive. So they're competent. It's not going to be an expensive way to invest.

If you go to ishares.com, you'll see the entire all the different funds that they have. But when I get a broad question like this, I shares for me is. usually the first person that I turn. I don't want this to be in the first person. The first person, the first company that I turned to. Yeah, that's probably better. I don't want this to be, you know, though an I shares commercial. Certainly, you can do a Google search and you'll find a lot of different companies that invest in these areas. But I like sticking with an ETF. Let's talk not about I shares, but an exchange trade of fund because then I am doing what you asked specifically, Chris, which is buying the economy, right? With an exchange trade of fund, I'm buying that marketplace

versus investing in one or two companies that I like in that country. And we'll address that too about why this might not be a great idea. With iShares, there's a few different ways you can go. India specifically, I Shares has an India index, very cleverly. The ticker symbol is I-N-D-A. See what they did there? Came very close. They used five letters instead of four.

They could have done it. You can also You know, there's some chatter about India changing its name Navarath, which would totally mess up that ticker symbol, right? Yeah, the I shares people are probably lobbying against it as we speak. You can't do that. India also has the India 50. Now you're investing that in just the 50 biggest companies in India, and that is ticker symbol I-N-D-Y. Ooh, that's also the abbreviation for Indianapolis, Indiana.

And if you want their small companies, like really aggressive, some exciting stuff happening in small companies in India, you can really add some hot sauce to your investing portfolio by going with their small cap ETF. That's S-M-I-N is their small-cap. You can go broader like the Asia 50. This will also include Singapore. S-M-I-N, small India. I got that. I know. They're so clever over there at ice shares.

You can go with emerging markets, Asia ETF. You can go with Asia Pacific dividend ETF. So there's a lot of different ways to parse this. But if you want Singapore specifically, EWS is the ticker symbol for the Singapore exchange and investing in Singapore. And we should add, you can buy these from all over the world. So you being in Mauritius. Cool. You can buy it from anywhere.

That's another reason why I recommended this particular company, Paula, is because they're global. The company, it's a global brand. The United States, there's a lot of ways. to parse this. My favorite way is the S&P 500, especially for somebody who's out of the country. You know, if you're outside the country, buy the S&P 500, which is the 500 biggest companies in America. The I Shares version of this is ticker symbol IVV. Traditionally, it has been the least expensive way to buy the S&P 500. So I like that one. Now, some people are yelling at their device, buy the total stock market. Okay, you can do that too. There's lots of different ways to

buy the total stock market. If you're going to do that, Vanguard is a lot of. another global brand, ticker symbol VTI is going to be the best way to buy the total U.S. stock market. Chris, one thing that I want to make sure that we address is the selection of countries that you are investing in because you highlighted the U.S., Singapore, and India, and these are very strong, all three are very strong countries with strong economies. But I do want to take a moment to draw attention to the fact that so often on this show, I am speaking to a U.S.-based audience with the assumption that they're earning in U.S. dollars, living in the U.S., retiring in the U.S., not only am I U.S.-based, but over 90% of the afford-anything community resides in the U.S.

The answers are a little different when you're international, in part because you have currency conversion risk. you're not necessarily earning your income in U.S. dollars, not only because you have currency conversion risk, but also because your portfolio necessarily needs a more global approach. Absolutely. Yeah, we're continually relying on each other, Paula. Which also brings up, I think, the second thing that you and I need to address, which is there's this concept called standard deviation that I think is really important in a portfolio. And standard deviation, to put it very non-scientifically, is the amount of of wiggle you can expect. So while investing in a single company can give you a lot more upside,

investing in a single company also, because there's no such thing as a free lunch in the markets, can also give you a complete downside, meaning the company could announce something. There was a company in the United States several years ago named Enron where maybe four people in this entire huge company knew the extent to which they were doing illegal activities. and nobody knew all the stuff that was going on. And because there were only maybe four people that knew Paula, the entire company went down, you lost all of your money. And there was no way to predict that, unless you were one of those people. It was very, very scary. So even if you have, quote, all the data, there may be stuff that you don't know. So, oh, fun fact, my accounting

professor was also the same guy who taught accounting to Jeffrey Skilling, the Enron CEO. I don't know if that's, is that good or bad? I can cook the books like the best of them. I know the whole shell game. Yeah. I don't know if that'd be in my resume. But I don't want to discourage people from investing in individual companies, but that's why people don't do it. It's not the upside because upside's big, but upside always comes a big downside.

But then I think the next level of magnitude down is investing in one single market versus taking a broader approach. And what I want to invest in just Singapore or just. just India or just the United States. They're still going to be the standard deviation risk that this one country can experience some problems that they haven't, that you wouldn't get if you had a more global approach. I'll give you an example. I'm a guy who's from Detroit, Paula. In the 1980s, Japan was kicking Detroit's, but a lot of people say they may still be when it

came to automotive production and just production on anything, like their ability to do just-in-time inventory, to think long-term about these companies. they did so many things right when it came to manufacturing in Japan that the U.S. wasn't doing. We were all obsessed with Japan. If you would have invested in Japan over the last 20 years, maybe even 30 years, not just a snoozer, like just a horrible mistake because you decided to go with one single country. And by the way, what a great country it is, what a powerhouse it is. There were a ton of reasons why you'd say to yourself,

whether there's no reason I shouldn't invest in Japan. Why would I not invest in Japan? And if you'd done that, it would have been horrible for your portfolio. So standard deviation is the risk that I think of here, Paula, when I hear Chris's question and why I might want to suggest that he thinks about broadening it out. Now, if this is maybe 10% of his portfolio, okay, yeah, I do the same stuff. I love Singapore. I think Singapore is an amazing place.

And I have to back myself down every day to not invest like 50% of my portfolio in Singapore. Like, I think Southeast Asia is the play. Like, that is the thing. But that's how I mean, Singapore is tiny. It's a city. It's a small city that is also a massive economy. The definition of a city-state right there. Right.

I've been to Singapore. I covered a lot of ground in three or four days. The Singapore airport, maybe my favorite airport on Earth. Wow. Incredible. Singapore Airlines is one of my favorite airlines. the zoo there is really cool. That's cool. Yeah, yeah.

But yeah, I agree. I think Crish would be well served by broadening his exposure to more than just these three countries. Global equities exposure can be a great thing. So thank you for the question, Crish. And I will look for the afford anything meetup on Mauritius. Well, Joe, we've done it again. Some fantastic questions. And I think that's the first episode ever where you and I have taken two questions and combined it into one monster marathon answer.

Exactly. And I hope that by doing so, we highlighted how Keith and Apar have more in common in their question than they have different. Which is often the case. Yeah. Joe, where can people find you if they'd like to hear more of you? Well, I'd like to say first a big thank you to everybody in the Ford Anything community with the notes that I've gotten about our New Year's Day episode that ran a couple of you. weeks ago and the part two with Alex Hormozi for people that didn't hear that, it's a great way to begin your January talking about more money or end your January.

We're getting into the second half now of January. But Alex Hormosey is a guy that makes around $100 million a year. And that sounds like hyperbole for most of us, like, I can't do that. He really talks through, Paula, how you might not make $100 million in 2025, but there are certainly a lot of ways to make more money. And it involves very much how you view your time. We talk about mentorship. We talk about the people on your team. We talk about which opportunities you say yes to and often more important, the ones you say no to in 2025. So if you didn't catch our episodes on January 1st and January 3rd with Alex Harmosi, not only did I interview him. He talks usually to

entrepreneurs. So he talks very much entrepreneurship. But oh, gee, my co-host on stacking Benjamin, and I, we play the interview, but we keep hitting pause, and then we break it down how even if you are an entrepreneur, somebody that works for somebody else, but you're really designing your own career, which you should, even if you work for other people, how this truly 100% applies to 99.9% of us. Beautiful. Beautiful. And I loved that episode, both of those episodes. So highly, highly recommend them. We'll link to those in our show notes as well. Thank you.

And thank you to all of you for being part of the Afford Anything community. If you enjoyed today's episode, please do three things. First and foremost, share this with the people in your life. Friends, neighbors, colleagues, babysitters, dog walkers, share this with the people that you know. Second, open up your favorite podcast playing app. Make sure that you hit the follow button so you don't miss any of our amazing upcoming episodes. And while you're there, please leave us a review. And third, download our free.

guide to making 2025 the best year ever with your money. It's called one tweak a week. And it's one small tweak that you can make every week for the rest of 2025 so that by the end of this year, your finances will be so much stronger than they were at the beginning. You can download that at afford anything.com slash financial goals. Again, that's afford anything.com slash financial goals. Thank you again for tuning in. This is the Afford Anything podcast. I'm I'm Paula Pan. I'm Joe Solcihai. And we'll meet you in the next episode.