Motley Fool Money - Subscribers Drive Spotify and Disney

Episode Date: November 15, 2024

It’s that magical time of year before the holidays where you still have time to catch up on retirement contributions for 2024 and get yourself ready for the new year ahead.  (00:15) Andy Cross and Matt Argersinger discuss: - Disney’s newfound strength at the box office and in streaming, Spotify’s subscription strength and advertising opportunity, and Shopify’s return to its winning ways.  - Why Cava and Instacart are both taking a breather post-earnings  - How the macro environment and housing market continues to weigh on activity for Home Depot. (19:04) Robert Brokamp runs through the key numbers investors need to know for their 401ks and IRAs for 2025 and the outlook for taxes and Social Security. (34:35) Andy and Matt break down two stocks on their radar: Nike and Papa John’s. Learn more about the Range Rover Sport at www.landroverusa.com and Get 15% off the Amazfit T-Rex 3 at us.amazefit.com/Fool Stocks discussed: DIS, SPOT, SHOP, CAVA, CART, HD, NKE, PZZA Host: Dylan Lewis Guests: Andy Cross, Matt Argersinger, Robert Brokamp Engineers: Rick Engdahl Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed sponsored jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate C. According to Indeed data, sponsor jobs have four times more applicants than non-sponsored jobs. So go build your dream team today with Indeed. Get a $75 sponsor job credit at Indeed.com slash podcast. Terms and conditions apply.

We've got the highs and lows of this week's earning slate and the money numbers for 2025. This week's Motleyful Money Radio Show starts now. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio Show. I'm Dylan Lewis, joining me over the Airwaves, Motley Fool's senior analyst, Andy Cross, and Matt Argersinger. Fools, great to have you both here. Hey, Dylan.

We've got the key numbers you need to know for retirement accounts in 2025. The world according to Bob Iger and stocks on our radar. Andy, we're going to start out with the world according to Bob Iger. Finally, some optimism over at the House of Mouse, shares of Disney up over 10% this week on earnings that I think were maybe a little bit better than the market was expecting. Well, we had some optimism last quarter, Dylan, with the streaming profit they announced and delivered. And we had more of that this quarter for the second consecutive quarter of the Disney streaming business made operating profits. this time they made 321 million versus a loss of 387 million a year ago.

So basically a 180. That's great to see. When you think about the average revenue per user, that was up 1% down 1% in the U.S., but up 3% in international, higher new advertising subscriptions offset by the ad revenue. So half of new U.S. subs deal in now are coming from the ad side of the business. So very similar to what we're seeing on Netflix, the advertising business continues to drive the subscriber business. Total revenues for the business up 6% operating income up 23% and adjusted earnings per share up 39%. The best ever quarter Bob Eiger wrote for studios with Deadpool and

Wolverine and Inside Out with two, which I personally enjoyed a lot, that helped boost content sales by 39%. And this quarter, Dylan, Moana 2 and Mufasa, the Lion King coming in 2025. And they have a whole slate of a bunch of releases next year. The weakness networks, Dylan, continues to be the struggle, revenue is down 6% and profits down 38%. So the network's business is really the drag on Disney right now. We are about two years into Bob Eiger's second term as CEO. And I think it's kind of interesting. Matt, they have announced that there is going to be a new CEO in 2026.

And this quarter, Bob Eiger gave some guidance for 2026 and for 2027 for Disney. Kind of writing some checks here for that future CEO to have to cash. Right, and let's hope they cash them, whoever tends to be, because they are pretty ambitious. I mean, if we start with the fiscal year that Disney just started, I mean, they're looking at $875 million. Andy mentioned, you know, the streaming business is now profitable on an operating basis. They're thinking that's going to grow operating profit, $875 million in fiscal 2025. That's a big move. And by the way, they're also targeting $15 billion in cash from operations.

Guys, Disney's market cap right now, I was looking at this. even with the latest move this week, is just a touch over 200 billion. Netflix, by contrast, is probably going to do about $8 billion in operating cash flow this year. Its market cap is around $350 billion. That's a high disparity, and it's not quite, as we know, apples to apples. I think Netflix has proven to be obviously leading when it comes to streaming and also just enormously profitable within that channel. But to me, that just seems like, I don't know.

I'm not paying a lot for that $15 billion in operating cash flow that Bobbiger thinks they're going to to do in this fiscal year. I also like that management said they're going to target dividend growth that tracks the company's earning growth. I love that approach. And by the way, since they reinitiated their dividend a year ago, Disney stock is up 20%. I think there's some correlation there, as you might expect. I like the double digit earnings per share growth in fiscal year 26, Dylan, and also setting out a little bit in the future with Bob Eiger in 2027. It'll be very interesting, by the way, guys, to see what happens with the ESPN. Now joining, he's going to join the tiles soon this year on Disney, on Disney Plus, and then next year ESPN will be a bigger

presence on Disney Plus in their streaming category as ESPN goes into the streaming world, Dylan. I believe Eiger characterized ESPN as undisruptible as a sports product. So we will have to see whether that materializes, but he's selling a pretty big bill of goods there. We'll stick with entertainment and the theme of strong results. Music streamer Spotify up 15% this week, Matt, continuing what has been an absolutely excellent 2024 for the company and shareholders. It really has been, Dylan. Steady goodness is how I look at Spotify's results. I mean, if you look at monthly active users, $640 million, that's up from $602 million at the end of 2020. It's climbed every single quarter this year. You've had steady growth in premium,

both premium subscribers, which make up about 39% of that $640 million. And, in the ad-supported subscribers. And by the way, that 38 million in new premium subscribers this year, that's despite a pretty hefty price increase that the company pushed through during the year. Average revenue per user, steadily climbed for both premium and ad-supported users.

Best of all, Spotify's profit margins are so much higher than they were a year ago. Total gross margin up about 500 basis points since the end of 2023. So when you combine those higher margins with efforts to control operating expenses, free cash flow hit 711 million euros. We've got to talk of euros, 711 million euros in the quarter, far away record, and 240% higher than a year ago.

As you remember, this was going to be CEO Daniel X year of monetization. Clearly, Spotify is monetizing. I'm a shareholder, and I've been very happy to own the stock because people are very loyal to the service, but also because it's been clear over the last couple of years, there are all of these adjacent markets or business operations for them to get into. We've seen them talk more and more about the advertising business. we're seeing them step a little bit more into video. When you see some of those other opportunities, Andy, where are you paying attention? Well, the ad side is really fascinating.

So the ad revenues as a percent of total revenues actually fell a little bit. So the ad business, the ad revenues were up 6 percent, premium revenues, up 21 percent, as Matt was talking about. So the ad market, Dylan, I think you need the advertising business for something like Spotify, just like we're seeing in Netflix, just like we're seeing in Disney. The advertising business has to really thrive. They understand that. I think Dan X, as Matt said, the year of monetization and the year of cost savings, I mean, their operating expenses fell 8%. That's incredible. That year monetization on the ad side,

they realize they have some challenges there and they're planning to spend a lot more time to fix them. I was happy to see what Spotify had to report. Also happy to see what Shopify had to report. That is another one that is in my portfolio. And I imagine in the portfolios of many fools, It's a widely followed one here. Shares up 25% after the company's report this week. Andy, what did you see? Well, Matt and I talked about this on a couple of different shows, and this was an incredible quarter, Dylan, by Shopify.

Their gross merchandise volumes of the traffic across their platform, up 24% to 70 billion. That was up almost 4% quarter over quarter. That's the fifth consecutive quarter of 20% or more growth. That led to revenues up 26%. It was 20% just a quarter ago. Their merchant solutions at 70% of sales, that's things like their payment business, their shipping, their capital, their point of sale business.

That was up more than 26% versus just 19% in Q2. And their monthly recurring revenue dealing up 24%. But here's a kicker. Operating expenses up 7%. Revenue up 26%. Operating expenses up 7%. No wonder their free cash margin was up 19% is at now. Their margin, Dylan, at 19% versus 16%.

percent last quarter. Really impressive on their business to business, Dylan. That was up 145 percent growth in their business to business, gross merchandise volume, smaller part of the business, but they're really making smart investments. If you are a shareholder, I'm sure you're having a good time. If you're also looking at this business as a read on how the consumer is doing, I think some positive signs in this report as well. The company mentioned that they are having or looking to have a good November and December management forecasting, that growth rate that you talk about, 26%, or maybe even a little bit higher, driven by strength in merchant sales on the platform. So that's not them being opportunistic with any of this.

That's activity they're expecting to roll through during the holiday quarter. Yeah, Dylan, I think that was an exciting part. So the guidance was mid to high 20s. That was somewhere in like the low to mid-20s. So I think investors reacted positively. That again, just continues to show why Shopify is winning. but also operating expenses are expected to be between 32 and 33% versus 39% in the third quarter. So again, more effective use of what they're producing into their platform and that's showing up in the stock price today.

All right, that was a rundown on who's up this week. After the break, we'll catch up on a few gross stocks that hit a snag after their reports. Stay right here. You're listening to Motley Full Money. These days, I'm all about quality over quantity, especially in my closet. If it's not well-made and versatile, it's just not worth it. That's honestly what I love Quince. The fabrics feel elevated, the cuts are thoughtful, and the pricing actually makes sense.

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Quince.com slash Motley. Welcome back to Motley Full Money. I'm Dylan Lewis, here on air with Andy Cross and Matt Argusinger. Beginning of the show, we talked about some earning season winners. Now over to a few companies with updates the market wasn't quite so fond of. We'll start out with one of the hottest stocks of 2024, and that's Kava. Matt, kind of an interesting response with the result. Stock popped 15% after hours, then fell 5% after settling out,

and the market really had time to digest. everything. What were investors reacting to? Yeah, that was actually the big thing for me with this one. I'll hit the results first. I mean, another fantastic quarter from Kava. 18% same restaurant sales growth, guest traffic up 12.9%. Average unit sales of $2.8 million up from $2.6 million a year ago. Restaurant level profit growth of 42%.

Cue up the video of Ron Gross. I mean, Kava is firing on all cylinders. But you mentioned the stock movement, Dylan, which I think is actually the the more interesting part of the story. You said it. I mean, Kava, the share price actually popped about 19% on Wednesday after the reported results, hitting a high over $172 a share. But then it fell all the way back to 147. And now it's last I checked, trading below 140. You know, we're not technicians here at the fool, but if I could play one for a second, I might call that like a false breakout or a gap fill, which is usually very negative for stock for a stock price in the near term. But back to

to reality, I think this is a case where I think the stock got ahead of its fundamentals. I mean, as amazing as Kava's results were, even at the current price right now, the average Kava store is being valued at about $45 million. I promise you, there's not one person on the planet who would put down $45 billion to own a single Kava restaurant. I mean, despite each restaurant's incredible economics. So I think it makes sense that the stock has sold off. It has just had an amazing run since its IPO. Now, Matt, you are a Kava shareholder. Andy and I have have been sitting on the sidelines as people who are fans of the food, but do not own the stock and are maybe kicking ourselves a little bit for that.

I'm curious, given the valuation and given some of the market reaction here, do we feel like we're settling out to something that's a little bit more sustainable, or is there still maybe a little bit of softness here because of the growth expectations built into this company? So I say this as a shareholder. I do think the stock could be set up for more disappointment. I just think the valuation is so. still so lofty that even a slight miss of expectations in a quarter that comes up, I could see the stock down a lot more.

And I say this as a person, yes, who owns the stock. Andy, as a non-shareholder, do you have a devil's advocate take on that? Yeah, I think if you want to nibble, go right ahead. I agree with Matt. But I've been saying that for a while with Kava, and I watched the Chipotle Grove story, so I didn't learn my lesson, Dylan. There are plenty of more bowls in our future, I think, either way. All right, shares of Instacart also taking a little bit of a break this week, down about 15%. after their earnings report.

And this is one that has had a wonderful 2024 as well. Is it a similar story here where we're kind of seeing the market adjust a little bit after there has been such an incredible run for this company? Well, I think their growth rates, their expectation for the coming quarter on their transaction volume at 8 to 10 percent was a little bit weaker. It was up 11 percent this quarter to 8.3 billion. Order growth was up 10 percent, and the average order up 11 percent. And so the growth of 8 to 10 percent next quarter, Dillon probably left investors,

wanting a little bit more, but it continues to do very well, achieved its fourth straight quarter of positive net income, adjusted EBITDA, the earnings before interest taxes, depreciation, and amortization was up almost 40%. Operating cash flow up 67%. It's a category for both small and big basket when you talk about shoppers and clients wanting to use grocery stores, which is really where Instacar dominates that.

and they're starting to build out their advertising revenue, Dylan, which I think is really interesting. It was up 11% for the year. They're seeing some large clients that are pulling back on some of the spending. But interesting, Dylan, some of the emerging brands, some of the smaller food brands and consumer product company brands are starting to increase spend across a platform. So that side of the business, why smaller for Instacart has some really emerging properties we'd like to see. We look for reads on how the consumer is doing. and we were talking about it before in the last segment talking about Shopify. When we look out at what Instacart is telling us,

they did mention that there was a little bit of diminished outlook, but it had nothing to do with the consumer. It had mostly an issue of we are lapping pretty tough comps. They are saying that they are still seeing very strong consumer demand, not a lot of trading down. Are you surprised to be hearing that from them? No, not really. I mean, I think you have to pay attention as an investor

and as an analyst to what the company's done in the past and how competitive they are for those growth rates compared to what they have done and what they delivered in the past. And as you mentioned, Saccard is kind of lapping some of that. They're still seeing an increase in activity across their platform. They have large market share. They have this niche into working with grocers specifically to be that offer much more complex ordering processes when you think about ordering groceries versus like ordering from McDonald's or something like that. It's much, it's much more complex. So they specialize in that. But they're also starting to push and work more with other retailers, like someone like Sephora or someone like

Home Depot. So I think as you think about the opportunity for them, it's still pretty immense. And I do like the profit picture and how they're investing their capital into their business. All right, bringing us home here. I almost want to go back and rerun the tape from last quarter when we talked about Home Depot, Matt, because looking at their results, I feel like we got a very similar quarter from them this time around. We did, Dylan. This business is, still on the struggle bus. It's been there, I guess, for the better part of two years now. You know, comparable sales down 1.3% in a quarter. U.S. comps down 1.2%. And, you know, customer transactions, average ticket size, sales per square foot, all down

year over year. That's like the trifecta of badness for Home Depot. Operating margin has also been trending lower. It fell again in the third quarter. It really comes down to just the sales of big ticket items, those that cost $1,000 or more. Those massive Halloween skeletons aside, Big ticket items were down 6.8% in the quarter. Customers are just still holding off on funding major renovations. Now, management did raise full-year guidance. There was better weather in the quarter. They did have some hurricane-related spending.

That's feeding into the comps a little bit, so they did raise the guidance a little bit, but still turning out to be a tough year for Home Depot. I think you might need to trademark the trifecta of badness. I think that is too good of an earnings framework for us to be looking at. We're going to have to pull that one back next time. we're doing Home Depot next quarter. I want to dig in a little bit to some of the management commentary we got. Here's a line from Ted Decker, CEO, and I want you to help me unpack this

a little bit. Sure. We all know that the Fed's cut interest rates, two cycles here, but from the cut in September, mortgage rates have actually increased about 60 basis points. So two rate cuts combined with 75 basis points, yet the 10-year, and then therefore mortgage rates up about 60 basis points. That continues to impact housing turnover, which were just about 3% of homes turning over, which is at a 40-year low. Matt, what is going on with the housing picture and how it is affecting Home Depot at this point?

That is it, Dylan. Ted Decker's talked about the housing market every quarter. It seems like he should because, yeah, it is at a 40-year low. Existing home sales just are not there because of the, one of the reasons is because of higher mortgage rates. And so that's why he's kind of fixated on rates. Until the existing home market gets on stock, it's really hard to see a pickup in renovations, remodeling,

the kind of activities that really feed Home Depot's business. And we could be at an inflection point. I think that's something also Ted Decker might be saying is, hey, it can't get any lower. If we're at a 40-year low and the Fed is easing, you know, our business could be at an inflection point. And you might not think about that if you look at Home Depot's share price because it is trended higher. In fact, it's one of its highest points for the year, 27 times forward earnings.

But just remember, cyclical stocks always tend to look the most expensive prior to a boom in demand. I would say if we get a housing turnaround, as Ted Decker expects, I mean, you're going to see a big rebound in Home Depot sales. You'll see a big rebound in their earnings. That valuation can come down pretty quick. And then, you know, maybe Home Depot is off to the races if spending does turn around. Guys, the other thing I think with Home Depot is if tariffs do increase under a new Trump administration, large companies, very effective companies with great distribution and great supply. chain logistics can tend to handle those increases a little bit better than maybe a small provider. So I think some investors might be thinking that's an advantage for Home Depot as well.

So investors shouldn't be sweating the big picture when it comes to Home Depot. It'll come around is what you guys are saying. I think so. I think so, Dylan. And that's why the stock has held up so well because I think investors are already looking ahead to a rebound in Home Depot's business. All right, Matt, Andy, we're going to catch up to you guys a little bit later in the show. Up next, we've got the numbers you need to know for your 401ks and IRAs in 2025. Stay right here. You're listening to Mountainful Money. The old adage goes, it isn't what you say, it's how you say it, because to truly make an impact, you need to set an example and take the lead.

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plug-in hybrid with an estimated range of 53 miles, there's an option for you. With seven terrain modes to choose from, terrain response two fine-tuned your vehicle for the roads ahead. The Range Rover event is on now. Explore enhance offers at rangerover.com. Welcome back to Motley Fool Money. I'm Dylan Lewis. Fools, we have six and a half weeks until the end of 2024, and that means it's time to start turning our gaze to 2025. Joining me to talk through the new money numbers you need to know for the new year, Robert Brokamp. Bro, thanks for joining me. Thank you, Dylan. So great to be here. So we have a lot of people that are saying, you know, maybe it's a little bit early to be starting thinking about the new year. The reality is we know

the holidays are going to be taken over fairly soon, and we've gotten quite a bit of guidance from the IRS and from the government on some of the limits for some of the most important accounts for investors for 2025. That's why we're talking about it now. We want to make sure that people have it on their radar before things get hectic later in the month. Let's kick off with, I think, probably one of the accounts that people are most mindful of, and that's 401Ks. What are we looking at for 401Ks for 2025? So the first thing that I think to think about is have you maxed out for this year so far. So this year, 2024, the amount you can put in is $23,000 with another $7,500 if you'll be 50 or older by December 31st. So you want to make sure you do that if you haven't

yet. And it's important to do that now because in most situations, you can't send a check to a 401k. You can only contribute through your payroll. And since, as you say, we only have six weeks left, you should probably do that now. Now, next year, the 401k contribution limits are going up, another $500. The catch-up contribution for most people is going to say the same at $7,500, except there's going to be a new wrinkle that starts next year for people who are just 60 to 63, and their catch-up will be $11,250. And this is also something to think about before the year ends, because if you want to do that higher contribution limit with the very first paycheck of January 1st, you probably have to change your contribution limit before the end of the year.

Talk to your HR department or your payroll department. It's usually like the last week of the year if you want to make sure you're contributing that higher amount with the very first paycheck of 2025. Yeah, bro, if folks are like us at the Motley Fool, I think we have three pay periods left, which means if you get those in early, you've got time to catch up, but certainly plenty of time to make sure you're all scored away for the new year. Right, exactly. Speaking with retirement, why don't we focus a little bit on what's going on with individual

retirement accounts. I know that'll be kind of a bonus level of retirement savings for some of those folks with 401Ks, but also something that is incredibly important for people who don't have that employer-sponsored account. Yes, and that is actually not going to change. So the limit is going to be the same in 2025 as it is for 2024. The limit is $7,000. The catch-up is $1,000 if you'll be 50 or older. Now, we talked about the 401k's generally, you have to have that done by December 31st. Technically, you can wait until next April 15th to contribute for 2024, but why not get that money and sooner, the sooner you invest, the better off you're going to be. Now, everyone who is working can contribute to an IRA. And if you're not working, but you're married to someone who's working,

you can contribute to an IRA. But there are some wrinkles that will determine whether you can contribute to a Roth IRA or whether you can deduct your contributions to a traditional IRA. And those income limits will be changing. They'll be going up a little bit. I'm not going to go into them in detail, except for the Roth IRA because everyone wants to know about that one, because we are still in historically low tax rates. So I do think if you're eligible for the Roth, it makes sense. So I'm just going to read it out here for 2024. It is a modified adjusted gross income.

If you are single of $146,000, and then the amount you can contribute begins to sort of gradually go down to hit $161,000. If you're married filing jointly, that's 230 to 240. Now, again, this is your modified adjusted gross income, not your gross, not your taxable. Somewhere in between, it's your adjusted gross income. with some things added back, look that up on the internet. But this is a good time of year to evaluate

that, right? Because if you're on the cusp of those limits, you can decide whether you should do the Roth, maybe, or if you should accelerate income this year or delay it to next year, if you can to make you more eligible for the Roth, if that's important to you. One of the things I wanted to get your take on, bro, was we've outlined here the allowances for these different accounts, and we're used to getting a steady update from the government each year on what will be considered. What goes into the decision? on the government side for the guidance that they're willing to give and the way that these programs work? It's pretty much all adjusted to inflation. And things like these income limits for IRAs or tax brackets,

it's really just tied to inflation. For the retirement account contribution limits, it's adjusted by inflation, but there has to be a step up, right? It's not always every year with inflation. It only goes up with the retirement accounts in $500 increments. So those were not, They were triggered for the 401k this year, not triggered for the IRA this year, but I suspect they will be next year. When you look out at most of the changes that are coming for the core retirement accounts, is it mostly current state of play continues, but we're seeing allowances move up a little bit? Is there anything new or different that people really need to be keeping in mind?

That's mostly anything related to income is going up a little bit somewhere between 2% and 3%. So that's good news. Same with tax brackets going up a little bit. So the only major change was that those higher catch-up contribution limits for those who are 60 to 63. That's a new thing in 2025. Since you mentioned tax brackets, I know a lot of people looking at their portfolios at year-end, thinking a little bit about tax loss harvesting, thinking about whether to sell that loser and maybe give themselves some offsets for income that they've generated.

How are you thinking about that right now and just kind of the general tax environment? for 2024 and 2025. I think tax loss harvesting can always make sense, especially if it's an investment that you just don't want to hold anymore. If it's down below a price that you paid for it, it's in your taxable brokerage accounts, not in an IRA or 401k, and you really just don't want to hold onto it anymore. You might as well sell it. Take the loss.

It offsets gains and then in the excess loss, it'll offset $3,000 of ordinary income and you can carry that forward to future years. If it's an investment that you really like, then you have to be a little bit more careful because you can't buy it back again for 30 days and you can't have bought it 30 days prior. The whole wash sale rule is what this is known as. It's not just 30 days after, it's 30 days before. I think there's always the risk that you sell that investment, you wait 30 days, and then the stock takes off to an degree that it kind of offsets any tax benefits that you had.

So I'm less excited about tax loss harvesting for investments that you like, totally for it for investments that you're ready to let go of. In addition to all of these updates, we also have a new political administration stepping into the White House in 2025. I'm curious, as you think about people's money, their portfolios, and people keeping an eye on their tax bill, is there anything that people should be expecting or thinking about in 2025? Yeah, tax rates are very low right now because of the Tax cuts and Jobs Act that was passed in 2017. The way that was set up was the corporate tax

breaks would mostly stay the same. But due to certain rules, the personal tax breaks were due to sunset in 2026. So we only had one more year of these lower tax rates, and then they were going to go back to 2017 levels. Now that we know that we're going to have a Republican Congress and a Republican and president, I think it's almost guaranteed that they will extend those tax breaks and possibly, possibly even reduce tax rates further. Why would that matter? Well, one thing that people have been doing to take advantage of low tax rates is doing more Roth conversions. That is basically taking money that's in a traditional account, turning it into a Roth. Now, whatever you convert gets added to your taxable income. So if you convert $50,000, you have to pay $50,000.

dollars added to your income, you have to pay taxes on that. So you pay taxes today, but then it grows tax-free as long as you follow the rules. There's some debate now about what should you wait until 2025 to do some of those conversions in case tax rates are even lower in 2025? I don't have an opinion on that. You'll find opinions online about that. I always like to hedge things. So if you think some conversions make sense, maybe do some this year, maybe do some next year.

I don't think there's any chance that tax rates are going up next year. year. So I think you'll still be in a good place. The other thing I will say, though, about these lower tax rates is it brings up a couple of issues, right? It's going to result in deficit spending, no question about it. And we're not addressing something very important. That is, the Social Security trust funds are going to basically be depleted in about a decade. So I recommend that, you know, everyone loves their tax cuts, but bank them, invest them, because at some point in the future, there might need to be either a higher tax rates to pay for all this or reduce Social Security benefits because we're not doing anything yet to solve that problem.

And so bank any money you are saving today because of these tax cuts because you might need it later. Speaking of Social Security for the retirees out there, what can they expect for their Social Security checks for 2025? So the cost of living adjustment is going up 2.5 percent, which is about in line. with where inflation is right now. So some people who may hear that number like, well, that's lower than what it's been in the last few years. But that's because inflation today is lower than it was in the past few years. So that's the great thing about Social Security is that it does keep up with inflation. And depending on the circumstances, the cost of living adjustment can actually be higher than overall inflation. And I think that actually, well, we'll see what

happens if that was the case this year or not. But so that's the big thing. For those who are getting close to the point where you would reach your full retirement age, and that's roughly between 66 and 67 these days, depending on what year you were born. There are also other limits that change every year. It's basically if you are working still, you're not reached your full retirement age and you're taking Social Security. If you earn above a certain amount, you have to give back your benefits. And those amounts change every year, so you should look into that. The bottom line for that really is, if you are continuing to work before your full retirement age, it's probably best not to claim Social Security because you might have to forfeit some of your

benefits. I've got a listener question for you in a second, but I want to give you kind of a big open one here. I've asked you about some of the specific accounts and some of the specific topics that I know some of our listeners are interested in. Is there anything that you think people should have in mind as they're doing some planning this year? I think that one thing that you should do every year is run your retirement numbers, right? And that means if you are still working, you use a retirement calculator. One of my favorite calculators is a calc XML calculator, just do an online search for a Calc XML retirement planning module. The stock market has done so well, right? In October, we reached the two-year

anniversary of the current bull market. You probably are doing pretty well. And you might be closer to retirement than you thought. If you are already retired, I think it makes sense to look at your portfolio every year to determine how much you can safely withdraw. And when your portfolio is up, it means actually you might be able to take out a little bit more. So this is generally good news for those who are both saving for retirement and in retirement. The market is at all the all time highs, home prices at all time highs. Anyone who is accumulating assets is doing pretty well. All right, bringing us home. We've got a listener question that seems

tailor-made for you. This one comes from Christian. Christian writes in, Hey, fools, one question I have is which investment account makes the most sense to purchase individual stocks with. I have a 401k, a Roth IRA, and a general brokerage account, all of which are largely invested in broad ETFs or mutual funds. A few months ago, I wanted to purchase some individual stocks, and I did so in my brokerage account just because as a non-retirement account, it felt less official and helped me mentally organize the purchase as an experiment. However, I now wonder if that was the right call. Theoretically, one would sell or change positions more frequently when dealing with individual

stocks versus a total market index fund, which is just a keep buying type investment. If that's the case, is it wiser to hold individual stocks in retirement accounts so I can change positions without tax penalties and leave the broad ETFs in my brokerage? The example I'm citing was a small purchase of a few hundred dollars worth of Kava, but I'd like to make a more informed decision on which account to choose when I next invest in individual stocks. Love the podcast. And thank you for your help. All right. Bro, what do you think? Well, there's a lot here. And I can't give personalized advice. So I'll give you some things to think about. So, first of all, when it comes to decisions about which accounts

to invest in, you start with your timeline. For money that you plan to leave until retirement, go ahead and put it in the IRA in 401. You can't take it out, generally speaking, before age 59 and a half. There's some exceptions, but you want to be able to say, I'm putting this money away and I don't need it. I'm going to leave it there. If instead you bought your shares of Kava because you are 30 years old and you are investing because you want to buy a house in five to 10 years, in that situation, then you would put it in the taxable brokerage account where you can get that money sooner and you wouldn't have to worry about the early withdrawal penalties.

The other thing to think about is if you have multiple types of accounts like a taxable brokerage, a traditional account, and a Roth. You want your Roth to grow the most because that is the tax-free account. So you have to look at cross your investments and say, what do I think has the most growth potential and put that in the Roth? Of course, there's no way to know for sure what's going to be the best investment. So I wouldn't put just one investment in your Roth IRA. But that is one way to think about it.

And you're on the right track too for when it comes to your brokerage account, if this is investment you don't need until retirement, you really do want to use it for something that you are going to buy today and hold for many, many years, perhaps decades. And an index fund is a great choice for that because you just set it and forget it. Plus index funds in and of themselves are relatively tax efficient, especially compared to traditional open-end mutual funds. So I think that's a good choice as well. Well, I certainly feel on track. And I'm hoping our listening to listeners do as well. Robert Brokamp, thanks for joining me today. My pleasure, Dillon.

When our old age pension check comes to our door. Listeners, you can catch Robert Brokamp, talking personal finance and answering your questions each week on Tuesday episodes of our Motley Full Money podcast. If you want his take on something, shoot us a note at Podcasts at Fool.com or calling to our voicemail. 703-254-14-5. One of our favorite things to do is get listeners' voices on the show. That's 703-254-14-4. We're going to head to a quick break, We've got stocks on our radar coming up soon. Stay right here. You're listening to Motleyful money.

As always, people on the program may have interests in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. There don't buy selling anything based solely on what you hear. All personal finance content follows Mountlepool editorial standards. It's not approved by advertisers. The Motley Fool only picks products. It would personally recommend a friends like you. I'm Dylan Lewis, joined again by Matt Argusinger and Andy Cross.

We're going to roll right into radar stocks this week, gentlemen. Our man behind the glass, Rick Engdahl, is going to hit you with a question. Andy, you're up first. What are you looking at this week? Team, I'm looking at Nike. And by the way, Nike is a little over $100 billion company. It's about half the size of Walt Disney, as Mattie just pointed out. So that's just some context theory.

But Nike just boost their dividend by 8%, Matt. I know you love that. So I'm bringing that one to you here. It fits well under the category I think of a lumbering giant in need of that shot of adrenaline. It lost its innovative brand edge, though it still remains one of the highest profile brand in sports and sportswear. It got that shot of adrenaline with the rehiring of Elliot Hill, a 32-year veteran who was president of the consumer and marketplace businesses before leaving when Nike brought on John Donahoe to jumpstart its e-commerce business. Hill is a Nike

person team through and through. He has degrees in kinesiology. He is a master's in sports administration, and he actually wrote a paper on Nike's brand when he was in school. He has said things like, we're going to put the athlete first and everything we're due. We're going to simplify and we're going to go. Sports have been a huge part of his life. The internal employees of Nike cheered this event when he was announced. It brought a little bit of excitement back into that brand. When you think about what it has happened with sales and profits both down pretty substantially this quarter,

Nike is in that turnaround stage and I'm excited to see. what Elliott Hill, who's been with Nike through and through for so many years, can bring back into one of the giants in sports and sportswear apparel in the world. Rick, a question about Nike, ticker NKE. How long has this company been around? Gosh, since its 1970s, I think, right? 1970. And it's called what?

I said it's a lumbering giant. No, no, no. What's the name of the company? It's called Nike. How come three or four times you say Nike? You know, because I always said, did I say that? Yes, because I always used to pronounce it as Nike until I learned it's actually pronounced Nike, so yes.

You've been covering this company for a long time now, and you're still saying, I think you need to. Exactly, move on. Show the Greek goddess of victory some respect, Andy. Matt, what's on your radar this week? All right, so Domino's Pizza, which is not my radar stock, got a bit of a bump on Friday because Berkshire Hathaway is taking a $550 million slice in the business.

See what I did there? Now, nothing against Domino's, and I'm certainly not the one who's going to bet against Buffett or Ted Westler or Todd Combs, whoever is making this Domino's purchase. But if you like better pizza and more importantly, a cheaper stock price, check out Papa John's ticker PZZA, trading about 16 times earnings compared to Domino's 25 times earnings, also comes with 3.7% dividend yield.

They recently added a new CEO, Todd Penninger. He's coming over from Wendy's. He did a wonderful job for shareholders there. I think he's going to be a big boost for Papa John's sales and its margins. And you're starting from a much cheaper place as an investor buying Papa John's today than buying dominos. Rick, a question about Papa John's, ticker PZZA. Better pizza, come on.

This is not a difficult recipe. Why is it that chain pizza is so lousy? It's not difficult. Well, it's all relative. I can go into any pizzeria on the street in New Jersey, and there's a grumpy Italian guy with cigarettes rolled up in his white t-shirt sleeve. But he can't scale. He can't scale from that location.

And the sausage is thinly sliced. It's not ground up like hamburger helper. And I know it's going to fold. in half nicely. It's going to drip off the back nicely. I don't know why pizza is so difficult for people. As a fellow New Jerseyan, I cannot agree more, Rick, and I think I know what you're doing. I think you're going with Nike based on that answer. Yeah, I'm going to go with Nike. Nike. Andy, Matt, thanks for being here. That's going to do it for this week's Monthful Money Radio show. The show is mixed by Rick Engdahl. I'm Dylan Lewis. Thanks for listening. We'll see you next time.