NerdWallet's Smart Money Podcast - Live From Las Vegas!

Episode Date: September 15, 2022

The smart way to lose your money gambling, whether now is a good time to invest and how to manage a big financial gift. In the first-ever live episode of the podcast — recorded at a NerdWallet conference in Las Vegas this summer — Sean and Sara cover these topics and more. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Hey folks, Sean here. We have a really fun episode in store for you today. Over the summer, NerdWallet employees got together in Las Vegas for our first in-person event since the beginning of the pandemic, and Sarah and I hosted a special live episode of Smart Money. We had a great time recording this episode, and we hope you'll enjoy it too. Here it is. So good to see all of you in person. Welcome to the Smart Money Podcast live from Las Vegas. I'm your host, Sean Piles. And joining me for our first ever live episode is my occasional Smart Money co-host, Sarah Raffner.

Hi, everyone. So for this special live episode of the podcast, we're answering a couple of nerds' money questions, including how to manage crypto, if you still want to do that. Weather now is a good time to get into the stock market. And we'll also talk about the smart way to lose your money gambling in Vegas. There is a smart way to do that. But before we get into all of that, we are going to play a little game with you guys. It's called Would You Rather. We'll have a few of these sprinkled throughout the episode. So pull out your phones, look at that QR code, and you'll be taken to a Slido where you will see a question that is, if you're given $100 right now, would you rather

spend it at the casino tonight, or would you put that in your savings account? So are you here to have fun, or are you feeling responsible, basically, is the question. We'll give you guys a minute to think that over. Sean, what would you do I would spend it yeah I would say because I hate gambling I'm not a gambler either really as we'll get into but I mean I'm here to have fun and we're heading out tomorrow so Viva Las Vegas I guess as they say what happens here yeah yeah let's do a show of hands like okay if you would spend the money tonight, put your hands up. All right. And if you'd save the money?

If you'd save the money. Okay. It's like... It's kind of 50-50. I would say 60-40 if I'm being honest. Okay. All right. I'm not going to fight you over this, but it's fair to say people are here to have fun, but also be responsible, which I appreciate. Great. Well, now let's talk about the smart way to lose your money gambling in Las Vegas. Yeah. So gambling can be fun if you're into that sort of thing, which I'm not, so I don't really get it, but whatever.

But it's also risky if you don't know what you're getting yourself into, or you go into it without any sort of preliminary planning. And I know it's like hard to plan before a night out, but hear us out. Yeah, but understanding some of the reasons why people like to gamble and how to do it in a very financially nerdy, responsible way can help you make the most of your time gambling. And as I mentioned, I'm not really a gambler.

I once lost 50 bucks in an hour on the Dolly Parton slot machine in Atlantic City. And I said, I'm done with gambling. But I called up my mom before this episode. She's a behavior analyst, and I talked to her about how the principles of behavior analysis can be applied to gambling. And she pointed me to something called

intermittent reinforcement, which is basically the idea that when you get a reward, or in this case, an endorphin rush, or maybe some money for doing something, at an irregular basis, you're more likely to continue doing it versus if you got a regular reinforcement for the same behavior. And slot machines are the perfect example of this, although intermittent reinforcement is around us all day every day in our lives. So if you think about a slot machine, you pull the lever or press the button, you're not going to win every single time. But you think, you hope, that there's

a guarantee of a win right around the corner. And so it keeps you going. It's very strong and actually is one of the underlying drivers of problem gambling, which, as we know, as it is in the name, is a problem for some people. Yeah, this actually explains a lot about my cat's behavior around the automatic feeder I have. Because they don't understand that it's set to a timer, nor do they understand the passage of time in the same way that I do. So they just hold vigil in front of the feeder for several hours before it actually goes off. And I think they just think that if they stare at it hard enough, their wishes will come true. So anyway, we're all cats as well. Yeah, we're all cats, lab rats, something like that.

So now that you understand a little bit of the psychology behind what drives you to gamble, let's talk about some smart ways to approach it. And one of the key concepts here is something called bankroll management, which is basically a fancy gambler's term for knowing your budget when you're going out to gamble. So Sarah, what should folks know about this? You should bring the cash that you intend to lose. Just assume you're going to lose it. Set a certain amount and bring it with you. And that's it. Once it's gone, it's gone. So you asked your mom for some advice. I turned to family as well. My husband is a blackjack player, not like professionally or anything. He's just like pretty good at it. And he's been to Vegas like 10 times. So I was like, what do you do to like,

not anger me when you go to Vegas and you gamble? And he takes the cash out at an ATM at home and brings it with him. And that way he's not paying extra fees because sometimes the casino ATMs charge a percentage of what you take out, not a flat fee. So it can get really expensive. And whatever the cash he has is the cash he has and that's it. So I would highly recommend that route. He also kind of warned me that given the odds of games, you might want to budget a little higher because if you want to come out on top, you actually have to gamble a higher amount

and play more hands in order to actually win. So if you go and play like three hands, for the most part, you need to play for a while to recoup your losses. But your husband's tip about taking out the money beforehand goes also to the idea of having a plan beforehand. So know exactly how much you want to spend and kind of think about it like a night out.

Like if you're going out to see a show or go to some bars with a friend, you don't think about having to recoup the 40 bucks you're going to be spending on drinks. It's just not really a thing that happens. But with gambling, you kind of have this idea that maybe I'm going to make this back. And you just shouldn't think about it like that

because the house always wins and you're just there to have a good time. So think about it as your entertainment budget for the evening. Yes. And I will say we did talk about how gambling can be problematic. I wanted to share with all of you and anyone listening the number for the National Problem Gambling Helpline. It's 1-800-522-4700. So please avail yourself of that if you need it. So I talked a little bit about playing a lot of hands because of the odds. So games of skill

tend to have better odds than games of luck. So a slot machine doesn't have as good odds as say like poker or blackjack where you actually have to know what you're doing. So that's another thing to keep in mind is you're picking which games you want to play. And know the game that you want to play well.

So if you're really curious about Blackjack, you've never played it before, think about pulling up a YouTube video beforehand. You can also find a table where the person there will teach you how to play as you're going through a game. You don't want to go in with no knowledge at all because that's a great way to lose your money. That's not a smart way to lose your money gambling

in Vegas. So you can approach it for a few different ways if you want to just try out something you've never done before. Go in with some knowledge beforehand. Yeah, the dealers don't operate in this cone of silence. So if you have questions while you're playing, you can talk to them. They want you to win because then you'll tip them more.

So it's really like a mutually assured situation. So get their help so you win and then give them a good tip. And then also lastly, when you are going to have fun doing anything, I mean, know that that's why you're there. You're there to have a good time gambling. And if it hits a point where you're not enjoying what you're doing that evening, if you've lost all of your money that you said you were going to spend, just walk away. It can also help to walk away on a high note.

So say that you just had a great game of blackjack. Think about walking away at that point versus one last game where you might lose everything. You kind of want to end things feeling good versus oh crap, I just lost money that I had won. So think about that too. Yeah, I mean, honestly, it's just good life advice. If you're ever not having fun anymore, like go home.

Yeah. Like leave. Leaving is always an option. So if you're not having a good time at the casino, go do something else. Yeah, great. So the bottom line basically is gamble if you want, have fun, but don't expect to come home richer

than you entered the casino. Well, now we have a question for the audience. So I would love to hear your approach to gambling, spending, and maybe losing some money at the casino. How do you all nerds approach this? Kevin, a microphone is being whisked over to you as we speak. It's on its way.

All right, this might be a little controversial, but I think it plays into the strategy of having a plan before you get here. And from the psychological perspective, I would really recommend making a plan for your first night in Vegas that does not include gambling. Because if you don't have a plan, you're going to end up gambling. And there's something to be said for

waking up on day two of your trip, having not lost any money. So like whatever it is, buy show tickets, go out drinking with your friends, go to a karaoke bar, but like have a plan for night one and actually try not to gamble. Because then you wake up day two and you're like, I have not lost any money at the casino. And most Vegas trips, like, right for normal vacations, two, three days. Then you can, like, take your stab on day two. There's nothing worse, and I speak from experience on this. There's nothing worse than waking up on day two and you're like, I'm already, like, $100 down or $200 down. It just puts a damper on your trip.

So if you can make a plan, just don't gamble day one. Okay. I like that. It's kind of like my philosophy. I'm never getting sunburned on the first day of a beach vacation, which I've done. Don't do it. Yeah. Day two is going to be real bad. And day three and four after that. Every day thereafter. Until you're done peeling. Yeah. Okay. Any other nerds want to share their gambling tips? Over here. Oh, I got a microphone coming. Someone's running, running, running.

Yeah, hi, everyone. I actually lived here for a long time, and the big advice that I always used to hear is not that you should only have a budget for what you're willing to lose, but also, like, if I win this much, then I will quit. Because otherwise you start with this idea that no matter how high up I'm going to get,

I might still get higher and I could still spend more and try more. But if you say like, if I win 500 bucks, I'm going to call it good and I'm excited, I'm going to quit. You have more of a chance then of walking away with your money instead of just keep frittering it away. Yeah. People call that their walk away number. And so knowing what your high point is, we're going to say, I'm going to go do something else besides gambling now. Okay. Well, I think we can move on to the next segment. And in between that, we have another, would you rather, Sarah, do you want to

tee up the question? Everyone get your phones maybe ready. This is not a Vegas related question at all. So this time the question is, would you rather own your dream home but not be able to invest in the stock market or rent in your favorite city and be able to invest as much as you want? While the nerds think over this complicated question with technical difficulties perhaps along the way, what would you do, Sarah? I would rent. Okay. Why is that? I am a homeowner. I didn't buy my first home until I was in my mid-30s,

so I spent a long time renting. I kind of rented my starter home. Yeah. People say, oh, renting is throwing them anyway. It's not. You have a roof over your head. It serves a purpose. It gives you a lot of flexibility.

It gives you a ton of flexibility, and you have a landlord who changes the light bulbs for you, if you have a good landlord. If you're lucky. If you're lucky. If you have a good landlord. Sometimes you have landlords who are like, oh, Roach problem. That's deal yeah your problem um but yeah and i'd much rather rent and i'm really location's really important to me too so if it means living where i really want to live and

being able to invest then yeah plus my house is 105 years old and I'll be damned if that thing doesn't take a lot of work. So I'd be okay losing that responsibility. Wow. Look at this. Okay. The results are trickling in. It seems like Dream Home Can't Invest is the winner. Yeah. A lot of you disagree with me.

Americans love to buy a home. Yeah. And we're international, so who knows? I don't know. Yeah. Honestly, I kind of lean that way, too. I love having my home and my safe, cozy space. And owning a home is an investment, in a sense.

It's true. Depending on when you got into the market. Okay, wonderful. Speaking of investing. Speaking of investing, let's get to our next segment, which is a money question from a nerd. The question is, if I would like to start investing, is it a good time now with the market moving down almost every day, or is it better to wait a year? So we will start by reminding you all that we are not investment advisors.

So nothing we say is personalized advice. Do whatever you want. We don't care. Yes. Shout out to the NerdWallet legal team. We will not tell you what to do with your money. I don't know if I phrased that in the way that our legal team would prefer. But I'll repeat it again.

We're not responsible, basically. Yeah, do what you want. I'll sleep at night. But that said, a financial advisor would probably say that you might as well get into the stock market now, because the longer that you have to invest, the more time you have for your wealth to grow, and that just gives you more money over the long run. Yeah, so there's this concept called time value of money, which involves a whole lot of algebra, so I won't really get into it.

But a dollar today is worth more than a dollar tomorrow. That's the idea. So whenever you're given the option of investing sooner rather than later, it typically is beneficial to you, mathematically speaking, to do it on the earlier side. And also it's just the whole idea of timing the market. For most people, it's not going to lead to success. Most of us simply don't have the knowledge that is required to be able to thoroughly analyze investment options and come to some sort of intelligent conclusion and course of

action based on the information that you found. Most of us aren't going to take the time to do that. We don't have the knowledge to do that. So you kind of want to take your lizard brain out of it a little bit. Whenever I talk to friends who try and time the market, I ask them, you know, like, what's your philosophy? What's high for you? What's low for you? What are you looking for in order to take action? And they're just operating on, like, vibes. They have no idea what they're doing.

So I'm just like, just take yourself out of it. We have the technology to automate a lot of these things, and it's okay to admit to yourself and others that you would much rather just let robots make decisions for you instead of trying to tinker with your investments all the time. Yeah, and getting started as soon as you can also helps you take advantage of the strategy called dollar cost averaging, which is a very jargony way of saying that you can average out the price that you're paying for stocks over the course of your investment lifetime, basically. So right now, stocks are actually what some people are calling on sale because the stock market's been going down. But a year ago, buying the same stock would have cost you a decent amount more. So if anything, now is an excellent time to get into the stock market. Yeah. And if you already contribute to the 401k that we have here at NerdWallet or another retirement account, then congratulations, you're already dollar cost averaging. Potentially.

You've done it. That's it. You fund the account, but then you have to choose the investment. Yeah, okay. So this is, oh God, this is a mistake that I have seen. I used to work for a financial planner, so I saw this with clients and I saw this with friends. A 401k or an IRA is merely an account. It is not investing.

It is an account that holds your money and then you can do things with that money. So the default when you deposit that money is it's held in cash and you have to tell it where to go. And I know people who didn't do that second half of the process and their money sat in cash in a 401k

for like a decade. So don't do that. That is a bad move there. Yeah. So that's spiel done. Spiel done off my soapbox. Just don't screw it up. Yeah. Well, we should also talk about investing when the stock market is on a downward trend, which is kind of the crux of our nerds question here. And unfortunately, whether we're going into a recession or not, the verdict is out. There's no such thing as a recession proof portfolio. But there are some companies and sectors that savvy financial investors will look into when the economy is not doing so great. So mutual funds that track sectors like consumer staples, groceries, as we know, have been getting more expensive. And also utilities tend to be pretty popular during recessions because they're more

stable. Yeah. And just really just think long-term with investing. Typically, we recommend if you've money you need in the next five years, don't invest it. So it's really more for a longer, middle to longer term goals that you might have. And time in the market helps smooth out volatility. If you look at how a stock or an index is performing in like a month, and then you zoom out and look at it over 10 years, the month view is like a roller coaster. And then you zoom out and look at 10 years, and it's just this smooth upward trajectory, hopefully. So something that feels like a massive dip over the course of one day

just has a way of feeling a little less intense. And that's true of so many things. You just want to take a long view. So, yeah. Right. Well, now we would like to hear from some nerds about how you think about and manage investments when the stock market's not doing so great or the economy seems like it might be tanking. So, nerds, what do you all think? Hi, I'm Alina. Alina, hi. The travel team. Hi, how are you? Hi. So I think that when the market goes down, you just kind of have to

ignore it and just stay with it. And before NerdWallet, I worked in banking. So I have like a outside view of the investing process on the market. But there's always cycles. And if you take your money out when the price is low and then it goes up, you're going to regret it. So if you have a long-term vision, then you could be confident that our economy is strong in the U.S. And that eventually it will rebound and then you can really take advantage of that yeah and one thing that we probably should have mentioned before is that now is a great time to not look at your 401k don't ignore all of your account I did that a few days ago and it's not doing well maybe forget

your credentials or don't forget them but store them elsewhere and don't look at it. Yeah. Okay. Anyone else? We have one down here. All right. There's a few things that helped us. One is that we're fortunate enough that we have our six-month emergency cushion, so we're able to just automatically deposit some amount of our money into an investment account every month.

It's helpful to know that there's at least money there that's available. The other thing is that I stopped looking at my Fidelity app about a month ago and I'm better for it. Part of it is a psychological game. If you're worried about losing too much money, it's important to note that most brokers will let you do things like stop loss trade, meaning you can set a price target and if that stock hits that price target, you can sell stock. So if you are worried about losing money or you have a walkaway number and the stock pops beyond a certain point, you can set an automated trade, kind of like what Sarah was talking about with automation. And doing things like that have really helped me manage the stress of investing,

essentially my future, not thinking too much about it. Yeah. Yeah. You make a good point about having an emergency fund. So having some amount of money, whether it's a few hundred dollars or a month of your living expenses or three to six months of your living expenses or even more than that in a savings account, in liquid cash essentially,

so you can withdraw that money when you need it in an unexpected situation without too much financial consequence, unlike selling investments for their tax consequences. So that's the foundation before you begin investing in other things. So get that set up first. So if you're wondering where to start, start with the emergency fund. And then from there, you can make a list of your other financial goals. But at least you can act knowing that if something were to happen, you don't have to go into debt to deal with the problem. Right. Sarah, how do you think about investing?

I am super lazy about my investing. Does that surprise anyone? I hate gambling. I'm like a cat. Yeah. Risk averse. I'm not risk averse, but I do invest. I've got some time until I retire, so it's not like all in bonds or whatever. But I know what I don't know, until I retire, so it's not like all in bonds or whatever. But I know what I don't know. And I don't know what's going to happen to the economy. So I just put money in the market every month. An amount of money that I feel comfortable with.

And it's an amount of money that I know I can back off from if I have other goals that are more pressing. So I've sort of structured my money in such a way that it's like I'm aggressive as I can when I can be aggressive. In terms of the amount of money I put in, not necessarily the investments. And then if I have to put the brakes on it and pay for something else in my life, then I can do that. And then I just don't check anything except when I check my 401k a week ago like an idiot. Yeah. Lesson learned. Yeah.

How about you? Very similar. I contribute to the 401k, get a match, have the Roth, and then I have robo-advisor account, which is a really easy way to invest for those who are lazy and new to investing. It helps fix investments for you largely based on your own criteria. And I just have automatic deposits into that account. So I don't think about it. I hardly look at it. I make sure things are good and on track every quarter to six months, depending on how lazy I'm feeling. But beyond that, I just let things do what they're going to do. And so we'll see.

Yeah. I think with that, it's time for our final would you rather question. Final one, you guys. Yeah. This is a bit of a math question. Would you rather get $10 million today or $100 million over the course of 30 years? Math. The content team is scared right now. Time value of money. Too many numbers.

Somebody calculate the rate of return. You're actually decent at math, Sarah. You did this calculation. I have a calculator that is especially for things like this. I will tell you what the answer is afterwards, but I'm curious. Is that the calc you got for CFP classes? Yes. Yeah, I have the same one.

Yeah, it's weird. It's collecting dust. Well, there's an app on your phone too. Oh. I don't even know where my calculator is. Yeah. It was $80. Yes.

I don't know where it is. Everybody's talking. They're saying, what do we want? Yeah. How did you first start thinking about how you would answer this question? Was it the numbers or did you have certain personal criteria? So I had a hunch, but then I ran the numbers and it confirmed my hunch. Okay.

So that's, yeah. Okay. All right. It seems like folks are kind of settled on $10 million today. Yeah. Sarah, will you show us the numbers? Okay. Not everyone's still, everyone's still like...

People are still doing it. We'll give them some time. Settling in. Okay. All right. So I think a lot of you took my dollar today's worth more than a dollar tomorrow advice to heart and you picked $10 million today. So here's the deal with that.

If you were to invest $10 million today for the next 30 years in the hopes of getting $100 million at the 30-year mark, you need a rate of return of 7.98%. Point being, if you were hoping to turn that $10 million today into a massive windfall, you're going to have to invest it pretty well, which you can't predict as we've discussed. So I would be okay with that. There's something to be said about just having a bunch of money immediately and doing whatever the hell you want with it. I'm kind of leaning towards the 10 million personally. Oh yeah? Yeah. I want instant gratification, it turns out. Well, neither of us

are going to get what we want. This is a hypothetical. No one's getting any money. Nobody's getting any money. Sorry. We aren't going to be like, look under your chair. Yeah. Everybody has a wad of cash. I'm sorry. This is Oprah. No.

I don't know what you were hoping for. All right. Well, now we are moving on to our next nerd money question. And we're actually going to be joined on stage by the nerd for this conversation. Skylar, please join us. Wow, it is really bright. Yeah. Hi, Skylar.

Welcome on stage, Skylar. We haven't met before, but I admire your cats on Slack. Thank you. Thank you. Cats channel, everybody go there. Yeah. Okay. So you reached out a few months back because you had a pretty interesting story about some Bitcoin that you received. So can you tell us the story of how you received a nice amount of Bitcoin? Yeah. So an old friend of mine that I'd known for like a decade from college came over one day.

First time we saw each other in like a year because pandemic. And we were making fun of cryptocurrency. And I was like, hey, I think I remember you saying you had some from like way back in the day, which is only seven years ago. And he's like, yeah, I think I do. I think it's on a hard drive somewhere so we uh ended up going on a treasure hunt through a big pile of hard drives and we found a substantial amount of cryptocurrency nice very nice yeah and you ended up acquiring some of it by their own generosity yes yes so like as a thank you gesture for being

like, hey, you have these files that you should protect before they wither away. I received a nice sum of money, which helped me buy a house that I've been moving into before this plant. Congratulations. Very nice. So getting this Bitcoin was a life-changing moment for you. You were able to buy a house, and I imagine that was an amazing feeling, but you also probably had a lot of questions in the immediate aftermath. What were your initial concerns? So our initial concerns were, what do we do,

and are we going to tank something just by moving funds places? So I actually ended up reaching out and we have the Slack channel at NerdWallet. I'm saying this as if the audience. Ask a content nerd. And I was like, can somebody just explain it like I'm five? I just don't know where to even begin. And some of the questions that ended up coming out with that are like, okay, what do we do, do we cash it all out right now?

Do we save it? It's a gift. What does that mean? Are you in trouble with the IRS all of a sudden? Yeah. Am I on a watch list right now? Probably. Probably. Sorry. Probably was before that. Yeah. For other things to be clear.

Shout out to NerdWallet writer, Andy Rosen for helping Skyler with this. Yes. Andy. So there are some very complicated intricacies of cryptocurrency, as you were kind of alluding to. But in essence, you received a big windfall. And there are some general principles of getting any kind of windfall that NerdWallet likes to recommend. One is just taking a moment and realizing, holy crap, something huge just happened to me. And just sitting with that before you do

what you should do next, which is make a plan, short, medium, long-term goals. What was your process for thinking through, okay, I'm going to buy a bunch of crap immediately versus 50 years from now, here's what I want that money to be doing for me? Well, I mean, to be perfectly honest, the big concern was that this happened on the downtrend of everything. So it's like, what do I do right now? And I did take the advice and sat with it. Andy actually recommended to me some crypto-focused financial advisors. I reached out to them. Finding a financial advisor was kind of like interviewing people

that you'd be working with. It literally is. You're hiring them. The value of what I had did drop during that time, but I'm thankful that I did that because it ended up making me realize what this can do and what it can do for me later. But the immediate plans that were like, what happens if I cash out too much of it? What are those implications? This was a gift. How are gifts taxed?

The other thing about this is that this is all Bitcoin that was mined in 2009 when the value was $0. What does that mean for a gift? How do you explain that to a financial advisor or even the IRS? Well, that's why it's important to find a financial advisor who knows this stuff in and out. And when you're shopping around for a financial advisor, as I'm sure you probably were aware of at the time, it's really important to find a fee only fiduciary financial advisor. And there are a lot of jargony terms in that title. So let's break it down a little bit. Fee-only means that they get paid by a fee. You pay them, not based on a commission for things they sell you, which, as you can imagine, might create a conflict of interest. And fiduciary just means that they're

an advisor that has your best interests first rather than their own bottom line. Yeah. And in your situation, you did right by finding somebody with crypto experience. That is still a very niche kind of specialized thing for a lot of people in the finance world. And not everybody has that expertise. So you really want to find somebody who can walk you through all the different ramifications of holding crypto, selling it, storing it, gifting it, leaving it to beneficiaries, all of those things. And speaking of beneficiaries, it might also be helpful,

especially if it's a very large amount of money, to talk to an estate attorney and work your cryptocurrency into your estate plan. You need to have things in writing, your keys, who can access them if something were to happen to you. Because crypto is stored on a tiny thumb drive that you should keep in a fireproof safe, by the way. If you don't, just leave it in a drawer

and then hide your keys somewhere and lose them. So you want to talk with people with this expertise because they can help you think, how am I going to use this windfall now and in the near future? But if it's big enough that I can think about, what's my legacy going to be with this money, then somebody can help you organize your thoughts and develop that legacy and create that plan. So after you talked with your advisor, how did you make a plan to do

what you ended up doing, buying a house? Well, I kind of just went, okay, how much do I need to put down? I ended up being really lucky, actually, because the house that I bought was on the market for five weeks. It was overpriced, and it was right when the market was cooling off in Chicago, and I was able to start that process right before the latest interest rate hike. That was also another question that I had. Do I need a mortgage? Is that a good idea? What does that do for me? I don't know.

I've told many people at NerdWallet, I was financially illiterate up until five years ago when I found the website. But yeah, and then the other thing too, like Sarah just touched on, you know, storage of cryptocurrency. There's many different ways to do it. There's a lot of heated drama online about where you should store it, how you should hold that. Sarah mentioned a hardware wallet, keeping that in a fireproof state. There's also the idea of your recovery seed phrase. I know our InfoSec team, they know all about that.

But what I ended up doing with that was the whole point of us looking for all of this was how do we protect this from a hard drive that's going to fail to something that can last longer. So we bought hardware wallets. We also bought fireproof devices that we can keep those storage keys on and put those in safe deposit boxes. I have one of my backup keys with a trusted family member, that sort of thing. Sounds like you got it all tied up with a bow. Very, you know, if there's one thing that I've taken seriously for the past decade, it's information security. So great.

Awesome. How did you think about gift taxes, if at all, on this process? I had no idea what that was. So the thing is, like my friend and I like, we were trying to be as private about this as possible, because this is, as what it says, was a windfall of change. I realize I'm talking about this publicly in a big room of people. We have thousands and thousands of listeners who will be hearing this later on. We're all going to your house after this. I mean, the house is great. I don't have furniture yet. And it'll fit us all better. But yeah, so the question was like, do we treat this as found

money? Do we treat this as a gift? What does that mean? And hiring a financial advisor, that was actually really helpful because, and again, this is not financial advice that I'm giving you, but if we were to claim it as found money, we would have had to claim it as income. Whereas if it's a gift, because of the specific parameters around this gift, it being that the original value of it was zero dollars, that at the time of cashing out, as I understand it from the fiduciaries I've talked about, this is really just a long-term capital gains tax thing. So that's why it was important. But can somebody actually explain a bit more about gift taxing? Because I've heard multiple different things about it.

Well, the good news is you don't owe taxes on this, and neither does your friend. Woo! Yes. But if you give someone more than $15,000 in a year, if you're generous enough to do so, you are supposed to file a gift tax return, and that basically subtracts the amount from the total that you can give over the course of your life, is 12 million dollars so again a lot of money so you're good don't worry about it again this is not advice talk to a tax pro yes they'll be able to help you especially next year when it comes time to file your taxes we're not accountants either yeah yeah no that's

actually next on my agenda is finding a cp Yeah. Awesome. Okay, well, now we would like to talk with the audience a little bit. How would you approach receiving a life-changing financial gift? What would be the first thing that you do? Which is a big question, so chew on it a little bit. Sarah? I would never fly coach again. Like, no joke with the flight here. I was seated next to somebody

for whom deodorant was apparently optional. And I was seated in front of the man who was very tall and took his shoes off and then just had his foot like this. So his like bare foot was just right in my peripheral vision in the aisle. I would live a life where there was more space between me and my fellow passengers

whenever I traveled. Yeah. And then you would call in the team of advisors. Yes. I would assemble my financial dream team. I'd have the financial planner. I would have the tax professional. I would have the estate attorney. And knowing myself, I would take a couple months just to sort of like process everything. But yeah, I would basically talk to the financial planner and be like, make it so that I never fly coach again. Right. That's my goal. Please make it stop. Yeah.

Yeah. Well, now let's hear from some folks in the audience. Anyone want to share what they would do first if they got a nice amount of Bitcoin? All right. Andy. Andy. I want to know.

Mr. Rosen. He's like, I would buy all the Dogecoin. I'm kidding. I don't think you'd do that. Well, congratulations, by the way. I'm really glad to hear it worked out so well for you. I don't know. What I'm thinking of, I mean, we keep talking about this as part of this discussion, which

is you have to make a plan. So even if your plan changes because you get more money, you want to think about what kind of lifestyle enhancements you might be able to afford, right? You might get a windfall of money and potentially you want to just spend it all right away, buy a giant house that you're going to have trouble paying off. Or you can see what about your financial life needs to be fixed.

Like if it was me, I'd be looking at exactly how I can get everything set up the way I want it and be comfortable in the life that I have now. And then I would say like, okay, what can I afford that I wouldn't be able to afford before? What are my values? What do I really want to do with this money? And it might turn out that I have a lot less to spend than I think I do. So the first thing I would do, I think, is make that plan, just like we've been talking about in all these other scenarios. Great advice. Other nerds? I want to hear something fun. Back there. I knows? Oh, in the back?

I know we're all so responsible. Who would blow all of it in one day? I want somebody to go out and buy a Tesla. Hey, folks. As far as my ideas on what would happen if you were to get a huge windfall of money, I think outside

of having, of course, a plan to figure out how you're going to actually handle this money i think you need to figure out like your not to get like meta here but like the like your idea or your philosophy behind money because it's like one thing to get like a ton of money and then just like spend it on like two teslas something. I don't know. But what I think one should do is, and this is just me personally, pay it forward to folks who are important to your life or something. Maybe your parents, maybe your partner, maybe your kids, for example, if you have any. And because not everyone gets a windfall and if you can look out for others, then I say do it. Yeah. I'd love that.

Budgets are documents that reflect your values. So if you want to contribute and help people who aren't as fortunate, that's something everyone should do, I think. Anyone else? Let's hear from one more person. If you received a nice amount of life-changing money, what would you do first? Amanda. Amanda in the front row here. Well, I don't know about y'all, but me and my husband have these talks and we're laying in bed at night going, the lottery is $500 million. What will we do? And we play this game in our head where we'll pay off the house we'll buy a car we'll pay off our parents mortgages you know thinking about the do for yourself do for

others but then i think there's got to be a certain amount of money where you just go ball at the mall yeah where you say like we each get five grand or whatever i don't even know at least the scale of this money is just like the space photos from NASA. It just seems so foreign. Anyway. But you just go ball at the mall. Absolutely. Ball at the

mall. And I just want to share one last thing. The thing that I did when this happened to me was I turned to the nerds. Great. Thank you for the plug. Thanks for talking with us, Skylar. Thank you.

All right. And that's all we have for this first ever live episode of the Smart Money Podcast. Thank you all for joining us. Thank you. So, as always, if you guys have money questions, turn to the nerds. Call or text us on the nerd hotline at 901-730-6373.

That's 901-730-NERD. Or email us at podcast at nerdwallet.com. Before we go, though, a quick reminder and more formal way to say the disclaimer that I said earlier. This is from the brilliant minds on the NerdWallet legal team. Your questions are answered by knowledgeable and talented finance writers.

Hi there. But we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.