The I Love CVille Show With Jerry Miller! - The Kyle Miller Show: Alex Urpí Of Emergent Financial Services Joined Kyle Miller

Episode Date: April 4, 2024

Alex Urpí, CEO of Emergent Financial Services, LLC, joined Kyle Miller live on The Kyle Miller Show! The Kyle Miller Show airs live Thursday from 2:15 pm – 3 pm on The I Love CVille Network. Watch and listen to The Kyle Miller Show on Facebook, Instagram, Twitter, LinkedIn, iTunes, Apple Podcast, YouTube, Spotify, Fountain, Amazon Music, Audible and iLoveCVille.com.

Welcome, ladies and gentlemen. I'm your host, Kyle Miller. Thank you for joining the show today. And as you know, this show is to bring on individuals who are doing amazing things in their lives, helping the communities, expanding from what they were first brought on to, and changing people's lives, right? Not only have they transformed their lives, but the people that they touch and they communicate with on a day-to-day basis,

they're helping them transfer their lives as well. So just all around great individuals. I want to bring you positivity in this. And with that said, I want to introduce to you our guest today. His name is Alex Erpe. He is with Emergent Financial Services. And I appreciate you being on the show today. No, it's a pleasure. Thanks for having me on. I've been looking forward to it. Awesome. And you also have your own podcast, right? Yep. We were here about four hours ago for Today Manana. My dad, my brothers, and I, we kind of all rotate now, just bring on some local entrepreneurs, nonprofits.

This morning we had Oratorio Society and Charlottesville Opera. Just chat and see what's going on, kind of share all the great things going on in Charlottesville that we love. Nice. We really enjoyed that one. Nice, nice. And so there you're interviewing just individuals throughout the community, just kind of like this show, right? Exactly.

Really similar, really similar vein. Yeah, we just bring on, sometimes it's entrepreneurs, sometimes it's nonprofits, just whoever we can get our hands on to come on and just kind of share a little bit about what they do and make sure we're keeping the community up to date on anything that's happening. Awesome. Awesome. Now, with Emergent Financial Services, right, what is this company? What do you guys do there?

So in a nutshell, basically, the way we put it is we help people save money, essentially. We help them save for retirement or it could be children's education. We help them with their financial planning. Right. So if they want to know, and that's anything from I want to know how to start budgeting, how much to save, all the way to, all right, I'm five years away from retirement. Do I have enough saved? When should I take Social Security? When should I pull out? Do I need this type of IRA? Should I

be putting this much in my 401k? So really the whole listed picture, we help people figure out what they need to do for their financial life. Right. And so you're helping people all across the spectrum here in Charlottesville. You have an office here in town? Yep. We're right on Ivy Road near Foods of All Nations. Old Ivy Road. So we're at Foods of All Nations under there by the old Ivy Inn. Man, if I was next to Foods of All Nations every day, I would go in there every day. There was a point where I was getting a baguette.

Do they have those Marie bet? I was there like four days a week getting a baguette for sandwiches for the office to the point that like, they knew me as the guy with the bread. Like one of the cashiers would, would be like, would like, I could see her like start raining out for $3 for the bread. They're like, okay, I know what this guy's buying. Right, right. Well, that's awesome. And so you have individuals come in, you help them with 401ks, all the financial aspects of it. With your experience, what do you see that most people that come to you aren't involved in? That's a great question. I would say usually the issue that I think a lot of people have with money is that it's not an easy subject to talk about, particularly with someone that you haven't met yet. Right. Or that this is your first time meeting them. It really takes that kind of trust

factor because, I mean, money is a very private subject for a lot of people. And it's something that I think a lot of people aren't very comfortable handling because I would say for most of us, the first time we ever did anything remotely resembling a financial literacy class is maybe an elective in high school,

maybe an elective in college. Even then, the odds are against it. So it's pretty much you graduate from college, you start working, you're like, oh, So it's pretty much you graduate from college. Right. You start working. You're like, oh, I need to figure something out about financial literacy. And because it's also such a closely held thing, I mean, it determines what you can do. There's a certain prestige of like, okay, how much do I make?

Do I really want to share that with someone? Right. That I think because people also are not super familiar with it, it's not an easy subject to talk about. So sometimes people will just put it off. They'll be like, I really don't want to think about investing or where to put it or something, so they just don't deal with it. And then there comes a point where they say, I really, really need some help here because I don't know what's going on. I don't know. Things are

not adding up. I have no idea how much I spend. I have no idea whether I'm saving enough. A lot of times, first kid or two comes along that it's like, oh, I really should be saving something. And then sometimes it's, oh man, retirement

which was once 30 years away, is now 15 years away. And I have no idea whether or not I can retire at 65 or not. So I think a lot of times the impetus is to come when something big happens. What people should do, which makes it a lot less stressful for them, is to just find someone you can trust and think about it a little bit earlier. Because I always tell people, I could be the world's greatest genius and pick all the best investments. I still cannot overcome time. Time is the most important factor. And someone who starts 20 years earlier than someone else can make so much more than I could even help them make. Absolutely.

And I want to go back to breaking this down, right? And it goes back to how our parents, like, you talk about people don't like to talk about money, right? My experience is that people don't talk about money because parents didn't talk about money. There was no talking about money in the house. There was no talk about finances. There was none of that. It was like, hush, hush. You don't get to talk. Nobody says anything. And so exactly your point. And I think that's wrong. I think we're doing our kids' disservices when we do that because I think

they're too young to understand about it is not a very good excuse because they do understand. There's kids that have jobs. There's kids that have allowances. There's kids that have all these things that they want to spend their money on. So why don't we talk to them a little bit more educatedly? And maybe that's because we're not educated about finances. We're not sure how much we know about it, so we're hesitant to share. So we're timid, right? And we have all these things of sayings about money, which are not true. Like some of my favorite are money doesn't grow on trees.

Well, technically, money is made out of paper, right? And that's a tree. There's a lot of money in the world, right? Another one is, say, for a rainy day. You have all these things. That's too rich for my blood. That's this. So you have kids that grow up with these sayings in their head

which are not necessarily true which then creates a um uh uh you know a belief a false belief about money it's kind of this i think it leads to this mentality that the only people who think about money and saving money are rich people right since i'm i don't see myself as one of those super rich people right i don't think about money. I just kind of go day by day. But it really, not only does it not have to be the case, but it really should be the other way around. The person who really needs to think about money the least

is the guy with $20 million in the bank because you know what? Even if he doesn't invest his money, he's set for life. But if you only have $10,000 in the bank, your money probably should be doing something for you because when you get to 65 and if you still only have $10,000 in the bank, your money probably should be doing something for you because when you get to 65 and if you still only have $10,000 in the bank, that's not going to help you. Yeah. Yeah. And too many people I think are relying on social security to take care

of them. And it's just, it's not sufficient. It's not. And once you get older and well, you're going to get 1600 a month or 1700 a month. Well, you see right now what's going on with all this inflation, right? Houses used to be, I bought a house at Lake Montice to get $1,600 a month or $1,700 a month. Well, you see right now what's going on with all this inflation, right? Houses used to be. I bought a house at Lake Monticello for $75,000 back in 2000. Was it like 13? Something like that. You can't find a house for under $250,000 right now.

Nowhere. So I bought that house. That house then has now, and now it's up to $250,000. So I don't necessarily play in stocks too much. And here's the other thing, guys. Just because you don't know, you've got to get comfortable with some sort of investing. You've got to get comfortable with something. So understand it and then know what the pitfalls and the, the, the, the parts where it's going

to be beneficial for you. Right. And understand those and invest in what you know. And then for things that you don't know, invest with somebody who knows those things. Right. And understand where you're going to get, where the, where the biggest returns are going to get. Because let's face it. If we have $10,000, right, and we're going to put it into the market at, what, an average of 8%? I mean, that's what it's been. I mean, if you want to be conservative, we use 6 a lot. 6.

Just to assume that maybe the next 20 years won't be as good as the past. 6%. And you guys, you've got to understand that's what you're going to get. And it's going to compound over time. And you can run the numbers out and you can do the math. And like you said, time is better in the market. When you see the chart of like money compounded over time, if you think about it this way, at seven percent, so kind of right smack between six and eight, just the rule of thumb is at

seven percent a year on average, your money doubles every 10 years. Right. So if you think about it, 50 becomes 100, becomes 200. So when you look at the compound interest chart, it balloons by the end. And it's the same return. Right. It's just the power of the interest compounding. Right. And so it's something that you've got to get familiar with.

It's something that you've got to do. Guys, I was talking to my mentor the other day, and I actually hate the money game. I hate what the Federal Reserve does, all the stuff, the things that they play, the manipulation of markets, all that stuff. If it's just cut and dry, here it is, it'd be a lot better. But it is what it is, and it's the game that we've got to play And I don't like the game, right? I don't want to be in the game. But I know if I'm not in the game, I'm going to be at the bottom of the barrel. And I don't want to be there either. So I have to learn the game. And this is something that I think is

imperative for everybody. You may not like it, you may not want to do it, but you have to learn it. You have to understand it. Because if you don't, you will perpetually be at the bottom and not understanding and not being able to function, I believe, in life. And by function, I just mean monetarily. Yeah. It's just the way you have to look at it is the way I always explain savings to people in investments is you really have two choices with any money you earn, any dollar you earn. It's either current consumption, meaning I will spend this dollar on something I need or want now, or future consumption, meaning I will eventually

spend this dollar on something I need or want in the future. And if you think about it right now, when you're young, you have a bunch of human capital, meaning you can do things which bring in money that you can spend now. So you can consume things now. In the future, there's going to be a point at which you don't want to be using your human capital at 70 to fund your future consumption at that point. So at some point, you need to say, all right, what do I need to do to make sure at 70 I have financial capital? I have something that is future consumption. So even if you wanted to take money, if you don't like the thought of stocks and dollar signs inside accounts and all these things, just think of it, okay, I can earn something now, which is current consumption. What do I need to do to make sure I have future consumption?

What do I need to do to make sure that in the future, I can still buy the things that I need and want? And the only way to do that is to have something that bridges the gap. There's something that basically, if I buy a piece of bread today, in 20 years, I can't eat the bread. If I have money today, in 20 years, it has eat the bread. If I have money today in 20 years it has maintained some semblance of value. Now granted, like you said, with inflation

it has to grow otherwise it will lose value. And that's really where investing comes in. In other words, saving says I'm going to not use this so that it's there in the future. Investing says, alright, if I just stick this under my mattress, it's going to be worth less in the future. What do I need to do to make it grow to counteract that effect?

And with the savings, I think people, well, I'm just going to save my way to a million dollars. That's hard. It doesn't grow. You've got to invest the money. Think of this. People are so emotional to money, right? They place this ownership over it, right? But it's actually just a tool, right? And that's how I look

at money. It's just a tool. If I lose it, I lose it, but I know how to get it back, right? I can't ever get time back. That's the key, right? Can never get time back. But if you lose it, I lose it, but I know how to get it back. Right. Um, I can't ever get time back that that's the key, right? Can never get time back. But if you lose money, you can make money up over here. You can make money back. You can make that money back. Um, and I think that's what people are afraid to lose money. People are afraid to like, let it out of their hands and put it, maybe put it into an account that can grow interest because now I can't touch it. I don't see it. People get a high over how much money they got in the bank account. Mine's like this, like this, like this all the time. And some days I got it, some days

it's out into the market and working for me. I think people are by nature risk diverse. There's been a lot of behavioral studies that say by nature we are risk averse. Now, obviously, different personalities are more so than others. But for the most part, human beings, when it comes to money in particular, we're not risk seeking. We're not saying, oh, I enjoy doing something riskier that might give me a greater odds of losing my money. We tend to be the other way around. But you have to take some risk to earn some kind of return. But the important thing to remember is that risk is always a measurement that relates to time.

In other words, I can do something, I can invest in something riskier. And it doesn't have to be individual stocks. There's so many ways to do it, which we can talk about. So many ways to get into the margins that don't involve trying to pick winners and losers anymore. Right. But I can do something risky that would be risky if it was a six-month time period, but not risky if it's a 20-year time period.

So if you think about it, I can invest. If I invest in 100 small companies, and I do this, but I need the money in three months back, that's a huge risk to take because those companies could have a really lousy three months. Now I pull out my money

and I have lost the ability to recover my losses because I've now taken the money out. But if I invest in 100 small companies and I have a 20-year time horizon, the odds of the American economy as a whole being smaller 20 years from now than it is today, you have to have some level of faith in American ingenuity and so forth, is very slim. So it's a different kind of risk and one that I need to be more willing to take because I have a 20-year time horizon, knowing that as my clock gets closer

and closer to the 20 years, at the point at which 20 years becomes five, that's when I will decrease my risk and say, well, maybe I don't want to be in the 100 small companies. Maybe I want to now be in 100 big companies because they won't move as much. But it's all relative to how much time do you have? Because your time horizon really has a lot to say about how much risk you can take. So it's not what can appear risky. If you think of it like, oh man, this is my money and it could go down 30%. Well, yeah, but if it goes down 30% and you have 40 years left, you're fine. Right. If it goes down 30%,

you need a net smart. That's an emotional response, right? That is that, oh my God, right? That's the, I'm invested in crypto. I invest in houses. I have stock market, but it goes up, it goes down, it goes up, it goes down.

More often than not, though, it's going up the entire time. If you look at the charts, it's always like one of those, you know what, it looks like an escalator. Where it's got, you know, but it has peaks and valleys, but the trajectory is up because there's more people in the future. So right now, still, there's more people. People make things grow. At some point, I mean,

if at some point you're like, oh man, the American economy is going to completely collapse and the world will end, then I'm like, you've got bigger problems than whether or not you have retirement savings.

Exactly. Don't bother with anything then. But in other words, you have to have some kind of faith in the economy as a whole. Right. Even if you're not, even if you might be worried about the next 12 months or the next five years. I remember the S and P I graduated college in oh seven. Right. And so I came into the, I came into the marketplace and, um, I was a personal trainer up in Boston and, uh, was

working with some high, high net worth individuals. Right individuals. Just kind of talking to them and just kind of listening. I would train them. We've got to have something to talk about other than just the weights. How's life going with you? That type of stuff. They would talk to me. I think the S&P was down to like $600 at that point.

I think that was 2009 or 2008. It would have collapsed. It was like $600. I'm like, man, if I would have just done that, what When it would have collapsed, yeah, but it had the bid. It was like $600. And I'm like, man, if I would have just done that, what's that, $3,500 right now? I think so. Where are we at now?

But I mean, yeah, the return has been double digits since then. The world thought it was over, right? And so they've done, if it's $35,000, I mean, they've done $X, 6X, right? From that point. The average has been, the S&P 500, even just the last few years, I mean, you're talking 15% on average. Yeah. And we're just talking about one index, right?

You can be in all these different other things. And your most basic, and that's your really, it's your most basic index. It's the 500 biggest companies in the U.S. Almost everyone can name the top five companies in there. Your Alphabet slash Google, Meta, formerly Facebook, Netflix, Amazon, right? Your basic ones. And you can literally go, you don't have to go in there and try to pick which 500. You can buy an ETF, which just means exchange-traded fund.

That just buys all 500. It's the simplest thing you can do. So it's not necessarily a confusing... It's not like the old days where you had to go and pick and buy one share of each of 500 stocks. You buy one share of one ETF, and you have a piece of all 500. So I'm sure with all this stuff, everything that we kind of talked about, some people are probably like, oh my gosh, that's a lot. I've never even heard about that stuff. This is way over my head. What do you suggest in regards to working with

you guys? The steps that you take to kind of take them through that process, to kind of educate them, also to let them know about the risk factors and how the whole process works to get them more comfortable about investing. We really like to start with the whole process works to get them more comfortable about investing. We really like to start with the basics. So to be honest, first conversation, the little questionnaire that we worked with people through doesn't mention investing at all. It's do you have an emergency fund? What's your checking?

Do you have any retirement work plans? What are your expenses what's your income just kind of your basic because the goal is to to get people comfortable to say okay this is my financial life as it currently exists yeah and then we can begin to kind of churn through our minds the the different partners and say okay we're seeing okay this is what needs to happen here but we don't necessarily know that yet because you want to do those building blocks and help people say, look, we're not

comfortable talking about your financial life. We've given you, we tend to give people a little questionnaire in advance so they begin to know, all right, if these guys are going to ask me about my expenses, I should probably look at my credit card statement and see, what do I spend on dining out? what do I spend on,

you know, dining out? What do I spend on groceries? What do I spend? Cause you could use, you know, find fancy phrases like non-discretionary, discretionary spending, but we just boil it down to what are your needs? You need to know what are the needs that you're spending money on your mortgage groceries. I always put it as mortgage slash rent groceries, gas, right? In other words, if you took out everything enjoyable about life, spending money on your mortgage groceries i always put it as mortgage slash rent groceries gas yeah right in other words if you took out everything enjoyable about life yeah you still have to spend money on those three things to exist right right so your needs but then you do want to put into you you don't know we do want to know people's wants because that's what makes life enjoyable at the

point of a financial advisor isn't to say oh oh, I cut everything enjoyable out of life so that when you're old, then you can enjoy life. So you still want to put in dining out, going on vacation, taking the kids on a weekend trip. So you factor these things in. You have to know what they are, know what you're spending on them, kind of put it together. And then we do basic building blocks, which often, to be honest, what I first start with the way that investing is not like a bank account. Okay. Because a lot of people get confused when you talk like IRAs, Roth IRAs, 401ks,

they're like, well, is this like a bank? And I always tell people this way, when you open a bank account, you're lending money to the bank. You're saying i give you the bank my 200 that bank he's lending it to someone else yeah you just trust that when you don't get it back that somewhere in their system they have the 200 give you back when you invest when you base it brokerage account which is your the equivalent right bank account is for you're checking, brokerage account every single type of investment account is a brokerage account. All the fancy names IRA, 401k

that just refers to tax issues. They're all brokerage accounts. And the job of a custodian bank, which is where the brokerage account is is to just hold things in your name. The way I put it like this, I have on my wall in my room a piece of paper which is one share of Disney.

Because back in 1992 when I was born, a friend of my dad's bought a share of Disney, which they own a piece of Disney, the company, and they used to give you a piece of paper that says Alexander Earpy owns one share of Disney. Now, nobody uses the paper anymore, so the job of a brokerage account is to just

keep a record that says, when you buy Disney, so and so has one share of Disney, has three shares of Costco. And that's all it is. They're not lending your money. All that account does is hold the record of what piece of companies or funds you own yeah and i start there but is that everything

else is just either a tax question how do you want the money you put into this account to be taxed, or an investment question. In other words, once you have the account, what companies or funds do you want to buy? But everything else boils down to the difference is you're not lending anybody money. You're not writing a check. We always start with lines, you should never write a check to Emergency Financial Services. You're not giving me your money to invest. You're putting your money in your own account whose only purpose is to hold things in your name. So that you don't have to deal with 100 pieces of paper that say you own five shares of this company. And we start really at those basics because everything else is just taxes or how much risk do I want to take?

It really boils down to. Yeah. I mean, that's good. I mean, I think the key is just education in this, right? There's a lot of people that just aren't educated in the process. And I know a little bit of it, but I don't know all of it, right? I'm involved with it in the day-to-day, but there's all these questions that can come up with the tax purposes. Are you taking long-term capital gains?

All this stuff that once you get in, it's like anything, though. You've got to take that first step, and then you're going to learn as you go. I think there are a lot of people also just sit back and listen and go, you know, I need to learn everything before I jump in. And that's not the case in anything in life because if it was, nobody would get anything done. Right. The step is, all right, take the first step, put some money into it, feel good about that and go, oh, okay, now I know how to get money into the account. Let's buy the first stock. Oh, okay, that wasn't as hard as I thought. Let's make the first trade.

Let's do, you know, and just go on and on from there. And so I like how you're working that. You bring them in. You talk to them. You ask about what their risk tolerance is. Get an understanding of them personally first, and then kind of grow from that aspect. Exactly. Because you have to mix risk tolerance. There's two types of risk tolerance.

There's people's personality, and there's their actual situation. Yeah. And you have to mix the two to get someone's real risk tolerance because i mean you you can have you know 70 year olds that are just really done ho and they're like out you know buy biotech and cryptocurrency and and so forth and it's balancing say look i i love that you're into these things right but you're 70 and this is all you have yeah therefore we need to balance your desire to to take risk with the circumstances of your financial life, which is that you can't afford to take risk. And vice versa.

We'll get 23-year-olds that are like, I'm really nervous about this. And we're like, okay, normally we would put you in a really aggressive portfolio because you have 40 plus years to retirement. And have one good year to make a huge difference. It can, it can. And what we'll say is we'll tamp it down a little bit. We'll go maybe instead of super aggressive, just slightly less than super aggressive

to match your personality, but also explain to you how this works and why you don't have to be nervous about it because of your long time horizon. Now, I'm sure you work with a lot of people with 401ks that had 401ks with companies. What is your experience with them knowing exactly what they can do with a 401k? Because some people just think it's it's just money there yes right and like that's for retirement but there are a lot of different

things that you can use that 401k for there are and and the tricky thing with 401ks is that on the one hand there's the free money aspect. I always tell people, if your employer is matching, always our first priority is going to be whatever they're matching, that's where we want to target first because you never leave free money on the table. The challenge with 401ks often is that their options can be very limited. They're very administrative. Their options can be somewhat limiting.

So oftentimes what you will do with that is say, okay, let's do the best we can in the 401k given what they have. And sometimes that could be just saying, you know what, just put the whole 401k in an S&P 500 index fund. The other options are either lousy, not really doing what they say they're doing, and the simplest thing is that, and then we'll adjust everything else to compensate for that.

In other words, if you should have a mix of stocks and bonds, but your 401k has no bond options or it has lousy bond options, then we'll say, well, let's not even worry about the bond options there. Let's put the stocks there. And then with other savings you have, we'll take a look at bonds.

We'll take a look at other things there. With the key things to think about, I would say 401k, I would say the number one thing that we try to make sure people are aware of there is because you do have that 59.5 age age limit whereby you if you try to take it out before age 59 and a half you get taxed yeah penalized what a lot of people don't realize is if your employer lets you go and you are 55 or over there's the rule of 55 you can actually touch the money earlier okay you only you get you still pay taxes because you weren't taxed going in. Right.

But you no longer have to deal with that penalty. Okay. And so that's a good little lead because a lot of people, something will happen between those ages. They're like, I can't. I'm stuck. I can't get Social Security until 62. Right.

And I can't touch my 401k. And we're like, you can touch your 401k. Yeah. Right. And you can do it without getting the 10% penalty. Okay. Right. And it's just treated

like taxable income. Gotcha. There are other things that are less frequently used. I mean, some people will use it as collateral. Some people will take

a loan off of it. Those, I think it depends a lot on the precise situation. Okay. Because those are places where we've seen people like get themselves

into a bit of a pickle. We have to get the money back. Yeah. Yeah. Because those are places where we've seen people get themselves into a bit of a pickle. If they're not careful. Because you're lending to yourself. You're borrowing from yourself, but the problem is there's still a custodian on the other end that says you've got to put that back in or else you're going to be taxed

on it. Taxed and penalized. So the benefit of 401k now is you don't get, you don't, it's, it's pre-tax money, right? Mm-hmm.

And so, the benefit of an IRA, Roth, right? Roth is the reverse. So yeah, we can talk about those. So 401k pre-tax.

So in other words, I like to put it this way. If you make $50,000 in a year, and you put $10,000 of that $50,000 into a 401k, as far as the IRS is concerned, you only made $40,000. They're going to look at it and say, you only made $40,000. But the price of that is, one, the IRS is like, you can't touch that money before 59 1⁄2 or we're going to come after you,

not just for income tax but for penalties. And the other price of that is when you then retire at 59 and a half and you're like, well, I want to take money out. Then you pay income tax on it. So it's something that you've got to figure out, right? Which is the Roth is the reverse. The Roth, if you made $50,000 and you put 10 into a Roth IRA, you can't actually put 10 for the sake of...

Yes. For the sake of... Right, this year it's 7 sake of... Yes. There's a limit for six. Right, this year it's seven. Seven, okay. It's not up to you. But for the sake of argument, we'll say you could put 10, right? You make 50, you put 10 into a Roth IRA.

Government still, IRS still charges you taxes on 50. Yeah. Right? When you take money out on the other end, you don't pay income tax. Right. So one way or another, the IRS gets their money.

But the question is, which is better for you to save on taxes now, pay in the future, or to pay now, save in the future? And so in the real estate aspect of it, this is where if you have these, and this is what I do, self-directed IRAs, right, where you can lend. And you guys, there's a lot of different things out there that you can get 10%, 15%, 20% on. You can, you know, if you know what you're doing, this is, don't do this and just, you're not getting this in the market. Like, just sitting it there. But this is kind of, I'm going to say this quotes because it's not necessarily, but active, you know what you're investing in, you're managing it, you're doing what you need to do, but you can't take the money. It's got to go back into the Roth, but you can

buy houses in those self-directed, right? And all that cashflow comes in there. You sell the house out of the self-directed, all the profit comes back into those things, and that's tax-free. Yeah, well, that's the beauty of all IRAs, right? All IRAs, 401ks, Roth IRAs, the one thing they all have in common, self-directed as well as just your basic, you know, I went to Fidelity.com and opened one, right? Right. The beautiful thing about all of them is that anything that happens

inside that IRA is tax-free. Yeah. The capital gains, tax-free. The interest, tax-free. The dividends, tax-free. So you're not getting a bill every year. That's huge because you're avoiding this thing called tax drag. And what tax drag is, is I make a hundred bucks. What would I normally do? I would put the $100 back to work immediately. I made $100, now I put it back to work. Now that $100 that I gained is growing. If I made $100, IRS takes $15, I'm only putting $85. So I lost, it's not that I lost $15,

because at the end I'll have to pay the 15 anyway but what I'm losing is that 15 could have grown yeah and then the next year that 15% of that could have grown yeah and 15% of that

so the tax drag if you can imagine 30 years of the little piece that the IRS tapes out every new year failing to grow,

sometimes that thing can be like 40%. Yeah. Right? And so what the beauty of IRAs and Roth IRAs is you don't have that. Everything that happens inside there, again, taking money in or out is where it gets tricky.

But anything that happens inside the context of an IRA or a Roth IRA or a 401k or a business retirement plan is tax-free. And that's really where the power lies and the reason why you want to look into those because

it can just do so much for you in the fact that it's growing tax-free. And it's also a peace of mind thing. I mean, you can imagine who wants to get a 1099 form every year and says, congratulations, you made $1,000 of interest sitting in a brokerage account, but now you have to come up with $150 to pay the IRS. No one wants to deal with that. If it's an IRA, you don't have to deal with any of that.

Yeah, absolutely. There's so many different things that you can get invested in so many, and I'm sure you, you help people do that with the risk tolerances and what they can do. Um, and so that everybody needs a financial planner or advisor or somebody that, you know, knows their way around. And I would suggest just get comfortable with the person that you're working with, right? It's just like anything, know, like, and trust. You know, Alex, you've been doing this for how long? Well, I myself, I mean, my dad's been in it for 35 plus years.

Okay. I myself, I mean, if you count when I interned, it's, man, actually, if you count when I first began to intern with my dad doing on the research side, it's over a decade now. Yeah. Actually, just last year, I passed a decade. So with your experience, obviously, if you've been doing this for 10 years, you've seen the markets go, right? And somebody that hasn't, you know, they dabble here and there.

You obviously have way more knowledge. So reach out to Alex if you have any questions on anything that's going on. Because, I mean, this is your life. This is your day-to-day. This is what you do. You help people with financial planning, with average, like all of it. So reach out, touch base with them. You're talking about the IRS.

You're talking about taxes. Do you think, we got a couple things going on here. You have taxes. Do you think taxes will be higher or lower in the future? It's a general assumption in my industry that for the most part, taxes, you can pretty much expect them

usually to be higher in the future. So the best thing to do would be to pay now, is what you're thinking. The only reason to, really, if all else equal, preference definitely is Roth IRA versus IRA. Right. But it's better to pay taxes now than expected higher taxes in the future. The issue is that there are a number of people, depending on what your income is,

that if putting money into an IRA traditional, meaning pre-tax, or 401k bumps you to a lower tax bracket, then your savings now may compensate for the fact that taxes are expected to be higher in the future. In other words, if I can get from a 25% to a 22% tax bracket now, present value of money is greater than future value of money. I may want to do that even if I

think the base tax rate is way higher. That's a good point because one shoe does not, it's not a one size fits all. It's like because of the incomes that you have coming in, the different tax brackets, you can play with it and utilize. I mean, I know that, but I totally forgot about that while I was talking with you.

And then you just brought it up. And it's like, yeah, you need both, dumbass. It's just the way it is. And sometimes it's a year to year. I mean, nothing stops you from having both. You can have a traditional IRA and a Roth IRA, and then just each year decide how much does that $7,000, which is the maximum you can put into those.

Now, business retirement plans for small business owners, things like that, you can do much more. But just base an individual person, $7,000 or max, you can just put that any way you want. You can go five to one, two to the other. You can go 50-50. You could do $7,000 to a Roth IRA one year, $7,000 the next year to a traditional IRA.

It doesn't matter. And sometimes it's a year-to-year thing because there may be a benefit to bumping down. Sometimes what will happen is you'll get a year where like, okay, I actually quit my job in March and then I got my next job doesn't start until January. Well, that might be a great year to put a bunch of money into a Roth because your income is lower.

Right. Right? Depending what your income is now, I mean, if you're at the height of earning, right, and you're making $150,000, $200,000 a year, right, at $200,000 you can still put into a Roth. There's like an income cap there. But let's say at $200,000 joint income, you might be sitting there saying, doesn't at 200 you can still put into a roth there's a like an income cap there but at two

let's say at 200 joint income you might be sitting there saying well yes taxes will be higher in the future but my personal taxes may not because in retirement when i'm pulling money out i might only be getting 60 grand a year from social security and this year i'm getting i'm getting 200 so i'm way higher right So I'd rather put into a traditional IRA. Conversely, if you're Roth IRAs often work really well for people under 30.

Because typically under 30, you're earning somewhere between 50 and 100. You're not, you may be at actually a lower, if you're first year in the workforce, you're earning $65,000, there's a good chance, given how low your tax bracket is,

the Roth is going to be perfect. Because you're willing to pay taxes on $7,000 given your tax rate right now, because there's a good chance that in retirement, you might actually be seeing a higher

tax rate by the time all is said and done right so you'd rather do that now so it really depends on kind of that's kind of why that first questionnaire we do is what's your income what's your situation because our minds are even before we've even you said the word roth or ira to the to someone is kind of churning, all right, where's the best picture? What's the jigsaw puzzle? Because every person is really unique in that sense. There may be trends.

Like I said, under 30, really good chance. Roth IRA is going to be the best option. Between 40 to 50. You know, 30 to 50 is where it gets a little iffy. 50 to retirement, peak earning, you're probably going to want traditional. But there's so much in between that it really depends on an individual

person's scenario. Yeah, and there's so much out there. I mean, we didn't even talk about half the stuff that you can do with financial services, right? I mean, we just talked about 401ks and IRAs pretty much today and how the taxes are going to affect it. Do you all do any tax? Do you do anything with taxes? So we're not CPAs in the sense of telling you, if you do X, you will save X dollars on taxes. We always have people, you know, actually use professional CPAs

to do that. What we know of is, what we do is try to figure out, okay, what are the methods that will save you on taxes? So that can be the IRA or Roth IRA decision. It can be something like tax loss harvesting. In other words, you have, let's say you have big gains and you worked for a company for 20 years. You had their stock since way back. And now you're sitting there, man, like, oh, man, I got 1,000% gain in this company. If I sell it, I'm going to have a big tax hit. Right.

Well, to say, okay, well, you have other things in your portfolio which are at a temporary loss. If we sell those, but which temporary and we're happy to move you into something else. Right. You can't just sell it, buy it back. Right. The IRS has figured that one out. That game's been played. Yeah, exactly.

But there's things you can do to say, okay, yeah, let me get out of this. Sell this for a loss. Sell that for a gain. They offset. Yeah. You know, I've reduced. You can't get rid of it entirely, but I've reduced my concentrated position. I've reduced this one stock that's really too big.

I don't want all my money in this one stock. I've reduced it, sold something else, and now I can move my funds elsewhere and try to compensate for that thing I sold at a loss. So there's things that we know how to do that will help people with taxes, and then we just send them, we'll say, to your cpa to get the exact number or to figure out you know in other words we'll be able to say you know if someone's making 198 if someone's making you know let's say 235 000 yeah we'll be able to say you're right on the edge where you may or may not be able to put money into a roth ira right talk to your cpa figure out once they trunch the numbers if you can yeah then come back to us because we think this would be a good idea, but we are not the ones to say whether or not you actually can.

You have to have a professional in that field do it. Right, right, right. And that's the thing, guys. Build your team. Build the CPA that does well for you. Build your financial advisor. Have the right doctor that you want to be involved with. Try like, this is why I like paying people for their services because they

have their own expertise and they know what goes on in this world. Right. And so when we start paying for advice instead of how everybody likes to do the DIY, right. Yeah. You know how some of those projects turn out. Same thing with anything else in life. A lot of rich people have people on their team, right? To advise them, to tell them what they need to do. They have their attorney, they have their financial guy, they have their tax guy, they have these people on their team and they consult with them to make better decisions, right? Because I'm going to come to you and ask you questions of, I have this, this, and this. I want to do this, this, and this. No, you don't want to do that because you're going to get in trouble. You're going to get a letter,

but we can do this. Great. You're keeping me out of trouble, right? Those type of things. I can't stress that enough to have people around you. Stop trying to figure it out on your own and making mistakes and saying it doesn't work contact professionals that do this on the daily um and i think that's you're going to have your best uh luck that way and it's a service you pay for that service guys so um you pay for that education on not screwing up right you? You have that. You learn. You grow. And you expand. So, Alex, I appreciate you coming on the show, man. It's been a joy. It's been a lot of fun.

Yeah. Sharing your knowledge, sharing your experiences that you have there, trying to get people. Obviously, we think everybody should be invested, right? Having money under the, because we are no longer backed by gold, having money under the bed. I always say, like, if you got money under the, because we are no longer backed by gold, having money under the bed. I always say, if you got money under the bed,

inflation is like the Federal Reserve coming in there and taking it out from under your mattress. They're taking a dollar every night out of that mattress, and before you know it, you're going to be like, oh man, I thought I had 10,000.

Well, yeah, but it's only worth five now. It just doesn't buy what it used to. It's just like, I mean, you go, look online and say, what was 50 million, well, yeah, but it's only worth $5,000 now. It just doesn't buy what it used to. It's just like, I mean, look online and say, what was $50 million? 50 years ago, what's $50 million worth, right? If we had 50 years ago, $50 million, what's it worth today?

And they're going to run an inflation calculator, and you're going to see it, and they've lost. It's going to be double, right? Think about my dad's day. So you're talking like 1960s. You could actually buy things with nickels right and dimes quarters one dollar yeah is there anything out there that you could actually buy even the dollar store is a dollar 25 now yeah right so in other words that's

what happens to money over time exactly you need to find you need to invest because you need to compensate for that and the worst the for that. And the worst, the people that it affects the worst are the people that aren't involved in this stuff, that in the lower income families.

That's who it hurts the most. This inflation hurts those people the most. Absolutely. The rich people, they pay it. They have the money. They have the cash flow.

They have it coming. But people who are living on fixed budgets that have limited income, this is who, what hurts them the most it's the most regressive of taxes yeah inflation yeah it takes it takes properties away from families it takes land it takes it takes everything slowly that's why i mean that's why nobody's kind of like

obviously because you don't see it you don't get a bill saying hey last year you paid 500 worth of inflation tax right No, it's just you go to the store and you're like, how come I have less money? And it says, well, yeah, because eggs are doubled. This is what they say. Everything's so expensive. No, no, no, no, no. That's not what happened.

Your dollar is worth less. Those same eggs that you bought at the store for, I don't even know, $3 I think they are now? I'm not sure, for a dozen? No, they're like, I've been seeing like five or six. It's like tripled. Yeah, five or six dollars used to be a nickel, right?

And so your dollar, the value of your money, has shrank that much that it needs that many dollars to equal that same nickel back in the day. So that's what's happening. It's not everything is getting expensive. Houses in the marketplace, the skyrocketing prices, it's not getting more expensive. Our dollars are getting less valuable. Yeah, it's the same manpower, if not less, to build a house now than it was 50 years ago.

It's not more labor hours. It's just that you've got supply and demand, but you also have just in general that piece of paper. Let's face it. The $1, you take it out, it's a piece of linen. It is worth only what we say it is worth. It can't even be exchanged for gold anymore. It is worth literally what we right it is worth literally literally what we say it is worth and it's not backed by anything it's not backed by anything so

the issue is it can fluctuate yep and over time as there are more people and more printed like anything else the more you make of something the less each one is worth yep so the more dollars we print the less each dollar is worth and it's inevitable so you just have to do something to counteract that effect or else you'll have saved money. And then you'll come in and be like, oh man, well, yeah, I did save this money, but now it's not, I thought it was going to be enough to live off, but it really isn't anymore. Yeah. Yeah. Well, again, Alex, your, your office is on the backside over there. So, uh so we're at 310 Old Ivy Way, Suite 302 in Charlottesville.

So yeah, if you're heading out, if you're passing Foods of All Nations heading towards Boar's Head, what you'll do is you'll go under that little train underpass into Old Ivy Road. You'll pass the Old Ivy Inn, and then on the left-hand side, there's Old Ivy Way, a couple offices there,

and we're right in there. Right in there. You know, super easy to reach. we're at emergentfs.com and then you have your your podcast as well on thursdays at 10 a.m 10 15 10 15 a.m uh same i love seville network today manana yeah awesome awesome um guys if you haven't learned anything on this show today, if you walk away with this, one thing is to invest your money. Don't hold onto it. Don't have emotional attachment, go out there and let it work, right? When you're investing the money, it's working for you. So instead of you working all of those hours, you invest the dollars and those go work for you.

Um, thank you, Alex. I appreciate you coming on the show. And until next week, thanks, guys.