The Personal Finance Podcast - Should I Invest Aggressively If I Am Behind In My 50’s? - Money Q&A

Starting point is 00:00:00 On this episode of Money Q&A, should I invest aggressively if I am behind in my 50s? What's up, everybody, and welcome to the Personal Finance Podcast. I'm your host, Andrew founder of MasterMoney.com. And today on the Personal Finance Podcast, we're going to be answering your questions in this episode of Money Q&A. If you guys have any questions, make sure to hit us up on the MasterMoney newsletter by going to MasterMoney.com slash newsletter. and you can respond to any of those newsletters there, and we will answer your question.

Starting point is 00:00:50 And follow this podcast on Spotify, Apple Podcasts, or whatever podcast player, you love to listen to this podcast on it. If you want to help out the show, consider leaving a five-star rating and review on Apple Podcasts, Spotify, or your favorite podcast player. I cannot thank you guys enough for leaving those five-star ratings and reviews. Now, before we dive into some of the questions today, I want to take note for you guys to make sure that you stay tuned for next. episode. Next episode, we have an episode coming out called The Ten Laws of Investing.

Starting point is 00:01:20 In the end of that episode, I am going to dive into some really deep frameworks on exactly what we think most people should have as their parameters for investing. So really excited about that episode. Stay tuned and make sure you check that out. Make sure you're following this podcast and make sure you can see that as well. Now, the questions we're going to be diving into on today's Money Q&A is we have three of them today. So the first one is, should I invest aggressively if I am behind in my 50s. So that is the first question. The second question is, should I invest money? I am saving for a car if I'm buying that car within the next eight to 10 years. And so we're going to talk through that scenario because they're looking to buy two different cars, one within the next

Starting point is 00:01:59 couple of years and then one within eight to 10 years. And they want to think through how they can save up that money in addition to being able to pay off those cars in cash and buy them in cash up front. And then question three is, should I put my rental property in an LLC? and the question actually goes way deeper than this, and we'll dive into that as we go through this process. So these are the three questions today. So without further ado, let's get into it. All right. So this first question before we dive into it is a very important topic. And I think most people, if you started to invest late, I want you to hear what I say in this question, because this is going to be something that most people need to hear. We have an episode talking about what to do if you started

Starting point is 00:02:41 investing late. And it is an episode we recorded a long time ago. We probably need to re-record that episode to add some additional things that we want to talk through here. But I want you guys to hear this first question because this is a really cool thing where it is never too late to start investing. And we're going to talk through that right now. So question one is, hi, Andrew. I was late, really late to the investing world. I have become a 57-year-old student in the past 12 months. Here is a snapshot of my situation. It would like to know if there's anything I am missing or could be doing better. I currently make about $55,000 a year, and my wife, a retired school teacher, brings in an additional

Starting point is 00:03:17 $38,000. We have no credit card debt, car loans, or student loans. Fantastic. We still have a mortgage at about 2.75% rate, and we owe about $168,000. We still have two high school-age kids at home. Now for our investments. I have a 401k through work, and I am contributing about 20% each paycheck with an employer match of 50% of the first 6% that I contribute. This year, I am maxing out my HSA at over 9,000 a year

Starting point is 00:03:46 and just started investing that money as well. I have recently opened a Roth IRA and when my CD matures, I plan on maxing out next year's allotment when my next CD matures in January. I have an emergency fund of $20,000 in a Fidelity Money Market account earning 4.75%. I still have another CD with 21,000 more due to mature in March 2025. Here are a few questions I have for you. Once the $21,000 CD matures, should I deposit it into my Fidelity Cash account and use it to counter a rise in my 401K withholdings? I am thinking about raising my contribution rate to 25% to 30% and taking advantage of the pre-tax benefits and saving on taxes. Number two, do I keep paying on my mortgage considering it has such a low rate or do I pay it off quickly? And then number three,

Starting point is 00:04:35 I realize I'm older in years and late to the game, but I am currently investing in an aggressive rate. Most of my investments are in the S&P 500 with little to no bonds. Should I take a more cautious approach to keep this aggressive rate since I am so far behind? So, first of all, absolutely amazing the progress you were making over the course of the last 12 months. And most people would not stand up and they would not try to fight for their retirement. I am so excited to see you do this. This is absolutely amazing what you are doing here. just over the course of the last 12 months. And I love to just see the progress that you

Starting point is 00:05:09 are making over this time frame. It is absolutely incredible what you are doing. And you put yourself actually in a strong financial path, whether you know it or not, you have a strong financial path ahead of you that you can really make some cool decisions going forward. Now, the first one is increasing your 401K contributions after your CD matures. So the first thing I would do is definitely consider increasing those 401K contributions. You know, if that is the task, strategy that you want to go for. You also have the Roth IRA contributions to consider if you wanted to go that route as well based on your income here that I see. So if you are looking through those two options, you know, if you have a CPA or anybody in your corner, I would talk through those two

Starting point is 00:05:48 processes to see which one you should raise. But that is absolutely a fantastic option for you, especially as that CD matures. Now, if you can live a lifestyle where you don't have to utilize that CD money in order to supplement your income based on the increase going into your 401K, more power to you, but I see what you're doing here. You're just kind of washing the CD contributions, and you're trying to put those into the 401K instead and making sure that works. So in that scenario, I think that is a great idea and probably something that I would personally do is increase some of those retirement contributions, because that is a really, really important thing to do. And then over time, as you see this progress going forward, you're going to see that these accounts are going to save you

Starting point is 00:06:25 on those upfront taxes. But if you want to save on the tax-free growth as well, then the Roth IRA is another great option, which I know you have opened up upfront there. Now, your second question is about your mortgage. And when it comes to your mortgage, you have a 2.75% interest rate. Now, because of that, I am in the same scenario. So my personal mortgage right now is like right above 2.5%. And for me, personally, there is no way I am paying that thing off any faster that it needs to be paid off. The reason for this is I can put the money in a high-yield savings account at current market interest rates. Now, if you're listening to this way in the future and rates have dropped, it may be very different. But currently right now, I can put that money into a high-yield savings account and get a 4% rate of

Starting point is 00:07:07 return on that money. So there is no way I am going to pay off my mortgage faster. But in your scenario, you are approaching retirement age, which is probably why you're asking this question because a lot of times we talk about, hey, it's great to have your mortgage paid off in retirement, so you don't have those additional liabilities that you have to worry about. And in addition, you do not have to have as much money to retire if your mortgage is paid off because you don't have those mortgage payments coming up. Now, you're still going to have tax. you're still going to have insurance, you're still going to have maintenance costs. So it's still expensive to own a home, even when your mortgage is paid off. I think a lot of people think that

Starting point is 00:07:39 their home expenses go way, way down, which they go down to whatever the amount of your mortgage is, minus your insurance and minus your taxes. And so your principal and interest balance is what goes away. Everything else is still there, and you're still going to have costs to incur when you pay off your mortgage. And so in this scenario, because you are trying to catch up and you're trying to get your investments to catch up, I would more than likely not be paying off the mortgage early because your interest rate is so low. That is a fantastic rate. I would try to keep that rate as long as as possible. And instead, I would take those extra dollars and put them towards your investments. If you're going to put them towards your 401k or if you're going to put them towards your Roth IRA or a

Starting point is 00:08:16 taxable brokerage or your HSA, which it sounds like you were maxing out that HSA, which is amazing. But I would take those extra dollars. I would not pay off this mortgage faster at this point in time. And I would take those and put it into the market and invest those dollars instead. Now, that's how personally I would look at it. Now, if you need site, psychological peace of mind, meaning some people just don't like having debt on hand. That is a different story. And that would be something that I would definitely reconsider possibly. But for the most part, the math kind of guides us on this one. And we definitely want to make sure that we are just moving forward with getting those dollars in investments instead of paying off that mortgage early.

Starting point is 00:08:52 Now, the third question is kind of thinking through your investment approach. So you are at age 57 and you are trying to think through, hey, should I just continue this aggressive investment approach where I have minimal bonds? Most people my age might have more bond exposure than I do right now. And that is a fantastic question. But because you want this money to grow, I think if I was in your scenario, I would kind of continue on your path that you're currently on, meaning that I would look at something like this and say to myself, hey, I want this money to grow as fast as possible because I maybe started investing late. And so because I started investing late, I'm going to continue investing heavily in the S&P 500, knowing that it may be more volatile. It may go up and down,

Starting point is 00:09:33 but I'm okay with that because I want a higher rate of return over the course the next couple of years. Now, if the volatility bothers you, if you think that in any scenario, if the market dropped at 30%, that you would really panic, then I would change my investment criteria. But it all really comes down to one thing, which is your risk tolerance. If your risk tolerance is okay handling this, then I think it's something that you definitely want to make sure that you can just continue on the path because historically the stock market has outperformed the bond market. And so this is something where, you know, having an allocation of bond is great, but in continuing in stocks is also something that you can aggressively move forward with. And, you know, just continuing on that path,

Starting point is 00:10:10 I think is going to be beneficial. Now, you can gradually over time shift to bonds if you feel that you are, as you approach retirement age, you can gradually start to shift to bonds if you want to decrease that volatility. I know people who have been retired for a very long time and all they own is VTSAX. And I know people, people who have been retired for a very long time, that all they own is V-O, which is the S&P 500 ETF. Those folks are completely happy with just having some of these large cap stocks because they believe in the U.S. economy long term. And so they believe that this is something that long term is going to have a higher rate of return than would a larger bond allocation.

Starting point is 00:10:47 And so because of that, those people are comfortable with it. And so it really comes down to your risk tolerance. Are you comfortable with that risk tolerance and or do you think you need some more bond allocation in that portfolio, then that would change drastically where you kind of land on that. For me, I'd be comfortable with the S&P 500 personally. Like, I'd be comfortable investing in VTI or something like that long term and just having only that in my portfolio. Only because I have a higher risk tolerance than maybe some other people do. Even in my current portfolio, I have minimal bonds and probably closer to like a Warren Buffett portfolio when it comes to my stock and bond allocation. And really, I am very, very comfortable with that. In fact, I would be comfortable with

Starting point is 00:11:27 100% stocks in my portfolio as well. So a lot of options there, but I think if your risk tolerance is high, I don't think there's any issue there. So, and then I would continue maxing out the HSA like you're doing, as you've probably heard me talk about the health care costs are rising and they're rising rapidly at a rate of about 7% per year. And so continuing to max out that HSA is going to be really, really helpful. And you're going to be able to probably reimburse yourself pretty nicely there. Now, if your wife is a retired school teacher, not sure if she gets a pension or anything like that, that could probably help you guys out a lot as well. And then moving forward, focusing on tax efficiency. So using that 401k, using that Roth IRA is going to be very,

Starting point is 00:12:03 very helpful. And then increasing those 401K contributions would be something that I definitely would consider when that CD matures. I would not pay off the mortgage early. And then I would stay aggressive with my investments if I were in your shoes. And you know, you can do whatever, whatever your risk tolerance suits. But if I were in your shoes, I would say aggressive with those investments, I think that is probably the better path for me, at least, in my risk tolerance. So thinking through those options, we'll do an episode coming up, by the way, for everybody on how to assess your risk tolerance, because I think it is something that is very important. We've had it on our list for a while. We just want to make sure that we are simplifying it as much as possible

Starting point is 00:12:39 for people so that it's easy to understand. And so that is one of the main goals for that. And we will have that episode coming soon so that you can kind of figure out what your risk tolerance is and assess that in a simple way. So that is coming up as well. Thank you so much for the question. And congratulations on focusing on this stuff. It is absolutely amazing what you are doing here. And can't wait to hear more about your progress. Please keep me updated. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy. Clothes don't fit anymore and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows with it. That's something I've been thinking

Starting point is 00:13:18 about more this spring, making sure the safety net we have in place actually matches the life that we're building. And that's where PolicyGenius comes in. PolicyGenius is an insurance company. They're an online marketplace that helps you compare life insurance quotes from some of the top insurers in America, all in one place for free. And their licensed team works for you, not the insurance companies. So they help you find the right coverage for your situation without all the guesswork. And they walk you through everything. Answer your questions, handle the paperwork, and help you get the coverage that actually fits your life today and where it's going. So protect your family with a policy that grows with your life. With PolicyGenius, you can see if you can find 20-year

Starting point is 00:13:57 life insurance policies starting at just $276 a year for $1 million of coverage. Head to PolicyGenius.com to compare life insurance quotes from top companies and see how much you can save. That's policygenius.com. I remember when I needed to hire someone fast, but finding the right person quickly felt impossible. And if you've ever been there, you know how stressful this can be. That's where Indeed comes in. When it comes to hiring, Indeed is all you need. Instead of struggling to get your job post noticed, Indeed's sponsor jobs help you stand out and hire faster. Your post jumps up to the top of the page, making sure it reaches the right candidates. And it makes a huge difference. Sponsored jobs on Indeed get 45% more applications than non-sponsored ones.

Starting point is 00:14:41 And there's no need to wait any longer. Speed up your hiring right now with Indeed. Indeed. And listeners of this show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash personal finance. Just go to Indeed.com slash personal finance right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash personal finance. Terms and conditions apply. Hiring. Indeed is all you need. Local news is in decline across Canada, and this is bad news for all of us. With less local news, noise, rumors, and misinformation fill the void, and it gets harder to separate truth from fiction. That's why CBC News is putting more journalists in more places across Canada, reporting on the ground from where you live, telling the stories that matter to all of us, because local news is big news. Choose news, not noise. CBC News.

Starting point is 00:15:37 Okay, when I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my out of office has a forever setting. An IG Private Wealth advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. find your advisor at IDPrivatewealth.com.

Starting point is 00:16:09 All right. The next question is an awesome one. We're going to talk through kind of phases of saving for cars and how to kind of think through that process. So here is the question. Hi, Andrew. Just want to start off by saying, I love the podcast. And I listen all the time and I've learned so much about what to do with my finances.

Starting point is 00:16:24 Because of you, I have taken control of my finances and investing and feel more confident and secure now that I know where every dollar is going. Well, thank you so much for the compliment there. And I truly appreciate you listening. and it's amazing kind of what you're doing as people will see here in a second. So my question comes with replacing cars and the best way to invest money to pay for those. I have an old Buick that I will need to be replaced in the next two to four years. So I plan to put that money into our high yield savings account. Great. And I'm the type of guy who does not need a fancy car. So listening to what you have

Starting point is 00:16:53 to say about getting a Toyota or a Honda, anywhere under $10,000 is a goal I am confident we can accomplish. My fiance's parents got her a newer car recently that will most likely need to be replaced in the next eight to 10 years. So my question is what to do with the dollars we want to invest to pay cash for that car? She has a little bit higher tasting cars, so I'm guessing we'll be spending around 30 to 40,000 in today's dollars on the next car for her. We are fine with doing that as long as we pay cash for it. Is this time frame something we should invest some of it in a high yield savings account and index some of it in an ETF? Or what is your best system for investing money that you will need 10 years down the road? Thank you for your time and all that you do to help people. So I truly,

Starting point is 00:17:34 truly, truly appreciate this question. This is an awesome question that I think that is really, really, I commend to you for even thinking through this process. Because what you are doing, and most people I want to kind of look at this example, what you are doing is you are planning ahead for big purchases. And this is what we want you to do. We want you to save small amounts of money over time and plan ahead for big purchases because you could do that and get to this goal of paying in cash with $30,000 with about $100 a month to $200 bucks a month, depending on the system that you put into place here. And so let's just think through this process as we want to go through this. So first, you want to buy a car within the next two to four years. And where you are

Starting point is 00:18:12 putting it is a high-yield savings account. That is absolutely where that money should go. So anybody listening to this podcast, if you have a goal to purchase something within the next five years or less, that money needs to be in cash. Why does that money need to be in cash? Because if we go into a recession, for example, and all of a sudden that you are trying to pay cash for a car and that money gets cut in half, then all of a sudden you can't buy that car. And so we need to make sure that short-term savings goals always go in a high-yield savings account and they stay in cash. We do not want that money being risk in investments because the market, you know, month to month, week to week, and even year-to-year will be very volatile. Long-term, the market goes in one direction,

Starting point is 00:18:54 but short-term, the market goes in a bunch of different directions. Mr. Market changes day-to-day. And so we want to make sure that we keep those dollars safe by putting them in a high-ealed savings account. What changes this equation, though, is that if we are looking to save up for something over the course the next 10 years. Now, what happens here is this will now come down to your risk tolerance because short-term, five years or less, always in a high-ield savings count. Don't even second-guess that, okay? Long-term, though, we need to think through, well, what are we going to do long-term with this money? And so I like to think about having that money saved in a specific way. And so the way I typically will do it is I will do the first five years.

Starting point is 00:19:35 So within the next five years, the first five years of savings will typically be in a high-ield savings account. And I will hybrid the second half into either conservative ETFs or index funds or something that I am more comfortable with with my risk tolerance. So for me, I'm fine with like an S&P 500 fund. I'll throw it in there and let that thing grow for the next five or seven years. And if there's a recession, you have a couple of years for that money to recover within that time frame. Then gradually, as you get closer to that time frame, then you can take those extra dollars and start to funnel them into a high-yield savings account as you get closer to the time frame. And so as I'm talking through this, I'm going to actually throw this in a compound interest calculator to show you the

Starting point is 00:20:10 differential of what would happen here. So if you had $10,000 and you wanted to utilize that $10,000 for a brand new car in the next eight years, for example. So if you took $10,000 with a 10% rate of return over the course the next eight years, that $10,000, if you didn't add another dollar, would turn into $22,181. So investing that money, if you had those returns, which you may not, you may have to get conservative here, let's put a 6% in there. It would still be $16,141. So maybe the first couple of years, the market was up. Then the next couple of years, it went down drastically. And then, you know, we averaged out to about 6% for that year. You still have $16,000. That's more than your $10,000 that you would have in there based on, you know, wherever else you'd have it. Now,

Starting point is 00:20:52 if you put in a high-ield savings account, you'd have $13,763. So if you're okay, with that risk. If you're okay with taking a risk, you have the potential to have over $20,000 per $10,000 that you save and invest as long as you're looking at it that way. Now, let's see what happens if you put an additional $100 into that investment account over the course of the next eight years. $10,000 at an 8% rate of return would be $32,000 if you added that $100 per month. So you're looking at being able to pay for that car in cash, you know, if you put $10,000 up front and then just had those small additions. Now, you can cut that balance in half. And let's say you had $5,000 and you added $200 per month. You'd have $36,236. So the periodic additions, meaning the amount that you add monthly does make a big

Starting point is 00:21:38 difference. And so if you want to start with the smaller amount you can and then start to build that up inside of index funds and ETFs, you're just going to get to your goal faster if that happens, as long as the market is continuing to uprise. But the risk is you hit a recession, you know, a couple years before you have to buy the car, and then you lose 30 to 40% of your portfolio. Now, you have to figure out, is that loss of 30 to 40% going to still be about the same as it would be in a high-ield savings account? Because high-old savings accounts will not stay at 4% forever. This is a golden time for us in high-ield savings accounts, but then they'll probably, if interest rates drop, then they will go back down over time. And we will be in a scenario

Starting point is 00:22:16 where we still have to go back to having those low-rate savings accounts, which absolutely stinks and cash is harder to hold onto in those scenarios. But at the same time, it is still something, hey, we all got to deal with it. It is part of protecting our wealth as to have cash on hand. And so making sure we have that is really important. So I like the balance approach. I like to split it into high yield savings and into investments. So the investment portion will start to grow. And as you see that investment portion start to grow, then I would start to tailor it back to more so high yield savings accounts is how I look at that. Now, if you want to stay 100% cash and you want to keep it in a high yield savings account, all of it, you do not have to invest this money at all.

Starting point is 00:22:51 not think through that because it is riskier to invest those dollars. So if your risk tolerance is like, I just want to save this as cash for the purpose of what it is for and put it in my high yield savings account for the car, then that is absolutely fine. There is nothing wrong with that. In fact, that is the safer route that guarantees your money is going to be there. And so there's nothing wrong with that at all. But if you're trying to optimize this a little bit and you're trying to see, hey, can I squeeze a few extra dollars out possibly? It's not guaranteed whatsoever. But can I squeeze a few extra dollars out so I don't have to pay so much out of pocket and my dollars can help work harder than I can. Then moving into possibly investing a portion of that is definitely a great

Starting point is 00:23:28 option. So listen, thank you so much for listening. Thank you for your feedback here. And in addition, this is a great question. And I hope this helps. Let me know if you have any other questions. Hey, Andrew, I really enjoyed a recent money Q&A that got me thinking about some questions that I have. Now that I actually have some money and some assets to lose, should I put my rental properties into an LLC? What about my primary residence and how does that work? Can you talk about the advantages and disadvantages of putting a property into an LLC and does that property have to be paid off before you can do that? All my properties are being financed. Lastly, is it possible to put your retirement in other accounts into an LLC? And how do you protect that money from potential lawsuits or liabilities?

Starting point is 00:24:07 I googled it and it looks like employer 401ks are typically protected, but Roth IRAs or not. Please elaborate. All right. So these are fantastic questions. And this is from a long-time list. and this is just a wonderful, wonderful thought process here on how you're actually asking these. And so what we're going to do is first I'll talk about rental properties, then I'll talk about your personal residence. And then lastly, I'll talk about those retirement accounts as we go through this. So rental properties, in my opinion, should be in an LLC. And the reason why is because of liability protection. So my rental properties, I put all of them in an LLC because of liability protection. And what this does is it helps protect your personal assets from liability in that

Starting point is 00:24:46 rental property. So if someone sues you over something related to the property, maybe they fell over and got hurt, they fell into a pothole, they were having a party and somebody else fell on your property. All of these different things, they can only sue the assets within the LLC. This is why you'll see a lot of property owners have a bunch of different LLCs for all their different properties, because if they put all their properties under one LLC, you can try to sue and go after all of the value of those properties. Whereas if they separate them in LLC, you'll see something like 1, 2, 3, Street number one, for example. They're really generic names, typically. The reason why they do that is because they can spread the liability out where each LLC only has the liability of either that

Starting point is 00:25:24 property or maybe it's two or three properties, depending on how many they have. Some of them try to simplify and put two or three under one LLC. Some put like up to five. Some put all of them and it's just, you know, the risk they take. But it definitely should be in an LLC if you have a rental property. That is one thing that I truly believe. And that's for a number of reasons. It protects your liability. It protects your privacy. There's a lot of different. things involved with that, but it also helps separate your assets so that you can keep your rental properties in a separate legal entity that helps clearly distinguish what your business is in comparison to what your personal residence is. Now, the disadvantages to this is you have to

Starting point is 00:26:00 kind of work with your lenders to make sure that you are doing this in the proper way. So what I would do is I would call up my lender and say, hey, I want to transfer my property into an LLC. How would this possibly work? Because sometimes if you just transfer it to an LLC, it could trigger that loans due on sale clause and you don't want that to happen whatsoever. So you got to make sure you're communicating with your lenders first on the process that they have within that bank to make sure that you have that available. Most lenders will allow property transfers into an LLC with their permission as long as they see that you're the, you know, the primary owner of that LLC. And so it's not a huge, huge issue. And also having that LLC open allows

Starting point is 00:26:38 you to have business expenses properly documented for those specific properties so that when you if you have a couple of properties, I would just have one LLC, but you can properly document them, and it makes accounting a little easier to separate those two things. Now, if you want to put your primary residence in an LLC, that is something where I'm not as interested in doing it. Now, people do it for privacy reasons. Really, really wealthy people will do it because they want to stay anonymous and they want to stay private. So it can be done. It's not something that cannot be done, but I would be much less likely to do it. One, because homestead exemption. So many states offer a homestead exemption, My state included Florida offers one, which protects a portion of your primary residence value from

Starting point is 00:27:18 creditors and bankruptcy and lawsuits. It also can help reduce your tax liability significantly. So like in Florida, for example, if we homestead our properties, we pay a lot less taxes than we would on a rental property. And so that's something you definitely want to do if it's your primary residence. But you also don't have on your personal residence, if you put it under an LLC, you don't really have that liability shielding. Meaning the main reason is on a rental property is to protect your liability. you don't have that as much if it's your primary residence, and they don't apply the same way as do rental properties. So your personal actions could still lead to liability issues regardless if it's in an LLC or not. So if you're looking for liability shielding, that's probably not the way to go either when it comes to putting your primary residence in an LLC.

Starting point is 00:28:01 So the only reason why I really do it is if you're trying to really hide where you live, which, you know, many people have different reasons to do that. So that's not something that, you know, is out of the ordinary, what's something. a lot of people do do that. And so that's one thing. But if you're trying to do it for financial reasons, there's not really any financial reasons to do that because of homestead and you don't get the liability protection like you wouldn't a rental property. Now, protecting your retirement accounts, that is something that you have to plan more so within trusts. And so that is going to be a much more complicated subject because asset protection trusts will be something that would help you do that process. There's no way to put it in like an LLC or anything like that. At least that I'm aware of,

Starting point is 00:28:42 I may be wrong. If you're an attorney and you're listening to this podcast, please correct me if I'm wrong. But it's really trusts are the way you're going to want to go if you're going to do something like that. Now, employer sponsored 401Ks, you are correct. Those are protected from lawsuits. While IRAs, they have varying levels of protection based on state laws. And you know, you can do something like umbrella insurance for your IRA, but that's just might be an added protection cost that you may not want to incur on a monthly basis. And so really just protecting those possibly in a trust would be the best route to go. And so you could kind of talk through that process with an attorney or trust and will or there's a bunch of different ways to do that. So yes, your 401k, if that's greater,

Starting point is 00:29:19 is protected. Your Roth IRA, that is going to be one that you may want to put in a trust if you are really worried about that protection level because that is going to be a very different animal when it comes to doing some of this stuff. So that is one for sure to talk to someone if you want to go through that process because it is worth diving into, especially if you have a bunch of assets that you're worried about, then it is worth looking into more so to put it into a trust and then protecting your assets that way. Anybody who has a net worth of a million dollars or more should be looking at least considering trust, and it may not be for you, but just weighing out those pros and cons are definitely something I would consider absolutely for sure. So fantastic question. Thank you so much for asking it.

Starting point is 00:29:58 Just to sum it up, yes, rental properties in an LLC, probably not personal residence in an LLC unless you're trying to just get some privacy stuff going on. And then a trust for like your retirement counts and those types of things. So that's at least how I would do it and consider it moving forward on this one. So listen, thank you guys so much for listening to this podcast episode. Cannot thank you guys enough for being part of this show. And if you guys are getting value out of the show again, consider sharing this with a friend or a family member. Our entire goal is to bring you as much value as possible. If there's an episode you want to hear, shoot me an email by joining the master money newsletter by going to mastermoney.com slash newsletter. And you can respond to any of those

Starting point is 00:30:36 newsletters as well. So thank you guys so much for listening to this episode and we will see you on the next episode. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play Ojo, the online casino with all the latest slot and live casino games. What you win is yours to keep with no wagering requirements, instant payouts and no minimum withdraws. Hey, I just won. Woohoo. Feel the fun. Play Ojo. Honey, forget about the lasagna. Celebrate. 19 plus Ontario only. Please play responsibly.

Starting point is 00:31:22 Concern about your gambling or that of someone close to you. Call 16-531-2600 or visit connexonterio.ca.

The Personal Finance Podcast - Should I Invest Aggressively If I Am Behind In My 50’s? - Money Q&A

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.