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Handing Out Financial Superlatives

Financial Symphony / John Stillman
The Truth Network Radio
August 13, 2019 8:46 am

Handing Out Financial Superlatives

Financial Symphony / John Stillman

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August 13, 2019 8:46 am

Remember your senior yearbook that included superlatives like 'Most Popular' and 'Class Clown'? Well, we're taking that idea and applying it to the financial world by picking out the investment options that are 'Most Overrated', 'Most Underrated', 'Most Popular', and 'Most Likely to Disappoint.' 

Check out the show notes by clicking here

Today's rundown:

[1:03] – Class Superlatives at the School of Financial Strategies

  • [1:33] Most Underrated: Roth IRA 

  • [3:05] Most Overrated: Expensive Cars 

  • [5:24] Most Likely to Disappoint: Whole Life Insurance Policies

  • [7:05] Most Popular: 401(k), 403(b), TSP (Thrift Savings Plan)

[9:20] – Possible Winner Overthrow?

  • Could the Roth take over as Most Popular? 

[10:10] – Teachers Pet: The Variable Annuity

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Book Amanda Mr. Stillman's opus.

I have been George alongside the man for which the show is named Mr. Stillman about Stillman when you show yourself you have these advantages.

Call what you want going good with glad to be with you on the show. Always a pleasure to welcome it. What are we like 50 episodes.

This is number 15. This is your debut got the call if it was a pretty good yeah I like this episode because probably familiar with this topic. It's I think I thing I think about you I think about a guy was probably voted most likely to succeed in high school I was probably so I'm going to assume I was second place on that side actually with it so I can only assume I came in second. They didn't release the vote totals but I'll just assume that's the case, no class clown for you though.

But Molly did get that this year I married a classical okay you actually have most dependable. Can you believe that your pretty dependable fella. I can see that okay I'll take that to live up to that to this day am proud of it. Also today were to take that same thought and apply to finance so will say you're on the yearbook committee of the school of financial tools and strategies will call it sacred. A lot of parties happen eventually.

It's a lot of the extracurriculars that school your jobs and am a winner for each of the following superlatives on many give you yet apply it to financial tools and maybe investments in the stuff that we might add to our portfolio today and will play on the same blessing. My friend, so let's start off with an easy one for you most underrated, most underrated R12 for that I'm going to go with the Roth IRA simply because I see so many people who are at retirement age that wish they'd contributed more to their Roth. So when they were younger, you know, in the 80s and 90s and even early 2000's.

Everybody was pushing tax deferral, but the money and the IRA. The 401(k) don't pay taxes on it now because you want to be a lower tax rate is lower tax bracket. Once you retire and a lot of people now that they're doing their retirement planning are now, realizing that's not actually good to be true. I'm to be the same tax bracket. If not, will hire for most people, and so now they wishing they had more money in the Roth on the younger in people and their late 20s early 30s, maybe even in their 40s. I don't see utilizing the Roth is much as they should be simply because you don't get that tax deduction when you put the money now and so there's sort of this immediate versus delayed gratification thing most people opt for the immediate gratification of putting the money in the 401(k) or the traditional IRA get the tax break now, when really they should be getting the tax-free growth for down the road, sought solace to me when I first got into investing was also installed your 401(k) in the Roth was like once you invest in 401(k) and whatever money I left every printer Roth I started shifting my my thinking as well.

Number two superlative about most overrated variable. This would not necessarily be a financial tool or strategy, but I'm to go with expensive cars okay were most overrated. So the way. This usually looks. I am not as anti-car payment as some radio hosts that you might hear nationally syndicated would be okay but I will say that car payments are an enabler which allow you to buy a lot more car than you should.

So when you think about how quickly cars depreciate it, really. Just as an investment doesn't make sense you put a lot of money into a car.

A lot of people say well I know it's not an investment. I was just an expense and I need a nice car. I need a reliable card people use this excuse of I need a reliable car to go spend $45,000 vehicle you never reliable car that doesn't cost that much.

You don't have to have a new car. You don't have to have a luxury car, you can be just fine in something a lot cheaper now if you want to spend more on that.

That's fine. I'm not telling you how to spend your money.

All I'm saying is don't use these excuses that you give yourself why you need that more expensive card and quite frankly, depending on what your income and your assets look like. You probably shouldn't be in that more luxury type a car.

So again I'm not anti-car payment necessarily, but if you pay cash for car you're in a spin 10 to 15,000 on a car but by financing it and having a car payment for the next five or six years.

It allows you to spend 35 or 40,000 car that's probably an indication that your spending more in the cognition. A lot of people do that.

That's the most common way to do it so that's why we say that's the most overrated. Gotta have those heated and cooled seats, shot a stepsister important flock. Interestingly, so we just went to see lion King Henry and the Southpoint theater. They just got done renovating it. You now have heated seats in the movie theater so they recline you can adjust the seat so they recline you can turn the heater on a new seat had no idea yeah so heated seats everywhere. Now we are running through superlatives financial superlatives with John still in present founder of Rosewood wealth management's third one I want to throw at you is most likely to disappoint.

You have one for that silver most likely to disappoint, which by the way, imagine getting it at his boarding school. Yeah, come go whole life. Life insurance so very often I see people that have bought these policies years ago or maybe appear it bought it for them with the idea that they are going to build cash value and you know something happened and they became uninsurable down the road they deftly have this guaranteed death benefit, but quite frankly, I see a lot of people who get 1015 20 years into those policies and they look at how much they've paid into the policy with that you paid $100 a month and you just don't have the cash value that's built up to justify that and you could had term life insurance for that same period of time. The same death benefit maybe would've cost you seven dollars a month instead of 100. So what you have is $93 a month that you spent essentially pretending like it was investment but your building up his cash value and more often than not, that cash value is nothing to write home about. So you know there are strategies where you would use a whole life policy, but they are much fewer and far between, than the actual and realize how often they're used right if that if I can come up with a more confusing way to say that you could probably put them in the most overrated category if you wanted to, but I'll put them in the most likely to disappoint okay we go down a rabbit hole for life insurance am sure John will wish it say that one for another episode, but I like the answer I wonder revising your group of friends back in high school most popular course.

So I got the 401(k) on this okay now when I say 401(k) that could just as easily, especially in our area be a 403B for people who are working for a nonprofit or government entity or university employee of its in the 403B plan instead of the 401(k) it so hard to follow because a lot of UNC employees and Duke employees have the 403B. Some of them have the 401(k) at all. It is kind depends on think when you started. What plan you're grandfathered in under whether your hospital versus university all that stuff but when I say 401(k). I'm talking about all the good retirement account associated with your employer. If your federal employee. The TSP so obviously it's the most popular because this limits kind of in your face right it's hard to avoid having at least a conversation about the 401(k). If you're eligible for one so very often you'll have seminars at work where they'll have somebody come in to talk to you about the 401(k) things you need to know about it and quite frankly it is a painless way to say you never see that money come home you just you don't get used to it ever being in your checking account.

You never miss it is just easy to put the money in there. So in terms of the way that most people are saving for retirement if they are it's in their 401(k). The problem is. Let's go look back at our very first superlative that we gave out most underrated the Roth IRA.

A lot of people should be putting money in the Roth, not necessarily in the Lou of the 401(k) but instead of putting 15,000 a year in the 401(k). Why not max out your Roth get $6000 in there and put 9000 in the 401(k) and obviously we want to get all the free money that's on the table so there's a company match that's happening absolutely.

Let's get the company match.

Don't forsake that but outside of that it's usually going to be better if you put additional contributions in the Roth and then after you've maxed out the rough yellows go back and with the 401(k) after that. A lot of people just get too hung up on the net pretax deduction you think will ever see the Roth overtake the 401(k) for most popular you see that anytime the next 10, 15 years, if people would figure out how tax rates are going to change over the years, then yachting would be a more obvious choice, but honestly, people are so lazy about this for the most part they're going to take the path of least resistance. The thing that's easiest to do and so often the thing that's easiest is to just tell your HR people at work you put 8% in the 401(k) for me and really for a lot of people that might be the best thing simply because they're not disciplined enough to then put the money in the Roth themselves if they bring it home. A lot of people if you bring Emily helmets can spent right so you kinda have to know yourself and be able to coach yourself through the right decision. There is not a bad thing and just more money could be better invested somewhere else. I our final superlative financial superlatives of the show teachers, pets have a different thought on this one for finance, so the teacher's pet will be what that something that I guess advisors think are popular right advisors like sites not just tell you anything like that. The Eddie Haskell of of financial panic right so you know, yes Mrs. Cleaver always says the right thing looks addresses sharp but at the end of the day and there's something not quite right. Right. So for this growth.

The variable annuity so I'm not anti-annuity. We use indexed annuities fairly routinely with a lot of our clients who are getting close to retirement and need a place to put money that's lowering risk or has no risk at all, but the problem is if you look at the annuities that are sold nationwide 75% of them are variable annuities really high in fees, usually very high risk and usually those fees are really getting you anything your you're not really creating a benefit for yourself by paying those fees so your combining sort of an investment product with an insurance product all mashed up together and it just becomes a very expensive inefficient way to invest your money but the commissions that you make when you sell them I guess are pretty high, so you have a lot of advisors that like to use these as part of people's portfolio.

So for that reason I'll call the teacher's pet popular for advisors, therefore they get pushed a lot but not this really the greatest thing says that your class superlatives for finance and of course if you want talk about any of these products and just get some more feedback on these and whether good for you. John's always available. You can check his website. Rosewood wealth Also, you call or text if it's easier 800-545-2991 and John you guys have a seminar coming up right yet always have classes coming up, so depending on when you're listening to this, there could be one next week.

There could be one in a couple months But there's always one that not too far around the corner. Those are most ideal for folks who are between the ages of let's say 55 and 65 may be you're getting ready to retire or you recently retired and is trying to get all those pieces together. That's what those classes are focused on if you're younger and you like to come in and have a conversation about how some of this stuff it's in your life well I'll means is, on the office no cost or obligation will sit down with you for 90 minutes in methanol out of the whiteboard. Figure out what you need to be considered awesome. Why doing this upset first episode of the books with you, but also fun topic class superlatives John at the time, will do it again.

Absolutely it will come up with more to give you think about handout but the next time Sven Mr. Stillman's office Carolina once towards doing business as Rosewood wealth management is a registered investment advisor in the state of North Carolina.

The material presented is intended to be general information and should not be construed by any consumer is the rendering of personalized investment advice

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