Q&A: The Roth Decision at Every Income Level (And Why It Matters Now!)

28:27Where does the difference come in? It largely comes into cashflow planning because you've got to plan for the tax bill that comes with the conversion. And so that's got to come from your budget somewhere. This is a fairly simple calculation if you know approximately what the tax bill is going to be. And I want to address later on the bigger question of hiring someone. And I think we can talk about when it makes sense to hire someone and when it doesn't make sense. In this particular case, I think that as long as you know roughly what your after-tax income is going to be, and you know what your tax rate then is, calculating how much money this is going to take, frankly, is not that hard.

29:19It is not that difficult. If your income is going to vary largely from year to year, it might be more difficult, Paula. But if your income's fairly consistent, not a hard thing to do. Take a look at your tax bill from last year. Just go to the line on your tax form. Look that up online where it says the tax that you paid for most people to be at the bottom of the second page, the amount of tax that you paid. Divide that into the pre-tax income that you brought in, and then you'll find what your approximate percentage was. of federal tax now in a state where you've got a state income tax, you're going to have to add that as well into the equation, but still very easy calculation to go, oh, that was 12 % of my income.

30:04That was 15 % of my income. That was 20 % of my income. So then take that same amount and apply that to whatever amount you're going to convert. If I'm going to convert$5 ,000, multiply that by 0.12 if you think it's 12 % or 0.15 if it's 15%. And you'll come up with what that number is. That's going to be approximately what you should put away. Joe, other than cashflow planning, do you see any other negatives to converting that money right away? Because I don't. No, it truly doesn't matter because there's no limit, which is why it's a good idea to do. And I like this. A lot of people do this. Let's do a little bit every year.

30:43If I know approximately how much I'm making in that particular year, I just don't want to bump up into the next tax bracket accidentally with money that I converted because I'm declaring that this money was income this year. So I want to be careful with my income tax bracket. So the only calculation I want to make is where am I at with regard to tax bracket? How much room do I have to the next tax bracket? And then how much pain can I withstand this year to do it? So to parcel it out a little bit at a time, I think is a great idea, Paula. Right. And in terms of pain that you withstand, you were just talking about being able to pay that tax bill.

31:20That's right. Right. That pain in your budget. Yeah. Coming up with the money in your budget. The money out of your emergency fund. If it's going to take your emergency fund, I wouldn't do all that. Even bumping up into the next tax bracket, it's not ideal, but given that tax brackets are marginal and it's only that top marginal portion that's being taxed, it's not going to adversely affect everything below it. You know, it's not the end of the world. Yeah, you're right on. I mean, don't let perfect be the enemy of good. Yeah. However, you know, why pay this extra little bit of tax when I could just do it next year?

31:54I think it's going to take you five minutes longer to avoid that, Paula. And I think, what's the efficacy of that five minutes? It could be a decent amount of money. Yeah. I don't object to it. I just know that, well, it's, you know, know thyself. If you are the type of person for whom trying to game out staying in a given tax bracket is going to cause so much stress or friction that you're likely to just throw up your hands and ignore it, then I say, you know what, just heck, don't let perfect be the enemy of good. Bumping up into a higher tax bracket is not that big of a deal. And I want to emphasize this.

32:32Some people mistakenly think that if you bump into a higher tax bracket, it means that all of your money gets taxed at that higher rate. That is not the case. Tax brackets are marginal, meaning only the dollar amount above a certain threshold is the amount that gets taxed at that higher rate. So your top marginal tax rate is different than your overall effective tax rate, meaning all of your money doesn't get taxed at your top marginal rate, only a sliver. But in any event, other than tax planning and other than making sure that you can pay that bill, when it comes to Roth accounts, generally speaking, the more the merrier and the sooner the better.

33:15Those are the two rules when it comes to Roth accounts. Can we talk about hiring somebody? Absolutely. We began this entire journey around the Roth IRA today by talking about our bias and why we might go against our bias, but we're generally going to bias toward the Roth. I'm also going to bias around if I'm hiring somebody to help me, there are situations where I want to hire somebody to help me with tactics. But I think you get far greater bang for your buck if you have somebody that's going to help you with strategy. Meaning, what's the bigger picture? Why would I do a Roth conversion versus just put money in pretext?

33:58Or in Apar's case, why is this advisor telling him to do something that he thinks goes against this rule of thumb that he's had in his head? I think the value of somebody that will fight with you over questions like that, that's an invaluable person to have in your corner to question your strategy. Somebody who knows you, knows what you're trying to do and goes, yeah, I think, Paula, you're thinking about that in a way that doesn't really help. Here's another way I'd think about that. And even if, by the way, you don't agree with them, having that person who will tell you that you should think a little bit more about that and maybe pump the brakes a little bit, I think that's valuable.

34:35Now, I do think that there are some times when tactics make sense, but it's because you already firmly 100 % know the strategy. And I'll give you an example. I know the strategy that I want my car to run. I know that I need to get from point A to point B. I also know my own limitations. And I know that the strategy is use my car for transportation. Isn't that the objective, not the strategy? Objective is you want your car to run. Well, okay, maybe. There's a bigger strategy that involves my car, right? I still may hire the mechanic to fix my car in a spot where I don't understand how the engine runs.

35:12It makes a ton of sense to find a qualified person to help me with this tactical thing. I know that it's making the noise and I need that to go away. That's a tactical. So there are places, but when it comes to your money, I find those Paula a lot fewer and farther between than I do when it comes to my heating and cooling or my plumbing. You know what I mean? when it comes to your money, I don't think I should hire somebody to pick a mutual fund for me. I don't think I should hire somebody to do the math, like we're talking about with Keith here, to do the math on my Roth IRA conversion. I think these tactical spots, can I hire somebody to do it?

35:53Yeah. I think it's much more likely you're going to overpay. You might get suboptimal help because you still don't understand the bigger picture. I would much, much rather hire somebody on a strategic level than on a tactical level. And so in Keith's case, how would he go about looking for a good strategist? What would his steps be in terms of identifying that individual? Well, I think it has to be somebody who works with people that are like him, number one. And I want someone who's going to be on my side of the table, meaning they're not selling me stuff. So the general first thing that I look for is actually a negative, not the positive.

36:35If I walk into your office, Paula, and you're an advisor in quotes, people can't see me doing the air quotes. You're doing air quotes right now. Yes. Advisor and air quotes. If I walk into a quote, advisor office, I walk into Paula's office and I go, Paula, I need help with my taxes. And Paula goes, I have this phenomenal solution. And what it will do is not only help you with your taxes, it will also make sure you can participate in the upside of the stock market and get none of the downside, right? What they are doing is pointing me immediately toward a product. And if my air quotes advisor leads with product, when I have a strategy question, I need to run.

37:14I like that, by the way, as job one. I also want, by the way, just in that scenario that I just presented, I also want my advisor to ask me what the problem is versus start off talking about what they offer. A great advisor is going to be an agent. And I think this is a great analogy, Paula. Taylor Swift, I'm sure, has a phenomenal agent. People that are in sports have phenomenal agents around them. The agent doesn't come in and go, oh, Paula, you're amazing. I'm going to do this, this, this, this, this. A great agent looks at what Paula needs in her life and goes, you know what, Paula? I really think that we could do this thing.

37:56I think this would be great for your career. I think this would be fantastic. So if you walk into an office and you're expecting like an agent because you're a freaking rock star and you know, I think if we treated ourselves like we're rock stars and we surrounded ourselves with rock star level people, we think about that, then we're going to get good help. So what I'm looking for is somebody that's going to have a conversation with me in the beginning. If I walk into Paula's office, Paula's not going to lead with a product. Paula's going to go, Joe, what are you trying to do? Tell me more about that.

38:25What's the exact problem? Why is that a problem for you and this other thing? Have you ever thought about this other thing? Because I see this might be a problem. If we get into a great conversation at the beginning, then I think they're much more likely to be somebody who's going to be on my team as an agent helping me navigate life versus somebody who's just shoving stuff down my throat. Lead with philosophy and lead with process rather than product. After that, then I want to know what exactly it is that they offer that's going to help me achieve the thing. So I get this generally good feeling or bad feeling.

39:00I can decide based on that alone, right? Do I want this person or do I not want? If I want them, that's just step one of my filter. And this is a lot different, by the way, than a lot of the filter garbage you'll hear online. Because I think most of those filters are garbage. Because number two then is, Paula, what are you going to do for me then? What's the actual system that you use? It's going to help me do these things that you just questioned. How are we going to work together? Am I going to hear from you once a year? Am I going to hear from you twice a year? Do I have permission to call you at no additional fee whenever I have a question?

39:37like if I'm if I'm buying a new to me car and I'm looking at car A and car B is that the kind of thing that you handle if I go get my taxes done or I do my taxes myself using software can I send those to you for a second look even though you're not a CPA and you might not even be an enrolled agent you're just somebody that does this can you can you be the second set of eyes what exactly do I get and then once you know what you're going to get the two questions after those two things Then we ask the questions that the stupidity online emphasizes because these truly are questions three and four.

40:12Question three then is what is that going to cost? And I think it's garbage starting off with, so how do you charge? What do you cost? I don't even know what the hell you're going to do for me. I don't even know if you're a fit. I don't even know if we're going to work together through that initial conversation. I'm going to know far more about whether I even want to ask you what you charge. There's a great chance that I'm going to walk out that door before I even get to that question. And yet online, all we talk about is, well, what do they charge? How do they charge? Forget that until you find out if it might be a fit.

40:42I will say, though, what do you charge and how do you charge are two very different questions. And how do you charge matters in terms of are you going to make commissions? Are you going to be incentivized by the commissions? A hundred percent. A hundred percent. Yes. Yes, because, you know, just go watch CNBC or Fox Business any day. This is a fun thing for money nerds to do. You will love doing this. This is one of my favorite pastimes. I will turn on CNBC and I will hear. The next person we have coming up runs a growth mutual fund. Paula Pant is the manager of XYZ Growth Mutual Fund. Paula, what do you think about the market?

41:20Oh, Jim, I think it's a great time for growth. I think growth is going to be fantastic. You know, growth doesn't look good right now. A lot of people are saying no, but I think that in the next six to 12 months, even if it's rocky the next six, I would hold in there with growth. Huh, that's weird. How do you get paid, Paula? And then the next person comes on and they're a bond manager. Paula Pant is a bond manager. She's with XYZ. We just heard from the growth manager. Paula, what do you think about the growth manager? I'd be a little worried about growth, Bill. I think Bill might be, you know what?

41:46I think we've got to be safer. I think bonds are a great place. It is amazing the number of people CBC have on and they all emphasize exactly how they're freaking paid. Right? So know that I don't think that's always a deal breaker, but it's a big time red flag cautionary spot. I know a lot of good people that are paid commissions and those people could be great people in my corner, but it's also a big red flag. And I want to make sure that, you know, if Paula sells life insurance and part of my plan involves permanent life, why does the permanent life insurance when I'm single? yeah the green flag is you as the client pay them you either pay them hourly or you pay a flat fee yes but you as the client are their sole source of income not other products not commissions that they're getting if you are their source of income that's green flag territory let me tell you though paula this is why i do this as number three and this is why this question up front is garbage because I know people who are commissioned salespeople that I would still hire over a bunch of the garbage, horrible, I can't stand them, fee-only financial planners out there.

43:03There is one guy in particular on the internet who talks about, I'm not going to name him, but look at how animated Paul can see how animated I'm getting. This guy sucks. This guy is horrible. And by the way, he thinks he's 100 % right all the time and his peacock feathers are out and he's just so cool with his advice. I wouldn't hire this idiot in a million years. He will lead me the wrong way. And yet, because he's a fee only advisor, if I ask that question, it's number one, I'm making a huge mistake. But if I get further down with this advisor, and I almost named him accidentally, if I get further down the road and I ask a bunch of questions, I'm like, this guy's from the freaking moon.

43:40I want nothing to do. Why would I hire this moron? So ask that question, but start off with that conversation. And then what do I get? And then what is the fee? Does that make sense? And how do you get paid? Which, to your point, are two separate questions. So, Joe, what you're saying is that just because you check all the boxes doesn't mean you necessarily have good judgment or wisdom. Yeah. How often have many of us had this romantically in our life, right? Where you're like, what is wrong with me? This person checks all these boxes that supposedly I should be completely attracted to them. And I'm not, you know, I'm just not.

44:17And I think it's the same. If this person truly is my agent, I got to see their name on my phone when they call me and go, oh, I definitely want to talk to Paula. But if I'm avoiding that call, like how many questions have we had over the last few years, Paul, people like, I don't really trust my financial advisor. If you've got an advisor in your corner that they're calling you and you don't want to take the call, you got to fire that person. You totally got to fire it because you are a rock star. You want to be a high performance athlete who has people in their corner that helps you go faster, which by the way, then brings up once I get to that affordability question, Paula, and what do I get paid?

44:55If they check that box, then I ask the next BS question, which isn't BS. If you put these in the right order, the next one is what are your qualifications and who have you helped and how long have you been doing this? Again, people ask this right up front. I do want to ask the question, but I want to find out how they work with me first and what can I learn? Because here's the deal. There's a good possibility that if I talk to you and you check all those boxes and then Paula's like, yeah, you're my third client ever, I might not hire you. I might not do that. Or I'm not a certified financial planner.

45:30If Paula's really smart, but she hasn't proven it yet, or she hasn't gotten the qualifications yet, I can still learn a lot of free information from that meeting about the next person if I have the conversation first. There are a bunch of people I know that are just starting out in businesses who are pretty intelligent that I won't hire now, but I want to hire later on. And if you and I have that conversation, I learn some of the issues that Paula thinks about. I get to the bottom and I go, uh. But if I lead with that, I miss out on this incredible opportunity to learn a bunch, even if I'm not going to hire you.

46:04Every professional who's worth you hiring is going to offer a free consultation. I'll take them up on it to learn a bunch from them. And then at the end go, no, thank you. And you know what? As a guy who's done this before, I didn't mind that. That's part of the risk I take as a business owner is that I'm going to meet with you. I'm going to give you a free hour of my time. And at the end, you might say no. Okay. And most of the time I was very happy for them not doing it. There were a few times I'm like, damn, I would to help them a ton. I hope they hire somebody good because I would have been great in that role.

46:33And you know what that did, Paula, when you didn't hire me as a guy that wanted to be good at it? I went out and I learned more, which was absolutely phenomenal for the industry, for me as a person, frankly, for everybody. Because I feel like even though they didn't hire me, we had a very good hour together and I was able to put a lot on the table for them. So I would ask those questions in that particular order. I like the question about qualifications coming last because what you're doing is you're discerning whether or not they have good judgment before you're discerning whether or not they've checked some official box.

47:08Yeah. The good judgment is subjective. It's qualitative. It requires judgment on your part as well. You need to know enough to be able to recognize talent. You need to be able to know enough to be able to suss out good advice from mediocre advice, from plain old bad or misleading advice. There's a certain amount of knowledge that it demands from you as the client. And I think that's why so many people gravitate immediately to what are your qualifications, because that doesn't require you as the client to make any independent assessment of your own. it's strictly binary. Yes, no checkbox. Well, I agree with you.

47:52I do think that at a base level, even if you're new at this and you're like, you know, I really need to go interview advisors. If I have that conversation, I can see if they're leading me toward product without having any qualifications. I can see if they're leading me towards strategy. I can get a feeling about how they answer my questions. They treat me with dignity and respect versus talk down to me. Like the number of times I've, I've talked to people and they've said, well, I like my advisor, but they're always talking down to me. Like they know everything and stop asking so many questions, you know, stop questioning my judgment.

48:25Well, for me, that's not who I hire. Maybe for you, that is who you hire, but you know, you're going to get a much better feeling of how they work for you. And even if they're not the smartest person on the planet, it. If they work with you in a way that I can understand what the hell they're actually talking about. And if they get hit by a bus, I'm smarter than if they weren't. Like for me, that's why I want to hire people. I want to have enough knowledge about this that after I hire you, maybe I'm smarter at this topic because you've got the heart of a teacher. Like for me, that's who I want to hire.

48:57I want to hire the person that two years from now, because I have this coach, man, I'm smarter at this. I have a diet coach. A lot of people listening know that because I talk about it all the time. And because of Jesse, I'm way more smart about what goes in my pie hole than I was two years ago, three years ago. Like Jesse has really helped me make some very smart choices about not just my food, but my exercise and how the two of those relate to each other without fad diets. I truly value what she has brought to the table and what she continues to bring to the table every time we talk. And just the fact that even when she's not in the room, when I make the inevitable stop at Dunkin' Donuts, which I'm prone to do, I can hear Jesse in my ear going, is that a good decision?

49:42And I am willfully Paula then saying, no, it's not, but I'm going to do it anyway, which I like. I truly like that. I accept the consequences for this delicious Boston cream. That's a good thing. She's bringing stuff to the table. And I want those people in my corner. I don't want the other people in my corner. And I can feel that. You know what I mean? I don't have to have a lot of knowledge about diet and exercise to feel that Jesse's going to be a good fit. But I also have to have some balls. And this is why I have to have some balls. It's because I have to have the balls that if I was wrong, and you and I, we've hired a lot of people, right?

50:16And I have to realize, as a business owner, this took me a while to realize, I'm going to often still get it wrong in that initial meeting. And I'm going to go, oh, you're a good fit. Oh, you're perfect for me. I can have the balls to fire them fairly quickly to six months from now go, you know what? I don't think that this is working the way that I thought. And I think it's better for you and for me if we just don't work together. I just fired somebody two days ago. I haven't gotten a letter yet.

50:50And he's going to find out about it tomorrow.

50:55Yeah. Yeah. But once I made the decision, I wanted to do it immediately. This person had, she'd worked for Afford Anything for a total of three weeks. And by the end of week one, I was already having my doubts. By the end of week two, those doubts were getting stronger. And then by week three, I was like, all right, it's time. It's time. Can we pause on this note for a minute? Because it is hard to fire people. And if you've never hired a consultant or fired somebody, at some point we're all going to have to say, you know what, it's time. Even in just relationships, we have to sometimes say, you know what, this isn't working.

51:38It's time to go. I read a great exchange that was written by the president of 1-800-Flowers. He was at a party in the 1990s and infamous is a good word, infamous businessman, Jack Welch, who was known for being very ruthless. Jack Welch was at the party and he ended up talking to Jack and he said, Jack, I just want to pick your brain if you don't mind. I know we're at a party and Jack's like, no, go for it. He goes, I got this vice president at 1-800-Flowers and he's really not working out, but he's a super guy. He's a family man. I just don't think that he is the fit. What do I do? and jack said there has never been a time in my entire career that i thought man i should have waited another six months to do that thing that was right for me but also and this is the key paula right for them he's like this is not the right thing for this person why am i gonna continue in this career that you know what deep down they know it's not working you know it's not working why am i gonna waste my time which is another precious resource it's this precious resource that we often take for granted that we've got forever.

52:49You don't have forever. If I wait six months, that's six months that this person could have been on a career that was more suitable. I tend to believe that we're all suited for something. And if this isn't it, the quicker I tell you this isn't it, the quicker you can get on with figuring out what that is for yourself. So I think I'm actually doing them a favor and me a favor by ending it earlier. The relationship analogy is a good one. You know, you don't want to waste both of your times, even if one person doesn't see it right away or even if one person disagrees with it. At the end of the day, if you know that this isn't going anywhere, it's better to just end it and not waste either of your times, but not waste both of your times.

53:31Sure. I mean, I can think of relationships I had back when I was single where I like them a lot, but it was very clear to me that they did not like me the same way. For whatever reason, Paula, because I'm awesome. I can't figure that out. But even then I'm like, yeah, we, we should probably just, you know, stop. I got to find somebody that is maybe a little bit into me. Keith didn't expect that, did he? It's like, how do we get to relationships to get back to Keith? I think Keith, you can figure this out. I think the math is not hard. I think if you know the line to look at, and even if you don't to struggle with it once, that's going to pay some dividends because you're going to look at your taxes and how they actually work a little bit.

54:10And it is figureoutable. But if you're like, why should I do this? Where does this fit? Is this something that truly is important to my financial situation? Then I think somebody to fight with you about that is a much better person to hire. And to that note, this is why I like a PARS financial advisor. Yes. Granted, I'm basing that statement off of one data point. So, you know, I don't have the full picture. Turns out the advisor got lucky. No experience at all. The advisor was just throwing darts at a dartboard. And from now on, their qualification is Paula Pan agreed with me. I didn't afford anything, Chuck.

54:54Oh yeah, there was this one time. But off of that one singular data point, Apar, I like that your financial advisor gave you advice that wasn't necessarily the advice that you wanted to hear or was the advice that you expected to hear. And it wasn't the advice that would give you a short-term immediate win, right? It's advice that I think is great for your long-term future, but not necessarily great for this calendar year, which to your point, Joe, a lot of advisors are going to tell you what's good for this calendar year because that's when they get paid. So I like that this advisor told you what you weren't expecting to hear, told you what you may not have wanted to hear, and told you what was best for your long-term, even if it wasn't best for your short-term.

55:34I like all three of those elements about the fact that your advisor told you to go Roth. So to both Apar and Keith, that is today's discussion on Roth accounts, the value and the beauty of Roth accounts and why, you know, the reason that we wanted to answer these two questions together is to highlight that whether you're making$60 ,000 or whether you're making$700 ,000, in both sets of circumstances, the Roth is often the better bet for different reasons, but also for a common set of reasons. Very fun. And while you can see the nuances in their situations, I hope that for everybody, because now you saw the connective tissue underneath that we're using to give them more information, I think makes us all more powerful consumers.

56:24Right. Yeah, Keith and Apar have more in common than not. You know what they have in common most? What's that? They're badasses who called us. Duh. Right? And speaking of awesome people who call us, we're going to hear our final question, which comes from Krish up next. And before we do that, Paula, what is up with being the Segway Ninja today? Oh, why, thank you, Joe. Thank you. Thank you. What is up with that? Speaking of awesome people, I saw what you did there. Thank you. Thank you. I've been working on my transition.

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57:38Gusto makes it simple. One monthly price, no hidden fees, and you get automated tools that are built right in. Offer letters, onboarding materials. So you save lots of time, you get direct access to certified HR experts, and it's quick and simple to switch. I've been using Gusto since 2017 or 18. It's been a long time. I remember I was living in Las Vegas at the time and I brought on my first team member, a woman by the name of Erin, who ended up working with us for six years. That was when I got on Gusto and I'm still there today. Try Gusto today at gusto.com slash Paula and get three months free when you run your first payroll.

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59:18We'll see you next time.

59:33Our final question today comes from Krish. Hi, Pula. I am Krish from Mauritius and would like to ask you the opportunities of investing in American, Indian, and Singaporean markets. the apps that can be used, and the future of cryptocurrency with blockchain technology. Thank you. Okay, Paula, can I just say? Yeah. I listened to the beginning of Carisha's message three times to make sure that is so badass. Right, Mauritius. It is so badass. Mauritius, what a beautiful place. I am so thrilled to hear that the Afford Anything community includes Mauritius. That's so cool. Afforders. We're a global phenomenon.

1:00:26Krish, you've got two very different questions in there. So we'll talk about them separately. And I'll start with a short answer to the cryptocurrency question, because as you know, that's a deep subject that we could talk about for days. But broadly speaking, cryptocurrency is a speculative asset class. And what I mean by that is that all assets, every asset makes money in one of two ways. There's the dividend or income stream that a given asset pays out. And then there's the appreciation in price. If you own a laundromat, for example, or if you own a car wash, then that laundromat or that car wash earns money and its net income, meaning its income after expenses, is a portion of the value of that business.

1:01:23And then that laundromat or that car wash ideally also has some price appreciation. It goes up in price over time. And so the combination of those two things, the appreciation plus the income stream is the total return on that business. Now, you take that model and you apply it to Coca-Cola or Nike or Tesla. You apply it to any business that makes money and you now get the value on publicly traded equities or publicly traded companies, right? The value is twofold. It's the dividend or income stream that it pays out and it's also the appreciation. Take that same model, apply it to rental properties.

1:02:02Same thing. There's the appreciation on the property, and then there's also the dividend or income stream that that rental property pays. But there are certain assets that don't generate any income in and of themselves. These are assets whose only value is speculative, meaning the only value is the fact that other people are willing to pay for it and other people think that its value will rise. Gold is an example of a speculative asset. Silver, same thing. Gold and silver have no intrinsic value. You can't eat it. You can't live in it. You can't wear it. Gold and silver have no utility other than the fact that we as a society collectively believe that these elements have some worth.

1:02:52And for as long as we all collectively continue to believe that, these elements will be traded as valuable. And gold in particular predates cash. Gold in particular is historically the oldest unit of measurement and store of value. So with that basis established, we now turn our attention to cryptocurrency. There's a distinction between Bitcoin, the network, and Bitcoin as a unit of trade in terms of its dollar-denominated value. And of course, also, there's a distinction between Bitcoin and all. Your question was not specific to Bitcoin, but all of cryptocurrency. Bitcoin, because it demands proof of work and because it is inherently limited and cannot be devalued through excess printing the way that cash can, has become favored lately.

1:03:49In a world in which people are increasingly wary of currency devaluation, many people are reassured by the fact that Bitcoin is programmed with limits such that the maximum total supply of Bitcoin is 21 million. And we know that there will never be more than 21 million Bitcoin ever mined. And so unlike paper currency, unlike fiat currency, it can't just be printed infinitely for people who are Bitcoin enthusiasts. That plus the proof of work protocol is a big part of the draw towards it. That said, when you think about what role, if any, cryptocurrency should have in your portfolio, the thing to remember is that these are fundamentally speculative assets and that they will have value only as long as other people collectively agree that they have value.

1:04:42And so the broader question to ask is how big of a role should speculative assets generally get in your portfolio? How big of a role would you give to gold or silver? Cryptocurrency is in some ways digital silver. So that's my high level 30 ,000 foot overview on a framework for how to think about cryptocurrency. But we've done a few episodes and we'll link to them in the show notes that will give you a much deeper dive into this topic, including an episode that we did called Bitcoin for Beginners, which was episode 325. You can find it at affordanything.com slash episode 325. I think that was super thorough, Paula.

1:05:26So I have nothing to add, Your Honor. So what I'd like to address, though, is the second part of the question, which is these very specific economies. Where do I invest in the United States? Where do I invest in Singapore? And where do I invest in India? I'm going to address the question directly first. And then I think we should address, do you really want to do this? But I think it's appropriate that we first answer the question. You know, Paul, my favorite place to go is an exchange-traded fund company called iShares for this. They have a broad diversification. They have very low expenses. In most categories, I find it difficult to find one that is less expensive.

1:06:06So they're competent. It's not going to be an expensive way to invest. If you go to ishares.com, you'll see the entire, all the different funds that they have. But when I get a broad question like this, ishares for me is usually the first person that I turn. I don't want this to be the first person, the first company that I turn to. Yeah, that's probably better. I don't want this to be an ishares commercial. Certainly you can do a Google search and you'll find a lot of different companies that invest in these areas. But I like sticking with an ETF. Let's talk not about ishares, but an exchange traded fund because then I am doing what you asked specifically, Karish, which is buying the economy, right?

1:06:44With an exchange traded fund, I'm buying that marketplace versus investing in one or two companies that I like in that country. And we'll address that too about why this might not be a great idea. With iShares, there's a few different ways you can go. India specifically, iShares has an India index, very cleverly, The ticker symbol is I-N-D-A. See what they did there? Came very close. They used five letters instead of four. They could have done it. You can also... You know, there's some chatter about India changing its name to Varath, which would totally mess up that ticker symbol, right? Yeah, the iShares people are probably lobbying against it as we speak.

1:07:26You can't do that. India also has the India 50. Now you're investing that in just the 50 biggest companies in India, And that is ticker symbol INDY. Oh, that's also the abbreviation for Indianapolis, Indiana. And if you want their small companies, like really aggressive, some exciting stuff happening in small companies in India, you can really add some hot sauce to your investing portfolio by going with their small cap ETF. That's S-M-I-N is their small cap. You can go broader like the Asia 50. This will also include Singapore. SMIN, small India. I got that. I know. They're so clever over there at iShares.

1:08:12You can go with emerging markets, Asia ETF. You can go with Asia Pacific dividend ETF. So there's a lot of different ways to parse this. But if you want Singapore specifically, EWS is the ticker symbol for the Singapore exchange and investing in Singapore. And we should add, you can buy these from all over the world. So you being in Mauritius. Cool. You can buy it from anywhere. That's another reason why I recommended this particular company, Paula, is because they're global. The company, it's a global brand. The United States, there's a lot of ways to parse this. My favorite way is the S &P 500, especially for somebody who's out of the country.

1:08:49If you're outside the country, buy the S &P 500, which is the 500 biggest companies in America. The iShares version of this is ticker symbol IVV. Traditionally, it has been the least expensive way to buy the S &P 500. So I like that one. Now, some people are yelling at their device, buy the total stock market. Okay, you can do that too. There's lots of different ways to buy the total stock market. If you're going to do that, Vanguard is another global brand. Ticker symbol VTI is going to be the best way to buy the total US stock market. Krish, one thing that I want to make sure that we address is the selection of countries that you're investing in.

1:09:26because you highlighted the US, Singapore, and India. And these are very strong, all three are very strong countries with strong economies. But I do want to take a moment to draw attention to the fact that so often on this show, I am speaking to a US-based audience with the assumption that they're earning in US dollars, living in the US, retiring in the US. Not only am I US-based, but over 90 % of the Afford Anything community resides in the U.S.? The answers are a little different when you're international, in part because you have currency conversion risk. You're not necessarily earning your income in U.S.

1:10:06dollars, not only because you have currency conversion risk, but also because your portfolio necessarily needs a more global approach. Absolutely. Yeah, we're continually relying on each other, Paula, which also brings up, I think, the second thing that you and I need to address, which is there's this concept called standard deviation that I think is really important in a portfolio. And standard deviation, to put it very non-scientifically, is the amount of wiggle you can expect. So while investing in a single company can give you a lot more upside, investing in a single company also, because there's no such thing as a free lunch in the markets, can also give you a complete downside, meaning the company could announce something.

1:10:52There was a company in the United States several years ago named Enron, where maybe four people in this entire huge company knew the extent to which they were doing illegal activities. And nobody knew all the stuff that was going on. And because there were only maybe four people that knew, Paula, the entire company went down. You lost all of your money. And there was no way to predict that unless you were one of those people. It was very, very scary. So even if you have, quote, all the data, there may be stuff that you don't know. So fun fact, my accounting professor was also the same guy who taught accounting to Jeffrey Skilling, the Enron CEO.

1:11:30I don't know if that's good or bad. I can cook the books like the best of them. I know the whole shell game. Yeah. I don't know if that'd be in my resume, but I don't want to discourage people from investing in individual companies, but that's why people don't do it is not the upside because upside is big, but upside always comes a big downside. But then I think the next level of magnitude down is investing in one single market versus taking a broader approach. And when I want to invest in just Singapore or just India or just the United States, there's still going to be the standard deviation risk that this one country can experience some problems that you wouldn't get if you had a more global approach.

1:12:13I'll give you an example. I'm a guy who's from Detroit, Paula. In the 1980s, Japan was kicking Detroit's butt. A lot of people say they may still be when it came to automotive production and just production on anything like their ability to do just in time inventory, to think long term about these companies. They did so many things right when it came to manufacturing in Japan that the U.S. wasn't doing. We were all obsessed with Japan. if you would have invested in Japan over the last 20 years, maybe even 30 years, not just a snoozer, like just a horrible mistake because you decided to go with one single country.

1:12:50And by the way, what a great country it is. What a powerhouse it is. There were a ton of reasons why you'd say to yourself, well, there's no reason I shouldn't invest in Japan. Why would I not invest in Japan? And if you'd done that, it would have been horrible for your portfolio. So standard deviation is the risk that I think of here, Paula, when I hear Chris's question and why I might want to suggest that he thinks about broadening it out. Now, if this is maybe 10 % of his portfolio, okay, yeah, I do the same stuff. I love Singapore. I think Singapore is an amazing place and I have to back myself down every day to not invest like 50 % of my portfolio in Singapore.

1:13:27Like I think Southeast Asia is the play. Like that is the thing. But that's, I mean, Singapore is tiny. It's a city. It's a small city that is also a massive economy. The definition of a city state right there. Right. I've been to Singapore. I covered a lot of ground in three or four days. The Singapore airport may be my favorite airport on earth. Wow. Incredible. Singapore Airlines is one of my favorite airlines. The zoo there is really cool. That's cool. Yeah, yeah. But yeah, I agree. I think Krish would be well served by broadening his exposure to more than just these three countries. Global equities exposure can be a great thing.

1:14:16So thank you for the question, Krish. And I will look for the Afford Anything meetup on Mauritius. Well, Joe, we've done it again. Some fantastic questions. And I think that's the first episode ever where you and I have taken two questions and combined it into one monster marathon answer. Exactly. And I hope that by doing so, we highlighted how Keith and Apar have more in common in their question than they have different. Which is often the case. Yeah. Joe, where can people find you if they'd like to hear more of you? Well, I'd like to say first, a big thank you to everybody in the Afford Anything community with the notes that I've gotten about our New Year's Day episode that ran a couple of weeks ago and the part two with Alex Hormozzi.

1:15:02For people that didn't hear that, it's a great way to begin your January talking about more money or end your January as we're getting into the second half now of January. But Alex Hormozzi is a guy that makes around$100 million a year. And that sounds like hyperbole for most of us, like, I can't do that. He really talks through, Paula, how you might not make$100 million in 2025, but there are certainly a lot of ways to make more money. And it involves very much how you view your time. We talk about mentorship. We talk about the people on your team. We talk about which opportunities you say yes to, and often more important, the ones you say no to in 2025.

1:15:45So if you didn't catch our episodes on January 1st and January 3rd with Alex Harmozy, Not only did I interview him, he talks usually to entrepreneurs. So he talks very much entrepreneurship. But OG, my co-host on Stacking Benjamins and I, we play the interview, but we keep hitting pause. And then we break it down how even if you are an entrepreneur, somebody that works for somebody else, but you're really designing your own career, which you should, even if you work for other people, how this truly 100 % applies to 99.9 % of us. Beautiful, beautiful. And I loved that episode, both of those episodes.

1:16:20So I highly, highly recommend them. We'll link to those in our show notes as well. Thank you. And thank you to all of you for being part of the Afford Anything community. If you enjoyed today's episode, please do three things. First and foremost, share this with the people in your life, friends, neighbors, colleagues, babysitters, dog walkers, share this with the people that you know. Second, open up your favorite podcast playing app. Make sure that you hit the follow button so you don't miss any of our amazing upcoming episodes. and while you're there, please leave us a review. And third, download our free guide to making 2025 the best year ever with your money.

1:17:00It's called One Tweak a Week and it's one small tweak that you can make every week for the rest of 2025 so that by the end of this year, your finances will be so much stronger than they were at the beginning. You can download that at affordanything.com slash financial goals. Again, that's affordanything.com slash financial goals. Thank you again for tuning in. This is the Afford Anything podcast. I'm Paula Pan. I'm Joe Salcihai. And we'll meet you in the next episode.