How 595,000 People Reached MILLIONAIRE Status (And How You Can Too)

18:59Brian Preston:Yeah, so this one is a little unique. 415 limits have salary deferrals of 23.5, where they actually go all the way up to$70 ,000 if you're going to fully fill up that across your contributions and your employer contributions. Well, one of the things, even though the salary deferral aggregates that 23.5, employer contributions do not aggregate. So you could have one plan where you have$70 ,000 a year going in. And then if you had another 401k that you had access to, while you as the employee could not put more money in there. Your employer could elect to make an employer profit sharing contribution into that one.

19:34Brian Preston:So you only get one 23 ,500, but employers can do multiple sources. Now there is one small caveat that's worth noting, and this might hit some of you. You mentioned, Brian, 401ks and 403bs and those different plan types, they aggregate across that 23 ,500. However, there is one. There's one that does not aggregate because it's in a separate code section, and that is a 457. So if you're someone who has access to a 401k plan or a 403b plan and also a 457, you can actually fill up those salary deferrals twice. You can do 23.5 into the 401k, 403b, and another 23.5 into the 457. So you can double dip if you have that account structure combination available to you.

20:18Brian Preston:Yeah, that's a major hack. That's awesome. Good stuff. ICL, if you would like a MoneyGuy Tumblr, we would love to send you one. I just got thirsty. Just email winner at moneyguy.com. Well, you saw it was spilt. That's just like the little IC machine. Yeah, it was. You were thinking it was like ICE-E. Like, right? That was like ICL, yeah. Coming out with a hot new track. And then I saw, and I was like, it's like cherry and cola mixed. Nailed it. Delightful. Okay, next question is from JB. It says, can you count credit card rewards towards your savings rate? Hear me out. How would you? It says in the question, hear me out.

20:58You already can hear me judging it.

21:01Brian Preston:The next part says, I have the Fidelity 2 % cash back card that goes into my brokerage. Can I count this towards my savings rate? Smart, fancy financial mutant or getting a little too cute with it? What do you think? Yeah, I mean, I think it's getting a little too cute with it because also this falls under the category of, because I saw somebody ask the question of why do you, after your certain level of income, do you not get to count your employer? It's because we're trying to create structures to where you are very deliberate with every dollar comes into your army of dollar bills. Why would I want to give you a shortcut that lets you basically cut the corner off of 2 %?

21:40By the way, hopefully you're not spending. If you make this amount of money, hopefully you're not spending just as much on the credit card to count that as 2%. Just think about that. The logistics of trying to figure out how this, I guess it's not that hard because you'd be like, oh,$300 got deposited. to$300 divided by whatever my annual income is. But still, I think it's not worth the squeeze of the fruit. I mean, this is the hassle factor. Plus, I want you saving as much as possible within reason, but as will your basic life. But this is something that I don't think is worth it.

22:09Brian Preston:Yeah, saving is saving and consuming is consuming. Now, if you're going to consume and you're going to make the decision to buy stuff, we love the idea of you doing it in a way that's as cost effective as possible. Maybe that's through a credit card where I have some reward structure. Maybe that's through some online portal where I get a discount. Maybe I'm using coupon codes, whatever that is. If you're going to spend money, we want you to spend as little as possible and get as good of a deal as possible. But that is a different line. That's a different behavior than the saving side. I would just consider credit card rebates, rewards, deposits are going in as like gravy and cherry on top.

22:45Brian Preston:That's a gross mixture. As either gravy or a cherry on top. Not together. But it does not get to count as savings. Well, and I think it also works against, I want you to do an automatic for the people and the fact that you set up automated processes, make the good habits as easy as possible. And if you're doing some weird convoluted calculation where you say, well, I know I got credit card rewards coming in this month, so let me make sure I leave enough room on my savings. It's working against it. Don't get busy doing nothing. It's just not worth all the factors in there. I'd rather you make it automatic and set up the monthly savings and investments and live your best life.

23:24Brian Preston:Love that. I love the Fidelity card getting tons of love in the comments too. Tons of love. Yeah, I mean, I use that one. Not that Fidelity gives us any thank you for being an advocate for them on that. I'm sorry, should I not have said that? Some great cash back though. JB, thank you for the question. Seriously, a good question. I hope that helps you not be too cute with it. I mean, behind the scenes, like when we were approaching advertisers or others for sponsoring the studio or whatever, I don't know. I'll just be quiet. Get us in trouble. Brian's ready to spill some tea that I don't even know what he's going to spill.

24:00Brian Preston:How did you sleep last night? He's ready. I slept good. I like this. Yeah, you can tell. He's ready to go. This seems like four-hour Brian, but I know you've got more than four hours. No, this is because yesterday was four-hour Brian, and the previous day was five-hour Brian, so seven-hour Brian is like, hot dog. This is what it's like when we actually charge this thing. Love it. I really love that. This is what it's like when we charge this thing. That's hilarious. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks.

24:37Brian Preston:Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18 plus.

25:12Brian Preston:Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. All right. We've got another question. Or well, did I give JB a Tumblr? No, you did not. If you don't have a Tumblr, email winner at moneyguy.com since we answered your question. Now I'm going to get to Doug P's question. It says, my question is what to do with equity in investment properties. I refinanced the mortgages on those properties four years ago. Rates are at about 3.75%. The equity is just building up, just sitting there. Should he do anything with this? How should he think about this? He seems bothered.

25:53Brian Preston:What do you guys think? I think a lot of people, whether it be your primary residence or whether it be investment properties, have this struggle. They end up thinking to themselves, man, all right, I got this piece of property. It's gone up in value. and I see all this wealth accumulating. I have all this built up equity inside of this illiquid asset. Man, is it just wasting away? Should I be doing something else with that? I think that is flawed thinking. I think that's flawed logic. And I think that people who try to get like really, okay, I'm going to buy it and I'm going to have the equity increase and I'm going to go borrow against that equity.

26:33Brian Preston:I'm going to go deploy that. You are now going likely further out on the risk spectrum than I think you really want to go. Because one of the things that you're going to notice, Doug, is if the rates when you refinance are 3.75 % and you're going to go now try to tap into that equity, you are likely not going to get 3.75%. Again, you're getting something closer to 6.5%, 7.5 % now. I just don't think that makes a ton of sense. Agree, disagree, 1.5%. Well, I think it's you have to markets and have different, there's a time and a place, different decisions come into vogue. And with a higher interest rate environment, and you've got 3.75 % mortgage rates on your rental property, those are like, people are very excited about those rates.

27:16Because that's allowing you to do multiple things. It allows you to have lots of flexibility on tenants, you know, because now you don't have to cover. That's the problem. I think a lot of people don't understand is that when you sell a piece of real estate, the previous owner might have had it at a 3.5 % mortgage. When the new investor comes in and buys a piece of rental property and they're paying at 6.5%, the carry cost on just making the note is much higher, and that probably means there's going to be higher rent. Whereas I like that you have a lot of flexibility because this is going to cash flow much easier at the 3.75.

27:52The way I'm handling this with clients, because I do have a number of clients who they're doing it, because remember, real estate in our eyes under financial order of operations is a step eight of the financial order of operations. You won't have this probably because hopefully the typical financial mutant, you're not only going to have rental real estate. If you did this right in step eight, you're going to have Roth IRAs, you've got 401ks, you're going to have taxable brokerage accounts. You're going to have a whole plethora of opportunities of how you're going to get access to money in retirement so you can choose the most efficient and best one.

28:23And that's why I have clients that they love the real estate game. They've had tremendous success with it. But it's going to be part of their retirement plan as they kind of simplify. Because real estate is not passive, despite what the brochure says. I mean, we own a number of real estate properties. And if you're going to do it right, you're going to be in the weeds on it. And for some of my several real estate clients, we're going to be divesting out of some of these properties, simplifying the financial life. And that's when we'll take that equity and roll it into the diversified portfolio at that point.

28:59Brian Preston:I think another thing, and this might help. This was Doug, right? If you are doing an annual net worth, and I do this, you don't have to do this, but this is what I do. And I know Brian does the same thing. Whenever it comes to real estate that I'm not planning on selling anytime soon, rather than valuing it on my net worth statement at market value, I instead value it at cost plus any improvements. So what it prevents me from doing is like looking at my primary residence, you know, I bought my house in this town a number of years ago, the housing market's gone really well. And so on paper, value of my house looks awesome, but I don't want to count that as part of my net worth bill because I'm not going to sell my primary house.

29:42Brian Preston:It's where we're going to be, it's where we're going to stay, it's where we're going to live. So I value it at cost. I do the same thing for any long-term investment properties I plan on holding. I think if you can do that, it will curb you from saying, man, I'm missing out on this opportunity. I need to be capitalizing on this equity. I don't think that's necessary in order to keep building financial independence. I know I have several clients that have, because they bought real estate residential rental properties in like 2009 or 2010. I mean, these are key demo times that if you bought in, you couldn't do anything but make money.

30:16So these are large portions of their future retirement. I do like the fact of, you know, you have to be mindful that real estate is illiquid and you have to have a plan for how you're going to turn it into a liquid part of your retirement. If you're not doing it through the cashflow, because a lot of people, now, if you're a person that loves real estate and you're going to be active even in retirement with it, because maybe you're retiring at 55, you know, there's nothing wrong that the cashflow is now essentially a pension. You've created your own pension. But for a lot of people, if you need access to the equity, you're going to have probably, because I don't know that I want you in retirement, say 60 years old, going in and re-leveraging the asset.

30:53I mean, because that really is pushing you out on the risk spectrum when you're trying to be as financially independent and remove obligations off of your life, because obligations are risk in retirement. So that's why I would think build it into your total plan. This is the part where we talk about take the relationship to the next level. It's very personal in the personal finances. How do we take all these complicated decisions and successes you've had and now to streamline it into your best version of yourself? This is a big part of it right here is how do we take an illiquid asset, bring that in with all your liquid assets and find the most optimal from a tax efficiency as well as from risk, as well as how do we maximize the returns?

31:34These things all work together, but it gets complicated really quick. Love that.

31:40Brian Preston:fantastic Doug P thank you for the question thank you for being here Doug P really doesn't love it because that's like it depends I hate giving it depends answers but do you see how many variables are out there there's a lot of moving it's a blessing I've heard very wise people say personal finance is personal Brian so I think you did great Doug P thank you for the question and if you would like a MoneyGuy Tumblr just email winner at moneyguy.com and we would love to send one to you I have a question Can I ask a question? You may. You don't have to give me a Tumblr. I've got one. Okay. A lot of people in the comments, I've been seeing this in our comments, and I saw one just come through.

32:17Brian Preston:People have been noticing you've been on a little bit of a fitness journey. They have. People have been commenting, like, Brian seems to be doing all right. I just thought, so one of the questions, guys, hey, what's Brian's fitness routine? Like, this new Brian, what's he begun focusing on? What's he begun, like, dialing into? Anything you want to kind of share? I don't mind because you guys are financial mutants. And I find out when y 'all come and do studio tours that I am, when a show creates an avatar of who their audience is, there's really two avatars currently, and it seems like it's Bo and Brian.

32:49I mean, because you guys come in and we all could be like hanging out. Hey, you're like us. Yeah, I like to hang out. And that's not a guy-girl thing because, I mean, a lot of you are like, you're like my brother or my uncle. But here's what's happened to me, and y 'all have heard me talk about it. Health is wealth. when I crossed 40 I had that great sage advice from um my former pastor Gary um I was in a small men's group with him and and he had talked about because he was a few years older than me and in my late 30s and he was already in his 40s he's like man that fork in the road you got to start exercising so and hanging out Bo is a great influence because I mean look at him he's a specimen so he's you know makes you feel like you should be doing better so in 40s I was doing something, nothing great.

33:34And then, but y 'all know I've crossed into my fifties and that, that kicks like a donkey. I mean, it really does. Not that I feel like I'm going anywhere, but there's definitely some, I have a fifties hangover in the fact that my father passed away at 55 and I know I've got to be very deliberate with, and so I'm proactive with my healthcare, with making sure I'm trying to stay ahead. And, and I'm happy to report like, cause I'm, I'm proactive. I'm getting heart scans and all these things that you hear about like executive stuff because I want to be giving you guys financial advice for decades.

34:04I don't want to be done with this thing because I like to think even though I'm in my 50s, hopefully, you know, according to a lot of my trackers, I'm in my 40s from a health standpoint. I want to be that way with the content creation too, is that I've kicked up, you know, the cardio side. I'm walking. I mean, truthfully, that is the... So when do you walk, Ron? I walk in the morning. I walk in of depressed about daylight savings time because it's going to squeeze my window down because we're central time here in tennessee and central time is the greatest thing in the world except for when we fall back because i've already in through my daughter because she's now because i probably because i put out these vibes i've gone through grok and acid hey when when are we going to have the less least amount of light and it's like december 1st through 11th it's gonna be dark here at like 4 30.

34:57How stinky is that? I mean that's just that's not cool. Let's get on let's get on that fallback. We don't need to be falling back. I'd like it to be 5 30 if we could but um but I've been walking. I still go to Orange Theory probably three to four times a week. I was doing that probably twice um but I've been doing that three to four times a week and um and I'm just not and here's the other thing it's it's kind of like what's that comedian I love her because I saw her at the Grand Ole Opry recently. She's got the Netflix show now. But she was like, avoid the bread and the sugar. Leanne Morgan, is that right?

35:32Is that the comedian? Yes, that sounds right. Yeah, so I've been avoiding the bread and the sugars too.

35:37Brian Preston:So I've seen you doing a lot of walking. Walking in the mornings, walking in the evenings, even sometimes you'll get a midday after we have lunch or whatever, which I think is awesome. And what I think is really cool is on those walks, you've been doing something else too. Well, this is Bo. Y 'all wonder where ideas come from. You know, we went to that press publish conference. Did I say that right? Nailed it. You did. Nice to know. And Bo was like, man, while it's walking, you want to do something with that. You know, because I always, and we, so Bo and I created a notes database that we're sharing back and forth with just ideas.

36:11And we've got like a hundred of them. I mean, it's crazy how we know each other's brains. And it's fun. I mean, I've just been having a blast kind of coming up with tidbits of parental advice or things I wish I'd have known when I was younger. I don't know that I'm going to share the Taco Bell 3-2-1 strategy yet, but it might make it in there eventually. But I'm definitely sharing a lot of funny things that I've figured out in life. And you guys, y 'all have been great. I love the comments that y 'all are saying when you're watching these. Because I think they're going out on Instagram, they're going out on TikTok and Facebook.

36:46Brian Preston:Matt, what's our handle so I can throw it out there? The Money Guy Show. If you go check out Money Guy Show on Instagram. What's up? I didn't know that. Money Guy Show on Instagram. Money Guy Show on TikTok. If you want to have some tangent time with Brian, that's what these things are. That's what they're designed to be. So if you haven't checked that out, make sure you go like, subscribe, and follow. I love them. They're very warm. It makes me feel happy. It's like going on a walk with Brian. It's like hanging out with Brian. We also, I mean, a lot of times when we have studio tours, people say, Brian, I love the tangents you do.

37:16But from a content standpoint, it's not always great that I go on random tangents. I don't mean to. It's just how I'm wired. So this just gives me a creative way to put those in a place that's probably constructive for the content. It doesn't mean that tangents are going away. I can't help myself, but it at least gives them another healthy place. Oh, they're here to stay.

37:36Brian Preston:We're just finding the right places to put them. Right. It's going to be awesome. Yeah. I love it. So they're probably now live streams. They're probably going to get a little extra. I mean, you always get their portion. I think this always gets a little extra. We're just spreading the love. All right. Doug P., I did give you a Tumblr, I believe. You did give Doug a Tumblr. Winner at moneyguy.com if I did not. And I have another question queued up from osthaboss1216. It says, hello, Money Guy team. I am proposing to my girlfriend of two plus years this Thanksgiving. Let's go. Congrats. Hope she doesn't watch the Money Guy show.

38:14See, I feel bad.

38:15Brian Preston:I want her to watch the Money Guy show, but hopefully not in the next two months. Let's go ruin the surprise. The question says, could you share financial advice that you wish you knew before getting married? For context, they're both juniors in college. They're both savers. Thank you. Well, you know what? I think you've already, the fact that you've already made the assessment, hey, we're both savers, means that you've had some conversation around, hey, how do you look at money? What do you think about money? because I think one of the things that couples can do really, really well before you enter into marriage is have the conversation around finances.

38:49Brian Preston:Hey, what does your balance sheet look like? And maybe you don't make it sound that nerdy, but like, Hey, do you struggle with credit card debt? Do you understand what a Roth thought? Like, so that way you can figure out, are you guys on the same page? Because it's amazing when you see two people come together and one is like an incredible saver and the other is an incredible spender, it creates a lot of friction. So if you can figure that out on the front end and begin working on, okay, how are we going to set up our financial situation so that we can be successful through this marriage, so that we can be successful through this partnership, it's going to be a lot easier than trying to figure that out as you go through it.

39:28Brian Preston:So I think the fact that you and your girlfriend are already having those conversations around, okay, what do we want our future financial life to look like? What are our goals, both short-term, intermediate-term, and long-term? I think communication is key. And the more you can have those conversations early on, the less surprised you'll be when all of a sudden you find out your spouse spends like, you know, 40 or 50 bucks on shampoo, or you find out that throw pillows are a necessity inside of a household. If you can talk about that stuff in the front end, you'll set yourself up for success.

40:01I have a fun exercise for Ask the Boss. Now, it's not going to be video form because we've been doing this long enough that this doesn't have a video equivalent of itself. But back in 2012, Bo got married. That's how long we've been doing this because you're like, wait a minute, it's 2025. Yeah, we've been doing this show a long time. And one of the funnest shows I think I've ever done is I asked Bo a bunch of financial questions of what he thought marriage was going to be like. Now, I think we did a 2013 show where we did a year in the future. But those are some just stellar content. So, Ostabas, if you want to, because that way you get to see here a young Bo talk about how he thought his wife wasn't going to spend more than like$20 on stuff.

40:41That was our check-in number. I couldn't remember. Was it$20 or$40? It was$40. So,$40. And I think I said at the line, even in that show, I was like, I bet her shampoo costs more than$40. And he was right. So it's one of those things where it's fun to kind of hear and reminisce where Bo is a financial mutant just getting married. What he was thinking, you might resemble yourself in listening to that content. Now, here's where the advice is, is open communication. Of course, Bo kind of hit that. Y 'all need to be talking about, first of all, don't skip out on the big life stuff. I mean, this is, I'm always amazed because it's going to, you're going to go ahead and just help you out tremendously.

41:20if you start talking about, hey, where are we at with kids? Where are we at with religion? And then next is, you know, probably third on that is, hey, what do you think about joint accounts versus are we going to keep things separate? How much debt do you have? I mean, you don't want secrets. Secrets kill marriages in a lot of ways. So you just want to have open conversations about what you have going on. Because, I mean, I've watched enough, you know, Christmas movies. You want to make sure that who you're marrying is not a princess or a prince and they're just not telling you. and then that creates its own little diabolical thing that you'll have to work through.

41:51But it is one of those things, open communication, that wasn't, y 'all didn't even laugh. No, I gave you a chuckle. And then I think about what's the parable of the, is it the Magi or whatever, is just try to be selfless. Gift of the Magi.

42:05Brian Preston:We've done this before. Gift of the Magi. So you just want to go into marriage knowing that you're going to, it needs to be a selfless thing. And I think if both people come into the marriage, understanding you have to give of yourself, you're setting yourself up for long-term success. And go through, I mean, I know, I think one of the important things I did was we did some counseling through our church or something like that, just to kind of make sure we were priming the pump on the communication and other things. Because don't just, just because you have love and passion doesn't mean that you got all the boxes checked.

42:38You need to do a little, you know, measure twice, cut once. I'm making sure you all have good open communication.

42:42Brian Preston:Love that. And congratulations, by the way. Yeah, very exciting. Great advice, guys. thank you, Ask the Boss, for your question. If you would like a Money Guy Tumblr, if you don't have one yet, just email winner at moneyguy.com. Next question is from Drew H. It says, first time chatter, long time watcher. Welcome. What are you laughing at, Bo Hanson? Did you not see the pump fake right there? That's fine. That's okay. I'll let you do Drew H. You know, we have Making a Millionaire. We have Making a Millionaire. You know what would be a fun show? because I had such a good time with Bo's show where we asked the questions.

43:19And I don't know if Making a Millionaire, if we even have any candidates out there, but a show like that with two young people that are about to get married. Compare and contrast and talk about money.

43:32Brian Preston:Didn't we have an engaged couple on? That would just be fun. Maybe missed opportunities. Because Bo was fun. I mean, I wish we could have gotten, if I could go back in time and put a young Bo and Jenna on the show and then we have Making a Millionaire that way, it would have been hilarious. It would have killed. It would have been a lot of fun. Okay, go back to Drew H. I'm so sorry. Well, I'm sorry I interrupted you there, Brian. No, you didn't. My brain is just like it was a little delayed. Okay, back to Drew H.'s question. Wonderful. It says, first-time chatter, long-time watcher. He's on foo step eight.

44:01Brian Preston:Congratulations. Is there a point where Roth conversions become counterproductive if your pension income will fill most of your retirement spending needs? I think the question that Drew is asking here is, can you have too much Roth? Now, I don't know your answer, Drew, so I want to think through that. Let me explain to you a scenario where I've seen Roth conversions be slightly detrimental. Someone has a lot of pre-tax assets, and they have a little bit of after-tax assets, and they want to start converting to Roth. So they retire early, and they begin doing these Roth conversions so that they can move some of the pre-tax bucket into the Roth bucket.

44:45Brian Preston:Well, they end up using all of their after-tax assets to pay the taxes on those Roth conversions. So they finally find themselves in a point where all they have are Roth assets and pre-tax assets. Now, if you're over 59 and a half, that's not necessarily a bad thing because you can get to that Roth money just as easy, if not easier, than you could get to the after-tax money. But if you're below 59 and a half and you don't leave yourself any dry powder to pay for living expenses, you could potentially have an issue. However, you said in your question, man, I actually have a pension that's going to be coming in.

45:19Brian Preston:So if I have provided for my living needs and I'm going to have a pension coming in, what I'm likely concerned more about and thinking more about if I'm in your situation, Drew, is what are required minimum distributions going to look like for me at age 73 or if I'm younger at age 75. and I may want to begin doing Roth conversions now so that I don't have these huge RMDs later in my 70s and 80s and I'm actually going to let my Roth converting be less of a strategy around how am I going to pay for my retirement living expenses and more about, okay, what's my estate planning and legacy planning look like?

45:56Brian Preston:Because Roth assets are some of the absolute best assets to ultimately get to leave to your heirs. Here's my take on this. By the way, I love that you're already in step eight and i don't did drew give us his age he did not so i don't know how early in the process to to be a step eight but it's still pretty cool that you're thinking about roth conversions but here's there you need to know the negatives of roth conversions because they also are part of why there's positives because we our favorite account structure you're not supposed to tell who your favorite child is but i'll tell you ours is roth because they grow tax-free.

46:31And man, we all get excited about tax-free, but there's a game you're playing. You're hoping for tax arbitrage. That's the whole thing with Roth conversions, meaning that you want to be able to turn your pre-tax assets, your tax-deferred assets that are like in 401ks and other things, because you know the government, there's a clock ticking in the background with required minimum distributions. You're trying to figure out how you, and it doesn't matter, By the way, if you die with these, your heirs will eventually pay the tax. Somebody's paying the taxes on all those pre-tax assets. So you're trying to figure out how do you get them in out of the tax structure with as little about as taxes as possible.

47:10Well, some people get so excited about Roth assets that they, even when they're in peak earning years, they lose their mind and they start doing Roth conversions way too early. And when you're in a higher tax bracket, that is not a tax arbitrage situation. You're actually paying maximum taxes when you do that type of stuff. So we'd much more prefer for you to play the tax arbitrage when hopefully you're out of your peak earning years. You drop your earned income because maybe you retired early, you're part of the fire slash fine movement, and all of a sudden your tax rates go to the seller. And you're able to essentially convert assets with minimal tax impact, minimal tax drag, because taxes are a problem.

47:50Because what happens is that you have to pay the taxes from some assets. And as Bo just shared, a lot of times that comes from your taxable assets, which might be your bridge account. If you're part of that part moving and you're retiring before 59 and a half, that could be your bridge money that you're actually spending off of. There's also the opportunity cost of anything you pay in taxes. No longer is in your army of dollar bills working for you. So that's why it has to be a very deliberate calculation to make sure that you're taking advantage of the lowest tax rate possible that won't hurt your long-term future.

48:26But you're also working against the cash flow. And that's why, once again, this is another one of those when it might make sense to have a financial advisor is because this is what a financial planner does for you. It's not just asset. Everybody thinks a financial planner is just going to put you in index fund and asset. No, a good financial planner is going to start doing running tax projections. They're going to start running through cash flow analysis of what retirement looks like in the first five to seven years. You know, what is it if you convert this amount this year versus then? What's the opportunity cost loss by us doing this?

48:57Is this truly an arbitrage or are we just paying taxes earlier than we should? This is what we do for a living. And I think people, that's why whenever you see all the people who trash financial advisors, I'm like, you haven't really talked to a financial planner because if all you're doing is investment management, that's already been commoditized. You just go buy an index target retirement fund. You don't even need to hire a financial advisor. So if we're going to pay for this building and all these people in here, we better be doing a heck of a lot more than that. And, Drew, that's where actually we have to help you put the personal and personal finance of figuring out what your best path forward is.

49:35so that's the negatives of Roth conversions are taxes reduction of taxable assets and then the opportunity cost that money will never get to work again once you pay the government so you just have to kind of understand those negatives and then figure out how you can find the most optimal time to work through because you do have that clock in the background with the required minimum distributions

49:53Brian Preston:the only thing I'm going to add to that and this is a practical thing a lot of people think alright I want to see if I can do a Roth conversion I'm going to go Google or I'm not even going to Google anymore I'm going to use AI and say, hey, should I do a Roth conversion? It'll spit out, hey, here are the pros of Roth conversions. Here are the benefits. And you give it all the details. They give you some stuff. It's interesting. Whenever we do like a full Roth conversion analysis for a client, what we do is we lay out a best laid plan. Hey, you retire at 58. Here's our Roth conversion strategy that we're going to anticipate implementing from age 58 all the way out until age 75.

50:24Brian Preston:It's really like 58 to 63 because you've got Medicare surcharges. You've got to figure out when social happens. And after that, it's from there until 75. So you lay out this best laid plan, but you know what actually happens in practice? Every single year you revisit, iterate, and adjust that plan. So it's not uncommon that we might start for the first three years of someone's retirement planning on this, but something changes. They move, they change states, they buy a piece of property, whatever that thing is. And all of a sudden now that plan that we were on needs to pivot, needs to shift. It is a dynamic process.

50:54Brian Preston:A lot of people think that like, oh, well, retirement's super easy. I'm just going to retire and I'm going to have 4 % withdrawal rate and that's all there is to it. it is very nuanced. And Roth conversions are one of those that are very, very nuanced and can have huge implications over the lifetime of a financial planner. And I'll tell you, just kind of getting behind the curtain of what financial planners do, typically it's a two-transaction discussion. It's because at the end of the year, we'll kind of game plan at the end of the year what we think we're going to be able to do in a Roth conversion this year.

51:23But we don't actually pull the trigger on it until typically fourth quarter. That's right. And here's why it's typically fourth quarter. clients, you guys, and you're going to do this for yourself too, you'll have outside income sources that just come out of the blue. You're like, oh, but this happened. You're like, well, crud, that kind of screws this up because now, because Bo just said it, you have to realize your Medicare, you know, there's your Medicare premiums, your taxability, social security, all these things every year get reset and we have to take that into account. And so that's why it's usually a two conversation conversion.

51:56It's because you have your best laid plan where you're kind of in the beginning of the year thinking about things, but then when you actually go to implement, you have to make sure that you double check all the variables that came into play. Love that.

52:10Brian Preston:Fantastic. Well, Drew H., welcome to asking a question. He's a first-time chatter, long-time watcher, so that was fun. This reminds me, I don't mean to belabor things, But I think about when I got LASIK surgery. When I got LASIK surgery in the mid-2000s, and I'm sure it's this way now too, is that the robots had gotten so good that all you had to do was go to these on the Sunday papers, if anybody even has a Sunday paper anymore. I'm sure they advertise just now on social media. You could get your eyes done for$500 a piece or something through LASIK. Back then? Yeah, it was something cheap because these clinics were set up to basically just blow and go and cut your eye and then do it.

52:54And I'm sure for 90 % of the people that was great. But for me, I was like, hey, I want to make sure I can see. I only got two of these things. I might be willing to stay and pay them$500. How about if I pay$4 ,000 and I get the same eye doctor as Greg Maddox, who was one of the world's greatest pitchers? That way when the robot doesn't or some scenario hits that the robot doesn't like, I've got a world-class person that's going to make sure that I don't give up my eyeballs because I was just trying to save$3 ,500.

53:27Brian Preston:It's not like a buy one, get one free deal. Yeah, because I'm only going to do this traction once, so maybe this isn't where I need to save my$3 ,000. So I feel like good financial management, that's why we get a bad rap, financial advisors. Look, now there's a lot of people, I think if you're – I was out with a great friend, and he works with one of these – I'm not going to say the name, but the custodians that do financial planning and charge an asset under management fee. And I was like, are they looking at your property and casualty? Are you doing a tax projection or anything? And it's like, no, they only do my investments.

53:58And they tell me they can't do anything outside of what they manage. And I'm like, is that even financial planning, what they're doing for you? And it sounds like they're just managing your money. So to just be careful with that, there is a better way to do money. That's why we share so much. We try to give you the ins and outs of this thing. So we agree. I mean, we probably jump in on the chorus when Ramit and others are kind of trashing financial advisors. Like, yeah, that's probably not great financial planning. But if you actually see what is really going on behind the curtain, it's a little different.

54:31And it just hits differently. And you kind of know that. And I think that's where we're going probably with all the AI stuff, too, is that, you know, the robots are going to get really good. But at the end of the day, you're going to be like, is that really where I should save my money? or is maybe some personalization okay on that?

54:47Brian Preston:Love that. Yeah. I don't know if you know this. A good friend of ours just popped into the chat. Did you see that? Are you aware? So is it true that the Humphrey baby is here? Because I think that everybody loved it. So talk to us about baby Humphrey. Baby Humphrey. And what's funny is Humphrey, because I tried to do prep when we had Humphrey on and the story told was not any of the prep. It was the coolest thing. I had no idea. I'm realizing a lot of these content creators have really cool parents and Humphrey is definitely one of them. His father flying unmarked planes for the CIA No, no, don't tell him.

55:21Brian Preston:If you don't know what he's talking about you need to go make sure you listen to that episode See what I did there? I'm good. I just tell it all. I just lay it out there for you. But welcome Humphrey. We always love it when we have friends show up like that That's hilarious. Incredible It's a great episode. I think we have some more I think there's more Humphrey content to come both his channel and our channel. Yeah, be sure to go subscribe to Humphrey Yang's channel and to this Money Guy show channel because there's more coming pretty soon actually. Very soon. Very soon. Very, very soon. Drew H., if you would like a Money Guy Tumblr, just email winner at moneyguy.com Alright, next question is from Just Joshin' ya.

56:00Brian Preston:It says, is there a certain level of wealth where... Tom out. Tom out. What? My wife likes to read to our kids. Right. Okay. Me, not a big reader. I don't mind admitting it. You don't like to read your kids? Wait a minute. I hear that successful people have to read like 12 books a year. Darth Vader. I've read 12 books since I got out of high school. My wife is a great reader though. So my kids want us to like read stories or whatever. And so I'm like, this moose belongs to me. No, your kids are reading like legit. They came by the other day and they had like all these autobiographies and stuff like that.

56:36I was really impressed.

56:37Brian Preston:They are way, way cooler than I am. Here's what I'm saying, though. My wife is what I call a vocal inflection reader, meaning when she reads, she's going to do the accents, and she's going to do the excitement. Oh, yeah. That's fun. And what I just heard from just Josh, Rebe is that kind of mom. I bet you and Rebe, you are an accent mom reader, aren't you? Not accent. But, yeah, like I'm going to have fun with it if I'm going to sit and read a book. When you used to read to your kids, did you change your voices and stuff? Yeah, I think so. I mean, I think right now if you put a kid's book in front of me, I probably would jump into that motion.

57:16Brian Preston:I wonder if there's a correlation. I think Brian and I were both theater kids in some respect. I was a theater kid. There's some element of that. So it's just like you were not. That's why I'm a very small sample size. Jack, we've all seen Revenge of the Nerds. what's funny is me and you have seen it a lot of folks in this room have not seen I mean Bo is the Alpha Betas or whatever he's going around and putting everybody in the locker I'm the one over there hanging out with the violin kids that's hilarious okay do you want to read Just Josh and you? yeah let's get back on track here Just Josh and you says is there a certain level of wealth where it makes sense to start using a charitable giving fund or can that be done at any point in your financial journey.

58:05Brian Preston:And I know this is one of those like, I don't know, kind of like behind the scenes things that gets you guys really excited. So can you give us a little insight on charitable giving funds? Well, I definitely think it's something that requires a little of your, I call it a, a, a bowling point, um, indicator that you're doing well is because what makes these charitable giving funds, these donor advised funds, um, really powerful is that if you have appreciated holdings, it can be stocks, it can be mutual funds, it can be anything that's appreciated in your brokerage account. You can now, if you're charitably inclined, you can start giving these appreciated holdings, if you're charitably minded, to the charity from these donor funds.

58:47And then you get a tax deduction for the market value. The charity gets use of that market value, whatever the market value is, because they're going to liquidate it. And you never have to pay income taxes on that appreciated holding. So a lot of you, I mean, I have, I just did a transaction last week and the holding that I did had an appreciation of 166%. So you think about what I was able to give to this charity is, I mean, it's amazing what I was able to give and I'm going to get a tax benefit. They're going to get great use of this. And then I'm going to basically walk away from all that appreciation and paying income taxes on it.

59:26So it is, but it's not one of those things. I think, you know, it is one of those things where if you're brand new in the journey, you'll get excited about finding out about this thing, but it just might not have the juice yet until you have appreciated holdings. Do you disagree or disagree? I should have said that better.

59:46Brian Preston:Do you disagree or disagree? Because you always say agree, disagree, or want to fight. I don't want to fight, Chip. You're too fitting out. I agree with you completely, but his question was, is there a certain level of wealth where it makes sense? I do not think it has to be level of wealth. And I wrote down sort of three different times that we see people do this. One, you had already mentioned, if you have any highly appreciated securities, even if you, hey, I mean, I bought this stock for$500 and it turned into a thousand. Well, that's a great stock or that's a great holding that you could give to a donor advised fund.

1:00:18Brian Preston:You could get the deduction and you can essentially wipe away those capital gains. So obviously, gifting appreciated securities makes a lot of sense. The second time where a donor advised fund or charitable giving account can make a lot of sense is if you're someone who needs to do charitable bunching. Meaning, hey, I give, you know, like I give, I'm going to make up a number,$10 ,000 to charity every year. But because the standard deduction is so high right now, every year I just take the standard deduction. So even though I'm giving to charity, I'm not really getting a benefit from that. Well, if you fall in that category, it might make sense for you to say, hey, instead of me giving$10 ,000 every year, I'm going to put$20 ,000 into my charitable giving fund this year, and I'm just going to do that every two years.

1:00:55Brian Preston:So one year, I'll take the standard deduction, and the next year, I itemize. And the next year, standard, next year, itemize. So if you need to bunch, a donor advised fund or charitable giving account is great for allowing you to do that to actually get a tax benefit. And then here's the third, and this one's not as often talked about, but we see this with a lot of our clients. A number of people like to give to a lot of charities. I give to 25 different charities throughout the course of the year. Well, it's really hard to track down, okay, where's my giving receipt? And I got to get this and I got to list them all.

1:01:25Brian Preston:If you're someone who gives to a number of different organizations or supports a number of different causes, and you would like to consolidate what you have to keep track of, a charitable giving account is great for that. Because all you have to track is what goes into the charitable giving account. Even if you distribute it across a hundred different organizations, all you have to report on your taxes is the one amount that went in. So it's a great tool for a consolidation when it comes to charitable giving. And also, it is interesting that you can, if you're doing the bunching like Bo was talking about, you control when you distribute it later to the charity.

1:01:59So if you know your charity is kind of, like think about your church and you're bunching every two years, it doesn't mean you're only making contributions to your church every two years. You could actually still spread out your distributions to them so that their cash flow is not impacted either. It's a powerful tool for financial mutants once you get in. And what I like is, because initially, you see a lot of charities, they'd say, hey, if you have appreciated stocks, let us know, because they've set up their own brokerage account. But if you had mutual funds or ETFs, they were kind of, not really ETFs, but mutual funds for sure, they had trouble.

1:02:33But I loved when these donor advised funds came around, because I'm an index investor, and now all of a sudden these index funds you could even give to charity much easier through these donor advised funds. It's a win-win. It's a really cool thing.

1:02:47Brian Preston:Love that. Love it. Well, just joshing you, if you would like a MoneyGuy Tumblr, just email winner at moneyguy.com. I love what's going on over at moneyguy.com. So if you haven't been there recently, head over there. See all of the content that we've got. Have we launched the new stuff, like the new organization stuff in there? Or is that still not live yet? The new organization stuff. Like on the website. You know how we've been working in the background for months and months and months and months? Is that live yet? Or is that still coming? Yes, and I was actually just making a mental note to get some cool visuals of it so I could tell them about it next week.

1:03:19Brian Preston:But since you are loyal fans, yes, there is some really cool stuff up there right now that we have finally launched, a little soft launch, that is going to help you find things even more efficiently. We have really common topics, trending topics that you can sort by, and it will show you all of our ultimate guides, resources, and full episodes that are covering those topics. So that should help you search and find content that matters to you even faster and better. So definitely go check that out. I'll be talking more about some of the stuff that's going on on the website in the coming weeks and months.

1:03:53Brian Preston:But moneyguy.com, definitely go check that out because we are always improving it and trying to make it the most valuable resource that it can be for our financial mutants because we really appreciate you guys. And we're on this journey with you. I get excited because I know when we do studio tours and others, people are like, holy cow. And I'm like, yeah, it's Bowen. I don't know how to turn on any of this stuff anymore. So I mean, that's a good, and it's kind of that way. I love that about the website too, because in the past, it was just a place to kind of just compile and keep a historical record of our content.

1:04:26But it has gone so beyond that now. Now we've become very deliberate that hopefully you guys in the audience too, you know that this is part of your wealth building journey. I mean, I was in Costco this weekend and I fell prey to going over and talking to one of these kiosk workers who were selling something that I've seen on TikTok. And I was like, oh, my God, this is actually going to see the product in person. And I'm not going to tell you what it is. It was embarrassing. But anyway, I was talking to this kid. I'll tell you all I'm off there later. But she's like, oh, so what do you do for a living?

1:04:58And I don't tell people like YouTube. So I just say like I'm a financial planner. And she's like, oh, my brother needs a financial planner right now. I'm like, okay, your brother needs a financial player. He's not going to hire somebody that you helped fit this thing for. So she's like, well, where do I go now? I was like, if you just go to money.com, it'll be good. And she goes, so I just tell him to go to money. And I was like, yeah. I think she thought I was being weird.

1:05:23Brian Preston:Why did you say I'm a financial advisor? What am I supposed to say, Bo? Anytime someone says, hey, what do you do for a living? I say, we have a personal finance YouTube channel. That's what I say. That sounds so, everybody wants to be on YouTube. so I don't like to tell people I'm on YouTube. I don't want to tell people the one thing that everybody wants to know and wants to know more about. I don't tell people. No, you're right. Everybody's dying to hear that you're a financial advisor. I tell everybody I work in finance. And what do they think? Either one, he's going to sell me something, or two, my brother's uncle's brother-in-law wants to come talk to you.

1:05:51Brian Preston:That's all it ever is. Okay. I don't even know why I brought up Costco at this point. I shouldn't have done that. I should be much better at saying, hey, give us a little bit of today, and if you just put something to work, It's going to help you build your great, big, beautiful tomorrow. This is the worst closing in history. I'm your host, Brian. Go to moneyguy.com slash resources, trying to salvage it. Joined by Mr. Bo Hanson, the rest of the content team, Money Guy team, out. The Money Guy show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management.

1:06:22Brian Preston:Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. A Bound Wealth Management does not render or offer to render personalized investment or tax advice through The Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss. Uncovered windows can make your home feel up to 20 degrees hotter.

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