Do We Need a Bond Fund?

Updated : Oct 24, 2019 in Articles

Do We Need a Bond Fund?


it’s the weekend and you have financial
questions that need answering that can only mean one thing
it’s time for Jill on money the show that takes the mystery out of your
finances here’s your host Jill Schlesinger welcome welcome it’s Jill on
money yes indeed beautiful October lots going on we are broadcasting live from
the Capital One studios Capital One what’s in your wallet that’s the
question mark I know it’s not surprising to you you know that I line up my dollar
bills they have to all face the same direction in descending order do you
have your singles first yeah that’s what I do too also my favorite new feature of
the ATM is that some ATMs allow you to pick your denominations I like that I
like I like having a couple of big bills just you know for certain purposes I
know mark saying you surprised I was like having a little cash I think it’s
because I’m old but I like having a little cash on hand I think that when
you live in a city sometimes it’s a little bit you feel like oh I never need
cash right cuz everyone takes Apple pay or you can you know use venmo you do all
that but every so often you find you oh I need some cash so it’s good to have I
just got back from a trip to Ireland learned by the way where they don’t
often take credit cards and cabs so I needed cash there also learned a lot
about the impact of brexit and what could be happening spoke to one
restaurant owner who said I know the Republic of Ireland is in the European
Union but all my booze comes through London and so she’s freaking out so even
on that very micro level you absolutely see the impact of this brexit talk all
right let’s get to your talk what’s important to you let’s find out first up
we’ve got Dee on the line she’s calling from Seattle how are you today I’m
fabulous in you today I’m great what can I do for you ma’am my husband and I we
have about a million in in stocks in the SP we have
in a money market we have a 500,000 in a money market a hundred thousand in CDs
we have about a million dollars in real estate and we have been talking to our
financial consultant and she has recommended to take the five hundred
thousand from the money market and put it into a managed bond fund we’re pretty
light in bonds we realized that it wasn’t our intention to get into bonds
and now the markets just gone like all crazy yes I liked it that’s the absolute
best way to describe it the markets gone all crazy so the million dollars in
stocks is that in individual stocks or is that in index funds what are the
what’s the nature of the stock position some of it is individual stock and some
of it is in index funds okay and you guys manage that yourselves or it is is
this person this financial consultant does that person manage it for you
so we manage all of our own individual stock okay and my husband has been using
money from the five hundred thousand it’s in the money market to buy the
stocks and he is a huge believer in oh my god this is the time to really look
for some good deals out there oh there’s good deals left and right there’s got to
be a few out here look let’s find them we tie that money up into this managed
bond fund that’s going to be available to us yeah we’re more recently retired
both of us yeah early sixties so it’s not like well you know we can still be
doing the 401k for three B we did those those are gone now so now let’s figure
it out so let me ask you a question D how are you guys supporting yourself we
have a small business which we make about 50,000 a year and to
be honest but probably not the world’s best consumers were better savers than
that’s okay we love good savers this is a program that loves a good saver is the
$50,000 a year all you need to live on oh you know yeah we could probably do it
on that although it would be nice to have a little bit more than that and
neither one of us are drawing social security at this point in time either so
when do you think you might want to draw Social Security because you are in your
early 60s so what’s your full retirement age 66 7 67 68 we’ve kind of been
playing around with some of those numbers the financial consultant says
that you know the rate was going right now we wouldn’t even have to really
worry too much about pulling anything oh that’s good so you know it’s we’re
completely free to do whatever is going to work best for us so what is it about
I’m just intrigued because presumably what I think is happening here is that
you’ve saved a bunch of money you’ve got this small business when you ever decide
to take your retirement benefits from Social Security that you got plenty of
money you’re not going to run out of money so tell me about your husband’s
desire to find these great deals and what is it that since you don’t spend a
ton of money do you want a bunch of money to kids like what woody is what’s
the what’s the motivation um I think that being children of depression-era
parents you know it was really important especially to his family to save to work
towards the future in a retirement his mother passed early and his father
recently passed though he wants he just wants to
make sure that we are secure no matter what happens and we do have you know two
children and a grandchild at this point so leaving it to them is not a problem
to us we are looking at you know doing things for us doing some traveling you
and edit habit I mean you know it’s just we’re not we’ve never been this huge
consumers yeah I get that if you’re not a huge consumer I’m not particularly
clear as to why your husband seems like he wants to except for the fun of it of
getting in on it and you’ve already got a million dollars invested in the stock
market I think that’s plenty giving you’re kind of where you stand no
I I don’t think it’s a terrible idea to actually have a good chunk in bonds I
don’t know whether you need to be in a managed bond portfolio I mean you you
don’t have state income tax in Washington State correct okay so you
don’t have to worry about buying some individual bonds that are you know
essentially you know munis tax-free you’d be buying some types of bonds
maybe some blended types of bonds why wouldn’t you just buy you know it even
if you just said let’s take some of the money and start buying index bond fund
you know with a couple of different flavors of that and call it a day
which would cost you a fraction of what you would pay in a managed account III
think that that might be more interesting and I guess the other piece
of this is that I am gonna caution you about you know that you don’t really
need to take on more risk I would say to your husband like look honey we’re in
great shape why are we rocking the boat alrighty
that could be you if you want to get on the program and ask us a question just
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find your favorite podcast we’ll be right back 401ks IRAs refinancing she covers it all
back to Jill on money with Jill Schlesinger you’re back and this is the
program that takes the mystery out of your financial life and one of the ways
that we can help you is what we can bring you on the air with us and you can
ask a question I’m still a certified financial planner hey I’m real Park
officially paid my dues took all my continuing ed I am a certified financial
planner still yes and so I’m all done with that which means I can actually
answer many of your financial questions not all of them I mean I I cannot know
everything I have a lot of good friends in the industry who can help me out when
I don’t know something I will tell you I don’t know it if you’d like to get on
the air send us an email ask Jill add Jill on money.com
ask Jill at Jill on money.com or when you’re on our website which is
coincidentally called Jill on money Jill on money calm there’s a contact button
in the upper right corner that’s all I have to do click and then we’ll get your
email and it could be about anything maybe it’s a retirement question or an
investing question a college funding question whatever it is we’d be
delighted to help you out always an honor that you think to use us to help
you in your financial decision-making let’s go take another question right now
in fact we’ve got Lisa and she’s on the line from New Jersey hi Lisa
hey Jill thanks for taking my call sure um I have an old 401k still at an old
employer and I wanted to know what is the best thing to do should I leave it
there should I roll it over to my current employers I roll it over we
currently have other accounts of fidelity should we roll it over into
that mm-hmm let me ask you a quick question
so first start with old employers 401k where is that plan held what what firm
holds that uh truthfully I don’t know okay you’re working now you’ve got a new
401k do you know where what investment company
mutual fund company holds that 401k my current account is that Sheila Hewitt oh
okay got it I don’t know what I mean I think
that I know kind of what that might look like inside and some of the choices but
my guess is it’s not the cheapest plan that’s out there I’ve seen it before the
reason to stay in an old 401k is that you’ve got this great plan maybe it’s a
plan that is like wow it’s at Vanguard and the the choices are vast and they’re
so inexpensive and I’ve got tons and tons of index funds
that’s one reason to keep it in the old place okay okay to move it to a new plan
there’s there’s the advantage of consolidating and having everything tidy
in one place or the new plan is so much better than the old plan again you know
lots of choices index funds all of that and then the third choice is to roll it
over into an IRA rollover account and maybe you would do that at fidelity is
you said you had other accounts so do you have an IRA account there already I
do okay so you know you might want to consolidate it there and look I’m not
the cheerleader for one of these companies versus another but you know we
know that if you’re in the fidelity family you’ve got a ton of different
index funds from which to choose it very easy to do that and and you will
consolidate so all that being said I think that you know not knowing a ton
about the old plan not thinking the new plan so great my inclination is to roll
that to the IRA rollover account that is at fidelity already and then we get to
like the larger issue which is how am I going to invest it how old are you Lisa
I’m 50 married single married okay and are you maxing out your 401k right now
I’m doing 15% 15% okay and how are you guys doing just as a couple financially
you have kids or you still are you paying for college what’s what’s right
now that we ever you kid kids 12 and 14 we you’re in it oh yes we are
we’d like to help them out with college but I don’t mind if they have to have
some skin in the game mm-hmm all right good and I don’t mind by the way think
Rutgers so let me just say that the have you saved money for college
not a lot okay and we’ve been concentrating on 401k as well as an
emergency fund okay great right now if you look at your retirement
assets between you and the spouse how much total 1.8 nice and you got a house
you have a house how much you say it’s worth it’s probably were 375 400
mm-hmm $160,000 mortgage at 3.87 sweet that’s great and you and you said you’ve
built up your emergency reserve so you’ve got a nice chunk of cash that’s
just in case good Rick we have 90 okay and any other debt besides the mortgage
nothing beautiful I love this how much do you make together
about 240 okay I mean you’re in very good shape
III think that have you ever actually run your retirement numbers I have it
fun thing to do well we did have a CFP we met with a couple of times she wasn’t
the best fit for us mm-hmm and we’ve kind of been looking
for somebody else mm-hmm but you know pulling a name up on
a website I got you little disconcerting I hear yeah it’s it’s nerve-racking you
know we can help you out with that first of all so if you want a an actual
planner to help crunch numbers and look at look at retirement look at college
make sure you’ve got the right health life disability make sure all the
insurance stuff is done make sure that your estate planning is in place that
you want like a real plan I I’m sure that we can get you a few names and I
think that what’s really interesting is that often times people will have this
kind of situation and they’ll say yeah well my money’s in retirement accounts I
don’t need a plan well wait a minute maybe you do because you rely on a plan
you don’t necessarily need someone to manage your money you just want to know
like what’s the game plan right right and in the future we would like to
have investments outside our retirement plan hmm yeah I mean I bet
totally makes sense I have the perfect person for you I’m gonna tell you what
we’re gonna I’m gonna have mark put you on hold and he’s gonna give you this
person’s name and literally in your neighborhood I think it’s a great idea
for you guys at this point you got a chunk of money that is set aside for
retirement you’re making good money I think the big questions that you have
about allocating your money is really in line with your risk tolerance but also
trying to figure out what makes sense in terms of how much should we be saving
for education should we be saving for education should we just pay this out of
cash flow and you know just getting a bigger picture idea I love that idea and
then speaking about what is an appropriate fee because the the guy we
met was charging an hourly fee not not a we don’t really have any investments
outside of our retirement in charge of percentage what was the hourly fee that
you were quoted I think at the time he was charging us 250 an hour that’s not
bad you know I think that that’s probably in
line but I do also think that there are plenty of people who will say I will do
a plan for you instead of an hourly you know pay me 3 grand then I’ll do a
financial plan I don’t know what that is but I’m just saying that I think there
are any of people who will give you I like a flat fee myself rather than
hourly I don’t know I just like I think hourly is always like oh you calling me
because you want to talk to me you what you know like I don’t know what yeah yeah and then he also told us that given
our age we would probably need to work until we were 70 that’s interesting
given our you know generation I don’t know about that I mean maybe it depends
what you want like if you said you know what we’re gonna do when you know well
first of all your kids are young so you know you’re kind of screwed anyway
you’re probably gonna work for at least you know let’s say 15 years so you know
six down until twelve year old gets through college right and presumably you
like what you do then like rock on keep doing it right but if you’re like man I
want to do something else then I’m so like bought in on this idea of like the
the next career you know in your 50s 60s 70s because I do think that there is
something to be said for people who remain in gay
in the work world I’m not saying you have to work as hard as you work but
being able to do something and have a place to go I think it’s fantastic so I
mean I think the second career would be great yeah and I think that that’s
really has a lot to do with how you communicate what your goals are to to a
financial planner I mean that’s really the issue so if that’s something you’re
like oh my god that turns my stomach I don’t want to do that then the planner
should be able to say okay well here’s plan B and here’s Plan C here’s plan D
here’s we’re gonna do mark is going to give you some info hang on one second
and we will absolutely positively help you out and I wish you the very best of
luck and again I’m just gonna say this Rutgers Rutgers there you go perfect
okay we’ll get back to more of your questions remember you can go to Jill on
money.com that’s our website and there you can sign up for our free weekly
newsletter and if you’ve got a question while you’re poking around click the
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back back to Jalan money where Jill
Schlesinger helps you take the mystery out of your finances your back it’s Jill
on money we are the program that tries to help
you get where you want to go think of us as like your friendly trainer at the gym
every so often we’ve got to kick your tush
but we’re mostly here to help you and you know you got to do some of the work
really most of the work but we’ll help you and guide you that’s really our job
if you’ve got a financial question anything really about anything going on
in your financial life and you’re anything with a dollar sign send us an
email ask Jill at Jill on money.com ask Jill at Jill on money.com so this is a
follow-up email from Jim who just wanted to clarify and he says I recently
received a $130,000 balloon payment on a property I have sold I live paycheck to
paycheck and a very small amount for emergencies I’m afraid to invest it with
the state of the economy and maybe a looming recession I am worried about
buying high and selling low been there done that and you actually wrote in a in
a follow-up that he wanted me to understand that he wants to do something
for the short term and invest if the market tanked so he can invest low he
hopes to retire in seven years and so here’s a deal Jim this is classic market
timing and as anyone who has read my book knows I tried to do that once I
tried to time the market and it just doesn’t work it is nearly impossible to
buy low and sell high mostly because you’ve got to make two perfect decisions
so let’s start with you when you say you’re living paycheck to paycheck the
first thing I’d love for you to do out of the one hundred thirty thousand
dollars set aside that emergency reserve fund and make it sacrifice
just really think of it as this is the emergency reserve and what is the amount
that should be in that emergency reserve fund well I’d love for you to take a
look at what your expenses are and put at least six months of your expenses in
that emergency reserve and probably a year’s worth because maybe if you’re
living paycheck to paycheck you need to have a little bit of a bigger cushion
because if something bad happened you couldn’t do anything about it now I
don’t know how much that is but I’m gonna make it up let’s pretend that
that’s you’ve got to put thirty thousand dollars a year maybe you spend 30 grand
or maybe you spend 40 grand whatever it is put that away
don’t touch it now for the rest of the money there is no short term there is no
buying high buying low selling high selling low there is a strategy so
whatever the rest of the money is going to be used for it should not be treated
as something where you could figure out with the perfect moment to enter or
leave a market so maybe that means that let’s just say there’s a hundred
thousand dollars that you are going to be a balanced investor some money and
risky stuff maybe that’s some stocks maybe that’s some commodities maybe it’s
a little real estate investment trusts but some riskier stuff and the other
half in less risky stuff like fixed income very boring but in essence it’s
like any other money because even though you’re going to retire in seven years I
don’t know maybe you don’t need all that money in seven years and if you are
going to retire in seven years my question is also how does your
retirement income look for you you will maybe receive a pension maybe social
security we need a little bit more information but my main point here is to
remind you that please please please don’t try to pick the best entry point
or exit point market timing over the long term
doesn’t work okay question from Scott about life insurance well Scott you’ve
missed your window of opportunity September was life insurance Awareness
Month just kidding I’ll do it Scott’s 50 is wife’s 47 they’ve got to
$500,000 20 year policies and the term of those policy is up in six years and
you know he says his only cost 75 bucks a month now here’s the question
our mortgage will be paid off in 15 years our kids will complete college in
10 years it appears to make sense for us to be insured another 15 years perhaps
even 20 my thought is to cancel our current insurance and start two new
policies a million dollars each which would likely cost a total of 250 bucks a
month does this seem like a good approach or would you recommend another
strategy let’s go back Scott it might be interesting for for us to know what are
your assets because when you bought those $500,000 policies 15 years ago you
probably didn’t have a lot of money saved so my question is do you have
other assets maybe you actually don’t need insurance I’m not saying you don’t
I’m just saying maybe you don’t because if in six years you have enough money
that is saved to actually be able to take care of all the needs necessary
then maybe you don’t need it so we need more information I’d love to follow up
with you my it does become fairly expensive as you’re seeing you know
three grand a year to buy term policy a term policy you know in the future so
I’d be interested to know exactly how much insurance you need you know it’s
got a really good insurance needs calculator is the American Institute of
CPAs the AICPA they’ve got a lot of calculators if you look at the life
insurance calculator it’s pretty good I like it but if you want to follow up and
just tell us like well how much money have you saved what are your asset
levels what do you need then we might be able to do that analysis with you so I
can’t recommend another strategy until we know those answers to those questions
okay one minute mark says can I do this fast okay this is from Shirley she and
her husband are in their early 80s that got IRAs and he’s basically saying you
know she’s of she wants to invest and she wants to basically start investing
with Vanguard I like Vanguard it’s a really easy way
to invest and so Shirley I really have the most the sort of the highest regard
for these companies that offer straightforward low-cost investing index
funds don’t go crazy individual you know sort of the individual sector funds
these can stay away from make it big make it broad and make it safe okay
thanks for writing so it’s Jill on money and we are so happy that you’re
listening to us during the break why don’t you go onto our website it’s
called Jill on money comm there you can read all the stuff that we write you can
listen to old shows you can watch my TV segments check it out Jill on money.com
we’ll be right back do I invest here should I put my money
there Jill Schlesinger can help you back to Jill on money you are back it’s Jill
on money and we are delighted you’re joining us hey have you followed us on
social media mark is very busy on social media you know mark since you kind of
took over and made sure that I don’t see nasty things my life is much improved I
know he has to see it but then he tells me if something’s important like oh your
uncle’s trying to reach you on Facebook you know the one thing I miss is
birthdays that’s the that’s the only downside of not being on Facebook so
actively mark can you tell me when my friends have birthdays okay great all
right okay this is a a very interesting email if you would like to make comments
or if you’d like to ask us a question just send us an email ask Jill at Jill
on money.com Julie writes my adult son and daughter-in-law take Florida trips
girls and guy weekends nothing is spared for our grandchildren’s activities and
clothes new cars and a nice home to live in social network reveals all the fun
things they do we don’t see them much as they are way too busy we only live a few
hours away but then I get a phone call when they need money to cover bills my
husband and I are retired we never did the things they do when we were young or
do those things now I guess it upset me and I said no well now we are excluded
and no phone calls to check on us what’s your thoughts on this mark would you
like to offer your thoughts on this before I do Julie it’s a terrible story
and I never want to hear about people feeling excluded shunned disowned by
family members so that said I mean do we really have to
have this fall apart over money it sounds like there is a problem it sounds
like your kids might have a problem in terms of how they spend and I guess one
question would be did you you did you did you previously offer to pay or had
you set up a pattern where you did pay and now you’re changing the rules have
you when melissap what was your relationship like before and you know I
hesitate to say this but like I it just makes me so sad to think you’ve lost a
relationship over is it money usually money is just the the easiest way to
express problems in a relationship so here’s what I think I think I’d love for
you guys to just come back together somehow someway and talk very frankly
about your feelings now if they’ve just completely iced you out what are you
gonna do but I don’t know this one makes me sad mark he’s given alright by the
way he’s totally just let me give you that mark the roll of the eye that just
came through the window pain you’re rolling your eyes two kids look I don’t
hi Julie is riding us so we’re immediately taking her side but you know
there are two sides of the story he’s not he’s not buying it anyway go get a
shrink go come back together come on your family all right sue writes what is
the source of the money you can put in a Roth IRA is it true you have to leave it
in there for five years before you can use it also is it possible the
government will tax the interest earned down the road in the Roth since it is in
an IRA it seems like the whole amount could be taxed when withdrawn again
what is the advantage moving money from a traditional to a Roth thank you I
enjoy your show sue in the Bay Area okay so yeah you’ve got a you can always
take what you put into a Roth out okay you can take your cost basis out it’s
already been taxed you can’t take the accumulation out for five years that’s
number one the source of the funds can be
anything but you have to have earned income or be the spouse of someone who
has earned income to use a Roth and the other piece of it when you ask
could this be taxed down the road I doubt it because most of the changes in
tax law grandfather in assets that had one type of tax status previously so I
don’t think so the big advantage of having a Roth versus a traditional su is
that the money’s already been taxed so that when you pull the money out down
the line there’s no tax – so obviously the money you put in it’s an after-tax
dollar all that accumulation grows without any taxation that’s the benefit
so if you you know mark will we do when we have our Roth we have a big Roth IRA
article don’t we have the traditional versus Roth so go to the website jill on
money.com click on read and you’ll see that I have that Roth article there it’s
probably from the summer-ish I think okay so check that out Donald rights
transfer profit from 401 K – brokerage account Roth IRA can I do this tax-free
I’m over fifty nine and a half or should I open an IRA with my principal 401 K
please advise I love your radio show Donald you cannot alright let’s start
here when you have a traditional 401k the money you put in has not been taxed
yet so there’s no pulling money out of that account transferring money out of
that account without paying taxes that’s the deal
so whatever you do you’re gonna have to pay taxes so you can open up a Roth IRA
you can do that but if you have a prince you say a principal 401k
it’s a 401 K so unless you have a Roth 401k option you’re stuck with that 401 K
if you are over fifty nine and a half all you’re doing is able to take money
out without a penalty you still have to pay taxes no matter what you do with the
proceeds ah all right if you got a follow-up
question let me know and if you listening have a question give us a
holler email us ask Jill at Jill on money.com
or go to the website Jill on money.com while you’re there poking around
why don’t you buy my book the dumb things smart people do with their money
thirteen ways to write your financial ROG’s we’ll be right back your back it’s Jill on money and we are
broadcasting live from the Capital One studios Capital One what’s in your
wallet they don’t even tell me to say that but I’m just isn’t what their
slogan is oh brother I think I can say it okay before we go
to a break finish up the hour here’s a question from John about the use of a
revocable trust versus a transfer on death account which is the smartest to
use asks John this account that he has has stocks and mutual funds worth about
five hundred thousand dollars to parents six adult children I’m interested in
knowing the hazards concerns and benefits why do you need a revocable
trust I mean you could okay so generally speaking I like if
you’re gonna do a transfer on death account is usually just a banking
account and it’s I don’t know if you need to do it for an investment account
but the revenue the revocable trust has more power and it has more discretion on
your part my question to you is why do you need it do you have a huge estate do
you hate one of your adult children spouses do you want you know some of
this is really a question for an estate attorney in that do you really need the
firepower of a revocable trust you may not maybe just leave it to them in a
will I don’t know I tend to like a river if you’re gonna go through it I’d rather
do a revocable trust probably because if you’re worried about something that
revocable trust which is changeable during your life becomes irrevocable not
changeable upon death that’s a more ironclad way of making sure your wishes
are known okay jack says I want to sell my house in Illinois relocate to Florida
does it make sense to withdraw money from an IRA account to help fund the new
house I need about a hundred thousand dollars extra to buy the house we want
in Florida after the sale of current home Jack don’t you realize you’re
supposed to be down sizing not up sizing it really depends how much money you
have if you’ve got you know 4 million dollars and you’re pulling out a hundred
grand sure but if you only have a certain amount of money and you’re
burning through a lot of that liquidity to pay for the home no I would not do
that okay you’re listening to Jill on money during the break why don’t you do
this hop onto the website Jill on money comm bookmark it and while you’re there
to sign up for our free weekly newsletter it’s free and it comes out
every week it’s Jill on money we’ll be right back it’s the weekend and that can
only mean one thing you’re listening to Jill on money the show that takes the
mystery out of your finances here’s your host Jill Schlesinger you are back it’s
our number two of the Jill on money show we are broadcasting live from the policy
genius Studios policy genius is the easy way to compare and buy insurance go to
policy genius.com well it got a great one this was this our boy yes jean
chatzky she almost needs no introduction you know her from the Today Show she’s
been on Oprah MSNBC CNN the view of the talk she’s got a podcast called her
money and she’s a she’s written like a thousand books her newest book is called
women with money the judgement free guide to creating the joyful less
stressed purposeful and yes rich life you deserve and I met Jean a couple
times it was so much fun to have her in the studio so check it out
here is our interview with Jean Chatzky now why write a book just for women
because men like you too Jean I hope so they do I wrote this book because things
are changing for women very quickly in terms
the amount of money coming our way the biggest shift is that women will inherit
twice will inherit from our parents and will inherit from the husbands that we
outlive now you still think we’re gonna inherit for our parents if all these
parents are basically blowing through their retirement yes thanks I think we
yeah there’s a house there are some assets that won’t get spent I think
overall we will still inherit it’s not a smart move necessarily to plan on it
because it could come 20 years later than you anticipated but I think the
money’s still coming our way and we are getting educated at a much
faster rate at men eventually the salary gap is going to close we’re starting a
lot of businesses we just are getting more money that is a really really good
thing but we want different things from our money than men want and we also like
to learn about it in a different environment I go around as I know you do
and speak a lot and the difference between a QA when I’ve got only women in
the room and a QA when it’s mixed is enormous ok let’s go there well how
different is it you’re holding these what are you doing you’re holding
sessions so these that that’s actually I was talking about sort of the bigger
speeches but I’m holding these her money happy hours her money is my podcast and
my website and we’ve just been crowdsourcing these groups of women when
I travel and saying come talk about money have a glass of wine let’s sit
let’s talk about money I developed this card game essentially pass around the
cards everybody takes one and you have to start talking and it is a
judgment-free zone it is incredibly special I think the way women just open
up to these women that they haven’t met before of a variety of ages and stages
and share and by the time I leave they are exchanging numbers today cool yeah
it’s amazing so what is it that you think makes the
addition of men in the environment different for the woman what is it
that’s that that she’s carrying that feels guarded maybe I think all of
a sudden it’s no longer a judgment-free zone or at least we don’t perceive it
that way I think we feel like we’re not doing it right and somebody’s gonna look
at us and say oh you’re not doing it right
even though we do it right like you’ve seen all the research the research shows
we’re great at this but we don’t have the confidence to acknowledge that and
to embrace that and we still have this incredible bias toward safety and
security that holds us back what is that where do you think that comes from that
when when you say to somebody what does money mean many times women will say
security yeah why do you think that is I said what do you want from your money to
every woman that I interviewed for this book safety security stability savings
money in the bank I think it is this need that we have to satisfy before we
can take on anything else I think it’s biological I think it’s
very much back to our cave man cave woman roots I think it’s emotional money
is incredibly emotional and I also think women don’t feel safe in the world but
even more basic than that I focused in on this Gallup study of how
safe people feel walking home at night hmm and women don’t feel safe you know
you were even in developed countries even in the best neighborhoods they
segregated the the research and took the top one-fifth of women in terms of
wealth still not safe that’s heard of daunting
although I never feel safe anyway and I just thought that that was just being
Jewish well it might be too I mean I agree with you and it’s like your mother
sitting on your head and saying look look both ways before you cross the
street look where you’re going and so we compensate and we compensate with money
and the irony of all of that compensation is that it actually
sabotages our financial security and how does it do that we keep far too much
cash in the bank I love my cash in the bank
so do I so do and when I got divorced I mean look all of this all of this
interviewing that I did made me take a really hard look at my own life and what
I realized was that I am typical and nobody likes to be typical but I have at
times in my life and especially after that divorce left far too much cash in
the bank I was intent on buying a home because I didn’t ever want to have to
move again even though it was 2005 and if I sold my home today I would not get
what I paid for it I mean how awful is that and it’s fine I
got a lot of use out of it but you know I Drive a Volvo wagon like if you want
to be typical and worried about safety you drive a Volvo wagon and I am NOT
giving it up okay and nor do you have to so what does money mean for you it means
at a very basic level it means safety it means security but it also means choices
about how to spend my time about what I don’t want to do it also allows me to
support the causes that I want to support to try to make the world into
the world I want it to be whether I do that through investing or whether I do
it through giving more money away that’s become a more important goal for me so
when you look at the lens of investment services and you see maybe some of these
services that are pointed towards women what’s your reaction to that you know
you see Sally Krawczyk opens up a robo and calls it L vest or whatever it is
what’s your opinion about that I think if it works for you if it gets you
engaged if that’s what it takes to bring you in okay I do think women should take
the fact that we’re gonna live an average five years longer than men into
our considerations and Sally’s model definitely does that I think you can
also do it yourself whatever it takes to get you to step up step up you don’t
want to listen to me you want to listen to Jill instead you want to listen and
Susie or Sally I don’t care but listen to somebody and do the right thing okay
we’ll get back to our interview with Jean Chatzky in just a minute hey during
the break why don’t you hop onto our website Jill on money comm you can sign
up for our free weekly newsletter we’ll be right back do I invest here should I put my money
there Jill Schlesinger can help you back to Jill on money your back it’s Jill on
money if you have a financial question we’d love to hear from you our email
address is ask Jill at Jill on money.com ask Jill at Jill on money.com our guest
this hour is the iconic Jean Chatzky she’s NBC today’s financial expert she’s
a best-selling author and she’s talking about her new book women with money and
she probably started her career speaking to women who are now like retiring but
now she’s actually talking to younger women maybe children of those women and
you know she notes that a lot of women tend to be conflicted and uncertain when
it comes to our personal finances and what’s interesting to hear is what’s
going on with the next generation of women are Millennials coming up and
beyond that gen Z hopefully they have a more I don’t know even keeled
relationship with their money let’s hear it from Jean because she’s talking to
these people all the time here’s more of our interview with jean chatzky how do
you feel the next gen is doing like you and I are about the same age and we came
up through you know you and journalism and then financial services and me and
financial services and then journalism in very male-dominated fields do you
think that there has been progress with younger women and their ability to kind
of grab hold of their financial lives more than us but I think that they have
been forced into it I think when you are sitting under a mountain of student loan
debt it absolutely forces you to pay
attention in a way that people who don’t have it
can just slide for almost a decade hmm and I feel I mean it’s an incredible
burden for for these kids who are coming out with a mountain of debt and having
to learn to deal with it and having to figure out things that they should have
been helped to figure out before they took it on about how much they have to
earn to actually comfortably repay that debt and maybe they would have made a
different college decision about going somewhere that would have been a greater
value but I do think in terms of saving I think the Millennials are doing great
and Gen Z is is following suit in terms of investing not so sure I feel bad
because they have like these many hurdles not just the student loan debt
crisis but you graduate or you watch your family suffer yeah during the
financial crisis right and it’s it’s very daunting you know and to have those
scars from your childhood or your teens or some of them who said like you know I
graduated and thought I was going to just have any job available and it
wasn’t there for me so how do you advise the younger generation what are your
your initial steps that you outline in the book or in your your life like what
do you think those best practices for younger women trying to take hold and
control of their money younger people actually because I’ve gone through this
with my with my kids might got a twenty five-year-old son hard to believe
unbelievable she had the child when she was ten and a 22 year old daughter and
he came out of school and he got a job that had no benefits like so many people
these days and I said you gotta open a rock though you gotta open a Roth you
gotta open a Roth and he was doing really well I have a I have a linked
savings account with his he hasn’t kicked me off yet I hope that he won’t
but I’m sure that that day is coming and and so I would watch him save and spend
and he was doing he was doing great and he had the bandwidth but he wanted to
hold on to that savings because he wasn’t what
I want to take a trip what if I were I said okay you’re doing fine you can do
this you can start small how much do you think that you could contribute a month
fifty dollars you know a hundred dollars I can do more than that and he and he
started with 250 he is continuing to ratchet that up he actually came back
and said I should have done this a year ago because because the thing that
people who are a little bit afraid of investing don’t understand is how much
fun it is to watch your money add up you know when you when you set it and forget
it when you just put it on automatic pilot and you then visit your account
even if it’s lost a little bit over the course of the month because the market
has has gone in the other direction the fact that you’re continuing to
contribute means it’s probably kept you close to whole and you feel good and
then you feel confident and then you want to do more and that’s that’s what I
tell young women just start you know I know you’re not feeling good about this
I felt pretty awful the first time I went to yoga class right so I sat in the
back and I the teacher who I loved because she makes fun of people made fun
of me and I got better over time but you’ve kind of have to be in it to
experience it and to progress and to gain that confidence I you know I’m
still the worst person in the class but why are y’all judging you know oh no come on but it’s okay
it’s okay all right so if you are getting the younger women at the earlier
stages and they are more in control hopefully let’s talk a little bit more
towards the 30s and 40s these women are confronting so many obstacles and
they’re really I think feeling just sort of overwhelmed by their family lives so
how can someone in their 30s or 40s maybe eyes like a controlling spouse
who’s kind of like they’ve maybe they’ve outsourced their money to the spouse it
happens right like you’re better at money than I am honey you do it what
should those people be thinking about the first thing they should be thinking
about is do I know the lay of the land if something happened let’s not even
make it a worst-case scenario let’s just make it a travel nightmare your spouse
is in Europe they are stuck because there’s a bad storm they can’t come home
the mortgage has to be paid and you have to do it because the computers are down
or something I don’t know could you do it could you sign on to those accounts
and actually do it and if the answer is no you don’t know the passwords you
don’t know where things are you know that’s really bad because what you don’t
want is for somebody to get really sick or die and you have to take it over and
not know how the second thing I would say is that if you’re staying home and
you don’t have an IRA of your own you’re missing a big tax saving opportunity you
should have one and the nice thing about retirement accounts is you can’t share
them they’re yours and you got to manage it and we know that when people have
accounts of their own they are more likely to step in and manage it and you
can do it the easy way I grew up at Smart Money Magazine owned by Dow Jones
and the Hearst Corporation there are restrictions on what you’re allowed to
do trading wise I mean that turned me into a passive investor but I’ve never
gone back I’ve always been that and passive investing is the way that most
of us as individual investors should be doing it we leave the fees low we we
leave our fingers out of things we set an asset allocation and we forget it one
of the things that I did in these her money happy hours was ask the question
are you an investor and very sheepishly like two or three hands would go up and
then I’d say do you have a 401k and every hand would go up and we have a
misunderstanding of what it means to be an investor women think investors look
like and sound like Jim Cramer they think they’re traders and that is not
how to invest for your long term financial life why has the industry
continues to try to lure people in with like there’s a man behind the curtain
right that can beat them market fees right it’s these I mean
active investing makes more money in many cases and and that is something
that we just have to acknowledge there are also a cohort of people generally
men who like to win you know they want to beat the benchmarks they take pride
in well my portfolio is doing better than the SP and that takes an active
investment stance you can’t just buy the SP and expect to beat the SP it’s not
going to happen you know I argue if you look
historically at how these indexes have done since the beginning of investment
time I’m fine with that okay we’ll get back to our interview with Jean Chatzky
in just a minute during the break here’s what I think you should do you should
subscribe to our podcast it’s called Jill on money you can get it on Apple
stitcher radio comm Google Play or just hop onto our website Jill on money.com
you’ll find everything there all right we’ll be right back 401ks IRAs refinancing she covers it all
back to Jill on money with Jill Schlesinger your back it’s Jill on money
this is the program that takes the mystery out of your financial life and
we’ve got a special guest this hour Jean Chatzky great author now I think
business owner in her own right she has her own company called her money
media and she’s really built a career on helping people understand their
financial lives in this the last part of our interview we’re going to talk about
the the things that will are the habits the traits that can make you a better
investor and you know what the book is called women with money but it’s for
everybody okay anyone can benefit from this here’s the rest of our interview
with Jean Chatzky so in the book I lay out the three components of being a
successful investor right so one is saving I heard once and I have stolen
this phrase that you can’t just like you can’t out exercise a bad diet you can’t
out invest a savings problem savings are the base and you got to put enough money
in there to grow or you’re not gonna you’re not gonna be successful
number one savings it’s the chatsky method TM number two asset allocation
right we’ve all seen you’ve certainly seen I don’t know if your listeners have
all seen but there are years of studies that point to the fact that asset
allocation is responsible for eighty to a hundred percent of the success of your
portfolio and and it’s sort of the first study put it at ninety the second study
sort of revised to say eighty to a hundred either way it’s like yeah it’s
like you do that’s where you’re going third thing is security selection you
don’t have to do it at all just by the markets and obviously all the index
funds out there are pretty much hurtling toward zero in terms of cost right so
that’s an interesting place to kind of talk
about the industry in general here we are in 2019 where we do not have a
fiduciary standard for the entire industry so what’s your view on what
should be happening with financial advice givers so I’m all 100% in favor
of a fiduciary standard doesn’t look like we’re getting one under this
administration but I think that individuals when we interview financial
planners should be asking that question you know are you a fiduciary what
standard do you adhere to or in English do you invest with my best interests at
heart at all times do you make decisions with my best interests at heart and
there are enough who are fiduciaries that you can find one of those yeah and
at all times because remember the old CFP rules which are changing at the end
of this year said you have to be a fiduciary during the planning right but
not during the sale so fiduciary at all times am I always first what do you do
with if you have someone’s listening and they’re like well I have an advisor who
I now have found out it’s not a fiduciary should I fire that person not
necessarily what should I ask him besides the fiduciary part you know I
would go back and I would make sure you understand the fees you want to dig into
and by the way you should do this anyway you should dig into the various
investments if somebody is investing on your behalf if you’re not a DIY er you
want to know what is this costing and are there alternatives that cost less
that could be substituted and why didn’t you buy those instead what what’s going
on that you chose this over that when the returns are equal and the costs are
lower because women in particular we are really big on control control makes us
happy but I think that’s true for for humans fees are controllable I can’t
control the markets I can’t control inflation I can’t control taxes I can
control fees what do you think is the most miss
understood all right let’s give us do threes because I love threes the
misconceptions that many of the women that you encounter who listen to your
podcasts or come to these meetings what do you think are some of the
misconceptions about advice givers that they have besides let’s say put it aside
that they think the guy or gal is a CPA or a lawyer working in your best
interests what other misconceptions do you think
they have I think there’s a big misconception that they’re all the same
you know people come to financial planning from a variety of backgrounds
summer accountants as you said some are insurance people some are trained as
CFPs you got to know where they’re coming from in order to filter the
advice that they’re giving you because it will have that sort of vent and bias
there’s a big misconception that somebody who is advising you about your
investments is looking at your life I like holistic investors I like somebody
who can who’s looking at my big goals I think people feel like you have to have
a lot of money to work with an advisor that’s my third one what I like most
about the financial planning industry right now
is that people are shaking things up you know they are opening facilities where
you can come every single month and you can have a discussion with a coach they
are charging by the hour if you don’t want to if you don’t want to hire
somebody who is gonna manage your money and take a percentage of your assets
there are a lot of different ways to do it these days and if what you want is a
little short-term therapy you can find that how do you feel about the advent of
these online platforms these robos do you think that that’s a good way for
people to to basically try to consolidate their financial lives and
get a snapshot or do you think that some of these people are gonna be a little
bit unnerved the first time we go into a real bear market
I think the robos have taken some important steps to account for the fact
that they can see coming that people are gonna get unnerved
when we go into a real bear market I mean I’ve been watching how they’ve
added human beings back into the equation and I think that that is I
think that’s a really good move because sometimes you really just want to talk
to somebody even if it’s just to say we’re watching things are okay
but I have an advisor and I like the phone call when things are going you
know a little bit sideways and I like being able to pick up the phone my my
husband and I are looking at buying an apartment and I am I’m talking through
you know well we look at my income and we’re projecting this out and if it
stays like this and well can we buy the bigger apartment you know I I I do this
for a living and I want to have people to bounce this off of thanks so much to
Jean Chatzky for joining us you know you can go get her book women with money
anytime and if you’ve got a financial question we would love to hear from you
ask Jill at Jill on money.com that is our email address give us a
holler and we’ll try to help you out we’ll be right back Aurel 1 K s IRAs refinancing she covers
it all back to Jill on money with Jill Schlesinger you’re back
it’s Jill on money and sometimes you send us emails and I ask you for more
information well here is a great case where Maria followed up so she had
written us awhile back that she was a 40-something year old person she’s
really on her own and she’s got a bunch of student loans $60,000 in student loan
debt 27 grand that’s unpaid she also has $10,000 I’m credit card debt and she
said she’s scared and she followed up like I just said well well tell me more
about what’s going on for you so here’s what she says I and by the way don’t get
too excited but when you send us an email what we do is we send you the
audio clip so you can hear it so she writes thanks for sending me the audio
this is the coolest way anyone’s ever replied to me regarding your question I
make a hundred seventy thousand dollars a year so she’s 41 years old makes
making good good money she says I have fifty thousand dollars worth of my
company stock and she gets a 401 K mat she says I’m thinking about buying a
small apartment so tax and maintenance costs don’t drain my savings but given
the change in mortgage policies I’m not sure if this is good how do I decide
budget for buying a house lots of calculators all right first things first
if you’ve got $50,000 of stock the first thing I would do is I would sell it and
I would pay down my outstanding student loan balance and my credit card balance
boom you’re done isn’t that easy and now just put the rest of it in in a savings
that’s your emergency reserve fund okay get that done get it out and now you can
really focus on what you need to do so you pay that debt off you you hurt you
sell the stock you put aside any money you might need for
taxes so make sure you know what that number is you pay off the debt and now
without that debt you can start putting as much as you possibly can into your
401 K so what you want to do is you want to put 19 thousand dollars into your 401
K and I would not go and buy anything right now I think just doing what you do
and keeping your keeping your financial obligations limited that’s what I would
do okay so you’re gonna be fine do that if you have a question just let us know
okay alright so this is a note from Gillian and you know some people think
my name is Gillian not just Jill FYI okay so Gillian’s from New Jersey my
husband and I listen to your show together we often discuss it here’s my
question I retired three years ago at age 68 and I waited to take my social
security until I was 70 about three months after I retired I was asked to
return one day a week to help out on a in a different department I was glad to
do it I earn about $8,000 a year from this job
none of which I need to live on it is now just being deposited into the bank
account here’s my question am I eligible to make a Roth contribution yes you are
how much can you contribute each year you’re gonna love this seven thousand
six thousand is if you’re below the age of fifty and extra thousand because
you’re over the age of fifty so that’s kind of cool if so and if I can use a
Roth can I have my paycheck direct deposited into my bank account and then
put the money into the Roth myself yes of course this is a great question thank
you so much we love you I even bought your book as a birthday present for my
husband Jill from New Jersey aren’t you sweet
I’m so happy thank you and go out and open a nice cheap Roth IRA with some
no-load mutual fund company you know Vanguard or zero price
or swab or fidelity or TD Ameritrade just something cheap okay
okay Brian Brian’s dad’s 88 he’s getting remarried after my losing my mom about
five years ago his bride-to-be is 80 the question should she wear white
no that’s not the question I’m kidding the question would it be better would it
be better I can’t say which is oh I see would it be better for them to just do
vows and not get legally married for financial reasons ah probably doesn’t
make a huge difference I don’t know but um you know first of all I’d hate for
you to have that conversation with your dad because I think that’s wildly
uncomfortable for you and you can ask an accountant to do a dummy tax returns
side-by-side as two individuals and this is actually a good time of year to do it
because they’re not so busy and so I would absolutely try to talk to an
accountant if they care about it but if they don’t care about it
guess what don’t get involved okay this is Mariah who says you mentioned the
problem with the fire movement that one problem the fire movement is health
insurance I want to share my personal answer getting the hell out of the US
there are two ways to do this as a nomad or by attaining legal residency in
another country medical emergencies are far more affordable in other countries
I’ve been living in Mexico for almost two years with temporary residency
despite the delicious food and wonderful people I don’t recommend moving here my
next move will be as a digital nomad in South America
hoping this ignites a spark with some of your listeners who might never have
thought of this idea it’s amazing the big problem for me would be like how am
I gonna go see my mother like most of us just can’t leave the country like that
so especially those of us with Jewish mothers ageing Jewish mothers and other
types of mothers okay it’s Jill on money if you’ve got a financial question we’d
love to hear from you ask Jill at Jill on money.com and you can always go to
the website and there we’ll find all sorts of fun things
including our sister podcast so you can subscribe to it anywhere you get your
favorite podcast radio.com Google Play Apple stitcher weds ba check it out
Jill on money it’s the podcast version ok we’ll be right back you’re back
it’s Jill on money we are broadcasting live from the policy genius Studios
policy genius is the easy way to compare and buy insurance just go to policy
genius.com ok I got a question from Brenda who says My partner and I would
like to set up an education plan for our 10 year old grandson he lives in Oregon
oh sorry we live in Oregon he lives in Washington any suggestions you have
might be appreciated you know I went on to the old saving for college comm
website because it’s just easy to kind of get some information there so here’s
interesting information so let’s talk about Oregon because that’s where you
live it doesn’t really matter where the kid lives contributions to an Oregon 529
plan could actually be deductible in terms of Oregon state income tax so we
know that when you put money into a 529 plan you put an after-tax dollar in and
it grows without taxation as long the kid as long as the kid uses the money
for college but in the Oregon plan if you’ve got 24 hunt rebuked to twenty
four hundred thirty-five dollars by an individual so that would be you and your
partner can individually both do this those contributions are deductible in
computing Oregon taxable income that’s kind of cool right and so I would
suggest that you take a look at at least the Oregon plan because
it’s so much better to get that beautiful tax deduction
I would absolutely check that out okay so check that out and you can go to
saving for college dot-com I think that might be your your best bet so give it a
shot and you know we’ll figure out where you need to go all right that’s it
that is the program thank you so much for listening it has been a delight if
you missed any part of this show or you want to go back and listen to other
shows just go to our website Jill on money.com and don’t forget we’ve also
have that podcast you want to check that out we put great stuff up out on social
media markt as all the hard work so as always I thank Mark for being the best
executive producer in the world and I thank you for listening we’ll see you
next week you

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