TPWM FOR 8-21-21 FINAL .mp3: Audio automatically transcribed by Sonix

TPWM FOR 8-21-21 FINAL .mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Following paid program is prerecorded. Eric Arnet is an investment advisor, representative of Retirement Wealth Advisors Inc. and says he registered advisor Take Point Wealth Management, this station and RWA are not affiliated. Exposure to ideals and financial vehicles discussed should not be considered investment advice or recommendation to buy or sell any financial vehicle. This information should not be considered tax or legal advice, and individuals should consult with professionals specialized in fields of tax, legal accounting or investments regarding the applicability of this information for their situation. Past performance is not a guarantee of future results. Investments will fluctuate and when redeemed, may be worth more or less than when originally invested. Take point on retirement, a well rounded show from a well rounded team leading you into retirement, an hour of simple retirement advice from your friends at take point wealth management. And by the way, we mentioned take point. Wealth management is a local company up and down the nature coast. See them or they'll see you. Whatever the case may be, you need to see takk point wealth management because they want to take you into the future with a stress free retirement. They also do so many other things. They're more than just wealth management with a slew of professionals under their umbrella. They are here to help you once again up and down the Nature Coast. Their local phone number is three five to six one six zero five one one. They show, by the way, an hour four of the important information that you need take point on retirement. So you need to grab a pencil, grab a pad of paper. You're going to want to take some notes, especially that phone number, write it down the website, take point wealth management and take point wealth dot com and take point in wealth management dot com. All you got to do is Google take point wealth or whatever search engine you used, type in take point. It'll take you to their Web site. In the meantime, we've got lead advisor retirement planner Eric Arnet in our studio, along with Randy Widra. Thank you for joining us. Twenty twenty one.

Speaker2:
Gosh. Well, what do you want to talk about? So and so we start. I think most folks know we do record this show for compliance reasons. We air Saturday morning. So not too much of a lapse in current events in time. But this is not a political show. This is a show about retirement planning. And we care mostly about our retirees and our listeners out there looking. For answers. But we do need to address. We've talked about this in previous show. So let's talk about what does a change in administration mean for some folks out there? We have been talking about how are the markets going to react to that. And there's a lot of speculation. There was a lot of speculation leading up to this. If the Democrats do take the Senate. What's going to happen if the Republicans maintain control? What's going to happen? And guess what, folks? Here we are. And guess what? The markets are still fine. Markets are still moving up. Markets are still going higher. Everything's fine. Everything's OK. Let's step back, take a deep breath. Let's refocused on what's important to us as retirees, as we plan for retirement. I want to say thank you to our listeners. We get all kinds of great feedback, people that are out there listening to the show.

Speaker2:
To those of you that get up that early and get your coffee going, I toast you as I appreciate it. Drink my coffee. We appreciate your listeners. We've been getting a lot of great feedback, which is encouraging to us and lets us know that, hey, we're doing something right and we're we're moving in the right direction. But we've been talking for quite a while. We've been preparing. What would it look like if the Democrats kind of take control? We have. And so let's continue with that, because now it's definitely a fruition and it has happened. And couple of things, look. Number one, we're in the middle of a pandemic. Right. And in fact, Covid, I guess from what we understand in the new strains that are coming out, it's going to be here for a while. And that's going to be a challenge for everybody. It's going to be a challenge for our country, for the economy. But what the markets do like and what we have been talking about is with the Biden administration being able to kind of have less friction as they want to pass their agenda. They'll definitely be a stimulus plan. You know, there'll be another large stimulus plan coming, and the market likes that. And why does it like that

Speaker3:
Cash in the system?

Speaker2:
That's cash in the system. It's government spending, folks. It doesn't matter who is in office. One of the major things that drives our economy is government spending. It's a huge portion of our of our GDP. In the short term. That's good for the markets. We're in a secular bull market. We have been for over almost 12 years now. There's still a lot of room for upside. And the market's going to continue to do well no matter who's in office. It does not matter who's in office. People still like to make money. And the economic engine still moves forward. Now, will there be some changes in the future? Potentially? One of the things that we've talked about is are there tax increases coming? So we've put out we've put out a flyer newsletter's the Biden versus Trump tax plan. You can always go to our website, send us an email. We'll send that to you. But we'll talk a little bit about that today. Yes, potentially the Biden administration will try to increase taxes, but they're not going to do it any time soon. OK, so that's not I agree with that. That's nothing to worry about, right? That's way on the back burner. I have a

Speaker3:
Project for a minute. Well, sure. If I agree with you that same time, want to caution everybody that the last thing we want to try and do is predict politician behavior with a. Do so while it makes all the sense in the world for them not to increase taxes any time soon. Well, we're in a pandemic and coming out of a pandemic is that would have a negative impact on the economy and the recovery. Again, as we've seen at the Capitol, sometimes you want to expect the unexpected and still having to back your mind and be planning for it ahead of time before it actually happens.

Speaker2:
You're dead on. Listen, the markets go up regardless of what party is in power. OK, we had eight years under Obama and the market did pretty good. We had four years under Trump. The market did pretty good then past Presidents Clinton administration. Let's not put all of the merits like these politicians have so much power and control that they can dictate what the economy's going to do, what the market's going to stop it. Let's not even go there. That's not possible. So there's so many other things that influence our economy. Is it true,

Speaker1:
Though, that in the past we've always had a divided Congress, though?

Speaker2:
Yeah, for the most part, I think that's a good point. J-W, a lot of market sentiment. And I think Wall Street in general or people in general would have preferred that checks and balances would be in place. However, this is this is temporary. It's only a two year deal. There's going to be a re-election. House seats and Senate seats. And so we don't know. That's just a short time from now. I mean, think about how fast years go by. And so can they even get tax reform or tax changes done? We don't know. Yes. Biden has said I'm going to increase taxes, but I'm only going to increase taxes on the wealthy. I feel as though and I read an article also the top 100 CEOs in our country were surveyed and they feel pretty strongly that the corporate tax rate will go up on on large corporations. I think it's at twenty one percent now. They're estimating maybe a 28 percent corporate tax rate, but that's going to take a while to one get through and then to even once that's passed in law, it takes a while for that to even affect the economy or to make any changes. So by the time they do that, there might be a change in the House and Senate again, and they might reverse it. So I just don't want people to focus just on that. I don't think that that's the right place to spend our energy. The right place is to stay focused on putting a plan together for you and your family.

Speaker2:
And now is a better time than any cause. We've talked about the fact that, yes, there might be an appetite to raise taxes and there might not be. I still have faith in both sides of the aisle that they're not going to do anything crazy while we're in a pandemic. And we're trying the economy is trying to recover and they're going to all sudden raise taxes on an on an economy that's somewhat, you know, wobbling right now. I just don't think that's going to happen. There's really no appetite to raise taxes or increase regulation right now in this fragile environment. I really don't think so. Like Larry said, I could be totally wrong, but this is my own personal opinion. I believe that what's been transpiring after the election leading up to this will maybe wake up our leaders in Washington and maybe they'll start becoming true leaders. Maybe they'll start working together, because even the majority that the Democrats do have, it's very, very, very thin. A one moderate Democrat could side with more moderate policies. And I think that it's a very slim margin. And I still think that we're not going to see like massive tax increases or government regulation changes overnight. So in the short term, I think things look very favorable. Those stocks are still where you're going to need to put your money. Interest rates are at all time lows now. Long term, long term. Two years, three years, four years out. All the stimulus being pumped into the economy.

Speaker2:
That's going to probably create inflation. That's going to create interest rates to increase. However, Randy and I were talking about this the other day and what we try to educate our clients on and why we think it's more important now than ever is to have an actively managed, diversified portfolio. And what does that mean? The means that the active portfolio has the ability to shift into different markets, different asset classes, different sectors, different sectors. So let's say large cap growth stocks take it on the chin. It doesn't matter if you only have a small allocation to them. Small cap companies, mid-cap companies, international companies. They could be a big winner. And there's still a lot of room for improvement there and a lot of money could flow into those parts of the economy. In fact, we've already seen that happening where technology was having such a big run up. It's selling off now and the money starting to flow into other areas of the economy. And so investors will start looking at, OK, when the stimulus when this infrastructure bill comes in, it's going to be great for the economy. It's going to put people to work. It's going to be a lot of government spending. There's going to be a lot of stocks and a lot of investments that do well because of that. Let's stay focused on long term planning, active management, diversified portfolios. And when we come back, let's talk a little bit more about that optimism.

Speaker1:
That's what we're talking about, looking to a brighter future. And if you haven't planned for your future, now is the time. Wake up, folks. It's time to get that financial future in place. And you can do that through take point wealth management. The folks with take point wealth management are in our studios, the prerecorded show. They do have offices up and down the Nature Coast. And you can contact them any time at three five to six one six zero five one one and check them out online. Take point wealth dot com or take point wealth management dot com. Just log in, take point wealth. It'll take you to Eric Garnette, lead advisor, retirement planner, and of course, Randy Woodrow's part of that team that are here to take you into a stress free retirement. We still got plenty of time to share some more information with you. Grab that pencil before we come back. In the meantime, take a short break and be right back after this. Take point on retirement, a well rounded show from a well rounded team leading you into retirement. Listen for an hour of simple retirement advice from your friends at take point wealth management take point on retirement brought to you by the fine folks at take point. Wealth management all up and down the nature coast here to serve you right in your backyard. They'll come to you. You go to them, whatever the case may be. You can contact three five to six one six zero five one one. Give him a call like I did. Reach out to Eric Arnet, lead advisor, retirement planner, and, of course, certified public accountant Randy Woodruff, just two members of that entire team of professionals ready to lead you into a stress free retirement. We're going to talk about that and more. Lead advisor, retirement planner Eric Arnette.

Speaker2:
Thank you, J-W.

Speaker3:
Eric, I want to ask you a couple of things about something you said in the last segment. One thing you said is that there's still room for upside in the market. And then we also we're talking towards you in this evening about actively managing your portfolio. And we've been talking for months about how the technology sector we talked about it in person in their offices with our clients on this show, how the technology sector has really led the stock market, if you will, in terms of gains during the pandemic. So I think that even though that sector may still have some room for growth, I think we're eventually we're seeing some some sell off in certain stocks. But let's talk a little more about active management and why the need is for that, because we've all heard the stories about somebody they bought Home Depot when it first came out or Microsoft or Apple when it first came out. And they held on to it for 30 years and now they're a millionaire. And, oh, here are the success stories. But we'll hear about the people that held on the stock too long or didn't get out when it was at its all time high and never got back. That got back to that that heighth again. Discuss how we actively managed portfolios, why people need to be looking more for active management today as opposed to just Pakatan. Forget it.

Speaker2:
Yeah. So keep in mind, the Nasdaq, which is a technology stock, large cap technology is up like 60 percent from the bottom of March in the pandemic south, an insane rally. So to your point, the only reason that that rally occurred was because of the fact that those technology companies really benefit from Covid. So now potentially, you know, because there's been so much money made in that sector, there's going to be some profit taking there. And so that money has to flow somewhere else. We talked about on some earlier shows, let's just say the S&P 500, for instance, five or six stocks drove that entire S&P 500. The other stocks looking for some money flow there. So the money's going to start flowing in other sectors. So now as the focus shifts and the market looks ahead and says, OK, hey, with a democratic change in administration, I think there's going to be a lot of stimulus. There's going to be that infrastructure bills, all those types of companies are going to benefit from that. So let's take money out of the technology sector and let's roll it into those sectors. But none of us have the ability to make those calls. OK. None of us has a crystal ball. So the way that you build a long term portfolio that can weather all storms as you diversify amongst all of those asset classes. And, yes, as certain asset classes get overvalued and volatility starts to pick up, then you can automatically kind of shift some of your weightings to the other asset classes, even during the pandemic.

Speaker2:
And when Covid created the stock market, there will crash overnight like 30 percent back in March. If you had a diversified smart plan or diversified portfolio, you might have been down five, 10 percent tops as opposed to being down 30, 40 percent. I know people I've talked to that were in all technology or just some growth fund or a lot of growth stocks in their portfolio or their four one k. They were scared to death because their portfolios went down like 30 percent overnight and they didn't know if they're going to come back. That's because they were too overweighted. And we saw this back in the in the late 90s or early 2000 where people just got so overweighted in dot com bubble and dot com and the dot com bubble hit and people got smoked. So once again. Now, more than ever, it's not about just picking the right mutual fund. It's about building a diversified portfolio that can be actively managed, that can make shifts in those different asset classes and sectors. If you look at small cap companies, mid-cap companies, international companies, it's great opportunities for those to pick up and do really well. So I think the broad market is still poised to move higher in twenty twenty one, no doubt about it, more than ever, actively managed portfolio makes sense and staying true to your investment objective.

Speaker2:
What does that mean? It means if we go through an exercise and we find out based on the questions that you answer, you're a moderate investor and let's have a moderate portfolio because that aligns with your goals. A lot of people have this are super aggressive portfolio, but they have moderate objectives or moderate risk tolerance. So it's way out of line. So let's get your portfolio and actually take some of the volatility out of but still be achieve your goals. There's multiple products out there. You don't even have to use investments. You can we've talked about it on this show many times before. You can do is insurance based products like annuities, whole life policies. There's a lot of ways that you can save on taxes in the future. And we talked about it prior to not even knowing what's going to happen, who's going to be in office. Right. We've been talking on this show for months about, hey, you've got to prepare for tax increases in your future. If you're a retiree, you're getting close to retirement. They're going to have to raise taxes. They have to. Whether Republicans or Democrats, it doesn't matter, folks. They have to raise taxes to pay for all the stimulus and the deficit were like a 30 trillion dollar deficit as it is.

Speaker3:
And the deficit comment back in 1980, we were around a trillion dollars in deficit. And we're at closing in on 30 trillion dollars here. With all this additional stimulus. So if 40 years, it went from one trillion to 30 trillion. So as Erick, I want to echo what Eric said. We've been talking many times on this show and we've given you lots of options like Roth IRAs and other things to reduce the taxes in the future. I know that some people may or may not be upset about the election, how things turned out. But here again, regardless of politics, regardless of the election, all those things. Yes. You know, that's inconsequential to the fact that eventually taxes are going to have to go up to pay for the borrowing of the past.

Speaker2:
Yeah, absolutely. And we've seen higher higher tax rates before in this country. So even if they just repeal it back to what it was prior to Trump's Tax Reform Act, it's going to be fine. It's not going to be any major shock to the system, folks. We've talked about what are some strategies to potentially decrease your tax bill in the future. And so, for one, doesn't matter whether you're listen, folks, it doesn't matter whether you're in a 401K or an IRA, all the money in that account is not yours. OK. The IRS is your partner in that account. Oh, yeah. They own a portion of that account. And people might think I'm crazy when I says that. No, they definitely do so. But there are strategies that we can start putting in place for you folks out there listening to to try to combat that in the future. Roth accounts, we've talked about this. I think it's the most underutilized tool out there. I'm finally getting folks out there that are listening to the radio. We are. Yeah, that's our office. And do rosewarne version. Absolutely. And looking at Roth accounts. And so that's exciting. I'm glad that we're reaching folks and they're starting to really evaluate that. Heck. Give us a call. Shoot us an email. I was talking to a guy the other day that called in off the radio show for like an hour. It was great. And he was like, wow, that's so thank. You know, that was very helpful. But it was good that people are starting to think about that. That means that the education is getting out there, but it's the most underutilized tool out there, really. Let's look at the rofe. Let's look at the Roth conversion. You know, putting some of your retirement savings in an aftertax Roth account could set you up for a tax free investment growth and tax free withdrawals and retirement. How great would that be?

Speaker3:
What we're talking about, Roth, let's talk to the business owners out there, too, that have, you know, because of Covid may have had a bad year this year, maybe, maybe down in terms of your net income for the year, maybe even lost money for the year since you have those losses are a lot less income this year. This could be a great year to convert all or part of your traditional IRA to a Roth IRA. Absolutely. So you're in a you're in a down year. You're in a lower tax bracket. May or may be several tax brackets lower. Now's a great time to do that.

Speaker2:
What about if you're a business owner and we set up a Roth simple Roth 401k or where you have a corporate plan that you can contribute to a Roth, that'd be something pretty cool to be able to do. You can start putting some of your earnings in that Roth account, and that's going to grow tax free for you.

Speaker3:
I think to your point, I mean, we've been indoctrinated for decades about, you know, saving, saving, saving, and we should all be saving. But the options that were available to us for so long were where we were saving tax dollars today for and then investing it and then in the future taken an out, which isn't a necessary or a bad thing. But I know we agree, Eric, and I agree, and I'm sure most of our listeners do that when you step back and think about it. Tax rates are going to have to go up. And so we need to begin to not just be investing all of our money into our four one KS or tax deferred accounts. We need to be thinking about paying taxes today at lower rates. They would have access to that money in the future when taxes are going to go up.

Speaker2:
Yeah, absolutely.

Speaker1:
As far as these Roth IRAs and these accounts such as that, if I have a 401K plan, I'm at a job. I've been there 20 years, been contributing to it for the last 15 years or so. And let's see, I've got some money buildup in it for a one k. I'm still at that job. Can I roll the money out of that 401k, even though I'm still at that job?

Speaker2:
So that's a great question. And the answer is yes and no. OK, so it depends on number one, your age. So there are a lot of corporate 401k plans if you're over the age of 55. Some are if you're over age 60, they will allow you to take a partial role over distribution and open up your own Roth. Absolutely. We've done that. However, the majority of 401K plans are not going to allow you to withdraw your money prior to your termination of employment. And it's all depends on age. That's why give us a call as look at your current situation, because it's possible that you can. And so there's no right or wrong answer there. And there are some that allow you just to go ahead and take a distribution if you want to. And you can roll it over, however. It makes sense to call your 401K provider and ask them, do they have a Roth option inside of the four one K plan, because that's becoming more and more popular. And that third party administrator or the administrator or the company that's administering your 401K plan, they should have those answers for you. So it's potentially that you can do that inside of your own home for one k. I've seen people that have 401. KS, and part of it's in a Roth and part of it's in an IRA. So it's absolutely possible. And I think that if you're a younger person, please definitely get started on that. But if you're an older person looking to make a more substantial change than the first place to call your 401k provider. And then secondly, give us a call, if you can't get any answers, will typically get on the phone with you and talk to those folks just to see what your options are. But I did have a gentleman this year who who reach age 60, had a very large four one K plan, and we were able to start taking distributions and rolling it to Roth. So every company different they all have different rules. So some are more flexible than others. So to answer your question, yes, boom.

Speaker1:
There it is. Right on. Good job. So our CPAs sitting in front of us here, Randi Woodruff's, who's got some tax information to share with us. A lot of new things coming on down the pipeline. We're going to have to take a quick break, but we'll be back to continue our conversation with Eric Arnet, lead advisor. Retirement planner would take point wealth management all up and down the Nature Coast, a local company with some fine and local professionals to help you into a stress free retirement. They helped me. They can help you, too. So just hang on. We've still got another half hour of take point on retirement. Every Saturday at this time and only on this station, folks. We'll be back after this. There's all this sound familiar or maybe confusing? Slow down, take a breath, relax, take point is here for you, J-W here. Take it from me. Let lead advisor retirement planner Eric Arnette take point on your stress free retirement with so many services at their fingertips and a well rounded team of professionals. Big point. Wealth management is on a mission to take point on your retirement. Take advice from someone with your best interests at heart. Take the risk free financial analysis. Call them today. Three five to six one six zero five one one take point. Welcom. Don't forget to ask for your stress free retirement books. Big point wealth management. As an investment advisor, representative of Retirement Wealth Advisors, Inc., an SEC registered advisor, your comments regarding safe and secure investments and guaranteed income streams that refer only to a fixed insurance products do not refer in any way the securities or investment advisory products.

Speaker1:
Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by retirement wealth advisors. So little compliance disclaimer there to share with you this morning from take point well, to management, Eric answer to Randy Woodroffe in the studio with us as they are every Saturday. It is a pre-recorded program. Thanks for joining us, folks. We've still got time to answer your questions. By the way, if you have a question, you can always email that to take point wealth management at info. That's info at take point on retirement dot com. The name of the show, big point on retirement. That's info info at take point on retirement dot com, the email address, email your questions and we may take that question and answer it on this radio program one Saturday. So you have to stay tuned to hear if your question is being answered. If not, you can always pick up that phone and call Jagex Point Wealth Management, just like I did, three five to six one six zero five one one. And take that take point blueprint on retirement. That's right. Or free financial analysis. Take advantage of that, folks. It is valuable and your future is valuable as well. Let's take a pause for station identification. You're listening to 1999 FM, JBI, Homosassa. These two gentlemen, professionals in front of me are valuable and I'm going to turn it back over to them.

Speaker2:
So I wanted to touch on a couple of more points as far as maybe some tax strategies. And Randy, then you can kind of jump in there. I know you got some some situations that you might be working on currently with clients. And I know you probably get that question maybe a hundred times a day. What do I need to do now? And then you're going to get that question a lot more now.

Speaker3:
Oh, yeah. Especially what's even after the presidential election, our phones are lighten up with people concerned about what's going to happen. And we talked about on this show in the first part of the show is that we're still kind of in a pandemic where I understand where we're at. The vaccines are coming in or out. And I think we're going to come out of this, you know, and to think that Congress is going to raise tax rates anytime soon. It's good to know what's out there is good to know it could be coming. But I think just by the year 2020, taxes will be under the last tax big tax while we got passed. And that could be in twenty eighteen, I think. Twenty twenty one is going to be mostly the same. I just don't see them making any any major tax law changes. And by two depends on where we're at. And sometimes people like to leave a mark before they see change. And so maybe the current administration may push something through because there were some campaign promises made. So they may push something through to in twenty twenty two just before a potential change in maybe the House or the Senate takes place with the 2022 midterm elections. So I think there is a failure. Twenty twenty one taxes, we shouldn't see much change. But here again, a disclaimer. Last thing I want to try to do is predict politician behavior, because I think we've all realized that sometimes that's futile at best.

Speaker2:
So I am more confident than ever that we have the solutions. I agree to help folks this year to and through retirement more than ever. Not to toot my own horn, but I think more than ever folks out there and really need to surround themselves with with good team members and have a good CPA, have a good investment advisor, and build that team around you and build that smart plan that can weather all storms,

Speaker3:
I think is the same. Build a team, but build a team of experienced people. I've been doing this now 26 years. You're about the same number of years. My dad started our CPA firm. So I'm second generation here and in doing this. So it's one thing to to have a team around you, but have a team of experienced professionals that have seen a lot of situations, have a lot of wisdom and experience to draw upon as they advise you as well.

Speaker2:
And a lot of this you've learned through your military service. Eric? Yeah, absolutely. You always, always have to have a solid plan in place. And maybe maybe that plan doesn't always work out. And that's why you have in the military, it's called contingency plans.

Speaker3:
You know, you plan A, plan

Speaker2:
A, B and C, and if you get to plan C and plan C is not working out, then it's called all hell has broken loose and maybe even retreat. But no, no. We've outlined in the show and we're going to continue to do that and shows that are coming. Going back to the wrath and attack stuff, by the way, if you didn't know this, they changed the requirement of distribution rules. You don't have to take money out of your IRA or your four one K until you're 72 now.

Speaker3:
Is that a big change in terms of the number of years? But it's an example of how there's been a lot of changes, especially with the twenty eighteen tax law. Of things that have been in place for decades. And now they're either change or they're no longer there. And so even in my profession, things that we've been talking about are saying for years, we're having to adjust our conversations or or think about what different opportunities because things have changed. And so to your point, Eric, it's been something that's been in place for a long time. I still get questions to this day that people still think that when they sell their home, the most they screw is they can exclude on their gains one hundred twenty five thousand dollars. That's been gone for 20 years. And they still think is there. So to your point, it's good to talk about this and to be talking about future shows that is now 72 as opposed to 70 and a half. So.

Speaker2:
Great change. What do you think about this? I mean, if you're in your 60s and in fact. Because of Covid and all the changes, there might be some people that are retiring a little bit earlier than they may have planned. And so you may be faced with an earlier retirement or you may just be saying, you know, what the heck with this crap I'm going or I'm. When you're taking distributions, you don't want to take anything prior to fifty nine and a half because you'll pay a 10 percent penalty. However, however, some 401k accounts and providers and even government plans, you can start taking distributions at age 55. So everybody's got a different situation. That's why I need to call us so we can work that out with you. But what do you think about this? Let's say you're 62, 63, 64, and you have until 70 to where you're required to take this risk. What about under these current tax rates, starting to take some distributions, some small distributions, and take advantage of these current tax laws where you're kind of instead of creating even a bigger, bigger bubble, where your tax deferred money is grown in an IRA another 10 years, and also you get this big, big bubble that potentially if they do raise tax rates, it's going to be, you know, all that's going to be taxed a lot higher. So I think when we look at numbers and we do kind of some long range projections, it looks like it's pretty advantageous to start taking small distributions now and paying that smaller tax on it, and then let's redistribute those distributions into other tax free strategies or tax advantageous strategies for you. So those are some multiple plans and things that we can come up with as well. But what do you think about that idea?

Speaker3:
I think it's a great idea. I think any time you can push your income into years when you're going to have a lower income, pay lower taxes for sure. As we talked time and time again on tax rates, we feel like you're going to have to go up pushing your distributions into years when you may not need them, you know, just taking the distribution pay in the tax and then investing the rest of the money as you would if it was sitting inside your IRA. I think it's a great idea. And, you know, again, things people don't really think about doing. We've been talking about Roths over and over and over again. But this is another opportunity for people to, again, not really save one, I guess, save some income tax. You can do it at lower tax rates. Great idea.

Speaker2:
Yeah. And I also I get this question all the time. I just left my current job thinking about taking withdrawals or rolling money out of my 401k. I say, well, well, hold on a second. Let's talk about what's really going on there. You know, what are you trying to accomplish? Keep in mind, if you withdraw money from your falling K when you change jobs, 20 percent of that will be withheld for income tax. However, you can avoid that tax penalty and potential trigger penalties and fees if you transfer that money directly from your 401K to an IRA. And so that's called a trustee to trustee transfer. So I think there's a lot of folks out there, unfortunately, that kind of misunderstand this rule. I had a guy the other day just was getting tripped up on it and almost made the mistake. And I got him to stop before he went down to the credit union and said, listen, you can't do that whole. I'm is it really? He said, well, man, they told me at the credit union, just go ahead and take distribution. We'll put right in your checking account. And I'm like, no, no, no, you can't do that. That's going to trigger attacks on all that money. You need to set up an IRA.

Speaker2:
First and foremost, you can roll that 401K to the IRA. That's a tax free transfer. And then let's talk about potentially what you're going to do with that money out of your IRA. You want to do some rollover, convert Roth conversion. Are you looking to pay a bill off or so? This is something that we need to talk about. And I think we've talked about it before. But in this particular case, this gentleman was like, hey, I'm getting ready to retire. I want to pay off my home. Mm hmm. I understand where you're coming from. Well, let's talk about. Put all the numbers on the board and let's see what your goals are here. Bottom line, folks, what it came down to was I think conventional wisdom has told us it's been pounded into our head since we were little Johnny, little Samantha Haroche, you know, like, hey, by the time you retire, you want your house to be paid off and paid for. Right. And I get that in the past, when you had exorbitant interest rates and you may have felt like, hey, let's get this paid off so we're not paying all this interest. Mm hmm. Think about this for a second. Why not stop that? Don't pay off your home, refinance your home at these crazy low rates? Because, by the way, these rates aren't going to be around much longer.

Speaker2:
OK. Instead of that money, instead of taking that money to pay off for your home, let's convert your IRA to a Roth and pay the taxes with that money, especially if you're in their 60s. Now, you have all your money in tax free growth the rest of your life. Hmm. Right. And take advantage of the low rate. It's OK to still have a mortgage, folks, if you can manage it with your monthly cash flow and nine times out of 10, they can. It's just a it's I mean, have very wealthy people. I want to pay off my home because it's just one of my bucket on my bucket list for retirement, and I'm like, OK, let's reexamine that. Like, you know, by the way, you're only like 62, 64. You're probably going to live in your nice 30 year time horizon. Don't think like this is something you got to do, especially at these interest rates. So what do you think about that? Because, I mean, I consider you a pretty smart guy. Well, when it comes to all that stuff, I need your opinion on this, because I don't want to be coming out of left field here.

Speaker3:
No, I agree. I think as we've talked on the show and other shows, as we talked about portfolios and how people need to come to grips with the fact that they need to have an actively managed portfolio and change their thinking about just buying something and holding and letting it said the same change. Think he needs to apply to mortgages as well, and then just step back and not just take. This is what I've been taught my whole life, is I'm going to do the right the rest of my life. It's like, no, the things are different today. And you take a look at where you're at today, look at what's around you, what's going on around you, what products are available to you, and then make a decision upon today. That's something that was, you know, as indoctrinated in you 30, 40, 50 years ago. Not saying that there's not a lot of wisdom and things that happened in the past. But, you know, here again, you need just need to be constantly changing and evolving and looking for your new opportunities and ways to handle your finances and will like certain things to stay the way they were 40, 50 years ago. But that's not going to be the case. So one thing we heard over before, the only thing constant is change. And so we need to dapto the change. And here again, with your finances, mortgage rates, things like that, definitely need to be open to exploring new new ideas, new ways of thinking and new ways of handling your finances.

Speaker2:
I know we were working with one couple not too long ago. We kind of utilized this strategy and they ended up like lowering their monthly payment, but they still had all that cash to stay invested in their portfolio. Yeah. Think about it, too. Like real estate right now has been really, really on or on the rise. I mean, is that going to continue? But bottom line, whether that does or not, I mean, two and a half percent, three, even if you get three percent on a reified, I mean, that's powerful. For instance, as an example, a lot of folks probably have. I'm just going to use this number of an example. There might be a million. It might be hard to just use one hundred thousand. OK, so a lot of folks are calling me and or I will sit down. And after we do an extensive kind of analysis and data gathering, we'll find out, hey, I got this hundred thousand dollars sitting over here and in the bank. It's really not making a whole lot of money. I owe about eighty thousand on my home or a hundred thousand on my home. What do you think about me taking that 100000 out of the bank and paying off my home? That way I won't have any mortgage payment any more, and that'll feel more comfortable to me in retirement.

Speaker2:
Nine times out of 10, based on conventional wisdom, that was the route to go. I remember I always learned from my folks and my grandparents and everybody around me was like, hey, by the time you retire, you want your house to be paid for. Well, yes and no. But under these current conditions, if you can borrow that hundred thousand at two and a half percent and take your one hundred thousand and reinvest it or even pay off the taxes on your IRA right now. So let's say you had an IRA and you convert it to a Roth. And the tax on that Roth was one hundred grand. I think you're better off for the long term paying off that tax bill now. Now having 90 percent or 80 percent of your IRA and a Roth that's going to grow tax free. And and 10 years from now, five years now, tax rates on Roth are on IRAs could be 50 percent. I don't know. But but if it's 50 percent on nothing, then you don't have to worry about it. So I try to get people to look 10 years out. Five years. That's so hard.

Speaker2:
We're such short term thinkers, really. We want immediate gratification, immediate, immediate relief. So I always try to get people to really look at the hard the hard numbers, harder for us to plan out that long term picture. I can show you in our software and run the numbers and you'll be like, wow, that's crazy. Like on the back end of your portfolio 10, 20 years out. It's it grows so much more. And then you have so much more cash flow and return because you're not having to pay taxes on thing about when you get 72 and you have to start taking 30, 40 grand out of it. You've got to pay 20 percent tax on that. Then it also taxes your Social Security and also taxes, you know, everything. So that's what we try to avoid, that tax bubble in the future. And now more than ever, because we're probably going to see increases in tax rates, we've got to get going on it. You know, we've got to get going on this strategy. And so I say not in all cases, but let's put the brakes on just paying off your home and let's look at some other ideas long term. Does does that make sense to you?

Speaker1:
The information, education wise, wise tips there from a professional that's in the business take point, wealth management, the professionals you need to see and talk to today. We'll be back after this with Take Point on retirement. Brought to you by day point wealth management. We'll be right back after this. Eric Arnet is an investment advisor, representative of Retirement Wealth Advisors, LLC and SEC registered advisor. Take point wealth management. This station and RWA or nonaffiliated exposure to ideals and financial vehicles discussed should not be considered investment advice or recommendation to buy or sell any financial vehicle. This information should not be considered tax or legal advice. Individuals should consult with professionals specialized in fields of tax, legal accounting or investments regarding the applicability of this information for their situation. Past performance is not a guarantee of future results. Investments will fluctuate and when redeemed, may be worth more or less than when. Originally, invest a simple retirement advice from takk point wealth management. Sometimes it just doesn't seem that simple. But these folks make it a little simpler take point wealth management up and down the nature coast to serve you and to lead you into a stress free retirement. Take that take point blueprint on retirement or free financial analysis, but you got to contact point wealth management. Take advantage of that. At least a fifteen hundred dollar value there. So three five to six one six zero five one one is the number you want to call all these three five to six one six zero five one one. Certified public accountant Randy Woodruff and lead advisor retirement planner Eric Arnet both in our studio once again to lead us the time the plan is now. And these two gentlemen are going to tell us how

Speaker2:
I alluded to earlier. I came up with twenty one things to do to protect and grow your money in twenty twenty one. And keep in mind, folks, what do we always talk about on the show? Three things that Randy and I focus on all the time when we're sitting down with you is one, how can we reduce fees to how can we reduce risk, which also is going to reduce a lot of stress, folks. Yes. So in three, how do we reduce taxes? So if your current advisor or current firm you're working with or whatever isn't getting in front of you and asking you those questions and working on those things, and then you deserve better. This was the number one thing for me. I'm not trying to push or sell annuities or index annuities, but I do feel pretty strongly in this current interest rate environment that we have. The solution is. So number one is. And folks, you want to get a notebook out and a pen and paper and start writing these down and then call me. We'll talk about them. OK, but one, replace the bonds in your portfolio with the fixed index annuity that best fits your needs. Hmm. OK. And people are thinking, well, that's that's pretty radical. But let's talk about this for a second. OK. You've got to remember that the price and value of bonds move in an inverse direction as to interest rates. Hmm. So of interest rate

Speaker3:
In that, please? Yes.

Speaker2:
Sure. So if interest rates are rock bottom right now, which they are rock bottom interest rates, if interest rates increase, which they potentially and probably will because of inflation. When were you flood the system with tons and tons of money? We just print money. One, it's going to devalue the dollar. And two, it's going to create inflation. And when you create inflation, you create a rise in interest rates. OK, so if interest rates go up, the value of the bonds that are currently in your portfolio will go down. And I bet folks out there listening don't even know that they have bonds in their portfolio because they probably own some kind of mutual fund that does have to bond fund an allocation. And it could be a growth in income fund that has 50 percent stocks and some bonds in it. You need to know what kind of funds you have. First of all, I'd look at and look at them and see how they're comprised and what their holdings are. But I'm going to bet that almost all of our listeners have some bonds in their portfolio. The cool thing about index annuities that I have no interest rate sensitivity to, no interest rate risk. So, yes, that is a risk, folks. Not just stock market risk. There is interest rate risk on your bond portfolios. So for, you know, every increase in interest rates, you can see a devout devaluation in your bond or your bond mutual fund. So we think that the trend over the next five, 10, 15, 20 years is going to be rates are going to be moving higher. Having those bonds in your portfolio can be a major, major drag on your growth.

Speaker3:
Makes sense into some people, Eric. That may sound a little complicated, but that's why we recommend you call us. We can walk you through it and explain to you how that works. And was it will sit down with you in the office as we put together your plan. We'll talk about any other financial topics that you want to get clarity on.

Speaker2:
Absolutely, 100 percent. Like I said, I'm happy I've done a bunch of times. You know, I'm happy to just talk to folks on the phone for a while. I'm happy to do a zom meeting and show them charts and show them why I can get you. I can actually get you a study by Ibbetson who's who is an economic prize winning economist in our country. Now he talks about this very same thing. And I'm he's a lot smarter guy than I am. So but I can get your reports on the things that, you know, you want to educate yourself on and where you feel more comfortable about it than were the first. First place to go, and we'll help you out with that. So number two, I think is very important of my 21 things to protect and grow your money in twenty twenty one. Number two is analyze your portfolio for the risks you are taking and the hidden fees you are paying. We have the ability to take your current portfolio. All you got to do is share your statements with me. You can upload them on my website even. We have an upload place on our website now. You can take point wealth management dot com. You can go to go there, fill out your financial workbook, you can upload statements, documents. We've made it really easy. You can book appointment on there, set an appointment, just click on the calendar. So we've made it really easy for folks turn Covid to for communication. But if we can just take a look at your portfolio, we'll run it through our software programs and I will pull out and show you exactly what you're paying in hidden fees.

Speaker2:
I can't tell you how many times people come to me and sit down with me was like, well, I'm not paying fees. And I got a 401k plan and they pay all the fees. I don't pay any fees or, you know, I've got this mutual fund portfolio and I'm paying if I don't pay advisory fees. All right, folks, think about that for a second. How has Wall Street become so wealthy and share those massive buildings in Wall Street and all those good zillionaires up there in New York? They they're not doing this for free. You are paying fees and you're paying some handsome fees and they're hidden and they're hidden. Right. And that's why when you work with an investment advisor, by the way, a fiduciary, we are completely 100 percent transparent. You see every little fee come out on your statement. There's no hidden fees. So let's look at and find out. You may be paying. You may be already like, hey, I got ETFs. I'm paying like 20 basis points. I'm on a great I'm going to say congratulations. Good job. But a lot of folks out there don't know. So I think that's really important for us. And then number one is, what's the risk of your portfolio? What does that mean? There's so many different things that make up the risk of your portfolio. But the number one thing we're going to pull out is what is the standard deviation? We call it the wabble factor.

Speaker2:
Folks, if your portfolio wobbles and what I mean by that is it's shifting values from day to day or month to month, and you're seeing big upswings, big down swings. That means you have risk in your portfolio, your wobbly, yet you've got a wobbly portfolio, a wobbly portfolio. And hey, if the stock market keeps going straight up, you're great. But if the market corrects 10, 15, 20 percent, you're going down with it. You're going to stumble. You're going to stumble. So let's take a look at that wobble factor and let's take a look at the risks that are driving your portfolio. So I think really those are two really great strategies. And I'm not giving you guys any more today. You got to stay tuned and give us a call. I'm sure like your mind kind of spinning right now. Are you thinking, what is this guy talking about? That's why you call us and we'll give you we'll give you the education that you need. I was talking to a guy the other day and he's like, give me all these specific questions about moves that he should make with his securities. And I'm like, listen, you've got to get 100 percent educated first before you make those moves. Don't just make a move because your neighbor said, hey, I got this great fund, or you pull up a screening tool and said, last year's best performing mutual fund was X. And you go, oh, I'm going to buy this one. Don't do that, folks. Please don't do that. So.

Speaker3:
We talked about that earlier in your show, how we're seeing already seeing a shift out of some of the hot stocks during the pandemic know are starting to see a slow pullback in some of those in other sectors. So to your point about buying last year's best performing mutual fund, that was last year.

Speaker2:
Yeah. I mean, growth funds are not going to perform. I'm going out on a limb here, but I'm going to say this because it's in my gut growth funds are not going to perform as well as Bilu funds, small cap funds, mid-cap funds. You need to look at some value funds. And things are cyclical stocks, things that are going to recover based on the economy. Recovery growth funds probably aren't going to outperform like they have in the past. I think there's going to be a shift to those other types of funds and other types of stocks. Just a guess. Dividends are still out there and they're not as high as they were in the past. But, you know, the average dividend on the S&P is like two to three percent right now. And that's why stocks continue to go up higher, too, because you can put your money in stock and get more than you can in a short term bond or short term interest rate vehicle. So there's dividend stocks out there, dividend strategy, where you can go out and pick up high dividend paying stocks. You know, you've got to be careful there, too. You want to make sure you have balance and diversification. But absolutely, there's still some really good dividend paying stocks out there. We have all the strategies.

Speaker3:
While you're dividend paying, stocks tend to be your non growth stocks or non tech stocks or biotech stocks. Their have been around. You've heard of your whole life and great stable companies. And that's a great addition to your portfolio to have some of those in there.

Speaker2:
Absolutely. And the other thing that's fueling well is stock buybacks. A lot of the big companies are buying their stock back, which is causing the stock values to increase based on supply and demand. So you got to ask yourself if we're in like a period of time where large corporations are at their highest level of buying back their own stock, that's kind of a good sign. I think stock prices are going to probably be higher. So in the future, we work. Hard to help educate our retirement warriors, our listeners out there. We're doing seminars, we're inviting people into the office to get their own personal seminar, see how their plan is working and what potential pitfalls going forward could be for their plan. We got a lot to battle through these days, all the political and economic craziness that's out there. You know, so we have put together what we think is a solid plan. You know, we recommend that you stay invested in two primary ways, our smart risk and our smart, safe investing. So we've talked about this on the show many times. The smart risk is investing in and actively. Let me say that again, an actively managed portfolio and smart safe is investing in a fixed index annuity with a highly rated insurance or annuity company where you can get market like gains without market risk. We absolutely have to replace the bonds with that going forward. In fact, folks, if you look at your statements, the principal value of your bonds versus what they're actually work today, you will see a negative sign. Trust me, I'm looking at these statements all week long. And unfortunately, you know, we've been out there trying to help folks for quite a while and get repositioned out of those for you more than a year or so. And sometimes it takes a while for it to set in. We really need to reposition portfolios in a smart, safe, smart risk plan. We're recommending that you consider a bond replacement strategy. You really need to give us a call. Come in. Let us let's put a plan together for you and talk to you about the bond replacement strategy.

Speaker1:
So you'll build a new plan for anyone that asks or you'll test a current plan. And you also provide a free financial analysis evaluation. You call the take point blueprint on retirement. You got. And that's a fifteen hundred dollar value, by the way.

Speaker2:
Yeah, you got it. There's there's a lot of meetings, a lot of hours. There are some professionals out there. They'll sit down with you one time and just try to slam into an investment. We have a disciplined process. It's, you know, a minimum of three appointments, a lot of time involved. We have a financial planning team of certified financial planners that put together the plans for us. We'll take your current plan, your current portfolio, and we'll test it. We'll put it through our software and we'll dig out all the metrics and the details and statistics and see if you truly have a market efficient, a fee efficient and a tax efficient portfolio. Those are the three things that we focus on. Once we take that portfolio or that that plan that you currently have and we morphed into what we think is our superstrong strategy going forward, our blueprint, you're going to see the difference. And we're reducing fees, reducing risk, and we're reducing taxes. So that being said, we've talked about and of course, everybody else knows a lot of tax increases on the horizon to help pay for all this money that's going out and be in print and trillions and trillions of dollars right now, which is causing some inflationary concerns. And that's why we've seen some volatility pick up in the market recently. And this is why we have stressed for so long that just having a passive portfolio of of investments is really not going to do the job anymore. More than ever today, you need an actively managed portfolio. You need a strategy that can duck and move and move with, you know, rotation of all the different asset classes and the sectors that are out there, particularly if your advisor is not calling you and giving you a bond replacement strategy or hasn't been there.

Speaker2:
And it's time to do that. And in fact, it was time to do that yesterday. And so, once again, we're willing to jump in and do that for you. Some good things. The jobless claims are getting better. The job market's improving. I still think that, you know, the market is poised for reaching new highs. However, it is now a discretionary market. When I say that, it's not like we've seen in the last three or four or five, even 10 years, you could just buy some kind of mutual fund or growth fund and you'd be fine. Now, this is this is where it's time to have a professional money manager that can select the right areas of the market to be in. And that's why you're seeing volatility like today in the market, the market selling off a little bit because big tech, big tech had such a huge run over last year. So those stocks got so overvalued. And so now there's profit taking and that money is moving to other sectors of the market, like value stocks or mid-cap companies, mid-cap value cyclical stocks. And it's time for some sector rotation in your portfolios. And I know that sounds like a big word, but let's keep it simple for you have a professional team that's actively managing it and looking for opportunities. Taking profit and profit needs to be taken. And if volatility increases and growth in technology, for instance, then it's time to kind of like slowly get out of that and move into areas that don't have volatility.

Speaker2:
And so there's still a great deal of stocks out there that are going to offer some good returns, but you just can't have one passive strategy. And then we talked about this a week or so ago on our show. If you have a traditional traditional moderate portfolio, 50 50, 50 percent stocks for. Sambas, if that 50 percent of your portfolio that's in bonds is negative and dragging down the stock portion. Hmm. You know, you're what you're seeing on a daily basis probably is when the stock market goes up, you're not catching the upside. But when the stock market goes down, you're catching a lot of the downside. Plus, the bond market is also going down. So it's time to really make some adjustments with our smart, safe plan. We're going to talk a little bit about that more later on. Let's just get to a couple of questions. I know. And in Spring Hill, she asked us, you know, my ex-husband and I were married for twenty five years before we divorced. He passed away this year. He was 68. And I am as well. My question is, how is Social Security affected? Well, I still be entitled to half of his Social Security, even though he passed away. So. OK, great question. And I'm sorry that the Social Security office and the Social Security websites aren't always the best places to get that information. But unfortunately, at Social Security offices and whatnot, they don't always have those answers for you or the

Speaker3:
Most important people.

Speaker2:
Yeah, absolutely not to get into too many details. But yeah, you were married 25 years. You are still entitled to your husband, Social Security. So you absolutely still would be able to entitled to collecting Social Security based on his benefit. So and that's a good a good question and a good topic. I mean, we help folks every day with Social Security decisions. So every family's different, every individual is different. And it's kind of confusing, like, should I take Social Security now? Should I wait? Should I take half my husband's should should I turn mine on? And, you know, so there's a lot of different strategies out there. And, you know, it's based on taxation and stuff. So let us help you with that and work through all those numbers for you. Question. Chad, I would like to invest money from my stock portfolio into something else, especially a good ETF, either in gold or exponential technologies or possibly health care. I know that not all Téa ETFs are created equal, so I wanted to get your opinion. I'm already invested in some traditional stocks and index funds. OK, so that's that's a pretty tough, long winded question there. Chad, great question. Great question. This gets into one. How old are you? What's your objective? How long are you going to be invested? Is it an IRA or is it a four one? K is in a regular taxable account. So many questions to be answered there. But in general, you know, ETFs are great investment if they fit your portfolio. You've got to be careful. An ETF is basically a electronically traded fund that goes out and buys every stock and a particular index.

Speaker2:
So it actually owns stock. And you can trade that like a stock instantaneously, not like mutual funds, you know, have to wait till the end of the day to get a price and all that kind of stuff. There's a lot of awesome ETFs out there that are low cost. And particularly you want to diversify your portfolio with ETFs. You don't want to just go all in gold or all in technology or all in health care. I like you buying several ETFs and spreading it out. It's cool. You can just go on like Fidelity dot com or any type of brokerage website, and you can search for different ETFs in different sectors and different industries. And it makes sense, like, OK, if you have one hundred thousand spread it across twenty five percent in each industry, they're all going to perform very differently at any given time. But it's going to give you the diversification like we're talking about now. Let's say you own a technology ETF and that technology starts to roll over and sell, but you have three other ones that health care infrastructure, ETF or like you said, in gold or commodities. Those might those might go up and do really well this year. So, yeah, I think it makes sense to have that. And that gets into that asset allocation that we talk about all the time. But. Great question. ETFs, if folks if you have any more questions about ETFs, just give us a shout. I think that we all we have time for.

Speaker1:
That's about wraps it up. And if you want to send that information to a take point, wealth management, that's your question to info that's in EFO at take point on retirement dot com. That's the name of this show Take Point on retirement pre-recorded played every Saturday with Eric Arnet, lead advisor, retirement planner, and of course, certified public accountant. Randy Woodruff in the studio is with us, just two members of that well-rounded team of professionals and some good wise advice for you today. And as always, our full of the information you need each and every Saturday from take point wealth management. Once again, local company here up and down the nature coast to reach out to them. Fake point wealth management dot com or take point welcom just Google take point. It'll take you to take point wealth management. We'll see you next time, folks.