[SPEAKER_05]: This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time.

[SPEAKER_05]: And now, here are Justin Klein and Luke Guerrero.

[SPEAKER_04]: Good afternoon, fellow investors, and welcome back to a special edition of Invest Talk.

[SPEAKER_04]: Today, while you're listening to this, Luke and I will be at a wedding.

[SPEAKER_04]: And so we decided to pre-record a special episode on personal finance.

[SPEAKER_04]: There's a lot of topics to unpack and we're gonna get to many during this hour, but with that in mind,

[SPEAKER_04]: go to bestlock.com and sign up for our retirement summit coming up on October.

[SPEAKER_04]: Is it 24th?

[SPEAKER_04]: It's the 24th.

[SPEAKER_04]: 24th.

[SPEAKER_04]: Memoring correctly in Irvine, California.

[SPEAKER_04]: So, I encourage you, we're more than half full.

[SPEAKER_04]: So, the spots are filling up fast.

[SPEAKER_04]: so make sure you go and check that out.

[SPEAKER_04]: Well, let's get started.

[SPEAKER_04]: Luke, we're first topic we're going to discuss today is kind of a cross between personal finance and investing, and it's really about dividends and dividend yields.

[SPEAKER_04]: When people

[SPEAKER_04]: get to retirement.

[SPEAKER_04]: There are a lot of more focused on income.

[SPEAKER_04]: How do I get income dividends as part of that?

[SPEAKER_04]: Maybe it's bond interest.

[SPEAKER_04]: But the problem with today's market is that dividends have declined pretty dramatically across the US stock market.

[SPEAKER_04]: The average yield is only around 1%

[SPEAKER_04]: So it's difficult to get that level of income just by dividends alone, especially when you're looking at what sectors pay dividends.

[SPEAKER_04]: It's or high dividends.

[SPEAKER_04]: It's pretty narrow.

[SPEAKER_04]: A lot of those can be value traps.

[SPEAKER_04]: And so how do you think investors should think about collecting income from their equity holdings in this new environment?

[SPEAKER_02]: Well, there's something that I've actually preached for a while, because I never understood this obsession with dividends.

[SPEAKER_02]: I get it.

[SPEAKER_02]: People think, I think a lot of people think that when they get dividends, it's actually new money coming to them.

[SPEAKER_02]: When in reality, it's cash leaving the company and theoretically speaking the value of your share should adjust by the amount of cash that leads to the, that leaves the company.

[SPEAKER_02]: It's not always one for one, but that certainly does happen.

[SPEAKER_02]: but then people are also trading in this defined income stream and giving up the optionality of when they want to have a taxable event.

[SPEAKER_02]: I've always told people, you can structure a portfolio not-around dividends and still get income for it by divesting from your long-term capital gates, meaning you choose when the income stream comes to you and you choose when you're incurring that taxable event.

[SPEAKER_02]: That has I think over the past couple decades become something more on the forefront.

[SPEAKER_02]: The reason being is before the 90s you have to remember not a lot of share by backs because it's viewed in Washington and by regulators as trying to manipulate stocks.

[SPEAKER_02]: a lot of that changed in the 90s.

[SPEAKER_02]: And so as you're seeing this progression, I imagine that the traditional dividend income focus portfolio is definitely going to continue to be less and less prevalent.

[SPEAKER_04]: Yeah, a lot of you will don't know that this is actually a byproduct of what I believe was under the Clinton administration, a you're trying to limit executive pay.

[SPEAKER_04]: And so they instead of just paying straight salary, a lot of companies started to give stock-based compensation to kind of make up for the difference.

[SPEAKER_04]: And what that did was really incentivize these executives to kind of maneuver for more short-term gain when it comes to earnings per share, et cetera.

[SPEAKER_04]: And so money has flown more towards those talk by-backs and then as opposed to the dividends and that's why you continue to see dividends plunged to in all time low, but when it comes

[SPEAKER_04]: The buybacks, those continue to move closer to an all-time high, and that's actually where most of the return of capital shareholders is coming from.

[SPEAKER_04]: Now, totally yields were roughly about 2% in 2025, with more of it coming from the buybacks of about 1% dividend, about 1.5% from a buyback.

[SPEAKER_02]: I think the critical thing to remember to, you know, lastly is that the difference between dividends and buybacks is one tends to be timely and more stable.

[SPEAKER_02]: The other obviously open to market forces and when companies depend to, you know, decide to buy back shares.

[SPEAKER_02]: So a lot of things obviously changing.

[SPEAKER_02]: It doesn't mean you still can't get income from your strategy.

[SPEAKER_02]: You're headed into a short break.

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[SPEAKER_04]: All right, let's pivot over to a topic that is often misunderstood.

[SPEAKER_04]: And that is college savings, whether that's for your child or grandchild.

[SPEAKER_04]: The 529 is the most popular way for

[SPEAKER_04]: parents, grandparents, family members to help fund a child's education, especially, you know, post K through 12.

[SPEAKER_04]: And it's because it promises tax for growth, tax tax for distribution on qualified expenses, et cetera.

[SPEAKER_04]: And so it is, it is the heavyweight within the industry, but it's also not the only way that you can save for college.

[SPEAKER_04]: Now, a lot of people, you know, they hate paying the tax man, that's, that's understandable.

[SPEAKER_04]: But Luke, what about just simply saving in a taxable brokerage account on top of the 529?

[SPEAKER_02]: Yeah, I think that's uh, people have kind of thrown the idea of a taxable brokerage account away because they think it costs them more because they have to be taxes on it than a 529 would than an FSA would an HSA, your IRA, your Roth account.

[SPEAKER_02]: and therefore they think that it is inherently worse.

[SPEAKER_02]: When if you think back to what we just talked about, about investing in stocks and then selling them rather than recognizing the defined income stream, with the taxable brokerage account you get more option out.

[SPEAKER_02]: Now, more recently because of, uh, what was a secure 2.0.

[SPEAKER_02]: I think that was included in there.

[SPEAKER_02]: You have a little bit more optionality in terms of you being able to roll over your excess 529 funds.

[SPEAKER_02]: I think up to $35,000 into a Roth for the beneficiary, but I just wouldn't encourage everybody to realize the benefits of using a taxable brokerage account, not just for saving for your kids' college, but writ large because you have that ability to realize that plans change sometimes.

[SPEAKER_02]: and maybe you didn't need to save as much because your kid did an incredible job and got so many scholarships and now they can use the money for something else.

[SPEAKER_02]: It can still be their money.

[SPEAKER_02]: But there's that optionality that I think people don't really consider when thinking about this because they think to themselves, I gotta pay taxes.

[SPEAKER_04]: Yeah, what if something bad happens, God forbid, and you need that money?

[SPEAKER_04]: Well, if you want to take the money out for non-qualified expenses, there's 10% penalty in a five, 29 versus taxable account.

[SPEAKER_04]: You can do whatever you want with it at any given time.

[SPEAKER_04]: And then even when it comes to actually once they do get to college, what expenses actually qualify,

[SPEAKER_04]: as a distribution, maybe not all of them, right?

[SPEAKER_04]: Maybe there are other purposes you want to support them with when it comes to their college experience that don't qualify.

[SPEAKER_04]: And so at a taxable account, you can go spend it on whatever you want.

[SPEAKER_04]: So I think that's a big factor here that most people are not taking to account.

[SPEAKER_04]: And then what I'm like you said, it's gonna scholarship.

[SPEAKER_04]: Or maybe they want to go to a cheap school.

[SPEAKER_04]: You know, they want to go to a community college to start off and then transfer after that.

[SPEAKER_04]: And maybe they need to.

[SPEAKER_04]: And you save too much.

[SPEAKER_04]: Now what do you do with that money?

[SPEAKER_02]: Yeah, I mean, it's a great point.

[SPEAKER_02]: And continuing on my, I swear, we didn't go into this thinking Luke's theme of the day is just gonna be talking about giving yourself more options.

[SPEAKER_02]: But not only the optionality of what you spend it on, but what you invest in.

[SPEAKER_02]: Right?

[SPEAKER_02]: Depending on what 529 plan you have, it can be incredibly restrictive and up to whatever the plan creator decided the fund options should be.

[SPEAKER_02]: Sometimes those are really good funds.

[SPEAKER_02]: Sometimes they aren't as good and obviously you shouldn't use those 529s because there is a benefit here.

[SPEAKER_02]: You don't have to use the one in the state in which you are.

[SPEAKER_02]: but giving yourself the ability to choose investments that fit not only the risk tolerance, time horizon, all those things you think about when you're constructing a portfolio in a brokerage account for is 529.

[SPEAKER_02]: Something that people often don't think about.

[SPEAKER_04]: Yeah, it goes back to what I say often, one of the biggest mistakes I see, whether it's about college savings, retirement savings, whatever that is, is that most people, one of the biggest mistakes I have to see people make is they only focus on the taxes, how do I avoid paying taxes?

[SPEAKER_02]: And what did you say there's good problems in math problems?

[SPEAKER_04]: Exactly.

[SPEAKER_04]: If good problems in bad problems, paying taxes is typically a good problem, which means you, you made money, all of that.

[SPEAKER_04]: Nobody wants to pay the tax money.

[SPEAKER_04]: If you don't have to, but you with a lot of tax deferred vehicles like a 529, you're giving up that optionality.

[SPEAKER_04]: And so when you go and you invest in a taxable brokerage account, yes, you might be paying a bit

[SPEAKER_04]: your hands tied.

[SPEAKER_04]: And so this lesson can spread out to the rest of your financial life.

[SPEAKER_04]: It's focusing on yes taxes are important, but they are not the only factor you consider it's part of a balanced analysis of really any financial decision.

[SPEAKER_02]: I will say though, I do think in terms of the penalty and correct me from wrong, isn't the penalty?

[SPEAKER_02]: Isn't it kind of like a Roth with the penalties on the earnings?

[SPEAKER_02]: So your contributions can come back?

[SPEAKER_04]: Let's see, you face the terms that penalty plus earnings impacts on earnings.

[SPEAKER_04]: Yes, on the earnings.

[SPEAKER_02]: Yeah, so just on earnings.

[SPEAKER_02]: So it's kind of similar to a Roth IRA, right?

[SPEAKER_02]: Where people think they can't touch any of their retirement money at all.

[SPEAKER_02]: You're just talking about the earnings versus the versus the contributions.

[SPEAKER_04]: Yeah, we're not we're not bashing fight 29s.

[SPEAKER_04]: No, we're trying to get we're trying to show you here There's just a balance approach and there's also it kind of reminds me of When people say shy invested in a raw IRA or traditional IRA well It might be good to have a little bit of a both over time so depending on the year

[SPEAKER_04]: maybe some years you take money out of the IRA, some out of the Roth IRA, maybe do some conversion in certain years, and so there's the tax diversity here, and same thing with a 529 versus a taxable account is when they get to college, you know, some years there may be other expenses that don't qualify for a distribution from a 529, and you still have that optionality to pull from that taxable account.

[SPEAKER_02]: Yeah, I also think there's, it also matters where you live, right?

[SPEAKER_02]: So there's 13 states that do not give you, you know, they've no state income tax.

[SPEAKER_02]: So you don't have to have anything to deduct against not 13, but there are certain states that don't have income tax.

[SPEAKER_02]: So you don't have anything to deduct against any,

[SPEAKER_06]: certain places New York City, for example.

[SPEAKER_02]: I think it might be one of them.

[SPEAKER_02]: I could be remembering this incorrectly, but there are some cities that also provide you tax reductions.

[SPEAKER_02]: If you only use their specific plan, depending on where you live, not only if you want to use a 529, but which one you might use, you might come to an entirely different conclusion.

[SPEAKER_04]: That's definitely true.

[SPEAKER_04]: Well, I think we did a good job covering this and we'll move on to a break reminding you to

[SPEAKER_04]: head over to invest.com and sign up for our retirement summit coming up here on November 20.

[SPEAKER_04]: I'm sorry October 24th.

[SPEAKER_04]: Not November October.

[SPEAKER_04]: I get that date right.

[SPEAKER_02]: You're going to have to go to our office and on for the wrong day expecting us to give them all this great information.

[SPEAKER_02]: You know, I think I think for a lot of people, they don't think about the whole picture

[SPEAKER_02]: financial planning but we're going to talk about real estate.

[SPEAKER_02]: What else are we going to talk about?

[SPEAKER_02]: We're going to talk about tax drugs and wills.

[SPEAKER_02]: You're not going to just have to listen to us drone on like a few five days.

[SPEAKER_04]: Yeah, I think it's going to be three great guests.

[SPEAKER_04]: Yeah

[SPEAKER_02]: I think we're really exciting and we can't wait to see you guys there.

[SPEAKER_04]: I do want to let you know we have a wonderful interview coming up, believe we're publishing that either tomorrow or the next day and that is from Anthony Katz, he is the founder of Hyperice and I think it's a...

[SPEAKER_04]: great interview talking about the various aspects of entrepreneurship, growth of his industry, crowds of evolving sports medicine, all of that, and I encourage you to tune into that coming up here tomorrow.

[SPEAKER_05]: The Invest Talk Retirement Summit is coming to Irvine, California on Saturday, October 24th.

[SPEAKER_05]: You are invited to join KPP Financial and guest experts in tax, estate planning, real estate, and financial planning for an exclusive in-person event.

[SPEAKER_05]: It will focus on five key decisions that can shape your financial future.

[SPEAKER_05]: Attendance is complimentary and seating is limited.

[SPEAKER_05]: Reserve your place now at investalk.com

[SPEAKER_04]: All right, now we're going to move on to another tax advantage type of account that is very popular and that is an H.S.A.

[SPEAKER_04]: and health savings account.

[SPEAKER_04]: Now it's not as popular as if I have 29, mainly because a lot of people don't qualify to put that money in, and the main reason is because they don't have the option within their company to opt into, which is called the Hyde deductible healthcare plan that would allow you to make HSA contributions.

[SPEAKER_04]: Now those contributions are subject to annual limits, but it is something I think most people

[SPEAKER_04]: Should think about at least talking to their employer if it's not available to try to open that app as an option, but I think it does depend on who you are whether this makes sense or not, right?

[SPEAKER_02]: Yeah, I mean, it doesn't make sense for me.

[SPEAKER_02]: I used to have a high deductible health plan which is based with an HSA back in the day.

[SPEAKER_02]: I used to be a bit more of an aggressive skier than I am now with my cats.

[SPEAKER_02]: I can't put my life in danger as much.

[SPEAKER_02]: It's also a blame to say it would be mad at me.

[SPEAKER_02]: But the point being, a couple of ski injuries, I had two years in a row where I hit my head a little bit, needed a CT scan and boom, you're blowing straight to that $34,000 deductible and that wipes away any benefit of what you're saving or your employer is giving you that year.

[SPEAKER_02]: Yeah, it's not right for everybody, what you do in life, how you choose to live your life certainly matters.

[SPEAKER_02]: And in meaning, if you're using healthcare more often, it probably doesn't make sense.

[SPEAKER_02]: If you never go to the doctor and don't get injured, then it would make sense.

[SPEAKER_04]: Yeah, it makes, I think most sense for people who are young and healthy that don't have a lot of out-of-pocket expenses in a record of the basis, I would be one of those right where I, I snowboard, but I don't do a lot of blacks, I don't go crazy, so I probably, you know, I've never really gotten,

[SPEAKER_04]: seriously injured, luckily.

[SPEAKER_04]: And my exercise is basketball.

[SPEAKER_04]: So, you know, I might spray an ankle here and there, but, you know, I think I'll be okay, hopefully.

[SPEAKER_04]: But, yeah, so it kind of depends what you are.

[SPEAKER_04]: You know, the good thing about when you put money into a niche, it says that unspent funds are not forfeited or forfeited.

[SPEAKER_04]: You just keep

[SPEAKER_04]: Hopefully never, but maybe you have some medical expenses that you can spend them on.

[SPEAKER_04]: And it's not just for you, it's for your spouse, your dependence, you can spend this money on dental, vision, prescription costs, things like that, anything that qualifies as a medical expense.

[SPEAKER_04]: And so,

[SPEAKER_04]: The good news is you put the money in, that's a tax deduction for that particular year.

[SPEAKER_04]: The money can grow tax-free, and then once again, if you take the money out, it's for qualified expenses, it's tax-free.

[SPEAKER_04]: So it's one of those rare triple tax-free accounts that I think everybody should take advantage of if, like you said, they're not doing extreme sports on a regular basis.

[SPEAKER_02]: Which for most people yeah, I think they they don't they don't fall in that category I think also you have to remember, you know you can really the the Health care expense term is used incredibly liberally here And so this can reimburse you from pain relievers allergy medicine medicine glasses sunscreen

[SPEAKER_02]: Um, so the list is pretty wide.

[SPEAKER_02]: It doesn't cover everything, right?

[SPEAKER_02]: So like gym membership, even though technically that should make you healthier, that's not covered.

[SPEAKER_02]: They're elective cosmetic procedures.

[SPEAKER_02]: So if you, you know, wanted to get a nose job, you can't use your HSA funds for that.

[SPEAKER_02]: But regardless, the breadth of things you can use it for, beyond even going to the doctor is very wide.

[SPEAKER_02]: And as you mentioned I think the biggest benefit though and I tell my my fiance this all the time she has an HSA and is not an extreme skier Is let it grow But I know there's no limit here.

[SPEAKER_02]: You can you could reimburse yourself for something 20 years after the fact as long as you keep her seats Which for the big expenses you should and so the big benefit of of any type of account like this any account

[SPEAKER_02]: is if you let it compound.

[SPEAKER_02]: So if you have an HSA, highly encourage you, don't use it like a bank account unless you absolutely need to.

[SPEAKER_02]: Don't reimburse yourself unless you absolutely have to because down the road, you want that money to be to be large, right?

[SPEAKER_02]: There can be a gap between when you are retiring and when you get

[SPEAKER_02]: Medicare coverage.

[SPEAKER_02]: Perhaps the fact that you decided to grow this HSA when you were younger means you can retire five years earlier without worrying about medical expenses.

[SPEAKER_02]: So just another type of account with a big tax benefit, but always only for the people for which it makes sense medically and for the people that use it to its fullest potential.

[SPEAKER_04]: When even if you do, say you stay healthy and you don't really need this money, once it's 65, you can withdraw the money without the 20% penalty.

[SPEAKER_04]: So it's taxable to you, but it's kind of ends up being like an IRA.

[SPEAKER_04]: So if you continue to save in it and you have a lot of flexibility, especially after the age of 65.

[SPEAKER_04]: are running to a quick break and we back with our next topic.

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[SPEAKER_04]: Now let's pivot over to a topic most people don't want to pay attention to because I think it's daunting for a lot of people It can be complex more if you do with you have to deal with lawyers yet morbid right talks about death and that is your estate Plan and there are a lot of pitfalls that people fall into.

[SPEAKER_04]: It's actually one of the things where we have an expert coming in

[SPEAKER_04]: to talk about at our retirement summit coming up in a few weeks that we've talked about, which is she does litigation around trust.

[SPEAKER_04]: So she's seen all of the pitfalls and problems that arise when you don't do the right thing, you don't update your document.

[SPEAKER_04]: So we're going to dig into some of the myths and what you should do about them.

[SPEAKER_04]: And what the reality is, I guess, is about a way to put it.

[SPEAKER_04]: Now the first mislook is that you, the will and trust always has the final say.

[SPEAKER_04]: And this is very common for our clients.

[SPEAKER_04]: I think we talked to our clients all the time about because

[SPEAKER_04]: we have clients with IRAs, Ross IRAs, trusts for one case, things like that.

[SPEAKER_04]: And what they put on the beneficiary form for those accounts, super seeds, whatever the trust says.

[SPEAKER_04]: So we always say it's probably better to focus on that, but make sure that those are how set up the way that you truly want and even align with the trust in some way, shape or form is probably the best way, right?

[SPEAKER_02]: Yeah, absolutely.

[SPEAKER_02]: I think that people oftentimes set their beneficiary when they open something up, let's be at a life insurance policy or an account and then they forget about it down the road.

[SPEAKER_02]: As an example, when I first got out of college, I

[SPEAKER_02]: got life insurance from my previous company to have to pay anything for it.

[SPEAKER_02]: And I made the beneficiary my college best friend.

[SPEAKER_02]: Luckily, they didn't try and kill me for the life insurance money.

[SPEAKER_02]: But, you know, five, six years later, when you have a nephew or if you have a wife or kids or a fiance and you just completely forgot that, you know, your life insurance policy goes to a guy named Zinsan.

[SPEAKER_02]: And it's hard to keep track of these things.

[SPEAKER_02]: And so putting that into using the legal system for something like a revocable trust where you are establishing separate shares for each child, it can be something that's really helpful there.

[SPEAKER_02]: You make the trust itself the beneficiary of these policies.

[SPEAKER_04]: Yeah, so making sure you treat your beneficiary designation as a coordinated plan, a comprehensive estate plan, your beneficiaries on your investment accounts,

[SPEAKER_04]: is part of that estate plan.

[SPEAKER_04]: It's not separate, it's part up.

[SPEAKER_04]: So you have to think about right where that money is going, who's going to, is that who you wanted to go to, how does that compare to, you know, where all your other assets might go, and how you want that to be distributed upon your death, if possible.

[SPEAKER_04]: And then there's the contingent beneficiaries, right, a lot of people forget those, where it's, you know, your spouse is the beneficiary.

[SPEAKER_04]: Yeah, that's fine.

[SPEAKER_04]: But what happens if God forbid you guys die in a plane crash, right?

[SPEAKER_04]: Uh, what happens next?

[SPEAKER_04]: Where does that money go?

[SPEAKER_04]: You don't want to be that to be thrown into probate.

[SPEAKER_04]: You want to have contingent beneficiaries as well.

[SPEAKER_04]: And so make sure that all of those beneficiaries are part of your broader intent with your will and trust.

[SPEAKER_04]: Now let's move on to myth number two.

[SPEAKER_04]: And that is, once you name the Beneficiaries, that's all you have to think about.

[SPEAKER_04]: You're done, right?

[SPEAKER_04]: Like you said, you set up that account.

[SPEAKER_04]: You write in your beneficiaries, your contingent beneficiaries, and you're done.

[SPEAKER_04]: Well, the reality is, over time, life changes.

[SPEAKER_04]: The people that you wanted to have that money five, 10, 20 years ago may not be those people today.

[SPEAKER_04]: Like you said, you might have more kids, grain kids, nieces, nephews, whatever that might be.

[SPEAKER_04]: You want to make sure those are updated.

[SPEAKER_04]: And then what happens to those people?

[SPEAKER_04]: For example, if you have, let's say you have three children.

[SPEAKER_04]: and those are the beneficiaries of your IRA.

[SPEAKER_04]: Well, God for them, maybe one of them passes away.

[SPEAKER_04]: Well, you might think, okay, well, that money is now going to go to their kids.

[SPEAKER_04]: If you pass away.

[SPEAKER_04]: No.

[SPEAKER_04]: actually, if one of them passes away, now that third, you know, one third that was supposed to go to them is now split between the other two beneficiaries.

[SPEAKER_04]: And so you might bypass the your grandchildren where you really wanted that money to go to, right?

[SPEAKER_04]: So you got to make sure it's updated consistently.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: And then there's the other part of what if, and again, this is all horrible to think about, right?

[SPEAKER_02]: Yeah.

[SPEAKER_04]: But you have a lot to think about.

[SPEAKER_02]: But the last thing

[SPEAKER_02]: your family what you're doing when they should be grieving is fine right having this all laid out is important and what happens if you're leaving your money to your kids and all of a sudden these minors are inheriting a minute incredible sums money millions of dollars what what do you do there and something that happens to 50% of us what about a horse yeah right some states automatically sever a former spouse's beneficiary designation the day a divorce is finalized some don't

[SPEAKER_02]: I don't think if you get remarried, your current spouse would appreciate part of your estate going to your ex-wife and so some of these things, some of these things you don't want to think about because they're ugly, but it's better to just deal with them upfront.

[SPEAKER_04]: Yeah, I've seen it first, and I remember one of my personal experiences with this was actually my grandmother.

[SPEAKER_04]: She shouldn't really have everything kind of written out what happens when she passes.

[SPEAKER_04]: And I remember my...

[SPEAKER_04]: my mom and her siblings, they kind of battled over how it was all going to be distributed.

[SPEAKER_04]: There's a lot of contentiousness.

[SPEAKER_04]: I remember them asking me what I wanted and I literally said, I just want to go the whales tail necklace that she always wore.

[SPEAKER_04]: I still have that, and that's the only thing I wanted.

[SPEAKER_04]: So I was not luckily involved, but I remember

[SPEAKER_04]: here in the stories and it was all because this really wasn't spelled out and so this is something you have to review consistently and not just your beneficiaries on your IRA or your Roth IRA but other types of accounts.

[SPEAKER_04]: as well.

[SPEAKER_04]: There are a lot of, I know we do this for our clients, is we set up not just taxable brokerage accounts, but transfer on death accounts.

[SPEAKER_04]: Meaning, yes, the taxable account, yes, it's in somebody's name, you have full control over it, but there is now a beneficiary on that account in case something happens to them.

[SPEAKER_04]: So nothing's kind of thrown into probate or anything like that.

[SPEAKER_04]: If you have a taxable account, I encourage you to move it into a TOD and name a beneficiary.

[SPEAKER_04]: And then, if you do have a TOD account, like just like your IRA, make sure that's updated on a consistent basis.

[SPEAKER_04]: Now, let's move on to number three, which is

[SPEAKER_04]: The more complex a plan is, the more bulletproof it is.

[SPEAKER_04]: The more security you have and your loved ones have.

[SPEAKER_04]: And I think the simple answer that is, more words doesn't make it airtight.

[SPEAKER_04]: In fact, in some ways, it can actually make it more up to interpretation, right?

[SPEAKER_04]: And so making sure

[SPEAKER_04]: that the assumptions are updated and the legal documents are in place is even more important than just having something that's super complex.

[SPEAKER_02]: I mean, as your life can change, as who you're intended beneficiaries can change over time, so to do laws.

[SPEAKER_02]: And so if you build this incredibly complex network of paperwork and trusts and laid out beneficiaries and then the law changes, well, your complex trust that you now have to unwind if you can at all is built upon these older assumptions.

[SPEAKER_02]: And sophisticated structures,

[SPEAKER_02]: can become pretty obsolete, pretty quickly.

[SPEAKER_02]: You can within this system, because it's thousands and thousands of pages realized or not realize, that's the bigger problem, but you didn't include everything within this complex system of documents that you wanted to as well.

[SPEAKER_02]: So it's not just about building it out initially.

[SPEAKER_02]: It's also about being able to update it when needed.

[SPEAKER_02]: right beneficiaries laws.

[SPEAKER_02]: It's also being able to understand down the road.

[SPEAKER_02]: And as with anything the more complex you make something, the harder, more difficult it is more work it takes to understand and therefore more work it's going to take to update it and most of us as people when we see something like this that's unpleasant to begin with.

[SPEAKER_02]: It takes a lot of work.

[SPEAKER_02]: We tend to ignore.

[SPEAKER_04]: Yeah, and you ignore or don't even to keep up with kind of changes like you said to the laws.

[SPEAKER_04]: A good example is two decades ago, the federal estate tax exemption was $1 million per person.

[SPEAKER_04]: Now it's 15 million.

[SPEAKER_04]: So 30 million for a couple.

[SPEAKER_04]: So if you're

[SPEAKER_04]: if you build a trust and it's designed for a $15 million per individual tax exemption, well, in a decade that's probably going to change and you're going to need to update it.

[SPEAKER_04]: So make sure you're figuring that out and updating it and then also ignoring certain assets.

[SPEAKER_04]: That goes back to what my ground's biggest issue was, is that

[SPEAKER_04]: Yes, she named a couple things, but she didn't update it and she didn't include all the things that the kids might want, my battle over.

[SPEAKER_04]: And so if you ignore a certain asset, so that could throw everything into disarray and there could be lawsuits on between siblings, between family members to get their hands on whatever asset you might have missed.

[SPEAKER_04]: And then I think the other one to me is forced together, NIST.

[SPEAKER_04]: I like this one because

[SPEAKER_04]: Just because you think they should have it doesn't mean that it makes sense for them to actually deal with that asset.

[SPEAKER_04]: For example, it's a piece of property.

[SPEAKER_04]: Are they going to agree or is it going to be a battle on what to do with that property?

[SPEAKER_06]: So make sure you understand those potential pitfalls.

[SPEAKER_04]: Let's go on to number four, and that is that your attorney is going to look out for you and call you up when, like we said, laws change or your particular situation.

[SPEAKER_04]: My change, they don't know that.

[SPEAKER_04]: They don't know when your life changes, and so they're not going to be proactive, right?

[SPEAKER_02]: Here's a fun fact.

[SPEAKER_02]: That attorney, likely, has more clients than just you.

[SPEAKER_02]: Yep, and if every single person who is there by the way, if they don't have any clients accept you and you're not an incredibly wealthy person that brings them a lot of business, you should probably find a different estate attorney.

[SPEAKER_02]: But they have multiple clients.

[SPEAKER_02]: And if they were responsible for noticing issues for every single person, they would have an impossible job.

[SPEAKER_02]: you have to be proactive.

[SPEAKER_02]: You have to do these self-reviews.

[SPEAKER_02]: You have to make sure that you are creating this effective plan that maps out who receives what and you are doing it in a plane and understandable way.

[SPEAKER_02]: And then you have to know that as as awesome it is when life developments happen, you get new jobs, you have more assets, not everybody's going to know that.

[SPEAKER_02]: You have to bring this to the people that are trying to help you and an attorney is certainly one of those things and going back to the infighting, when our lives eventually come to an end.

[SPEAKER_02]: Yes, we don't want our families fighting.

[SPEAKER_02]: We also don't want the single source of truth in a complex and messy situation to be this person that maybe none of them has interacted with before.

[SPEAKER_02]: And so understanding that dynamic is kind of critical for figuring out where they fit

[SPEAKER_04]: Yeah, so make sure you're doing your own self review of who the beneficiaries are, how it should be distributed, and then when you're speaking to your attorney, if you're going to go update these things, make sure that you're keeping it simple.

[SPEAKER_04]: Okay, this is what you want, this is how you want it to go and ask them questions that are

[SPEAKER_04]: more open-ended.

[SPEAKER_04]: Like, would this work in my particular situations that they can advise you on whether or not this is the right path to go down?

[SPEAKER_04]: Make sure that you are clearly stating what your end results goal will actually be.

[SPEAKER_04]: And then bringing your statements, make sure everything is account for all your assets that are accounted for.

[SPEAKER_04]: They cannot help you if you are not giving

[SPEAKER_04]: Now lastly, let's talk about that a good plan is built to last a lifetime.

[SPEAKER_04]: That's the myth.

[SPEAKER_04]: Right?

[SPEAKER_04]: If you build a plan, it's designed forever.

[SPEAKER_04]: And that...

[SPEAKER_04]: is far from the truth.

[SPEAKER_04]: We've kind of talked about that, but we know that over time you're this is a living document, right?

[SPEAKER_04]: That's why they call them living trusts so that you can edit them and adjust them over time.

[SPEAKER_04]: So use that, use that flexibility and continue to update it, right?

[SPEAKER_02]: It's kind of similar to when I'm talking with clients about their financial plan, and we're talking about what they might want to do in the future.

[SPEAKER_02]: A lot of people, their biggest purchase is a house they're saving for a house.

[SPEAKER_02]: If somebody, if client tells me I want to buy a house, my next question is, is it in the next five years?

[SPEAKER_02]: Because if it's not in the next five years and you don't have a definite plan, five, ten years of how much you want to spend, where you want to live,

[SPEAKER_02]: It might have a little not exist, because nobody knows where we're gonna be, five, 10, 15, 20 years from now.

[SPEAKER_02]: And so you have to take this opportunity to realize that this isn't a one size fits every part of my life situation.

[SPEAKER_02]: And plan for those next five and 10 years and constantly revisit, because your life changes, the legal system changes, your assets change, your family changes, right?

[SPEAKER_02]: Not set it and forget it, it's set it and revisit it.

[SPEAKER_04]: Yeah, so just like your investment accounts, even though that's usually more interesting for people to focus on consistently, these are documents that you should be actively engaged on a regular basis.

[SPEAKER_04]: It should be always thought of in context too, as you said, major life events as life evolves.

[SPEAKER_04]: So don't ignore them, don't put them in a drawer and forget about them, make sure you actively engaged.

[SPEAKER_04]: Now, I think that wraps that segment up and we are going to move into our final segment, but I do want to let you know we have a wonderful interview coming up, believe we're publishing that either tomorrow or the next day.

[SPEAKER_04]: And that is from Anthony Katz, he is the founder of Hyper-Eyes, and I think it's

[SPEAKER_04]: greats interview talking about the various aspects of entrepreneurship, growth of his industry, crowds of evolving sports medicine, all of that, and I encourage you to tune into that coming up here tomorrow.

[SPEAKER_04]: Now with that said, we're going into our final break and we'll be back with our last segment next.

[SPEAKER_06]: Invest talk is ready 24-7 for your finance and investment questions.

[SPEAKER_06]: Justin Klein is here and ready to tackle your questions.

[SPEAKER_01]: Is it a good idea to sell your losses in a raw IRA and just use whatever you have left to reinvest into better stocks?

[SPEAKER_00]: Wondering, would you thought about this route if it would be a good time to get in?

[SPEAKER_03]: I wanted to pick your rainbow apples.

[SPEAKER_03]: What did you think about their earnings cost?

[SPEAKER_03]: This is a good time to add to my position.

[SPEAKER_06]: Don't forget to call, in best talk, 888-99 chart.

[SPEAKER_06]: Got a question for Justin or Luke?

[SPEAKER_06]: You're the best person to ask it.

[SPEAKER_03]: I wanted to pick your brain about Apple.

[SPEAKER_03]: What did you think about their earnings call?

[SPEAKER_03]: They're just a good time to add to my position.

[SPEAKER_06]: Call in Vestock.

[SPEAKER_06]: 888-99 chart.

[SPEAKER_04]: Alright, let's move on and preview something we'll be talking about at our retirement summit and that is putting all of this together into a broader plan.

[SPEAKER_04]: now that sounds for a lot of people sounds kind of boring, but it's really about giving people peace of mind.

[SPEAKER_04]: And not just peace of mind of whether they can happen up money until full life expectancy, that's certainly part of it.

[SPEAKER_04]: But it's all about

[SPEAKER_04]: how you are going to utilize that money for your various end goals.

[SPEAKER_04]: And that's what we do when we build a plan.

[SPEAKER_04]: There's the retirement slice that is part of your end goal.

[SPEAKER_04]: But it might be other goals as well like paying for a kid or grandkids education.

[SPEAKER_04]: Maybe it's some charity that you want to give money to.

[SPEAKER_04]: Maybe it's a setting side of money, money to travel.

[SPEAKER_04]: a raw number, right?

[SPEAKER_02]: Absolutely.

[SPEAKER_02]: I think people tend to focus on the wrong thing when they think about retirement.

[SPEAKER_02]: They think about how much money do I need?

[SPEAKER_02]: $2 million, $3 million, $4 million.

[SPEAKER_02]: And that's approaching the problem incorrectly.

[SPEAKER_02]: They're ending at the number and then trying to figure out a rather starting at the number than trying to figure out how to get there.

[SPEAKER_02]: You should really be doing is saying how much money am I going to spend?

[SPEAKER_02]: what is the general consumption level I expect in retirement and then how do I get there?

[SPEAKER_02]: How do I build a portfolio to systematically grow over time and then reduce risk and make it more focused on income so that I can utilize it in my retirement for what my expenses want to be because at the end of the day we're not all trying to reach some number on a sheet.

[SPEAKER_02]: We're trying to reach some type of lifestyle, some type of enjoyment in our retirement.

[SPEAKER_04]: Yeah, two thirds of Americans say money is a tool for creating the life that they want, like you said that can mean a lot of different things that can be caring for a loved one.

[SPEAKER_04]: It can be just having some level of security for preparing for some unexpected events.

[SPEAKER_04]: It could be pursuing meaningful experiences, maybe that's giving a charity, maybe that's traveling, whatever that might be.

[SPEAKER_04]: So supporting important causes, building some sort of legacy, maybe it's passing money on.

[SPEAKER_04]: to the next of Ken or building some sort of charity that can give back and support education for kids with come from difficult backgrounds, whatever that might be for you, maybe it's giving to cat organizations.

[SPEAKER_04]: so that you can save cat lives.

[SPEAKER_04]: I know Luke would probably be a big fan of that, right?

[SPEAKER_02]: I do give to cat organizations.

[SPEAKER_02]: It's been a lot of times saving cat lives.

[SPEAKER_02]: But I think that's that's a critical piece too, right, that I think that overall number tends to ignore when people are building that that financial plan.

[SPEAKER_02]: You have to start.

[SPEAKER_02]: And I think that's where this survey is really getting at.

[SPEAKER_02]: It's most people are starting to realize they shouldn't be thinking about the number, but what that number is supposed to

[SPEAKER_02]: which is essentially a way for saying what I said before, which is how much you're spending in these various categories and then how do I build something out, substitute, I can achieve that level of spending.

[SPEAKER_02]: That is easier said than down when you're older, because, you know,

[SPEAKER_02]: who knows what the next 40 years of inflation is going to look like for a 20-year-old versus one of the next five years going to look like for somebody who's 60, that makes it easier.

[SPEAKER_02]: That's why when we we model these things out, we do it on probability distributions and check in every year to see if we're on track because we could all be transacting in buttons in the 26ities.

[SPEAKER_02]: Who knows the future is incredibly uncertain as are what your expense levels would be?

[SPEAKER_02]: Will be?

[SPEAKER_02]: But I think that what I see from this is people getting their mind or starting to get their mind a framed properly in terms of how they can achieve those goals.

[SPEAKER_04]: Yeah, especially post-COVID and a lot of people have kind of reassessed, I think, their lives and what they want out of it, and, you know, this is a part of that process building a plan, it's a move forward, really with clarity and confidence, because, like you said, it's not just about, oh, I want to hit something number, but why do you want to hit that number, what is the end result of hitting that number when it comes to boots on the ground, on your financial life, day to day, and for,

[SPEAKER_04]: you know that the years into the future.

[SPEAKER_04]: So financial success is broader than just a single number.

[SPEAKER_02]: Well, it's also hard to do to do it alone, right?

[SPEAKER_02]: And so that's why we wanted to talk about this at our summer.

[SPEAKER_02]: So we hope to see some of you there.

[SPEAKER_04]: we're excited for that.

[SPEAKER_04]: Well, I think that about does it for this special edition of the best talk.

[SPEAKER_04]: Like I said, Luke and I will be at a wedding, but we are hopefully brought you some value today and a good preview of our upcoming event.

[SPEAKER_04]: So thank you all and to you next time to the best talk.

[SPEAKER_02]: Here's a quick heads up for our Southern California listeners.

[SPEAKER_02]: KPP Financial will be hosting an Invest Talk Retirement Summit.

[SPEAKER_02]: It's happening on Saturday, October 24th in Irvine, California.

[SPEAKER_02]: We'll be joined by guest experts in tax and estate planning, financial planning, and real estate.

[SPEAKER_02]: They will appear in-person alongside the KPP team.

[SPEAKER_02]: It will be a focused discussion of five key areas that can shape your financial future.

[SPEAKER_02]: Seating is limited, attendance is complimentary, and guests are welcome.

[SPEAKER_02]: So, don't delay.

[SPEAKER_02]: Reserve your seat now by visiting investalk.com.

[SPEAKER_06]: Invest talk is a trademark of KPP financial, because of the nature of the interactive dialogue inherent in the format of this program.

[SPEAKER_06]: It's important for the listener to understand that not all comments made will apply to them.

[SPEAKER_06]: Specifically, nothing said she'll be taken to be investment advice.

[SPEAKER_06]: or shell statements on this program be considered an offer to buy or sell security.

[SPEAKER_06]: Because such advice is rendered solely on an individual basis, and at times will require that the investor review a perspective before investing.

[SPEAKER_06]: Invest talk is a copyrighted program of client, Pavlis, and Peasley Financial, a registered investment advisor firm, which retains all rights.

[SPEAKER_06]: For more information regarding KPP's investment advisors,

[SPEAKER_06]: Thank you for listening and your comments and questions are welcome on our 24-hour listener line at 888-99 chart