Free Money?

SPEAKER_00 0:05

You're gone to a really great financial future. Tom and Don are talking real money.

SPEAKER_03 0:11

Here is an interesting quote that will make sense as we move a little farther into today's exciting edition of the Talking Real Money Podcast. Here you go. Just let this sit with you for a moment. Just let

Dividend Myth Exposed

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it sit. Quote, it's rare that the stock market leaves free money lying around, unquote. Think about that for a minute while I introduce your two exciting co hosts of your exciting program. I'm John McDonald, holding down the Florida fort. That's Tom Cock, waiting for the sun to come out, still in Washington State or the Seattle area.

SPEAKER_02 0:53

Okay, you want to you want an illustration of that? Yeah. You really laugh. So every week now I check the temperature in my little lake, you know, that I live on.

SPEAKER_03 1:02

Yeah, you live on a little lake.

SPEAKER_02 1:03

I already I made a pledge to get in it in May, which is Well, it's May. I know. As my daughter pointed out, well, that could be May 31st. Yeah, and it very well may be. That's no pun intended. But the thing is, uh, I checked the temperature a week ago, it was sixty-eight. I checked the temperature yesterday, sixty-five. I mean, we're going the wrong direction here. So this is the lake temperature. It's kind of cold.

SPEAKER_03 1:27

Just to put that in perspective, when Debbie and I want to go visit and play in water, we don't go to some lake because Florida's lakes are full of alligators and amoebas. Uh we we go to a little place called Typhoon Lagoon down the street. A little distant. Some kind of violent typhoon lagoon. It's a theme thing where anyway. It's a great water park. It's really a great water park.

SPEAKER_02 1:50

I believe that's big.

SPEAKER_03 1:55

That's where they keep it. A bath. Eighty-two degrees. Well, okay, a bath only for people who think that they can get into 68 degree water. Trevor Burrus, Jr.

SPEAKER_02 2:04

Which I may well be getting in here in the next couple weeks. We'll see. Crazy man.

SPEAKER_03 2:09

No, what are we talking about today? We're talking about what people believe is magic money. A lot of pundits and experts and media are out there recommending that you, particularly you in retirement, uh go for a really wonderful source of income in retirement, and those are called dividends. Buy dividend-producing stocks, and you'll be set for life because you know how safe these dividends are. These companies have been paying dividends for decades and decades and decades. But a lot is missed in that advice, and we want to expose all of the holes in what we believe is really, really bad investing advice, Tom.

SPEAKER_02 2:59

Yeah, and remember, when you're getting a dividend, you're getting a profit. This is money the company has earned, right?

SPEAKER_03 3:06

Well, hold on. May I I was going to say you hope you're getting a profit, but some companies don't have a profit and pay dividends for a while anyway.

SPEAKER_02 3:15

Pay an amount. But the company could also do what with that money? They could spend it on the company. And in many cases, they you read some of these stories, they probably should. But overall, it's an interesting time for dividends because um I think I heard you mention recently on your your Friday call-in show that the yield has uh traditionally been somewhere between, I think, two, two and a half percent, right?

SPEAKER_03 3:40

But traditionally, yeah. Right. It's because of all the people chasing dividend yields. You see, if demand exceeds supply, which it does right now, the yields get pushed down. And where are they these days? And the S P 500 now, right around 1%.

SPEAKER_02 3:58

So it's a pretty small number. But that doesn't stop so many fund managers, so many investors from thinking they can find the free lunch. In the first quarter, $22 billion, it's uh the the the highest amount in four years, was poured into high dividend paying exchange traded funds that pay out five, six, you know, I mean, a lot of money, right? More than what you could get, certainly with safe money in a treasury investment. Exactly, or something like that. So um these are funds, again, where people believe they're getting something for nothing. That's been the problem I have with them. But listen to some of the companies. Um these are good companies, right?

SPEAKER_03 4:46

General Mills, UPS, Best Buy, Kraft Heinz, oh yeah, those are all the kind of they're they're considered safe dividend payers.

SPEAKER_02 4:54

Exactly. Whirlpool, we'll get to that in just a minute.

Growth Beats Income

SPEAKER_02 4:57

Um big dividends, big, big money. So, how should people look at high dividend paying funds? I mean, this is the this is the part that that we all forget, I think.

SPEAKER_03 5:09

Yeah, because we're all caught up in that income stream that we forget the biggest part of stock market returns is growth. The value, the increase in value of these companies. That's why a lot of companies don't pay dividends. They put it back into the company to invest in growing the company. Apple for many years didn't pay a dividend, it's still a very small one. Nvidia pays a teeny tiny dividend. And here's here's where the disconnect lies. And this is from an article by Spencer Jacob in the uh Wall Street Journal recently. Someone should read. Yeah, he's good. We let's look at some of these big dividend payers. Big ones, big ones, like oh, oh, let's go. Um, let's look at Campbell's. I mean, what could be better than soup? Soup is a money-making machine, right? Pays a nice dividend. Over the past ten years, you would have made negative fifty-four percent on Campbell's soup. The stock, the price. The stock. You would have lost half of your money over the past ten years. How about Kraft Heinz? Very similar. You they got your ketchup, they got your cheese, they got all that stuff you eat. It's a defensive stock. It's got great potential right, right last 10 years, negative 57 percent. By the way, what has the SP 500 done over that same period?

SPEAKER_02 6:35

That's uh that was fun part of the article. Oh, only 324 percent.

SPEAKER_03 6:39

Uh with five hundred. Irrespective of the dividend strategy.

SPEAKER_02 6:44

Yeah, which they point out, by the way, a decade ago at a yield of 2.1, as they say, now it's closer to one. Um and yet this goes on. People believe they're free money, they forget that the value of the company goes down. I think there's nothing more illustrative, interestingly enough, that in the same day in the Wall Street Journal that Spencer wrote about this, the the cash cow that had been paying out dividends uh since 1955, I think it was. Something like that. Um Whirlpool.

SPEAKER_03 7:16

It was a money-making machine back in the day.

SPEAKER_02 7:19

Yeah.

SPEAKER_03 7:19

Um they made Kenmore, which we've talked about on past episodes.

SPEAKER_02 7:23

Exactly. Um they have decided to pull the plug on their dividend. Last year they paid out $300 million, even though their sales are down six percent, even though their market share continues to erode thanks to uh great companies in South Korea, for example. And last year they also, to sort of keep the lights on, and I hope this is still shocks me, they uh they decided to sell another $1.1 billion worth of shares, uh, sort of to buoy the company. Um, how you can take that in the front door and hand it out the back door. I I'm not an accountant, but it doesn't sound like a good practice in general.

SPEAKER_03 8:00

Um And if you look at their balance sheet, you'll see they've been paying out these third of a billion dollar a year in dividends, and they borrow money. Borrow money to pay dividends?

SPEAKER_02 8:12

Yeah, it doesn't, it just it doesn't for me pass the smell

Total Return Matters

SPEAKER_02 8:15

test. So, okay, but what seems like bad math. Yeah, how is all this what does all this meant? Because the article correctly points out really basically the entire article in these uh six words, and total return is what matters. What matters is how much you made on your money. Now you pointed out some of these shocking, frankly, losses for 10 years, half your money, 10 years. That's a long time to be underwater. But how is a dividend paying strategy, for example, in a fund, mutual fund or exchange traded fund, done compared to just owning, I don't know, an index, for example?

SPEAKER_03 8:52

Well, I I I looked at uh the Vanguard Dividend Growth Fund, uh, and over the past five years, the Vanguard Dividend Growth Fund has returned total return of six percent per year. The underlying index, which I believe is the SP, 13% over that same period per year. So more than double just by owning the index. And your risk is not dramatically reduced when you own a uh a dividend paying fund. The it's a little lower. Your standard deviation, because it's buoyed, the the volatility is buoyed a little bit by those higher dividends, is like a 11 where it's 13 for the index, but your returns are dramatically lower. And they they're not safe. Remember, dividend funds aren't safe like a bond fund.

SPEAKER_02 9:51

It's not income like that. No. Yeah. Yeah. No way.

SPEAKER_03 9:54

And there's no guarantee from the uh by the company. Uh with a with a corporate bond, you have a full faith and credit, usually you have a full faith and credit guarantee by that company that you're gonna be first or second in line as a creditor.

SPEAKER_02 10:11

Yeah. And and I think Whirlpool is a great example of uh of how bad it can be to go from $300 million one year to zero the next, and to see all these things that have happened to them. So again, a couple things in my mind, always true. Uh first of all, yield really is, and this is from somebody else that I read a lot, yield is for farmers. They they're the ones that need to determine how much they're gonna make on their crop yield. That's one thing. I uh and it's funny, I'm the farmer and you're anyway. Um there is no free lunch. You just said it right. There is no there's no dollars to be scooped up on Wall Street that nobody else is paying attention to. That's what people think. Like that is easy to noticed.

SPEAKER_03 10:53

Hundreds of millions of people worldwide invest and they didn't notice that money laying on the ground. Yeah, you think?

SPEAKER_02 11:00

You go ahead and grab it. I mean, here's the other thing. When you limit the number the types of stocks you own, and when you h buy high yield or high dividend payers, you are reducing your diversification dramatically.

SPEAKER_03 11:14

Well, here, let me give you an example. You ready? The Vanguard Dividend Growth Fund? How many? Fifty-one stocks. Yeah. I mean, versus a SP 500 is 500.

SPEAKER_02 11:24

Right. And you know that we're going to tell you to own 10,000 stocks. And if you do that, guess what? Dr. Bessenbinder is going to remind you, will this include the 4% that have done better than T-Bills? Maybe, maybe not. So you really don't this is not a this is not a good strategy. It's it's it's a panacea, I think you used the word when we were discussing this, that people believe really will play out for them in work, but I don't think it will in the long haul.

SPEAKER_03 11:52

No. Well, and plus, here's the thing. A lot of the folks who talk about money, who give advice, they're always looking for a gimmick, for something that sets their advice apart. And so it it's enticing to think, well, I can make more than that lousy little 1% that the S P 500 makes in income. I can get bigger checks every month if I go for that five or six or seven percent high dividend paying fund. But remember, and by the way, with some of these high dividend paying funds, some of that money is yours just coming back to you. It's not income. It's just a return of your principal. So it's there's no strategy that's magical. And any anytime anybody anywhere is pitching you on one, you can pretty much count on it being wrong. I'm not gonna say lying, but but wrong. Questions?

Military Retirement Plan

SPEAKER_03 12:50

Hopefully we have answers. If not, we're gonna try really hard and get them. But we have a lot of answers because we've been doing this for a very long time. You can just simply go to talkingrealmoney.com. I know all of you have some sort of an internet device. You do. Even if it's just that little annoying phone thing in your hand. It can get on the internet. Go to talkingrealmoney.com. Look for a button that says contact us or ask a question. And then either type your question or speak your question. If you type your question, we're gonna answer it on one of these shows or maybe even in a phone call with oh, look, Tom's taking another call right now. And so we go to the phones.

SPEAKER_02 13:31

Let's talk to and you're this is a great name. I love this, Davey in the Navy. All right, all the ships at sea, they've come in and they're calling us. Davey, how are you today?

SPEAKER_01 13:42

I'm doing great, Tom. Thanks for taking my call today.

SPEAKER_02 13:46

My pleasure. How can we help you?

SPEAKER_01 13:48

Well, I'm coming up on retirement. Um, I've got 33 and a half, I'll have 33 and a half years of active duty service uh when I retire in about two and a half years. I have a guaranteed pension that's gonna be cola adjusted at about 10,600 a month, and then possibly some VA disability on top of that, which uh uh potentially another 4,000 a month. Um, we're pretty heavy in our retirement between TSP, Roth IRAs, um, about 700,000 there. And I'm trying to figure out what to do as I get closer. Having this guaranteed pension and income, should I still keep putting money into retirement or work on paying off the house?

SPEAKER_02 14:36

Wow, it's a great question. What's the uh mortgage on the house?

SPEAKER_01 14:40

Uh we still owe about $395 at 5.25%.

SPEAKER_02 14:47

You know that 5.2, that's an interesting number because generally anything over five, I'm gonna say pay it down. Um, but let's just very quickly just go the the the pension, fantastic. Um, and so do you expect the pension and or disability to cover your day-to-day expenses?

SPEAKER_01 15:06

Yes. Uh we should have a hundred percent coverage just off of those two uh payments.

SPEAKER_02 15:12

Okay, and then when you look at your overall savings, how much of on a percentage basis would you say is sort of in the you know qualified like an IRA, traditional IRA or 403B, whatever it is? How much is in Roth and how much is in brokerage? Can you kind of break it down fairly simply that way?

SPEAKER_01 15:29

Yeah, so uh between TSP, which is our thrift savings plan, uh Roth IRA, there's 700,000 there between those, between mine and my wife's. And then I also have an additional brokerage account uh for about 170K on top of that.

SPEAKER_02 15:46

So you so you're a little lighter on the sort of what I would call after tax money, the brokerage money. Correct. Yeah. So this is yeah, I due to the fact that you're gonna have all that guaranteed income, uh, and and the fact that by the way, the the the other money, the the the traditional that you've saved will continue to grow. You won't have to take that out until you're age 75. That's a long time from now for you.

SPEAKER_01 16:09

Right?

SPEAKER_02 16:10

I don't know that I would be adding in any more in the traditional. I might be trying to load up on the Roth um and or the brokerage if you had sort of money to save. Um, the only question then I might have is what's your tax rate? It should be relatively low working in the military, correct? So I mean you're not you're not facing a huge tax break by sort of taking money and putting it in the traditional. So I might turn the knob up a little bit on the Roth and turn the knob up on the brokerage. In terms of paying off the house, whether you take some money and you throw it at that. Um this is always a very difficult question because emotionally we all say, well, I would like to live in a house paid off. I feel that's that way sometimes too. And then I look at my payment and it's not that big. And the interest rate, yeah, mine's a little higher than yours. I don't love it, but it's it's not gonna kill me one way or another. So, you know, I might, I might say do the Roth, do the brokerage, and then maybe put a little bit more towards the house. Again, I don't know that I'd be running telling you you have to pay off that mortgage, that that has to get done prior to retirement. But those might be the order in which I set money aside for the next few years. And man, I'm I'd be also recommending that you you figure out, because I know the way having a father who is in the armed forces, you figure out what you're gonna do when you when you leave the leave the employment of the U.S. government. Plan some trips, do some fun things. You're young, you should get out and enjoy some of that money as well. So that's another reason to have money in brokerage, because it's easier to access at generally a lower tax rate.

SPEAKER_01 17:43

Yeah, that makes a lot of sense.

SPEAKER_02 17:45

I would probably do something like that. I mean, the other thing that might be worth considering in your situation would be kind of what the asset allocation is. In other words, how much in riskier stocks and how much in bonds, because you have that bond-like pension, right, that's gonna pay you all the time, that's gonna make up such a large portion of your income. Maybe you then not knowing your personality, but you tilt a little more heavy into the stocks, riskier stuff there, hope you get some growth. And as I said, you're gonna have another 20 years of growth, you know, tax deferred, which is gonna be awesome. And maybe even at some point you consider some conversions. I wouldn't worry about that today. But I probably would, I'd probably try and stock up on that Roth, boost that the post-tax savings a bit, and then maybe throw a couple bucks at the house. But I wouldn't get overly worried about that unless it really is an emotional thing, like I just want to have this paid off. Then maybe you could come up with a strategy to put some of the extra money towards that and sort of clean that up.

SPEAKER_01 18:41

Yeah, that sounds great. Yeah, most of our uh funds that we currently have, we're 100% invested in equities. And actually, before I started listening to your show, I was a hundred percent in uh like VTSAX or or VTI. But after listening to you guys, I really started getting into a little more into the international funds and expanding my horizon a little bit more into the VT or VXUS um EFTs now.

SPEAKER_02 19:10

Good. I mean, and that's again, we got we don't favor other countries over the United States. We're big fans of the United States. Uh, it's been good to to us and to you as well. But in the security yeah, it's good exactly. But the thing is, having that balance has meant a little more return and a little less volatility. Certainly the last year and a half have been dramatic, right? Internationals have way outperformed, especially emerging markets, um, the U.S. market. So you just want to make sure your money's positioned there for whatever's coming along. Balance that out. You're doing a lot of things right, Davey. And uh, and again, thank you for all your for thank you for listening to the show, but thank you for your service, which is un unbelievable and exemplary.

SPEAKER_01 19:54

Well, thank you very much. I appreciate you taking my call.

SPEAKER_02 19:56

Take care.

SPEAKER_03 19:57

Nice call. There you go. Good job. Thanks for doing that. Look at you. You get you and Tom had a nice chat. That was lovely. But you can also just, you know, if your question's a little shorter, it doesn't need all that uh banter, it doesn't need all that conversation. You can just type it up, and Tom will pick up a piece of paper. For some reason he can't look at it on a screen. I'm not sure why. Even with my book, I had to send it to him in paper. Yeah. Because he didn't want to read the e-book.

SPEAKER_02 20:28

Which oh I I'm pretty close to having everything now on Kindle, but not everything. Can can here here's can I can I plug?

SPEAKER_03 20:36

I just came up with something really cool too.

SPEAKER_02 20:40

Okay, go ahead.

SPEAKER_03 20:41

Oh, the book is called The Line Uncrossed.

SPEAKER_02 20:43

Ah, that's it.

unknown 20:44

Okay.

SPEAKER_03 20:44

Um No, I came up with a great idea. I came up with a great idea because uh around the book, The Line Uncrossed, which is the the fictional story uh kind of loosely based on my great-great-grandfather. It's more fiction than fact. Uh it's a Civil War story about a young man, very young man, true true story, who enlisted in the Union Army as a teenager. Wow. And fought in various battles, and uh anyway, had a bad bad bad bout of things when he got captured at Chickamaugua. So I wrote also a couple of short stories that I've uh that I'm doing on uh on lit reading around that, from the line Uncrossed universe, two other short stories. And I also found a lovely old story written by a Union officer who became a writer, very famous writer, Ambrose Beerce. And he wrote a story called Chickamaugua, which is about the Battle of Chickamauga. Ver great story. So what I've done is I've created an ebook to accompany the ebook of The Line Uncrossed. And you can get both of those for the price of the ebook, and I'm gonna try and put them out early. They should be out before the twenty second, and you can buy those for just five bucks at donmcdonald.com.

SPEAKER_02 22:00

Wow. I'm loving I'm loving the uh the the uncrossed line, the line uncrossed.

SPEAKER_03 22:05

That's an e pub or a PDF edition along with the bonus of the uh short stories too.

SPEAKER_02 22:10

Uh the picture on the cover, remarkable shot of your grand great grandfather. It's very crazy.

SPEAKER_03 22:16

Yeah, w that was tr taken with a drone.

SPEAKER_02 22:18

Wow.

SPEAKER_03 22:19

Those early 1860s drones, yeah.

unknown 22:22

Funny guy.

SPEAKER_02 22:22

All right, let's see. It was a powered drone. Yeah. All kidding aside, it's very well written and it's a great story.

Global Fund Choices

SPEAKER_02 22:29

Uh Ricardo writes us from Alhambra, California, which is important to me because that is the city of my father's birth. Oh. Beautiful Southern California. Uh Don and Tom, thank you for your show and the service you provide. I've learned much listening to both of you. I'm an employee of the University of California, which has its own retirement plan, UCRP. You can invest in-house using UC funds found here. Yeah, exactly. Or here's the here's the crux of the question. Or through Fidelity Brokerage Account where you have access to many choices. I've learned from your show to be diversified as an investor to be be the market, not beat it, as you both continuously state. I'd like to know your thoughts if it makes sense to invest the 403B in an ETF like an A V GE or DFAW through Fidelity, or in the UC Global Equity Index Fund, which is very inexpensive, by the way, tracks the performance of the MC M S C I IM it's an international X, in this case, X fossil fuels and tobacco, which worries me a bit.

SPEAKER_03 23:35

But well, that's because it's UC, dude.

SPEAKER_02 23:38

Right. It's also learned about having small cap value, which I cannot determine if the UC fund has compared to the ETFs. I'll just tell you right now that is no. But the gross operating expense ratio for the UC fund is 0.01. We know the expense ratio for the AVGE very low. 023, et cetera. It makes it the question at hand is should he use that very low cost index fund available through the UC plan, or should he go through the brokerage account and use one of the aforementioned global funds, A V G E or D F A W? Oh, you're slacking. You're ready to go. Okay. That's such a great answer to this one.

SPEAKER_03 24:20

I'm so happy. Please. For the bulk of your international, use the cheap fund. For the bulk. And then add maybe 20% of the equity portfolio, 10%, in uh small cap value.

SPEAKER_02 24:39

So an AVUV, for example.

SPEAKER_03 24:41

Like an AVUV.

SPEAKER_02 24:42

Yeah. Okay. That's 80% in the UC plan uh UC fund, which is very cheap, sounds diversified. I don't really like that they're selecting out fossil fuels and tobacco, but I think that's the same thing.

SPEAKER_03 25:04

Um but wait a minute, doesn't Avant that the AVUV is only US, though.

SPEAKER_02 25:09

That's correct.

SPEAKER_03 25:10

Uh how about adding, oh wait, how about 10% US small cap value? That would be AVUV. And then oh um even tape 10% AV I got a better plan. 10% AVUV, about six or seven percent AVDE, which is their international equity fund, it's gonna have a small value tilt. Yeah, and then the rest in A V E M. That's their emerging market. Yep. Okay. Yep. I built the portfolio just like that. Look at that.

SPEAKER_02 25:50

Beautiful. Ricardo, thank you for the question. Uh, David from Fort Myers, Florida, writes I started listening to Don in Erie, Pennsylvania on AM radio in the late 90s. W P S E. Now I'm assuming this is the 1990s?

SPEAKER_03 26:06

It better have been, yeah. The 1890s, we we hadn't invented uh radio station checks.

SPEAKER_02 26:11

He says he was in his late 20s, retired at 59, never never made over a hundred thousand, now worth 2.5 million with no debt. Simple S P 500 investment and some smart moves. Thanks again. Don't know if you were still around. Just wanted to say thank you.

SPEAKER_03 26:29

I'm still around. Um by the way, when little funny story. When I was fired by Business Radio Network in 1993, uh my wife got on the phone. My wife and the staff of our newsletter got on the phone and they started calling the Nighty Stations. I was on the list. Yeah, you were on the list. They started calling the Ninety Stations that carried the Don McDonald show. That's right. And eighty-nine of them decided to break their BRN contracts and flip the switch over to Disney's satellite channel when I was doing my show out of Disney World. And only one was afraid to switch.

SPEAKER_02 27:04

No, it was WPS E and Erie. Oh, interesting.

SPEAKER_03 27:08

Because they were part of the University of Pennsylvania. Trevor Burrus, Jr. They didn't want any trouble. They didn't want any trouble. Yeah.

unknown 27:14

Okay.

SPEAKER_03 27:14

Whereas Ron Cohen went, let them sue me.

SPEAKER_02 27:17

Yeah, I just switched it. I don't think they ever knew. They run around listening to everybody.

SPEAKER_03 27:23

It was so funny, because that was right at the beginning of paid financial programming.

SPEAKER_02 27:28

They put on hints from Heloise or something, right?

SPEAKER_03 27:30

No, they put on a paid program by a guy out of Kansas City. He bought my slot, and they were paying me a salary, a six-figure salary, for doing the show. And he he caught my he bought my slot and he went on the air with one station.

SPEAKER_02 27:44

Probably not really successful show, is why he's that's why I'm not sure if you're not doing the show today, and you are.

SPEAKER_03 27:50

Yeah.

SPEAKER_02 27:50

All right, one more question. Keith De Green. That was his name. Keith De Green. I remember that. Probably still on KFN in Phoenix. Oh, sorry.

SPEAKER_03 27:58

Uh Rob writes us. They went under.

Withdrawal Strategy

SPEAKER_03 28:01

Yeah.

SPEAKER_02 28:02

Rob writes us when it comes to scheduled withdrawals from my retirement account, which is 6040 equity bond should be scheduled to pull from across the portfolio. In other words, if you have a 6040 and you're doing withdrawals, should you pull from the bonds? Should what how does this all work? Where do you take the money from in withdrawals from a balanced portfolio like 6040?

SPEAKER_03 28:25

Oh, well, first the place you start is with your rebalancing. That's the magical way to do it.

SPEAKER_02 28:32

Okay, describe what that is.

SPEAKER_03 28:34

Well, for example, let's say you've had a good year with the stock market like this year, and your 6040 is now sixty-five, thirty-five. Trevor Burrus, Jr.

SPEAKER_02 28:42

More than that, actually. But okay.

SPEAKER_03 28:44

Well, okay, but I'm just, you know, I'm this is a it's overweight stocks.

SPEAKER_02 28:48

You're 65% in stock market.

SPEAKER_03 28:49

Which gives you if you sell off the overweighted stocks. And I know the feeling. You're going to get yourself just by selling off the stocks and taking that money in cash, you're going to get yourself back to a sixty forty. It you just take out enough to get you back to a sixty forty. That cash you just took out, that's the first money you draw from. The second money you draw from is the dividends. You just stop reinvesting some of the dividends.

SPEAKER_02 29:19

But again, the better approach long term is a total return approach. Let the dividend. Right, right, right.

SPEAKER_03 29:24

I'm just saying, if you want to f well, yeah, but where are you going to take it and that total return approach? It's a total return. The rebalancing primarily, but if you need a little more over and above that, then you just start taking some of those dividends. It's but that's still part of the total return approach.

SPEAKER_02 29:39

Yeah, okay. All right.

SPEAKER_03 29:40

Um and uh then you take them out, you take it out from your taxable account first, then you take it out from your deferred accounts.

SPEAKER_02 29:48

Qualified.

SPEAKER_03 29:49

Qualified IRAs in 401ks. And you leave the Roth away alone forever. Yeah. That's good. Forever and a good advice. Um you know that uh Keith De Green has a podcast.

SPEAKER_02 30:00

He's still on the air, huh?

SPEAKER_03 30:01

I don't know if it's still new. No, it hasn't he hasn't done it since 2023. Okay. So it was called as I S E A It. I don't know what that means. Oh, I guess he's on a boat.

SPEAKER_02 30:14

As I see it. See it. Okay. Uh great question, Rob. That comes up a lot, by the way. That's a a reason sometimes to talk to an advisor because that's exactly the kind of thing a good advisor is going to do. Not just portfolio construction, not just great planning, not all the work they should be doing, but the but the generation of cash. It's part of the toughest thing for many people in retirement, the most tax-efficient manner which to do it. The one that's going to have your portfolio sustain itself for the longest. That's that seems to me the biggest stumbling block for most people as they approach retirement.

SPEAKER_03 30:49

Yeah, it's really important for uh for those who've really built up a decent sized nest egg to at least, at the very least, sit down with a planner who doesn't sell product, someone who can write a plan and at least pay for the plan, even if you don't hire an advisor, at least pay for a plan. Okay? Yep. Where does Keith live now? Oh, he lives in Arizona. He lives in Scotland.

SPEAKER_02 31:15

Isn't there a big surprise? There's a lot of sailing in Arizona, as you know.

SPEAKER_03 31:19

So at least he did on his LinkedIn profile. I don't know what any of this means.

SPEAKER_02 31:23

I think it's time, in the words of a very famous Disney movie, for you to go.

SPEAKER_03 31:29

Yeah, I think so. I was just curious. Okay. I was curious. He's an RIA in Arizona. Oh, okay. I wonder what he's selling. You know, that's for another another. I think I'm gonna look it up for a future episode. I'm gonna do some more. I am. I'm gonna do it in a future episode.

SPEAKER_02 31:46

Let's send him to Andersonville. What do you say? Huh?

SPEAKER_03 31:49

No. Oh man, no. Ooh, after doing the read I mean, I I went to Andersonville about 20 years ago. I was driving to Atlanta for something and I saw the sign and I went, oh gosh. And I had my great-great-grandfather's letter with me for some reason, or it was on a phone or something. And I went to Andersonville and I walked around and I read his letter, which I can't find now. And um I was moved. I was teary. It was man. Is it so that's why one of the reasons I Andersonville is definitely in the book.

SPEAKER_02 32:23

No, the the letter.

SPEAKER_03 32:24

No, letters not in the book because I can't find the letter. I asked my sister, she thinks she has it somewhere. So no letters in the book. Her, Keith, which is like

Free Advisor Consults

SPEAKER_03 32:34

Keith will be fine. Uh send your questions in. Talking real money.com is the place to do it. If you want to meet with one of these fiduciary advisor people we have at our company, Alpello Wealth, you can do it for nothing. Really. I know everybody says, complimentary consultation. Well, no. Everybody offers that. Everybody offers that. This is not that. Well, it's complimentary, and I guess if you want, you can call it a consultation. But here's what it isn't. It isn't what ninety five percent, ninety-nine percent of the others are, which is not really informational. It's sensational.

SPEAKER_02 33:13

Well, they want to find out what you've got, and then they're gonna pitch you on why what they've got is better. Trevor Burrus, Jr.

SPEAKER_03 33:17

Right. We'll make you more money. We have magic tricks, we have good stuff. Yeah, I don't know. And they anyway. We're not gonna do that. We're not gonna we're not gonna put the full court press on you. We just don't believe in doing that because we don't need to.

SPEAKER_02 33:28

Oh, I'm too old. I only do a half court press at this point.

SPEAKER_03 33:31

So you don't even do a quarter court press anymore. Trevor Burrus, Jr.

SPEAKER_02 33:34

The only last thing I pressed was a shirt.

SPEAKER_03 33:36

So although I can't believe you're still farming, Mr. Green Jeans.

SPEAKER_02 33:41

Oh boy. I'm gonna this is gonna be a big year for the garden, especially since we put up the netting to keep the uh the deer out.

SPEAKER_03 33:47

So I I understand that the Seattle area has above average intelligence deer, so they're gonna figure out a way through that netting. All right, thank you all for being there. Please tell a friend or maybe a dozen and uh oh, and keep pushing us up there to pass stacking Benjamins like we recently did. We we did it. I know I know you don't listen, Joe Saul C high.

SPEAKER_02 34:11

We're coming for you, is that right?

SPEAKER_03 34:13

We're coming for you, dude. All right, thanks for listening. I'm Don. That's Tom. We're talking real money.

SPEAKER_00 34:19

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