Ep. 1977: The Confusion-to-Risk Ratio

SPEAKER_04 0:41

We're moving along through the book. We

Confusing Products, Real Costs

SPEAKER_04 0:44

are moving forward. We are plotting through the tone that it is, the laws of financial physics, talking real money. I'm Don. That's Tom. And this is our Monday episode where we talk about the basic kind of rules or theories of how money works or should work. And today we are going to focus on a rule that comes up actually quite a bit.

SPEAKER_03 1:11

And uh, Tom, what is today's rule from the I was reading the chapter and the author said something about a naked short straddle. So I got my attention. I didn't know what that's all about, but I certainly want to know more. I'll put it that way.

SPEAKER_02 1:24

Yeah, that's as much fun as that sounds like it might be.

SPEAKER_04 1:28

I you would hurt yourself if you tried it.

SPEAKER_02 1:30

I'm old, I get it.

SPEAKER_04 1:32

So but actually it's an option strategy.

SPEAKER_03 1:34

Ah, okay. I'll take the option, option A there. Uh yeah, this is a fascinating chapter, actually.

SPEAKER_04 1:41

You know, you managed to right at the very beginning. You totally, totally reduced this show to middle school humor.

SPEAKER_03 1:51

That's where I reside. Bad. Uh the author says rule nine is confusion to risk.

SPEAKER_04 1:59

Why do we keep saying the author?

SPEAKER_03 2:01

Because that aren't we discussing the book here?

SPEAKER_04 2:04

Okay. All right.

SPEAKER_03 2:05

No? Okay.

SPEAKER_04 2:06

Um I feel like I'm being referred to using the royal we or something.

Finance’s Complexity Problem

SPEAKER_03 2:11

I'm I'm referring to you in past tense just in case. Uh says most financial products are purposely confusing. I think that's true. I think that's I think this is one of the understated things about the world of finance generally. You read all these people, there's so much silly commentary and prediction, and this is uh And complex products. Yeah, it that's what they're selling.

SPEAKER_04 2:35

Like week before last, we did a whole show on a uh a structured note that a listener sent us that turned out to be one of the most convoluted, complex, ridiculous products I have ever, ever seen from the financial services industry. And that was a BNP uh structured note. If all of the cards fell the exact right way and the unless the worst market did better than the best market who did worse than the last market. I I don't know. It made no sense to me when I was all done. If you want to hear that, that was I think last Wednesday's show or something.

SPEAKER_03 3:15

I think you're right. And and the thing is the problem is, and I understand this to those of you listening, is all you hear is the 11.5%. After that, it just everything else disappears. It doesn't matter. Your hearing shuts down. It's like it just I didn't say something else. I get the 11.5%. Um and so, but let's talk a little bit about why. I think this the the thing I love about this chapter is the explanation of how we ended up where we are today. It in the olden days, the olden days, which aren't that olden actually, when it comes to all this, um, it was about buying individual stocks, right? And there was a pretty hefty cost associated with that. Oh, the commission was huge.

SPEAKER_04 3:59

I remember even when I Okay, I am old. I remember when I was a broker, we our commissions would be uh hundreds of dollars. Just to buy and sell at individual company. Yeah. It was a lot. Now, now it's free.

SPEAKER_03 4:14

Yeah, you don't pay anything. So all that went away, right, as a source of revenue for the folks that you know, financial companies. So the the again, the author correctly points out that well, something needs to pay the freight here. Something needs to okay. The author's Don. All right, I'll I'll quit saying that. You point out, sir. Um that the stock trades aren't gonna keep the yachts, you know, out in the waters over the summer. So we've got to find something else here. So they started designing all these products that are complicated, confusing, and guess what? Expensive. At the bottom line, at the bottom line was the bottom line, right?

Annuities and Hidden Fees

SPEAKER_04 4:53

Yep. As a matter of fact, one of the most famous ones, and it's kind of like that one we just talked about, the uh the structured note. Uh think back. Uh and these are these are all from the uh Financial Physics Hall of Complex Fame. Uh the a mortgage-backed security that was called a CDO squared. I don't know if you remember this one. I don't. They referred to it as the Russian nesting doll of bad debt.

SPEAKER_03 5:19

And for those of you who don't remember, that's where you pull one out of the other, out of the other, out of the other.

SPEAKER_04 5:23

Yeah, it was a mortgage-backed security that contained slices of mortgage-backed securities that were almost all subprime mortgage securities, which turned out to be later on, they went, oh, wait, that was a nice euphemism for liar loans. And there were people just a lot of them, those mortgages. Yeah. And then they turned them into credit default swaps and whatever. Basically, what that all meant was we diversified a portfolio by filling it with smaller portfolios, filled with smaller portfolios, filled with smaller portfolios, and it was so confusing. Nobody understood it. They said it was absolutely safe, and then it wasn't.

SPEAKER_03 6:03

And the other thing that it did do was create massive profits for those firms. Oh, heck yeah. Big, big, big money. So that's one that's confusing, but I think more down-to-earth.

SPEAKER_04 6:15

More today confusing. It shouldn't be, frankly.

SPEAKER_03 6:21

Last year, this number blew me away. Sixty-three billion dollars worth of variable annuities were sold. I I we don't even discuss them anymore because I don't hear from people about them, but apparently they're still being hawked.

SPEAKER_04 6:36

They're still and I, you know, the pr the bulk of them are being hawked in 403B plans still. Yeah. That's where the big market is, because that was an area that the insurance industry managed to um to entice. Break into. Yeah, and they controlled it for a very long time.

SPEAKER_03 6:53

Still do, really. I concur. So and this is a product which which combines insurance, often life insurance, right? Could include long-term care insurance, has a whole bunch of uh winds all this stuff up, and an investment, right? You're putting the money in, the money's growing. It's just and it's expensive.

SPEAKER_04 7:15

They add expenses. Yeah. You don't get they make it sound like you get these as the you get this nice stock market return, and then you get all these little added-on benefits, but they forget, and this is one of the big problems. We're gonna have a whole episode on this coming up. One of the big problems with the insurance industry is the fact that they pretty much can get away with anything they want. They're not that well regulated. They're not explorable. They're not well regulated. That's uh that's beyond an understatement. Wait till you hear what we're gonna talk about in a few days.

SPEAKER_03 7:45

Oh, Dan, a variable annuity on average, because we've looked at this previously, the average expense to all of this, when you lump in the cost of the funds, you lump in the M and E, all that stuff, it's like 3% a year. Um it violates one of my rules, which is you know, don't pay more than 1% a year. Anyway, uh if that's not enough, $63 billion last year, the more popular now, um, equity index annuities, uh $128 billion worth sold last year. Now they're gonna say, well, that those are great products because you get market-like returns and none of the risk, and you don't pay anything. They're free, right? There's no fee.

SPEAKER_04 8:31

That's one of the big lies. It's just like one of my songs on my new album by my fictional band called The Financial Physicist, available on all major streaming platforms, apparently that everyone uses except Tom. There's one song called That Stakes Not Free. And we're not talking about the one you drive into the It's about that kind of product.

SPEAKER_03 9:00

So equity index annuities 128, index-based annuities, which I I don't know that I know the difference between equity index annuity and index-based annuity, $80 billion. Total annuities sold last year. And I'm sorry to pick on the insurance companies or maybe a nine.

SPEAKER_04 9:16

I'm not. I am so happy you are.

SPEAKER_03 9:18

Total annuities sold in the year 2025. $464 billion worth. I think it's like half a trillion, right? I mean, it's a pretty large number. And most people that ended up with these did not go, they didn't wake up one morning and say, I got to go buy an annuity. Most of them were sold, and most of them were sold under the premise of somehow you're going to make money, not lose any money, and end up ahead of just that being in a stupid stock and bond portfolio. For the most part, that's how they're sold.

SPEAKER_04 9:52

You know, I should sit down and figure out what the average commissions are for that half a billion dollars in annuities between the. No, half a trillion. Half a trillion, I meant half a trillion. Because look, bear in mind, that those are almost all commissioned products. Uh a teeny tiny fraction are commission free products. They're they rarely exist. Um and and I wow, what would the commission be on that?

SPEAKER_03 10:16

Well, let's just say it's let's be kind and say it's like six percent, even though. Yeah, five. So I don't have a calculator with the same thing.

SPEAKER_04 10:25

So that's C that's five hundred billion with a B. Yes.

SPEAKER_03 10:30

That's a lot of zeros. Zero, zero, zero, zero, zero, zero. 250 million? I don't know. So it sounds like that doesn't sound like a number. 2.5 billion? That sounds that sounds closer.

SPEAKER_04 10:42

That sounds closer.

SPEAKER_03 10:43

2.5 billion. It's a lot of money. So they're heavily incentivized to do those. You mentioned, did you mention collateralized loan obligations, still 200 billion of those this year? It just goes on and on and on. Um these products that that frankly, you know, the the people that I think you should trust, the academics, uh and you mean the guys like David Booth who we talked to about. Yeah, thank thank you. Great interview, and uh, and I'm about two-thirds of the way through the book, which I am enjoying. Um, I thought I knew everything about kind of dimensional, but there's still history there that I had not learned or remembered. But they're gonna tell you this is a nicely a bunch of garbage. Uh frankly, that's really good for the people selling it, lousy for the people buying it. But let me give you my take on this chapter, which thank you, author Don. I think is is one of your best.

Never Buy What You Can’t Explain

SPEAKER_03 11:35

Part one there was a client that I had many years ago who is also a friend. And uh he he had golfing uh partners that worked at Merrill Lynch. So they were always working him for you really should try this product, you really should do this. So finally he did.

SPEAKER_04 11:52

That's why Merrill Lynch people learn to golf.

SPEAKER_03 11:55

That's yeah, they're good golfers, which I'm not. So that's and and we still manage to do okay, even though my my score is probably a hundred plus today. But so they were always working and he finally switched. So and I called him up one day and I said, Hey, your money's your I'm I'm not one of these guys, by the way, these stockbrokers that call people after they decide to move their money. That is outrageous. How can you do that? I still can't believe that. It's I it's the client's money. We don't treat people that way if you decide to leave. We don't get very many people fire us. But he took his money and I asked him, What are you moving into? He stumbled, he wasn't sure. It was a very complicated investment. Now, how it all worked out, I don't know, because this is many years ago. But I believe that anything you've heard the say thing, uh never invest in anything you don't understand. And I'm gonna bet you that many of you still don't even understand the workings of some ETFs or mutual funds you're in. That's fine. But you should be able to, within a minute, properly explain to your friends or family how you're invested. I mean, if you asked me, I'm you know globally diversified, I use factor investing, low-cost, tax efficient. That's it. I can explain it.

SPEAKER_04 13:10

We don't understand the basics. We'll never understand these complex investments, even those that we learned in hindsight were terrible investments that were sold as great investments. We still, I guarantee you, you cannot explain them. 99.999% of you cannot tell me what a synthetic CDO is or was before they collapsed and fell apart. But uh a synthetic collateralized debt obligation didn't even need to own mortgages. They just used, remember, credit default swaps? Exactly. That were mainly just bets, which AIG, by the way, it nearly took down AIG, formerly known as Valic, because they were playing credit default swaps to make them their own profitability look better, which it wasn't. Remember long-term capital? Remember them? They were using intellectually sophisticated discrepancies between related securities and borrowed to magnify those teeny tiny incremental gains. And here's how it failed. Okay? Here's how this is the problem. These complex investments are destined in most cases to fail. The failure mechanism in this one was really basic. Too much leverage, too many similar positions that all moved in the same way, and no liquidity. They had no way to get out when the market moved against them and people started wanting to liquidate. They did not have the means to pay them. Uh there were there were oh my gosh, there have just been so, so many of these things. And if you don't understand them, really, do not do them.

Complex Bets Blow Up

SPEAKER_03 14:48

Yeah, and I think one of the I think one of the other ones that you wrote a paper about a few years ago, the equity index annuity. Until you wrote that paper, I had no idea the limitations they put on the if if the market goes up twelve, guess what? You only get eight. Certain parts that it was very, very, very can't even say complicated enough times when it came to that.

SPEAKER_04 15:09

Participation rates, ceilings, gaps, crazy fees.

SPEAKER_03 15:13

So again, back to my my take on any of this. If you can't explain it in a minute, you shouldn't be in it. Number two, if you're paying more than one percent a year for anything like that, too much. And you are. By the way, I got back to the equity index and UDI, I know they said there's no fees, which there aren't. However, the amount that they keep, remember we ran the number, so you end up with somewhere between three and four percent. Does that sound like stock market returns in the long haul?

SPEAKER_04 15:39

No, it's because it's because the confusing uh qualifiers they put in there, they leave you with so little of the money afterward. Um, and uh you know, as a matter of fact, that's kind of what most of the songs on my newly released album by the financial physicist are. I'm plugging that penny. Do you know how much I get for every time somebody streams it? I open something. I get a penny. I get a penny.

SPEAKER_03 16:02

That's hard-earned money right there.

SPEAKER_04 16:05

So right now we've had 32 streams, so I am on my way to a dollar. It's better than replacing roofs in the middle of streams. Anyway, Florida. You you did not listen to the album. I didn't. I don't know how to. Here, does this too much to ask? My co-host, I created this thing and I asked him to listen to the website.

SPEAKER_03 16:25

I thought it was the songs on the website. No, no, no. Those are the jingles.

SPEAKER_04 16:29

I created a fake band called The Financial Physicist that is sort of a uh Prague art rock, classic rock band. Um fits your genre, yes. And uh there are eight songs about money. The album is called Let the Boring Money In. That's the name of the album. So that's what we want. You see, it's not it's the opposite of this. Good point. And I kind of wanted my my co-host and friend and partner to listen to it and tell me what he thought. Let the wise people do it now. I don't know how to listen to it. I said, okay, you go you go to Apple Music or Spotify or or uh Amazon Music or Google Music and listen to.

SPEAKER_03 17:13

You know, actually, I think I have Amazon Music, isn't that part of my prime membership?

SPEAKER_04 17:17

No, you have to pay extra. You can only listen to like one song. It's like the same as everybody. It's like 10 or 12 bucks a month extra.

SPEAKER_03 17:24

That's $150 a year.

SPEAKER_04 17:27

Oh my gosh. One he has to he has to skip one lunch on vacation a year. Oh no. Getting the perspective. Oh no. Do you know how Tom listens to music? On on Sirius. One the quality of music on Sirius, it's horrible. The music is so compressed.

SPEAKER_03 17:48

It's like Well, my ears are old. It doesn't matter. But you're also skipping the fact that I listen to high quality CDs too when I get home.

SPEAKER_04 17:56

So I can't even believe he popped one in the concets, too?

SPEAKER_03 18:00

Or I don't have to be able to do it.

SPEAKER_04 18:05

It's funny, the other day um I was Debbie was reading something and she goes, Did you know this album is worth a thousand dollars? I said, Yeah, yeah, yeah. Like if you can get somebody to pick up. You hear that all the time, but then when you actually get the money, no. I went through my albums. I pulled out my 200 albums from the 70s.

SPEAKER_01 18:21

Yeah.

SPEAKER_04 18:21

All from the 70s, and uh laid them out. And Chat GPT, you take a picture and chat will look and tell you what they're worth. Yeah. I had two that might be worth three figures if I was lucky.

unknown 18:33

Yeah.

SPEAKER_04 18:33

And the rest, five to ten bucks a pop.

SPEAKER_03 18:36

Yeah. And by the way, my wife went through this. She had some stuff that was supposed to be very unus very few pressings of some Elvis discs that went back like 50 years. She did the same thing, and it all ended up being about $300 total.

SPEAKER_04 18:50

Yeah, they would like I had one album, I can't remember, I think it was Gentle Giant or something, and it said, Oh, go a lot. The chat went, That that could be worth a lot based on the cover. Pull the album out and let me see the numbers on it. And she went, No. No. That was like three years later. That was pressing. That was the U.S. pressing that doesn't count.

SPEAKER_03 19:06

So I will find your album, sir, and I will listen to it. No, no, you don't have to. No, it said three months free or something on one of them, so I'll try to.

SPEAKER_04 19:15

Oh, that's true. You can do a free free trial. Trevor Burrus, Jr.

SPEAKER_03 19:18

Can't say that. But most people actually Okay, but real quick before we go to the questions, financial what?

SPEAKER_04 19:26

Oh, the the band? The financial physicist with an F. Okay. So just spell physicist without a pH. I will listen. Or if you want, you just go look for Let the Boring Money In. And but I will tell you right now, you're gonna interrupt. It won't say Don McDonald because I have a fictional band name. What? Okay.

SPEAKER_03 19:42

You're gonna interrupt my podcast on the ride home, but okay. That's fine, I guess.

SPEAKER_04 19:47

Actually, that's probably the better place to listen to it because you're that's probably the best stereo you own, is the one in your car. Probably is. Sorry. Another sad statement. Do you have headphones? Good headphones? These ones right here. Those won't plug into anything anymore. They have a wire.

SPEAKER_03 20:08

Trying to drag me into the 20, whatever century we're in, please.

SPEAKER_04 20:12

You don't even he doesn't even know the century. See, that's how sad this is, folks. I'm telling you.

SPEAKER_02 20:18

I'm still living in the world.

SPEAKER_04 20:19

One thing he's good for, he is good, he is good at killing trees because you're good at sending in your questions to him at talkingrealmoney.com on the ask a question button, and then he takes them and instead of reading them off at an electronic device like us, like us 21st century people, he reads them off of printed paper, and we have some.

SPEAKER_03 20:41

There was somebody at the house the other day out for dinner, and they were looking at one of those 120-foot fir trees that you you would have a much nicer view if you hack that down. Wait a minute. Wait a minute. Is that the one right in front of your house? Well, there's two that are yeah, the one to the right, right? One's the eagle tree. Yeah, you don't have to be able to do that.

SPEAKER_04 21:00

Yeah, you don't take down the eagle tree. You're gonna you'll go to jail for 30 years you take that down.

SPEAKER_03 21:06

Either one that no, I that would no. But then I have a lot, I have like four or five of those on the other side of the house, but no, we're not taking I'm not taking those trees down because we got enough paper. It's all pulp anyway. There's a great piece in the Wall Street Journal talking about how it's basically not big trees anymore, anyway. So uh let's go let's go to the trees. Jeff from Del Rio, Texas writes Hi, Don and Tom. I like when listeners also greet Dom and Steve and Roger and whatever other names they come up with.

SPEAKER_04 21:37

Okay.

SPEAKER_03 21:38

Okay, I'll I'll go

Kiddie Tax and Gains

SPEAKER_03 21:39

with that.

SPEAKER_04 21:39

Anyway, okay. Hey, Frank, what is what does the rest of the question say?

SPEAKER_03 21:43

The question, this is a very unusual question. My question is about tax gain harvesting and the kitty tax. I put $100 a month into my kid's Utma, uniform transfer to minor act account, and know that when they sell one day, they will be responsible for the capital gains. Wait, did he say responsible and children in the same line? That's a good one. Uh, I have heard about tax gain harvesting as opposed to tax loss harvesting, where I would sell the whole account on one day, then buy it all back the next day. If I understand correctly, there's no time period to wait and no wash sale rule because this is locking in, realizing gains and not losses, and the kid is essentially getting the account with a stepped-up cost basis on their 21st birthday when the account fully transfers to them 18 in some states. Could you address how those gains will be taxed each year and whatever the kitty tax is?

SPEAKER_04 22:33

Yeah, this sounds wacky. Why would you do that? I guess I see. Okay, wait, there's tax loss harvesting, where if you lose money, you sell your stocks, you deduct the loss, and then you wait. You have the wash sale rule, which means you have to wait over 30 days to get back in. Yeah. All right. So here's let me give you kind of a basic overview of how this works, okay? Let's use the year 2026, Tom, the one we're in, 21st century. We're over a quarter of a century into the 21st century already. Were you aware? 21? 21? I never thought it lived this long, so I guess that's why I didn't pay attention. Every year a dependent child gets a $1,350 deduction against any unearned income. Capital gains or dividends. $1,350. Now, once their total unearned income exceeds $2700, the kitty tax taxes the excess at the parent's rate.

SPEAKER_03 23:41

So they're paying whatever percent on anything above the $2,700.

SPEAKER_04 23:46

So the trick is, see, long-term capital gains between $1,350 and $2,700 qualify for the child's 0% capital gains rate. You see? No capital gains. So you sell enough. So you sell enough. So let's say you bought a fund for $5,000 and it's now worth $7,000. You got a $2,000 capital gain. The kid takes that. The federal tax would be zero, and the cost basis goes up to $7,000. So now any gains over and above that are you're gonna have to pay that at twenty-one. Yeah, you're gonna pay that when you're when you when it when you're gonna do that.

SPEAKER_03 24:28

But you could do this. Sure.

SPEAKER_04 24:30

Yeah, no, so it is a it is a strategy. It is a strategy.

SPEAKER_03 24:35

Who keeps track of all this stuff?

SPEAKER_04 24:37

Yeah, it can you you the kitty text, by the way, just to let you know, so you remember this, it's generally for kids under 18. In some cases, it can be up to 23 if they're full-time students. No, it can't. No, there's a point at which they go, all right, yeah, no. That's the same thing. Where the parents do not say that, but the government does. The government does, yeah. The government is hinting at something, folks. Uh okay. So you

Massachusetts Municipal Bonds

SPEAKER_04 25:10

could do that.

SPEAKER_03 25:11

I I uh Yeah, no, it's a strategy.

SPEAKER_04 25:13

It's not a big dollar strategy, but it's a strategy. Yeah, okay. I'm good with it. Move on. Yeah.

SPEAKER_03 25:18

Uh from Abington, Massachusetts, Steven writes. Wait, wait, wait. Didn't we do Abington, Massachusetts in like the last show? Or is he back again? All right. Uh hi, Tom, with a combined marginal tax rate of 43 percent. So I'm imagining that's federal, state, local, neighborhood, whatever. Wow, 40 percent. We just talked to somebody else that has the same thing. Where can I put money that's not needed for four to five years? Wow. 100K, he says.

SPEAKER_04 25:56

Yeah, and the problem is the problem is it's only gonna take you it's only gonna take you up to the federal rate. Yeah. Um, you would need a Massachusetts tax-free bond fund. They gotta have them. Boy, I betcha, if I I've never looked these up, but uh a Massachusetts probably gonna be well, maybe not. No, I just found one. Oh. Well, Vanguard's got one for some. I'm glad I looked. Vanguard has one. Of course they do. VMATX.

SPEAKER_01 26:33

V-M-A-T-X.

SPEAKER_04 26:35

VMA-TX. Now it's a little longer maturity than I'd like. How long? Its average duration is about eight years. So it can be a little bit more volatile than BND or their intermediate term uh tax-free bond fund would be. But you're saving the current 30-day SEC yield.

SPEAKER_03 26:59

Don't tell me. I don't know. Uh let's see. Four? Is it that high?

SPEAKER_04 27:08

It's almost four, three point nine. Okay. Yeah. That's cool. Well, bear in mind, intermediate term bond funds are just over four.

SPEAKER_03 27:13

Right.

SPEAKER_04 27:13

And you're getting this tax. This is almost four ta state and national tax-free. They don't call it taxes. Uh again, be aware that in periods of rising longer-term rates, kind of like what we're seeing a little bit right now, but we, you know, we don't predict the future, you could see some reduction in the value of your portfolio. The other way around this, there is a way around it. Uh it's a little bit more work, but you want uh AAA rated, one to maybe seven-year Massachusetts individual municipal bonds. Oh, yeah. And build yourself. It's a lot more work because building a ladder is a little bit harder. There are fewer securities from which to choose. You need to make sure they're well, at least double A. And then build those maturities, and you may not be able to find the right maturity when your bonds mature, so there may be a little lag. It can be a little harder, but it's another way to do it. The easiest way is just to grab that Vanguard Massachusetts tax exempt fund.

SPEAKER_03 28:25

But if you buy the individuals, then you don't face the the volatility.

SPEAKER_04 28:28

You don't as long as you don't sell.

SPEAKER_03 28:29

Right. As long as you hold

RMDs at Year-End

SPEAKER_03 28:31

them.

SPEAKER_02 28:31

Right. Good. All right, one more. We got Chuck from Mesquite, Texas.

SPEAKER_04 28:38

West Texas, my my my family's country. Yeah. Yeah. Adjacent to Mosquito, Texas, apparently. Uh West Texas is not big on mosquitoes because they got they've got no water for themselves. Too hot, too dry. They're big on horny toads. Let's leave it at that. Uh please discuss the timing of which RMDs which which are are are actually less fun than a uh naked straddle.

SPEAKER_03 29:01

God, this show. Right down the drain. Uh please discuss the timing of RMD withdrawals. I think he's referring to required minimum distribution withdrawals. I believe the best case would be to take when the market is high and late in the year. However, since the market fluctuates, is there a better strategy like quarterly withdrawals? I would love to hear your thoughts. Thanks. I enjoy the podcast daily. Don't try to when the market is high. Okay, this is pretty easy. That doesn't mean anything. That's nobody knows the market's higher. Nobody knows the market's high at the time. Most of the time, most of the time, because the market has an upward motion to it, up and to the right, right?

SPEAKER_04 29:41

It rises more than it falls.

SPEAKER_03 29:42

Yes. So most of the time it makes sense, and this is what we do for our clients. We wait until the last month and a half to take the RMD. So halfway through the right.

SPEAKER_04 29:49

That's what most people do, because then it becomes disciplined.

SPEAKER_03 29:52

Correct. Thank you. Right. Rather than saying the market's high, so I'm going to get my money.

SPEAKER_04 29:56

You do it at the end of the year, then you can you can do all the tax calculations. It makes them easier too. And then you fund your living expenses. You use that money to either to first fund your living expenses for the next year, and then anything else you reinvest in a taxable account.

SPEAKER_03 30:15

If you took it quarterly, the the numbers would suggest over the long haul you ended up with less money. You should generally speak end up with less. You might be lucky, but yes.

SPEAKER_04 30:25

And we don't like playing the luck angle. So there you have it. I think that's all the questions for today. It is. Yeah.

SPEAKER_03 30:31

No more silly jokes or anything else.

SPEAKER_04 30:33

Right at 30 minutes. Nicely done. Thank you. Another edition of the Monday Financial Physics program is in the can almost, and we

Questions, Jingles, and Farewell

SPEAKER_04 30:42

really appreciate you being there. If you have questions, send them in at talkingrealmoney.com using the uh ask a question button or the microphone in the lower right hand corner to speak your questions. And I know that sometimes you have very long questions because I get them sometimes and have to edit them down to something palatable, um, like I did in the last QA show. So uh if you really have a complex question, meet with one of our advisors. I can promise you several things. One, you can have a meeting with them for free. One, that meeting will not consist of any kind of high-pressure sales pitch. You will walk away with answers to your questions and a better idea of where you are financially today than you're probably going to get most places. So it's really truly free. It's just as free as it can be, and you can talk to Tommy. I love it. You know that. I've been to writing lyrics lately. So have you ever, yes. Go to talkingrealmoney.com, then click on the Meet and Advisor button.

SPEAKER_03 31:51

And just put in there I want to chat with Tom.

SPEAKER_04 31:54

You can put that in there too. Yeah. Oh, and by the way, if you want to listen to the show jingles, they're at talkingrealmoney.com. There's a music.

SPEAKER_03 32:03

That I've done.

SPEAKER_04 32:04

Those are the jingles. Those are the short ones.

SPEAKER_03 32:05

They generally I had them on when the boss came in the other day and he said, The big boss? Yeah, the big boss. And he said, What is that? I said, Those are the jingles to the show. He had not heard them.

SPEAKER_04 32:19

So that's because no one at our company listens to the podcast.

SPEAKER_03 32:24

Hate to say it, but the truth really does in this case. Absolutely.

SPEAKER_04 32:27

Really hurt. And but what's funny is my wife doesn't listen to the podcast. My wife doesn't listen to the podcast. My children don't listen to the podcast. My children don't either. So most of my neighbors. I don't think my neighbors I'm I'm president of the HOA. I don't think they have any idea.

SPEAKER_03 32:41

I have a neighbor I know, several neighbors I know listen, including the guy two doors down that you borrowed the vacuum from when you did your hair mixed. Oh, yeah, because I needed it for my floby. He still he still listens. So thank you, Mick, for listening.

SPEAKER_04 32:56

And thank you all for listening. And please spread the word, because we like that and it makes us feel good. And uh hopefully in this one, I really worked hard not to be just calling it in as or phoning it in, as one reviewer said. I was just phoning it in. Folks, I've been phoning it in for over 40 years. So, you know.

SPEAKER_02 33:16

Let the phone in.

SPEAKER_04 33:18

I'm tired. I'm freaking tired blazing saddles. Right?

SPEAKER_03 33:28

Mm-mm. I'm so it's uh the one where Alex Karras punches the horse. That's blazing saddles. Oh, it is, pardon me. I'm not having a good day. He's not having a good day. Drag me into the 20th.

SPEAKER_04 33:43

Take good care of yourselves. I'm Don, that's Tom, and we're Talking Real Money.

SPEAKER_00 33:51

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