The Index Ate Their Homework

SPEAKER_01 0:33

Oh, don't I love AI? You know how much that would have cost back

AI Jingles and Show Intro

SPEAKER_01 0:38

in the day?

SPEAKER_02 0:39

I remember the day when you were when I was in the radio business, and you they would bring to town uh a company that would go, you'd go out to to pitch people, and you would go out there and say, Okay, Don McDonald, we could have a we could have a rock and jingle for you. I did it. And you'd write it and you'd send it to these people, and then they'd get the choir together and record it. It would take months and thousands of dollars, and then you get this production.

SPEAKER_01 1:03

So well, yesterday, for yesterday's show, uh I I kiddingly at the end of the show said, I need a jingle for that. And so yesterday's show, if you haven't listened to yesterday's show, it now has a uh a stinger at the end. Instead of me saying talking real money, you may have heard it. So I thought, well, I wonder, I wonder if Suno, and by the way, for those of you who get freaked out about AI, Suno actually has paid licensing fees to Warner Music Group to use the field.

SPEAKER_02 1:31

I don't want I didn't know it was Sumo because the rest it scares me.

SPEAKER_01 1:35

Those guys are huge. No, not huge, not not huge guys.

SPEAKER_02 1:38

Huge AI talent.

SPEAKER_01 1:41

I'm telling you, yeah. It's coming for you.

SPEAKER_02 1:45

It's scary.

SPEAKER_01 1:45

I may scary. I may have a different themed intro now for every show. Wow.

SPEAKER_02 1:51

Can you do one that just says Tom and no Don on it? Could you make that happen?

SPEAKER_01 1:55

I didn't put Tom or Don in that jingle.

SPEAKER_02 1:57

Well, I think we should have one of us there. Ask AI which one they would prefer, and we'll go from there.

SPEAKER_01 2:02

Yeah. I'm afraid my AI knows me better than it knows you, so it's gonna be a little biased. So I just want to be fair. Hey everybody, welcome to Talking Real Money. We own that song, by the way. We own that song. That is we own the rights to that. That's crazy. Isn't that really? Uh so uh today, a lot of questions. So we're gonna get really, really quickly through our topic of the day, which is

Active Managers Complain

SPEAKER_01 2:31

active managers looking for another excuse. They really are desperate to find a reason why they are no longer the cat's meow. Or the is it the cat's pajamas or I think it's I think it's the pajamas in this case.

SPEAKER_02 2:48

Uh you know, and the other thing is fascinating about you see who the author of the study is? Yeah, it's a PhD study. It's a student. It's a PhD study. I mean a PhD student, but you know, yeah.

SPEAKER_01 2:58

No, she yeah, right. I mean, but here's the thing about this study, this study, this was from Spencer Jacobs in the Wall Street Journal. He alluded to this. Uh this study is another excuse as to why index funds, indexing has made active managers less useful. I think is a good idea.

SPEAKER_02 3:19

And let's go back. Remember, look you go back about twenty-five years. One out of twenty dollars was invested in index funds, something like that. It was a very small number. In stock and today it's one out of the yeah. Yeah, exactly. It's commie. Uh and you today it's you could argue a little, but it's about half of the money is managed using index or index-like products, right? Rules-based and blah, blah, blah. And so there's been a lot of whining and complaining by the active managers because guess what? They're their lifespan is going to be, you know, less than the dinosaurs because they're they're going out fast. Um, and you didn't even need the cataclysmic event. So it's a fascinating thing that uh that there's this new study by uh the Hannah Unterberg. Didn't we have Besson binder on one? Do you have somebody do you have somebody calling? Yes, I do. So I didn't think you'd be hearing. Is it important? I don't know. Well, it's my daughter, she's at the airport, and they're leaving for the college orientation. So the Broncos. Oh, I this that takes a lot of people.

SPEAKER_01 4:24

Your daughter's about to become a Bronco.

SPEAKER_02 4:26

You have no idea that a Raiders fan gets to root for a Bronco. I can feel the hives every time you say that again, it just starts kind of exploding. Your daughter's a Bronco. I love that. So there's a lot of discussion about how this happens, right? Why can't active fund managers, and we're talking about traditional active fund, picking stocks, timing markets, being in sectors, finding a hop manager, all the things that were the kind of the way the industry really was until index funds came around and became more popular in the 80s, 90s, and certainly the. Okay, let me wait. Can I rephrase that? A little hard to understand, I think, in some why they underproduced. So let me record, please. It's an excuse, not the why, but it's the one in a one. As I said, let the whining continue. Um award-winning, they're calling it an award-winning paper. I don't know what that means. I guess the paper that you wrote for I guess of some kind.

SPEAKER_01 5:31

Okay. Here's the thing. It's basically what it's saying is that because the index, let me hear how you index funds and index ETFs in the marketplace. It has made the market overall more efficient. There aren't the price discrepancies where people miss price securities like there used to be when there wasn't this behemoth that just bought stocks at market value, that there's no longer the inefficiencies that can be exploited by active managers. Now, active managers will say that differently. They will say that what the what the indexes have done is kind of averaged out the market and taken away their ability to pick better stocks. But what I believe, and what I think you'll find most of the academics believe, is that the market has become better at taking all available information and coming up with a relatively fair price thanks to indexing. It's not a w again, they're whining because they can't beat the market anymore. The best you can do is be the market, and then if you charge extra fees, you lose to the market.

Index Funds Boost Efficiency

SPEAKER_02 6:52

Well, extra, I mean single-digit uh basis points or hundreds of a percent pretty small.

SPEAKER_01 6:59

So basically what it comes down to is the industry is trying to find about the fact that it's not good at what it used to be. I think good at. And that was an illusion because the market failed to be as efficient as indexes have forced it to be.

SPEAKER_02 7:24

Yeah, and I think the other part of all this is the active managers, they're not they're not only mad about the fact that they're they've become far less significant than they once were, but they keep referring to the market as being broken, fundamentally broken, et cetera, et cetera, due to the fact that this money comes in i every two weeks into 401ks, it buys index funds, and so they don't feel that prices are really the people are really looking at the company one by one to say, well, is is Microsoft really worth the market. What they're saying is the elite people aren't setting the price. And the rest of them. And so they're saying that's in a lot of people. They're not.

SPEAKER_01 8:04

The whole argument comes down to are they smarter than the market? They believe they are. And they just think the market is a bunch of stupid people. And that the pricing that you see now is because the because people who are buying and selling stocks, which are in the millions, are stupid. They're because they're just buying the indexes. It it's a spurious, twisted, convoluted argument that really doesn't hold a lot of of weight, and we think is is probably just, again, a whine.

Social Security Child Benefits

SPEAKER_01 8:34

Now, we are going to take your questions. We're going to do a bunch of questions that Tom is going to read that he got from talkingrealmoney.com on the ask a question form.

SPEAKER_02 8:45

Yeah, from Seattle Bill writes, comment, not a question. At age 50 or so, if you have a newborn and thereafter have any reason you take early social security, your child under the age of 18 can also receive a benefit. It may be substantial. It partly paid college tuition for my son. That is true, by the way. Um, but I don't remember that had being an issue on the show. Um, somebody else wrote, Contact it's all Renee from Seattle, and thank you for all your comments. Renee from Seattle wrote, Contact Social Security. My co-worker discovered that when he started taking Social Security benefits at full retirement age, he was able to collect about 50% more of his SS benefit for his underage child until they reach a certain age. I think it's she says 16, I think it's 18. I cannot remember either. I think it's 18 too. Yeah, verify and share with your listeners. Because I think I could have done this with my child, but I decided not to do it. Um and it does not reduce your benefit, by the way. Um it was only gonna be a very short time in my house, anyway. So um, but yes, you can you those tricks still exist with Social Security, and they do not affect your uh your benefit when you do take it for retirement.

SPEAKER_01 9:59

Strange trick. It's just an unusual kind of a thing,

UK Investing Question

SPEAKER_01 10:02

you think. Okay, now to real questions that came into talkingrealmoney.com.

SPEAKER_02 10:06

This one comes from the UK. Oh, wow. United Kingdom, where they're celebrating their new uh Prime Minister, whose name I now forget. But it's the seventh in ten years.

SPEAKER_01 10:16

Yeah, I can't remember his new name.

SPEAKER_02 10:18

Do you know the last time they had seven in ten years? Um no, I don't. The time of the American Revolution. So we're already independent, so we don't have to worry about it.

SPEAKER_01 10:28

That's because King George was going mad.

SPEAKER_02 10:30

He was yeah, he was a little bit.

SPEAKER_01 10:32

Well, he was good at the beginning, and then he started going a little nuts. He had a brain condition of some sort. Is that what it was? Yeah. Yeah. Okay. Let's leave it at that.

SPEAKER_02 10:40

Don and Tom, greetings from the UK. I discovered your podcast three years ago. Oh, come on, do it with an accent. Tom and Don. Greetings from the UK. After realizing, realizing I'd previously watched Tom's videos with Mark Hebner.

unknown 10:54

Oh, good.

SPEAKER_02 10:55

I did some work with Mark Hebner many years ago. Oh my god. Those are old as the hills. But they're not up there anymore. He had to tear them all down. I asked him once what happened to them, but that the FCC, the SEC said take them down because that Tom guy is saying weird things. He says those videos mark the beginning of my personal finance journey for which I'm very grateful. People sometimes ask. This would be a good idea. People sometimes ask. Yes.

SPEAKER_01 11:22

Why I listen to an American personal finance project. Why do I listen to let's do it? Why I listen to an American personal finance program.

SPEAKER_02 11:32

Yeah, when our tax systems are so different. While the details differ, many of the underlying issues are remarkably similar. The decline of defined benefit pension schemes. That's true. I mean, that's global, I think, um in the private sector. Concerns over the long-term funding of the state pension, and governments constantly tinkering with already overcomplicated tax systems. Boy, is that true. Wow. That's true everywhere. One of the things I enjoy most about your podcast is testing myself when you answer listeners' questions to see whether I can predict what your advice will be. Oh, by the way, this isn't one where he said Don will say I'm overthinking it. That was a later one, I think. Um he's a big dimensional fan with the help of a fee-only advisor, moved a portfolio from Hodge Podge Idis, et cetera, et cetera. There's a question in here.

SPEAKER_01 12:21

Okay, but so far, so far, what he's talking about, it we are seeing a globalization of investing, uh where there are fewer differences between the types of investment vehicles available to investors globally, in every country practically on the planet, it's happening. And that is such a good thing where you can get dimensional in Avantis and Vanguard and all of these products, almost anywhere on the globe. Oh my heavens, it's such a good day.

SPEAKER_02 12:52

Yeah, it is.

SPEAKER_01 12:53

Oh my heavens, it's such a good day.

SPEAKER_02 12:56

When I was in Italy, I looked it up for someone, and uh there's a outfit called Interactive Brokers. I think it's a good one. They're everywhere, yeah. And you can buy pretty much everything. Now, in his case, he has to buy a British version of the Dimensional World Allocation 6040. And his question is he kind of wants to move to a 50-50. He wants a bond fund to place in there or reduces exposure to the 6040. He says Dimensional does not have a hundred percent bond fund available in the U.K. And and so I here's the thing. I don't know why you have to use dimensional for that. No, I think you could own a Vanguard, I'm sure Vanguard's B and D or similar is available globally. Um he wants to know am I overcomplicating things. Keep up the excellent word. Thank you, by the way, Charles, for all this. Yeah, probably. Uh I mean, frankly, to move from a 60-40 to a 50-50, I'm not sure is that significant. It's it's it's not.

SPEAKER_01 13:53

And and the one of the ways you could do it is the British equivalent of a certificate of deposit, whatever that might be. That could be part of it. You could build it a CD ladder or a bond ladder. Uh the um you can buy, let's see, the iShares U.S. aggregate bond ETF, which is basically BND. Cheap, probably. Is available, yeah. It uh can be it trades on the London Stock Exchange. It's S-U-A-G, and it's it's denominated in British pounds, but it trades the iShare's U.S. Aggregate Bond Index. So it's U.S. bonds, but in pounds.

SPEAKER_02 14:37

And you can so you could still own the global 6040 and then put this however much you want to do.

SPEAKER_01 14:42

Yeah, if you want them in U.S. bonds, because that's gonna be U.S. bonds. Uh the US dollar version, but see, that's gonna get you into currency exposure, which isn't a good idea. I'm not even gonna mention that. Not gonna mention that. Never mind.

SPEAKER_02 14:56

I think it's a pretty simple solution. I like the fact that you're keeping it simple to self-manage. It makes sense. And here's the other thing, Charles. Extremely sorry about the World Cup. Extremely sorry.

SPEAKER_01 15:06

He is actually sorry. He was rooting for Great Britain. He was rooting for England, not Great Britain. I'm sorry. Scotland has a team, Northern Ireland, et cetera. So apologize for that. Yeah, and but you know the CD thing, I I think that's a very good way to get a fixed income portfolio. Uh the UK uh is is has the bank instruments have bond in their name. They're called, I think, fixed-term bonds or fixed rate bonds, but they're from banks, and they're insured up to 120,000 pounds per person per institute, just like our CDs. Yeah. So um but ladder it up. Yeah. You could use you get a five-year ladder for the other 10%. What that adds is you got the bonds in the the regular fluctuating bond exposure in the dimensional fund, and this gives you non-fluctuating, a component that really doesn't fluctuate if you never sell.

SPEAKER_02 16:02

Now what do you what are you getting for a five-year CD right now? Is it is I'm averaging right about four. Yeah. Okay, averaging four across my ladder. Nothing wrong with that. And it's locked in. Probably keeping

What To Do With New Cash

SPEAKER_02 16:13

up with inflation. Yeah. Probably. Barely, but probably. You're not cutting your trees down the way Don does. You're probably okay.

SPEAKER_01 16:19

So got a new bid, though, 3,600. Feeling better.

SPEAKER_02 16:22

Oh, wow. That's major, can we say it? Undercutting. Uh, sorry. Thank you. I'll be here all week. Um, from Mosquego, Wisconsin, Roy writes, My daughter, 47, just profited $200,000 from a deal. I'm just saying, that's so drug deal.

SPEAKER_01 16:40

What I don't know, did he say what kind of deal?

SPEAKER_02 16:43

Good point. Yeah. Uh she has a small Roth Ira Roth Ira of $50K. She and her husband have an income of $160K. This sounds like one of those, you know, math problems or something. House payment is under a thousand.

SPEAKER_01 16:56

Is there a train involved going west?

SPEAKER_02 16:59

At three miles an hour, and you got to go over the hill. That's gonna reduce it to one and a half. Um, she needs a car soon.

unknown 17:05

Yeah.

SPEAKER_02 17:06

There's a lot of four. Well, she's got two hundred thousand dollars. She can afford a car. So how should she invest the two hundred, keeping in mind she needs a car soon?

SPEAKER_01 17:13

Anything she needs for a car.

SPEAKER_02 17:14

I hope she's not gonna pay $200 for a car.

SPEAKER_01 17:16

Anything she needs for a car goes into high yield savings. Yeah.

SPEAKER_02 17:21

Period. And that's still paying close to four, I think.

SPEAKER_01 17:23

No, you can get four.

SPEAKER_02 17:25

And I hope, by the way, new car today, I think I just read the average is like 55k. Yeah, I gotta tell you.

SPEAKER_01 17:32

I I am a huge fan of CarMax now. I love CarMax.

SPEAKER_02 17:38

I haven't seen him. Is he on TV? Is he a personality of someone?

SPEAKER_01 17:40

Another bad dad junk. I'm sorry. Uh I found CarMax, I compared CarMax and Carvana. I found their prices to be a little better at CarMax. Okay. CarMax actually has uh has really good service. I was surprised how good their service was. Um so you can save a lot of money. Uh my my uh Armada is from CarMax and it's been a great and if I can make a suggestion around this.

SPEAKER_02 18:01

I got it a few years ago and I love it. The hybrids, I think, are just Oh, I have a Honda hybrid. Love my hybrids. And I buy gas once a month. Whether he needs to or not. What's that? Whether you need to or not. No, it's but it's nice. So, okay, so going back, you got 200K. First of all, I'd pay whatever taxes I owed on the deal. Get that out of the way.

SPEAKER_01 18:23

Unless it's an illegal drug deal and then don't maybe there aren't. Yeah. You know, buy a car wash and launder it. I forgot the car wash. That was great, dude.

SPEAKER_02 18:34

I know. What a crazy. That's where they open the storage bin and they have all those that money there. I thought, God, what would you that would just but you can't do anything with it. That was the whole irony of it. That's fascinating.

SPEAKER_01 18:42

Anyway, so um You could take it to Panama, spend it down there. They're dollar denominated.

SPEAKER_02 18:47

How do you get it from here to Panama? A truck? Oh, I see. Like drive it, put it in a truck. Drive it down through Mexico. That's true. You could bribe people. You got bribe money for all along the way. Good point. Yeah, okay. All right, there's your idea. Uh 200.

SPEAKER_01 19:01

I have a criminal mind, apparently.

SPEAKER_02 19:04

Good for you. Gotta make a buck, kid. Um, okay. So let's assume, for sake of argument, that you're gonna spend, gosh, I hope it's not more than 50 on the car.

SPEAKER_01 19:11

50. 50. Let's say 50.

SPEAKER_02 19:13

Yeah. Then I would take um, is it 7,500 per Roth now? Per year? Yeah, I think so. I would take $7,500 for each one of you, daughter and husband, and put that in the Roth IRA contribution for $2026.

SPEAKER_01 19:32

Okay. Well, that sounds like uh that's good. And then the rest of it just invest in your brokerage account.

SPEAKER_02 19:38

That's right.

SPEAKER_01 19:39

Based on your portfolio.

SPEAKER_02 19:41

But Don's right. Put the whatever you're gonna need for the car whenever you're gonna need that, that should just be in high yield savings. Don't mess around with that. Then I would do the Roth, no question. And then from there, I would open a brokerage account and invest the rest. Yeah. All right.

SPEAKER_01 19:54

There we go.

SPEAKER_02 19:55

Muskego, we got you.

SPEAKER_01 19:57

We got it.

SPEAKER_02 19:58

Uh we got more. You want more?

SPEAKER_01 19:59

I'm ready, sir. And by the way, it is 7,500 under 50 and 8,600. Weird numbers.

SPEAKER_02 20:06

Wait, what?

SPEAKER_01 20:07

8,600 if you're fixing.

SPEAKER_02 20:10

I know. 8,600? 86. I'm not sure I did that right for 20. I get to look at that for 20. I think I did 8,500 for each one. Anyway. All

Retirement Portfolio Allocation

SPEAKER_02 20:19

right. Um, Sharon writes from Bloomfield Hills, Michigan. Hi, Don and Tom. I'm retired from the federal government. Well, congratulations on that. I have a pension and four hundred and eighty-five thousand dollars in my 401k. What funds? G, I think that's the government guarantee. That's the government fund.

SPEAKER_01 20:39

The special government fund. C, that's the SP 500.

SPEAKER_02 20:42

Basically, yeah. They call it common stock, I think. S is small cap and I is international. What funds should I invest the money in? I don't need the money until three years. Wow. Three years? Really tough answer.

SPEAKER_01 20:58

Gee.

SPEAKER_02 21:00

Yeah, if you're gonna spend it all in three years, yes.

SPEAKER_01 21:02

Well, yeah, but we don't know anything other than that. I need it in three years.

SPEAKER_02 21:06

Okay, but all right. That's funny. You gotta have a plan, Sharon. You gotta say what rate of return do I need on this money for the long haul, because you just retired, you're probably still young. And how much volatility you're willing to accept to make that. Once you do that, then you can go back. By the way, it's pretty simple. Um, the G fund would be your bond portion. And then I just divide the other th the other three into thirds. One third large, one third small, one third international.

SPEAKER_01 21:33

Bing bang boom. I can't argue with that. That's good advice. Appreciate you not arguing. Simple insane. Yeah.

SPEAKER_02 21:38

Yeah. So, but you gotta first you got and by the way, we haven't we haven't promoted this in a long time.

SPEAKER_01 21:43

The risk quiz. Oh, that's true. You everybody should take the risk quiz. It's free. Yep and you don't get like any I know you think I I well you have to fill out some stuff, and but you don't get solicited ever.

SPEAKER_02 21:58

You simply go to talkingroommoney.com.

SPEAKER_01 22:02

No, it's not.

SPEAKER_02 22:03

It's right there in that right column. I thought it was harder. It's not, but it's not at the top the way it used to be, I don't think.

SPEAKER_01 22:09

Oh, hold on. Let me look. I don't remember because you know.

SPEAKER_02 22:12

But the risk quiz is free, and every person should take it because it helps you understand.

SPEAKER_01 22:16

It's in the right-hand column. There's a little place that says, What would you like to do? Meet an advisor, type your question, speak your question, take our risk quiz, watch retire meet 2026, find an advisor, find a few good funds. Look at that. I made it so easy. It's a list.

SPEAKER_02 22:30

Um so then, then, and only then can you decide? This is a question for every person who invests one dime. You gotta be able to answer those questions first, then you can invest. But as Don said, if you're gonna spend the whole 485 in three years, probably just all in the G fund, which is a nice guaranteed fund. It's probably paying, I don't know, four percent or something right now, my guess. And uh it's all guaranteed, it never goes down. That sounds pretty good. I like that.

Tiny Town, Big Question

SPEAKER_02 22:58

Thank you for your question. It's a let's see. Yeah, we got more uh from Tontagony, Ohio. Do you know Tonogany?

SPEAKER_01 23:07

No, never heard of it. Do you know where it is? I do not. Ohio. I I thought maybe you knew. Ohio. I don't even know how to spell tauntageny.

SPEAKER_02 23:17

Just as it sounds, T-O-N-T-O.

SPEAKER_01 23:20

Oh, Tontaug. All right, I'm now gonna have to find out where the heck it is.

SPEAKER_02 23:26

I and by the way, when we say this on the show, we're not meaning to insult you, we just don't know.

SPEAKER_01 23:31

I don't think people are insult. I wouldn't be insulted as Celebration Florida. They Duvall, Washington.

SPEAKER_02 23:38

I consider that a badge of honor.

SPEAKER_01 23:41

I go to Google and I look up Tauntogony, and the first thing that came up is a junkyard for old equipment. Oh, it's the Historical Equipment Museum.

SPEAKER_02 23:53

The second largest in the country? Yeah, okay. Never missed.

SPEAKER_01 23:56

It is in Wood County, Ohio. Uh it's just up just northwest of Bowling Green. Oh, okay. I know the north of the state of it. South of Toledo. Yeah.

SPEAKER_02 24:10

Can I ask the question now?

SPEAKER_01 24:12

Yeah, of course. I was trying to help people out. Population 387. Okay, so now you can see why we wouldn't know it. Right.

SPEAKER_02 24:20

I wonder what the population of Duval is. It can't be more than maybe

Dividend Income Myths

SPEAKER_02 24:23

a thousand people. Anyway. Um Lincoln says, I'm planning for retirement with a $4,000 a month pension, $1,300 in Social Security, that covers most expenses at seven at $65. And I have $700,000 in a traditional IRA. I asked AI for advice. It suggested turning on dividends for additional income and retirement. No. It said have 40% in S C H D, which is a dividend-paying um stock uh uh uh ETF, 10% in JEPI, we know that one, J E P I, 10% in JEP Q, J E P Q, 20% in V G I T, which I do not know, and 20% in SGov, which is uh uh bond fund. It stated the turning on dividends would pay two to three thousand dollars a month without ever having to sell shares.

SPEAKER_01 25:17

Wait a minute, how much does he have?

SPEAKER_02 25:20

700? So let's see, let's just take it at the low end, so that's 24 a year on 700. Yeah.

SPEAKER_01 25:30

Um, I put it into Chat GPT. I said, chat suggested dividend funds to a listener. Uh and I said, is that terrible advice? Recommending dividend funds without understanding the listeners' taxes, total portfolio, income needs, and risk tolerance is lousy advice. Dividends aren't free money.

SPEAKER_02 25:49

Thank you. Yeah, AI? Yeah, anybody else who runs around and tells you just get your five percent of your guarantee.

SPEAKER_01 25:58

You're limiting the exposure to the stock market. And it really depends a lot on the d we would need to know the exact question asked. Well, you can you can change AI's opinion by asking the question in a certain way. Well, that's true.

SPEAKER_02 26:14

So, but okay, but generally, here's what we suggest if you need to generate income from a $700,000 portfolio. Right? Okay. First, we're gonna find out, as we said before, what your you know, ability to take risk is, how much you can take up and down. Number two, how much money you need from the portfolio. Right? Does it need to be $24,000 a year? Right? Then we build the right portfolio, in other words, how much in stocks, how much in bonds, and at the end of every year or so, we're simply going to rebalance. This year we'd be selling things like emerging markets because they're way up above everything else, and putting that money in your pocket. Then we do the same thing a year later, basically. Sometimes we do it more often. You can do it semi-annually. But that approach, that total return approach, it turns out over time has been better than harvesting.

SPEAKER_01 27:06

And it makes sense it should be. It should be from a a both a risk and a return standpoint better because you have greater diversification. The problem we we as investors and apparently as AI assume that these dividend-paying stocks, that the dividends they're paying are as safe as the income from high-quality bonds. And it is not even close. Generally speaking, if a stock is paying a four or a five or a six or a seven percent dividend, these are companies that aren't in the best financial shape. They tend good companies tend not to pay out a lot in dividends because the more you pay out in debt dividends, the less you have to reinvest in your company and grow it.

SPEAKER_02 27:49

And remember, some of the reasons that dividend percentages are high is the stock price has gone down. Right. People have a tendency to forget. Well, now wow, what a ratio.

SPEAKER_01 27:57

So And by the way, you're gonna get higher dividend-paying stocks, generally speaking, in a value-tilted portfolio anyway. Should because the lower prices are how value is determined. So, no, that was bad advice. Bad, bad, bad advice.

SPEAKER_02 28:12

Yeah. That that and that concludes our questions for today, sir. I know you're big on your jingles and you got the whole group warming up in the back there and they're ready to go. I do.

SPEAKER_01 28:21

I'm I'm uh I'm just you know, I'm fascinated to see how many different stingers and jingles we can come up with.

SPEAKER_02 28:29

I want one. When I think of the 70s jingles, I was thinking Tom and Don on talking real money, something like that. That's what I was thinking.

SPEAKER_01 28:37

But wow, that isn't nearly as creative as what we were working on.

SPEAKER_02 28:41

I know. Well, that's okay. I'm not the creative guy here. I'm the business guy. So you're the creative guy. All right.

SPEAKER_01 28:47

So I'm gonna come up with see, we had yesterday's stinger. I don't think I'll use it again today. I think I'll use this one.

SPEAKER_03 28:56

Talk it real, buddy.

SPEAKER_00 28:59

Talk it real, buddy. The opinions are used expressed in this podcast were current on the date recorded. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice, including any forward-looking estimates or statements which are based on certain expectations and assumptions. Although information and opinions given have been obtained from or based on sources believed to be reliable, no warranty or representation is made as to their correctness, completeness, or accuracy. Information presented on the podcast does not personalize investment advice from a fellow wealth. The views and strategies described may not be suitable for everyone. This podcast does not identify all the risks, direct or indirect, or other considerations which might be material to you when entering any financial transaction. We hope you realize that the information provided on Toxin Real Money is for informational, educational, and hopefully enjoyable purposes only. The podcast is not trying to get you to buy or sell any financial products or securities. Instead, the program is provided as a public service by Appello Wealth, a fee-only registered investment advisor. The Apello Wealth ADB Part 2A on our website for information regarding Appellos fees and services. Apellar Capital, LLC D B A Appello Wealth, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in the states where it is properly registered, or excluded or exempt from registration requirements. Registration with the SDC or any state securities authority does not imply a certain level of skill or training. Apollo does not provide tax or legal advice, and nothing either stated or implied here should be inferred as providing such advice. Thanks for listening, and please visit talkingrealmoney.com for more information and important disclosure related to performance of any specific index or fund quoted in this podcast. And the lawyers get richer.