Conquering Financial Fear: A Behavioral Finance Perspective
On this week’s Best of Simply Money podcast, Amy and Bob unravel the complexities of market fear and investor behavior during turbulent times. They share real-life stories, plus the psychological triggers that influence our financial decisions, all while offering actionable advice to maintain a steady course amid market volatility.
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Amy: Tonight, the hidden dangers of being afraid when markets are all over the place, there's turbulence, and it's difficult to make sense of even what's what. You're listening to Simply Money presented by All Worth Financial. I'm Amy Wagner along with Bob Sponseller. One of my favorite stories about how fear has worked into the equation, Bob, and also why maybe you need to be working with an advisor is, and I would love to take credit for this, but it wasn't me, it was our colleague Andy Schaeffer, but this was during the pandemic, right? 2020, starting in February, markets in a free fall. Many of us remember this very, very, very well.
Andy had a client who had recently retired. They had bought a place in Florida, and they were actually eyeing another place. Didn't exactly have the means for it quite yet, but it had a better view, slightly bigger for the grandkids, right? What do they do during this time, during the pandemic? They get nervous, they pull their money, right? Years later, I run into them here, and I'm talking to them and they are just raving, raving, raving about Andy and what a great advisor is. And because of him, they are now in that new, bigger condo in Florida with a better view, right? And so I go to Andy, and I was like, what a cool couple. They're so sweet. I know that they worked with you for 20 years, and he said, did they tell you about what happened during COVID? And I was like, no, what happened during COVID? And he said, they took their money out of the market. And I was like, well, they're raving. They missed out on all those gains. He said, they did not miss out on all of those gains because I called them every single day until they finally got tired of me calling them and put their money back in the market. If you, as an investor in 2025, are starting to get that feeling, maybe you've had it for weeks now or a couple of months, and you are nervous and you're starting to think about making a decision based on that, we want to give you some perspective.
Bob S.: Well, a couple of things as I listen to you share that. First of all, great job by Andy. I mean, very few advisors would care enough and know their client enough and care enough to make all those calls and do what they know at the end of the day is in the best interest of their client long term. So that's a great story.
Second, I mean, last time I checked, Amy, most of our client portfolios are up for the year. So I continue to kind of be surprised by all this hype and fear and everything going on in the media. I mean, things are not that bad. Our client portfolios are up for the year. I know the S&P and NASDAQ are slightly down for the year, but this is by no means an extreme period of volatility. And I guess this goes back to the main point that we're trying to get across today. Correct me if I'm wrong, Amy, but fear is always such a stronger emotion than joy. And it causes people to do some pretty remarkable and oftentimes harmful things to themselves, especially in the area of money.
Amy: Yeah. And you know, I love behavioral finance. You know I love that component. I have a deep background in it. And I think it's because I have seen investors many times either on the verge of making a bad decision with their money based on their emotions or they have. And it's our job, and we say this all the time, to make sure that our investors that we are working with are not making mistakes from which they cannot recover from. There is something that happens in your brain when you are reading headline after headline, it triggers literally fight or flight sometimes. And you feel and think about this, right? I mean, going back to cavemen or what pre-hist... there was a really real need when there was a threat to either run or fight it, you had to do something. And so we are programmed in our brains to either run or fight, but to certainly do something when we feel there is any kind of a threat. There is no difference when we feel there is a threat to our money and how our body, and how our brains, and how our emotions react to that. If you are feeling any of these things right now, please understand it is normal. You are wired that way. We're here to rewire how you're thinking or at least give you some context.
Bob S.: And I had a meeting with a client, Amy, this is a client that's worked with me for over 30 years. Had a long phone conversation with him last week where he was just saying things and expressing things that were completely not consistent with what we have done together for 30 years. And I begged him to come into the office, and he did yesterday.
Amy: Oh, good.
Bob S.: And we had another hour and a half long conversation. So you want to talk about fear. Imagine having a conversation where you're mixing fear and greed in the same conversation. On the one hand, he is highly concerned about what's going on in the world and the economy and the administration and blah, blah, blah. And then in the next breath, he wants me to go find him the next like five or six AI stocks that are going to be the next...
Amy: Find in the next video.
Bob S.: No, his exact words was I don't want to miss the next Amazon.com. That's what he said to me.
Amy: So I'm afraid, but I also want to make a lot of money.
Bob S.: Yes. And this is a very rational, highly intelligent, very emotionally stable person, but it's just illustrative of how a lot of people are feeling right now. It's just a very interesting time.
Amy: It is. And I get it when I'm afraid. I get laser focused on that fear and I just keep thinking about it. And you lose perspective. And I would say if you're focusing on your fear of these market fluctuations, right? Maybe you are coming up on retirement or are just retired or whatever. Right? I mean, I think there's investors across the board, maybe who are a little nervous, but if that's all you're focusing on, what you're missing is the long term perspective. You will have market fluctuations. That is the cost of admission to the markets. You have to understand it's going to happen.
Bob S.: Yeah. And that's where we need to focus here for a minute. I mean, since 1980, the average annual correction, intra-year, during the year has been 14%, 14% on average every year since 1980, the market will go down usually, but during that same period. So now we're talking about 45 years. The market total return for the year has averaged over 12%. I think people have lost sight of that. And I don't know why. I think the media, all the social media stuff, I think people are just getting bombarded with these 30-second sound bite pieces of advice and fear and everything else. And it's making people lose rationality to say nothing of the fact that very few people study history anymore. And that shocks me. But again, 14% average decline every year for the last 45 years, but the market total return when all the dust is settled in excess of 12% a year. Like you said, it's the cost of admission and that's how it works. And so, yeah, you've been forewarned.
Amy: You're listening to Simply Money presented by All Worth Financial. I'm Amy Wagner along with Bob Sponseller. We are trying to give you some perspective here. If you have any fears or concerns over the market and then you are deciding that you think you want to do something with your money, with your long-term financial plan because of it. You know, you're talking about the fact that we're so laser focused on this and we're kind of missing historical perspective, but let's face it, there's also a recency bias that comes into play here. We just came off the heels of 2024. Stellar. Stellar mark. 2023, pretty good too, right? And so we have forgotten what this feels like because we have gotten really used to, and let's face it, a little spoiled with the fact that when you are checking your 401k for the past couple of years, you felt like the smartest investor on the planet every time, returns up, returns up, returns up, right? And now that we've got some volatility, it's like, what is happening here? We forgot what it feels like. We also forgot that this is normal.
Bob S.: It's normal. And some of this way people are feeling is reminding me of the late '90s. You know, we had that period where the NASDAQ went up, you know, 25%, 27% a year for five straight years. And people forgot about volatility back then too. Amy, the market was down in 2022. So it was up sharply in '23, '24. I mean, what we're experiencing again is normal. So I think what we really want to say here is these are the times when people will try to prey on your fear. And I'm talking about salespeople now. And I don't want to throw too many stones, but this is where all the annuity people come out of the woodwork and say, Hey, you don't have to experience any of this volatility, buy an indexed annuity with a floor under it and you'll be able to sleep at night. Well, you might sleep at night, but you're also giving away long term potential returns that you will likely get if you just stay the course and have a truly diversified portfolio.
Amy: Some of the most impactful research I think that Andy Stout, our chief investment officer has ever done. And you guys know I'm a huge fan. He's brilliant. But was looking at two identical investments in the market for what was it? 20, 25 years, right? You put $100,000 in, you know, same returns. But the difference between if you were to stay just in the market that whole time, let it ride or miss five of the best days in the market or 10 of the best days in the market, and you look at how much it comes down with just every five-day interval that you miss those best days. And by the end, it's like, if you miss the 20 best days in the market, you barely have more than you originally invested versus the person who let it ride and they're at a million, right? Around a million dollars.
I just spoke to a fantastic group of investors last night and I said, okay, one more point I want to make. And then of course I went off for 10 more minutes, but it was making this point that the best days in the market come on the heels of the worst days. There's nothing in the headlines on any particular day to say, Hey, this is going to be a good one. But we looked at it on this show last year and it was toward the end of summer. So maybe say September, there were eight days in the market up to September of last year that had driven the great gains to that point. Eight days.
Bob S.: For the whole year.
Amy: For the whole year.
Bob S.: And we're talking about another 20-plus percent, what? 23% year for the S&P all in eight days.
Amy: Absolutely. So for whatever reason this year, you miss those great days. You could be missing the potential for a rebound.
Bob S.: Well, and this is why our good friend, as you pointed out, our good friend and colleague, Andy Schaeffer, this is why he was on the phone with his client every single day because he knows this stuff and cared enough about his client to make those calls and do what was in their long term best interest.
Amy: Here's the Allworth advice. Please do not let fear dictate your financial future, your money decisions. Stay informed, stay focused, make sure your investment strategy aligns with your longterm goals. Coming up next, what do you get when you combine meme stocks with Bitcoin? I mean, who even thinks this is a good idea? I love this one. We're going to get into this next. Plus why Roth IRAs are all the rage. You're listening to Simply Money presented by Allworth Financial here on 55KRC THE Talk Station.
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Are you familiar with the after tax options that some 401k plans offer? This could be a fantastic opportunity for you. It's one of several questions you are asking us. We will answer them at 6:43.
Okay. We've talked, laughed, made fun of on the show many times, meme stocks. And we've also had some interesting conversations around Bitcoin. And now there is an actual company that is then putting those two concepts together.
Bob S.: The board at GameStop, the board of directors of GameStop is reporting...
Amy: Of course, GameStop.
Bob S.: The board of directors is reporting that it has now approved a plan to buy Bitcoin as an investment, you know, with their cash and money they might borrow in the future or future stock equity, you know, issuances that they could take all that money and buy Bitcoin. I don't know what to say about this.
Amy: It's like we're speechless. And also there is so much to say about this. Right. And listen, they're not saying how much they can... this, this is what I like to refer to as a Hail Mary, right? If you are going to invest in a company, I like to say, if I'm going to put my money in anything, it should probably be fundamentally sound. I have a 15-year-old who plays video games. He has asked me to go into a GameStop store zero times. In the past five years, zero times.
Bob S.: I would say, Amy, you took the words out of my mouth. I mean, I know your son's 15. My wife and I have three sons that are in their 20s. I've never seen them walk into a GameStop store.
Amy: No, you download this stuff anymore. So what we're saying is their fundamental business plan is a little outdated, right? And in fact, they have been closing physical stores, trying to change things up. And again, I don't... this feels like a Hail Mary, but it makes me laugh because many of the investors in GameStop, right? This is a meme stock. They, you know, tried to stick it to the man who was trying to short this because it was not a great long-term viable business plan. And now, you know, they hear Bitcoin and they're all in. Please, if you are a smart, long-term investor, laugh along with us, don't invest.
Bob S.: Yeah. If you like Bitcoin, just go buy Bitcoin. Don't get involved. I mean, this stock, believe it or not, went up 64% over the last 12 months and is down 19% already this year. That feels to me to be pretty much trending with the price of Bitcoin. So if you want to buy Bitcoin, just go buy Bitcoin. Don't buy a company that has a dead business model. That's trying to resurrect itself by becoming a Bitcoin ETF.
Amy: Yes, exactly. All right. Let's pivot now. We have started to see...
Bob S.: Please pivot.
Amy: Let's pivot away from this craziness to something that is not crazy at all and something that I hope that you are considering when you are building your portfolio. I think a lot of investors have gotten the memo. Your retirement is on you. And I get a lot of people in my office now who I would call super savers. They have stuffed every dime they possibly could into that 401k. And I think there's some old messaging that's still out there that says, Hey, if you're a higher earner, like, let's just take that all tax deferred. What you're missing is you may be making, you are making a deal with Uncle Sam that not that you're not going to ever pay, just that you'll pay them down the road. And the problem with that is I've seen people save enough where what they have to take out of that account when you get to that age of 73 and you have to take required minimum distributions can then bump you up into a higher tax bracket. What I'm saying here is that too many people, I think, are missing this Roth option in your 401k.
Bob S.: I think a reason for this, and we've talked about this before on the show, Amy, is more and more 401k plans have an auto enroll feature. When you start working for the company, they auto enroll you at some percent, 3%, 4%, 5%, 6%. And they think they're doing you a favor, but when they auto-enroll you in the pre-tax option, that may or may not be the best thing for especially younger folks that are in a lower tax bracket. So, you know, check what you're invested in at your company. Yes, you want to be enrolled and you want to take full advantage of that company match, but get a little bit of fiduciary advice here on what the best place to invest your 401k money is because to your point, Amy, for a lot of people, that Roth option, especially for younger, lower income folks is a game changer down the road. And then we can talk about another option for folks that are higher earners that might have more discretionary income to do something with. If there's an after tax option in your 401k plan and you've maxed out your pre-tax contributions, that is a wonderful way to really win the game here against Uncle Sam. We're talking about a mega back door Roth IRA. Don't be intimidated by that term. It's just the contribution limits on an after tax basis go way above the pre-tax contribution limits. And if your plan allows it, you could put that money in the after tax category and then immediately move it into Roth. And away we go here with tax-free earnings for the rest of your life.
Amy: Yeah, I was actually looking at an example of this last night, right? So say you're 50 or older and you can put 30,000 right into that 401k this year. And then there's the company match of say, $5,000, $5,500. Right? So that's a pretty good year. $35,000 into a 401k. Not bad at all. If this option is available to you, right? So check how your plan is set up. The numbers work where you could put in as much as $77,000 combined pre-tax rate. And then the after-tax rate goes into a Roth. If your 401k is set up where it can go into a Roth 401k, that's kind of a cleaner way this can happen. If not, you can also set up a Roth IRA and put those dollars in it. But I've always said, Hey Congress, like what is it that we know we have a retirement crisis in this country, yet we're setting limits on how much people can, this is a way for a... if you have some really good cashflow and you are a higher income earner and you can't figure out where to stuff that money thinking, like I have a client who is American Airlines captain, right? And he's like, what do I do with all this? Great option for higher income earners. Even if you're not, please look into whether a Roth makes sense for you. Otherwise we see too many people retiring and having such a large bucket of money that they owe taxes on. And that's a whole different issue with taxes.
Here's the Allworth advice. Please talk with a fiduciary financial pro about whether a Roth IRA, mega back door Roth makes sense in your portfolio.
Coming up next, Zillow, have you used it? Is it accurate? We're going to talk to our real estate expert about that and a lot more next. You're listening to Simply Money presented by Allworth Financial here on 55KRC THE Talk Station.
You're listening to Simply Money presented by Allworth Financial. I'm Amy Wagner along with Bob Sponseller. Have you played the fun game recently of just jumping on Zillow, looking at your house and seeing what it was worth? I can tell you during the pandemic, I was doing this almost weekly because it was so I'm like, what you're telling me my house is worth how much? It seemed crazy. But really now that we are maybe out of that pandemic into more normal times, can you jump online and look at Zillow and say, yep, this is exactly how much my house is worth? Joining us, our real estate expert, Michelle Sloan, owner of RE/MAX Time. Michelle, do we put a lot of stock into Zillow valuations? Is that really what my house is worth?
Michelle: I think you should take it with a grain of salt. It's just one piece of the puzzle that you have to look at when you are looking at the valuation of your home, how much your home is worth. And Zillow is an algorithm. They are a marketing firm and they, you know, every time you go on there, you put in your information and, you know, they're going to sell your information. So you have to... I would just say buyer or seller beware when you're looking at these valuation sites or if you see something online that says click on this button to find out what your home is worth today. And very likely it is a real estate agent who has purchased or, you know, has that link and you're going to be put in touch with somebody who's going to want to work with you. So if you're just snooping around, look at it, grain of salt, then the key is to actually call someone that you know and trust, call a real estate agent that you know and trust and have them come to your house. Because to be honest, no one can valuate a home without actually walking inside the home. It's just not fair to you. And it really does blow things out of proportion either to the plus or the negative, you know, you get excited about that valuation on Zillow. It could be wrong as much as 10%, which is thousands and thousands of dollars.
Bob S.: So, Michelle, that leads to a question I have as you start the process with one of your clients to actually sit down and figure out what their house is worth. You talked about actually going in the home, which is great. What is the process and other steps that you go through as a seasoned real estate pro to help one of your clients figure out what is the right price at which to list my home?
Michelle: That's a great question. Honestly, I don't even look at those online websites. You may have looked at it because a lot of people will say, as we're sitting at the kitchen table, did you see what Zillow has as a valuation of my home? And my answer is no, I'm not looking at that. I'm actually looking at the data that surrounds your home that's extremely focused on the value of your home. I will look at the homes that sold in your neighborhood in the last six months. If I have to go back to a year, I will. But again, we have to look at so many factors, including what will an appraiser say the value of that home is. So I'm already thinking three steps ahead of the situation when I'm pricing your home. We also have to have a conversation of what you have done. What kinds of updates have you done in your home? Do you have a new roof? Have you replaced the flooring? Have you updated your kitchen or bathrooms? All of those factors will be extremely important on how I price your home. So I would say there are dozens of touch points that I go through with each and every client and each and every home is different. You can't just put that blanket over the top and say, okay, this house is worth this much money. It's just not fair. And so if it was that easy, everybody would be doing it.
Amy: You're listening to Simply Money presented by Allworth Financial. I'm Amy Wagner along with Bob Sponseller. We are joined by our real estate expert, Michelle Sloan, telling me that I probably should get off of Zillow and not put a lot of stock into it. I can't even remember. I was in a neighborhood recently, Michelle, and I was like, oh, this is a cute neighborhood. I jump on Zillow. There's like two pictures of the outside of the house and how much it's worth. And, you know, I immediately put stock in it. You're telling me maybe I should not.
Michelle: Just a grain of salt. You know, when I'm on vacation and I'm looking, let's say I'm in Florida or I'm over, I'm somewhere out of the country even, I may use Zillow just for the fun of it to see what homes have sold in the area, how much these homes are worth. Again, I'm not buying one of these homes, but I'm just looking to see just a general range. And again, it's a general range because here's the thing. Zillow is going to take a radius around that property and then will look at the statistics that are available online. It's just like AI. It could be really good, or it could be just completely out of whack. If you have a neighborhood and your neighborhood is worth $500,000 or $600,000, but you have a million dollar neighborhood within a half mile and you have a $200,000 neighborhood, all that's going to get populated. And it may not actually take into account anything other than maybe square footage, maybe number of bedrooms and bathrooms, things of that nature. But it's going to be a real basic type of a situation. So it is important and it's it is fun to look.
You know, Zillow is not the only one out there. There's so many different websites that will realtor.com and everything. You can go on and look and see what their valuation is. The other key to this is if you really want Zillow to be more accurate, you could, there on the website, it says "claim your home." So is this your home? You can claim it. And if you claim it, again, you're giving this marketing firm all of your information like how to reach you, what's your phone number, what's your email address, blah, blah, blah. And know that that information will be sold because your information is worth a lot of money. And if you put your claim, your home in there, don't be surprised if a real estate agent didn't buy your information from Zillow and contact you and say, oh, I understand you're interested in selling your home. And you're like, what? So just be careful. Be careful.
Bob S.: This sounds like something that's going to interrupt my peace and quiet while I'm trying to watch college baseball this weekend. I don't need people knocking on my door wanting to buy my house, Michelle, but that's a great tip. I had no idea how that all worked with the whole claiming your home process. That's good stuff.
Michelle: Yeah. And you can add, you know, if you've updated things or you've done some stuff, you can add that information in there and it will affect the algorithm, but just understand there's a really good chance. So a lot of us have the, our main email and then maybe we have a hotmail account. You know, use your spam account for that, for claiming your house, just so that you're a little bit careful and you're not getting a ton of, you know, calls and things.
Amy: Well, obviously this whole claim your house thing is news to Bob and I, because I didn't even know that was a possibility. I'm just wondering if people who are listening will think, okay, well that might be a good kind of step one or dipping my toe in, just to see if there's maybe interest in my home, do you recommend that if someone's maybe thinking of selling their house over the next year or so, or is it a little bit not place to start and you should go directly to a realtor?
Michelle: Well, I do admit that I am fine. Once you have signed an agreement with me and you have your agent in place so that you have your representation, at that point, if you want to claim your home, update the information so that it's a little bit more accurate, I'm fine with that because there may be buyers out there who are, that's where they're getting their information.
You want to have representation as a seller. You want to have representation as a buyer. You want somebody who is working with you. And before you go to that next step, it's smart to talk to an agent, an agent that you know and trust and that works in your area and is familiar with your area.
Amy: I hear you saying, Michelle, that Zillow could be a tool that you could use when buying and selling a home, that you would use in conjunction, right? With your team, your realtor, your research, everything else you need to buy or sell a home, great insights as always, of course, from our real estate expert, Michelle Sloan, owner of RE/MAX Time. You're listening to Simply Money presented by Allworth Financial here on 55KRC THE Talk Station.
You're listening to Simply Money presented by Allworth Financial. I'm Amy Wagner along with Bob Sponseller. If you've got a financial question that's like in the back of your head and you cannot figure it out, there's a red button you can click on while you're listening to the show. It's right there on the iHeart app. Record your question. It's coming straight to us and let's get straight to those questions. First one from Sherry Merrimont.
Sherry: If I max out my 401k for 2025, should I then consider doing the after-tax 401k option that I have?
Bob S.: Well, Sherry, you might be an excellent candidate for the concept that we just talked about in the last segment, that mega backdoor Roth IRA. And again, don't be intimidated by our industry jargon. What this means is you're doing a great job of saving. If you've already done the pre-tax savings to the max and gotten your company match and you got discretionary funds, put it in the after-tax portion and then have a fiduciary advisor sit down with you, review the summary plan description of your plan and see if we can take after-tax 401k money and shove it into the Roth option and that's a wonderful way to get a ton of tax-free growth on your retirement money.
Amy: Yeah. Great point about that. Let's get to Brian's question. He's in Florence.
Brian: I have 529 money that won't be used. Will I lose it? What are my options?
Amy: So, no, you will not use it. One of the things I love about 529s is it is so-
Bob S.: You will not lose it. You might use it.
Amy: Yes.
Bob S.: All right.
Amy: You should... Oh, sorry. Yes. You will not lose it. You will use it. There's a lot of great flexibility with these. And so one of your options is, Brian, if you have another child or grandchild who might need this money, it's really easy to just transfer the person who's the beneficiary on that account, but also Secure Act 2.0 gave us another option. Right? And I'm thinking of really good friends of ours who have an only child. They super-staffed her 529 and she ended up not... she's not going to finish college. She's got another plan. She's on a great career track, but they don't have anyone else. They need to transfer those funds to Secure Act 2.0 gave us the opportunity. And listen, check into the rules here. The money has to be in the account for a certain amount of time. There is a certain amount that you can roll over into a Roth IRA in that person's name. So it went... it's interesting. It goes from funding kind of earlier in life education to later in life retirement. But if those funds aren't used, I love this so much.
Bob S.: Yeah. And Amy, great point. And I'll tell you very, very, very few people even know you can do this. So...
Amy: Yes. So few that actually the people I'm talking about called their advisor. And he was like, we don't even know enough about this yet to actually do it. You know, and they should. This is happening here.
Bob S.: So call Amy here at Allworth, she'd be happy to walk you through this.
Amy: Exactly. Right. And on my spare time, I've got you there. All right. Let's get to Bob in Green Hills now.
Bob: I'm about to receive a $750,000 inheritance. Now that amount of money has me freaked out. What's the first thing I should do with it?
Bob S.: Well, Bob, the first thing you should do with it...
Amy: Nothing.
Bob S.: Yeah. You took the words out of my mouth. This is great. Do nothing until you are no longer freaked out.
Amy: Oh, that's a great point.
Bob S.: Just calm down, do nothing. Have it in a FDIC insured cash equivalent account, and then get a referral to a high quality fiduciary financial advisor to sit down and map out a long-term financial plan to put that money to work for you so it can do a great job of achieving your long term financial and life goals. That's what you should do.
Amy: Yep. Wait, take a breath, get your head around it. Assemble a team that can help you figure out, you know, and I like to talk about...
Bob S.: Don't buy GameStop with it.
Amy: Not GameStop. You know, I say this often, but listen, we think through the lens of our future self and there's always someone else in the room that we can't see. And we think about our present self and we miss the future self in this. So give your future self a gift, make some good long-term decision, go on a trip or whatever. You can absolutely do that. But also let's plan for the future here because you can make a huge impact in how that money could potentially grow and make an even larger impact. All right. I quickly want to get to Richard in Blue Ash right now.
Richard: Heard you talk about municipal bonds earlier this week. You touched on it briefly. Would you mind explaining the benefit?
Bob S.: Well, in summary, and every situation is different, but you know, the big picture look at municipal bonds is the interest is federally tax free. You don't pay taxes on it. And if you buy a municipal bond in a specific state that you live in, it could be free of state taxes as well. So you want to sit down and look at the credit quality of these bonds and the interest rate on these bonds compared with other alternatives and look at your specific tax situation and then arrive at the conclusion of which type of bond portfolio or mix of bonds is best for you in your particular tax situation.
Amy: This is a great strategy, I think for maybe shorter term money to get some growth and not necessarily have to pay taxes on it. Coming up next, get out your Red Skia and your money. We're going to talk about opening day next. You're listening to Simply Money presented by Allworth Financial here on 55KRC THE Talk Station.
You're listening to Simply Money presented by Allworth Financial. I'm Amy Wagner along with Bob Sponseller. Happy opening day. I got to tell you, Bob, that's one of the things that I love about living here and being from here. It is not a national holiday in other places, but here, I mean, even my son this morning was like half of my friends will be at school today.
Bob S.: My dad who played college baseball and he passed away several years ago.
Amy: You're a big baseball family.
Bob S.: Yes, huge baseball family. It was a national holiday in our home. However, my mother forbid my father from pulling us out of school to go to the... you know, she wanted us in school. But once I got out of school, my dad and I went to that parade every year for almost 30 years. It was always a great day. So huge day in Cincinnati and along with all that tradition and hoopla. And the other thing as an aside, Amy, being a sports fan in Cincinnati, the wonderful thing is there's always a new season that starts where we can wash ourselves of all the disappointment from the Bengals and Bearcats and Musketeers and everything else. And now we can at least dream for one day that our Cincinnati Reds will once again hoist a world championship trophy. We all believe it at least for one day. And it's a beautiful thing.
Amy: I think sometimes we believe it through April. And then...
Bob S.: Well, you're a Kentucky Wildcat fan. So, you know, hope is still alive down there.
Amy: Yes. In this rare, beautiful year, there is still hope alive. Fantastic point. And I'm holding on to it with everything that I can. But on opening day, right, not only are we going out to the parades and the game, right, GAPP packed, but also we are spending more. And I think this is interesting. We're spending more even at the ballpark on opening day than we do other days throughout the year.
Bob S.: Well, and again, just an opinion here. I mean, there's data that say, you know, spending down there jumps 9.2 percent every day on opening day. And I think it's for the reasons partly that I've already stated. It's an exciting day. People are unified around here.
Amy: Hope. Springs new.
Bob S.: You know, you put on your Reds gear. We're all on the same team. We're running around down there together. We're happy. The weather's starting to get better. And, yeah, you pick up a sweatshirt, a hat, a pullover, some cotton candy and a few beers and whatever else. And you just celebrate living in the greater Cincinnati area with your fellow Reds fans. And the hotels are packed. The restaurants are packed. It's a great day.
Amy: Yeah, friends of mine own Holy Grail down there. And they have given me the night because you can't even can't even ever get close to that place.
Bob S.: You can, though, because you know people.
Amy: Well, doesn't matter if I know people.
Bob S.: You know people.
Amy: There's just people packed in. The numbers that they bring in just on that day. Right. Bars, restaurants, hotels, all of it. This is a big boost to the local economy. Thanks for listening. We hope you're going to tune in tomorrow. We're helping you do a little spring cleaning on your portfolio. You've been listening to Simply Money presented by Allworth Financial here on 55KRC THE Talk Station.
Andy had a client who had recently retired. They had bought a place in Florida, and they were actually eyeing another place. Didn't exactly have the means for it quite yet, but it had a better view, slightly bigger for the grandkids, right? What do they do during this time, during the pandemic? They get nervous, they pull their money, right? Years later, I run into them here, and I'm talking to them and they are just raving, raving, raving about Andy and what a great advisor is. And because of him, they are now in that new, bigger condo in Florida with a better view, right? And so I go to Andy, and I was like, what a cool couple. They're so sweet. I know that they worked with you for 20 years, and he said, did they tell you about what happened during COVID? And I was like, no, what happened during COVID? And he said, they took their money out of the market. And I was like, well, they're raving. They missed out on all those gains. He said, they did not miss out on all of those gains because I called them every single day until they finally got tired of me calling them and put their money back in the market. If you, as an investor in 2025, are starting to get that feeling, maybe you've had it for weeks now or a couple of months, and you are nervous and you're starting to think about making a decision based on that, we want to give you some perspective.
Bob S.: Well, a couple of things as I listen to you share that. First of all, great job by Andy. I mean, very few advisors would care enough and know their client enough and care enough to make all those calls and do what they know at the end of the day is in the best interest of their client long term. So that's a great story.
Second, I mean, last time I checked, Amy, most of our client portfolios are up for the year. So I continue to kind of be surprised by all this hype and fear and everything going on in the media. I mean, things are not that bad. Our client portfolios are up for the year. I know the S&P and NASDAQ are slightly down for the year, but this is by no means an extreme period of volatility. And I guess this goes back to the main point that we're trying to get across today. Correct me if I'm wrong, Amy, but fear is always such a stronger emotion than joy. And it causes people to do some pretty remarkable and oftentimes harmful things to themselves, especially in the area of money.
Amy: Yeah. And you know, I love behavioral finance. You know I love that component. I have a deep background in it. And I think it's because I have seen investors many times either on the verge of making a bad decision with their money based on their emotions or they have. And it's our job, and we say this all the time, to make sure that our investors that we are working with are not making mistakes from which they cannot recover from. There is something that happens in your brain when you are reading headline after headline, it triggers literally fight or flight sometimes. And you feel and think about this, right? I mean, going back to cavemen or what pre-hist... there was a really real need when there was a threat to either run or fight it, you had to do something. And so we are programmed in our brains to either run or fight, but to certainly do something when we feel there is any kind of a threat. There is no difference when we feel there is a threat to our money and how our body, and how our brains, and how our emotions react to that. If you are feeling any of these things right now, please understand it is normal. You are wired that way. We're here to rewire how you're thinking or at least give you some context.
Bob S.: And I had a meeting with a client, Amy, this is a client that's worked with me for over 30 years. Had a long phone conversation with him last week where he was just saying things and expressing things that were completely not consistent with what we have done together for 30 years. And I begged him to come into the office, and he did yesterday.
Amy: Oh, good.
Bob S.: And we had another hour and a half long conversation. So you want to talk about fear. Imagine having a conversation where you're mixing fear and greed in the same conversation. On the one hand, he is highly concerned about what's going on in the world and the economy and the administration and blah, blah, blah. And then in the next breath, he wants me to go find him the next like five or six AI stocks that are going to be the next...
Amy: Find in the next video.
Bob S.: No, his exact words was I don't want to miss the next Amazon.com. That's what he said to me.
Amy: So I'm afraid, but I also want to make a lot of money.
Bob S.: Yes. And this is a very rational, highly intelligent, very emotionally stable person, but it's just illustrative of how a lot of people are feeling right now. It's just a very interesting time.
Amy: It is. And I get it when I'm afraid. I get laser focused on that fear and I just keep thinking about it. And you lose perspective. And I would say if you're focusing on your fear of these market fluctuations, right? Maybe you are coming up on retirement or are just retired or whatever. Right? I mean, I think there's investors across the board, maybe who are a little nervous, but if that's all you're focusing on, what you're missing is the long term perspective. You will have market fluctuations. That is the cost of admission to the markets. You have to understand it's going to happen.
Bob S.: Yeah. And that's where we need to focus here for a minute. I mean, since 1980, the average annual correction, intra-year, during the year has been 14%, 14% on average every year since 1980, the market will go down usually, but during that same period. So now we're talking about 45 years. The market total return for the year has averaged over 12%. I think people have lost sight of that. And I don't know why. I think the media, all the social media stuff, I think people are just getting bombarded with these 30-second sound bite pieces of advice and fear and everything else. And it's making people lose rationality to say nothing of the fact that very few people study history anymore. And that shocks me. But again, 14% average decline every year for the last 45 years, but the market total return when all the dust is settled in excess of 12% a year. Like you said, it's the cost of admission and that's how it works. And so, yeah, you've been forewarned.
Amy: You're listening to Simply Money presented by All Worth Financial. I'm Amy Wagner along with Bob Sponseller. We are trying to give you some perspective here. If you have any fears or concerns over the market and then you are deciding that you think you want to do something with your money, with your long-term financial plan because of it. You know, you're talking about the fact that we're so laser focused on this and we're kind of missing historical perspective, but let's face it, there's also a recency bias that comes into play here. We just came off the heels of 2024. Stellar. Stellar mark. 2023, pretty good too, right? And so we have forgotten what this feels like because we have gotten really used to, and let's face it, a little spoiled with the fact that when you are checking your 401k for the past couple of years, you felt like the smartest investor on the planet every time, returns up, returns up, returns up, right? And now that we've got some volatility, it's like, what is happening here? We forgot what it feels like. We also forgot that this is normal.
Bob S.: It's normal. And some of this way people are feeling is reminding me of the late '90s. You know, we had that period where the NASDAQ went up, you know, 25%, 27% a year for five straight years. And people forgot about volatility back then too. Amy, the market was down in 2022. So it was up sharply in '23, '24. I mean, what we're experiencing again is normal. So I think what we really want to say here is these are the times when people will try to prey on your fear. And I'm talking about salespeople now. And I don't want to throw too many stones, but this is where all the annuity people come out of the woodwork and say, Hey, you don't have to experience any of this volatility, buy an indexed annuity with a floor under it and you'll be able to sleep at night. Well, you might sleep at night, but you're also giving away long term potential returns that you will likely get if you just stay the course and have a truly diversified portfolio.
Amy: Some of the most impactful research I think that Andy Stout, our chief investment officer has ever done. And you guys know I'm a huge fan. He's brilliant. But was looking at two identical investments in the market for what was it? 20, 25 years, right? You put $100,000 in, you know, same returns. But the difference between if you were to stay just in the market that whole time, let it ride or miss five of the best days in the market or 10 of the best days in the market, and you look at how much it comes down with just every five-day interval that you miss those best days. And by the end, it's like, if you miss the 20 best days in the market, you barely have more than you originally invested versus the person who let it ride and they're at a million, right? Around a million dollars.
I just spoke to a fantastic group of investors last night and I said, okay, one more point I want to make. And then of course I went off for 10 more minutes, but it was making this point that the best days in the market come on the heels of the worst days. There's nothing in the headlines on any particular day to say, Hey, this is going to be a good one. But we looked at it on this show last year and it was toward the end of summer. So maybe say September, there were eight days in the market up to September of last year that had driven the great gains to that point. Eight days.
Bob S.: For the whole year.
Amy: For the whole year.
Bob S.: And we're talking about another 20-plus percent, what? 23% year for the S&P all in eight days.
Amy: Absolutely. So for whatever reason this year, you miss those great days. You could be missing the potential for a rebound.
Bob S.: Well, and this is why our good friend, as you pointed out, our good friend and colleague, Andy Schaeffer, this is why he was on the phone with his client every single day because he knows this stuff and cared enough about his client to make those calls and do what was in their long term best interest.
Amy: Here's the Allworth advice. Please do not let fear dictate your financial future, your money decisions. Stay informed, stay focused, make sure your investment strategy aligns with your longterm goals. Coming up next, what do you get when you combine meme stocks with Bitcoin? I mean, who even thinks this is a good idea? I love this one. We're going to get into this next. Plus why Roth IRAs are all the rage. You're listening to Simply Money presented by Allworth Financial here on 55KRC THE Talk Station.
If you can't listen to our show every night, we've got a daily podcast for you. Search Simply Money. It's on the iHeart app or wherever you get your podcasts.
Are you familiar with the after tax options that some 401k plans offer? This could be a fantastic opportunity for you. It's one of several questions you are asking us. We will answer them at 6:43.
Okay. We've talked, laughed, made fun of on the show many times, meme stocks. And we've also had some interesting conversations around Bitcoin. And now there is an actual company that is then putting those two concepts together.
Bob S.: The board at GameStop, the board of directors of GameStop is reporting...
Amy: Of course, GameStop.
Bob S.: The board of directors is reporting that it has now approved a plan to buy Bitcoin as an investment, you know, with their cash and money they might borrow in the future or future stock equity, you know, issuances that they could take all that money and buy Bitcoin. I don't know what to say about this.
Amy: It's like we're speechless. And also there is so much to say about this. Right. And listen, they're not saying how much they can... this, this is what I like to refer to as a Hail Mary, right? If you are going to invest in a company, I like to say, if I'm going to put my money in anything, it should probably be fundamentally sound. I have a 15-year-old who plays video games. He has asked me to go into a GameStop store zero times. In the past five years, zero times.
Bob S.: I would say, Amy, you took the words out of my mouth. I mean, I know your son's 15. My wife and I have three sons that are in their 20s. I've never seen them walk into a GameStop store.
Amy: No, you download this stuff anymore. So what we're saying is their fundamental business plan is a little outdated, right? And in fact, they have been closing physical stores, trying to change things up. And again, I don't... this feels like a Hail Mary, but it makes me laugh because many of the investors in GameStop, right? This is a meme stock. They, you know, tried to stick it to the man who was trying to short this because it was not a great long-term viable business plan. And now, you know, they hear Bitcoin and they're all in. Please, if you are a smart, long-term investor, laugh along with us, don't invest.
Bob S.: Yeah. If you like Bitcoin, just go buy Bitcoin. Don't get involved. I mean, this stock, believe it or not, went up 64% over the last 12 months and is down 19% already this year. That feels to me to be pretty much trending with the price of Bitcoin. So if you want to buy Bitcoin, just go buy Bitcoin. Don't buy a company that has a dead business model. That's trying to resurrect itself by becoming a Bitcoin ETF.
Amy: Yes, exactly. All right. Let's pivot now. We have started to see...
Bob S.: Please pivot.
Amy: Let's pivot away from this craziness to something that is not crazy at all and something that I hope that you are considering when you are building your portfolio. I think a lot of investors have gotten the memo. Your retirement is on you. And I get a lot of people in my office now who I would call super savers. They have stuffed every dime they possibly could into that 401k. And I think there's some old messaging that's still out there that says, Hey, if you're a higher earner, like, let's just take that all tax deferred. What you're missing is you may be making, you are making a deal with Uncle Sam that not that you're not going to ever pay, just that you'll pay them down the road. And the problem with that is I've seen people save enough where what they have to take out of that account when you get to that age of 73 and you have to take required minimum distributions can then bump you up into a higher tax bracket. What I'm saying here is that too many people, I think, are missing this Roth option in your 401k.
Bob S.: I think a reason for this, and we've talked about this before on the show, Amy, is more and more 401k plans have an auto enroll feature. When you start working for the company, they auto enroll you at some percent, 3%, 4%, 5%, 6%. And they think they're doing you a favor, but when they auto-enroll you in the pre-tax option, that may or may not be the best thing for especially younger folks that are in a lower tax bracket. So, you know, check what you're invested in at your company. Yes, you want to be enrolled and you want to take full advantage of that company match, but get a little bit of fiduciary advice here on what the best place to invest your 401k money is because to your point, Amy, for a lot of people, that Roth option, especially for younger, lower income folks is a game changer down the road. And then we can talk about another option for folks that are higher earners that might have more discretionary income to do something with. If there's an after tax option in your 401k plan and you've maxed out your pre-tax contributions, that is a wonderful way to really win the game here against Uncle Sam. We're talking about a mega back door Roth IRA. Don't be intimidated by that term. It's just the contribution limits on an after tax basis go way above the pre-tax contribution limits. And if your plan allows it, you could put that money in the after tax category and then immediately move it into Roth. And away we go here with tax-free earnings for the rest of your life.
Amy: Yeah, I was actually looking at an example of this last night, right? So say you're 50 or older and you can put 30,000 right into that 401k this year. And then there's the company match of say, $5,000, $5,500. Right? So that's a pretty good year. $35,000 into a 401k. Not bad at all. If this option is available to you, right? So check how your plan is set up. The numbers work where you could put in as much as $77,000 combined pre-tax rate. And then the after-tax rate goes into a Roth. If your 401k is set up where it can go into a Roth 401k, that's kind of a cleaner way this can happen. If not, you can also set up a Roth IRA and put those dollars in it. But I've always said, Hey Congress, like what is it that we know we have a retirement crisis in this country, yet we're setting limits on how much people can, this is a way for a... if you have some really good cashflow and you are a higher income earner and you can't figure out where to stuff that money thinking, like I have a client who is American Airlines captain, right? And he's like, what do I do with all this? Great option for higher income earners. Even if you're not, please look into whether a Roth makes sense for you. Otherwise we see too many people retiring and having such a large bucket of money that they owe taxes on. And that's a whole different issue with taxes.
Here's the Allworth advice. Please talk with a fiduciary financial pro about whether a Roth IRA, mega back door Roth makes sense in your portfolio.
Coming up next, Zillow, have you used it? Is it accurate? We're going to talk to our real estate expert about that and a lot more next. You're listening to Simply Money presented by Allworth Financial here on 55KRC THE Talk Station.
You're listening to Simply Money presented by Allworth Financial. I'm Amy Wagner along with Bob Sponseller. Have you played the fun game recently of just jumping on Zillow, looking at your house and seeing what it was worth? I can tell you during the pandemic, I was doing this almost weekly because it was so I'm like, what you're telling me my house is worth how much? It seemed crazy. But really now that we are maybe out of that pandemic into more normal times, can you jump online and look at Zillow and say, yep, this is exactly how much my house is worth? Joining us, our real estate expert, Michelle Sloan, owner of RE/MAX Time. Michelle, do we put a lot of stock into Zillow valuations? Is that really what my house is worth?
Michelle: I think you should take it with a grain of salt. It's just one piece of the puzzle that you have to look at when you are looking at the valuation of your home, how much your home is worth. And Zillow is an algorithm. They are a marketing firm and they, you know, every time you go on there, you put in your information and, you know, they're going to sell your information. So you have to... I would just say buyer or seller beware when you're looking at these valuation sites or if you see something online that says click on this button to find out what your home is worth today. And very likely it is a real estate agent who has purchased or, you know, has that link and you're going to be put in touch with somebody who's going to want to work with you. So if you're just snooping around, look at it, grain of salt, then the key is to actually call someone that you know and trust, call a real estate agent that you know and trust and have them come to your house. Because to be honest, no one can valuate a home without actually walking inside the home. It's just not fair to you. And it really does blow things out of proportion either to the plus or the negative, you know, you get excited about that valuation on Zillow. It could be wrong as much as 10%, which is thousands and thousands of dollars.
Bob S.: So, Michelle, that leads to a question I have as you start the process with one of your clients to actually sit down and figure out what their house is worth. You talked about actually going in the home, which is great. What is the process and other steps that you go through as a seasoned real estate pro to help one of your clients figure out what is the right price at which to list my home?
Michelle: That's a great question. Honestly, I don't even look at those online websites. You may have looked at it because a lot of people will say, as we're sitting at the kitchen table, did you see what Zillow has as a valuation of my home? And my answer is no, I'm not looking at that. I'm actually looking at the data that surrounds your home that's extremely focused on the value of your home. I will look at the homes that sold in your neighborhood in the last six months. If I have to go back to a year, I will. But again, we have to look at so many factors, including what will an appraiser say the value of that home is. So I'm already thinking three steps ahead of the situation when I'm pricing your home. We also have to have a conversation of what you have done. What kinds of updates have you done in your home? Do you have a new roof? Have you replaced the flooring? Have you updated your kitchen or bathrooms? All of those factors will be extremely important on how I price your home. So I would say there are dozens of touch points that I go through with each and every client and each and every home is different. You can't just put that blanket over the top and say, okay, this house is worth this much money. It's just not fair. And so if it was that easy, everybody would be doing it.
Amy: You're listening to Simply Money presented by Allworth Financial. I'm Amy Wagner along with Bob Sponseller. We are joined by our real estate expert, Michelle Sloan, telling me that I probably should get off of Zillow and not put a lot of stock into it. I can't even remember. I was in a neighborhood recently, Michelle, and I was like, oh, this is a cute neighborhood. I jump on Zillow. There's like two pictures of the outside of the house and how much it's worth. And, you know, I immediately put stock in it. You're telling me maybe I should not.
Michelle: Just a grain of salt. You know, when I'm on vacation and I'm looking, let's say I'm in Florida or I'm over, I'm somewhere out of the country even, I may use Zillow just for the fun of it to see what homes have sold in the area, how much these homes are worth. Again, I'm not buying one of these homes, but I'm just looking to see just a general range. And again, it's a general range because here's the thing. Zillow is going to take a radius around that property and then will look at the statistics that are available online. It's just like AI. It could be really good, or it could be just completely out of whack. If you have a neighborhood and your neighborhood is worth $500,000 or $600,000, but you have a million dollar neighborhood within a half mile and you have a $200,000 neighborhood, all that's going to get populated. And it may not actually take into account anything other than maybe square footage, maybe number of bedrooms and bathrooms, things of that nature. But it's going to be a real basic type of a situation. So it is important and it's it is fun to look.
You know, Zillow is not the only one out there. There's so many different websites that will realtor.com and everything. You can go on and look and see what their valuation is. The other key to this is if you really want Zillow to be more accurate, you could, there on the website, it says "claim your home." So is this your home? You can claim it. And if you claim it, again, you're giving this marketing firm all of your information like how to reach you, what's your phone number, what's your email address, blah, blah, blah. And know that that information will be sold because your information is worth a lot of money. And if you put your claim, your home in there, don't be surprised if a real estate agent didn't buy your information from Zillow and contact you and say, oh, I understand you're interested in selling your home. And you're like, what? So just be careful. Be careful.
Bob S.: This sounds like something that's going to interrupt my peace and quiet while I'm trying to watch college baseball this weekend. I don't need people knocking on my door wanting to buy my house, Michelle, but that's a great tip. I had no idea how that all worked with the whole claiming your home process. That's good stuff.
Michelle: Yeah. And you can add, you know, if you've updated things or you've done some stuff, you can add that information in there and it will affect the algorithm, but just understand there's a really good chance. So a lot of us have the, our main email and then maybe we have a hotmail account. You know, use your spam account for that, for claiming your house, just so that you're a little bit careful and you're not getting a ton of, you know, calls and things.
Amy: Well, obviously this whole claim your house thing is news to Bob and I, because I didn't even know that was a possibility. I'm just wondering if people who are listening will think, okay, well that might be a good kind of step one or dipping my toe in, just to see if there's maybe interest in my home, do you recommend that if someone's maybe thinking of selling their house over the next year or so, or is it a little bit not place to start and you should go directly to a realtor?
Michelle: Well, I do admit that I am fine. Once you have signed an agreement with me and you have your agent in place so that you have your representation, at that point, if you want to claim your home, update the information so that it's a little bit more accurate, I'm fine with that because there may be buyers out there who are, that's where they're getting their information.
You want to have representation as a seller. You want to have representation as a buyer. You want somebody who is working with you. And before you go to that next step, it's smart to talk to an agent, an agent that you know and trust and that works in your area and is familiar with your area.
Amy: I hear you saying, Michelle, that Zillow could be a tool that you could use when buying and selling a home, that you would use in conjunction, right? With your team, your realtor, your research, everything else you need to buy or sell a home, great insights as always, of course, from our real estate expert, Michelle Sloan, owner of RE/MAX Time. You're listening to Simply Money presented by Allworth Financial here on 55KRC THE Talk Station.
You're listening to Simply Money presented by Allworth Financial. I'm Amy Wagner along with Bob Sponseller. If you've got a financial question that's like in the back of your head and you cannot figure it out, there's a red button you can click on while you're listening to the show. It's right there on the iHeart app. Record your question. It's coming straight to us and let's get straight to those questions. First one from Sherry Merrimont.
Sherry: If I max out my 401k for 2025, should I then consider doing the after-tax 401k option that I have?
Bob S.: Well, Sherry, you might be an excellent candidate for the concept that we just talked about in the last segment, that mega backdoor Roth IRA. And again, don't be intimidated by our industry jargon. What this means is you're doing a great job of saving. If you've already done the pre-tax savings to the max and gotten your company match and you got discretionary funds, put it in the after-tax portion and then have a fiduciary advisor sit down with you, review the summary plan description of your plan and see if we can take after-tax 401k money and shove it into the Roth option and that's a wonderful way to get a ton of tax-free growth on your retirement money.
Amy: Yeah. Great point about that. Let's get to Brian's question. He's in Florence.
Brian: I have 529 money that won't be used. Will I lose it? What are my options?
Amy: So, no, you will not use it. One of the things I love about 529s is it is so-
Bob S.: You will not lose it. You might use it.
Amy: Yes.
Bob S.: All right.
Amy: You should... Oh, sorry. Yes. You will not lose it. You will use it. There's a lot of great flexibility with these. And so one of your options is, Brian, if you have another child or grandchild who might need this money, it's really easy to just transfer the person who's the beneficiary on that account, but also Secure Act 2.0 gave us another option. Right? And I'm thinking of really good friends of ours who have an only child. They super-staffed her 529 and she ended up not... she's not going to finish college. She's got another plan. She's on a great career track, but they don't have anyone else. They need to transfer those funds to Secure Act 2.0 gave us the opportunity. And listen, check into the rules here. The money has to be in the account for a certain amount of time. There is a certain amount that you can roll over into a Roth IRA in that person's name. So it went... it's interesting. It goes from funding kind of earlier in life education to later in life retirement. But if those funds aren't used, I love this so much.
Bob S.: Yeah. And Amy, great point. And I'll tell you very, very, very few people even know you can do this. So...
Amy: Yes. So few that actually the people I'm talking about called their advisor. And he was like, we don't even know enough about this yet to actually do it. You know, and they should. This is happening here.
Bob S.: So call Amy here at Allworth, she'd be happy to walk you through this.
Amy: Exactly. Right. And on my spare time, I've got you there. All right. Let's get to Bob in Green Hills now.
Bob: I'm about to receive a $750,000 inheritance. Now that amount of money has me freaked out. What's the first thing I should do with it?
Bob S.: Well, Bob, the first thing you should do with it...
Amy: Nothing.
Bob S.: Yeah. You took the words out of my mouth. This is great. Do nothing until you are no longer freaked out.
Amy: Oh, that's a great point.
Bob S.: Just calm down, do nothing. Have it in a FDIC insured cash equivalent account, and then get a referral to a high quality fiduciary financial advisor to sit down and map out a long-term financial plan to put that money to work for you so it can do a great job of achieving your long term financial and life goals. That's what you should do.
Amy: Yep. Wait, take a breath, get your head around it. Assemble a team that can help you figure out, you know, and I like to talk about...
Bob S.: Don't buy GameStop with it.
Amy: Not GameStop. You know, I say this often, but listen, we think through the lens of our future self and there's always someone else in the room that we can't see. And we think about our present self and we miss the future self in this. So give your future self a gift, make some good long-term decision, go on a trip or whatever. You can absolutely do that. But also let's plan for the future here because you can make a huge impact in how that money could potentially grow and make an even larger impact. All right. I quickly want to get to Richard in Blue Ash right now.
Richard: Heard you talk about municipal bonds earlier this week. You touched on it briefly. Would you mind explaining the benefit?
Bob S.: Well, in summary, and every situation is different, but you know, the big picture look at municipal bonds is the interest is federally tax free. You don't pay taxes on it. And if you buy a municipal bond in a specific state that you live in, it could be free of state taxes as well. So you want to sit down and look at the credit quality of these bonds and the interest rate on these bonds compared with other alternatives and look at your specific tax situation and then arrive at the conclusion of which type of bond portfolio or mix of bonds is best for you in your particular tax situation.
Amy: This is a great strategy, I think for maybe shorter term money to get some growth and not necessarily have to pay taxes on it. Coming up next, get out your Red Skia and your money. We're going to talk about opening day next. You're listening to Simply Money presented by Allworth Financial here on 55KRC THE Talk Station.
You're listening to Simply Money presented by Allworth Financial. I'm Amy Wagner along with Bob Sponseller. Happy opening day. I got to tell you, Bob, that's one of the things that I love about living here and being from here. It is not a national holiday in other places, but here, I mean, even my son this morning was like half of my friends will be at school today.
Bob S.: My dad who played college baseball and he passed away several years ago.
Amy: You're a big baseball family.
Bob S.: Yes, huge baseball family. It was a national holiday in our home. However, my mother forbid my father from pulling us out of school to go to the... you know, she wanted us in school. But once I got out of school, my dad and I went to that parade every year for almost 30 years. It was always a great day. So huge day in Cincinnati and along with all that tradition and hoopla. And the other thing as an aside, Amy, being a sports fan in Cincinnati, the wonderful thing is there's always a new season that starts where we can wash ourselves of all the disappointment from the Bengals and Bearcats and Musketeers and everything else. And now we can at least dream for one day that our Cincinnati Reds will once again hoist a world championship trophy. We all believe it at least for one day. And it's a beautiful thing.
Amy: I think sometimes we believe it through April. And then...
Bob S.: Well, you're a Kentucky Wildcat fan. So, you know, hope is still alive down there.
Amy: Yes. In this rare, beautiful year, there is still hope alive. Fantastic point. And I'm holding on to it with everything that I can. But on opening day, right, not only are we going out to the parades and the game, right, GAPP packed, but also we are spending more. And I think this is interesting. We're spending more even at the ballpark on opening day than we do other days throughout the year.
Bob S.: Well, and again, just an opinion here. I mean, there's data that say, you know, spending down there jumps 9.2 percent every day on opening day. And I think it's for the reasons partly that I've already stated. It's an exciting day. People are unified around here.
Amy: Hope. Springs new.
Bob S.: You know, you put on your Reds gear. We're all on the same team. We're running around down there together. We're happy. The weather's starting to get better. And, yeah, you pick up a sweatshirt, a hat, a pullover, some cotton candy and a few beers and whatever else. And you just celebrate living in the greater Cincinnati area with your fellow Reds fans. And the hotels are packed. The restaurants are packed. It's a great day.
Amy: Yeah, friends of mine own Holy Grail down there. And they have given me the night because you can't even can't even ever get close to that place.
Bob S.: You can, though, because you know people.
Amy: Well, doesn't matter if I know people.
Bob S.: You know people.
Amy: There's just people packed in. The numbers that they bring in just on that day. Right. Bars, restaurants, hotels, all of it. This is a big boost to the local economy. Thanks for listening. We hope you're going to tune in tomorrow. We're helping you do a little spring cleaning on your portfolio. You've been listening to Simply Money presented by Allworth Financial here on 55KRC THE Talk Station.