AI’s Investment Impact, Global Investing Made Simple, and Your Questions Answered
On this week’s Best of Simply Money podcast, Bob and Brian dive deep into the AI investment craze that’s dominating headlines. Are we too late to cash in? Or is this just the beginning of a new economic era? They break down the hype, the risks, and the smarter way to invest—without trying to pick a winner. Plus, why international investing may deserve another look, a fresh update on the real estate market, and how to break out of financial decision paralysis. Finally, your listener questions on giving, planning, and the fear of running out—even when you have enough.
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Bob: Tonight, the AI boom is here, but is it too late to invest, or is this just the beginning? You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James.
Let's face it, you can't open a financial newsletter or turn on CNBC these days without hearing about artificial intelligence. AI is the thing. It's the story. But the question we're hearing from listeners is simple, what do I do about it? Do I buy AI stocks now? Do I ignore the whole sector? Are they overpriced? Or do I continue to chase the hype? Brian, I know you love data. We joke around a lot about data, but let's talk about this AI space, because I think there's a lot of historical context to draw into this discussion.
Brian: If you look back through market history, Bob, whenever the market goes on a run, there's almost always some kind of catalyst behind it, some interesting story somewhere in the economic world that is driving things. You know, 25 years ago, it was the Internet itself. It was just the original concept of let's use computers to communicate and buy stuff and conduct commerce and all that kind of thing. And then for a while, it was real estate. Way before that, in the '70s, it was oil and gas partnerships, whatever. There's always something that's attracting attention and capital and so forth.
So, right now, it's AI, and we're still in the very beginning stages of this. So, there's still a lot of promise and a ton of guessing going on. Same way, I think the easiest thing to draw a parallel to is the original dot-com boom, because we didn't know which companies were going to make it. There were just a lot of companies out there with interesting marketing plans and interesting products and services and so forth in taking advantage of new technology. And that's where we are right now. So, if you're trying to invest in AI directly, like you're trying to pick the next NVIDIA or the next open AI, that's the company behind ChatGPT, you're basically placing bets on individual horses, not really knowing, of course, what's going to happen at the end of that race.
So, that brings us to, there's three choices everybody has. So, option one is what we just kind of hinted at. Pick that winning horse. You're going to bet on the Tesla's, the NVIDIA's of the world, and maybe that up and coming chip company that nobody's heard of, yet. And meanwhile, your neighbor is investing in some other thing that you never ran across that nobody else has heard, yet. That's the most tempting option, Bob. Had you done this early on with an NVIDIA or Apple or an Amazon, this is what makes it so tempting, it would work fine. But for every Amazon, there are web vans and pets.com and Myspace. And most of these companies just plain don't survive.
Bob: Yeah, I think the way to look at this is, you know, let's face it, if artificial intelligence really is a thing, and I think it is, I think the debate is over at that point. It's going to change things. And probably in a good way, if you like efficiency. So, just like the internet, you know, early on, you can invest in the technology hardware or the early software developers, things like that. But, you know, let's face it, the internet, there's not a company in existence today, there's not a home in existence today that doesn't use the internet. My point here is that if artificial intelligence is going to be a thing, and it's already becoming a thing, it's going to impact efficiency in every corner of the market.
And so, you don't have to pick the next hardware supplier, you can just watch companies continue to grow their productivity and their earnings by adopting a piece of technology like AI or like the internet that causes productivity to go up and profits to rise. In other words, you can be broadly participating in the economy and not even have, you know, the letters A-I behind the name of a company, but make no mistake, they're benefiting from the adoption of this technology if they're being smart about things.
Brian: Correct. And we're picking winners and losers here, right? So, at the end of the day, some companies are going to be around forever, right? We can name some of those companies from the original internet boom that obviously now are the core of the internet. They made it. But then you've got the others who didn't quite make it. And the example I would give is I can go on amazon.com right now and I could rent a video or I could buy a book about the demise of pets.com. So, one of them is going to win and one of them is going to lose. How do we find a winner? Is it the company with the best technology or is it the company with the best marketing partnerships or scaling ability? You know, the ones who turned it into the most successful type of a business, that kind of thing.
But picking winners isn't just about who's smart. It's about who can make money out of there. The road to financial success is littered with smart people who simply couldn't take a great concept and turn it into a real business. The market already knows that NVIDIA is good. That's not news. So, you're not just betting on their success. You're betting that they're going to do better than the already sky-high expectations that the market has placed on them because so many people have piled into these stocks. That is a much taller order than looking at some business plan from somebody that's working out of a garage and hasn't built anything, yet.
Bob: Yeah. And at the end of the day, I don't care what industry you're talking about, it comes down to how much are you willing to pay for a dollar's worth of earnings or profits. Let's give an example. Let's compare Tesla right now to Toyota. Tesla stock is priced around $400 a share. Earnings are around $1.50 per share. Toyota, on the other hand, their stocks priced around $200 a share, but their earnings per share is $20. That means Tesla's price to earnings ratio is about 100 while Toyota's is 12.
Point here is you got to look at value. And I know the market will pay up for dramatically growing earnings, but sometimes, Brian, and we see this all the time, if people chase or get too speculative about assuming that sky-high earnings growth is going to continue, that's where these stocks can really crater and come down to earth. As an investor out there, you got to be looking at, what amount of risk are you really willing to take? And is it better to go buy something like a Toyota at 12 times earnings that is still growing? And that's what goes into constructing a risk-adjusted, well-constructed, diversified investment portfolio.
Brian: Yeah. I want to put some more numbers to that too, because just to help people get an idea of the scale of the demand that there is for these stocks. So, if you're buying Tesla right now, you're paying $400 for $1.50 in earnings. That's where a price to earnings ratio comes from. But if you're going to go to it with Toyota, obviously a little more traditional, a little more standard type of a car company, now you're paying $200 for $20 in earnings. So, the math says it's going to take about 100 years to earn back your Tesla investment, if earnings stay the same, versus 12 years with Toyota. If Tesla stays on the same trajectory of growth that they've had, then, yes, it could potentially continue on that type of a pace. But on the other hand, if other car companies catch up to that technology, if somebody else comes up with a better idea, Tesla's got a lot further to fall than the new companies, the new entrants to that arena that don't quite exist yet.
And I don't mean to pick on Tesla. Maybe that's right. I mean, maybe that is the valuation it should have. But as an investor, you've got to ask, what is already priced in? Everybody knows that this is unique technology and a very unique charging network and all these other stuff. They do have a hell of a head start on other companies. But at the end of the day, it's a growth stock, and it can have wild swings simply because expectations are so crazy high. And that's what comes along with being... You know, Tesla's not quite a meme stock. It's definitely got its own...you know, it's a more unique situation. But at the same time, it's also something that has had an awful lot of speculative activity around it because of what it might do, not what it has done.
Bob: All right. Well, we talked about option one here, which is trying to pick the next big winner. Let's talk about option two. You sit out the market entirely. You say, "Hey, all this stuff is too crazy, too speculative. I don't understand any of it. I'm just going to ignore that AI exists, and I'm going to stay out of it completely." This might feel safe, especially after the tech bubble in the early 2000s that, let's face it, a lot of investors went through, or cryptocurrency crashes in the short-term. But here's the problem. You risk missing out on structural growth, and I would say, a generational growth in innovation opportunity, which is AI. AI could become like the Internet or electricity, meaning it's ubiquitous everywhere. Being so embedded that not investing in it means just falling behind in terms of return and growth of your portfolio and your whole retirement plan.
Brian: Yeah. And I think that electricity example is really apropos here. Because if you think back to that, I'm sure there were people who sat on the sidelines going, "That electricity stuff, that's dangerous. I don't want that pulled into my building. I want nothing to do with that." And those folks kind of, obviously, missed out on opportunities to make their businesses more efficient. And I'll bet there's plenty of stories out there about businesses that went out that, basically, failed because they didn't move quickly enough to take advantages of what electricity could bring.
And those factories that were making things by hand lost quickly. And I would I have to think that's got to be almost an overnight thing if you weren't on the on the cutting edge of that 150 years ago, whenever that was. But at the same time, that's what you're potentially missing out on. So, we can't ignore these things. They are the types of things that drive the markets forward. And that extends to further than just that sector, just that little stock. So, history shows that we need to be paying attention. We need to be willing to invest like that. So, with that, maybe we move on to option three here, Bob.
Bob: Well, option three is the smart choice here. You invest in the whole market. Again, broadly diversified funds that give you exposure to all the contenders, all the industries out there. Because, again, if artificial intelligence is going to be a thing and I think it's going to be a thing, every sector of the economy is going to benefit from that. It's going to be a productivity booster. And so, you don't have to worry about picking the next winner and loser. You just stay invested in the broad market. You count on ingenuity, innovation, hard work, people out there always finding a way to leverage technology, to grow businesses, and grow profits. And that's why staying diversified is usually, for most people, the best way to go.
Brian: That's the way to think about it. At the end of the day, I think the biggest thing here is that there is a new technology out there that a lot of companies are going to be looking to take advantage of. And I always think back to the stories that we heard from the gold rush in the middle of the 19th century. Was it the gold diggers that made all the money? No, it wasn't. It was the Levi Strauss's of the world who decided to make clothing that was appropriate to go dig in the dirt all day. It was Wells Fargo. Remember the Stagecoach logo? Well, that's what it's from, because there were businesses out there making money out in the middle of nowhere, and they needed a way to get those dollars back in safely. And that's where that Stagecoach came from. And a number of other companies.
That's what's going to happen here. It's going to be the companies who have some other kind of product and service who are using AI to continue selling that long-running product or service in a much more efficient and much more profitable manner. That's what history shows when we have new technology. That's where the advantage is. Not for the lucky holders of that one company that survived alongside the 19 that didn't.
Bob: Well, Brian, to take your gold rush example, which is a great one, and catapult that all the way forward to 2025. I mean let's face it, we're going to need a ton of energy to fuel these servers that power AI. And this is not a stock recommendation. I'm just saying look at a company like GE Vernova. Nobody would have thought going into 2024, 2025 of GE Vernova as an AI stock, but go look at the performance of that stock. Meaning, you know, back to your Stagecoach example, it's not the people that were digging the gold, it's people that are supplying the things necessary to harvest gold, to harvest energy. So, there's a lot of beneficiaries all the time in emerging technologies.
Here's the Allworth advice, don't gamble on the future, invest in it broadly, and let the winners come to you. Just how much should I be investing outside the United States of America? It's a question we get a lot. We'll share some perspective on that coming up next. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. If you can't listen to "Simply Money" live every night, subscribe and get our daily podcast. And if you think your friends or your family could use some financial advice, let them know about us as well. Just search "Simply Money" on the iHeart app, or wherever you find your podcast. Well, managing money as a team to navigating retirement when life feels more expensive than ever, we're answering your pressing financial questions straight ahead at 6:43.
Most American investors are heavily concentrated in one market, the United States. It's what we know, it's where we live, and quite frankly, it's worked really, really well for the past decade-plus if not decades. But we should at least be willing to shift the conversation a little bit from investing in countries to investing in companies. The global economy does not stop at our borders, and your portfolio shouldn't either. Brian, 2025, you know, we've got some data backed reasons to kind of revisit this whole international investing topic, because it is valid, and it's something people kind of ignore or forget about over time.
Brian: Well, yeah, there's been a huge focus on reducing the expense of my investment portfolio, and that's a good thing to focus on. But it has led a lot of people down at the bottom of the funnel to conclude that there's just nothing but the S&P 500, "All I need is this S&P 500 index fund, and that's all I'll ever need because nothing happens anywhere else." Well, that's a good core of a portfolio because the U.S. does make up a big chunk of the overall global economy, about 65%. Sixty-five percent of economic activity occurs right here in the United States. But that means 35% doesn't. That is trillions of dollars in value that you're ignoring if that's not something that you represent in your portfolio.
So, let's give an example. Let's say, you said, "I only want to invest in U.S. car companies because the U.S. is the only place that there is to deal with." You'd have at this point Ford, General Motors, and Tesla. There's a handful of other car companies out there that have done okay. So, that is not a diversified bet on the auto industry. That's just a slice of it. You're ignoring Toyota, Honda, Hyundai, BMW, Volkswagen, Ferrari, BYD in China. That's a new one on me. But still, it's out there, and there are billions of people who buy cars that aren't built in the United States. Jaguar, Land Rover are now based in India. So, if you simply focus so much on that, you're going to leave an awful lot of economic activity on the table simply because it doesn't occur within the boundary of the United States. That does not mean it's not profitable activity. And the winds will change direction on occasion as they have this year.
Bob: Well, Brian, I know you love history. I do as well. So, let's talk about Japan, for example. From 1970 to 1989, Japanese equities returned an average of 22% per year. People thought Japan, at that time, and I remember this, I remember when the Hondas started coming out in droves, people thought Japan was going to absolutely dominate the global economy forever. And then came the 1990s. U.S. technology took over, Microsoft, Intel, eventually Apple, Amazon, Google. Nobody had even heard of these companies in the late '70s to early '80s, but the tide certainly did shift. The point here is, no country in and of itself as it relates to stocks dominates forever. Yes, the U.S. has been on a great run, especially post 2009, but there have been decades like the 1970s where the U.S., Brian, actually underperformed global markets.
Brian: Yeah, that's right. And that's actually happening right now. But technically, in 2025, the U.S. is underperforming global markets. International stocks are doing better than U.S. stocks. Now, everybody's having a pretty good year, right? We could be looking, knock on wood, we could be looking at the third, double-digit rate of growth in the United States here by the end of this year. But international stocks, both at the big, established, developed level, as well as emerging markets are all doing better. The reason for this is because, you know, for better or for worse, regardless of the side you are on of the political aisle... We're not going to turn this into politics, of course. But the reason is, the United States has chosen to portray itself drastically differently than it has in the past. And that is forcing countries and companies who are internationally based to say, "Well, if it's going to be harder to do business there, maybe we're overlooking some opportunities elsewhere in the world to build business partnerships."
And that is exactly what has happened. The market has recognized that dollars have flowed into internationally-based, non-U.S. companies at a faster pace this year than they have U.S. companies. That doesn't mean that the U.S. market is down. That's not the case at all. Everybody's having a pretty good year thus far. Again, furiously knocking on wood. But international companies are having a slightly better year. That is why we always have these discussions about, make sure you've got a diversified portfolio so that you're not completely missing the boat in some other area that maybe didn't do so great last year, but all of a sudden, has taken the lead this year.
Bob: Yeah, a couple of examples where international companies are just as innovative, if not more innovative than their U.S. counterparts. Samsung, for example, is really pushing the boundaries in semiconductor chips. Taiwan's semiconductor is critical in AI technology. And let's face it, a lot of European firms lead the globe here in innovation in green energy technology. So, there's a lot of innovation going on all over the world. And it's another reason to be open to diversifying your portfolio.
That being said, this is where some good, I would say, managed portfolios, and it's worth paying somebody to really kick the tires and look at some of these companies. Because when you get into investing internationally, there's different regulatory environments. There's different corporate governance rules. This is where it's helpful a lot of times to have boots on the ground, really looking at this on a company-by-company basis. Not just saying, "Well, I'm going to just throw money at the Japanese market or at the Taiwan market." Because things are different literally, company-by-company, and region by region.
Brian: So, it's important to talk to your fiduciary advisor. Just make sure you've got the right level of exposure to offset the other risks you have in your portfolio. That's the whole point of asset allocation and diversification. But it all starts with a financial plan anyway. Before you worry about what color bricks you're going to put on your house, you need to have a blueprint to begin with.
Bob: Here's the Allworth advice, don't invest in countries, invest in great companies wherever they are. Coming up next, an update on the local real estate market. Are prices cooling off, or is the bidding war era still alive and well? Our real estate expert is in next to talk about all of that. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. And we're joined tonight by our real estate guru, Michelle Sloan. Michelle, thanks as always for making time for us tonight. We to kick things off tonight just by getting your perspective on what the current environment is out there in the real estate market, the residential real estate market. I mean, let's face it, rates have come down a little bit. What have you seen change since the last time we talked to you about, you know, where's the market at? I know the weather's cooling, everybody's back to school. Are things slowing down? Are things speeding up with these rates coming down? Give us a good, overall view of the residential real estate market in greater Cincinnati.
Michelle: Well, I'll tell you what, the biggest difference is, we are seeing a shift in the market to a more balanced market. And what that means is, it's no longer strictly a seller's market in Cincinnati, Ohio. We have had a seller's market for years, actually. And now, in some areas of Cincinnati, we're seeing more of a buyer's market. What does that mean? So, it's all about supply and demand. And you guys are very familiar with that. But, you know, the supply, we've had more buyers than we've had homes for sale. But now, we're balancing out the market.
And so, this is a good thing for buyers because there's opportunities out there. When it's a buyer's market, we have more homes on the market, and maybe fewer buyers. Therefor the buyers that are out there are going to have an opportunity. They may not have to actually compete against a whole bunch of other buyers. And so, they might be able to get a home for... I'm not going to say the price is going to be dramatically lower, because we are definitely seeing the prices are still increasing in the Cincinnati area as far as the home price. Median prices are up 5% year-over-year. And so, we're seeing still a slight increase. It's not the crazy increases though that we saw in the past several years where, you know, the market has increased 10% or 15% year-over-year, which is just crazy to even think about.
So, I would say, the biggest change that we're seeing is, it's no longer a seller's market. We have a more balanced market. And it's leaning a little bit towards a buyer's market. So, days on market, meaning, how long a home has to sit on the market before someone actually gets under contract and buys that property is taking longer. Instead of just a couple of days, which it has been over the last few years, we're looking at a 49 day average time on market, 45 days average time on market. So, that's a huge change.
Brian: So, Michelle, the question I have is... So, I am also married to Michelle. That's why I'm stammering here because I was going to say her name and I said your name, and then I don't know who anybody is anymore. Anyway, Michelle and I aren't going anywhere anytime soon, but we are sneaking up on empty nest time of life. So, I'm sniffing around a little bit just to see what things look like. That means, you know, in this day and age, I've got a few apps going and just kind of watching different properties. We're not going to place a bid or anything anytime soon. So, anybody listening to me, who knows, leave me alone. Anyway. But anyway, so I've got these apps going, and I've noticed...
Bob: Brian, if your wife starts looking around, you might be making a transaction here sooner than you think you are.
Brian: Hold on, my phone is ringing, guys. It might be the sellers.
Bob: I'm just trying to teach you how this really works.
Michelle: Now, you've started something with the other Michelle, look out.
Brian: It's the other way around. I'm the one feeling antsy, but this isn't happening anytime soon. But my question was, I've got the app here, of course, all these different apps, and just in the last two weeks, it seems like all of these houses that I've sniffed around, right, they're all getting shoved in my face. I may not even like it, but I looked at it once, therefore, the app thinks I love it. But anyway, all of these are coming up with price reductions. So, it seems like everybody, the sellers are starting to sense this too. But at the same time, this is happening when we've had a cut in interest rates. I myself have been advising clients who have one of these 6%, 7% mortgages that, or a little higher than that, "It might be time to refinance." So, could rates coming down goose this back into a seller's market if the buyers come back in droves?
Michelle: Potentially. I think that everybody is just being a little bit cautious or a lot cautious right now. I don't expect us to do an immediate switch overnight. So, rates have come down really, really slowly. I mean, like tenths of a point. We're still hovering around six and a quarter, you know, depending on the type of loan that you get, and depending on your specific financial status and credit and all of that. So, honestly, I don't expect it to turn into a seller's market again overnight.
But here's the thing, I had four listings in the last 30 days. Two of them sold within a day in multiple offers. Two of them are still sitting. And there's no seemingly rhyme or reason why the two that sold really, really quickly... Although, you know, they were great homes, great properties, they both had swimming pools, which to me, leads me to believe that swimming pools are definitely something that people are looking for. The other two, they're great homes in great neighborhoods and great areas, and we have had to have some price changes.
So, you know, I do think that the longer sellers are on the market, the more nervous they get, and they tend to want to point fingers at their real estate agent like, "What is going on?" So, don't do that. Don't point your finger at me or at your real estate agent. Because trust me, if there was a buyer out there wanting to purchase your home, they would come. You know, you put it on the market, and they will come.
Bob: Well, Michelle, in the minute or so we've got left, I mean, let's face it, houses are like any other commodity. Correct me if I'm wrong, it's supply and demand. You use the word cautious. What is causing people to be cautious right now. And is this affecting supply more than demand, or demand more than supply? Meaning, has the supply gone up while demand has gone down? What's causing this cautiousness out there?
Michelle: Yeah, absolutely. I think that the number of people who have been stuck in their home for a long time, they're like, "It's time for me to make a move." And some people just miss the bubble. This fall has been very, very interesting. And timing is everything. If you want to sell your home, you've got to put it on the market. For the most part, people have to know that it's available. And so, we just have a lot of buyers who are exhausted with the process. They don't want to get into multiple offers. They do see the rates coming down. But I think everybody is just overwhelmed with the situation in life right now. And a lot of buyers are saying, "Yeah, I'm just going to wait. I'm going to sit tight for a while." So, I think there are fewer buyers out there and a few more sellers that are ready to make a move.
Bob: Interesting. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station. You're listening "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. You have a financial question you'd like for us to answer, there is a red button you can click while you're listening to the show. If you're listening to the show from the iHeart app, simply record your question, and it will come straight to us. All right, Brian, Paul in Fort Mitchell says, "We have more than we'll ever spend, but I still can't shake the fear of running out. Is that just how people are wired, or does it mean our plan's not clear enough?"
Brian: I love when we get questions from the Forts because I feel like I'm talking to our soldiers on the front lines of northern Kentucky, again, protecting us from the hordes of Florence, Kentucky. Paul in Fort Mitchell, so what you just did, the question you just asked just basically gave Bob and I job security for a good, long time. There's a lot of people out there in this situation. I know I've got enough, but I still have this fear that it's not. I just kind of can't see the future. And, yes, that is very much how people are wired, Paul. That voice in the back of your head that's telling you you don't have enough is the same voice that told you to save all of that beginning from the very beginning of your career.
So, we'll go ahead and assume you've got a 401(k), some kind of retirement plan. You made a choice at some point to start to carve out money away from yourself that you can spend this week and stick it in a savings plan. You did that, I don't know. I have no idea how old Paul is. Let's say it's 30 years ago, who knows? But you did that. And now, all of a sudden, you've got options. But what you're running into is the bigger mountain behind the initial fear of not having enough money. Oh, my gosh, we do have enough money. But now, how does it all work?
So, the answer to this is, put together a financial plan. Run some actual numbers. Figure out what it is that you spend. What does it cost your household to stay afloat for a month? And then string that out for 30, 35 years, whatever the life expectancy is. And then on top of that, add your other goals. You might have a mortgage in the mix maybe for a few more years. Maybe you're helping parents, kids, and so forth. The answer is just simply do the math. Run a plan based on a hunky-dory scenario, and then do it again, but take away 25% of your financial net worth.
That is the fear that most people have, which is, "Okay, I'm okay now, but what if a 2008 comes and sneaks up on me? Will I be okay then?" Exhale, Paul, congratulate yourself for doing what you've done. But now, look forward. Stop looking in the past and look forward and run some projections for yourself.
All right, moving on to Emily in Lebanon. Emily says, she's finally in a spot where they can afford to be generous, so they want to start sharing their wealth that they've built, but it starts to feel harder than saving ever did. So, how do you decide when you've given enough? When have you done your duty, versus when are you sacrificing too much, Bob?
Bob: Well, Emily, it's hard to tell from your question whether you're talking about giving to adult children, let's say, or grandchildren, or giving to charity, or all the above. So, there's a numbers part of this answer, which is, have a good financial plan and kind of know where the boundaries are in terms of how much can you afford to give without putting your long-term retirement plan in jeopardy. But then I think what you're kind of implying here is, maybe we've already done that, but it's really hard to cut loose to some of that money.
As it relates to charities, this is the best advice I can give you. I think giving to charity is a lot like anything else we do with our money. We're going to tend to follow our passion in our heart, whether that's taking a cruise or buying a new car or giving to some kind of charity that we've become attached to. So, the best advice I can give you is from the New Testament. 2 Corinthians 9:7 says, "Each of you should give what you've decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver." In other words, don't do any giving under pressure. Make sure you have peace, and I would say, some excitement and passion about it. And then that's where you know, you know, you your husband are heading in the right direction. You should derive some joy from giving money to others. And I hope that helps. All right, Greg...
Brian: I want to tack on an extra bullet to that, because I just had a conversation yesterday that I think goes along with this. So, a lot of people are, of course, passionate about tithing, which is pretty easy to do. You know, 10% of my income is easy to calculate when I've got two W-2 checks. But I think what happens is, a lot of time, people will kind of write that number in stone and say that it must be that dollar amount forever, or we're somehow not fulfilling our obligations, spiritually. But nowhere in the Bible does it say you should give X% of your IRA distributions and X% of your rental real estate income, or when you take this much out of savings, a chunk should always go.
The Bible doesn't quite get that specific. So, just be conscious that if you are a tither, it's okay to reduce your contributions because your income has lowered. Because you retired, congratulations, maybe your income doesn't need to be what it used to be. But we don't have to marry ourselves to the number we gave in the past just because it was the number. Have a reason, like Bob just said, figure out mathematically, what it is you can afford, first of all, and then make sure you're comfortable with it. And it does not have to be what you gave before you retired. A lot of people get screwed up by that.
Bob: Yep, good stuff. All right. Greg in Anderson, Brian, says, "We're close to retirement, but our life feels busier than ever. Our parents are aging. Grandkids are growing. Careers are winding down. How do you plan when everything's changing at once?" Well, I can relate to some of this question, Brian. I'd love to hear your advice.
Brian: Yeah, some of this hit a little close to home, isn't it? So, we all spent time at one point as a young person trying to build wealth and just trying to get started in adult life and so forth. So, I can tell that Greg did a good job of that. Because all of a sudden, he's getting hit in the face with all of these questions. And these are just all the normal things that everybody goes through. It does all happen at once. I'm not going to say, life is quiet in the first several decades. That is not the case at all. However, it's usually financially relatively quiet. The answers are fairly simple. I always tell young people, you've got three things to do, save your money aggressively, invest aggressively, don't panic when the market wobbles, and don't make a mess of your credit. If you do those three things for 30 years, you're going to have all these questions that Greg has. So, congratulations, Greg, you got what you wanted.
The answer is, first of all, exhale always. And remember, you're not the only one going through this. There are plenty of people around you who are hitting, who are seeing all these things. The good thing is, when we get ourselves hung up over the math, the financial math behind all of this, it's just math. You can get it all down in a piece of paper or a spreadsheet or a financial planning tool, and then you can make that question go away from a standpoint of, you've kind of got it down in concrete, you've got it somewhere you can play with it. Then you can focus on all the things you highlighted, Greg, are more emotional in nature. So, once you have the math out of the way and you understand it, you have a tool that you can flex as things change, then you can focus on those more difficult psychological and emotional questions you just highlighted. But, again, first thing, Greg, exhale.
Bob: Coming up next, Brian has his Bottom Line on how to avoid analysis paralysis. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station. You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. Brian has some words of wisdom for us tonight about how to avoid analysis paralysis.
Brian: Well, Bob, I thought of this the other day because I had a few conversations with clients ,and then you and I were talking on it on an earlier show, about the idea that the market is at a peak, and what does that mean? And we kind of highlighted the fact that the market is usually at a peak. So, it doesn't really mean much of anything. It just means that we've got more money than we've ever had, but it doesn't necessarily change what you need to do.
So, what happens, though, is a lot of times this causes people to get that...you know, we've all heard this phrase, paralysis by analysis. In other words, overthinking, looking for so many different options and researching everything to death that I never bothered to do anything. So, now, tell me this sounds like you. You ever spent hours comparing credit cards or researching that perfect investment only to wind up going, "You know what? I don't see the answer. I'm going to look at this again tomorrow." And tomorrow comes, same thing happens. And eventually, you just quit looking at it.
So, I have a couple of clients, Bob, that went to cash in 2008, panicked, unfortunately, and sat that way until 2021. This was not with us. They came around, came to our doorstep well into that whole situation. But the entire time, they spent 10, 15 years looking for the perfect investment that would never take them through a 2008-type thing again. And that is just not a possibility. But they set themselves back. And so, what happens is, obviously, this is a psychological issue happening here called loss aversion. "I don't want to lose money. That's a bad thing. I can't. That is a negative permanently. It's a mistake. If something goes wrong, we've made a mistake." You know, not realizing that that's just life. Sometimes it rains and sometimes we make picnic plans on the wrong day. It just happens, but it doesn't mean there isn't going to be another day out there.
So, the research shows that a lot of Americans can delay these financial decisions for months or even years because they feel overwhelmed. And in 2025 with costs going up and lots of scary headlines and so forth, and the market being in year three of a really, really strong bull market, that gets a lot of people concerned about, "What do I do? What do I do today?" The answer oftentimes, is nothing. Do you ever see this kind of thing in your daily routine?
Bob: Yeah. And I think this, you know, speaks to the value of having a good, fiduciary financial advisor. Forget about products and strategies and all that. A lot of times... And Brian, we joke around a lot about this on the show, but it is vitally important to study history and study data and actually have some good historical data to go through that is constructed in such a way where people can understand it. And that's where I know you do a great job of this and educating your clients. I think once people get armed with good information... And a lot of the best information out there, you never hear about in the financial media because they're just talking about what's going to go up or down over the next 36 hours. So, to have a good advisor step back and look at some good historical data, I have found, armed with data, people can get a little release here, and be willing to get off that analysis paralysis train.
Brian: Yeah. So, three quick steps here. Set a deadline, give yourself a week, a month or whatever, but set that hard deadline. Narrow your options down to two or three. And embrace imperfection. You're not going to nail it. You'll never have perfect information, like Bob just said. But know that you will have made the decision with the most information you can, and therefore, the most educated manner.
Bob: Thanks for listening tonight. You've been listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
Let's face it, you can't open a financial newsletter or turn on CNBC these days without hearing about artificial intelligence. AI is the thing. It's the story. But the question we're hearing from listeners is simple, what do I do about it? Do I buy AI stocks now? Do I ignore the whole sector? Are they overpriced? Or do I continue to chase the hype? Brian, I know you love data. We joke around a lot about data, but let's talk about this AI space, because I think there's a lot of historical context to draw into this discussion.
Brian: If you look back through market history, Bob, whenever the market goes on a run, there's almost always some kind of catalyst behind it, some interesting story somewhere in the economic world that is driving things. You know, 25 years ago, it was the Internet itself. It was just the original concept of let's use computers to communicate and buy stuff and conduct commerce and all that kind of thing. And then for a while, it was real estate. Way before that, in the '70s, it was oil and gas partnerships, whatever. There's always something that's attracting attention and capital and so forth.
So, right now, it's AI, and we're still in the very beginning stages of this. So, there's still a lot of promise and a ton of guessing going on. Same way, I think the easiest thing to draw a parallel to is the original dot-com boom, because we didn't know which companies were going to make it. There were just a lot of companies out there with interesting marketing plans and interesting products and services and so forth in taking advantage of new technology. And that's where we are right now. So, if you're trying to invest in AI directly, like you're trying to pick the next NVIDIA or the next open AI, that's the company behind ChatGPT, you're basically placing bets on individual horses, not really knowing, of course, what's going to happen at the end of that race.
So, that brings us to, there's three choices everybody has. So, option one is what we just kind of hinted at. Pick that winning horse. You're going to bet on the Tesla's, the NVIDIA's of the world, and maybe that up and coming chip company that nobody's heard of, yet. And meanwhile, your neighbor is investing in some other thing that you never ran across that nobody else has heard, yet. That's the most tempting option, Bob. Had you done this early on with an NVIDIA or Apple or an Amazon, this is what makes it so tempting, it would work fine. But for every Amazon, there are web vans and pets.com and Myspace. And most of these companies just plain don't survive.
Bob: Yeah, I think the way to look at this is, you know, let's face it, if artificial intelligence really is a thing, and I think it is, I think the debate is over at that point. It's going to change things. And probably in a good way, if you like efficiency. So, just like the internet, you know, early on, you can invest in the technology hardware or the early software developers, things like that. But, you know, let's face it, the internet, there's not a company in existence today, there's not a home in existence today that doesn't use the internet. My point here is that if artificial intelligence is going to be a thing, and it's already becoming a thing, it's going to impact efficiency in every corner of the market.
And so, you don't have to pick the next hardware supplier, you can just watch companies continue to grow their productivity and their earnings by adopting a piece of technology like AI or like the internet that causes productivity to go up and profits to rise. In other words, you can be broadly participating in the economy and not even have, you know, the letters A-I behind the name of a company, but make no mistake, they're benefiting from the adoption of this technology if they're being smart about things.
Brian: Correct. And we're picking winners and losers here, right? So, at the end of the day, some companies are going to be around forever, right? We can name some of those companies from the original internet boom that obviously now are the core of the internet. They made it. But then you've got the others who didn't quite make it. And the example I would give is I can go on amazon.com right now and I could rent a video or I could buy a book about the demise of pets.com. So, one of them is going to win and one of them is going to lose. How do we find a winner? Is it the company with the best technology or is it the company with the best marketing partnerships or scaling ability? You know, the ones who turned it into the most successful type of a business, that kind of thing.
But picking winners isn't just about who's smart. It's about who can make money out of there. The road to financial success is littered with smart people who simply couldn't take a great concept and turn it into a real business. The market already knows that NVIDIA is good. That's not news. So, you're not just betting on their success. You're betting that they're going to do better than the already sky-high expectations that the market has placed on them because so many people have piled into these stocks. That is a much taller order than looking at some business plan from somebody that's working out of a garage and hasn't built anything, yet.
Bob: Yeah. And at the end of the day, I don't care what industry you're talking about, it comes down to how much are you willing to pay for a dollar's worth of earnings or profits. Let's give an example. Let's compare Tesla right now to Toyota. Tesla stock is priced around $400 a share. Earnings are around $1.50 per share. Toyota, on the other hand, their stocks priced around $200 a share, but their earnings per share is $20. That means Tesla's price to earnings ratio is about 100 while Toyota's is 12.
Point here is you got to look at value. And I know the market will pay up for dramatically growing earnings, but sometimes, Brian, and we see this all the time, if people chase or get too speculative about assuming that sky-high earnings growth is going to continue, that's where these stocks can really crater and come down to earth. As an investor out there, you got to be looking at, what amount of risk are you really willing to take? And is it better to go buy something like a Toyota at 12 times earnings that is still growing? And that's what goes into constructing a risk-adjusted, well-constructed, diversified investment portfolio.
Brian: Yeah. I want to put some more numbers to that too, because just to help people get an idea of the scale of the demand that there is for these stocks. So, if you're buying Tesla right now, you're paying $400 for $1.50 in earnings. That's where a price to earnings ratio comes from. But if you're going to go to it with Toyota, obviously a little more traditional, a little more standard type of a car company, now you're paying $200 for $20 in earnings. So, the math says it's going to take about 100 years to earn back your Tesla investment, if earnings stay the same, versus 12 years with Toyota. If Tesla stays on the same trajectory of growth that they've had, then, yes, it could potentially continue on that type of a pace. But on the other hand, if other car companies catch up to that technology, if somebody else comes up with a better idea, Tesla's got a lot further to fall than the new companies, the new entrants to that arena that don't quite exist yet.
And I don't mean to pick on Tesla. Maybe that's right. I mean, maybe that is the valuation it should have. But as an investor, you've got to ask, what is already priced in? Everybody knows that this is unique technology and a very unique charging network and all these other stuff. They do have a hell of a head start on other companies. But at the end of the day, it's a growth stock, and it can have wild swings simply because expectations are so crazy high. And that's what comes along with being... You know, Tesla's not quite a meme stock. It's definitely got its own...you know, it's a more unique situation. But at the same time, it's also something that has had an awful lot of speculative activity around it because of what it might do, not what it has done.
Bob: All right. Well, we talked about option one here, which is trying to pick the next big winner. Let's talk about option two. You sit out the market entirely. You say, "Hey, all this stuff is too crazy, too speculative. I don't understand any of it. I'm just going to ignore that AI exists, and I'm going to stay out of it completely." This might feel safe, especially after the tech bubble in the early 2000s that, let's face it, a lot of investors went through, or cryptocurrency crashes in the short-term. But here's the problem. You risk missing out on structural growth, and I would say, a generational growth in innovation opportunity, which is AI. AI could become like the Internet or electricity, meaning it's ubiquitous everywhere. Being so embedded that not investing in it means just falling behind in terms of return and growth of your portfolio and your whole retirement plan.
Brian: Yeah. And I think that electricity example is really apropos here. Because if you think back to that, I'm sure there were people who sat on the sidelines going, "That electricity stuff, that's dangerous. I don't want that pulled into my building. I want nothing to do with that." And those folks kind of, obviously, missed out on opportunities to make their businesses more efficient. And I'll bet there's plenty of stories out there about businesses that went out that, basically, failed because they didn't move quickly enough to take advantages of what electricity could bring.
And those factories that were making things by hand lost quickly. And I would I have to think that's got to be almost an overnight thing if you weren't on the on the cutting edge of that 150 years ago, whenever that was. But at the same time, that's what you're potentially missing out on. So, we can't ignore these things. They are the types of things that drive the markets forward. And that extends to further than just that sector, just that little stock. So, history shows that we need to be paying attention. We need to be willing to invest like that. So, with that, maybe we move on to option three here, Bob.
Bob: Well, option three is the smart choice here. You invest in the whole market. Again, broadly diversified funds that give you exposure to all the contenders, all the industries out there. Because, again, if artificial intelligence is going to be a thing and I think it's going to be a thing, every sector of the economy is going to benefit from that. It's going to be a productivity booster. And so, you don't have to worry about picking the next winner and loser. You just stay invested in the broad market. You count on ingenuity, innovation, hard work, people out there always finding a way to leverage technology, to grow businesses, and grow profits. And that's why staying diversified is usually, for most people, the best way to go.
Brian: That's the way to think about it. At the end of the day, I think the biggest thing here is that there is a new technology out there that a lot of companies are going to be looking to take advantage of. And I always think back to the stories that we heard from the gold rush in the middle of the 19th century. Was it the gold diggers that made all the money? No, it wasn't. It was the Levi Strauss's of the world who decided to make clothing that was appropriate to go dig in the dirt all day. It was Wells Fargo. Remember the Stagecoach logo? Well, that's what it's from, because there were businesses out there making money out in the middle of nowhere, and they needed a way to get those dollars back in safely. And that's where that Stagecoach came from. And a number of other companies.
That's what's going to happen here. It's going to be the companies who have some other kind of product and service who are using AI to continue selling that long-running product or service in a much more efficient and much more profitable manner. That's what history shows when we have new technology. That's where the advantage is. Not for the lucky holders of that one company that survived alongside the 19 that didn't.
Bob: Well, Brian, to take your gold rush example, which is a great one, and catapult that all the way forward to 2025. I mean let's face it, we're going to need a ton of energy to fuel these servers that power AI. And this is not a stock recommendation. I'm just saying look at a company like GE Vernova. Nobody would have thought going into 2024, 2025 of GE Vernova as an AI stock, but go look at the performance of that stock. Meaning, you know, back to your Stagecoach example, it's not the people that were digging the gold, it's people that are supplying the things necessary to harvest gold, to harvest energy. So, there's a lot of beneficiaries all the time in emerging technologies.
Here's the Allworth advice, don't gamble on the future, invest in it broadly, and let the winners come to you. Just how much should I be investing outside the United States of America? It's a question we get a lot. We'll share some perspective on that coming up next. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. If you can't listen to "Simply Money" live every night, subscribe and get our daily podcast. And if you think your friends or your family could use some financial advice, let them know about us as well. Just search "Simply Money" on the iHeart app, or wherever you find your podcast. Well, managing money as a team to navigating retirement when life feels more expensive than ever, we're answering your pressing financial questions straight ahead at 6:43.
Most American investors are heavily concentrated in one market, the United States. It's what we know, it's where we live, and quite frankly, it's worked really, really well for the past decade-plus if not decades. But we should at least be willing to shift the conversation a little bit from investing in countries to investing in companies. The global economy does not stop at our borders, and your portfolio shouldn't either. Brian, 2025, you know, we've got some data backed reasons to kind of revisit this whole international investing topic, because it is valid, and it's something people kind of ignore or forget about over time.
Brian: Well, yeah, there's been a huge focus on reducing the expense of my investment portfolio, and that's a good thing to focus on. But it has led a lot of people down at the bottom of the funnel to conclude that there's just nothing but the S&P 500, "All I need is this S&P 500 index fund, and that's all I'll ever need because nothing happens anywhere else." Well, that's a good core of a portfolio because the U.S. does make up a big chunk of the overall global economy, about 65%. Sixty-five percent of economic activity occurs right here in the United States. But that means 35% doesn't. That is trillions of dollars in value that you're ignoring if that's not something that you represent in your portfolio.
So, let's give an example. Let's say, you said, "I only want to invest in U.S. car companies because the U.S. is the only place that there is to deal with." You'd have at this point Ford, General Motors, and Tesla. There's a handful of other car companies out there that have done okay. So, that is not a diversified bet on the auto industry. That's just a slice of it. You're ignoring Toyota, Honda, Hyundai, BMW, Volkswagen, Ferrari, BYD in China. That's a new one on me. But still, it's out there, and there are billions of people who buy cars that aren't built in the United States. Jaguar, Land Rover are now based in India. So, if you simply focus so much on that, you're going to leave an awful lot of economic activity on the table simply because it doesn't occur within the boundary of the United States. That does not mean it's not profitable activity. And the winds will change direction on occasion as they have this year.
Bob: Well, Brian, I know you love history. I do as well. So, let's talk about Japan, for example. From 1970 to 1989, Japanese equities returned an average of 22% per year. People thought Japan, at that time, and I remember this, I remember when the Hondas started coming out in droves, people thought Japan was going to absolutely dominate the global economy forever. And then came the 1990s. U.S. technology took over, Microsoft, Intel, eventually Apple, Amazon, Google. Nobody had even heard of these companies in the late '70s to early '80s, but the tide certainly did shift. The point here is, no country in and of itself as it relates to stocks dominates forever. Yes, the U.S. has been on a great run, especially post 2009, but there have been decades like the 1970s where the U.S., Brian, actually underperformed global markets.
Brian: Yeah, that's right. And that's actually happening right now. But technically, in 2025, the U.S. is underperforming global markets. International stocks are doing better than U.S. stocks. Now, everybody's having a pretty good year, right? We could be looking, knock on wood, we could be looking at the third, double-digit rate of growth in the United States here by the end of this year. But international stocks, both at the big, established, developed level, as well as emerging markets are all doing better. The reason for this is because, you know, for better or for worse, regardless of the side you are on of the political aisle... We're not going to turn this into politics, of course. But the reason is, the United States has chosen to portray itself drastically differently than it has in the past. And that is forcing countries and companies who are internationally based to say, "Well, if it's going to be harder to do business there, maybe we're overlooking some opportunities elsewhere in the world to build business partnerships."
And that is exactly what has happened. The market has recognized that dollars have flowed into internationally-based, non-U.S. companies at a faster pace this year than they have U.S. companies. That doesn't mean that the U.S. market is down. That's not the case at all. Everybody's having a pretty good year thus far. Again, furiously knocking on wood. But international companies are having a slightly better year. That is why we always have these discussions about, make sure you've got a diversified portfolio so that you're not completely missing the boat in some other area that maybe didn't do so great last year, but all of a sudden, has taken the lead this year.
Bob: Yeah, a couple of examples where international companies are just as innovative, if not more innovative than their U.S. counterparts. Samsung, for example, is really pushing the boundaries in semiconductor chips. Taiwan's semiconductor is critical in AI technology. And let's face it, a lot of European firms lead the globe here in innovation in green energy technology. So, there's a lot of innovation going on all over the world. And it's another reason to be open to diversifying your portfolio.
That being said, this is where some good, I would say, managed portfolios, and it's worth paying somebody to really kick the tires and look at some of these companies. Because when you get into investing internationally, there's different regulatory environments. There's different corporate governance rules. This is where it's helpful a lot of times to have boots on the ground, really looking at this on a company-by-company basis. Not just saying, "Well, I'm going to just throw money at the Japanese market or at the Taiwan market." Because things are different literally, company-by-company, and region by region.
Brian: So, it's important to talk to your fiduciary advisor. Just make sure you've got the right level of exposure to offset the other risks you have in your portfolio. That's the whole point of asset allocation and diversification. But it all starts with a financial plan anyway. Before you worry about what color bricks you're going to put on your house, you need to have a blueprint to begin with.
Bob: Here's the Allworth advice, don't invest in countries, invest in great companies wherever they are. Coming up next, an update on the local real estate market. Are prices cooling off, or is the bidding war era still alive and well? Our real estate expert is in next to talk about all of that. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. And we're joined tonight by our real estate guru, Michelle Sloan. Michelle, thanks as always for making time for us tonight. We to kick things off tonight just by getting your perspective on what the current environment is out there in the real estate market, the residential real estate market. I mean, let's face it, rates have come down a little bit. What have you seen change since the last time we talked to you about, you know, where's the market at? I know the weather's cooling, everybody's back to school. Are things slowing down? Are things speeding up with these rates coming down? Give us a good, overall view of the residential real estate market in greater Cincinnati.
Michelle: Well, I'll tell you what, the biggest difference is, we are seeing a shift in the market to a more balanced market. And what that means is, it's no longer strictly a seller's market in Cincinnati, Ohio. We have had a seller's market for years, actually. And now, in some areas of Cincinnati, we're seeing more of a buyer's market. What does that mean? So, it's all about supply and demand. And you guys are very familiar with that. But, you know, the supply, we've had more buyers than we've had homes for sale. But now, we're balancing out the market.
And so, this is a good thing for buyers because there's opportunities out there. When it's a buyer's market, we have more homes on the market, and maybe fewer buyers. Therefor the buyers that are out there are going to have an opportunity. They may not have to actually compete against a whole bunch of other buyers. And so, they might be able to get a home for... I'm not going to say the price is going to be dramatically lower, because we are definitely seeing the prices are still increasing in the Cincinnati area as far as the home price. Median prices are up 5% year-over-year. And so, we're seeing still a slight increase. It's not the crazy increases though that we saw in the past several years where, you know, the market has increased 10% or 15% year-over-year, which is just crazy to even think about.
So, I would say, the biggest change that we're seeing is, it's no longer a seller's market. We have a more balanced market. And it's leaning a little bit towards a buyer's market. So, days on market, meaning, how long a home has to sit on the market before someone actually gets under contract and buys that property is taking longer. Instead of just a couple of days, which it has been over the last few years, we're looking at a 49 day average time on market, 45 days average time on market. So, that's a huge change.
Brian: So, Michelle, the question I have is... So, I am also married to Michelle. That's why I'm stammering here because I was going to say her name and I said your name, and then I don't know who anybody is anymore. Anyway, Michelle and I aren't going anywhere anytime soon, but we are sneaking up on empty nest time of life. So, I'm sniffing around a little bit just to see what things look like. That means, you know, in this day and age, I've got a few apps going and just kind of watching different properties. We're not going to place a bid or anything anytime soon. So, anybody listening to me, who knows, leave me alone. Anyway. But anyway, so I've got these apps going, and I've noticed...
Bob: Brian, if your wife starts looking around, you might be making a transaction here sooner than you think you are.
Brian: Hold on, my phone is ringing, guys. It might be the sellers.
Bob: I'm just trying to teach you how this really works.
Michelle: Now, you've started something with the other Michelle, look out.
Brian: It's the other way around. I'm the one feeling antsy, but this isn't happening anytime soon. But my question was, I've got the app here, of course, all these different apps, and just in the last two weeks, it seems like all of these houses that I've sniffed around, right, they're all getting shoved in my face. I may not even like it, but I looked at it once, therefore, the app thinks I love it. But anyway, all of these are coming up with price reductions. So, it seems like everybody, the sellers are starting to sense this too. But at the same time, this is happening when we've had a cut in interest rates. I myself have been advising clients who have one of these 6%, 7% mortgages that, or a little higher than that, "It might be time to refinance." So, could rates coming down goose this back into a seller's market if the buyers come back in droves?
Michelle: Potentially. I think that everybody is just being a little bit cautious or a lot cautious right now. I don't expect us to do an immediate switch overnight. So, rates have come down really, really slowly. I mean, like tenths of a point. We're still hovering around six and a quarter, you know, depending on the type of loan that you get, and depending on your specific financial status and credit and all of that. So, honestly, I don't expect it to turn into a seller's market again overnight.
But here's the thing, I had four listings in the last 30 days. Two of them sold within a day in multiple offers. Two of them are still sitting. And there's no seemingly rhyme or reason why the two that sold really, really quickly... Although, you know, they were great homes, great properties, they both had swimming pools, which to me, leads me to believe that swimming pools are definitely something that people are looking for. The other two, they're great homes in great neighborhoods and great areas, and we have had to have some price changes.
So, you know, I do think that the longer sellers are on the market, the more nervous they get, and they tend to want to point fingers at their real estate agent like, "What is going on?" So, don't do that. Don't point your finger at me or at your real estate agent. Because trust me, if there was a buyer out there wanting to purchase your home, they would come. You know, you put it on the market, and they will come.
Bob: Well, Michelle, in the minute or so we've got left, I mean, let's face it, houses are like any other commodity. Correct me if I'm wrong, it's supply and demand. You use the word cautious. What is causing people to be cautious right now. And is this affecting supply more than demand, or demand more than supply? Meaning, has the supply gone up while demand has gone down? What's causing this cautiousness out there?
Michelle: Yeah, absolutely. I think that the number of people who have been stuck in their home for a long time, they're like, "It's time for me to make a move." And some people just miss the bubble. This fall has been very, very interesting. And timing is everything. If you want to sell your home, you've got to put it on the market. For the most part, people have to know that it's available. And so, we just have a lot of buyers who are exhausted with the process. They don't want to get into multiple offers. They do see the rates coming down. But I think everybody is just overwhelmed with the situation in life right now. And a lot of buyers are saying, "Yeah, I'm just going to wait. I'm going to sit tight for a while." So, I think there are fewer buyers out there and a few more sellers that are ready to make a move.
Bob: Interesting. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station. You're listening "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. You have a financial question you'd like for us to answer, there is a red button you can click while you're listening to the show. If you're listening to the show from the iHeart app, simply record your question, and it will come straight to us. All right, Brian, Paul in Fort Mitchell says, "We have more than we'll ever spend, but I still can't shake the fear of running out. Is that just how people are wired, or does it mean our plan's not clear enough?"
Brian: I love when we get questions from the Forts because I feel like I'm talking to our soldiers on the front lines of northern Kentucky, again, protecting us from the hordes of Florence, Kentucky. Paul in Fort Mitchell, so what you just did, the question you just asked just basically gave Bob and I job security for a good, long time. There's a lot of people out there in this situation. I know I've got enough, but I still have this fear that it's not. I just kind of can't see the future. And, yes, that is very much how people are wired, Paul. That voice in the back of your head that's telling you you don't have enough is the same voice that told you to save all of that beginning from the very beginning of your career.
So, we'll go ahead and assume you've got a 401(k), some kind of retirement plan. You made a choice at some point to start to carve out money away from yourself that you can spend this week and stick it in a savings plan. You did that, I don't know. I have no idea how old Paul is. Let's say it's 30 years ago, who knows? But you did that. And now, all of a sudden, you've got options. But what you're running into is the bigger mountain behind the initial fear of not having enough money. Oh, my gosh, we do have enough money. But now, how does it all work?
So, the answer to this is, put together a financial plan. Run some actual numbers. Figure out what it is that you spend. What does it cost your household to stay afloat for a month? And then string that out for 30, 35 years, whatever the life expectancy is. And then on top of that, add your other goals. You might have a mortgage in the mix maybe for a few more years. Maybe you're helping parents, kids, and so forth. The answer is just simply do the math. Run a plan based on a hunky-dory scenario, and then do it again, but take away 25% of your financial net worth.
That is the fear that most people have, which is, "Okay, I'm okay now, but what if a 2008 comes and sneaks up on me? Will I be okay then?" Exhale, Paul, congratulate yourself for doing what you've done. But now, look forward. Stop looking in the past and look forward and run some projections for yourself.
All right, moving on to Emily in Lebanon. Emily says, she's finally in a spot where they can afford to be generous, so they want to start sharing their wealth that they've built, but it starts to feel harder than saving ever did. So, how do you decide when you've given enough? When have you done your duty, versus when are you sacrificing too much, Bob?
Bob: Well, Emily, it's hard to tell from your question whether you're talking about giving to adult children, let's say, or grandchildren, or giving to charity, or all the above. So, there's a numbers part of this answer, which is, have a good financial plan and kind of know where the boundaries are in terms of how much can you afford to give without putting your long-term retirement plan in jeopardy. But then I think what you're kind of implying here is, maybe we've already done that, but it's really hard to cut loose to some of that money.
As it relates to charities, this is the best advice I can give you. I think giving to charity is a lot like anything else we do with our money. We're going to tend to follow our passion in our heart, whether that's taking a cruise or buying a new car or giving to some kind of charity that we've become attached to. So, the best advice I can give you is from the New Testament. 2 Corinthians 9:7 says, "Each of you should give what you've decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver." In other words, don't do any giving under pressure. Make sure you have peace, and I would say, some excitement and passion about it. And then that's where you know, you know, you your husband are heading in the right direction. You should derive some joy from giving money to others. And I hope that helps. All right, Greg...
Brian: I want to tack on an extra bullet to that, because I just had a conversation yesterday that I think goes along with this. So, a lot of people are, of course, passionate about tithing, which is pretty easy to do. You know, 10% of my income is easy to calculate when I've got two W-2 checks. But I think what happens is, a lot of time, people will kind of write that number in stone and say that it must be that dollar amount forever, or we're somehow not fulfilling our obligations, spiritually. But nowhere in the Bible does it say you should give X% of your IRA distributions and X% of your rental real estate income, or when you take this much out of savings, a chunk should always go.
The Bible doesn't quite get that specific. So, just be conscious that if you are a tither, it's okay to reduce your contributions because your income has lowered. Because you retired, congratulations, maybe your income doesn't need to be what it used to be. But we don't have to marry ourselves to the number we gave in the past just because it was the number. Have a reason, like Bob just said, figure out mathematically, what it is you can afford, first of all, and then make sure you're comfortable with it. And it does not have to be what you gave before you retired. A lot of people get screwed up by that.
Bob: Yep, good stuff. All right. Greg in Anderson, Brian, says, "We're close to retirement, but our life feels busier than ever. Our parents are aging. Grandkids are growing. Careers are winding down. How do you plan when everything's changing at once?" Well, I can relate to some of this question, Brian. I'd love to hear your advice.
Brian: Yeah, some of this hit a little close to home, isn't it? So, we all spent time at one point as a young person trying to build wealth and just trying to get started in adult life and so forth. So, I can tell that Greg did a good job of that. Because all of a sudden, he's getting hit in the face with all of these questions. And these are just all the normal things that everybody goes through. It does all happen at once. I'm not going to say, life is quiet in the first several decades. That is not the case at all. However, it's usually financially relatively quiet. The answers are fairly simple. I always tell young people, you've got three things to do, save your money aggressively, invest aggressively, don't panic when the market wobbles, and don't make a mess of your credit. If you do those three things for 30 years, you're going to have all these questions that Greg has. So, congratulations, Greg, you got what you wanted.
The answer is, first of all, exhale always. And remember, you're not the only one going through this. There are plenty of people around you who are hitting, who are seeing all these things. The good thing is, when we get ourselves hung up over the math, the financial math behind all of this, it's just math. You can get it all down in a piece of paper or a spreadsheet or a financial planning tool, and then you can make that question go away from a standpoint of, you've kind of got it down in concrete, you've got it somewhere you can play with it. Then you can focus on all the things you highlighted, Greg, are more emotional in nature. So, once you have the math out of the way and you understand it, you have a tool that you can flex as things change, then you can focus on those more difficult psychological and emotional questions you just highlighted. But, again, first thing, Greg, exhale.
Bob: Coming up next, Brian has his Bottom Line on how to avoid analysis paralysis. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station. You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. Brian has some words of wisdom for us tonight about how to avoid analysis paralysis.
Brian: Well, Bob, I thought of this the other day because I had a few conversations with clients ,and then you and I were talking on it on an earlier show, about the idea that the market is at a peak, and what does that mean? And we kind of highlighted the fact that the market is usually at a peak. So, it doesn't really mean much of anything. It just means that we've got more money than we've ever had, but it doesn't necessarily change what you need to do.
So, what happens, though, is a lot of times this causes people to get that...you know, we've all heard this phrase, paralysis by analysis. In other words, overthinking, looking for so many different options and researching everything to death that I never bothered to do anything. So, now, tell me this sounds like you. You ever spent hours comparing credit cards or researching that perfect investment only to wind up going, "You know what? I don't see the answer. I'm going to look at this again tomorrow." And tomorrow comes, same thing happens. And eventually, you just quit looking at it.
So, I have a couple of clients, Bob, that went to cash in 2008, panicked, unfortunately, and sat that way until 2021. This was not with us. They came around, came to our doorstep well into that whole situation. But the entire time, they spent 10, 15 years looking for the perfect investment that would never take them through a 2008-type thing again. And that is just not a possibility. But they set themselves back. And so, what happens is, obviously, this is a psychological issue happening here called loss aversion. "I don't want to lose money. That's a bad thing. I can't. That is a negative permanently. It's a mistake. If something goes wrong, we've made a mistake." You know, not realizing that that's just life. Sometimes it rains and sometimes we make picnic plans on the wrong day. It just happens, but it doesn't mean there isn't going to be another day out there.
So, the research shows that a lot of Americans can delay these financial decisions for months or even years because they feel overwhelmed. And in 2025 with costs going up and lots of scary headlines and so forth, and the market being in year three of a really, really strong bull market, that gets a lot of people concerned about, "What do I do? What do I do today?" The answer oftentimes, is nothing. Do you ever see this kind of thing in your daily routine?
Bob: Yeah. And I think this, you know, speaks to the value of having a good, fiduciary financial advisor. Forget about products and strategies and all that. A lot of times... And Brian, we joke around a lot about this on the show, but it is vitally important to study history and study data and actually have some good historical data to go through that is constructed in such a way where people can understand it. And that's where I know you do a great job of this and educating your clients. I think once people get armed with good information... And a lot of the best information out there, you never hear about in the financial media because they're just talking about what's going to go up or down over the next 36 hours. So, to have a good advisor step back and look at some good historical data, I have found, armed with data, people can get a little release here, and be willing to get off that analysis paralysis train.
Brian: Yeah. So, three quick steps here. Set a deadline, give yourself a week, a month or whatever, but set that hard deadline. Narrow your options down to two or three. And embrace imperfection. You're not going to nail it. You'll never have perfect information, like Bob just said. But know that you will have made the decision with the most information you can, and therefore, the most educated manner.
Bob: Thanks for listening tonight. You've been listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.