AI Is Booming. But Will You Invest in the Right Companies?
On this episode of Simply Money presented by Allworth Financial, Bob and Brian break down Anthropic's highly anticipated IPO, the eye-popping revenue numbers, and why investors should be cautious about chasing the AI hype. Plus, they examine silver's wild price swings, explain when a living trust makes more sense than a simple will, and answer listener questions about concentrated company stock and minimizing taxes on an inherited IRA. They also share why communicating your estate planning wishes could be just as important as the documents themselves.
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Bob: Tonight, one of the biggest names in artificial intelligence is getting ready to go public. Should you jump in? You're listening to "Simply Money," presented by Allworth Financial. I'm Bob Sponseller, along with Brian James. Well, we've obviously talked a lot about artificial intelligence, and whether all this excitement is creating another investment bubble. We're about to get a fascinating test of just how much investors are willing to pay for the AI revolution. And we're talking now about Anthropic, the company behind the popular AI chatbot, Claude. Anthropic has officially filed paperwork to go public, Brian. This is gonna happen next month, right?
Brian: Yeah, and this one could make history, Bob. So, we're talking about a company valued privately at almost a trillion dollars earlier this year, and now there's reports that the IPO valuation itself could approach $2 trillion, for a company that didn't exist five or six years ago, so... The IPO is expected to happen the week of November 16th. No official trading date has been announced. And the reason for all the hype is, of course, money. The revenue numbers are kind of ridiculous, so go figure. Anthropic generated about $4.6 billion in revenue during all of 2025. That's revenue, right? There's a difference between revenue and net profit.
Bob: Sales.
Brian: Yeah, that's sales.
Bob: Revenue equals sales, right? [crosstalk 00:01:33]
Brian: People like their stuff, is all that we know about it so far. So, just in the first six months of 2026, $16.3 billion. So, obviously, again, let's do the math there, $4.6 billion in all of 2025, and now, in the first half of this year, it generated four times that much. So yes, for sure, Claude is something that has caught fire, and is appearing in a lot of places. But that's not the entire story, is it, Bob?
Bob: No. I mean, watching these revenue numbers or sales numbers really tells us about the adoption of artificial intelligence in the broad economy, which we're starting to see. As profits continue to grow in every business, all over the place, and we talk about that all the time, businesses are actually spending a ton of money on this kind of software. And this just isn't people asking a chatbot to write an email or plan a vacation. I mean, actual companies are using this software now, and using it effectively, to write software, analyze a bunch of information, automate routine tasks, and improve productivity, and that's one reason why you're seeing S&P 500 earnings, year over year, over 26%. And that's really the distinction here, because one of the biggest questions surrounding AI has been whether these companies can actually turn all this excitement into real revenue. Well, Anthropic and others have certainly answered that question with a resounding yes. However, when it comes to investing, this all comes down to how much we're willing to pay for stocks like this, because stocks trade relative to their earnings, or sales multiples or whatever. You wanna make sure these companies are actually making money and growing their profits year over year. And you can get caught here if you pay too much per unit of earnings here, and then have the industry as a whole or a company in general slow down their revenue projections, and the stock can plummet in price. And we've seen that in various points of times in history, Brian.
Brian: So, let's hit those eye-popping numbers again. Remember, we said $4.6 billion in revenue during all of '25. Think only sales, not net profit. First half of '26, $16 billion. So if they just keep their pace, they're on pace to generate about $32 billion worth of revenue, and that obviously will probably continue to grow, especially with it hitting the headlines now. Let's talk about some more eye-popping numbers, though. $80 billion is the next number we're gonna talk about, and it's on the wrong side. It's on the wrong half of the income statement. So, Anthropic reported a net loss of $80 billion, again, in the first six months of this year. Oh, you pulled in $16 billion in revenue? Cool. What did it cost you to do that? Oh, $80 billion? Okay, maybe that's not working out quite the way we would want it to. Now, again, this is not at all a referendum on the quality of the products and the impact that their products and services are gonna have, but it's taking an awful lot to get it all out there. So, how does a company lose that much money? So, $72 billion of the $80 billion came from accounting adjustments related to its financing arrangements. So, it's not as though Anthropic wrote checks totaling $80 billion, right? They didn't buy $80 billion worth of office supplies and coffee, that kind of stuff. It is moving money around and that kind of thing, like all companies do. That doesn't mean its actual net operating costs aren't enormous, though. They spent about $9 billion. These are the numbers I think that'll make more sense to people. Spent $9 billion on computing and infrastructure, right? There's an awful lot of hardware that needs to live and run all this stuff. That $9 billion is more than an expend on the same expenses during all of last year, right? So they're basically doubling that already huge outflow just to keep things going. That's the part investors really need to understand, right? Artificial intelligence is not cheap. You need huge data centers, advanced computer chips, massive amounts of electricity, and highly-paid engineers, and that's where all this money's going.
Bob: Yeah, and that's why we've seen memory chips, think Micron and other semiconductor stocks, just take off the first half of this year, and they pulled back a little bit here in recent weeks because of the concern that some of this capex spending, as the industry likes to call it, might slow down, or might not stay at the same pace it's been. We'll see on that. We've talked also about companies are borrowing more and more money through the bond market, to raise capital to buy all this stuff. So, you gotta look at, when it comes to investing, you gotta look at what end of this whole AI business you're investing in. Do you want to invest in something like Anthropic, that's literally selling this stuff to businesses? Or do you wanna be investing in the chip stocks that are supplying the hardware and the software and all that, the energy stuff that needs to power all this? Companies like GE Vernova, and other energy suppliers? You know, you wanna look at what end of the business it makes sense to be invested in, and how much at what time, because this thing has really been moving around at certain point in time in the year.
You know, going back to how much to pay for Anthropic, this is probably a good time to go revisit the SpaceX IPO. Brian, I can't believe SpaceX came public. It seems like yesterday, but this stock came public on June 12th. We're coming up on almost five months ago. Time sure does fly. Just as a reminder, the people that were clamoring for the IPO shares, yeah, they got them at $130. The stock started trading publicly at $150 a share, on June 12th, and rocketed above $220, and then promptly plummeted during the month of July and into early August, down in the $110 - $111 range, and yesterday it was sitting right about at $147. So, just slightly below what the public was able to pay for this stock back on June 12th. So, my point in bringing that up is a lot of volatility will happen in these IPO stocks, and that's why you don't wanna just have this fear-of-missing-out mentality, and just start piling a bunch of money, because there's usually time to get into these companies at a better price, once all the initial hype and excitement settles.
Brian: Yeah. So, I'm looking at a chart Bob. I think that's a great point you just brought up. If you bought SpaceX... So, it came public in mid-June, like you said. If you bought SpaceX any time between when it went public and about July 9th, then you are sitting at a loss...
Bob: Yeah.
Brian: ...because that's when it, it came back down, all the way back down to its initial... Remember, the first time the public could get it was 150 bucks a share. That is very different. That $130 IPO price, that's if you know somebody on the inside, effectively. You have to have connections to get to that IPO price. But if you're just buying on the public market, you had about a month where you're sitting at a loss. Now, if you bought then, through, say, August, early August, then you're probably sitting at a little bit of a profit, because it dropped as low as about $108, $110, something like that. But regardless, where it is right now is roughly where it started when it first went public, as you just said, so don't necessarily feel like you gotta get on the bus right now. The IPOs anymore, over the last 20, 30 years, especially these, get so much hype that they just run way farther in terms of price than they do in terms of earnings, because of the way that we are geared for instant gratification, and we want the hype now, and we'll eat the vegetables later. So, be careful with this, and remember, S&P 500, every company out there is involved in AI. I don't even think it'd be possible to build a portfolio that doesn't somehow have AI baked into it, right? Microsoft is in the headlines today too, because they're laying off a chunk of people, about 60,000 people, partially because they're starting to replace jobs with AI. Microsoft is a stalwart of the S&P 500, as well as a lot of the other exchange-traded funds and things you can buy out there. It's hard to avoid a company like that, and guess what? Everybody else is doing it too. So, the AI is not a fad. It's here to stay. Does that mean you must own the companies that are specifically related to products that use AI? No, because it's already everywhere in your portfolio anyway. Don't get too wound up about the hype.
Bob: Exactly. And, you know, Brian, as I listen to you talk about that, another company to mention here is, let's just take a company like Amazon. There was a time when every single quarter, they would just report loss after loss after loss, and there was a time when Jeff Bezos actually, I think, said in an analyst meeting, he's like, "I'm not really worried about making a profit right now. I'm worried about building out my company." And Wall Street didn't like that. You like to see positive earnings, but man, over time, and I guess this is my point, if you love the business, if you love Amazon, if you love Anthropic, if you love SpaceX, if you see this as a company you wanna own for the next 10, 20, 30 years, well then just put a little money in, at certain points in time, and play the long game. Brian, not too many people are willing to play the long game in anything these days. They wanna get in, make a buck, get out, time the market, and you can really get whipsawed around, and lose a lot of money trying to do that. So find good businesses, that are showing a good trend of earnings growth and building a good business, you mentioned one, Microsoft, what a great business, and just invest a little at a time, hold it for the long term, don't try to become rich overnight. You know, so [crosstalk 00:11:44]
Brian: Yeah, and one more quick thought on that, Bob...
Bob: Yeah.
Brian: ...and then, remember, whatever the darling of the stock market is right now is gonna be replaced by something. Remember, it wasn't that long ago that we were all talking about ChatGPT as if it had a monopoly on the whole AI space. But now here we are, nobody heard of Anthropic at that point, but here we are talking about Anthropic and Claude. So, there's another one out there. That's always the way it's working. There's always another bigger fish out there somewhere.
Bob: Hundred percent. Here's the Allworth advice. Don't confuse explosive growth with a great investment. What matters isn't just how successful a company becomes. It's how much you're willing to pay to own a piece of it. All right. Well, gold gets a lot of attention, but silver has quietly become one of the most talked-about investments of 2026. Why investors seem to be piling in, and whether it deserves a place in your portfolio, 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's Sponseller, along with Brian James. Hey, if you can't listen to "Simply Money" live every night, subscribe and get our daily podcast. Just search "Simply Money" on the iHeart app, or wherever you find your favorite podcasts. Well, how much company stock is too much, and how do you avoid a big tax hit on an inherited IRA? We'll tackle your questions and more, coming up straight ahead.
Well, when we talk about precious metals, gold usually steals the spotlight, but this year, silver has been making some pretty incredible headlines of its own of late, and now investors are asking, should I own some?
Brian: Well here's the reason. We don't tend to pay attention to these things until after the horse has left the barn. So, the reason investors are questioning this is because silver actually got above $115 an ounce in January. However, by late October, it had fallen back to the mid-$50 range, so that's a drop of more than 50% from its peak. That would be a pretty tough pill to swallow in a year like this, where the market has been pretty strong all year long. But, that said, silver's different than gold. It's not just a precious metal. Yes, it has those qualities. People think it's pretty. But it's also used in a lot of industrial products. Silver shows up in solar panels, electric vehicles, electronics, even the data centers that power AI. So, as those industries grow, there's more demand, there's real argument that demand for silver could grow with them. But there's also a supply issue that comes with this, right? It's just like anything else. Remember, not that long ago, when we couldn't get computer chips into Ford F-150s, so we dumped them all on the Sparta racetrack for a while. So, there's no difference here, right? We need to get the stuff somewhere. A lot of the silver comes out of mining other metals. It's a byproduct. We have to dig copper and zinc out of the ground. So, if silver prices go up, mining companies can't suddenly flip a switch and produce a lot more. It's all tied to other metals that have to come out of the ground too.
Bob: Yeah, and then, with these precious metals, gold and silver in particular, there's always an emotional side of this. We have people that are worried, they're not thinking at all about industrial use for these metals. They're thinking about inflation, government debt, geopolitical tensions. We've got midterm elections coming up in a week. They want something tangible, something they can hold in their hands, something that can beat inflation, and silver feels like an affordable alternative to gold. But Brian, as you just talked about, these precious metals, the price of these things are volatile. And if you're trying to just own something that beats inflation, and feels like you're holding your purchasing power, a lot of people get unpleasant surprises if they buy too much of any of this stuff, and then open up their brokerage statement month after month because the numbers can whipsaw around quite a bit, and then all of a sudden, people don't feel so safe, because they bought too much of this stuff.
Brian: Yeah, that's right. And the other thing I would throw out is, remember what we just talked about. Silver dropped by 50% just during this year.
Bob: That...yes. Yeah.
Brian: So you're not gonna sneak up on anybody. The market knows very well that there's a lot of technology out there that's happening. The technology that is driving a lot of the growth that we're seeing in a lot of areas requires silver. So, you're not gonna be the only one that has the idea that silver's gonna be a popular thing to own because there's a lot of demand for it right now. And yet, it dropped by 50% during a year where we had this massive expansion of all of these technological triumphs and things like that. So, I would say the buyers are already there, and there's a lot of profit-taking going on. That's where the whipsaw comes from, right? You're not wrong about your assumption that, hey, a lot of industries want silver, therefore I should buy it because it is of value. That's true, except everybody got there first. And that first, well, actually probably two or three waves now, of profit-taking, is what's happening now, and that's what drags the stock, or, the price of silver back down, so... If this is really something that's important to you, just think about what, if I buy this, what role does it play in my portfolio? Am I swinging for the fences, hoping for a home run? Am I saying that I don't trust the overall stock market anymore, so therefore precious metals are where it's at? By the way, that's been wrong for, oh, about a hundred years or so. Or do I want it to reduce risk? That's a good reason, right? If you want something that is not correlated to the stock market, that's a good reason. But remember what you're asking for. If the stock market does continue to run, hopefully you've kept your investment exposure there, but you could see silver go the opposite direction, just like we've already seen once, and it will drag your overall portfolio down, so, I don't know. I'm not necessarily convinced that buying something volatile, just because it's uncorrelated with the market, really helps all that much. Because if I still have investments that are the market, then all I'm gonna do is kind of tamp down the returns of my overall portfolio, and make it ride the roller coaster a little more, when most people simply ignore their portfolios anyway. That's the right way to go. Don't try to get too cute with it.
Bob: Yeah, I think you bring up a great point. People underestimate the amount of volatility they inject into their portfolio by trying to get cute with some of this stuff. Meanwhile, the term "sequence of return" is probably appropriate to raise here, because when you're trying to cash flow a portfolio, I'm talking to retirees or pre-retirees right now, volatility is not your friend. It's good to have diversified asset classes, non-correlated asset classes in your portfolio, but make sure you're not getting, you're trading off diversification with added volatility, because at a time where you're trying to take your $4,000, $6,000, $10,000 a month out of your portfolio, gross return matters a whole lot less than the results of your portfolio after generating this monthly income that you need and want, over a 10, 20, 30-year period of time. So, that's another good reason to just stress test these portfolios with different percentages of asset classes built inside of them, and sometimes people are surprised at the results.
If you're going the ETF route, obviously you get more diversification, but make sure you're understanding that ETF's structure, expenses, and potential tax treatment, Brian, because certain physically-backed precious metals investments can be subject to higher federal collectibles capital gains tax rates. People forget about that in a taxable account. That's especially important for people in a higher tax bracket. Anyway, here's the Allworth advice. Don't chase silver just because it's making headlines. Make sure every investment in your portfolio has a purpose in your personalized long-term financial plan.
Well if you think you only need a will, you could be wrong. Coming up next, our senior estate planning expert is in, to discuss the nuances of trust. You're listening to "Simply Money," presented by Allworth Financial on 55 KRC, THE talk station.
You're listening to "Simply Money," presented by Allworth Financial. I'm Bob Sponseller, along with Brian James, joined tonight by one of Allworth's senior estate planning specialists in our private client group, Paul Schwartz. Paul, thanks for carving some time out for us tonight. You're gonna cover what I think is a very important topic. A lot of folks come in and do their reviews, and we get on the topic of estate planning, and let's face it, especially here in Cincinnati, people love that KISS principle, keep it simple, stupid, right? And for a lot of people, proper beneficiary planning will get the job done, along with a will and a power of attorney. But for some folks, depending on their needs and objectives and individual circumstances, a trust is something they should definitely be considering. Walk us through what some of those situations are that definitely merit at least a discussion about a living trust document, Paul.
Paul: I think there's several situations that require a revocable living trust. The first is if they want to maintain privacy. Your will is gonna get probated in the Hamilton County, or the court, the county in which you live in, and, for everybody to see. So they're gonna be able to see your assets. They're gonna be able to see a copy of your will. They're gonna be able to see everything. So, the second reason to do a trust is to avoid that probate process. And then the third reason is creditor protection. And creditor protection is not for the people who are the grantors of the trust, but it's to provide that creditor protection for the next generation. So, their children, whether they wanna keep the funds in trust for the benefit of their children, or whether they wanna keep the funds in trust to protect them from the creditors of their children.
Brian: Paul, can you talk about what it was like, say, 20, 30 years ago, or 50, 60 years ago, when you first got started in this career? What was it like? Why were trusts back then, and of course I'm giving you the business because it's fun, but why was it different? Why were trusts more appropriate for wealthier people back then versus now? Now it's just kind of a standard estate move. What's the difference?
Paul: Back when I started practicing law, and we're gonna go back a great deal of time, the federal exemption amount was $600,000 per person. Fast-forward to 2026, the federal exemption amount is $15 million per person. So, we used to do a lot of estate planning back in the old days, in order to save on estate taxes. Since then, the federal exemption amount has gone up considerably. Ohio has gotten rid of their estate tax. Indiana has. And Kentucky does not have an estate tax, although they do have an inheritance tax.
Brian: Got it. Yeah. [inaudible 00:23:01] So, it sounds like back then, it was more of a, the trust itself hasn't changed that much, the concept of a trust, but it used to help with taxes. Now it helps more, now the focus is primarily efficiency of estate settlement. Is that a good way to think about it?
Paul: That's exactly correct.
Bob: Hey, Paul, I know you see a lot of estate planning documents and financial plans come across your desk. Can you walk us through maybe an example you've worked with recently, where, on paper, it looked like things needed to be, it could be very simple, from a document standpoint, but the more you got to know the client, and some of their nuanced situations with family and things like that, the situation screened for a living trust. Can you walk us through maybe, you know, a couple, one or two examples, you know, you've recently run into where, you know, you uncovered a need for a living trust, and why?
Paul: Certainly. And they usually involve a blended marriage. So, the situation was an older gentleman who did not have children, and he has a simple will, and he is gonna give everything to his wife, although he wants to give some of his assets to his nieces and nephews. But he is going to rely on his wife, his current wife, to give them the, once he passes away, to give them, you know, to give according to his wishes, the assets that he wants them to get. So, I, you know, that's an informal way of kind of going through it, but, you know, I told him if he wanted to make sure that they were to receive his assets, he probably should put them in a trust. He could hold them in a trust for his current wife, and then when she finally passed away, they could go down to his nieces and nephews, and anybody else that he wanted.
Brian: Got it. Okay. Hey, so, I'm sitting here listening to you, and I'm thinking back to, I wanna go back to what we were talking about, about the way it used to be and the way it is now. Every now and then, Paul, I run across a client who's got a, a new client, and we're kind of going through the documents, and they've got, and it's like a walk down memory lane, to the beginning of my career, when I see those old marital bypass trusts, you know, trust A sets aside for the surviving spouse, but doesn't count in his or her estate amounts and all that kind of stuff. So, obviously, something that's very outdated. It almost sort of feels like for estates that aren't that $15 million, $30 million dollar range, it almost feels like I'm looking at a black and white square TV, and not an HD TV, just because it kind of feels outdated. What do you recommend when you run across trusts that are set up like that? Because it seems to create a bunch of unnecessary movement of money, because, when somebody passes, those dollars are gonna move around in a way that is not necessary anymore. So, when you run across that kind of thing, do you actually recommend, "let's undo this marital bypass trust," and then what do you do in place?
Paul: So, what happens in those is, it's unfortunate, because they were done back in the early 2000s or late '90s, when the first spouse dies, the funds are held in that credit shelter trust for the benefit of the surviving spouse when they're well under the $15 million exemption. So, what we usually recommend is doing a restatement of those trusts. They can do a joint trust at that time. And so, really, what they're doing is they're avoiding probate, they have this privacy in doing a joint trust, and they're providing for the surviving spouse, and making sure the assets just go to the surviving spouse, versus going into that credit shelter trust, at that point.
Brian: Okay. Got it. So, is it okay, if I have one of those, should I get in touch with my attorney, to modernize it? Is that a crisis, do you think, or is that something that really, not that big of a deal, it can be dealt with? Is it a real problem?
Paul: No, it's a big deal. And yes, they should do an amendment or a restatement of their trust at that point.
Bob: Hey, just to follow up on that topic, Paul, how many times, when you either help people redo their estate plan, or you review their existing estate plan, where maybe they already have a trust in place, and the investment accounts are titled correctly, all that, do people forget to put their residence in their trust? Do you come across that often?
Paul: I do. I do come across it often. And that's one of the main, that's one of the biggest assets, and it should be held either in the trust, or, like we've spoken in the past, there should be a transfer on death deed, that needs to be done in order to avoid probate. Otherwise, I usually see it in married couples, where the deed is held jointly with right of survivorship, but they haven't transferred the deed into the trust at that point. So, a lot of couples wanna wait until the first spouse passes away, but that's not the time to wait.
Bob: Good, good stuff. All right. Hey, great advice, as always. Thank you for your time tonight, Paul. You're listening to "Simply Money," presented by Allworth Financial on 55 KRC, THE talk station.
You're listening to "Simply Money," presented by Allworth Financial. I'm Bob Sponseller, along with Brian James. Do you have a financial question you'd like for us to answer? If so, there's a red button you could click while you're listening to the show, but only if you're listening on the iHeart app. Simply record your question there, and it will come straight to us. All right, Brian, Dan in Milford says, "I'm 58. I've accumulated a little under a half a million dollars in my employer stock, through bonuses and stock awards. My total portfolio is around $1.3 million. I want to diversify, but selling would trigger substantial capital gains. How much company stock is too much company stock?"
Brian: Yeah, so you've got almost a third of your portfolio invested in the company. That's simple math. You probably already know that, but remember to think about it this way. It's the same company that supplies your paycheck, so heaven forbid something goes wrong, it's gonna impact a third of your portfolio, and it very well could take your paycheck away too. That's an extreme outcome, but it's still an outcome, and there are plenty of headlines out there over the past decades that support that, so... Yeah, I'd say that's a little risky. There's no hard dollar or percentage amount, but I think 5% to 10% in any one individual stock, employed by it or not, 5% to 10% I think is a good guideline there. Above 10%, you really gotta have a clear reason for taking on that level of risk. And your employer stock, of course gets extra attention because your salary and your benefits and your bonuses and all that other stuff all depend on the success of that same business, so, think of it this way. If that stock fell 50%, you'd lose $200,000, which is about 15% of your portfolio, even if everything else held steady. And if that decline reflected trouble at the company, now all of a sudden your employment is under pressure at the same time, so the paycheck could be under a threat.
A great way to think about this is if you had $400,000 delivered to your front yard today in a wheelbarrow, would you invest every nickel of it in that employer? Because that's the decision you're making right now. A decision to hold a concentrated position is really no different than choosing to invest a giant pile of money proactively. So, if the answer is no to that, then that should color your decision-making there. And don't get hung up on the high water mark. Worst thing anybody can do is draw a line under their portfolio, and declare that anything underneath that was some kind of a failure. If the stock happens to be at a high water mark, now is really the time to decide to do something about it. Brad in Mason. So, Brad says his mother passed away. Condolences to Brad and your family there. Mom left him a $620,000 IRA. He is 55, earns about $240,000 a year, and he's got about $1.5 million saved for retirement. His concern is having to empty that inherited IRA within 10 years, and he's wondering how to time those withdrawals. Bob?
Bob: Well, let's review the rules here. Under the SECURE Act, anyone who passed away in 2020 or later, the SECURE Act does require the entire inherited IRA, for a non-spouse beneficiary like you, Brad, to be distributed by December 31st of the 10th year following the original owner's death. It sounds like you're already aware of that. I'm going to assume here, because the rules are a little different, if your mom passed away before the age at which she had to take, pardon me, required minimum distributions, you don't have to take anything out in years 1 through 9, but then you gotta empty the entire account by year 10. I'm going to assume that you're in the second camp here, where your mother, based on the fact that you're 55 here, was probably at RMD age, so she was already taking required minimum distributions. Under those rules, you do have to take a little bit out every year, based on your age and life expectancy, but it doesn't have to be equal. And that's the key here. It doesn't have to be the same amount every year. So, in your case, at 55, I'm just gonna make an assumption here. You might be looking at retiring sometime here within the next 10 years. I could be wrong there, but if that's the case, and I guess that's my main point, is make sure you sit down with somebody and do a financial plan, and look at your personal goals and when you might be retiring, meaning, when your $240,000-per-year salary is going to disappear altogether, or go down significantly. So, in your case, what it might make sense to do is just take the required minimum distributions, starting now, which you have to do anyway to not run afoul of the IRS rules, but then push it out as far as you can, and then let's say you retire eight years from now, that's when you can replace that $240,000-a-year salary with the remaining required minimum distribution from the inherited IRA, and not jump tax brackets significantly here in the near term. So, there's a little bit of planning work that has to be done. Hopefully, I explained this in a simple enough way. It's not a disaster here whatsoever, but dovetail your personal objectives, Brad, with what the IRS rules dictate, as far as withdrawing that required minimum distribution. Hope that helps. All right. Coming up next, I've got my two cents on how important it is to communicate, even on the most simple, or seemingly simple, estate plan. Communication with your family, so critical. You're listening to "Simply Money," presented by Allworth Financial on 55 KRC, THE talk station.
You're listening to "Simply Money," presented by Allworth Financial. I'm Bob Sponseller, along with Brian James. Hey, Brian, I thought I'd talk about an actual case I'm working on right now, involving estate planning, and this is not a large estate. It's not super complicated. There's not these complex trusts and an army of attorneys involved. The point I'm gonna make here involves communication. Let me explain. You know, we've got a situation here where a widow client has three adult children. Two of her adult children are doing very well financially, and according to her, don't "need any money," in terms of inheriting her estate when she dies. The third child, which happens to be the middle child, is in a different situation. That child, or adult child at this point, is going to need financial support to get by in later years, so this client has decided to basically financially disinherit the other two kids, and leave everything to that third child. So, we're not talking about a ton of money here, but I've helped this lady get with an attorney and update her estate planning documents, and the topic came up the other day, when it came time to sign this document, because in the original trust, it said, "Hey, leave the jewelry to the daughter." Well, the daughter is one of the two kids that's pretty much gonna be disinherited from this estate. The older child in this case is the executor, the successor trustee, the one that's gonna settle this whole estate. And this older child's wife, who is the daughter-in-law of this client, has been doing a lot of caregiving, a lot of support, just being the solid rock here, and taking care of this lady. So, what she did the other day is gifted a lot of her expensive jewelry to that daughter-in-law. Here's the problem. I don't think she has sat down with the other two kids and explained what is gonna happen with her estate plan. And my concern here is when this lady passes away, Brian, even though the estate plan is gonna work just fine, when everybody shows up and wants to have the trust in will read, and all that jewelry's already been given away, not to the daughter, and people don't realize that they're getting disinherited, I think there's some potential here for a little bit of family discord and hurt feelings and everything else. And I bring all this up just to say, even if you don't have a super-complicated estate plan, make sure you sit down and explain what you're planning to do with your family, even if you don't talk about exact dollar amounts, just so you don't create some unintentional family discord when all this situation unfolds at the death, when it comes time to settle the estate. Have you run into anything like this in a similar fashion, Brian?
Brian: Oh, for sure. And there's a lot of assumption that, you know what, I'll just tie out the, in this case, it's the "I'll just give the jewelry away, and that'll take care of that. I'll relieve myself of the guilt of this person taking care of me." Well, the other parties in this may be completely supportive of benefiting the person who has put the most work into it, but there could be some emotional attachment to some piece of jewelry because of the family history that that in-law might have, so... Might not have, I should say, so, I definitely think it's, I see both sides of this, but definitely, communication is key. Just make sure you understand how folks are gonna react.
Bob: Thanks for listening tonight. You've been listening to "Simply Money," presented by Allworth Financial on 55 KRC, THE talk station.
Brian: Yeah, and this one could make history, Bob. So, we're talking about a company valued privately at almost a trillion dollars earlier this year, and now there's reports that the IPO valuation itself could approach $2 trillion, for a company that didn't exist five or six years ago, so... The IPO is expected to happen the week of November 16th. No official trading date has been announced. And the reason for all the hype is, of course, money. The revenue numbers are kind of ridiculous, so go figure. Anthropic generated about $4.6 billion in revenue during all of 2025. That's revenue, right? There's a difference between revenue and net profit.
Bob: Sales.
Brian: Yeah, that's sales.
Bob: Revenue equals sales, right? [crosstalk 00:01:33]
Brian: People like their stuff, is all that we know about it so far. So, just in the first six months of 2026, $16.3 billion. So, obviously, again, let's do the math there, $4.6 billion in all of 2025, and now, in the first half of this year, it generated four times that much. So yes, for sure, Claude is something that has caught fire, and is appearing in a lot of places. But that's not the entire story, is it, Bob?
Bob: No. I mean, watching these revenue numbers or sales numbers really tells us about the adoption of artificial intelligence in the broad economy, which we're starting to see. As profits continue to grow in every business, all over the place, and we talk about that all the time, businesses are actually spending a ton of money on this kind of software. And this just isn't people asking a chatbot to write an email or plan a vacation. I mean, actual companies are using this software now, and using it effectively, to write software, analyze a bunch of information, automate routine tasks, and improve productivity, and that's one reason why you're seeing S&P 500 earnings, year over year, over 26%. And that's really the distinction here, because one of the biggest questions surrounding AI has been whether these companies can actually turn all this excitement into real revenue. Well, Anthropic and others have certainly answered that question with a resounding yes. However, when it comes to investing, this all comes down to how much we're willing to pay for stocks like this, because stocks trade relative to their earnings, or sales multiples or whatever. You wanna make sure these companies are actually making money and growing their profits year over year. And you can get caught here if you pay too much per unit of earnings here, and then have the industry as a whole or a company in general slow down their revenue projections, and the stock can plummet in price. And we've seen that in various points of times in history, Brian.
Brian: So, let's hit those eye-popping numbers again. Remember, we said $4.6 billion in revenue during all of '25. Think only sales, not net profit. First half of '26, $16 billion. So if they just keep their pace, they're on pace to generate about $32 billion worth of revenue, and that obviously will probably continue to grow, especially with it hitting the headlines now. Let's talk about some more eye-popping numbers, though. $80 billion is the next number we're gonna talk about, and it's on the wrong side. It's on the wrong half of the income statement. So, Anthropic reported a net loss of $80 billion, again, in the first six months of this year. Oh, you pulled in $16 billion in revenue? Cool. What did it cost you to do that? Oh, $80 billion? Okay, maybe that's not working out quite the way we would want it to. Now, again, this is not at all a referendum on the quality of the products and the impact that their products and services are gonna have, but it's taking an awful lot to get it all out there. So, how does a company lose that much money? So, $72 billion of the $80 billion came from accounting adjustments related to its financing arrangements. So, it's not as though Anthropic wrote checks totaling $80 billion, right? They didn't buy $80 billion worth of office supplies and coffee, that kind of stuff. It is moving money around and that kind of thing, like all companies do. That doesn't mean its actual net operating costs aren't enormous, though. They spent about $9 billion. These are the numbers I think that'll make more sense to people. Spent $9 billion on computing and infrastructure, right? There's an awful lot of hardware that needs to live and run all this stuff. That $9 billion is more than an expend on the same expenses during all of last year, right? So they're basically doubling that already huge outflow just to keep things going. That's the part investors really need to understand, right? Artificial intelligence is not cheap. You need huge data centers, advanced computer chips, massive amounts of electricity, and highly-paid engineers, and that's where all this money's going.
Bob: Yeah, and that's why we've seen memory chips, think Micron and other semiconductor stocks, just take off the first half of this year, and they pulled back a little bit here in recent weeks because of the concern that some of this capex spending, as the industry likes to call it, might slow down, or might not stay at the same pace it's been. We'll see on that. We've talked also about companies are borrowing more and more money through the bond market, to raise capital to buy all this stuff. So, you gotta look at, when it comes to investing, you gotta look at what end of this whole AI business you're investing in. Do you want to invest in something like Anthropic, that's literally selling this stuff to businesses? Or do you wanna be investing in the chip stocks that are supplying the hardware and the software and all that, the energy stuff that needs to power all this? Companies like GE Vernova, and other energy suppliers? You know, you wanna look at what end of the business it makes sense to be invested in, and how much at what time, because this thing has really been moving around at certain point in time in the year.
You know, going back to how much to pay for Anthropic, this is probably a good time to go revisit the SpaceX IPO. Brian, I can't believe SpaceX came public. It seems like yesterday, but this stock came public on June 12th. We're coming up on almost five months ago. Time sure does fly. Just as a reminder, the people that were clamoring for the IPO shares, yeah, they got them at $130. The stock started trading publicly at $150 a share, on June 12th, and rocketed above $220, and then promptly plummeted during the month of July and into early August, down in the $110 - $111 range, and yesterday it was sitting right about at $147. So, just slightly below what the public was able to pay for this stock back on June 12th. So, my point in bringing that up is a lot of volatility will happen in these IPO stocks, and that's why you don't wanna just have this fear-of-missing-out mentality, and just start piling a bunch of money, because there's usually time to get into these companies at a better price, once all the initial hype and excitement settles.
Brian: Yeah. So, I'm looking at a chart Bob. I think that's a great point you just brought up. If you bought SpaceX... So, it came public in mid-June, like you said. If you bought SpaceX any time between when it went public and about July 9th, then you are sitting at a loss...
Bob: Yeah.
Brian: ...because that's when it, it came back down, all the way back down to its initial... Remember, the first time the public could get it was 150 bucks a share. That is very different. That $130 IPO price, that's if you know somebody on the inside, effectively. You have to have connections to get to that IPO price. But if you're just buying on the public market, you had about a month where you're sitting at a loss. Now, if you bought then, through, say, August, early August, then you're probably sitting at a little bit of a profit, because it dropped as low as about $108, $110, something like that. But regardless, where it is right now is roughly where it started when it first went public, as you just said, so don't necessarily feel like you gotta get on the bus right now. The IPOs anymore, over the last 20, 30 years, especially these, get so much hype that they just run way farther in terms of price than they do in terms of earnings, because of the way that we are geared for instant gratification, and we want the hype now, and we'll eat the vegetables later. So, be careful with this, and remember, S&P 500, every company out there is involved in AI. I don't even think it'd be possible to build a portfolio that doesn't somehow have AI baked into it, right? Microsoft is in the headlines today too, because they're laying off a chunk of people, about 60,000 people, partially because they're starting to replace jobs with AI. Microsoft is a stalwart of the S&P 500, as well as a lot of the other exchange-traded funds and things you can buy out there. It's hard to avoid a company like that, and guess what? Everybody else is doing it too. So, the AI is not a fad. It's here to stay. Does that mean you must own the companies that are specifically related to products that use AI? No, because it's already everywhere in your portfolio anyway. Don't get too wound up about the hype.
Bob: Exactly. And, you know, Brian, as I listen to you talk about that, another company to mention here is, let's just take a company like Amazon. There was a time when every single quarter, they would just report loss after loss after loss, and there was a time when Jeff Bezos actually, I think, said in an analyst meeting, he's like, "I'm not really worried about making a profit right now. I'm worried about building out my company." And Wall Street didn't like that. You like to see positive earnings, but man, over time, and I guess this is my point, if you love the business, if you love Amazon, if you love Anthropic, if you love SpaceX, if you see this as a company you wanna own for the next 10, 20, 30 years, well then just put a little money in, at certain points in time, and play the long game. Brian, not too many people are willing to play the long game in anything these days. They wanna get in, make a buck, get out, time the market, and you can really get whipsawed around, and lose a lot of money trying to do that. So find good businesses, that are showing a good trend of earnings growth and building a good business, you mentioned one, Microsoft, what a great business, and just invest a little at a time, hold it for the long term, don't try to become rich overnight. You know, so [crosstalk 00:11:44]
Brian: Yeah, and one more quick thought on that, Bob...
Bob: Yeah.
Brian: ...and then, remember, whatever the darling of the stock market is right now is gonna be replaced by something. Remember, it wasn't that long ago that we were all talking about ChatGPT as if it had a monopoly on the whole AI space. But now here we are, nobody heard of Anthropic at that point, but here we are talking about Anthropic and Claude. So, there's another one out there. That's always the way it's working. There's always another bigger fish out there somewhere.
Bob: Hundred percent. Here's the Allworth advice. Don't confuse explosive growth with a great investment. What matters isn't just how successful a company becomes. It's how much you're willing to pay to own a piece of it. All right. Well, gold gets a lot of attention, but silver has quietly become one of the most talked-about investments of 2026. Why investors seem to be piling in, and whether it deserves a place in your portfolio, 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's Sponseller, along with Brian James. Hey, if you can't listen to "Simply Money" live every night, subscribe and get our daily podcast. Just search "Simply Money" on the iHeart app, or wherever you find your favorite podcasts. Well, how much company stock is too much, and how do you avoid a big tax hit on an inherited IRA? We'll tackle your questions and more, coming up straight ahead.
Well, when we talk about precious metals, gold usually steals the spotlight, but this year, silver has been making some pretty incredible headlines of its own of late, and now investors are asking, should I own some?
Brian: Well here's the reason. We don't tend to pay attention to these things until after the horse has left the barn. So, the reason investors are questioning this is because silver actually got above $115 an ounce in January. However, by late October, it had fallen back to the mid-$50 range, so that's a drop of more than 50% from its peak. That would be a pretty tough pill to swallow in a year like this, where the market has been pretty strong all year long. But, that said, silver's different than gold. It's not just a precious metal. Yes, it has those qualities. People think it's pretty. But it's also used in a lot of industrial products. Silver shows up in solar panels, electric vehicles, electronics, even the data centers that power AI. So, as those industries grow, there's more demand, there's real argument that demand for silver could grow with them. But there's also a supply issue that comes with this, right? It's just like anything else. Remember, not that long ago, when we couldn't get computer chips into Ford F-150s, so we dumped them all on the Sparta racetrack for a while. So, there's no difference here, right? We need to get the stuff somewhere. A lot of the silver comes out of mining other metals. It's a byproduct. We have to dig copper and zinc out of the ground. So, if silver prices go up, mining companies can't suddenly flip a switch and produce a lot more. It's all tied to other metals that have to come out of the ground too.
Bob: Yeah, and then, with these precious metals, gold and silver in particular, there's always an emotional side of this. We have people that are worried, they're not thinking at all about industrial use for these metals. They're thinking about inflation, government debt, geopolitical tensions. We've got midterm elections coming up in a week. They want something tangible, something they can hold in their hands, something that can beat inflation, and silver feels like an affordable alternative to gold. But Brian, as you just talked about, these precious metals, the price of these things are volatile. And if you're trying to just own something that beats inflation, and feels like you're holding your purchasing power, a lot of people get unpleasant surprises if they buy too much of any of this stuff, and then open up their brokerage statement month after month because the numbers can whipsaw around quite a bit, and then all of a sudden, people don't feel so safe, because they bought too much of this stuff.
Brian: Yeah, that's right. And the other thing I would throw out is, remember what we just talked about. Silver dropped by 50% just during this year.
Bob: That...yes. Yeah.
Brian: So you're not gonna sneak up on anybody. The market knows very well that there's a lot of technology out there that's happening. The technology that is driving a lot of the growth that we're seeing in a lot of areas requires silver. So, you're not gonna be the only one that has the idea that silver's gonna be a popular thing to own because there's a lot of demand for it right now. And yet, it dropped by 50% during a year where we had this massive expansion of all of these technological triumphs and things like that. So, I would say the buyers are already there, and there's a lot of profit-taking going on. That's where the whipsaw comes from, right? You're not wrong about your assumption that, hey, a lot of industries want silver, therefore I should buy it because it is of value. That's true, except everybody got there first. And that first, well, actually probably two or three waves now, of profit-taking, is what's happening now, and that's what drags the stock, or, the price of silver back down, so... If this is really something that's important to you, just think about what, if I buy this, what role does it play in my portfolio? Am I swinging for the fences, hoping for a home run? Am I saying that I don't trust the overall stock market anymore, so therefore precious metals are where it's at? By the way, that's been wrong for, oh, about a hundred years or so. Or do I want it to reduce risk? That's a good reason, right? If you want something that is not correlated to the stock market, that's a good reason. But remember what you're asking for. If the stock market does continue to run, hopefully you've kept your investment exposure there, but you could see silver go the opposite direction, just like we've already seen once, and it will drag your overall portfolio down, so, I don't know. I'm not necessarily convinced that buying something volatile, just because it's uncorrelated with the market, really helps all that much. Because if I still have investments that are the market, then all I'm gonna do is kind of tamp down the returns of my overall portfolio, and make it ride the roller coaster a little more, when most people simply ignore their portfolios anyway. That's the right way to go. Don't try to get too cute with it.
Bob: Yeah, I think you bring up a great point. People underestimate the amount of volatility they inject into their portfolio by trying to get cute with some of this stuff. Meanwhile, the term "sequence of return" is probably appropriate to raise here, because when you're trying to cash flow a portfolio, I'm talking to retirees or pre-retirees right now, volatility is not your friend. It's good to have diversified asset classes, non-correlated asset classes in your portfolio, but make sure you're not getting, you're trading off diversification with added volatility, because at a time where you're trying to take your $4,000, $6,000, $10,000 a month out of your portfolio, gross return matters a whole lot less than the results of your portfolio after generating this monthly income that you need and want, over a 10, 20, 30-year period of time. So, that's another good reason to just stress test these portfolios with different percentages of asset classes built inside of them, and sometimes people are surprised at the results.
If you're going the ETF route, obviously you get more diversification, but make sure you're understanding that ETF's structure, expenses, and potential tax treatment, Brian, because certain physically-backed precious metals investments can be subject to higher federal collectibles capital gains tax rates. People forget about that in a taxable account. That's especially important for people in a higher tax bracket. Anyway, here's the Allworth advice. Don't chase silver just because it's making headlines. Make sure every investment in your portfolio has a purpose in your personalized long-term financial plan.
Well if you think you only need a will, you could be wrong. Coming up next, our senior estate planning expert is in, to discuss the nuances of trust. You're listening to "Simply Money," presented by Allworth Financial on 55 KRC, THE talk station.
You're listening to "Simply Money," presented by Allworth Financial. I'm Bob Sponseller, along with Brian James, joined tonight by one of Allworth's senior estate planning specialists in our private client group, Paul Schwartz. Paul, thanks for carving some time out for us tonight. You're gonna cover what I think is a very important topic. A lot of folks come in and do their reviews, and we get on the topic of estate planning, and let's face it, especially here in Cincinnati, people love that KISS principle, keep it simple, stupid, right? And for a lot of people, proper beneficiary planning will get the job done, along with a will and a power of attorney. But for some folks, depending on their needs and objectives and individual circumstances, a trust is something they should definitely be considering. Walk us through what some of those situations are that definitely merit at least a discussion about a living trust document, Paul.
Paul: I think there's several situations that require a revocable living trust. The first is if they want to maintain privacy. Your will is gonna get probated in the Hamilton County, or the court, the county in which you live in, and, for everybody to see. So they're gonna be able to see your assets. They're gonna be able to see a copy of your will. They're gonna be able to see everything. So, the second reason to do a trust is to avoid that probate process. And then the third reason is creditor protection. And creditor protection is not for the people who are the grantors of the trust, but it's to provide that creditor protection for the next generation. So, their children, whether they wanna keep the funds in trust for the benefit of their children, or whether they wanna keep the funds in trust to protect them from the creditors of their children.
Brian: Paul, can you talk about what it was like, say, 20, 30 years ago, or 50, 60 years ago, when you first got started in this career? What was it like? Why were trusts back then, and of course I'm giving you the business because it's fun, but why was it different? Why were trusts more appropriate for wealthier people back then versus now? Now it's just kind of a standard estate move. What's the difference?
Paul: Back when I started practicing law, and we're gonna go back a great deal of time, the federal exemption amount was $600,000 per person. Fast-forward to 2026, the federal exemption amount is $15 million per person. So, we used to do a lot of estate planning back in the old days, in order to save on estate taxes. Since then, the federal exemption amount has gone up considerably. Ohio has gotten rid of their estate tax. Indiana has. And Kentucky does not have an estate tax, although they do have an inheritance tax.
Brian: Got it. Yeah. [inaudible 00:23:01] So, it sounds like back then, it was more of a, the trust itself hasn't changed that much, the concept of a trust, but it used to help with taxes. Now it helps more, now the focus is primarily efficiency of estate settlement. Is that a good way to think about it?
Paul: That's exactly correct.
Bob: Hey, Paul, I know you see a lot of estate planning documents and financial plans come across your desk. Can you walk us through maybe an example you've worked with recently, where, on paper, it looked like things needed to be, it could be very simple, from a document standpoint, but the more you got to know the client, and some of their nuanced situations with family and things like that, the situation screened for a living trust. Can you walk us through maybe, you know, a couple, one or two examples, you know, you've recently run into where, you know, you uncovered a need for a living trust, and why?
Paul: Certainly. And they usually involve a blended marriage. So, the situation was an older gentleman who did not have children, and he has a simple will, and he is gonna give everything to his wife, although he wants to give some of his assets to his nieces and nephews. But he is going to rely on his wife, his current wife, to give them the, once he passes away, to give them, you know, to give according to his wishes, the assets that he wants them to get. So, I, you know, that's an informal way of kind of going through it, but, you know, I told him if he wanted to make sure that they were to receive his assets, he probably should put them in a trust. He could hold them in a trust for his current wife, and then when she finally passed away, they could go down to his nieces and nephews, and anybody else that he wanted.
Brian: Got it. Okay. Hey, so, I'm sitting here listening to you, and I'm thinking back to, I wanna go back to what we were talking about, about the way it used to be and the way it is now. Every now and then, Paul, I run across a client who's got a, a new client, and we're kind of going through the documents, and they've got, and it's like a walk down memory lane, to the beginning of my career, when I see those old marital bypass trusts, you know, trust A sets aside for the surviving spouse, but doesn't count in his or her estate amounts and all that kind of stuff. So, obviously, something that's very outdated. It almost sort of feels like for estates that aren't that $15 million, $30 million dollar range, it almost feels like I'm looking at a black and white square TV, and not an HD TV, just because it kind of feels outdated. What do you recommend when you run across trusts that are set up like that? Because it seems to create a bunch of unnecessary movement of money, because, when somebody passes, those dollars are gonna move around in a way that is not necessary anymore. So, when you run across that kind of thing, do you actually recommend, "let's undo this marital bypass trust," and then what do you do in place?
Paul: So, what happens in those is, it's unfortunate, because they were done back in the early 2000s or late '90s, when the first spouse dies, the funds are held in that credit shelter trust for the benefit of the surviving spouse when they're well under the $15 million exemption. So, what we usually recommend is doing a restatement of those trusts. They can do a joint trust at that time. And so, really, what they're doing is they're avoiding probate, they have this privacy in doing a joint trust, and they're providing for the surviving spouse, and making sure the assets just go to the surviving spouse, versus going into that credit shelter trust, at that point.
Brian: Okay. Got it. So, is it okay, if I have one of those, should I get in touch with my attorney, to modernize it? Is that a crisis, do you think, or is that something that really, not that big of a deal, it can be dealt with? Is it a real problem?
Paul: No, it's a big deal. And yes, they should do an amendment or a restatement of their trust at that point.
Bob: Hey, just to follow up on that topic, Paul, how many times, when you either help people redo their estate plan, or you review their existing estate plan, where maybe they already have a trust in place, and the investment accounts are titled correctly, all that, do people forget to put their residence in their trust? Do you come across that often?
Paul: I do. I do come across it often. And that's one of the main, that's one of the biggest assets, and it should be held either in the trust, or, like we've spoken in the past, there should be a transfer on death deed, that needs to be done in order to avoid probate. Otherwise, I usually see it in married couples, where the deed is held jointly with right of survivorship, but they haven't transferred the deed into the trust at that point. So, a lot of couples wanna wait until the first spouse passes away, but that's not the time to wait.
Bob: Good, good stuff. All right. Hey, great advice, as always. Thank you for your time tonight, Paul. You're listening to "Simply Money," presented by Allworth Financial on 55 KRC, THE talk station.
You're listening to "Simply Money," presented by Allworth Financial. I'm Bob Sponseller, along with Brian James. Do you have a financial question you'd like for us to answer? If so, there's a red button you could click while you're listening to the show, but only if you're listening on the iHeart app. Simply record your question there, and it will come straight to us. All right, Brian, Dan in Milford says, "I'm 58. I've accumulated a little under a half a million dollars in my employer stock, through bonuses and stock awards. My total portfolio is around $1.3 million. I want to diversify, but selling would trigger substantial capital gains. How much company stock is too much company stock?"
Brian: Yeah, so you've got almost a third of your portfolio invested in the company. That's simple math. You probably already know that, but remember to think about it this way. It's the same company that supplies your paycheck, so heaven forbid something goes wrong, it's gonna impact a third of your portfolio, and it very well could take your paycheck away too. That's an extreme outcome, but it's still an outcome, and there are plenty of headlines out there over the past decades that support that, so... Yeah, I'd say that's a little risky. There's no hard dollar or percentage amount, but I think 5% to 10% in any one individual stock, employed by it or not, 5% to 10% I think is a good guideline there. Above 10%, you really gotta have a clear reason for taking on that level of risk. And your employer stock, of course gets extra attention because your salary and your benefits and your bonuses and all that other stuff all depend on the success of that same business, so, think of it this way. If that stock fell 50%, you'd lose $200,000, which is about 15% of your portfolio, even if everything else held steady. And if that decline reflected trouble at the company, now all of a sudden your employment is under pressure at the same time, so the paycheck could be under a threat.
A great way to think about this is if you had $400,000 delivered to your front yard today in a wheelbarrow, would you invest every nickel of it in that employer? Because that's the decision you're making right now. A decision to hold a concentrated position is really no different than choosing to invest a giant pile of money proactively. So, if the answer is no to that, then that should color your decision-making there. And don't get hung up on the high water mark. Worst thing anybody can do is draw a line under their portfolio, and declare that anything underneath that was some kind of a failure. If the stock happens to be at a high water mark, now is really the time to decide to do something about it. Brad in Mason. So, Brad says his mother passed away. Condolences to Brad and your family there. Mom left him a $620,000 IRA. He is 55, earns about $240,000 a year, and he's got about $1.5 million saved for retirement. His concern is having to empty that inherited IRA within 10 years, and he's wondering how to time those withdrawals. Bob?
Bob: Well, let's review the rules here. Under the SECURE Act, anyone who passed away in 2020 or later, the SECURE Act does require the entire inherited IRA, for a non-spouse beneficiary like you, Brad, to be distributed by December 31st of the 10th year following the original owner's death. It sounds like you're already aware of that. I'm going to assume here, because the rules are a little different, if your mom passed away before the age at which she had to take, pardon me, required minimum distributions, you don't have to take anything out in years 1 through 9, but then you gotta empty the entire account by year 10. I'm going to assume that you're in the second camp here, where your mother, based on the fact that you're 55 here, was probably at RMD age, so she was already taking required minimum distributions. Under those rules, you do have to take a little bit out every year, based on your age and life expectancy, but it doesn't have to be equal. And that's the key here. It doesn't have to be the same amount every year. So, in your case, at 55, I'm just gonna make an assumption here. You might be looking at retiring sometime here within the next 10 years. I could be wrong there, but if that's the case, and I guess that's my main point, is make sure you sit down with somebody and do a financial plan, and look at your personal goals and when you might be retiring, meaning, when your $240,000-per-year salary is going to disappear altogether, or go down significantly. So, in your case, what it might make sense to do is just take the required minimum distributions, starting now, which you have to do anyway to not run afoul of the IRS rules, but then push it out as far as you can, and then let's say you retire eight years from now, that's when you can replace that $240,000-a-year salary with the remaining required minimum distribution from the inherited IRA, and not jump tax brackets significantly here in the near term. So, there's a little bit of planning work that has to be done. Hopefully, I explained this in a simple enough way. It's not a disaster here whatsoever, but dovetail your personal objectives, Brad, with what the IRS rules dictate, as far as withdrawing that required minimum distribution. Hope that helps. All right. Coming up next, I've got my two cents on how important it is to communicate, even on the most simple, or seemingly simple, estate plan. Communication with your family, so critical. You're listening to "Simply Money," presented by Allworth Financial on 55 KRC, THE talk station.
You're listening to "Simply Money," presented by Allworth Financial. I'm Bob Sponseller, along with Brian James. Hey, Brian, I thought I'd talk about an actual case I'm working on right now, involving estate planning, and this is not a large estate. It's not super complicated. There's not these complex trusts and an army of attorneys involved. The point I'm gonna make here involves communication. Let me explain. You know, we've got a situation here where a widow client has three adult children. Two of her adult children are doing very well financially, and according to her, don't "need any money," in terms of inheriting her estate when she dies. The third child, which happens to be the middle child, is in a different situation. That child, or adult child at this point, is going to need financial support to get by in later years, so this client has decided to basically financially disinherit the other two kids, and leave everything to that third child. So, we're not talking about a ton of money here, but I've helped this lady get with an attorney and update her estate planning documents, and the topic came up the other day, when it came time to sign this document, because in the original trust, it said, "Hey, leave the jewelry to the daughter." Well, the daughter is one of the two kids that's pretty much gonna be disinherited from this estate. The older child in this case is the executor, the successor trustee, the one that's gonna settle this whole estate. And this older child's wife, who is the daughter-in-law of this client, has been doing a lot of caregiving, a lot of support, just being the solid rock here, and taking care of this lady. So, what she did the other day is gifted a lot of her expensive jewelry to that daughter-in-law. Here's the problem. I don't think she has sat down with the other two kids and explained what is gonna happen with her estate plan. And my concern here is when this lady passes away, Brian, even though the estate plan is gonna work just fine, when everybody shows up and wants to have the trust in will read, and all that jewelry's already been given away, not to the daughter, and people don't realize that they're getting disinherited, I think there's some potential here for a little bit of family discord and hurt feelings and everything else. And I bring all this up just to say, even if you don't have a super-complicated estate plan, make sure you sit down and explain what you're planning to do with your family, even if you don't talk about exact dollar amounts, just so you don't create some unintentional family discord when all this situation unfolds at the death, when it comes time to settle the estate. Have you run into anything like this in a similar fashion, Brian?
Brian: Oh, for sure. And there's a lot of assumption that, you know what, I'll just tie out the, in this case, it's the "I'll just give the jewelry away, and that'll take care of that. I'll relieve myself of the guilt of this person taking care of me." Well, the other parties in this may be completely supportive of benefiting the person who has put the most work into it, but there could be some emotional attachment to some piece of jewelry because of the family history that that in-law might have, so... Might not have, I should say, so, I definitely think it's, I see both sides of this, but definitely, communication is key. Just make sure you understand how folks are gonna react.
Bob: Thanks for listening tonight. You've been listening to "Simply Money," presented by Allworth Financial on 55 KRC, THE talk station.
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