ABOUT HOSTS

Joe Anderson
ABOUT Joseph

As President of Pure Financial Advisors, Joe Anderson has led the company to achieve over $2 billion in assets under management and has grown their client base to over 2,160 in just ten years of the firm opening. When Joe began working with Pure Financial in 2008, they had almost no clients, negative revenue and no [...]

Alan Clopine
ABOUT Alan

Alan Clopine is the CEO & CFO of Pure Financial Advisors. As CEO he currently leads Pure Financial Advisors along with our executive team. As CFO he is responsible for the financial operations of the company. Alan joined the firm about one year after it was established. At that time the company had less than [...]

Published On
November 16, 2021

Can your investment portfolio be over diversified? How do dividends and net unrealized appreciation (NUA) work? How will ownership inequality in the stock market impact future returns for most investors? What do Joe & Big Al think of target date funds? Plus, the YMYW podcast is now on video! Watch the fellas spitball on annuities, bonds, long-term treasuries, risk tolerance, the buckets of money investing strategy and the latest on the Roth provisions in the Build Back Better Act. Show notes, video clips, free resources, Ask Joe & Al On Air: https://bizlink.to/ymyw-352

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Show Notes

  • (01:04) Is Too Much Portfolio Diversification Possible? (Wyatt, Fargo, ND)
  • (09:40) Thoughts on Target Date Funds? (Sally, Waukesha, WI)
  • (15:16) How Will Ownership Inequality in the Stock Market Impact Future Returns for Most Investors? (Karmen)
  • (18:58) Understanding Dividends, Diversification, and Net Unrealized Appreciation (Wade, CA)
  • (28:31) Should I Invest Extra Cash in Annuities or Bonds? (Ted, San Diego)
  • (32:38) Are Long-Term Treasuries the Best Way to Balance Equities in a Portfolio? (podcast survey)
  • (35:08) How to Determine your Risk Tolerance (podcast survey)
  • (37:42) How to Manage the Buckets of Money Investing Strategy (podcast survey)
  • (39:21) Build Back Better Roth Provisions Gone, Then Back. House Vote This Week (David, NYC)

Free resources:

NEW! WATCH Joe and Big Al answer questions from the YMYW podcast – on video! 

Pursuing a Better Investment Experience

8 Timeless Principles of Investing

Why Asset Location Matters Guide

Listen to today’s podcast episode on YouTube:

 

Transcription

Today on Your Money, Your Wealth® podcast #352, Joe and Big Al are answering your retirement investing questions: can your portfolio be over diversified? How do dividends and net unrealized appreciation or NUA work? How will ownership inequality in the stock market impact future returns for most investors. And what do the fellas think of target date funds? Plus, partway through this episode we start something new and exciting: the YMYW podcast is now on video! Don’t just listen, now you can watch Joe and Big Al answer your questions on investing extra cash in annuities or bonds, long-term treasuries, figuring out your risk tolerance, and the buckets of money investing strategy. Oh boy, better get my makeup on straight. Click the link in the description of today’s episode in your podcast app to go to the show notes, see the new video clips, subscribe to the podcast on YouTube, and to Ask Joe and Big Al On Air. I’m producer Andi Last, and here are the hosts of Your Money, Your Wealth®, Joe Anderson, CFP® and Big Al Clopine, CPA.

Is Too Much Portfolio Diversification Possible? (Wyatt, Fargo, ND)

“Hi Andi, Big Al, & Joe, I’m a big fan of your podcast and look forward to new episodes every week. I’m a long-time listener and first-time caller. I have a question that I haven’t heard covered in your previous shows. Is there a point where you become too diversified in your portfolios?
I’m 27 years old from the frozen tundra up in Fargo, ND. I drive a 2004 Chevy Silverado and prefer bourbon in an old fashioned but can never turn down a cold Busch Latte. My question revolves around being too diversified in my portfolios while I’m still at a younger age. I feel like I’m going against the adage of “Concentration creates wealth, diversification preserves it.” My portfolio breakdown is as follows. I am 100% allocation towards equities. (You can disclose these amounts on the show if you want).
401K: $50,000
· S&P 500 Index Fund: 42%
· 2060 Target Date Fund: 40%
· Large Cap Growth Fund: 7%
· Small Cap Index Fund: 6%
· Total International Index Fund: 5%
Roth IRA: $12,000
· Large Cap Growth: 27%
· Individual Stocks: 22%
· Small Cap: 16%
· Large Cap Value: 9%
· Emerging Markets: 8%
· Sector ETFs: 8%
· Mid Cap: 6%
· Developed Intl.: 3%
Bridge account (non-qualified brokerage): $4500
· Large Cap Growth: 28%
· Large Cap Value: 16%
· Small/Mid Cap: 14%
· Individual Stock: 12%
· RIETs/Sector ETFs: 11%
· Emerging Markets: 9%
· Intl. Developed: 7%
· Cash: 3%
Non-qualified Brokerage: $4000
All individual stocks.
· 60% growth focused
· 40% dividend focused

I know there is a lot of information accompanying the question but would really appreciate your thoughts on this topic. Looking forward to future episodes as always. All the best, Wyatt from Fargo”

Thoughts on Target Date Funds? (Sally, Waukesha, WI)

“Sally From Waukesha, love titos and tonic and spotted cow (and like to use %s as you found from my prior question). I listen to podcast faithfully (either walking the dog or while trying to fall asleep). I am currently 50 and hope to retire at 55 where I will use my tax deferred to live. I am trying to tie employee savings accounts that are have significant amount in target date funds to an overall allocation for all my accounts (HSA/ taxable brokerage/ cash). What do you think about target date funds? You have to dive deep to get the overall allocation by large/mid/small/bonds/growth/value. I am trying to optimize and get to that level of detail. I assume it changes if there is a glide path as I approach the date so not sure how often I have to update the %s. If I want to get out of it now, do you suggest I move it all to brokerage link option in my plan and use ETFs to get to my desired allocation as I do for my taxable brokerage account? Or to the other fund options besides 13 target date funds: diversified fund, FTIHX, SM & Mid cap equity, SP 500 Index, FXNAX (bond), Stable value. Thanks for the spit ball.

Find out exactly how your retirement portfolio should be invested by scheduling a free financial assessment with a CERTIFIED FINANCIAL PLANNER™ professional on Joe and Big Al’s team at Pure Financial Advisors. They’ll take a close look at not only your current financial situation, but also your ability to tolerate risk, your specific retirement needs and goals, your tax liability, and many other factors. They’ll help you develop a comprehensive financial plan to reduce your taxes and make the most of your retirement. Click the link in the description of today’s episode in your podcast app to go to the show notes and click Get an Assessment to schedule a no cost, no obligation financial assessment at a time and date that’s convenient for you.

How Will Ownership Inequality in the Stock Market Impact Future Returns for Most Investors? (Karmen)

“Dear Joe and Al, the charts in this post beg a number of questions as it relates to the government’s 10 year rule. It would seem that very large withdrawals from the market for inheritors of the top % will negatively impact future returns for the remaining 90% in the market. Any insights on the future impact with larger than previously seen withdrawals?”

Ownership Inequality in the Stock Market (awealthofcommonsense.com)

Understanding Dividends, Diversification, and Net Unrealized Appreciation (Wade, CA)

“Hi All.. I have two questions I was hoping you could assist with.

1) My first question is regarding people who talk about living off of dividends in retirement. I agree with you that receiving or creating your our ‘synthetic’ dividend is essentially the same. My thought is that people in the accumulation phase should most always reinvest dividends, cap gains, etc but what about those spending from their taxable accounts? If I am paid a dividend, then I reinvest it, and then I later sell shares for living expenses, would I be in a worse after-tax position than if I just paid the div’s to cash? In other words, I paid tax on the dividend that I reinvested, and then also paid cap gains on the shares I sold (assuming you didn’t specifically sell the shares that were purchased by the reinvested div. itself). How do you guys structure this when people are living off their taxable dollars? Do you always pay dividends to cash in retirement?

2) My second question is about NUA. The situation is I know someone who has $16k in basis in employer stock in an ESOP with a current market value of $2million. To some people this may seem like a no brainer NUA scenario but this person has nearly 100% of their assets in this stock and could benefit greatly from diversification in an IRA. Maybe it would be best to do partial NUA with ~$300k of this so there are assets outside of retirement accounts for emergencies and diversify the rest in the IRA? How do you think about NUA scenarios and is there ever a time that you recommend people take advantage of it? I know some that say its never worth it and others say do it when there is low basis.. what are your thoughts?”

Visit the podcast show notes at YourMoneyYourWealth.com to download free investing resources that’ll help you on your way to a successful retirement. Our guide to Pursuing a Better Investment Experience will help you effectively target long-term wealth in the capital markets. 8 Timeless Principles of Investing will show you how to avoid poor investment decisions, protect yourself from risk, and grow your investments even in volatile markets. The Guide to Why Asset Location Matters will clue you in on how considering the tax treatment and future expected returns of each asset class may help you enhance those returns. Click the link in the description of today’s episode in your favorite podcast app to download all three guides, all for free. Now, let’s move into the TV studio and get ready for lights, cameras, and action! You can watch all of the rest of the questions from today’s episode in the podcast show notes too.

Should I Invest Extra Cash in Annuities or Bonds? (Ted, San Diego)

“I am 60 and am getting ~$250k cash from my recent divorce and don’t know what to do with it.
I have ~$1.3M in 401k and IRAs, ~$750k in stocks.
I have a military retirement
I max out my 401k contribution.
I anticipate working another 6-8 years.
Not looking for big risk but am wondering about annuities or bonds. Maybe a mix of aggressive and safe.”

 

Are Long-Term Treasuries the Best Way to Balance Equities in a Portfolio? (podcast survey)

“During retirement is Long Term Treasuries the best way to act is ballast to the equity portion of your portfolio given its lower correlation to other bond Subasset classes?”


How to Determine your Risk Tolerance (podcast survey)

“How does one figure out your risk capacity as you approach retirement if you have always been aggressive and have a high stock allocation.”


How to Manage the Buckets of Money Investing Strategy (podcast survey)

“What are the nuts and bolts of how to manage the “Buckets of Money” method?”


Build Back Better Roth Provisions Gone, Then Back. House Vote This Week (David, NYC)

This article below appeared in my email inbox today. If this is fact, then the back-door Roth (regular and mega) will be alive and well, at least for now. I haven’t seen this reported elsewhere yet. Have the YMYW crew heard this? Thanks! David

Biden package boots many retirement, tax changes worrying advisers (InvestmentNews)

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Wyatt, Tombstone, and the Tivoli, drinking Busch Lite in the parking lot at a funeral, and the latest TV in the Derails at the end of the episode, so stick around. 

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Your Money, Your Wealth® is presented by Pure Financial Advisors. Sign up for your free financial assessment.

Pure Financial Advisors is a registered investment advisor. This show does not intend to provide personalized investment advice through this broadcast and does not represent that the securities or services discussed are suitable for any investor. Investors are advised not to rely on any information contained in the broadcast in the process of making a full and informed investment decision.