What exactly are dollar-cost averaging and reverse dollar-cost averaging? Joe and Big Al explain as they answer questions about paying Medicare premiums with HSA funds, and ETFs vs mutual funds when dollar-cost averaging into small-cap value funds. Plus, why would you want to reduce the stock allocation in your emergency fund, and should a stable value fund be part of your portfolio? Is it possible to “re-identify” an inherited IRA as a spousal IRA to change the RMD calculation? Is the section 162 executive bonus plan just whole life insurance? And finally, Joe’s past comes back to haunt him with 9 cats, a neurotic beagle, and 200 IRAs.
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- (01:03) Dollar-Cost Averaging Explained via HSA Funds and Medicare Premiums (Jim from Santa Cruz)
- (04:46) Why Reduce Stock Allocation in an Emergency Fund? (Jim from Santa Cruz)
- (07:13) Should I Dollar Cost Average Into Small Cap Value Funds? ETFs Vs. Mutual Funds (Brian, Queens, NY)
- (16:55) Should a Stable Value Fund Be in My Retirement Portfolio? (Sharon, Waukesha, WI)
- (20:48) Inherited IRA vs. Spousal Rollover IRA (Mike, San Diego)
- (25:15) Is the Section 162 Executive Bonus Plan Just Whole Life Insurance? (Dee, Irvine)
- (29:39) COMMENT: Another Top Notch Episode, Joe Coming Off the COVID List (Juan)
- (30:42) Is Manually Consolidating 200 IRA Accounts My Only Option? (Helen Wheels)
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Today on Your Money, Your Wealth® podcast 367, what exactly are dollar-cost averaging and reverse dollar-cost averaging? Joe and Big Al explain as they answer questions about paying Medicare premiums with HSA funds, and ETFs vs mutual funds when dollar-cost averaging into small-cap value funds. Plus, why would you want to reduce the stock allocation in your emergency fund, and should a stable value fund be part of your portfolio? Is it possible to “re-identify” an inherited IRA as a spousal IRA to change the RMD calculation? Is the section 162 executive bonus plan just whole life insurance? And finally, Joe’s past comes back to haunt him with 9 cats, a neurotic beagle, and 200 IRAs. You don’t wanna miss this. Visit YourMoneyYourWealth.com and click Ask Joe and Al On Air to send your questions, comments, and bizarre stories as an email or a voice message. I’m producer Andi Last, and here are the hosts of Your Money, Your Wealth®, Joe Anderson, CFP® and Big Al Clopine, CPA.
Dollar Cost Averaging Explained via HSA Funds and Medicare Premiums (Jim from Santa Cruz)
Joe: “Hello, YMYW team. Jim from Santa Cruz calling. We haven’t talked in a while.” Jim, I don’t think we’ve ever spoken.
Andi: He hears you.
Al: You read his questions.
Joe: I feel like we have a connection.
Al: Yeah, I do, too.
Andi: He does, too.
Joe: He’s like listening, driving his Honda CRV right now, and he’s like, See, we are talking. We talk. So I write in and then like, 4 weeks later, we talk. “I’m still driving the ‘21 Honda CRV, but not if I’ve been drinking my Sierra Nevada pale ale. I still don’t have a pet, but I’m still dodging a metric ton of four legged critters on the steps at Seacliff Beach. I’m also still helping my friends, Jack and Diane who have a couple of new questions as they prepare for their retirement in 2025. On the day she retires, Diane will have $40,000 in a health savings account. The money is invested in an S&P 500 index fund. Once enrolled in Medicare, she plans to withdraw an amount equal to her Medicare Part B and the premiums each month as a way to get tax free income. This seems like a reverse method of dollar cost averaging. What are your thoughts on this? Does dollar cost averaging work on the way down?” No. Reverse dollar cost averaging is very, very bad, Jim. So I’ll get into that in a second. He is going to take money out of the S&P 500 fund to pay for premiums, and he’s considering that reverse dollar cost averaging. It’s reverse dollar cost averaging if the market goes down.
Al: Well, I think what he’s saying is he wants to pay those premiums from the health savings account. Is that what he’s saying?
Joe: Well, regardless, he’s taking distributions from an account to pay for something.
Al: Reverse dollar cost averaging is terrible when the market’s going down. Normal dollar cost averaging is you’re investing a similar amount into your 401(k) every month. And as the market goes up, you have more and more shares or you have more and more investments. But when the market goes down, which it does on occasion, you end up with more shares and do better longer term.
Joe: So let’s say you’re saving $1,000 a month, and one month the market’s up 10% and then the next month the market’s up 5%. What is your average cost of those two months? It’s $7.50. So you’re just averaging the cost of your share price as the market fluctuates, as you’re contributing. But what happens with reverse dollar cost averaging is when you take dollars out. So let’s say that the market drops. I use this example because it’s really easy. If the market drops 50%, you need a 100% rate of return to get your money back. So if the market drops 50% and you’re taking money from your overall portfolio to purchase any type of goods and services, you need more money than a 100% return to get your money back. You need 100% plus whatever dollar that you took out of the overall account, so it’s very difficult to get caught back up. Saving money in a volatile market is your best friend. Taking distributions in a volatile market can hurt you. That’s why we talk so much about creating a retirement income strategy. It’s completely different than a savings strategy. So hopefully that can clear things up there.
Why Reduce Stock Allocation in an Emergency Fund? (Jim from Santa Cruz)
“Diane’s emergency fund is equivalent to a year of expenses that is separate from her well-diversified stock portfolio. She concluded that if her portfolio returns an average of 7% over 35 years, even if her emergency fund was depleted, they wouldn’t run out of money until age 100. With that in mind, why reduce stock allocation? Conventional wisdom suggests 60/40 or 50/50 stock/bonds split. But if you’re investing for the long term stocks when in the longest possible term is lifetime, would you try to talk her off the ledge?” So he’s saying that she’s got enough cash reserves to fund her…
Al: To cover a year.
Joe: No, he’s not saying that.
Al: Yeah. “Her emergency fund is equivalent to a year of expenses that is separate from her well-diversified portfolio.”
Joe: “If our emergency fund was depleted, they wouldn’t run out of money until age…” How does he know that he won’t run out of money until age 100?
Al: Well, I think he’s assuming 7%. You know how people assume a 7% every year?
Joe: Yeah, it’s not.
Al: It’s not.
Joe: It’s an average.
Al: That’s the problem. That’s why you have a little more safety when you start withdrawing from your accounts.
Joe: Because if you’re taking dollars out in the down market, you’re not going to average 7%.
It’s going to be something significantly less than that.
Al: Think about the market goes down and you’re taking money out. How do you recover from that?
Joe: So let’s say you’re averaging 7%. People think, OK, I’m going to average 7% so I can take 7% from my portfolio because 7% growth, I’m going to just take the growth. How about the market’s down 7%? You take 7%, but you’re down 14%. Now, what do you do?
Al: It’s hard to catch up.
Joe: Now you need 40 some odd percent rate of return just to get your money back. You don’t need a 14% rate of return. If you’re down 25%, if you earn 25% the next year, you’re still not square one. If you lose 25%, you need to earn a lot more than 25% because it’s on a lower dollar value. That, again, is called reverse dollar cost averaging. It’s reverse compounding. Compounding, when you save, it’s money growing on top of itself. When you’re taking money, it has the reverse effect. So you’ve got to be careful when you’re taking money from a portfolio and whatever assumptions that you’re making.
Should I Dollar Cost Average Into Small Cap Value Funds? ETFs Vs. Mutual Funds (Brian, Queens, NY)
“Hello, Joe, Al, and Andi, it’s Brian from Queens, New York for the third write in. But it’s been a while as you answered my first and second questions on podcast 275 and 303. I continue to listen every week. Got to tune in because I never know what Joe might say next.” Oh. I don’t know how to take that.
Al: It could be a dig or could be a compliment. Use your imagination.
Joe: I got a couple of digs today. “Never got to these important details. I drive a 2012 Honda Odyssey minivan with 90,000 miles on it. Wife, two young kids and in-laws. The midlife red convertible and baseball cap just doesn’t cut it in. My go to drink is Jack and coke.” Got a lot of jack and coke people out there.
Al: Seem to.
Joe: “Not going to ask about the Megatron barnyard back door rules. Just spitballing here.” Just chillin’ in the 2012 Honda Odyssey minivan.
Al: Yeah. Can’t do the convertible. Sounds like he wants to.
Joe: That’s what you have.
Al: That’s what I used to when I went through my midlife crisis, which is about your age now. So I expect to see you any day in a red convertible.
Joe: “My first question. You guys had Paul Merriman on the show.” Yeah, like 100 years ago. That was when Al was in the heat of his midlife crisis.
Al: Yeah, I don’t even remember those days.
Joe: “I learned from him that having 10% to 20% portfolio in a small cap value trying to search for the extra 0.5% to 1% gain over a lifetime can do wonders for a portfolio. I did not have any small cap value and didn’t know it was the best asset class historically up until very recently. The only small cap I have is just the small weighted portion of the total stock market index funds that I own. So now does it make sense to do this? I’m 45 years old, making $120,000 a year as a schoolteacher. Also, expect about an $80,000 pension at age 55. I contribute to and max out my 403(b), Roth 457 and backdoor Roth IRA. Hoping to continue to max it out until retirement eligibility, including the 50 year catch up rule. These accounts currently total about $725,000. The 403(b) and 457 do not have small cap value options. So as I make the contributions to the 403(b) and 457 of about $4,000 a month out of my paycheck invested in the total market S&P, the midcap index funds, and 7% into the fixed account, does it make sense to do an exchange of my total market index fund in my Roth IRA for the same $4,000 per month over the next few years in dollar cost averaging the Small Cap Value Index fund until I reach the 20% or 10% overall threshold in my portfolio?” OK, how much does he have in the Roth IRA? $725,000.
Al: $725,000 is the total.
Joe: So he wants to get to $70,000 to $140,000 in small cap value.
Al: Yeah, his 10% to 20%.
Joe: “I also recently started a taxable brokerage account and had the Fidelity mutual fund version of the Total Market Index Fund, but sold that and bought the ETF iShare equivalent for the following reasons. My second question.” For the following reason and then so the following reason goes into the second question?
Al: Well, read it and we’ll figure it out.
Joe: I just feel like naked here. “My second question. Is it true that for better tax efficiency it is more beneficial to hold ETFs in a taxable brokerage account than regular mutual funds because there is less of a short term and long term capital gains and dividend distributions? Can you explain this? Thanks always for all the terrific information, Brian.”
Al: Let’s start with the first question.
Joe: He’s trying to eke out a little bit more returns. So Paul Merriman is a big fan of small cap value. And so if you look at small cap value are small companies that are underpriced. That means they’re distressed of some sort. So if you take a smaller company that has a lot of risk, that is underpriced because it could be distressed for some reason or out of favor, it has a lot more room to grow. So the expected return of that particular asset class is higher than a large company growth stock that is already built and producing goods and services that is a very strong industry.
Al: And the rate of return has to be higher because otherwise, who would invest in it?
Joe: Why would you take the risk?
Al: If it’s the same return, let’s go with the strong company.
Joe: Exactly. But the risk premium, is what they call it, doesn’t happen every year. You have to buy the overall asset class and hold it for a long period of time. Over a long period of time, historically, smaller companies have outperformed larger companies. Is that saying that that will continue to happen? It should. But who knows? Growth companies have outperformed. Small companies have gotten hammered, but then they come back. Value companies over growth and so on. There’s large debates. But the academics say that value will outperform growth because there’s more risk in value type companies. And smaller companies will outperform large companies because there’s more risk. So Brian here, a buddy from Queens, says I want to load up on this small cap value. I want to get a little catnip.
Al: 10% or 20% of the portfolio.
Joe: That’s a little rich. But he’s 45 years old. He’s going to have a huge pension, so I would put 20% of my portfolio in small cap value right now. But if he doesn’t have the $140,000 in the Roth, well, then yeah. But I wouldn’t necessarily dollar cost average and say, Hey, I’m going to take this from that and do whatever. I would reorganize my portfolio to what it should look like today and make those traits today and then move on.
Al: I agree with that. And the thing is, if you go back the last hundred years, small cap value has outperformed the total stock market, particularly larger companies by a factor of 2% or 3%, sometimes more percentage on an average annual compounded basis. So not only is it good to own them anyway, just because of the higher potential rate of return. The last decade, that has not been the case. In fact, larger companies have done better. There’s something called reversion of the mean, which means there’s probably more opportunity anyway and smaller in value. So you would want to go ahead and invest it and all the money that you can put in it up to 20% of your portfolio, go ahead and do it now. I agree with that.
Joe: I would just reallocate to whatever your allocation is. We are not recommending people to go into any particular investment, any type of asset class. He is asking to say, Hey, I want to put 20% into this particular asset class. We explain why that asset class is popular and why Paul Merriman likes it, but we are not recommending that.
Al: No, we’re not. And 20% might be a little rich because that’s a pretty good allocation. But I’ve got a small cap value in my portfolio and I’m older and I will always, because it’s a great asset class.
Joe: So there you go. ETFs and index funds are almost identical. It’s just how they’re created and structured. ETFs were really created to trade for the big institutions because they trade like stocks. Mutual funds trade at net asset value. I think you’re getting way into the weeds here. You have a brokerage account that you’re just starting and you’re changing the index fund into an ETF. If you look at the distributions on both of those, it’s going to be almost identical. Because an index fund is not trading. An ETF still has to reconstitute the ETF as well. And that’s when an index fund trades, is that if there are stocks that come out of the index. So like the S&P 500, there’s roughly 500 companies within, but it’s not the same 500 companies. Some of them fall out of favor, some of them come in. And so they have to reconstitute to make sure that the index is pure. That’s when those trades happen. So if you’re in an actively managed mutual fund, that’s when you get more dividend distributions. That’s when you get interest and that’s when you get turnover and that’s when you get capital gains and so on and so forth. So if you have an index mutual fund versus an ETF in the same index, you’re not necessarily going to get killed in the overall taxes. But yes, overall, on a high level, ETFs are more tax efficient than mutual funds.
Make sure the asset classes you hold in your investment portfolio are appropriate for your retirement goals and your tolerance for risk, especially when markets are volatile. Go to the podcast show notes at YourMoneyYourWealth.com and click “get an Assessment” to schedule a comprehensive assessment of your entire financial plan with one of the experienced professionals on Joe and Big Al’s team at Pure Financial Advisors. Pure Financial is a fee only financial planning firm, and they’re a fiduciary. They won’t sell you investment products and by law they must act in the best interests of their clients. There is no cost and no obligation. Click the link in the description of today’s episode in your podcast app, then click “Get an Assessment” to schedule your one-on-one video meeting at a date and time that works for you.
Should a Stable Value Fund Be in My Retirement Portfolio? (Sharon, Waukesha, WI)
Sharon, a good friend from Waukesha, Wisconsin, writes back in, “Hello, Joe, Big Al and Andi. I was interested in your thoughts on the role of the Stable Value Fund in my retirement portfolio.” What if Sharon just kind of sits around and all of a sudden thinks: stable value fund. And I think I’m going to email Big Al and Joe.
Al: She saw some kind of internet ad. “Ooh, that’s a good one.”
Joe: “Just retired on 12/31 and my 401(k) plan offers a stable value fund. It pays zero fees. The fund purchase fee, redemption fee, 12B-1 fee equals none. Returns have been 6.71% since inception in 1997. 5% return for the last 1, 3, 5 and 10 years. I just retired and plan to roll my 401(k) into an IRA. However, I’m planning to leave some money in the stable value fund with my existing 401(k). Would it be wrong to think of the money in the stable value fund as part of an overall bond allocation with a historical 5% rate of return? What is wrong in making this asset a major part of my bond portfolio? I currently have 60% stock, 40% bond. Do you have any guidelines on the percentage of your overall retirement portfolio to exist within a stable value fund within my 401(k)?” So, what do you think about stable value funds? How many times are they gonna say stable value fund? “It seems like this fund could also serve as an emergency safety net while still giving returns in the market. Thoughts? Thanks for all you do. Sharon from Waukesha.” Stable value, 5% return, Al. That’s a pretty decent return.
Al: That’s almost hard to believe, but I’m not going to question it. It’s a great return if that’s real.
Joe: In general, a stable value fund is basically a wrapper of bonds. It’s a bond portfolio and then there’s like an insurance wrapper around it.
Al: It’s kind of like a mutual fund of bonds. So it is a bond, so you can count it as a bond in your portfolio. It just has insurance in there so that you can’t lose principle, which in general tends to lower the rate of return because there’s a cost to paying for insurance inside this mutual fund.
Joe: I wonder. I remember a long time ago that we were using some of these funds, but I don’t know if it was stable value, but there was another type of floating rate. That’s what it was. A floating rate fund that you could get a little bit of a kicker in the overall return that was supposed to be safe. But a 5% rate of return, if you take a look at bond yields right now they’re pretty low.
Al: They’re going to be closer to 2% or less.
Joe: I have no idea what Sharon’s stable value fund is made up of. It’s in her 401(k) plan. There’s multiple types of stable value funds.
Al: And they’re all a little different. But the idea is the investment itself. Think of it as a mutual fund that goes out and buys bonds. So you got a portfolio of bonds in your mutual fund. And then there’s insurance so that if the bonds go down in value, you don’t lose money. That’s the idea behind this type of fund.
Joe: Do you see any harm with her…?
Al: No, especially if it’s making 5% and it’s guaranteed no loss in principal. It seems a little too good to be true. So, Sharon, I would just check your facts to make sure this is really true.
Inherited IRA vs. Spousal Rollover IRA (Mike, San Diego)
Joe: Mike writes in From San Diego. He goes, “Hey, a husband and wife are both 84 and taking RMDs. Husband dies in 2021 and wife identifies his accounts as inherited IRAs instead of rolling them into her accounts.” So, the spousal rollover is what he’s referring to. You can keep it in husband’s name and be the beneficial owner of those. Or a spouse has the opportunity to roll those into her name.
Al: And that’s only for spouses. If you’re a kid, nephew, whatever, friend, you can’t do this. Only spouses.
Joe: Yeah, it will blow you up. Let’s say, if you inherit it from your father, grandfather, nieces or nephews and you try to put it in your own name, that’s a 100% distribution. Fully taxable. No bueno. Reason why people want to keep it in the deceased’s name is for one reason. If they were under 59.5, they would have full access to the dollar if they need it. Otherwise, it doesn’t necessarily make a lot of sense to keep it in the deceased’s name. You could just roll it into yours. Because let’s say if you have a lot older spouse and you kept it in the deceased’s name and then you don’t necessarily need the cash. And so the money can continue to defer. And then you would have to take a required minimum distribution based on the deceased age. So the money would be forced out at their age of 70.5 or 72, and so on and so forth. All of these rules change with the Secure Act. Because now there’s different tables because the RMD or the beneficiary IRA doesn’t have the stretch provision anymore. You have to distribute the account within 10 years. And I’m guessing that’s where this question is going. “In Jan 2022 the wife’s RMD from her accounts are calculated by using the factor of 16 based on her age of 85 this year. The RMD of the inherited IRA is calculated by using a different table, and therefore, the factor’s 8.1 is used because of her age 85 this year. Can the wife somehow change the identification of the decedent’s IRAs from inherited to her own so the RMD of her IRA and her late husband’s IRA will be calculated using the factor only instead of using her factor for her accounts in the higher factor for the inherited accounts?” So what he’s saying is that the amount of money that has to come out of the inherited IRA is a lot more than the factor that has to come out of her IRA because of the new RMD tables. “She doesn’t need all that money each month and worries about having to pull so much money out of her late husband’s account. It’s been more than 60 days since his IRA became her inherited IRA, and she is scheduled to receive her first RMD from the inherited IRAs in the middle of February.” Is this guy a CPA?
Andi: I was wondering when he referred to somebody as a decedent. That’s a giveaway.
Joe: And then he knows the 60 day rule, he’s looking at the factor of 16.
Al: Or he’s an advisor, he’s got a client. What do I say? Let’s see how they answer it.
Joe: Or maybe let me try to stump him. I don’t know.
Al: I do know. I guess by default, it’s an inherited IRA, but you can change it to your own IRA anytime you want. There’s no time frame. So yeah, she can change it now. She could change it 2-3 years from now. It doesn’t really matter.
Joe: You’re 100% sure on that?
Al: I looked it up.
Joe: Cool. That’s Big Al for you. But Mike, just come clean. Say, this is Mike. I work for XYZ advisory firm.
Al: And we didn’t know the answer.
Joe: And I don’t know the answer to this and my clients, we have until February to figure this out, so I thought I’d just write in and hopefully you answer.
Al: And I googled it and couldn’t get it.
Joe: So, I thought Big Al would help.
Is the Section 162 Executive Bonus Plan Just Whole Life Insurance? (Dee, Irvine)
Joe: Dee from Irvine. “Dear Joe and Al. I love the show and listen weekly. I recently was introduced to the Executive Bonus Plan Section 162 for businesses. Is this non-qualified plan worth the investment for the employer? And is it good for the employee? Seems just like another whole life insurance plan to me. When would this option make sense? Dee from Irvine. The drink of choice, Jack and Coke and the car is a Chevy Bolt.” So Section 162.
Al: I had to look that up, but I got it here.
Joe: I know what that is. Basically, it’s a plan, it’s a bonus plan. So let’s say that I’m a small business and Alan, you are my employee and I want to lure you to come work for me at Joe Anderson’s Pet Shop.
Al: Oh, and you want me to be an executive, too. That’s really nice.
Joe: Yes, you’re going to be my CFO. I’m thinking about how else can I compensate Big Al? And I’m going to put together a life insurance plan. So we’re going to buy a big fat, whole life policy or maybe a variable universal life policy. And then I’m going to give you a bonus every year. But that bonus is not going to go into your pocket. The bonus is going to go to fund the life insurance contract. And here’s how it’s sold. Basically, I’m going to give you the bonus. It’s compensation. You don’t receive the compensation, but it’s going to grow 100% tax deferred in this overall plan. And then when you retire, you can pull the money out tax free. And by the way, if you were to pass away prior to your retirement date, guess what? Your heirs get a big fat life insurance proceeds. You want to come work for me?
Al: If that’s the only reason, no. But it’s a benefit for you, the executive. It’s a life insurance policy and it’s a bonus, but you don’t have to pay taxes on it. That’s how it works. So this is if you want this without having to pay compensation.
Joe: However, the employee, it’s taxed. It’s a bonus.
Al: I don’t think so.
Joe: Yes, for sure. 100%. What they do is that they’ll double bonus you. So I’m going to bonus you $20,000, but I’m actually going to bonus you $40,000 because the other $20,000 will help pay the tax on the $20,000 bonus. Because it’s comp. It’s a bonus. And that bonus is not paid to you as cash. It goes into the policy, then the policy grows, tax deferred and then they’re using it as a quasi retirement plan and you get the money out tax free on the other end only if it’s a qualified distribution. So there’s a lot of things that have to happen. I’ve already gone on several rants and raves in regards to using life insurance as an overall investment strategy. Life insurance should be used as a death benefit. I’m not a huge fan of this unless you absolutely overfund the hell out of it, which I don’t think most employers do. Most employees don’t stay at the same company for that long. So if they’re going to bounce and leave in 5 years, they’re going to take the policy with them and they’re going to cash the thing out and all of that’s for none. So I don’t know. I’m not a huge fan of the 162.
Al: Got it. And I will defer to you because I am clearly out of my comfort zone.
Maybe you’re out of your comfort zone when it comes to your retirement. Maybe you know how to get there, but you aren’t taking action to meet those goals. Studies show that we often have a disconnect between the realities we’ll face in retirement and our actions to deal with those realities. Watch the YMYW TV Retirement Disconnect episode and download the Retirement Disconnect Guide, both in the podcast show notes at YourMoneyYourWealth.com. You’ll learn about retirement disconnects that can quickly unravel your retirement, and how to reconnect and start getting your retirement back on track. Click the link in the description of today’s episode in your podcast app to go to the show notes, read the transcript of today’s episode, Ask Joe and Big Al your money questions on air, and get your retirement reconnected.
COMMENT: Another Top Notch Episode, Joe Coming Off the COVID List (Juan)
Joe: OK. We get interesting comments.
Al: We sometimes do, yeah. And sometimes you read them.
Joe: Juan, he’s a staple of the show, he goes “Another top notch episode, Joe playing injured while coming out the COVID list. Al protecting Joe from the real imitation ninja as well, once played Chuck Norris stunt double? And as always, Andi saving the best for last, pun completely intended, control the chaos while keeping it classy.” Juan, he always comes up with something creative. He liked that show, I guess. I had COVID. Made the COVID list.
Al: Yeah, you were playing hurt.
Joe: Yeah, that’s what I do.
Al: And you got through it.
Joe: Not like these youngsters nowadays, Al.
Al: I got a little sniffle, can’t come in for a week.
Is Manually Consolidating 200 IRA Accounts My Only Option? (Helen Wheels)
Joe: I got an interesting email here, it goes “Joe, you might not remember me, but we hooked up one night in Atlanta.”
Al: Ooh, this could get steamy. Sure you want to read this?
Joe: I lived in Atlanta, Georgia like 20 years ago.
Al: I know, that’s why I’m thinking this is a blast from your past.
Joe: “While we were talking”
Andi: “Talking.” That’s probably in quotes.
Joe: That’s what it says. “While we were talking, you mentioned the importance of diversifying investments. So when I started investing into IRA accounts, I set up a new account each month to put the money into.” That’s a pretty good smart move there.
Al: Set a new account up every month…
Joe: Every month!
Al: Because you got to diversify.
Joe: So let’s just keep setting up accounts. “I always put the money into Sears stock, but it hasn’t been doing very well lately. So I’d like to transfer all of it into game stock, which I’ve heard good things about. The problem is, since I now have over 200 accounts, it’s going to take a long time and effort to get them all transferred. Is there an easier way to do this than having to manually transfer all of them? They are all with Vanguard, but I’m not finding any better options than just manually doing it.”
Al: Wow. 200 accounts.
Joe: What the…? This is so strange.
Al: So you got a couple shares of Sears in each one.
Joe: Could you imagine? Could you absolutely imagine having someone come into the office and say, here I opened up a new account every time I made a contribution into Sears stock?
Al: I want to hire you to manage my assets. We just got a little problem here. There’s 200 accounts that need to be transferred.
Joe: My mailbox is full every week of account statements.
Al: Oh boy. OK. I wonder if Vanguard would consolidate, since it’s all the same investment?
Joe: I don’t know, I wonder if that’s even possible.
Al: I don’t know. Never heard of anyone doing this.
Joe: “I’ve got nine cats and a neurotic, paranoid beagle. I drive a ‘97 Toyota Prius and live in Portland. I signed this Helen Wheels, since you sang that song to me at the karaoke bar because my name is Helen. Since you never called me after that night, I hope you will be willing to make it up to me by helping me out with my situation.” Wow!
Al: Yeah, you didn’t call her back.
Joe: Yeah, I was singing karaoke.
Andi: I love the fact that you hooked up with somebody and then talked to her about diversifying her investments, that might explain why you’re still single.
Joe: It could be.
Al: Was that before or after you hooked up?
Joe: I don’t know who Helen is. Nine cats, a paranoid dog, drives a Prius…
Andi: Yeah, but the hook up was a long time ago. This is how Helen is now.
Al: A different animal.
Joe: This is what I did to Helen. She had to move to Portland and get a bunch of cats.
Al: Because you never called her back.
Andi: And she had to manage her 200 accounts.
Joe: Yes, I am so sorry about the situation. It would be good to see Helen.
Al: Do you have a good karaoke voice?
Joe: Oh yeah.
Andi: He’s much better as a dancer, I think.
Joe: Yes. I’m not a singer. I’m a dancer.
Al: I will vouch for that.
Joe: These hips don’t lie, Al.
Al: I’ve seen you dance Michael Jackson for an hour straight thinking, When is this going to end?
Joe: I’ve got a routine. I practice it in the mirror.
Al: It actually was really good.
Joe: I was a dancer one time at a pool party. This one guy goes, No way he doesn’t practice that.
Al: It just comes naturally.
Joe: It does! Get a nice little music and you start dancing. I’m sure a lot of people like that.
Al: Not too many that I know of.
Joe: All right. Well, keep your questions coming and go to yourmoneyyourwealth.com, click on Ask Joe and Al On the Air. If you want to leave a voicemail like a lot of you are now doing, I really appreciate that, do that. If you want to send us an email, you can do that there. You can go to our website at yourmoneyyourwealth.com. There’s many, many ways to get a hold of us. We truly appreciate you writing in because it’s a lot of fun to kind of go through your questions and hopefully we can help a couple of people along the way. Honestly, if you want a full financial plan here, a lot of people give us like eight pages of stuff. We go through them all. We will do our best to spitball whatever solutions that make sense for conversation.
Al: Yeah, we like to spitball. And it’s just that, it’s spitballing. It’s not advice. It’s just kind of, here’s our quick thoughts based upon what you told us.
Joe: Yeah, absolutely zero advice. All right. That’s it for us. Appreciate you hanging out once again. Andi, wonderful job. Thank you. And yeah, we’ll see you guys next week. Show’s called Your Money, Your Wealth™.
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Joe reading, Al’s midlife crisis, partial information, listeners we haven’t heard from in a while, and gambling in the Derails at the end of the episode, so stick around.
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