 Everyone, thank you for coming to our session. This is part of the accumulators track. I'm Karen D'Amato and I am joined by a wonderful panel starting from my right, Dan Egan, is the Director of Behavioral Finance and Investing at Betterment. In his research, he focuses on understanding how our minds and our emotions work in order to help people make better decisions around their money and investing and spending. Next, Nick Majuli is the Chief Operating Officer and Data Scientist at Ritholes Wealth Management. He's the author of the blog of Dollars and Data, an author of the recently published book, Just Keep Buying, which he's supposed to be waving up now, but you can see it. And he'll be discussing the book tomorrow morning at 8.10, so set your alarms early for that one. And Randy Bruns is the founder of Model Well and a senior financial planner with the firm which serves consumers with hourly and flat fees. And as an advisor, Randy works directly with clients who are widely varied in their ages and in their financial resources. Thank you all for being here. I think the accumulators audience is an interesting one because it can encompass people from their 20s into their 60s, potentially so an audience potentially of people of very different stages in their lives, different financial circumstances. And I guess the place where I wanted to start is sort of with a big picture issue. We all have lots of demands on our time and our attention. And so to set the stage, Nick, I was hoping you could discuss your guidance on where people should focus. So thinking about do I focus on my income, my spending, saving, investing, how do I prioritize where I'm putting my energy around my personal finances? Yeah, thanks, Karen. Thanks for coming out. In terms of prioritizing time, I mean, this is a Boglehead's meetup, right? So we all talk about investing and, you know, how much should I have international? How do I rebalance all those types of things? And that's very relevant for the people in the other room, right? They've done most of their accumulating already. Their money's already saved up. They're trying to, you know, go through the next 20, 30 years, et cetera, of their life. And all those little things matter a lot. But for people in this room, people are still accumulating, or those especially younger, it matters a lot less because you don't have all that money yet, right? So when I talk about, you know, in the first chapter of my book, I kind of lay out this framework, which I call the Save Invest Continuum, was basically, you know, if you can save more money than your investments can earn you, then you need to focus on that savings part. And that's what this room is really about. And so when I talk about where you're going to use your time, it's your income. It's like that's everything. I think that's something that's downplayed in most of the personal finance community, is like income, income, income, it's everything, right? And so people talk about, you know, savings and things like that, but I think you have to focus on growing your income. And that's like the primary way to build both. And then that question of how much you're focusing on investing versus just finding those dollars to save. I mean, we may have people in this room who have already accumulated a lot and they're still accumulating more. So for them, the investing decisions do become more significant. Yeah, they'll start to become more significant as your investments can actually earn you more than you could save in a year. And let's just use a simple example of this. You know, if you have a million dollars saved up, you know, a 10% returns $100,000, can you save 100,000 in a year? Maybe some people in this room can, right? But what happens if it's 10 million? Can you save a million in a year? Most people probably can't, right? So you see as that investment value gets higher, you start to have less and less control over what happens to your wealth, right? At least on your, with your savings side. So that's what I would say focus on income if you're especially just starting out. So I wanna think about my income. I wanna think about getting money into savings. But Dan, you were telling me that one thing I probably don't need to bother with is using one of those cool apps to track all my spending. Like, why not? That seems like it should help me. Yeah, so one of the more interesting elements of money management is how much time and effort you spend stressing about your money. It's this perversity of like, you think you own things, but actually if those things require time and concentration and effort, they kind of own you. They own your attention. And one of the traps people can fall into is thinking that budgeting is about looking in the rear view mirror at what I spent. And being like, oh, I overspent on takeout last month. Oh, I underspent on this. There are like consistent studies that show like the more that you do that, you're not gonna save more. You're gonna be unhappy or because you're stressed about the fact that you're not doing better. And there are a constant sort of escalating benchmarks of if you did good last month, you should do even better this month. People who are very good at saving as a process tend to invert the usual thing. They don't say I'm gonna exert a lot of self-control and I will have saved money by the end of the month by not spending it. There's lots of different ways of saying this, generally pay yourself first, which is effectively I make two grand. I know that I should be saving 500 of that when I get paid. I'm gonna auto deposit it into a savings account somewhere so that it's not even in my checking account to spend. That's sort of like top down, think about a budget at one point, lay out very simple math, you know, like one plus one plus one equals three, I'm gonna save one third of it, allows you to save systematically and in a way that doesn't stress you about what specifically you spent money on. Your retirement doesn't care if you spent it on cappuccinos or muscle cars or any other thing, it's just a matter of how much money did you save? The spending should not be something that causes you stress because you know you are saving enough from the outset. Thank you. Let's talk a little bit about the investing environment we find ourselves in. So it's a year when stocks and bonds have done terribly, inflation is high, it's scary, the economic conditions are scary. Bill Bernstein says that's a great market for accumulators but he also said, you don't know until you're in that bear market how awful it's going to feel. So Randy, if you could talk to us about when you talk to potential clients about investing and investing in an environment like this, what are you talking to them about? How are you trying to get them to look at the world? Well you stole my quote from Bill Bernstein this morning and I paraphrased him on Twitter. I said, Bill Bernstein had said, I would love it if I were an accumulator, I'd love a market like this, I would drool over it I think is the word he was using but and it is true because if everybody in this room is an accumulator, volatility is good, it helps you buy more shares mathematically, you end up paying a lower share price on average than the very same mutual funds or companies you're buying into but that still doesn't mean almost like something I've heard is like you can take a, you can do a flight simulator and have a good feel for what it's gonna feel like in a plane crash but until you actually get into a plane crash that can't simulate the feeling. So what we do in our firm is we remind investors of their time frame but we also make sure they know not just how much they need to save but also that there are going to be major bumps along the road and we don't say, oh if you're in an 80-20 portfolio that has historically fallen as far as 37%, we actually put it in terms of dollars and every meeting with our clients we make sure we're the nag that says, hey here's how much value you could lose if things go south and then things do go south and they can't say we didn't warn them and yeah. Dan, what are some lessons from behavioral finance that'll help us act more intelligently in this market? So the first one that actually I'm gonna play off of which is distance and time. Distance and time are very powerful assets in multiple ways and one of the most powerful is that when we are stressed, when we are scared we make worse decisions that are generally more short termists. We say like what do I need to deal with? Right now I don't care about the long term I just wanna feel better in the short term. One of the unfair advantages that a lot of accumulators are gonna have is that they're gonna be looking ahead 10 plus years and when I log in, I remember during March of 2020 when it was kind of like the trough of the pandemic related drop, I logged in and looked at my retirement plan that consists of like okay I'm gonna keep saving for this many more years into these account sites, et cetera and it said something absolutely horrifying like you're gonna spend $300 less per month in retirement and I was like oh nevermind, okay, no problem. I'm not stressed about that anymore. The more that we can remove stress by using distance and time as buffers between ourselves, the smarter decisions we make and one way you can think about this is Jeff Bezos has this quote that he's like if Amazon had a great quarter this quarter it's because of decisions that we made three years ago. Like when you are thinking about these things the decisions you make today they roll out they kind of get realized in terms of the outcomes years and years into the future and you realize that you think I don't need to react to what's going on in markets right now, right? Like we are planting trees these things take decades to grow effectively. Stuff matters, you need to come and intend to it you need to think about seasonality and what do I do in different seasons but give yourself that relaxation that like I should not be worried about this quarter to quarter because I am sticking to a plan that plays out over decades. The more that we allow ourselves to have distance and time in how we make decisions we make better decisions that play out better and we get to say we made an awesome decision three years ago and we're bearing the benefits of it today. I know Nick you were also saying you feel like people one of the risks today is that people are so focused on the short term which I think it feels natural I mean we're always bombarded with so much news and information but when it's scary I think it's you pay a lot more attention to it than the days you look at the market and you say oh the market's up again great and you go on with your life as opposed to the market is down a lot today I'm gonna spend a little more time thinking about it. Other tips for how I can resist that and keep my focus where it should be? Yeah I think just like studying history you start to realize how much stuff repeats itself. For example recently my sister and I went to Florence and I'm not just it's not a brag this is relevant and they had these little thing called wine windows I know because they're really good with the hell yeah they had these little thing called wine windows that apparently during the black plague they used to sell wine and things out of these little windows to prevent face-to-face contact with people during the black death because it took out like some cities took out two thirds of their inhabitants right in Italy it was really bad so during COVID they started reusing the wine windows so you see history repeats in very odd ways and just like that little things like that little stories you find out about stuff it's like we're sitting here looking at like this ticker tape moving and it like really doesn't make that much of a difference right and I really love Dan's answer about when he logged in in like March 2020 and he said oh I just lost you know X hundred dollars a month in retirement and I think a really cool just easy way to think about that is like for every hundred dollars a month you wanna spend in retirement that's about $30,000 in principle right using like the 4% rule or something it's not perfect just assume that for now just trust me on that right so if that's true if you're down you know $90,000 in your retirement account right now what did you really lose you lost $300 a month in retirement so and if you actually look at the retirement date on how people spend money in retirement they don't actually most people don't pull down principle they just live off their income so it doesn't matter it's actually kind of very interesting what I'll talk about I need to have much more money in retirement this and that everyone just lives off their income no matter what that income is even the people that have no savings they just live off their social security right so if you have some savings you're ahead of them right and so you're just gonna live off whatever income you have and I'm not saying it's gonna be a great retirement if you don't have a lot saved but you're going to make it work like everyone else in America is currently making it work right so that's one positive side there's a key kind of insight here which is when you start thinking about your balance like a score like in a video game or something and that you just want your score to go up it puts you into a very bad place but when you convert it into what matters to you and your life it's very easy to be de-stressed about it so again March 2020 I worked for a FinTech company markets were down, things were not good my wife said hey just so we're clear like if you get laid off what happens and we had a very large emergency fund and I was like at least over like six to nine months we don't have to worry about anything that meant that I didn't stress at my job I was able to focus on the income on doing what needed to be done it meant that I didn't think about taking money out of a retirement account where there might be tax penalties and I can't put it back in so the only other thing is like think about setting yourself up if you're worried about markets think about why does it actually affect anything other than like looking at a score and making you feel good or is there an impact to your life and if there is an impact to your life how can you like hedge that or immunize how do you make it so that you don't care what markets do because if you care what markets do and it's not just because it's a score you're in a risky position and you want to focus on that as almost like financial planning thing to do how do I not care about markets? So I appreciate your point about the emergency fund part of what it is buffering me from is making a short term decision that might not be the right one for the long term I feel like emergency funds that's one of the pieces of advice you always hear and I think there are a lot of people who don't do that so how much of an emergency fund do you recommend people have and where do you put it and I'm just wondering if we're on an agreement here on the magnitude of that? So studying for the CFP exam they I always remember they said have somewhere between three to six months of spending in an emergency fund and it would be six months if it was just one sole income earner or one of the earners was less that had less than stable income but we would typically recommend three to six months in most cases we would definitely put it in like the highest FDIC insured savings account you can find that's still accessible I personally have my checking account through Chase Bank which is a phenomenal bank if you live in the Chicago area but it's horrible when it comes to the interest rates they pay on savings almost offensive so I chose Ally for its online savings account and don't wait for a Chase banker to remind you of this but you can actually link external accounts where I don't even go to Ally anymore I just go to Chase to move money in or out to Ally back and forth but I also think having an emergency reserve plays into your risk tolerance during tough times because we can look at our investors and our clients and say you have to spend through this before you even get to that and so if somebody has afforded themselves a lower required return we would agree if they need a bigger savings account because the savings account at the end of the day is just going to follow inflation you're not going to beat inflation but if they've afforded themselves the ability to have an overabundance of recommended cash and savings if that allows them the peace of mind to ride out a down year like this, we're all for it. So yeah, the only thing on emergency fund, I agree with that I think it's also very individualized every person's different I'm guessing many of you know Morgan Housel Psychology of Money, he wrote the book he's 25% cash and he's been like this before he had a bestselling book like he was 25% cash so it's like some people and he's like I sleep great at night I'm never going to change that so I think that's way too high of an allocation personally but that's everyone's each their own so don't feel bad if you have like oh I want to have two years of emergency cash like I think Bill Gates when he was running Microsoft early had at least what 12 months or 24 months of cash you know when he was running the company he's like I want to be able to say if we got no more money coming in the door I can pay my employees for at least a year or so so like there's different ways of thinking about risk management but yeah. So when we look at the people who are attending the conference if you're here you are probably pretty darn serious about investing about thinking about your personal finances about saving in your 401k and doing other things you know you should looking ahead to the long term. Randy what are some of the things that people may be less likely to focus on because they're awkward and painful and difficult to even talk about? I love this question because it's one thing to build a financial plan based on everything going as expected but then something doesn't go as expected and this might be an estate plan for a young family or even if you don't have kids yet you should everybody every adult should have an estate plan just to know who makes your health decisions if God forbid you end up in a hospital or who manages your finances if God forbid you end up in a hospital having term life insurance in place whether it's before you have children or if you ever plan to have anybody dependent on your income get a term life insurance policy immediately while you're healthy long term disability it's all based on everything in accumulation is based on your ability to save which starts with your ability to earn an income and if you suddenly can't earn an income as I learned in March of 2020 day one of COVID I thought I had COVID I ended up collapsing in the shower my wife drove me to the or my wife drove me the ambulance took me to the hospital and I found out like I was in the hospital all day long I found out at about 430 that night that I had a tumor on my brain and because it was day one of COVID I couldn't go home they said we don't know what the hospital is gonna look like if you're even gonna be back in here we would suggest you get it removed immediately so that was Thursday March 12th day one of COVID and on Saturday March 14th I had surgery so and if I didn't have Alex here who's my partner at the office he pretty much saved our practice from what could have been financial ruin just because it's not like COVID just hit and everything else was a breeze but the stock market fell 30 plus percent that sharp period of time and if I didn't have a long term disability insurance policy in place I would have had to sell or didn't have a savings account in place I would have had to sell from assets that were sharply down in value and they wouldn't have been there for the ensuing recovery which as everybody in this room knows was extremely sharp so we are professional nags at making sure that those areas like having an emergency savings having a term life insurance getting in a state plan and having long term disability insurance which most employers provide those are the things that are very easy to overlook and say well it'll never happen to me I mean I'm not gonna say I knew I didn't own long term disability insurance because I knew for some reason I was gonna get a brain tumor but I knew the financial implications of something like that so catastrophic happening so yeah I was just thinking as you were saying that and I'd say thank you for sharing that obviously that really brings home the things that can happen to any of us so suddenly and that is why we make plans but I was also just thinking when talking about estate planning that is a phrase that has a bad name because you think well it's about estate planning it's about dying so I'm not gonna think about it and I'm not gonna die right now I'm young but if you go to an estate planner all those other documents the healthcare proxy, the living will your powers of attorney I mean those are not about when you're dying they're about now if something happens to you and you were temporarily incapacitated and so I think if we thought about it as like critical legal documents as opposed to just estate planning maybe a few more people would focus on it Dan I wanted to ask you from Hey Karen Yes So one last thing on the estate plan so I have an almost six year old and a four year old that like my wife and I got in a estate plan because we didn't know if we didn't have an estate plan who would raise these kids if we weren't around? I have two brothers, she has two sisters I don't trust either of my brothers to raise my kids her older sister, not a chance but her younger sister is like the greatest would be is the greatest person ever to raise our two kids and her fiance but they're not great with money and so the person that you name as a guardian for your children may not be the person who you appoint as somebody who is the guardian of your finances basically so And there are benefits also just a separation of powers, checks and balances to having those be different people I think too I think so, yeah Dan are there lessons from behavioral finance that would help me, any of us actually carry through on all these things that we need to do there are things that are sort of fun to focus on in personal finance and the things that are just chores what can I do to help myself get everything done? Well, they're great things so my favorite is what's called temptation bundling which is that, and I sort of doing this before I knew there's a term for it when I was in college I would go into the library when I had to study for a test and on the way in I would buy myself four York peppermint patties and I'm allowed a York, I put them in front of me and I was allowed one of them once I had studied for 45 minutes I didn't smoke cigarettes, but I would go outside and I would eat a York peppermint patty it was exactly like the commercial so refreshing So it's been simple, but like, you know, like set this up so that it is bundled with a reward me and my wife have a thing we have it regularly in the calendar we usually have date nights and I think it's like once a quarter we have admin night and we go out and we have a beer and we look at spreadsheets together and we talk about like what's right what's not right, you know, like are we thinking about everything okay and that night is a nice thing because at the end of it I'm allowed to go to the really fancy silly hipster cocktail bar and get a nice drink and say like I've done my job now I get a reward for it use technology for like planning it out doing it regularly if you're thinking about it if you're doing it ad hoc I'm probably not going to do it but when I have number one it in the calendar and into the calendar with someone else that we can go do it together you can do this even if it's you know you're not going to go to the bar and go over finances with your buddy but you can both go to the bar and say we're going to do this thing at the end of it we'll be able to chat do it with somebody else make it something that's a recurring activity with somebody else so that you kind of hold each other accountable just like going to the gym. Thank you. Thinking about bundling not quite your peppermint patties maybe Nick tell us about your is it the two times rule? Do I have that right? That's the two X rule but basically I think this is really relevant for Bogleheads because I was just having lunch with some people I met and the big problem for all of us is we talk about most Americans don't have $400 to meet some random expense that's not the problem for people in this room people in that room it's for most of us it's going to be like spending down our money and so I think the real issue and the stuff I kind of write about is like people are disciplined they're saving money over time it's like how do you spend money without kill and a lot of people especially if you're really good at saving you're by definition probably not great at spending I mean all is equal right? So the question is how can we get over that guilt and there's a lot of different ways to do it one rule I came up with is like I call it the two X rule so if you want to go splurge on something you feel bad about that like you know let's say it's going to cost you know let's say you want to take yourself out to dinner you're going to go out to dinner you're going to spend like $400 you're going to spend like a lot of money like a really you're going to buy a nice bottle of wine whatever you're going to do right? You should save another $400, two X and take that other $400 and invest it in something you know S&P 500 index or income producing assets of some other sort or you could even donate the other $400 if you feel like oh I'm going to spend it instead of being selfish and just thinking about myself I'll donate the other $400 so it's these little simple rules I mean they're not anything crazy I have no data that shows that they work so I can't really back that but all I can say is like it's these little heuristics that I like to use and I know other people have found useful if you're trying to spend money so I'm just trying to get rid of spending guilt because I think there's a lot of people that have a lot of guilt around spending money especially in this community where we're very good at accumulating obviously but we're very good at guilt This is very true Nick said it in passing earlier but I think it's worth coming back to the vast majority of retirees don't spend down their balance because it feels bad to see it going down Vanguard actually has I believe it's called a managed payout fund that's a fund that's meant to act like an annuity you are meant to spend whatever payments you get from it and people take those payments and they reinvest about 25% of them back into the fund which is extremely frustrating for the fund manager who's like you are using my product wrong why are you doing this to me I don't want inflows stop it one of the things that we've seen so this is not a plug it's just an explanation at Betterment you can use goals and you can say like this is the thing that I want for this this is my like vacation fund this is my nice new car fund or a goal or whatever it is and bookmarking things is like this is the purpose of this money does a great deal to remove this kind of like guilt because it's like I saved up for a really common one as a Tesla for some reason and it's like I saved up for the Tesla and now I have all this money but it's in the Tesla the entire purpose of this money is to fulfill this real life thing it's not to just have the balance go up and so you know like do it however you want like set up a whole bunch of different savings accounts whatever it is it's a pain in the butt logistically but put labels on things so you say like when I spend this it's not gonna feel bad because the entire purpose of this account was my 10 year anniversary trip to wherever Randy how do you handle that with clients when clients are saving for multiple goals they're saving for buying a house they're saving for college they're saving for retirement they're saving for the home addition they're planning how do you recommend that they manage that? So what we do is we make sure that their emergency reserve is covered and then we also make sure that they're putting away enough for retirement and it's in very simple low cost investments but I remember one particular client who was her she was probably 31 at the time but she was gonna buy a home in the next five years and we made it very clear to her that like the growth of the portfolio is not so important anywhere near as important as the confidence you can have that those funds will be available in your in five years and Nick I think you mentioned this in your book right here's a plug a shameless plug for Nick's book but anyways like it was five years down the road she was putting money in on a monthly basis and we it also wasn't like something that she was dead set on it has to be bought in five years so she had some wiggle room but we just she was putting money in on a monthly basis we recommended the Vanguard Wellesley income fund but if it was something that they were going to use within two years or even less than three years we would quantify the value of it work the math backward assume a 0% if not a negative 1% or negative 2% return relative to inflation because that's the cost of short term safety and liquidity and then we just make sure that they managed to that goal basically one of the things that I wanna talk to you about sort of the flip side of feeling so guilty that you don't actually spend is lifestyle creep you know the shared apartments and the hostels on vacation are great when you're in your 20s but at some point down the road you probably wanna use your raises to have a bigger house live in a different lifestyle how do I figure out if I'm in a comfortable place not spending too much I mean how do I make sure I don't let my lifestyle get out of hand so I think a lot of personal finance experts and especially in you know Boglehead's community may say things like you know oh we don't want your lifestyle to creep just save all your raises et cetera I actually wanted to test that so I've written a blog post about this this is in the book as well basically long story short you have to save like half of your raises more or less and actually for people who are have a very high savings rate you actually have to save more of your raises to kind of end up at the same place you can imagine someone in equilibrium imagine you're saving now you know you're gonna retire at 65 you're saving whatever you're saving and then you get this positive shock to your income you'll get a raise it's a good thing if you want to spend the same amount of money through the rest of your life and in retirement remember you're already on your equilibrium path the question is when you get that extra money if you spend it all now when you hit retirement you have to drop your spending again so you can imagine that already so the question is like you obviously have to spend less of it to kind of you can raise your lifestyle a little bit but then you can save the rest and you can still retire at the same date right because if you spend you know all of it or more than all of it you'll have to retire later you can just think about that logically but long story short basically if you run all these simulations different savings rates and all this like you have to say basically half your raises which ironically fits really well with the two X rule so it's easy to remember I did the math just panned out that way I did not plan on that but yeah so that's what I would say like I've looked at it and I think you can do like half your so if you get a raise after tax income of $1,000 you can spend an extra $500 a month enjoy that but you have to save the other $500 to stay on track to whatever path you're on so I don't know what to say the only thing I throw in there is that there's a sort of if you go hard in the early parts of your career you can have a really easy ladder part of it meaning if you do like 75% of every raise up until the time you hit like 32, 33 number one all that money is going into the market earlier more time to grow, et cetera, et cetera it also keeps your lifestyle low up until that point in time generally right around then is when you are at very, very high risk for a certain set of liabilities called a family and your ability to save escalates without your ability to control it and you're like how did after school cost this much why does this happen? But once you like if you go hard in the beginning all of a sudden you'll find yourself in this middle zone you'll spend money on family and you'll come out of it let's say 18, 20 years later you'll feel okay and you'll know then that like because you went hard early you have an easy life now and you can adjust them that's the thing you're giving yourself the option to say I'm not gonna be stressed when I come out of the family liability situation if you go into it stressed you're probably gonna come out of it stressed you can always adjust later easily to say like I'm gonna spend more money because I have too much that's a very good problem to have the other way is not a very good problem to have so go hard when you're younger it'll make later life easier Most people when they say that they're not actually talking about saving but let's talk a little bit about real estate and home ownership because you will have people in the accumulator stage who may be making that first home purchase what do you advise people when in looking at the real estate market how do I decide if this is the time to buy and how do I do it smartly? So one of the biggest things here I think is try and figure out where your private values most diverge from public values by which I mean you are investing in something that is your home you will live in this thing it is like where you will spend most of your non-waking hours and a fair share of your waking hours the important thing like everybody there's like a common price for a house it's like how much is this price worth that's what it's worth to some sort of median person you will find the best house for you by thinking about how am I different than most people how am I different than the median person what matters to me that doesn't matter to them and what doesn't matter to me that does matter to them real quick example the apartment that me and my wife ended up with is not near a subway in New York City that is fine we love biking we live near the river we're able to come up and say like there's a lot of stuff about this apartment it doesn't have a washer dryer in it that's not a problem for us when you're looking at a home the most important thing is again to say like this is my house let me try and go out and find a house that is most undervalued to me in the market and that means looking at a house that is gonna be not cookie cutter not sort of conventional in some way it should be different and that different is gonna be right for you yeah I love that answer only thing I'd add is I actually don't think it's as much of a trust me it's a huge financial decision but I think it's much more of a personal decision like is this the right time for me to do this should I be you know is your professional life kind of settled or mostly settled and is your personal life settled right if you're single do you want to be buying a house to then sell it in a couple of years and then have to go out and you know buy another one right it's just you don't want to pay those transaction costs right it's usually like what's six percent I mean you include all the fees and everything so that's the one thing I would say there and in terms of right now with with how things are with the rates as high as they are so like payments are a lot higher so unless home prices come down you're not gonna be able to get the same payment that you could have got a year ago for the same size house right so it's gonna be interesting to see what happens in the next year and I can say I agree that if you buy a house you don't buy it for financial reasons you buy it because you want to plant your roots there I specifically and my wife specifically we're looking for a tall trees fat squirrels neighborhood that looks like it had been there a long time our house is 103 years old which brings up a whole other set of issues but these is so and this is gonna tie back to the emergency reserve or just having cash on hand we finally decided to replace seven windows in our house and they cost everybody knows windows are ridiculously expensive so it cost us $18,000 which we had prepared for but what we did not prepare for was our AC unit going out on the hottest day of August that year and then our hot water our tankless hot water heater went out so we all together that was a $29,000 burden that we 18,000 of which we planned for 29 the extra 11,000 we did not plan for but we had a buffer so and that's something that an example we use with we have an individual that a couple that we worked with a few years ago who only one of them was working they were living they were renting and they just felt like they were 31 and 30 years old and they just wanted to no longer rent and we said well why so first of all they didn't have any savings they would have had she was a veterinarian's technician or whatever she would qualify for a doctor's loan which allowed her to put only like however much down a very small down payment and then she didn't have to pay private mortgage insurance and we just said no do not do that what if your furnace breaks so we talked them out of it thankfully but that's a big big concern too renting is fine I have one more thing interesting nobody thinks about it the right way you generally don't want to be the least well-off person in your neighborhood you will be unhappy there because you will be constantly comparing yourself to your neighbors it's tricky because that's usually associated with but I want to get my kid into the good school something like that there are other factors but do you think about like the neighborhood that I am buying a house in am I going to feel good living here or am I going to feel unwelcome or like I am not as you know I'm not spending as well and like just drive around what kind of cars are people apart are they displaying their cars out there you know like what do the houses look like being aware of what it's going to feel like to live in a neighborhood in terms of what the houses and it feels like money-wise is actually important be at the upper end of that not the lower end because also if you're at the lower end and you are very aware of that that's another thing that's the other lifestyle creep pressure and it's not even fun it's that pressure to keep up with the Joneses absolutely one thing we haven't talked about yet is debt so there will be some people in the accumulator audience who maybe early in their careers may actually be earning substantial salaries but are starting from a point of having significant debt as well from their education Randy what do you how do you work with those clients or what are some of their particular issues well so being an hourly based firm we do cater to a lot of recent college graduates who are buried in college debt still haven't saved up for a sufficient amount in an emergency reserve they want to save for a down payment on a house they also are you know they want to save for retirement because what's the most precious commodity that any young saver has versus everybody in that room is time so I think we help people prioritize and definitely if you have high interest credit card debt if you're paying 19% that's not doing any good so pay off the credit cards first but I'd say like the debt pay down versus saving for a down payment on a new home and then we have like student with student forgiveness loan forgiveness I think that's a pretty complex complex answer that's gonna be very specific to each individual but we would prioritize at least saving to your 401k up to the company match and then pay off any high credit card debt because again paying interest in the teens is I mean it's basically getting a 15% return once that's down or paid off but I don't have a specific answer because everything we do is very much case study specific to each individual I think we'll take a moment now and see if people in the audience have questions they'd like to ask the panelists I'll bring our microphone down or I'll let Rick bring the microphone down I've got a question that might be a bit of a mathma to the crowd here but what are your thoughts of sort of platforms like seed invest, we funder that allow people to invest small amounts of money to private companies and also the proliferation of ads at least of fractional art, fractional cars and all that kind of stuff as an asset class So I've done some of these things I've done something with the we funder and I've also I do own some art I have a partnership with them so I will not mention the name of the company but you can probably guess what it is so I think that should be a very small portion of your portfolio I think like 90% of your assets should be in income producing assets I don't see art or wine or crypto or gold as income producing because there's no cash flows and so because of that even we funder which is private companies you're like well that's a business isn't that cash flow producing well right now it probably isn't so I would say for all practical purposes those are like the high risk like non-income producing I keep that 10% of my portfolio I don't know what other people do but that's just kind of how I look at it I think those are sometimes they're actually hobbies masquerading as investments and I think I expect to lose money on my hobbies I spend money on equipment I spend money on fees of various kinds I love it it's worth it I'm gonna do it anyway but I don't expect to make money on my rock climbing and I think a lot of that's similar like enjoy it get into the community this is your spare time don't expect to make money on it just enjoy it I had a question about estate planning you know it's something I always know I need to do but I've always postponed it because in my mind I'm thinking okay if I don't have at least two million or three million do I really want to do estate planning so I guess my question is is there really the right time when you should be doing estate planning and is there really a certain threshold or dollar amount that it makes sense to start doing estate planning? I can't say much about that I'm gonna hand it off to you there's one me and my wife said oh my God we have a kid we need to have this done just so it's clear what's going on the worst thing you can do to espouse or significant other is to have them deal with the loss of you and all this stuff at the same time and I've seen that play out multiple times so just if somebody else is effectively dependent on you in some fashion or it's gonna be a big pain in the butt to deal with do it ahead of time again when you're cool and calm and collected it's a lot better way to do it we used a site online called Trust and Will I don't think it's just trustandwill.com it was fantastic it was like easy to get through we don't have an estate we're not landed gentry but it was very good for like the 98% I'll reference the CFP exam which I took probably 12 years ago but there was one question and I think in Alex you had it on your exam too they gave just like four just insane things that no prudent investor or consumer would ever do it said like oh this person has $30,000 in credit card debt all of their retirements tied up in one stock they have no savings account and they don't have an estate plan what should this person do and in the practice exams I said oh you know what they should pay off the credit card debt you know whatever I can't remember but the answer was get an estate plan because you never like Dan just said you never want to be a burden to somebody else and even if you don't have any assets or you don't feel like you have $2 million as you said well who is going to make the decisions if God forbid you end up in a hospital and somebody has to determine do we pull the plug on this person or you know give her treatment so it's not the nice thing about not having a complex estate means you're not going to pay that much for a good estate plan so I think that question is appropriate given my circumstances I've been widowed for eight years my husband dropped dead on me and I would say that that advice I would hope that everybody takes that to heart because had he not had that in place I think it would have been considerably worse than my situation is have a two year old and a six year old when he died and now they're 10 and 15 so we're still trying to make our way through things I had two comments one of them was this is a very male heavy crowd here and there make sure that your partners are aware of where your money is the greatest thing my husband did for me was teaching me about keeping track of the money keeping track of the accounts all that stuff we didn't have the big book that the Bogle had to talk about but I had everything in in Quicken so when he died and two months later I had to file taxes I filed taxes in two hours because everything was right there the next year it was a mess but so I would say at a minimum even if your spouses are not really into it the chances are you're gonna men are gonna die before women and to the extent that you can encourage your partners to at least know a little bit about where your puts and takes are that's super helpful as as I can attest one suggestion I just came to my mind was when you have a power of attorney for your finances consider something that I did having it be valid right now and because when I brought this up to my attorney I said you know how can I trust somebody if there's a valid power of attorney she could clean me out and her response to me was well why would you trust somebody when you're you know half dead you know half brain dead in the hospital it should be somebody that you could trust while you're you know compass mantis and non compass mantis so I just throw that out there too my my question though is what advice do you give to your clients about the reality about returning to the workforce after being out for a period of time first of all sorry for your loss um I I don't know I don't really have a great answer to that um if you so what advice would we give to somebody who's been out of the workforce yeah so first of all that would be very admirable because and it's unfortunate because you it sounds like you did have to take time off because of your husband passing I mean I would think the best thing I would do is just stay very active on the LinkedIn community stay closely connected to wherever it is you were working make sure your your resume stays fresh I don't really have a great answer to that though anybody this is um like not necessary for everybody this this came up um we were looking at um the stats around the impact of women staying home to take care of kids uh especially in the first four years and there's a great report that was done on it that was like the biggest financial hit is not that they are not earning money and it is not that they are not saving it is that when they come back to the workforce their marketable skills have gone down and people are like oh we're going to pay you less in real terms than when you were here last um so I think the key thing there is uh take whatever time you can to keep some evidence based skill up that you're like I have been doing this um I have been volunteering to do taxes down here I have been doing some professional thing so that it is and you know like it's if you haven't lifted weights for four years and you come back the first time you do it is horrific um whereas if you just go every once in a while it's not that bad so I think a little bit of um continuing to do something to keep those muffles there and keep it evidence like it can be one day a week whatever it's just keep your foot in the game just a little bit um and I would also flip it and say this is a opportunity to think about changing careers if you haven't again not for everybody my wife went through this she went from being a public school teacher to being a software engineer she learned how to program did all that stuff and ended up coming out of it much happier so it is you know you can go into the chrysalis and metamorphosis and come out the other side something new thank you all I think we're gonna have to cut it off now sorry um thank you to a tremendous panel it is been my honor to be with you meet you all of Rick tell us where we're going now we're going back to the next room for your conversation with Bert Malkiel is that right okay thank you all