The Pilot Money Guys: Recent Episodes
Leading Edge Financial Planning
The Pilot Money Guys are a group of financial planners with a passion for bringing together financial planning and the commercial airline industry. Brought to you by a team of financial planners with backgrounds flying for major US airlines and military service.
If you have questions about personal finance with an interest in news and interesting stories from the airlines, then we hope you will give us a listen.
https://www.leadingedgeplanning.com
Is artificial intelligence really replacing jobs, or is it simply changing the way we work? In this episode, Dr. Jay Jay Billings, CEO and co-founder of Band Gap, cuts through the hype surrounding AI to explain what it actually is, where it's already transforming industries, and why many of the biggest headlines miss the point. You'll learn the difference between traditional AI and today's large language models, how organizations are using AI to solve real-world problems, and why putting customer needs first—not the technology—is the key to successful innovation.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/bdsemstm
How do you stay focused when the headlines are shouting one thing, but the markets are doing another? In this quarterly market update, we unpack the biggest investment stories shaping the second quarter, helping investors separate fact from fiction. You'll learn what drove one of the strongest quarters for U.S. markets in years, why diversification is making a comeback, and what the latest economic data really means for your portfolio.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/mpa9ftfp
What if the most "sophisticated" money moves you've been hearing about online are actually the least helpful for building real wealth? In this episode, we break down seven financial strategies that sound impressive on the surface but can range from genuinely useful tools to misleading traps or outright scams. From viral currency schemes to complex products like structured notes and annuities, the conversation is all about cutting through financial noise and focusing on what actually works.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/bdehcjev
How can high-income professionals and first-generation millionaires support their adult children or grandchildren without creating a sense of entitlement? When does financial help empower the next generation, and when does it accidentally hold them back? In this episode, Charlie Mattingly sits down with Amelie Riendl, an Accredited Financial Counselor (AFC), to tackle the complex emotional and financial dynamics of giving to "adult-ish" kids.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/5n8bafs3
What do pilots often get wrong about LLCs, taxes, and starting a business? And when does structure actually start to matter? In this episode, we break down some of the most common misconceptions around business formation, tax savings, and self-employment strategies for high-income professionals.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/4w4v4xbd
What happens when you stop judging people by their circumstances and start seeing them as human beings first? In this powerful episode, Danielle Lewis shares her journey from her own upbringing to becoming the founder of Village Hope, serving the unhoused community in downtown Atlanta. Danielle opens up about the moment she realized she wanted to dedicate her life to helping people struggling with homelessness, addiction, and poverty, and why compassion often matters more than having all the answers.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/4h5ysth2
What's really driving the market right now, and are you paying attention to the right signals? In this episode, we break down what happened in the first quarter and unpack some of the global events quietly shaping investor sentiment, including the situation in Iran and how geopolitical tensions can influence market opportunities and risks.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/msjck2fp
What does it really take to be successful with money? And why do even high-income professionals still struggle? In this episode, you'll learn why financial success has far less to do with knowledge and far more to do with behavior. Jason Moore, Certified Financial Therapist, breaks down the hidden patterns, biases, and emotional triggers that influence how we earn, spend, and invest, as well as how these can quietly derail even the most capable individuals.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/4k6k56nd
There is a lot of financial noise right now, but what actually matters? In this episode, James Angel joins the show to cut through the headlines and explain what's really happening with inflation, the strength of the U.S. dollar, global conflict, China's economic impact, Bitcoin, stablecoins, and the future of the global economy. Listen in to learn why energy is the foundation of the entire economy, how money printing leads to inflation, why the global economy is more connected than ever, and what makes today's economic environment different from past recessions.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/yd5ch94t
What does it really take to retire early as a pilot—and are you truly prepared for what comes next? In this episode, we break down both the financial strategies and emotional realities behind early retirement, specifically for those in aviation careers. You'll learn the essential "science" of early retirement, including how to estimate your true spending needs, manage portfolio risk, plan distributions, and prepare for major costs like healthcare.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/deuraj9n
If you bought and held a mutual fund or ETF, what return should you earn—and why do some investors earn less? In this episode, we unpack the fascinating findings from Morningstar's Mind the Gap study and explore the difference between total returns and actual investor returns. You'll learn what the "investor return gap" is, why it exists, and how timing decisions, emotional reactions, and behavioral biases quietly erode performance over time.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/bdd2tz84
Are you missing opportunities to build tax-free retirement income? In Part 2 of this Roth series, we break down the latest changes and advanced strategies that could significantly impact your retirement plan. You'll learn how the new Roth catch-up rules affect those 50 and over, what the Roth NEC means for high earners, and how the mega backdoor Roth works in practice.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/3hr2psac
Recent changes to airline 401(k) plans—especially the Roth Nonelective Contribution (NEC) option—have created new opportunities and new confusion for pilots and airline professionals. In this episode, we break down what the Roth NEC actually is, how it works at airlines like Southwest, and why simply ignoring your elections could mean missing out on valuable catch-up contributions.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/y7bncn35
What can last year's markets actually teach us beyond the headlines and noise? In this episode, we look back at the market lessons from the past year to better understand how markets behave and why short-term movements can be so misleading. Rather than trying to predict what comes next, this conversation focuses on learning from what already happened and why diversification remains one of the most powerful tools for managing risk.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/38ftvryn
What if the lessons from 2025 could completely change how you approach the year ahead? In this episode, we reflect on the biggest epiphanies, revelations, and insights gained from our clients, our work, and our own lives last year. You'll learn practical techniques to prioritize what matters most, avoid burnout, and separate your identity from your job. From generosity and communication to asking better questions, this conversation sets the tone for building a meaningful, balanced, and intentional life in 2026.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/y9r6jf2u
What if most individual stocks actually don't outperform and a small handful of massive winners are doing all the heavy lifting? In this episode, renowned finance professor Hank Bessembinder joins the show to break down decades of research on market returns, stock picking, and why diversification matters far more than most investors realize. We unpack his groundbreaking findings on market skewness and explain why identifying winning stocks is far harder than social media and headlines suggest.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/3kef3pdx
What if we're asking the wrong question about market peaks, bubbles, and crashes? Everyone wants to know what happens next, but this episode shifts the focus to what you can actually control: risk, timing, and smart decision-making. Today's conversation breaks down the most common fears investors face — from AI bubbles to gold hype to stock market pullbacks — and gives you a grounded lens for evaluating what's real versus what's noise.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/2d3z463u
What happens when success, identity, and purpose collide with some of the hardest battles a person can face? In this powerful conversation with Ryan Watson, we explore the realities many pilots and high-performing professionals quietly carry: addiction, mental health struggles and the pressure to appear "perfect" in an industry where vulnerability can feel dangerous. Ryan opens up about the challenges he faced, the misconceptions around struggle, and the hidden cultural stigma that keeps so many silent.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/4ahwrx8w
Are private equity and alternative investments really the secret weapon of the wealthy or are public markets still your best bet? In this episode, we tackle one of the most common questions we hear: should you look beyond the stock market? We'll break down what private equity really is, who it's for, and why some companies stay private instead of going public. You'll learn how these investments work, why they're not always the golden ticket they appear to be, and how to think critically about diversifying your portfolio.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/2eyuv9n8
Why do airlines struggle to make money even when planes are full? In this episode, we unpack the surprising economics behind one of the world's most essential yet fragile industries. From razor-thin profit margins to the ripple effects of global shocks like COVID-19, you'll learn why airlines operate on such precarious financial ground and what it takes for them to stay in the air.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/ypwpywzf
What do the new Secure Act 2.0 rules mean for Roth contributions and retirement planning in 2025? In this episode, we explore what pilots and high-income earners need to know about Roth catch-up contributions, required Roth designations, and the risks of in-plan Roth conversions. You’ll also learn how these changes may impact your taxes, your long-term retirement savings, and the best ways to prepare now.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/2f6srj8e
What actually makes for a happy, fulfilling retirement? Is it all about the numbers, or is there more to the story? In this episode, Dr. Michael Finke—professor, researcher, and one of the most respected voices in retirement planning—shares his groundbreaking research on what truly drives satisfaction in retirement. Drawing from decades of data, interviews, and insights from retirees themselves, Dr. Finke uncovers the three essential pillars of a rewarding life after work.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/bwvxsd69
What exactly is private equity, and why is it suddenly being linked to your 401(k)? In this episode, we break down the recent executive order that directs the Department of Labor to explore ways of including private equity in retirement plans. You’ll learn what sets private equity apart from the public markets you’re familiar with, why it excites some investors, and why others aren’t as enthusiastic.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/39xt6s9c
How can you avoid running out of money in retirement and still live the life you want? In this episode, we break down the most important strategies for sustainable retirement spending. You’ll learn how retirement spending actually works in real life and why your financial plan needs to adjust as your lifestyle and health change over time. Whether you’re a do-it-yourself planner or prefer to delegate, you’ll walk away with practical steps for knowing your expenses, stress-testing your plan, and creating a retirement strategy that helps you spend confidently without fear of running out.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/c2r2hsp9
Is Social Security really running out of money, or is that just a headline meant to scare you? In this episode, we cut through the noise to uncover the truth about its future, its viability, and how it actually works. You’ll learn how to separate political fear tactics from the facts, why the “trust fund bankruptcy” story isn’t the whole picture, and how your claiming strategy could mean hundreds of thousands of dollars gained or lost over your lifetime.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/4cr6bm56
Are you wondering what the sweeping changes brought by the recently passed "One Big Beautiful Bill Act" (OBBBA) are? In this episode, we break down the new legislation, providing a clear overview of how it impacts individual income taxes, business provisions, and specific deductions. We'll explain the intricacies of standard deductions, the nuances of phase-outs (and why they're usually bad news!), and the critical updates to the State and Local Tax (SALT) deduction.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/bdfkfk8k
What do you do when your aging parent needs care, but you live across the country and don’t know where to start? In this episode, Casey Rausin, RN, CCM, and CEO of HOMECAREceo Forum, joins the show to help answer that question. With decades of experience in advanced aging and lifecare planning, Casey breaks down how her team acts like a “healthcare advisor,” helping families proactively manage aging-related care before it becomes a crisis. You’ll learn why executive functioning is often the first red flag in elderly decline, why it's critical to know your parents’ care team (just like you'd know their financial advisor or attorney), and how to approach care from a preventative, not reactive, mindset.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/mw2j9fyn
Is Medicare more confusing than it should be? If you're nearing retirement or thinking about leaving your job early, the healthcare piece can feel overwhelming and expensive. In this episode, we sit down with Cole Craven, co-founder of Move Health, to demystify the complexities of Medicare, healthcare costs, and early retirement planning. Listen in to learn how to time your enrollment correctly, what your healthcare options are if you want to retire before 65. and more.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/3v67de6s
Does the phrase “long-term care” make you cringe? If so, you’re not alone, but it’s something we all need to think about eventually. In this episode, we sit down with Amy Arnett, VP of Insurance Solutions at DPL Financial Partners, who brings 36 years of experience in the insurance world to help us understand the evolving landscape of long-term care options. Listen in to learn why insurance isn’t all or nothing anymore and how you can now tailor coverage to your needs and budget.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/k4c9wv6u
What is a Market-Based Cash Balance Plan (MBCBP), and why is it becoming the go-to retirement vehicle for pilots at major airlines like Delta? In this episode, we explain what an MBCBP actually is, how it's different from a pension or 401(k), how the investments work, and why pilots need to understand this model to make smart retirement decisions. You’ll hear how funds are pooled, what kind of returns to expect and why the guarantee provided by the airline makes this a powerful planning tool.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/mwk4w2d4
Can a mindset of gratitude really change your financial life? In this episode, we explore how the power of gratitude directly influences your outlook, your decisions, and ultimately, your financial success. You'll learn why slowing down to reflect on what you’re thankful for can actually sharpen your focus and guide you toward a more meaningful retirement. Gratitude isn't just a feeling; it’s a practice that creates clarity, helps you define what really matters, and strengthens your ability to handle life’s challenges with resilience.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/ybx77hbr
What if you're about to retire—and the market takes a nosedive? For those in their 60s, looking toward retirement at 65, market volatility can feel like a punch to the gut. In this episode, we dive into how to confidently retire into a turbulent market, what lessons we’ve learned from past downturns, and why market dips aren’t as rare—or as disastrous—as they seem. You'll learn why diversification matters, how to assess your true financial risk, and what practical steps you can take right now to protect your retirement plans.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/bdf6edab
What do you do when the world feels unpredictable—and your financial future even more so? In this episode, we’re diving into how pilots can mentally and financially prepare for uncertain times. From industry shake-ups to unexpected announcements from new governments, uncertainty is the only constant. But it's not the events themselves that rattle the market—it’s the surprise factor. Listen in to learn why mindset matters just as much as money, and how to develop habits that help you thrive—not just survive—when markets get shaky.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/pppbw5j3
What good is wealth if you don’t feel good? For busy professionals—especially pilots—maintaining health and nutrition while constantly on the go is a major challenge. In this episode, financial planner Mark Covell and his wife Adriana Covell, NBC-HWC, break down how small, intentional choices can lead to long-term health without feeling deprived. Adriana discusses the emotional connection we have with food, how to break unhealthy habits, and why understanding what your body actually needs is key to achieving both quality of life and longevity.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/b5jz2u
Is direct indexing the right investment strategy for you? In this episode, Shawn Jaberzadeh, Co-Head of Enterprise Group at Dimensional Fund Advisors, breaks down how direct indexing works and when it might be a better fit than off-the-shelf investment options. We explore the key differences between standard and aggressive tax management, the role of separately managed accounts (SMAs), and how tax loss harvesting can impact your portfolio.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/y62e97hb
How can you teach your kids smart money habits without creating entitlement? In this episode, we dive into the essential lessons of raising financially responsible children. We explore the challenges first-generation wealth builders face, the guilt that often comes with financial success, and why many families lose their wealth by the third generation. You’ll learn why discussing money early and intentionally is key to long-term financial success.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/5dmymzmf
What does it take to transition from a TOPGUN fighter pilot to a bestselling author? Jack Stewart, a former U.S. Navy fighter pilot with 23 years of service, joins the show to share his fascinating journey from flying combat missions to writing gripping novels. With five books under his belt, Jack dives into how he develops his stories, navigates classified information, and handles rejection in the publishing world.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/4rw39rr7
What does it take to redefine success and find joy in the journey, not just the results? In this episode, we’re joined by Anthony Thompson, CEO of Thompson Consulting & Advising, a mindset and performance coach, and author of The Unhurried Life: Discovering Peace and Purpose through Faith-Filled Living. With over 20 years of experience driving growth for Fortune 500 companies and non-profits, Anthony shares his proven strategies for achieving clarity, aligning your values with your goals, and transforming your life from the inside out.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/ycy2rn35
Are you a young professional pilot looking to build a solid financial foundation? In this episode, we sit down with Lisa Rosenthal, COO, Nolan Clark, Associate Financial Planner, and Jon Schultz, Paraplanner, to discuss strategies tailored for young professionals aiming for long-term success. From understanding your unique financial behaviors to establishing savings priorities, you'll learn about the steps you need to take to secure your future.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/btpycmpt
Is the market overvalued and on the brink of an implosion? Join us as we dive into the intricacies of market valuation and investment strategies. In this replay episode, we’re tackling some of the pressing questions about whether the market is currently overvalued, what market valuation metrics mean, and how investors can navigate these uncertain times.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/ytbnkpss
Are you contemplating whether to enlist the expertise of a financial advisor as your income rises? In this replay episode, we dive into the pivotal question: Should you hire a financial advisor? We discuss how to evaluate and question potential advisors, shedding light on the crucial questions you must ask before making a decision.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/39cpj3s4
What truly makes for a fulfilling and happy retirement? In this episode, we explore the key pillars of health, relationships, and finances to help you create a retirement plan that aligns with your values. From understanding how deliberate planning impacts retirement satisfaction to practical tips on managing health, maintaining relationships, and navigating retirement finances, this discussion offers a comprehensive roadmap to prepare for a purposeful and joyful retirement.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/55pctj3a
Have you received an inheritance recently? Or have you been thinking about how to leave one? In this episode, Kevin and Charlie tackle key questions about inheritance, covering everything you need to know—whether you're inheriting or passing on assets. From new legislation to strategies that help both you and your beneficiaries maximize your wealth, this episode will give you a powerful roadmap for navigating the process today and in the future.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/mtuc9zev
Curious about strategies pilots can use to maximize tax efficiency? In this episode, we’re tackling hard-hitting tax numbers, future-focused savings strategies, and essential tax changes on the horizon, especially for those over 60. You’ll learn the ins and outs of tax deductions, even on W-2 income, and tips for maximizing tax-efficient retirement income. We’ll also cover the benefits of backdoor Roth contributions, health savings accounts (HSAs), and charitable donations to reduce taxable income.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/3aedvek6
Should you get into real estate investing? In this episode, we sit down with former Top Gun Navy and Air Force fighter pilot—and current UPS pilot—Micah Porter, aka Peachez. He joins us today to discuss his transition into real estate investing, sharing his motivation for entering the real estate market and why real estate became his side gig.
Take The Pilot Wealth Index to find out if you are on track for retirement!
You can find show notes, resources and more at: https://tinyurl.com/uv43zupa
What does it really take to be successful with money? In this episode, we dive into key insights from The Psychology of Money by Morgan Housel, discussing principles that can help transform your relationship with money. Whether you're preparing for retirement or simply trying to make smarter financial decisions, these lessons apply to everyone. You'll learn why discipline is crucial, how to face the reality of your financial choices, and why success can sometimes be your worst teacher.
You can find show notes, resources and more at: https://tinyurl.com/y5besksw
How much influence does a president truly have over the stock market? In this episode, we dive deep into the relationship between presidential powers and market performance, examining how different administrations impact the economy. While many believe the president has significant control over the markets, we explore whether the data backs that up, and how much external factors really shape the financial landscape.
You can find show notes, resources and more at: https://tinyurl.com/3ehxpejd
How does the Federal Reserve shape the economy, and what should you really know about its role? In this episode, Seema Sheth, Senior Vice President and Regional Executive of the Federal Reserve Bank of St. Louis, joins the conversation to share insights on how the Fed looks beyond the data to understand the bigger picture. She discusses her unique path to success and the importance of focusing on what you truly want to achieve rather than conforming to others' expectations.
You can find show notes, resources and more at: https://tinyurl.com/2vn2t69b
How can you become the multi-millionaire pilot next door? In this episode, we discuss the principles of wealth building, inspired by the timeless lessons from the book The Millionaire Next Door. We’ll explore how pilots, with our unique income trajectories and financial challenges, can apply these principles to build substantial wealth over time.
You can find show notes, resources and more at: https://tinyurl.com/bdzxpwwd
Is the market overvalued and on the brink of an implosion? Join us as we dive into the intricacies of market valuation and investment strategies. In this episode, we’re tackling some of the pressing questions about whether the market is currently overvalued, what market valuation metrics mean, and how investors can navigate these uncertain times.
You can find show notes, resources and more at: https://tinyurl.com/96s6cshy
As the sun sets on the Tax Cuts and Jobs Act, the financial landscape for many, including our pilot community, is poised for significant changes. Join us as we dive into the upcoming tax reforms set for 2026 and how they may impact your finances.
You can find show notes, resources and more at: https://tinyurl.com/5bd9ndjm
What exactly is an activist investor, and how do they influence the companies they invest in? In this episode, we are joined by Andy Christopher, CFA, Lead Financial Planner, to explore the world of activist investors. You'll learn about their roles, the impact they have on companies, and whether they typically boost returns or create concerns.
You can find show notes, resources and more at: https://tinyurl.com/2kztm2be
Are you chasing the right goals and prioritizing what truly makes you happy? In this episode, we discuss the importance of setting goals that align with your joy and fulfillment. Often, we achieve goals only to find that they don't bring the happiness we expected. It's essential to consciously identify what brings you joy rather than blindly following the paths others are on. We'll explore how to avoid the pitfalls of setting the wrong goals and the impact it can have on your overall well-being.
You can find show notes, resources and more at: https://tinyurl.com/5fcsy44y
How can aviation play a pivotal role in combating human trafficking? In this episode, Jared Miller, CEO and Co-Founder of Freedom Aviation Network (FAN), joins us to share the mission and impact of his organization. FAN is pioneering efforts to transport survivors of human trafficking and their advocates, offering their services completely free of charge. Listen in to learn how pilots volunteer their time and skills, and aircraft owners contribute their resources, to provide essential support for counter-human trafficking efforts, ensuring survivors reach safe shelters.
You can find show notes, resources and more at: https://tinyurl.com/mry253yy
Are you struggling to gain control of your spending and align it with your true values? In this episode, we explore a complete mindset shift to improve how you think about money. Lisa Rosenthal, Chief Operating Officer at Leading Edge Financial Planning, joins us to discuss how spending can impact marriages, lead to mistakes, and incur opportunity costs—both financial and emotional. Listen in to learn five strategies to align your spending with your mindset, how to align your money with your goals, and more.
You can find show notes, resources and more at: https://tinyurl.com/5n86p3y4
Have you ever considered buying a plane? In this episode, we dive into the complexities of such a decision and why it can't just be about saving on taxes. Contrary to popular belief, setting up an LLC or another corporation may not provide the tax benefits you expect. We explore the criteria for tax deductions and why expenses must be reasonable and directly related to business purposes. Additionally, we discuss the importance of evaluating your plans for using the plane, frequency of use, and geographical considerations to determine if buying is the best option.
You can find show notes, resources and more at: https://tinyurl.com/mvwvnczs
How do you navigate the complexities of the economy and stock market? Andy Christopher, CFA, joins the show to shed light on the relationship between the two and provide insights into predicting market entry points with precision. In this episode, we aim to dispel common myths surrounding market dynamics to help you to protect your investments. From clarifying the role of the Fed to debunking misconceptions about presidential influence on markets, Andy offers practical advice on understanding and preparing for market fluctuations.
You can find show notes, resources and more at: https://tinyurl.com/3zbbpas3
Are you contemplating whether to enlist the expertise of a financial advisor as your income rises? In this episode, we dive into the pivotal question: Should you hire a financial advisor? We discuss how to evaluate and question potential advisors, shedding light on the crucial questions you must ask before making a decision.
You can find show notes, resources and more at: https://tinyurl.com/bd22j86d
Today we're diving deep into credit card points, sharing highlights for both seasoned collectors and newcomers alike. Joining us is Mary Graves, who shares her journey into the world of point collection and how it can pave the way for a fulfilling retirement. Discover the strategic moves necessary to accumulate points without depleting your savings, and learn how to leverage them effectively for travel experiences.
You can find full show notes, resources and more at: https://tinyurl.com/3rr3hjsm
1 - Sign up bonus – Frequent Miler. Greg the Frequent Miler has a blog, a podcast, and a FB Insiders group – all for no cost. And he does a really good job of explaining programs with equal attention to the downsides as the benefits. Frequent Miler posts an updated page of best offers. This is the best place to check for all credit card offers BEFORE signing up – except for the BILT card. BILT is the only credit card that awards transferable points for rent payments. BILT does not have a structured SUB – but usually offers 5X points for all purchases up to 50,000 points for 5 days. This is a significant offer and way to earn lots of BILT points – so plan accordingly. If you’d like to apply for a no AF BILT card – please consider using my referral code: https://bilt.page/r/Z5N7-WTUX - I will receive 2500 BILT points for referring.
2 – Ongoing points multipliers and promos – check app or website – example BILT earns 3X points for travel (6X on the 1st of each month) but Amex Platinum earns 5X on airfare and offers travel insurance. Citi Premier is a great everyday card because it offers 3X at gas, grocery & travel with a $95 AF. AMEX gold gets 4X at grocery stores and restaurants up to $25,000 spend annually with a $250 AF.
3 – Credits for services such as Global Entry, Nexxus, Clear – most cards that offer the Global Entry credit only allow it’s use once every 5 years – but Clear reimbursement usually is annually. GE is used to re-enter USA faster but it also affords the holder to TSA pre-check on all flights – domestic and international.
4 – Credits for travel and/or miscellaneous items – AMEX plat, Venture X – example Venture X comes with a $300 travel credit (used through the Venture X travel portal – so maybe not worth $300 in the wild) to help offset the $395 AF and Amex personal platinum has a $200 airline credit (I use mine annually to deposit into my United travel bank) and a $200 hotel credit when booking a hotel through the AMEX Fine Hotel & Resort collection (these can range from $100/night to $1600+/night and include free upgrades, breakfast, and a $100 hotel credit) to help offset the $695 AF.
5 – Fast track to elite status – Hilton Diamond via Amex Aspire, etc. – the AMEX Hilton Surpass offers Hilton Diamond Status which gives holder free breakfast & lounge access outside of US and a breakfast credit within US for $150 AF.
6 – Free bag checks, inflight purchase discounts, free companion pass – SW companion pass available when you earn 135,000 SW points in a single calendar year or complete 100 flights. This pass can last up to 2 calendar years depending on when in the year you earn it and allows you to bring one person free (+ $5.60 fee) on any flight you are one (whether paid or award ticket) as long as there is at least one seat (at any price level) left on the plane. Couples that use this pass report their savings as high as $3,000 per year. Annual fees for SW credit cards range from 0 - $199 per year.
7 – Travel insurance, lost baggage insurance, rental car primary insurance – this has been scaling back over the last few years but the two best cards for this are the AMEX platinum (business or personal) and the Chase Sapphire Reserve.
8 – Lounge access – Amex Centurion, Capital One Lounges, Chase Sapphire Lounges – Priority Pass is available with several cards like Venture X, Amex Plat, US Bank Altitude Reserve & Connect Visas, BOA Premium Rewards Elite Card. The more inclusive Priority Pass Select is available with Venture X and Chase Sapphire Reserve.
9 – Curated experiences – Bilt, Chase, Citi – Chase will set up a hospitality tent at a music festival or sporting event.
10 – Free night certificates for hotels – Marriott certs can range from 30K – 85K point value and you can “top off” a free night cert w/ up to 15K Marriott points. Hilton free night certs are considered the most valuable in the industry because they can be used for any Hilton property regardless of price or points as long as there is standard room inventory available.
If you’d like to see where my points take me – feel free to follow me on IG @mary3graves or on Facebook: https://www.facebook.com/mary.graves.923/
With airlines finalizing new contracts and increased 401(k) contributions, the question of whether to invest in a Roth IRA has become a hot topic among pilots. In this episode, we aim to provide clarity on this complex decision and offer guidance tailored to various scenarios and limitations. From understanding who can contribute to a Roth IRA to delving into the concept of Roths, we explore considerations for first officers.
You can find show notes, resources and more at: https://tinyurl.com/38ywhkfd
Did you know that you're leaving a legacy, whether you realize it or not? Join us for an eye-opening discussion on legacy planning with Jon Cremer, Financial Advisor. In this episode, we dive into the impact of intentional legacy planning and why it's crucial to start thinking about it sooner rather than later.
You can find show notes, resources and more at: http://tinyurl.com/mryv6ysa
Are you ready to explore the dynamic world of Real Estate Investment Trusts (REITs)? Dr. John Worth is an expert in economics and the Executive Vice President of Research and Investment Outreach in a REIT, and he joins us to share his deep understanding of REITs, their crucial role in a diversified portfolio, and how they perform in today's economic environment.
You can find show notes, resources and more at: http://tinyurl.com/mzw84wsh
Tune in as The PMG's discuss the following financial aspects of the SWA 2020 Contract:
Market-Based Cash Balance Plan, Tax withholdings for the Ratification Bonus Pay (RBP), New Life Insurance benefits, One-time SWA Profit Sharing rollover opportunity, and more!
Join us for a deep dive into the complex world of taxes, where we'll dissect the mysteries of what's fraudulent, what's a gray area, and what's not only legal, but also incredibly smart. Discover why the allure of complexity may not be in your best interest and why trying to outsmart the tax man is a risky game.
You can find show notes, resources and more at: http://tinyurl.com/y74d8at9
Kevin Gormley, CFP, CPA, PFS, and Lead Financial Planner at Leading Edge Financial Planning LLC., joins the show to help us explain the seven critical lessons learned in the tumultuous financial landscape of the past year. Brace yourself for a journey through bank failures, crypto turmoil, and market fluctuations that led to the collapse of major financial institutions, sending shockwaves through the industry.
You can find show notes, resources and more at: http://tinyurl.com/5f9s9zux
Unlock the secrets of successful investing as we pay tribute to the legendary Charlie Munger. A titan in the business world, Munger's principles for both investing and life are timeless lessons that can shape your journey to prosperity. Delve into the wisdom of a man who, alongside Warren Buffett, navigated the complex world of finance with hunger, humility and unmatched intellect.
You can find show notes, resources and more at: http://tinyurl.com/u4dzk9be
Explore the world of bonds with Jim Jackson, Co-Chief Investment Officer at Victory Capital. In this episode, Jim delves into the role bonds play in a diverse portfolio and the predictability of their performance compared to stocks. He also simplifies the complexities of bonds, emphasizing their mathematical nature in contrast to stocks, and challenges the financial industry's predictive shortcomings by opting instead for planning.
You can find show notes, resources and more at: https://tinyurl.com/36upwv67
When it comes to creating a positive environment for success, it's not just about investment returns—it's about your mental framework and decision-making. In today’s episode, we explore how to identify whether you have a wealthy mindset, as well as what it means to embrace the KISS principle. You’ll find out why being a lifelong learner is crucial and how treating all aspects of your life as investments can lead to both financial prosperity and happiness with a sense of abundance.
You can find show notes, resources and more at: https://tinyurl.com/5n94n9vc
What should you do with unexpected financial windfalls, such as a bonus check or unforeseen extra income? Today we answer this question and address the essential balance between celebrating your financial wins and planning for the future, sharing valuable tips to avoid financial pitfalls and the importance of building a robust emergency fund. Listen in to learn how to make the most of unexpected financial gains and more.
You can find show notes, resources and more at: https://bit.ly/3QGFghf
Discover the secrets to a harmonious marriage and a prosperous financial life in this engaging panel discussion. Join us as we sit down with our team members at Leading Edge Planning, including Betsy Wheeler, Paraplanner, Kevin Gormley, Principal, Jon Cremer, Financial Advisor, and Nolan Clark, Paraplanner, to explore the intricate relationship between marriage and money.
You can find show notes, resources and more at: https://tinyurl.com/mwjvtm5p
In this episode, we have the privilege of hearing the remarkable aviation journey of Roger Lance, a retired Air Force officer and Vietnam War veteran. Roger takes us on a captivating flight through his experiences, from his early days in aviation to the intense moments in the war. He provides a glimpse into the different aircraft he piloted and shares his favorites, shedding light on the competitive yet camaraderie-filled world of flying.
You can find show notes, resources and more at: https://tinyurl.com/3hcuyejp
Today we're joined by investment expert Andy Christopher, a Naval Academy graduate and F-35 Contract Instructor Pilot, and Sunil Wahal, a Professor at Arizona State University and Consultant to Avantis Investors. Together, they shed light on the intricacies of investing, emphasizing its profound connection to life itself, and the importance of self-awareness, helping you calibrate your risk tolerance and assess potential risks in your investment portfolio.
You can find show notes, resources and more at: https://tinyurl.com/nk7yz5sk
Meat of the Mission – Five Ways to Avoid Getting Hacked with Cyber Hunter Akiva Clark
- Always use Multi Factor Authentication. (MFA)
- Use different emails for more or less security sensitive accounts.
- Password strength is critically important.
- Use password manager.
- Freeze your credit – Click here to see specific instructions from Nerd Wallet to freeze/lock your credit at all FOUR credit reporting agencies.
Flight #63 - Dumb Things Smart People Do with Money
Questions from the flight deck:
· Next year all 401k catch up contributions will be Roth. How will this affect your taxes?
· https://www.kiplinger.com/taxes/the-problem-with-401k-catch-up-contributions
o Under SECURE 2.0, if you are at least 50 years old and earned $145,000 or more in the previous year, you can make catch-up contributions to your employer-sponsored 401(k) account.
o But there’s a catch. You would have to make those extra contributions on a Roth basis, using after-tax money.
o You wouldn’t be able to get tax deductions on those catch-up contributions as you would with typical 401(k) contributions, but you could withdraw the money tax-free when you retire.
Dumb Things Smart People Do with Money
· Vanguard’s Advisor’s Alpha – They say most value is from behavioral coaching.
o https://advisors.vanguard.com/advisors-alpha#overview
· Buy High – Sell Low – why?
· Example: Value investment premium – Part of premium could be from our human behavior that seems to persist and is not arbitraged away.
o “According to the behavioral school of thought, human tendencies are behind the existence of the value premium. Many investors are lured by the appeal of companies with exciting growth stories and prospect of strong short-term returns, while being deterred by those that receive little fanfare or are unloved by the masses.”
§ From article by Investment Firm Robeco.
· “Human instincts drive the Value premium”
· Recency bias – Recency bias is the tendency to put too much emphasis on recent events, such as a stock-market rout, the meteoric rise of bitcoin or a meme stock such as GameStop, for example.
o The “Lost Decade” is mostly ignored due to lack of recency.
o “The term “Lost Decade for Stocks” refers to the ten-year period from 12/31/1999 through 12/31/2009, when the S&P 500® generated an annualized total return of -0.9% over the period. This was only the second time that the market actually had a negative total return over a decade period.”
· Average investor performance vs. The investment’s performance – ARKK.
o See Pilot Money Guys Podcast/Flight #30 “Chasing Hot Stocks – Investing in the Rearview Mirror”
· Morningstar’s “Mind the Gap...” https://www.morningstar.com/lp/mind-the-gap
· Morningstar Article: “Bad timing cost investors one fifth of their funds’ returns”
Morningstar investor research firm recently published an article titled, “Bad Timing Cost Investors One Fifth of Their Funds’ Returns
Airline/Aviation News:
United AIP, American, FedEx AIP segway
Questions From The Flight Deck:
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What if age 67 passes? What is Hybrid retirement?
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https://www.nbcnews.com/news/amp/rcna95349
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The Senate still needs to pass its own version of the bill before the current authorization expires on Sept. 30.
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Make an intentional decision - I.e., plan.
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Those that do not plan – life happens to them, and they get angry and bitter. 2. If you’re squarely “in the green” - Retire!
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70% - 90% 3. If you LOVE flying – fly part time. 4. If you don’t love slipping the surely bonds BUT you’re on the financial bubble – Hybrid retire.
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Do NOT save in your retirement accounts!
- Additional $30k plus in your pocket for spending.
- Fly part-time – 1-2 trips per month.
- 2 years of NO retirement distributions:
- ~8% improvement or more income
- VSP ~ $1000 per month 5 years
- Social Security Strategy – wait till 70?
- Insurance against bad stock market
- $7mm left over versus $4mm
- ~8% improvement or more income
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Meat of the Mission:
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What is a cash balance plan?
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Cash Balance Plan Basics:
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- Pension-like, Hybrid...DC versus DB.
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Big picture – a better way to save more money!
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- Is it guaranteed or not? Fiduciary responsibility.
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- Market-based plans are a type of cash balance plan where the account’s growth is tied to the actual return on plan assets. This contrasts with a traditional cash balance plan that typically has a fixed interest credit rate.
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- Pros/Cons in relation to 401k, in relation to Pension.
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- MBCBP – may underperform...
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- Think annuity-like versus market like...what does the average investor get for investment returns?
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- Flexible – unlike Non-Qualified “spill-over” plans
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Differences at airlines? Decision points for FedEx, Delta, American etc.
https://www.msn.com/en-us/money/companies/american-airlines-pilots-want-bargaining-do-over-after-united-bests-on-pay/ar-AA1e5RMo
Questions From the Flight Deck:
- What do we do with large retro/bonus checks?
- Is a cash balance plan any good?
Meat of the Mission:
- Never spend more than they make.
- How?
- Habit Patterns...
- What type of spend
- Spend money on fun stuff; Leisure, fun, travel
- Don’t spend money on stuff that does not add value – cut it out.
- YNAB, EveryDollar, or other apps.
- https://www.iwillteachyoutoberich.com/
- Amelie Riendle Podcast (Flight #44 and Flight #27)
- How?
- Prepare more, plan more...
- What do you want to do in retirement? You can only sit on the beach or play golf so much.
- The #1 thing people do in retirement is watch television! Michael Finke.
- Know your retirement needs...it’s expensive!
- Start a financial plan now to know your “number” for how much to save to meet your retirement financial goals. Don’t let it be a lingering question.
- Simulate (software), practice...take some time off and live on the retirement budget.
- Deliberation, Planning, and Intention in and of themselves make people happier in retirement: (Michael Finke)
- E.g., Those that retire in accordance with their plan vs. Forced retirement.
- Both experience happiness, but forced retirement is a delayed happiness (3- 4 years).
- E.g., Those that move after retirement...not b/c they move but because they had a deliberate plan with intentionality.
- Control vs. Out of Control???
- Michael Finke says “Invest in Imagination”
- E.g., Those that retire in accordance with their plan vs. Forced retirement.
- What do you want to do in retirement? You can only sit on the beach or play golf so much.
- Never compromise their health: exercise and eat right.
- Exercise not only helps you feel better in retirement but also helps mental capacity and cognitive health.
- Flight #58
- Exercise and the Brain: The Neuroscience of Fitness Explored.
- “Exercise stimulates neurogenesis – the creation of new neurons – primarily in the hippocampus, influencing memory and learning while increasing key mood-regulating neurotransmitters. It also enhances brain plasticity, essential for recovery from injury and aging, and improves cognitive functions such as attention and memory.”
- Estimated that average couple will need $315k to cover medical expenses in retirement, excluding LTC (https://institutional.fidelity.com/app/item/RD_13569_42402/retirement-planninghealth-care-costs.html)
- Exercise not only helps you feel better in retirement but also helps mental capacity and cognitive health.
- Invest more in their relationships and always work to build new connections. (Michael Finke)
- “Dude...you’re not as good at retirement as the women are.”
- Invest in relationships outside of work.
- Strongest predictor of life satisfaction during retirement:
- Relationship with your spouse – huge impact, good and bad. Highest statistical significance.
- Marital counseling to prepare...? (Valuable investment)
- Friends – Second highest statistical significance.
- Your kids – not as significant...statistically and FB comments online.
- Relationship with your spouse – huge impact, good and bad. Highest statistical significance.
- Takeaway – Invest in your marriage...invest in friendships outside of work.
- Plan, prepare for taxes...it is a large (frustrating) expense
- What are the financial AND emotional costs of paying too much taxes in retirement?
- RMDs – when not needed?
- Legacy planning: Roth, 529, Brokerage account.
- Practical side: HSA, Roth, Cash, Taxable Brokerage
- What are the financial AND emotional costs of paying too much taxes in retirement?
- The right mindset – what is money? It does not make you happy...
- Money is paper or numbers on a computer screen...E.g., bricks to build a house.
- Pre-Retirement:
- Don’t allow money to make you miserable...
- Examples of how money ALONE has made people miserable
- By chasing after it too much...like a trophy
- Airlines are great b/c fly more = more pay. BUT...
- Money is a tool to reduce stress and increase your enjoyment...there are other tools!
- By chasing after it too much...like a trophy
- Post-Retirement:
- It’s okay to spend your retirement money on frivolous stuff...
- Example, people spend from pensions but not on IRAs, 401ks. Defined Contributions versus Defined Benefit.
- Finke example: Mom has a pension and spends every dollar happily, but refuses/hates to draw from her IRA
- Understand what truly DOES make you happy in retirement – you must invest in these three things:
- Finances
- Health
- Relationships
- It’s okay to spend your retirement money on frivolous stuff...
- Realize there are things that you cannot control – Realize that you have more control (of other areas) than you realize:
- Example – Short-term stock market gyrations versus your own personal inflation.
- Example – Our country's debt crisis – saving more to prepare.
- Example – Higher inflation and taxes in the future – save more to prepare.
- If things go really badly – you'll be glad you prepared, saved, etc.
- Example – MGP “bad timing” scenario – 2008-type retirement for airline pilots at age 60.
- Be an Ant during working years and be a Grasshopper in retirement (up to a point). Though Aesop’s fable is regarded as a lesson in thriftiness, “grasshoppers” are likelier to smooth their spending over their lifespans. Don’t wear thriftiness as a badge of honor- you saved to consume later- hint, it is now later! (https://www.aaii.com/journal/article/grasshoppers-and-ants-in-retirement)
- Don’t compare (especially finances) – live someone else’s values.
- Comparison is the thief of joy!
- From this article:
- “Feelings of jealousy, frustration, and hopelessness emerge if comparisons continue. If left unaddressed, chronic anxiety and depression can stem from such behavior.”
- Avoid comparing other peoples' "outsides" to your own "insides"
- When, if ever, is it okay to compare yourself to someone else?
- How to prevent comparison from limiting your success and peace of mind?
- Comparison is the thief of joy!
- Even if we do not want to think about it, our mortality is real. Should we spend the money today or wait until tomorrow? How many pieces should I cut “the financial cake” into not knowing how many years we shall be here. Very few get to spend the last dollar at the last second of life. How do we create a good retirement under so much uncertainty?
- Consider your legacy not “at the end of life” but 50 years from now. Helps to consider mortality and legacy that you want to leave financially.
Questions From The Flight Deck:
Introducing: Andy Christopher – F18 Navy Fighter Pilot and Investment Advisor
- Background
- How’d you get interested in flying?
- Why the Navy?
- Navy flight experience.
- Ejection story – first flight!?!
Meat of the Mission – 529s
Common Questions:
- What if my kid gets a scholarship?
- Do I need to invest in my state’s 529? No!
- What if I overfund the 529?
- Can I give my 529 to my child?
- How does the 529 affect financial aid?
- Can I use the 529 for United, Delta, SWA feeder schools – aka career development programs.
- United Aviate
- Delta Propel Program
- SWA Destination 225
- Should I just use the Roth IRA? Roth 401k?
- The major difference between Roth IRA withdrawals and Roth 401k withdrawals:
- There is one catch, though. Early withdrawals have to be prorated between (nontaxable) contributions and (taxable) earnings. To calculate the portion of the withdrawal attributable to earnings, simply multiply the withdrawal amount by the ratio of total account earnings to account balance. U.S. Department of Labor. “401(k) Plans for Small Businesses Supplement.”
- Why save for college?
- College Tuition Inflation Statistics | BestColleges
- Tuition increases over time have traditionally outpaced inflation
- Avoid student loan debt (for parents and children)
- One of the most expensive “investments” in one’s life
- 529 basics
- Similar to Roth IRA: After-tax money in, tax-free money out when used for qualifying tuition expenses
- FAFSA: Does a 529 plan affect financial aid? - Savingforcollege.com
- Any parental assets beyond that amount ($10,000) will reduce a student’s aid package by up to a maximum of 5.64% of the asset’s value.
- So, if a parent’s 529 account exceeds the Asset Protection Allowance by $10,000, his child’s financial aid award could be reduced by as much as $564.
- Which plan to pick?
- What Is a 529 Plan? - Savingforcollege.com
- Don’t have to use your state’s plan, but may be reasons to use in-house plan
- Unique plan rules for transfer of ownership, total account value limits for contributions
- State tax benefits (OH)
- E.g., Virginia residents – tax deduction PER ACCOUNT, age 70 rule and tax deductions carry forward...
- Low-cost plans (Utah my529, W VA, etc.)
- How much to save?
- Vanguard Savings Calculator
- Rule of thumb:
- Public vs. Private
- Scholarship
- Other sources of funding: grandparents, GI Bill, etc.
- "Superfunding”: 10 Rules for Superfunding a 529 Plan - Savingforcollege.com
- How to invest the contributions?
- Low-cost/index approach
- Target-enrollment date (works like a 401(k) target-date fund)
- What if you don’t use the funds?
- Estate Planning Considerations: Dynasty 529 Plan For Multigenerational College Expenses (kitces.com)
- Secure Act 2.0 Changes: The SECURE Act 2.0: The Most Impactful Provisions #10 — Moving 529 Assets to a Roth IRA - Fred Reish
- Withdrawal Options: Penalty-free (not tax free) for service academies, scholarship, death/disability
- Changing beneficiaries
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Veteran Benefits
- GI Bill Transfer
- State Specific Benefits (CalVets, etc.)
- Hazlewood Act - Through the state’s Hazlewood Act, originally approved in 1943, Texas promises its veterans or their survivors 150 free credit hours at any of the state’s public universities or community colleges, once their federal benefits have been exhausted. And vets may transfer hours they don't use to their children.
- Hazlewood benefits are available to veterans who currently reside in Texas and who lived in Texas or had Texas as their home of record at the time of enlistment, or who simply enlisted in Texas.
- Hazlewood Act - Through the state’s Hazlewood Act, originally approved in 1943, Texas promises its veterans or their survivors 150 free credit hours at any of the state’s public universities or community colleges, once their federal benefits have been exhausted. And vets may transfer hours they don't use to their children.
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Vanguard college funding calculators
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https://vanguard.wealthmsi.com/csp.php
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Leading Edge 529 video
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https://youtu.be/Br4ws8waxDQ
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Morningstar College report, comparison.
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https://www.morningstar.com/personal-finance/best-529-plans-2023
**Airline News:**
* Pilot retirement age 67!!! Maybe...
+ https://www.usnews.com/news/us/articles/2023-06-14/u-s-house-panel-votes-to-raise-commercial-pilot-retirement-age-to-67#:~:text=%22While%20commercial%20airline%20pilots%20are,help%20address%20a%20pilot%20shortage
+ *The pilot age proposal faces opposition from unions and an uncertain fate by a U.S.* *Senate committee, which will consider its version of the FAA measure on Thursday and does not currently include the pilot age hike.*
+ *The Air Line Pilots Association (ALPA) opposed raising the retirement age and says it could cause airline scheduling and pilot training issues and require reopening pilot contracts. Even if the proposal is approved, the union noted that international rules would still prevent pilots older than 65 from flying in most countries outside the U.S. ALPA called the proposal a "politically driven choice that betrays a fundamental understanding of airline industry operations, the pilot profession, and safety."*
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American Airlines pilot sues over ESG funds in his 401k.
- “The complaint by American Airlines pilot Bryan Spence was filed on June 2, 2023, in
federal court in Fort Worth, Texas, against American Airlines, its employee benefits
committee, Fidelity Investments Institutional, and Financial Engines Advisors.” - “...the suit is significant because it concerns one of America’s largest pensions, takes aim at new federal guidance involving retirement plans, and may affect the plan’s self- directed brokerage account option, also known as the brokerage window. The brokerage window is the part of a plan that lets participants invest in funds and publicly traded securities outside the limited menu on offer. In 2021, the American Airlines plan brokerage window reportedly had 12% of the plan value.”
- “What’s concerning about this lawsuit if it goes anywhere, is it suggests there is some sort of fiduciary obligation to vet individual funds and individual securities available through a brokerage window,” Hadley says. Attorneys for the plaintiff didn’t respond to requests for comment.”
Questions From The Flight Deck:
- “The complaint by American Airlines pilot Bryan Spence was filed on June 2, 2023, in
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What are the best wealth building habits we’ve seen and learned in our experience working with clients?
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I’ve stopped investing...tired of throwing good money after bad.
Meat of the Mission:
- How to think about LTC...mindset.
- Hard to plan for your 85-year-old self...
- Four options/basis types:
- Standard LTC insurance – pay monthly, forever
- Premiums increase, strict medical screening.
- Use or lose...not totally true, always.
- Annuity – increased payouts
- Do you need an annuity?
- Payout doubles for a few years...
- Hybrid Life Insurance – 2nd to die...or individual policy.
- Life insurance or LTC insurance.
- Self-Funding...
- Plan for it...
- Set aside the funds and name it!
- Tax Considerations
- VA Benefits
- https://www.va.gov/health-care/about-va-health-benefits/long-term-care/
- Private Pay: Even though VA, Medicare, Medicaid and other funding sources cover the costs of some long-term care services and settings, depending on eligibility, many people need to use their own income or savings to pay part of the costs for long term care services or settings they need or prefer. For example, people often use their own resources to pay for:
- Residing in an Assisted Living Facility or Adult Family Home
- Paid caregiver assistance with personal care needs, chores, or meals in their home
- Medicaid Trusts?
- Medicaid trusts are designed to help people qualify for Medicaid, the government health insurance program. Unlike Medicare, which is not means-tested, Medicaid is only available to people of limited financial means.
- The program is administered by states, which determine their own Medicaid eligibility requirements in a variety of ways. In most, the annual income limit is $29,160 or less. This cap includes Social Security and pension benefits as well as wages and investment income. Financial resources such as bank accounts, investments, revocable trusts and real estate typically can’t total more than $2,000. People who have more income and more assets may have to spend their own assets to pay for nursing home care until their assets have declined to the point, they meet the Medicaid caps.
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An irrevocable Medicaid trust is designed to help someone qualify for Medicaid without having to deplete their own assets. After creating the trust, they can transfer in enough assets to bring them below Medicaid’s caps. Once they have done that, assuming they have followed the rules, Medicaid will pay some or all of their nursing home costs. In this way, an irrevocable trust can protect assets from nursing home costs.
Sources
https://www.morningstar.com/sustainable-investing/pilot-sues-american-airlines-others-over-esg-funds-his-401k
https://www.morningstar.com/personal-finance/100-must-know-statistics-about-long-term-care-2023-edition
Yahoo Finance on Irrevocable Trusts for LTC
Is Long-Term Care Insurance Tax-Deductible? - SmartAsset
Do You Have to Pay a Long-Term Care Tax? - SmartAsset
https://www.va.gov/health-care/about-va-health-benefits/long-term-care/
https://www.aaltci.org/long-term-care-insurance/learning-center/long-term-care-insurance-partnership-plans.php
Airline News:
- American Airlines, FedEx Agreements in Principle: AIP...
How To Think About Your Health And Improve Your Quality Of Life Now And In Retirement
Sources:
- Financial wellness can increase the quality of your physical health.
- High levels of financial stress manifest through physical symptoms like sleep loss, anxiety, headaches/migraines, compromised immune systems, digestive issues, high blood pressure, muscle tension, heart arrhythmia, depression and a feeling of being overwhelmed.
- Can induce feelings of happiness.
- Enhances the quality of your sleep.
- Physical activity is often associated with reduced symptoms of depression and anxiety.
- Exercising is critical for airline pilots due to the sedentary lifestyle of flying and traveling.
How:
- You must be intentional.
- What’s the best diet/eating habits?
- What’s the best exercise routine?
- The one that you’ll do!
- What you are able to make part of your lifestyle.
- Without a plan, you will drift... to bad nutrition and exercise habits.
- Hire a fitness instructor. Also, develop an eating plan.
- Especially plan for days on the road.
- It’s not your age that has you feeling the need to rest -- it’s that you’re not moving. Even older adults with serious health problems -- heart disease, diabetes, arthritis, and others -- can live better lives by getting up and moving.
Resources:
https://neurosciencenews.com/fitness-neuroscience-23228/
https://www.purdue.edu/hr/CHL/healthyboiler/news/newsletter/2020-01/finances-health.php
Questions From The Flight Deck:
What the heck is ChatGPT, and what jobs will most be impacted?
- What is it...? https://en.wikipedia.org/wiki/ChatGPT
- What jobs are at risk...? https://www.visualcapitalist.com/cp/which-jobs-artificial-intelligence-gptimpact/
- What about ChatGPT from an investing perspective? ETFs: AIQ, BOTZ, ROBT, AIEQ – see Kwanti.
- https://www.visualcapitalist.com/how-smart-is-chatgpt/
AI in the Cockpit? https://theaircurrent.com/technology/natural-language-processing-aviation-atccockpit/
Optimism – It's NOT cool!
Have we always been pessimistic? Or is it a new phenomenon?
“The preacher man says it’s the end of time and the Mississippi river, she’s goin dry...the interest is up and the stock market’s down and you only get mugged if you go downtown...”
Great survival story...Hank Williams Jr.
If Everything is Getting Better, Why Are People So Pessimistic?
“...Those are three emotional biases toward pessimism. We also have cognitive biases that incline us that way, foremost among them being the “availability heuristic.” This is a feature of the psychology of probability also documented by Tversky, in collaboration with the Nobel Prize–winning economist Daniel Kahneman. Forty years ago, Kahnemanm and Tversky argued that one of the ways the human brain estimates probability is by using a simple rule of thumb: the more easily you can recall an example of something, the more likely you estimate it to be. The result is that anything that makes an incident more memorable will also make it seem more probable. The quirks of the brain’s ability to retain information will bleed into our estimates of a risk’s likelihood.”
“...The bad‐ dominates‐ good phenomenon is multiplied by a second source of bias, sometimes called the illusion of the good old days.
People always pine for a golden age. They’re nostalgic about an era in which life was simpler and more predictable. The psychologist Roger Eibach has argued that this is because people confuse changes in themselves with changes in the times. As we get older, certain things inevitably happen to us. We take on more responsibilities, so we have a greater cognitive burden. We become more vigilant about threats, especially as we become parents.
...At the same time, we see our own capacities decline. As we get older, we become stupider in terms of the sheer ability to process and retain information.
There’s a strong tendency to misattribute these changes in ourselves to changes in the world. A number of experimental manipulations bear this out. If you have people try to make some change in their lives — say, to eat less fat — often they become convinced that there are more and more advertisements for fatty foods.”
Ten Reasons Clients Should Be Optimistic About The Future:
https://www.fa-mag.com/news/ten-reasons-clients-should-be-optimistic-about-the-future-72935.html?section=68&utm_source=FA+Subscribers&utm_campaign=d580b67712-FAN_IP_Next_Chapter_Parnassus_050422_COPY_01&utm_medium=email&utm_term=0_6bebc79291-d580b67712-240228216
- The US is a net oil exporter.
- Higher short-term interest rates.
- Inflation is moderating
- Companies are great at passing along costs.
- Now is the time to seek out lower cost providers/products.
- The Federal Reserve is not a bunch of dummies.
- Companies know how to cut expenses to boost profits.
- The stock market has been the best way to make money consistently for decades.
- The US dollar is the world’s reserve currency.
- Riding High...
Some Alternatives:
- https://www.nbcnews.com/business/economy/how-is-the-economy-doing-right-now-inflationinterest-rate-hikes-rcna73613
- Inflation cooling – 4.9% in April – announced today – 10 May 2023.
- The Fed doesn’t have as much control as you think. And no more, QE!
- https://awealthofcommonsense.com/2023/05/some-things-the-fed-doesnt-control/
- US households are in excellent shape, the ratio of liabilities to net wealth has declined 50% since the 2008 financial crisis, and household leverage is currently at levels last seen in the early 1980s; see chart below. If the unemployment rate rises, consumer spending will slow down, but the starting point for US households is very strong.
- Balance Sheets Are Barriers Against Contagion...Household, corporate and bank balance sheets are more resilient today than during past crises.
Factfullness: Ten Reasons We’re Wrong About the World—And Why Things Are Better Than You Think.
https://www.amazon.com/Factfulness-Reasons-World-ThingsBetter/dp/1250123828/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=&sr=
Author Hans Rosling
Quotes
The first is from philosopher, historian, psychologist, William James: “Pessimism leads to weakness, optimism to power.”
The second from the late former Chairman of the Joint Chiefs of Staff, Army General Colin Powell: “Perpetual optimism is a force multiplier.”
Resources
- https://www.theatlantic.com/newsletters/archive/2022/09/bill-melinda-gatesfoundation-goalkeepers-report-poverty/671415/
- https://www.morningstar.com/articles/1103776/why-optimism-is-a-secret-weapon-ininvesting
- https://www.cbo.gov/publication/58612#:~:text=In%20CBO%E2%80%99s%20projections%2C%20the%20U.S.%20population%20increases%20from,accounts%20for%20all%20population%20growth%20beginning%20in%202042
- https://www.forbes.com/advisor/investing/is-inflation-good-or-bad/
- https://www.reference.com/world-view/inflation-good-bad-5bcd09b085e0a85d
Special Test Flight Edition – The Banking System: How Do Banks Operate And What Happens When They Take On Too Much Risk – Silicon Valley Bank? ~Exclusive Captain Rob “Rubber Mallet” Eklund
Where is the best cup of cappuccino in New York City, according to Rob’s new friend Luciano Pavarotti?!?
- Actually, a friend of a friend of Pavarotti...Samir Sanbar. Previously served at the United Nations as International Communications and Media Consultant.
How do banking systems work? How do they benefit the consumer and make our money safer?
- In exchange for leaving your money with them, the banks pay you an interest on those dollars
- What does fractional banking system mean?
- What were some banking factors that led to the subprime mortgage crisis of 2008?
- What did long-term government bonds have to do with the failure of Silicon Valley Bank?
- What if your broker-dealer (aka custodian) goes bankrupt? What happens to your investments?
“Banking is a very good business. If you don't do anything dumb.” ~Warren Buffett
“The good bankers, like good tea, can only be appreciated when they're in hot water.” ~Jafar Hussein, a Malaysian banker.
Aviation News:
- Age 67 retirement? - https://www.lgraham.senate.gov/public/index.cfm/2023/3/graham-senators-reintroduce-bill-to-address-pilot-shortage#:~:text=The%20legislation%3A,be%20renewed%20every%20six%20months
- Bill reintroduces Let Experienced Pilots Fly Act….
- Pilot Incapacitation recent events, Southwest, Envoy, and others
- https://www.youtube.com/watch?v=hPUbr6SPcy8
Questions From The Flight Deck:
- How to vote proxy if you’re a stock owner.
- DFAS – Discontinue survivor benefit plan (SBP) for military retirement?
- Pros/Cons
- Tax season lessons learned: DFAS withholding, Social Security withholding – defaults to 8%...spouse earning money – 68 cents versus 76 cents. Safe harbor – 100% of this year or 110% of last year is a safe harbor to prevent penalties.
- The stock market has been down – why not get 5% guaranteed T-bills.
- Sell bonds? Sell stocks? What are your savings goals? What if rates drop?
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US Dollar World Reserve Currency: https://realeconomy.rsmus.com/why-the-dollar-remains-the-worlds-reserve-currency/
- “Why the dollar remains the world’s reserve currency, and will stay that way”...APR. 17, 2023 BY JOSEPH BRUSUELAS
- We find the recent discussion around the end of the dollar dominance bereft of any linkage to the reality of international finance and understanding of the dollar’s role as the anchor of the rules-based order that governs global economics.
- Economies like China that run surpluses need dollar-based demand from the United States to make up for their own weak consumption and high savings rates.
- Rather, the recent conversation is stoked by global grievances about the relative disparity of economic power and the dead end in which some economies find themselves.
- Pilot Money Guys Flight #55: US Dollar as World Reserve Currency
- Here’s How Reserve Currencies Have Evolved Over 120 Years
- https://www.visualcapitalist.com/cp/how-reserve-currencies-evolved-over-120- years/
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CDs (callable vs noncallable)
- When to sell I-bonds
- The composite rate for I bonds issued from November 2022 through April 2023 is 6.89
- New rates are 4.3% composite: 3.4% Inflation component and 0.9% fixed rate.
- Kevin “The Professor” Gormley:
- https://www.youtube.com/watch?v=v1SACB6S7kQ
Meat of The Mission:
Get up for health and wealth...
Should you own Gold?
Two things: Gold as an investment – diversification? Gold as a currency in times of economic collapse.
https://awealthofcommonsense.com/2015/07/a-history-of-gold-returns/
Why is gold attractive? Hot button issue...
- Gold standard...vs. Fiat currency – us versus them. Very political and ideological.
Three Options For Owning/Investing In Gold:
- Physical gold in your home, safety deposit box.
- How could one use physical gold in an economic collapse
- https://atlantagoldandcoin.com/how-will-gold-silver-coins-be-used-following-a-monetary-collapse/
- Gold and/or Gold Miners ETF in your portfolio. Is it a diversified?
- How has gold performed? What about bonds?
- https://awealthofcommonsense.com/2015/07/a-history-of-gold-returns/
- Ben Carlson’s stance: “My stance on gold has always been that I have no idea what’s going to happen with it in the future. No one else does either.”
- As of 2015...Even after the most recent crash, gold is actually up around 10% per year over the past decade. But it’s unlikely many individuals actually participated in this rise unless they held physical gold. The Gold ETF (GLD) only had around $3 billion in assets in 2005. It then grew to nearly $80 billion by the peak in 2011-12, before falling back down to less than $25 billion more recently. Unfortunately, that means many of the bandwagon investors got sucked in very late to the bull market and lost a lot of money in the ensuing crash.
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Physical Gold in a Self-Directed IRA.
- Why?
- Can I own physical gold in my IRA?
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If you opt for the actual metal, certain criteria apply for it to be held in an IRA. “The precious metal coins or bars must meet IRS fineness standards and must be held by the IRA trustee instead of the IRA owner,” says Moy. “The gold must be stored in an IRS-approved depository.”
- https://www.investopedia.com/articles/personal-finance/091814/analysis-should-you-get-gold-ira.asp
Tax Implications of Gold Coins...28%
- Physical gold (including the ETF – GLD) is tax as collectible.
- However, the IRS considers physical quantities of metal to be a “collectible.” For collectibles, such as coins, art and bullion, the standard tax rate is 28%. As a result, owning physical gold, or owning funds that themselves own physical gold, means that you can pay a higher maximum capital gains rate of 28%.
- https://smartasset.com/taxes/avoid-capital-gains-tax-on-gold#:~:text=This%20is%20called%20the%20capital,a%20general%20rate%20of%2028%25
The Ascent of Money: A Financial History of the World - By Niall Ferguson
Questions from the Flight Deck:
What if the US Dollar is not the dominant world currency?
- https://www.visualcapitalist.com/cp/how-reserve-currencies-evolved-over-120-years/
Part 1:
How to know how much FDIC insurance you have?
- https://edie.fdic.gov/calculator.html?
Should we be nervous about the banking system?
- There is no safer place...
How much can I actually hold in my bank account, FDIC insured? See FCIC calculator.
Why are banks and brokerage firms different?
- Banks accept deposits onto their balance sheet. When you deposit money, it becomes a liability for the bank.
- Brokers are middlemen. They hold your money (custodial relationship) and then allow you to buy investments. These do NOT go onto the broker's balance sheet. They take a little to “broker the sales” but do not own anything. You own the underlying investments.
What would happen if Schwab went bankrupt? FDIC, SIPC.
- Rule 15c3-1, "Net Capital Rule" of the U.S. Securities and Exchange Commission (SEC), makes it mandatory for brokerages to maintain a minimum amount of prescribed capital in liquid form. Rule 15c3-3, “Customer Protection Rule,” requires brokerage firms to keep client assets (both cash and securities) in a separate account from the firm’s assets to avoid any confusion
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What does a broker (Schwab) do with our money versus what a bank does with our money?
- Bank invests and loans your money
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Schwab puts it in stocks that YOU own. Schwab doesn’t hold them. Schwab can't do anything with your money. It’s not even on their balance sheet.
- However, Schwab does have a banking component. A subsidiary of Charles Schwab.
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Schwab has several components, subsidiaries:
- ETFs, Mutuals Funds
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- Custodian, Broker-Dealer
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- Banks
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- Who controls money at ETFs, Mutual Funds...
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- Securities of underlying funds are not held at Schwab, Vanguard. They hire and pay a custodian to keep these securities separate...
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- Who WAS the same – Bernie Madoff.
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- https://international.schwab.com/account-protection
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- Broker collapsing versus broker theft...
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- Protected up to US$600 million. The combined total of our SIPC coverage and our "excess SIPC" coverage means Schwab provides protection up to an aggregate of US$600 million, limited to a combined return of US$150 million per customer, up to US $1.15 million of which may be in cash. This protection becomes available in the event SIPC limits are exhausted.
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- SIPC covers shares, not $$$ amounts: For example, if an investor is holding 200 shares of ABC Inc. originally purchased through a failed stock broker, SIPC will work to replace or restore the same number of shares to the investor. However, if the stock price plummets during the time the stock broker goes bust to the time that the SIPC steps in, the SIPC will not reimburse the money the investor lost.
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Ron Berger: https://www.youtube.com/watch?v=wz64z1YuL0A&t=816s
Part 2:
https://www.businesstrialgroup.com/practice-areas/securities-litigation/oil-gas-partnerships/
Why do we go after these types of investments? Are they necessary to be successful? Do they add diversification?
- Private REITs
- Land Investments
- Mineral Rights
- Oil and Gas LPs
Why do they look so attractive? 10-12% annual Yield...
- Phoenix Capital Group...
- What does Yield mean?
Early bank run on Blackstone last December but it is NOT a bank. This guys says it is OK but if you wanted your money out of it- you cannot have it https://seekingalpha.com/article/4563565-the-truth-about-blackstone
How do you value something?
Are short sellers able to sell private securities easily.
How do we know if the price is right, close to right or downright wrong.
In public markets, is volatility a bug or a feature?
“Fox watching the hen house”
Fundrise claims that privately held outperform public markets but there are multiple issues with this kind of data:
https://fundrise.com/education/why-private-markets-outperform-traditional-publicly-traded
- Internal rate of return helps private equity firms but NOT always clients
- Are losers in private equity always captured in data? survivorship bias.
- What counts in private investment is the quality of people, trust, and the investments?
- How many private firms are zombies that still show value on balance sheets
- When the tide goes out... you see who swimming is nakedly.
- ..."But I get my 8%, 9% or 10% dividend : ) “ Where does the dividend come from?
- Wall Street moved from banks & public markets (active mutual funds) to private- why? Because that is where the story, the reputation, the glitz, can be manufactured- with out all this “nobody can beat the market stuff” That is where the money is in the roaring 20s.!
- Craig Pieper Publisher & Founder of Aero Crew News
- Scott Rehn CEO of Aero Crew Solutions & Co-Founder of Aero Crew News
- Craig Pieper’s Linkedin
- Scott Rehn’s Linkedin
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Make sure to follow Aero Crew News on Facebook, Instagram, & Twitter
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Aero Crew Solutions Phone Number: 484-NEW-NEWS
Pilot News
https://www.reuters.com/business/aerospace-defense/european-regulator-rules-out-single-pilot-flying-by-2030-2023-02-06/
Question From The Flight Deck:
Q: Are all annuities Crap?
A: Annuities are NOT investments; they are Insurance income products, and most of them are sold as something they are not - again, not investments! People that hate annuities compare them to investments - life insurance is used when people die. Annuities can help people that live too long or need mortality credits to decrease anxiety or smooth out the journey.
LEFP is not licensed, nor makes commissions on annuities, but we do sometimes recommend them through third parties. Find someone who does NOT make commissions on annuities but believes that they are sometimes necessary and EVEN helpful as a part of a financial plan. 2022 was the number one year of annuities sales in history.
- Contingent Deferred Annuities: CDAs, Retire One - “Constance”
- No changes in taxation – Roth IRA, Taxable brokerage account
- Remain invested in Mutual Funds, ETFs
- Turn off anytime...
A CDA acts as a sort of “risk wrapper” for your IRAs, Roth IRAs and taxable brokerage accounts, but the insurance portion is unbundled from the underlying accounts so that investments in ETFs and mutual funds may be covered. The amount of income you receive from the CDA (your coverage base) is calculated from the total of your initial investment, and will not drop below that amount, no matterwhat the markets do. In fact, your coverage base may go up, and those annual income payments can range from 3% to 6%. Keep in mind that excess withdrawals CAN impact your coverage base, however.
The CDA’s income payments trigger when you need them and are paid by the insurance company for the rest of your life, even after your assets are depleted.
https://www.financial-planning.com/news/2022-was-the-best-annuity-sales-year-in-history
https://awealthofcommonsense.com/2023/03/talk-your-book-lifetime-income/
Q: Should I own bonds?
A: There are two reasons to own bonds.
- Decrease recovery time in your portfolio: TYPICALLY, (not 2022) bonds act as ballast. During a recession, Treasury bonds act as a flight to safety, plus Fed may lower interest rates which may cause bond prices to increase. See JPMorgan Chase Charts.
- It’s all about the math...50% decline in your investment dollars requires a 100% increase to get back to even.
- $100,000, 50% loss = $50,000. 100% gain = $100,000.
- A 25% decline in stock prices requires
- $100,000, 25% loss = $75,000. 33.3% gain required to get $100,000.
- https://www.hughcalc.org/getback.php
- Then why would anyone be 100% equity???
- It’s all about the math...50% decline in your investment dollars requires a 100% increase to get back to even.
- There is actually yield, interest now. T-Bills
- Annuities, higher
- CD, Money Market higher
- Long-term investors are better off after bond price declines and interest rate increases from 2022
Main Topic – Tax-Efficient Giving Strategies
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When to use a Donor Advised Fund - https://www.morningstar.com/articles/1039795/pros-andcons-of-donor-advised-funds
- Pros:
- The major benefit of donor-advised funds is the ability to take an immediate tax deduction on the amount contributed. Donors contributing cash can take a deduction of up to 60% of adjusted gross income...
- Donors can also contribute a wide range of appreciated assets, including stocks, bonds, mutual funds, privately held business interests, restricted stock, and even bitcoin and other cryptocurrencies. Donors contributing securities or other assets can take a deduction of up to 30% of adjusted gross income.
- Cons:
- Donor-advised funds also come with an additional layer of annual administrative costs. Fidelity, Vanguard, and Schwab all charge a 0.6% administrative fee for accounts with balances up to $500,000. All three have tiered expense structures, so accounts with balances greater than $500,000 are subject to lower fees in percentage terms.
- These charges are in addition to the fees on the underlying investments (operating expenses for mutual funds and exchange-traded funds, or trading commissions for individual stocks and bonds). All these fees come out of the amount donated, making donor-advised funds less cost-efficient than donating directly to a charity.
- Pros:
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Gifting highly appreciated stock
https://www.blackrock.com/us/financial-professionals/insights/donate-stock-to-charity-for-tax-savings
Gift your star performers. Maximize your savings on capital gains taxes by donating your strongest-performing stocks. They may be your favorite holdings, but this is not goodbye – replenish your portfolio by purchasing the same security (or a similar exposure). Because the stock has appreciated since your original purchase, your new cost basis will be higher, which creates the potential to harvest tax losses to offset gains in future years.
- When do you get to deduct your giving on your tax return?
https://turbotax.intuit.com/tax-tips/tax-deductions-and-credits/tax-deduction-wisdom-should-youitemize/L8Ln7K0Gp
“Add up all of these taxes, but remember the IRS limits your state and local tax deduction to $10,000.
Tip: Add your total state and local taxes (capped at $10,000) to the mortgage interest number you calculated above. If the total is larger than your standard deduction, you'll likely benefit from itemizing.”
- Lump your giving?
- Other reasons to give?
The immediate effect on our physiology…Psychologytoday.com - Dr. Eva Ritvo - https://www.psychologytoday.com/us/blog/vitality/201404/the-neuroscience-giving
“Neuroscience has demonstrated that giving is a powerful pathway for creating more personal joy and improving overall health...Dopamine, serotonin, and oxytocin make up the Happiness Trifecta…benefits are better moods, sleep, digestion, memory, learning, and appetite, blood pressure decreases…Oxytocin is known as the “cuddle hormone.” trust and empathy are enhanced. Oxytocin is also anti-inflammatory and reduces pain, and enhances wound healing. “So, if giving allows us to secrete all the chemicals at once, we owe it to ourselves to give as often as possible!
How to Be a Real Estate Professional & Save on Taxes with Gina Roth
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(4:30) How do you recommend selling your primary residence and ensure you don't pay taxes?
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- You have to live in it as your primary residence for two out of the trailing five years
- Once you complete this, it is free capital gains
- Married: $500,000 exclusion
- Single: $250,000 exclusion
- These can include any improvements to the property
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(7:15) Requirements to be a Real Estate Professional for tax purposes
- You must spend 750 hours/year doing some sort of real estate duties (brokerage sales counts towards this)
- Documentation of hours is a necessity
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(17:15) Real Estate & Taxes
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Passive income from real estate can often be offset with income from your main source of income
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- Depreciation is your superhero in real estate!
- You can make your money from your main source of income, all of that income gets taxed as ordinary, and the real estate can be used as depreciation to offset some of that main source of income
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(21:00) Gina’s Advice
- If someone has the ability & willingness to keep their first starter home, it can be a great tool to use as rental income in the future
- It can be a huge wealth builder, great for diversification, & helps with cash flow in retirement because you won’t have to touch your nest egg
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(26:30) Multiplex
- They are very favorable because you have multiple tenants paying rent at the same time. If one person moves out, there is still some cash flows
- Less maintenance typically on a multiplex
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(28:15) Other Real Estate Licenses
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Active in Real Estate License: For people that make less than $150,000
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- Material Participation: Not having a rental unit, but a business
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(29:00) Short Term Rental Benefits
- A short-term rentals are anything that can qualify for anything less than 30 days of occupation
- You can classify any losses associated with the business as offset to your ordinary income (you must own a short-term rental, you have to be material participation, & documentation!)
- There are many tools today that allow you to manage short term rentals (even out of state)
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- You have to be the one who is property manager and must document everything
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(40:26) Breckendrige, CO has made it very complicated by putting different zone/resort zones. So, to buy a short-term rental, you would need a very qualified agent right now
- Some alternatives to Breckenridge could be Keystone and Grand County
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(46:20) Gina’s Book Recommendations/Resources
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Rich Dad Poor Dad by Robert T. Kiyosaki
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- Short-Term Rental, Long-Term Wealth by Joseph Bafia
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The Seven Tests of Participation (Material Participation Tests: Definition, IRS Rules, Vs. Passive (investopedia.com))
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You participate in the activity at least 500 hours during the year.
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Your participation constitutes substantially all the participation for the year by anyone, including nonowners.
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You participate more than 100 hours and as much or more than any other person.
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The activity is a “significant participation activity” — that is, you participate more than 100 hours — but you participate less than one or more other people yet your participation in all your significant participation activities for the year totals more than 500 hours.
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You materially participated in the activity for any five of the preceding 10 tax years.
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The activity is a personal service activity in which you materially participated in any three previous tax years.
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Regardless of the number of hours, based on all the facts and circumstances, you participate in the activity on a regular, continuous, and substantial basis.
Quote: Nelson Mandela once said: “I learned that courage was not the absence of fear, but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear.”
Kim "KC" Campbell - "Fear can prevent us from achieving success or it can lead us to a greater path of growth and change if we harness it effectively."
Your story:
- Mother and father...encouraging
- You developed a higher calling, higher purpose...?
- Air Force Academy, the first time that a father and daughter both served as cadet wing commander
- What values, principles about yourself, and others you admire are most valuable to you?
The Flight - Bagdad
What?!? A-10 got shot down the next day??? Launched on CSAR mission?
Retirement August 2021...
Leadership Lessons for us, our audience:
- Simultaneous fear and courage...you admit to fear.
- Leadership lessons for airline pilots now - going through tough negotiations, multiple near misses...trying times
- All of us can use these lessons with spouses, kids, friends, family. We all go through stuff!
- How did/do you balance being a wife, mother, Group CC, Entrepreneur, etc?
- As we get older and comfortable, having achieved things, how do we stretch ourselves???
- How do I use your lessons in leadership and character with my kids?
- What are some of the failures you've learned the most from?
- Humility, courage, respect, balance. The greatest leadership attributes are courage, integrity and balance.
Air Force Afterlife:
What are you transitioning to in the business sector? Victory Strategies
- https://www.victory-strategies.com/#services-section
Keynotes speaking, center for leadership and character development
How do we create a culture of courage at our business?
Links for show notes:
- @kchawg987
- www.kim-kc-cambell.com
- Flying in the face of fear; a fighter pilot’s lessons on leading with courage
- https://www.amazon.com/Flying-Face-Fear-Fighter-Lessons/dp/1394152353/ref=sr_1_1?crid=321E4AO1WBGRB&keywords=kc+campbell&qid=1676310099&sprefix=kc+cambell%2Caps%2C98&sr=8-1
- Aiming Higher: A Journey Through Military Aviation Leadership (Military Mentorship Mastermind
- Aiming Higher: https://www.amazon.com/Aiming-Higher-Leadership-MentorshipMastermind/dp/B0B1CP8G5X
- Victory Strategies:
- https://www.victory-strategies.com/#services-section
Dave Goetsch shares his fascinating story about his investing experience and journey. He started as an investor that was emotionally tied to every up and down the stock market experienced. He was known as the “Chief Worrier.”
Through his own studies and the counsel of his financial advisor, he’s more at peace with the short-term craziness of the stock markets, and continuous news headlines of impending doom we all seem to hear daily. In many ways, Dave’s journey is very similar to all of ours. However, he’s better at telling the story since he’s a Hollywood writer!
Finally, Dave’s passion for helping others learn through his experience is contagious. It was truly an honor to have Dave on our podcast, and we’re grateful for his desire to share his personal story so others can learn and eventually come to be a bit more comfortable with the uncertainty of the stock market.
“...when you have a plan for the future, for kids and retirement...You don't know [everything] exactly...but you have a plan. The effect of that is that you can feel better now. And that's the big, big game changer, which is awesome to have less stress so that you can spend more time with your family...spend more time on the things you care about.”
~Dave Goetsch
Book that helped Dave Goetsch go from the “Chief Worrier” to the “Transformed Investor”: The Investment Answer: Learn to Manage Your Money & Protect Your Financial Future
Airline News
- Delta Airline Pilot Contract Updates:
- https://www.cnbc.com/2022/12/03/delta-pilots-would-get-more-than-30percent-in-pay-raises-under-new-contract-deal.html
- The agreement includes an 18% increase on the day the contract is signed, then a 5% increase one year later and two 4% raises in each of the following years. It also includes a one-time payment of 4% of 2020 and 2021 pay each, plus 14% of 2022 pay.
Being a Father:
- https://vitaliy.substack.com/p/being-a-father?utm_source=emarketing&utm_medium=email&utm_campaign=cid75618&utm_content=emailid143539
People have memories – markets do not.
“One of the best things about markets is that they don’t have memories. They don’t remember what happened last week or last year. They don’t even remember what happened a minute ago. Prices change based on what’s happening right now and what people think will happen in the future.” ~David Bood, Chairman and Founder of Dimensional.
https://www.dimensional.com/us-en/insights/people-have-memories-markets-dont?utm_source=linkedin&utm_medium=organic&utm_campaign=
Obsession with Recessions:
- https://seekingalpha.com/article/4547443-the-recession-obsession
Other resources:
-
Why can’t we time the market before a recession?
- Flight #43 Myth vs Fact in Down Markets. What the evidence says with Apollo Lupescu, VP Dimensional
-
Here what Kevin and Charlie say about a “Dead Cat Bounce”!
- https://youtu.be/oI-DqJfD6Ho
Flight #48: New 401k, IRA Limits New SECURE ACT 2.0 A
Airline News:
New IRA, 401k 401(a)17 and 415 Limits
Secure Act 2.0
Highlights:
Setting Every Community Up for Retirement Enhancement (SECURE) Act...originally passed in December 2019.
- December 23, 2022, passed the Consolidated Appropriations Act of 2023, an omnibus spending bill that includes the much anticipated and long-awaited retirement bill known as SECURE Act 2.0.
- RMD 73,75...plus reduced penalty 73-1951-1959 / 1960+ RMD 75 ▪ What does this do...Roth Conversions???
- Plus 10-year rule from Secure Act 1.0
- Beware of higher RMD at 73/75 - jump tax brackets???
- QCD no effect – still 70 and a half years old.
- No Roth 401k RMD (2024)
- Roth style SEP and SIMPLE IRA
- 529 plans to Roth IRA transfers up to $35,000.
- Subject to annual Roth limits and 529 accounts in existence for 15 years.
- Student loan payments count and qualify the employee for 401k matching. I.e., you’ll get matched in your 401k for student loan payments. Base matching contributions on student loan repayments.
- Catch up contributions:
- 2025 – 60-63 – catch up contribution of 10,000 or 50% more than the standard catch-up contribution that year.
- Catch up contributions are now linked with inflation
- 2024 - $145k – catch-up contributions must be made in Roth
- Roth basis if permitted by the plan sponsor SECURE Act 2.0 provides that all catch-up contributions to qualified retirement plans are subject to Roth tax treatment, effective for taxable years beginning after December 31, 2023, An exception is provided for employees with compensation of $145,000 or less (indexed)
- RMD 73,75...plus reduced penalty 73-1951-1959 / 1960+ RMD 75 ▪ What does this do...Roth Conversions???
https://www.kitces.com/blog/secure-act-2-omnibus-2022-hr-2954-rmd-75-529-roth-rollover-increase-qcd-student-loan-match/?utm_source=social&utm_medium=linkedin&utm_campaign=tagged_author
https://www.youtube.com/watch?v=i-PXuU_2wnA
Q&A: Most common client questions lately:
The whole world is going into a recession!
What is a recession? Schwab “dominoes” diagram...there’s only a few things missing to be in a recession – Labor market weakness, EPS growth falls, NBER (Nat’l Bureau of Economic Research) recession declared.
See Flight #33 for “Inverted Yield Curve – Canary in the Coal Mine.”
- https://podcasts.apple.com/us/podcast/inverted-yield-curve-canary-in-the-coal- mine/id1557278856?i=1000564180334
So, what does this mean...mild recession. Already priced in?
- See DFA “...Official Announcements” graphic
Why should we stay in the market? Why would we keep investing?
- 1st - gotta have a plan...context for why you're doing what you’re doing.
- Flight #43 Appolo from DFA
- https://podcasts.apple.com/us/podcast/flight-43-with-dimensional-fund-advisors- vice/id1557278856?i=1000585072712
What if I’m near retirement?
- Podcast/Flight #45 Sequence of Return Risk
- https://podcasts.apple.com/us/podcast/flight-45-what-is-sequence-of-returns-risk- and/id1557278856?i=1000588498807
What are the positives to the current environment?
- No more quantitative easing.
- “The Fed is propping up the markets/economy”
- Higher future returns expected...fairly valued equities?
- Higher yields on cash – great for short-term savers and retirees.
- 4%-5% - CDs, T-Bills, Annuities
- Housing was getting out-of-control – would soon become unaffordable for most Americans.
- Two jobs for every one person is not a healthy job market.
- The Fed is fighting inflation! That’s the real risk...unlike the Fed of the 70’s.
So, what do we do...as investors
- Stay globally diversified, don’t chase trends or recent trends, performance.
- Bonds are back!
- Quality investments: Profitability, Dividends...
- Improve your balance sheet
- Prepare/Insure for deep risks...
- Flight #42
- https://podcasts.apple.com/us/podcast/flight-42-why-is-the-fed-driving-us-into-a/id1557278856?i=1000583422605
- Flight #42
Lessons Learned from 2022:
- Rob’s Lesson Learned:
- Identify and accept what I cannot control. And realize that the only thing that I can control is how I react to the situation.
- When experiencing difficult times with family health it would be easy to get angry, frustrated and allow negative emotions to be destructive to yourself and those around you.
- Instead, make a disciplined decision (with help from trusted friends, loved ones) to have a positive attitude and make the best of a difficult situation.
- When going through difficult times thing about: “What does this make possible?” In Rob’s situation, he was able to spend focused time with his son and get help from the doctors that may improve his son’s health.
- Identify and accept what I cannot control. And realize that the only thing that I can control is how I react to the situation.
- Charlie’s Lesson Learned:
- Time is the most valuable, precious resource. Become a protector and defender of your time.
- Time goes by so fast, take the time and be intentional about the impact you are having with your time.
- Take time to plan your time and how you will be using it wisely, for the benefit of you and your family.
- https://www.forbes.com/sites/kevinkruse/2016/07/18/successful -people-agree-this-is-their-most-valuable-asset/?sh=cf1f1aa42d78
- Kevin Kruse: CEO of Leadx and author of Great Leaders Have No Rules.
- https://www.forbes.com/sites/kevinkruse/2016/07/18/successful -people-agree-this-is-their-most-valuable-asset/?sh=cf1f1aa42d78
- Time is the most valuable, precious resource. Become a protector and defender of your time.
- Rob’s Lesson Learned:
- Treat others with respect and kindness. Even when it’s not easy.
- It’s easy to treat friends and people you like well. However, there will be many opportunities to treat people with respect and kindness that don’t treat you that way.
- This takes intentionality and planning. You must think about how you will react when someone makes you angry.
- How will you react with your personal values and principles in mind.
- Treat others with respect and kindness. Even when it’s not easy.
- Charlie’s Lesson Learned:
- Choosing the meaningful over the urgent.
- Don’t let tasks drive your day and distract you from the meaningful things.
- https://valorieburton.com/
- “Choosing the meaningful over the urgent so that our life is unhurried, yet purposeful and reflects the values and the impact we want to make, takes reflection. It takes intention. It takes planning...”
- https://valorieburton.com/
- Think about the analogy of filling the glass container throughout the week. Fill the container with the big rocks first. The most important things. Then the smaller rocks, sand will fill in around the larger rocks.
- Don’t let tasks drive your day and distract you from the meaningful things.
- Choosing the meaningful over the urgent.
- Rob’s Lesson Learned:
- Be present, stay on target, remain focused on the task at hand.
- Sometimes we get caught up on thinking of past wrongs and/or mistakes and it can negatively affect our present performance and quality of life.
- Be present!
- See Lesson Learned #1: Control what you can control. Sometimes the only thing you can control is only your reaction to difficult situations.
- Be present, stay on target, remain focused on the task at hand.
- Charlie and Rob, Final Lesson Learned:
- Practice Gratitude!
- It will improve every aspect of your life and those around you.
- Without practicing gratitude, other things in your life will suffer:
- Mental health, physical health, quality of relationships, your positive impact on those around you.
- By practicing gratitude, you become a person other people enjoy being around. Your positive influence grows as your gratitude, even during difficult times, encourages others who may be struggling.
- Practice Gratitude!
Resources:
- https://awealthofcommonsense.com/2013/08/ignore-noise/
- https://podcasts.apple.com/us/podcast/stay-wealthy-retirement- show/id1260181429?i=1000470057040
The Narrative There’s a lot going on...in the past few years; Covid, Stock Market stress, impending recession, inflation, politics...crypto collapse???
Our audience is especially vulnerable to information (news) overload: Traveling; downtime pick up the phone and review news, talk about it during the 3-hour flight, TV on in the hotel room, gym, etc.
Where is the balance?
What is the truth?
Why does this matter – Why does the news and/or events make me angry.
- Being disrespected or treated unfairly?
- Examples? Higher taxes, wealth re-distribution
- Fear...threatened, violated, offended?
- Is my preferred way of life at risk?
- Being interrupted when you are trying to achieve a goal
- Retirement???
- Feeling powerless...
- Loss of control
- Can’t control the short-term gyrations of the market.
- Uncertainty is a feeling of powerlessness...
Being angry is a natural reaction. When experienced in excess, however, you might ask yourself "why am I feeling so mad?" and it can result in health problems, including depression, anxiety, high blood pressure, heart disease, and more. It's okay to ask yourself, "why am I feeling so mad?", but it's important to deal with those emotions.
Example of uncertainty:
All issues are about a million times more complex than we’d like to believe. We search for simplicity to help us cope and explain things. We hate uncertainty.
Loss of control:
https://dariusforoux.com/about/
Does Social Media Leave You Feeling Angry? That Might Be Intentional September 13, 2022 - New York Times reporter Max Fisher took a deep dive into the impact of social media in his book, "The Chaos Machine: The Inside Story of How Social Media Rewired Our Minds and Our World." He shares with us how platform leaders have prioritized profit and growth over safeguards and how the polarizing effect of social media is only speeding up. “...This is because algorithms consistently select content that evokes anger and outrage from its users to maximize engagement. And sometimes, those extreme emotions turn into extreme actions.” Serenityrecovery.org Neurobiology & Anger In the moment anger feels good. It’s so powerful that it overrides our rational and moral frameworks we’ve established because it comes from our primordial, original limbic system: the center of the brain – where our most automatic emotions like fight or flight originate. This response system controls adrenaline, heart rate, alertness, and other instincts that prepare you for battle or a quick escape. Similar to other addictions like gambling, extreme sports, or even drugs like cocaine the brain releases a dopamine reward when you’re angry which clouds your judgment and can lead to terrifying consequences. Anger & the Ego Anger can often times be triggered by underlying feelings of weakness or insecurity. Anger is an easy way to feel powerful and get attention in the moment and overcome feelings of inadequacy. It also gives you a feeling of being in control of things that in reality you don’t have control over. The sad irony is when anger takes over, not only do you not have control of the things making you angry, you’ve also lost control of yourself. The cycle continues because it damages you in the eyes of the people who you want to connect with most which just adds to your ego insecurities. So what do we do to tune out the noise and be happy? Guard your mind! “A man is but the product of his thoughts. What he thinks, he becomes.” Ghandi “I will not let anyone walk through my mind with their dirty feet.” What do we do? 1. Know the science.
- Knowing what drives your emotions
-
Investment academic research
-
Maintain A/C control...Focus on what really matters in your life. Focus on what you can control and realize there is a lot you cannot control.
-
Be a long-term investor...in all aspects of life.
-
Prepare for the inevitable:
-
“Chairfly”
-
Planning
-
Know the source and the motivation of the source of the information you’re taking in...
- Read the financial news to take the emotion out of it.
- How to avoid making decisions based on the noise?
- From the book Decisive: How to make better choices in life and in work. Chip and Dan Heath.
- Normal decision process in four steps:
- You encounter a choice. But narrow framing makes you miss options.
- You analyze your options. But the confirmation bias leads you to gather self-serving information.
- You make a choice. But short-term emotion will often tempt you to make the wrong one.
- Then you live with it. But you’ll often be overconfident about how the future will unfold.
- Normal decision process in four steps:
- From the book Decisive: How to make better choices in life and in work. Chip and Dan Heath.
Q&A: Most common client questions lately:
Election Lessons Learned:
“Vote with your ballot not yourlife savings.”
~Dimensional founder David Booth
https://my.dimensional.com/elect-to-leave-your-portfolio-alone
Will the stock market do worse now that xxx party has won and the election is over?
What do the numbers show? Does the stock market do better or worse when “X” party is in office, power?
Lessons learned – do not anticipate or try to outguess the markets. Maintain discipline. Lots of advisors said: After the mid-terms, the markets will “pop.” After Biden was elected lots of folks said markets will tank.
Some things are unknowable...in the short-term. Luckily, we do not have to know.
“Did anyone predict that Joe Biden would be elected president and that the US stock market would have its strongest election-week results since 1932?”
What the heck is FTX and how did Sam Bankman-Friedlose $16 billion in one day?
https://www.visualcapitalist.com/ftx-leaked-balance-sheet-visualized/
Founder and CEO Sam Bankman-Fried –FTX.
What crypto companies went bankrupt?
FTX's move marks the third crypto company to seek bankruptcy protection this year, following Voyager Digital and Celsius Network. The filing also clouds the fate of BlockFi, a crypto lender that FTX helped bail out with $400 million earlier this year. ~CBS News
Boring is beautiful!
- TRUMPLOSE tokens –on the FTX balance sheet. Created by FTX to enable a betting market on whether Donald Trump would win or lose the 2020 presidential election.
https://awealthofcommonsense.com/2022/11/boring-is-beautiful-in-investing/
“Those old stodgy blue-chip stocks in the Dow that pay dividends and have stable cash flows are crushing the innovation-led stocks that have more potential than profits in 2022.
This is in stark contrast to the FOMO days of 2020 and 2021 when it felt like the only place to put your money was the most intoxicating of investments.
French philosopher Blaise Pascal once wrote, “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.”
The investor play on words here would be: “All portfolio problems stem from investor’s inability to stick with a boring old asset allocation.”
Successful investing should be boring. It should be long-term in nature. It requires patience and discipline and the ability to ignore the madness of the crowds.
But you can’t brag about boring to your friends and co-workers. No one writes glowing profiles about normal people who diligently save and invest their hard-earned money, keep fees to a minimum and stay the course.
That’s not sexy.
Sexy is SPACs, meme stocks, IPOs and life-changing amounts of money in a short period of time.
Why wait decades to build wealth when you witnessed someone else do it overnight?
"Flight #45 –Retirement Income:
The Narrative
Why is investing during retirement very different from investing in the accumulation phase of your life?
Example: A) You are an accumulator, and you invest $12,000 January 1, 2020. You fall asleep and wake up on December 31, 2020. B) You are in retirement taking monthly income. You have $12,000 on January 1 and you are taking monthly income of $1,000 per month.
Accumulators are like chickens and eggs...you’re involved in producing eggs. Retirees are like pigs, and they are producing bacon. You are committed in retirement!
How to avoid running out of money in retirement:
- Know your budget – Spending plan.
- Spend Conservatively.
- Spending flexibility.
- Social Security timing.
- Keep investing! (In equities)
- Reduce volatility.
- Buffer Assets – Avoid selling at losses.
- Taxes:
- Minimize RMDs
- Roth Conversions when income declines –65-70.
- Life expectancy – Longevity.
- E.g., client age 85.
- Sequence of return risk
- https://www.schwab.com/learn/story/timing-matters-understanding-sequence-returns-risk
- Avoid withdrawing assets in a down market.
- Will I have to change my retirement goals or retirement income due to the down market?
- https://www.schwab.com/learn/story/timing-matters-understanding-sequence-returns-risk
Part 2 – How to mitigate the above risks...especially #6.
- Have a plan – Pick one or a combination of...
- Annuities?
- Annuities in general –Sales commissions! Fees...
- SPIA –Best, but no access to principle.
- Contingent Deferred Annuity –Constance from RetireOne
- Risk wrap: Same investments, income guarantee.
- Turn on –Turn off.
- Retirement Bucket approach?
- 4% Rule
- Target Date funds
- Dynamic spending, ongoing planning.
- Monte Carlo...MGP
- What’s wrong with online calculators?
- One said I’ll have $12,500 and the other said $19,500.
- Annuities?
- Why does seeking advice pay off?
- Annual withdrawal rates can change
- What about underspending in retirement?
- Don’t get to age 90 with millions left over...unless that’s your goal.
- Spend more in the early part of retirement...the retirement smile.
- Mitigating the risks
- What if...!
- Higher Inflation
- Part-time job
- Reverse mortgage
- Long Term Care Risks
From Retirement Researcher –Wade Pfau, Professor of Retirement Income at the American College.
Q&A: Most common client questions lately:
Will I have to change my retirement goals or retirement income due to the down market?
- Short-term risk versus long-term risk, taxes, inflation, overspending
- Sequence of return risk...
- https://www.schwab.com/learn/story/timing-matters-understanding-sequence-returns-risk
- Worst year ever for bonds?
- https://www.advisorperspectives.com/articles/2022/10/17/six-good-things-to-tell-clients-about-this-horrible-market
Article: “Six Good Things to Tell Clients About This Horrible Market” by Allan Roth, 10/17/2022.
Four Options Plus Combo Option for Preparing for Potential Airline Disability
- Be ready to live on your maximum disability payout.
- Takes careful budgeting and cash flow management.
- For example: Be ready to freeze your “core” budget at FO pay. Or on one person’s salary if you are a dual-income family.
- Create a (mega) Emergency Fund. Work to self-insure. Becoming your own insurance company!
- We believe the six-month emergency fund is the minimum for airline pilots. One year is even better.
- An emergency fund of cash or cash-like investments gives you great flexibility.
- It can bridge the gap until you are able to get your FAA medical back.
- If appropriate and cost-effective, purchase additional disability insurance.
- Consider how a long-term disability would affect your retirement savings. For example, if you can live on the current disability insurance your airline offers, would you also be able to save for retirement?
- Your retirement plan assumes annual savings into tax-advantaged retirement accounts.
- Consider how a long-term disability would affect your retirement savings. For example, if you can live on the current disability insurance your airline offers, would you also be able to save for retirement?
- Become financially independent!
- This most likely applies to the pilots that are nearer to retirement. If they lost their FAA medical, then these folks could more easily transition into early retirement.
- On the other hand, this is a great goal for all pilots to shoot for as soon as possible.
- This step encompasses working on all the steps listed here as well as saving in your retirement accounts.
- Combination of 2 or more options 1-4.
- Additionally, we suggest exploring other skill sets that may allow for additional income away from aviation in the case of long-term disability.
- What do you love to do outside of flying?
- Have fun with it and dream a little!
- For example, become a financial planner!
- Pilots are much more marketable than they think.
- Additionally, we suggest exploring other skill sets that may allow for additional income away from aviation in the case of long-term disability.
Information about today’s podcast:
Dimensional Fund Advisors (DFA) - https://us.dimensional.com/
“The assets we(DFA)manage represent more than shares in a portfolio. That money represents the savings, sacrifice, and dreams that investors have entrusted to us. We take this responsibility seriously. Founded in 1981, Dimensional has a long history of applying academic research to practical investing. We offer a full range of equity and fixed income strategies designed to target higher expected returns.”
Apollo Lupescu, PhD, Vice President, Dimensional Fund Advisors:
Apollo Lupescu is vice president at Dimensional Fund Advisors, one of the premier investment managers in the world, managing around $650 billion in assets. He is a nationally and internationally recognized speaker who has delivered hundreds of lectures and seminars to financial professionals and individual investors on various investment topics. Apollo is considered “secretary of explaining stuff”, because he has a knack for explaining complicated issues in a clear and understandable way.
Apollo has been with Dimensional in Santa Monica for over 18 years, and prior to that he taught at the University of California. Apollo also served in a variety of roles with the US Department of State, from which he formed his own consulting firm, Apollo Consulting Group.
He received his PhD in economics and finance from UC Santa Barbara. Apollo also holds a BA in economics from Michigan State University, where he competed and coached water polo. Rumor has it that even to this day he is still playing, and more recently he is not only in the pool, but also learning how to surf in the ocean.
Top Investor Myths... Common Questions & Lessons Learned:
What does the evidence tell us about what to do in down markets? What do our innate biases tell us to do and why are they the opposite?
1. Myth -Successful advisors need to “time the market.”
Common Question: “Clearly, the stock market is going down and going to get worse, why not just go to cash...?”
The idea that an investor wants to avoid downturns in the market is an understandable and reasonable response. The challenge in the execution. Most of the time, it turns into a bigger loss and more stress than staying invested. In summary, mistiming the market comes with punishing consequences.
From our experience, when someone sells their equity positions to relieve stress, they simply replace the stress of being in the market with the stress of being out of the market and wondering when they should get back in. There is no magic signal. In other words, they exchange one stress for another.
We miss the best days in the market... therefore “portfolio performance could be decimated.” See JPMorgan “The Case For (Always) Staying Invested”https://www.jpmorgan.com/wealth-management/wealth-partners/insights/the-case-for-always-staying-invested#infographic-text-version-uniqId1663780633203
This chart shows the annualized performance of a $10,000 investment made between January 2002 and January 2022. A fully invested investment returned 9.4% or $60,253. When the investor missed the10 best days, the return is 5.21% or $27,604. When the investor missed the 20 best days, the return is 2.51% or $16,414. Finally, when the investor missed the 30 best days, the return is 0.32% or $10,651. An added fact is that seven of the 10 best days occurred within 15 days of the 10 worst days.
2. Myth - The Fed funds rate changes and impacts on bonds and stock returns.
Common Question: “So, the Fed raises rates because the economy is strong enough to stand on its own and the stock market tanks? That doesn’t make sense?”
The expectations of the Fed’s actions, commitment, and plan to fight inflation are very important. For example, if consumers, employers, and investors believe inflation is here to stay, then in many ways, it becomes a self-fulfilling prophecy. If we have confidence and believe the Fed is going to take strong action to fight inflation, then people’s behaviors (spending patterns) will fall in line with those expectations as well.
What does recent history tell us about stock market (S&P500) performance and rising interest rate environments?
Rising interest rates can and will cause short-term pain in the economy and sometimes the stock market. However, in the most recent rising rate environments the stock market has been up. From January 2000 to December 2021, five out of six years of rising interest rates the market did not drop.
As an investor, “...it is critical to remember that the stock market is about purchasing ownership in public companies. And the value of the ownership depends on the profits that the company expects to make. And we'll come back to this because it is a crucial concept. If you think in terms of the value of a company like Apple, Google, Facebook, you name it, Coca-Cola, etc., it is tied to the profits that they make. The question is, is the federal funds rate a primary variable that you can link directly to the profits of the company, and are they tied directly into what that interest rate does? And what the data seems to suggest is that it is quite likely that the fed fund rate does have some impact on the profits of a company, but there does not seem to be a primary connection there that you could say, if interest rates go up, profits go down.” ~Apollo Lupescu
3. Myth -Politics and the market (the President controls the markets)
Common question or comment: “If X president was in office, we would not be in this mess.”
The economy and the markets become an extension of investors’ emotions related to their personal politics. It is important to have personal values and political points of view; however, most investing decisions need to be data-driven. Being careful to differentiate between personal emotional biases and what the data tells us.
For example: Is there an obvious pattern that would tell you that having a Republican or a Democrat is better or worse for the markets? Is there evidence to suggest which political party fared better? When you look at the historical data, it is not clear that having one president, or another is better or worse for the markets.
“...In fact, President George W.Bush was extremely business-friendly, and cut taxes, specifically on investments. And yet during the eight years that he was in office, the market dropped. Should he be blamed for that? My answer is, absolutely not because 9-11 happened just as he came into office...” ~Apollo Lupescu
Listen to the podcast to hear how the stock market performed when Republicans had a unified government (controlled the White House, the Senate and Congress) versus when the Democrats had a unified government.
Bonus:
What is the difference between Index Funds (Indexing) and the investment approach used by Dimensional Fund Advisors?
What emerged in the 1970s, With the advent of computers and more rigorous data was a different way to think about investing. And the idea back then was that, okay, well, let's look at these companies. There might not be any reason why not to hold them, so let's consider them.
But the idea was that instead of trying to understand the behavior of these companies and form an expectation about these companies by themselves, the idea was to create a different way of looking...And the idea is that as an investor, you want to understand not the stock itself, as much as the category to which it belongs. An idea that became known as asset-class investing.
Q&A: Most common client questions lately: * Headline of the day! (See slide...)
https://www.jpmorgan.com/wealth-management/wealth-partners/insights/the-case-for-always-staying-invested#infographic-text-version-uniqId1663780633203
This chart shows the annualized performance of a $10,000 investment made between January 2002 and January 2022. A fully invested investment returned 9.4% or $60,253. When the investor missed the 10 best days, the return is 5.21% or $27,604. When the investor missed the 20 best days, the return is 2.51% or $16,414. Finally, when the investor missed the 30 best days, the return is 0.32% or $10,651. An added fact is that seven of the 10 best days occurred within 15 days of the 10 worst days.
Topics we have been writing about, helping our clients with... * Non-Airline Company Life Insurance and Portability... * The limits of standard Disability Insurance and how to manage those limits * How to stay disciplined in this battle...bad stock market * What’s the best path for young aspiring pilots? Cargo, Passenger, Fractional, Military?
Meat of the Mission:
- Why is the Fed raising rates such that we could go into a recession
- Why is inflation so dangerous?
- What role does psychology play in our economy, inflation, etc.?
- i. 1970, 1980’s...
- Why would we keep investing if we knew we were headed for a recession?
- Official dates of the Great Recession: December 2007 – June 2009
- S&P 500 Market returns
- January 1 – December 2009 – 26.5%
- 2010 – S&P 500....about 15%
- S&P 500 Market returns
- Official dates of the Great Recession: December 2007 – June 2009
- What is Deep Risk versus Shallow Risk? We are afraid of the wrong things.
Book by ...Deep Risk: How History Informs Portfolio Design (Investing for Adults) 1. 1. William Bernstein - William J. Bernstein is an American financial theorist and neurologist. 1. The Four Pillars of Investing 2. If You Can 3. Deep Risk 2. Deep Risk: 1. Deep Risk are inflation, deflation, confiscation, and devastation... “any useful discussion of portfolio design of necessity incorporates their probabilities, consequences, and costs of mitigation.” 1. For example, investment discipline, taxes, inflation, disability, death, spending, income... 3. Shallow Risk: 1. “The Biggest Lie” Leading Edge video, news media. CNBC. Short-term market performance. 1. You will experience shallow risk every few years... 2. This down market does not help but it is factored in. It’s part of investment, a cost, not a risk. Something to be planned for... 1. Ongoing, below average returns would be a big concern. In other words, what did you plan for? What are your market expectations? 2. For example, March 2020 – down 30%-ish. 35% from the high in February. 3. Do not allow shallow risk to become deep risk... Investor discipline
https://www.jpmorgan.com/wealth-management/wealth-partners/insights/the-case-for-always-staying-invested#infographic-text-version-uniqId1663780633203
This chart shows the 20-year annualized return by asset class (2001–2020). REITs returned 10%. EM equity returned 9.9%. Small cap returned 8.7%. High yield returned 8.2%. The S&P 500 returned 7.5%. A 60/40 portfolio returned 6.4%. A 40/60 portfolio returned 5.9%. DM equity returned 5%. Bonds returned 4.8%. Homes returned 3.7%. The average investor returned 2.9%. Inflation ran at 2.1%. Cash returned 1.4%. Finally, commodities returned -0.5%.
Full Show Notes
15 Lessons Aviation Can Teach You About Life:
1. You are responsible.
2. Attention is life. Inattention will be at least minimally harmful if not deadly.
3. There is always a curriculum. Preparation is advised.
4. A well-lived life, like flying, requires constant adjustments.
5. Think before you speak or key the mic.
.... Listen for more.
Q&A: Most common client questions lately:
o Headlines – Beware!
▪ See housing market headline from Redfin
o Headlines are meant to make you fearful. They have about three seconds to grab your attention in the world of fast-paced news. You will often see over-the-top headlines that are not even related to the article itself.
o For example, “Redfin predicts sharpest turn in housing market since 2008 crash”
▪ If you actually read the article here is an example of the content:
• “...for the first time since 2021, the average home is selling for
less than its list price...”
• “While home prices are still higher than a year ago, with the average home now selling for just under $370,000, inflation and high interest rates are slowing down the market.” Please sign up for our monthly Leading Edge-Read-Before-Fly Newsletter and Rate and Share our Podcast.
1. Please sign up for our monthly pilot newsletter: Leading Edge “Read Before Fly”
• Go to Leading Edge Planning.com and sign up for our monthly pilot newsletter.
Pop up or click on contact us...
• Scroll to the bottom of the podcast page, click on “The Pilot Money Guys” then “Subscribe” in the upper right corner.
2. Please rate and review our podcast...
• Step one – Hit “library” then “shows” then hit the thumbnail pic then, scroll down to the bottom of our podcast feed on iTunes
• Step two – Hit the 5th star on the rating.
• Step three: look slightly below that area and hit “Write a review” ...
• Step four: type something (awesome and funny) in and hit “send.” • I’ve learned that it knows when I've personally rated and reviewed the podcast more than a dozen times... What’s the best path for young aspiring pilots? Cargo, Passenger, Fractional, Military?
Common questions and points-to-ponder when deciding which path is right for you.
• Do you enjoy long-haul flights that may last six to twelve hours?
• How long are you comfortable being away from home?
o Oftentimes, cargo pilots are gone for longer periods of time but they may also
get large chunks of time off. For example, ten days on and ten days off.
o Fractional carriers like NetJets typically work seven on and seven off.
o Southwest Airlines' typical schedule would be three days on and four days off.
• What are the differences in pay?
o You’ll probably make more at the cargo carries since most of the flying is wide-
body, international.
o You’ll probably make less than average at fractionals but you may enjoy the type of flying more. For example, it is much more dynamic and less rote from day-to- day. Many people that have a passion for general aviation love the type of flying at a fractional carrier.
• What type of commute should you expect?
o For example, if you fly for FedEx or UPS, your bases will be very limited. So you’ll probably be a commuter.
o NetJets will fly you on a commercial carrier from your home to wherever your trip begins.
o Either way, the panel of pilots agrees, living where you are based can greatly increase your quality of life and increase your income. Tune in for more details and differences in the types of commercial aviation.
15 Lessons Aviation Can Teach You About Life:
1. You are responsible.
2. Attention is life. Inattention will be at least minimally harmful if not deadly.
3. There is always a curriculum. Preparation is advised.
4. A well-lived life, like flying, requires constant adjustments.
5. Think before you speak or key the mic.
.... Listen for more.
Q&A: Most common client questions lately:
o Headlines – Beware!
▪ See housing market headline from Redfin
o Headlines are meant to make you fearful. They have about three seconds to grab your attention in the world of fast-paced news. You will often see over-the-top headlines that are not even related to the article itself.
o For example, “Redfin predicts sharpest turn in housing market since 2008 crash”
▪ If you actually read the article here is an example of the content:
• “...for the first time since 2021, the average home is selling for
less than its list price...”
• “While home prices are still higher than a year ago, with the average home now selling for just under $370,000, inflation and high interest rates are slowing down the market.” Please sign up for our monthly Leading Edge-Read-Before-Fly Newsletter and Rate and Share our Podcast.
1. Please sign up for our monthly pilot newsletter: Leading Edge “Read Before Fly”
• Go to Leading Edge Planning.com and sign up for our monthly pilot newsletter.
Pop up or click on contact us...
• Scroll to the bottom of the podcast page, click on “The Pilot Money Guys” then “Subscribe” in the upper right corner.
2. Please rate and review our podcast...
• Step one – Hit “library” then “shows” then hit the thumbnail pic then, scroll down to the bottom of our podcast feed on iTunes
• Step two – Hit the 5th star on the rating.
• Step three: look slightly below that area and hit “Write a review” ...
• Step four: type something (awesome and funny) in and hit “send.” • I’ve learned that it knows when I've personally rated and reviewed the podcast more than a dozen times... What’s the best path for young aspiring pilots? Cargo, Passenger, Fractional, Military?
Common questions and points-to-ponder when deciding which path is right for you.
• Do you enjoy long-haul flights that may last six to twelve hours?
• How long are you comfortable being away from home?
o Oftentimes, cargo pilots are gone for longer periods of time but they may also
get large chunks of time off. For example, ten days on and ten days off.
o Fractional carriers like NetJets typically work seven on and seven off.
o Southwest Airlines' typical schedule would be three days on and four days off.
• What are the differences in pay?
o You’ll probably make more at the cargo carries since most of the flying is wide-
body, international.
o You’ll probably make less than average at fractionals but you may enjoy the type of flying more. For example, it is much more dynamic and less rote from day-to- day. Many people that have a passion for general aviation love the type of flying at a fractional carrier.
• What type of commute should you expect?
o For example, if you fly for FedEx or UPS, your bases will be very limited. So you’ll probably be a commuter.
o NetJets will fly you on a commercial carrier from your home to wherever your trip begins.
o Either way, the panel of pilots agrees, living where you are based can greatly increase your quality of life and increase your income. Tune in for more details and differences in the types of commercial aviation.
Financial Q&A: Most common client questions lately:
- How to get some sort of return/interest for short-term goals? 1-5 years?
a. I-Bonds: Currently paying an annualized 9.62% for the next six months.
https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#:~:text=The%20composite%20rate%20for%20I,October%202022%20is%209.62%20percent.
b. Treasury Bills: Payingabout 2.8%-3.4% depending on the term.
https://ycharts.com/indicators/3_month_t_bill
https://ycharts.com/indicators/1_year_treasury_rate
c. Treasury Bonds:
https://ycharts.com/indicators/2_year_treasury_rate#:~:text=Basic%20Info&text=2%20Year%20Treasury%20Rate%20is%20at%203.42%25%2C%20compared%20to%203.37,long%20term%20average%20of%203.14%25.
- Should I stop saving and investing since the market is tanking?
a. No! This is the best time to save and invest. Buy low! Stay invested, even when it’s difficult because the stock market tends to recover quietly. There is no magic signal or announcement that the stock markets are doing better.
Special guest Darren Ellisor:
Darren Ellisor is a Captain at SouthwestAirlines with over 11,000 flying hours. He started flying for Southwest in 2008 after serving more than 10 years in the active-duty Air Force. Darren graduated from the US Air Force Academy in 1997. In the Air Force he flew multiple versions of the Boeing707, accumulating the majority of his time in the E-3 AWACS as an Instructor and Evaluator Pilot. In the E-3, he flew numerous Combat Support flights during Operation NOBLE EAGLE and during middle east deployments for Operation NORTHERN WATCH, Operation SOUTHERN WATCH, and counter-drug operations. During tours at Tinker AFB, OK and Geilenkirchen NATO Airbase, Germany, Darren worked as Squadron Chief of Standardization and Evaluation, as well as Squadron Chief of Flight Safety. He was named Pilot of the Year at Geilenkirchen in 2004.
On April 17, 2018, Darren was flying with Captain Tammie Jo Shults from LaGuardia to Dallas-Love on Southwest Airlines Flight 1380. Climbing through 32,500 feet, the number one engine exploded, causing shrapnel to damage much of the left wing and a passenger window to blow out. The aircraft banked more than 41 degrees to the left and experienced extreme aircraft vibration, hydraulic malfunctions, and an explosive decompression of the cabin. Darren, who was flying the aircraft at the time, recovered from the ensuing unusual attitude and started a descent. He worked alongside Captain Shults and their flight attendants Rachel Fernheimer, Kathryn Sandoval, and Seanique Mallory to safely make an emergency landing of the crippled jet at Philadelphia International airport—saving 148 lives. One passenger was unfortunately killed in the accident. In his free time, Darren has volunteered as a Cub Scout Pack Leader and as a Little League baseball coach. Darren and his wife, Jennifer, live in League City with their four children.
Financial Q&A: Most common client questions lately:
- How to get some sort of return/interest for short-term goals? 1-5 years?
a. I-Bonds: Currently paying an annualized 9.62% for the next six months.
https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#:~:text=The%20composite%20rate%20for%20I,October%202022%20is%209.62%20percent.
b. Treasury Bills: Payingabout 2.8%-3.4% depending on the term.
https://ycharts.com/indicators/3_month_t_bill
https://ycharts.com/indicators/1_year_treasury_rate
c. Treasury Bonds:
https://ycharts.com/indicators/2_year_treasury_rate#:~:text=Basic%20Info&text=2%20Year%20Treasury%20Rate%20is%20at%203.42%25%2C%20compared%20to%203.37,long%20term%20average%20of%203.14%25.
- Should I stop saving and investing since the market is tanking?
a. No! This is the best time to save and invest. Buy low! Stay invested, even when it’s difficult because the stock market tends to recover quietly. There is no magic signal or announcement that the stock markets are doing better.
Special guest Darren Ellisor:
Darren Ellisor is a Captain at SouthwestAirlines with over 11,000 flying hours. He started flying for Southwest in 2008 after serving more than 10 years in the active-duty Air Force. Darren graduated from the US Air Force Academy in 1997. In the Air Force he flew multiple versions of the Boeing707, accumulating the majority of his time in the E-3 AWACS as an Instructor and Evaluator Pilot. In the E-3, he flew numerous Combat Support flights during Operation NOBLE EAGLE and during middle east deployments for Operation NORTHERN WATCH, Operation SOUTHERN WATCH, and counter-drug operations. During tours at Tinker AFB, OK and Geilenkirchen NATO Airbase, Germany, Darren worked as Squadron Chief of Standardization and Evaluation, as well as Squadron Chief of Flight Safety. He was named Pilot of the Year at Geilenkirchen in 2004.
On April 17, 2018, Darren was flying with Captain Tammie Jo Shults from LaGuardia to Dallas-Love on Southwest Airlines Flight 1380. Climbing through 32,500 feet, the number one engine exploded, causing shrapnel to damage much of the left wing and a passenger window to blow out. The aircraft banked more than 41 degrees to the left and experienced extreme aircraft vibration, hydraulic malfunctions, and an explosive decompression of the cabin. Darren, who was flying the aircraft at the time, recovered from the ensuing unusual attitude and started a descent. He worked alongside Captain Shults and their flight attendants Rachel Fernheimer, Kathryn Sandoval, and Seanique Mallory to safely make an emergency landing of the crippled jet at Philadelphia International airport—saving 148 lives. One passenger was unfortunately killed in the accident. In his free time, Darren has volunteered as a Cub Scout Pack Leader and as a Little League baseball coach. Darren and his wife, Jennifer, live in League City with their four children.
The Basics of Roth Conversions
- In General, young, lower income (e.g., new First Officer) expect a higher tax bracket in retirement...Roth can be a no-brainer.
a. But there are other very important considerations that may go against this rule of thumb.
-
Important to know – Everyone, regardless of income, can contribute to an after-tax or nondeductible IRA.
-
What are my options if I only have pre-tax IRAs?
a. Convert the pre-tax IRA to a Roth IRA, and you will be taxed at your marginal income tax rate. Or...
b. Roll the pre-tax IRA into your 401k, then execute back door Roth the following calendar year.
- What are my options if I have after-tax IRA contributions? Also known as “basis” in your IRA.
a. Convert to Roth and pay fewer taxes than you would if all the IRA were pre-tax.
b. But you must know your basis. Sometimes, that can be a challenge to figure out.
- Roth Conversions are more advantageous when markets are down.
a. You will pay less taxes on the conversion.
Vanguard’s Article - “A BETR approach to Roth conversions”
Click here for the full article. (see below for hyperlink address)
- Three situations in which the BETR (break-even tax rate) is lower than the current marginal tax rate: In other words, making a Roth conversion when your future tax rate will be lower than your current tax rate.
a. When a conversion tax is paid from a different account.
i. In this case, the longer the investment horizon, the lower the BETR.
ii. How you pay the tax on the Roth conversion really matters. Paying the taxes from your cash flow or a tax-inefficient investment account is ideal.
b. When the traditional IRA includes non-taxable basis.
c. When the conversion of the traditional IRA opens the “back door” to future Roth contributions.
- Future tax rates are only one consideration for Roth conversions. What are other valuable considerations?
a. Flexibility in retirement; example, large purchases-house purchase, build.
b. Estate planning – pass on Roth to your children – 10-year required minimum distribution RMD (Required Minimum Distributions) requirements.
c. Tax diversification in retirement. “Most investors will benefit from tax diversification by holding taxable, tax-deferred, and Roth accounts” ... (also HSA (Health Savings Account))
**Bonus!**
- What is the Mega-Back Door Roth?
a. Some employer 401ks allow for after-tax 401k contributions. If so, you can contribute above the normal 401k contribution limits and then convert those contributions to Roth 401k.
- What is the next best option if I cannot save in Roth 401k or do Roth conversions?
a. Health Savings Account (HSA) - The only account that is completely tax-free.
b. Taxable Brokerage Account. I.e. a non-IRA investment account.
WARNING: Tracking Roth IRA conversions on your tax return is not easy. Many tax professionals struggle in this area. If you do not document after-tax IRA contributions and Roth conversions correctly on Form 8606 in your tax return, you will highly likely get a letter from the IRS saying you owe some taxes. Even though this situation can be rectified with proper documentation, it is never fun to get a letter from the IRS!
https://institutional.vanguard.com/insights-and-research/report/a-betr-approach-to-roth-conversions.html#:~:text=The%20traditional%20wisdom%20has%20been,investor%20indiff erent%20to%20a%20conversion
The Basics of Roth Conversions
- In General, young, lower income (e.g., new First Officer) expect a higher tax bracket in retirement...Roth can be a no-brainer.
a. But there are other very important considerations that may go against this rule of thumb.
-
Important to know – Everyone, regardless of income, can contribute to an after-tax or nondeductible IRA.
-
What are my options if I only have pre-tax IRAs?
a. Convert the pre-tax IRA to a Roth IRA, and you will be taxed at your marginal income tax rate. Or...
b. Roll the pre-tax IRA into your 401k, then execute back door Roth the following calendar year.
- What are my options if I have after-tax IRA contributions? Also known as “basis” in your IRA.
a. Convert to Roth and pay fewer taxes than you would if all the IRA were pre-tax.
b. But you must know your basis. Sometimes, that can be a challenge to figure out.
- Roth Conversions are more advantageous when markets are down.
a. You will pay less taxes on the conversion.
Vanguard’s Article - “A BETR approach to Roth conversions”
Click here for the full article. (see below for hyperlink address)
- Three situations in which the BETR (break-even tax rate) is lower than the current marginal tax rate: In other words, making a Roth conversion when your future tax rate will be lower than your current tax rate.
a. When a conversion tax is paid from a different account.
i. In this case, the longer the investment horizon, the lower the BETR.
ii. How you pay the tax on the Roth conversion really matters. Paying the taxes from your cash flow or a tax-inefficient investment account is ideal.
b. When the traditional IRA includes non-taxable basis.
c. When the conversion of the traditional IRA opens the “back door” to future Roth contributions.
- Future tax rates are only one consideration for Roth conversions. What are other valuable considerations?
a. Flexibility in retirement; example, large purchases-house purchase, build.
b. Estate planning – pass on Roth to your children – 10-year required minimum distribution RMD (Required Minimum Distributions) requirements.
c. Tax diversification in retirement. “Most investors will benefit from tax diversification by holding taxable, tax-deferred, and Roth accounts” ... (also HSA (Health Savings Account))
**Bonus!**
- What is the Mega-Back Door Roth?
a. Some employer 401ks allow for after-tax 401k contributions. If so, you can contribute above the normal 401k contribution limits and then convert those contributions to Roth 401k.
- What is the next best option if I cannot save in Roth 401k or do Roth conversions?
a. Health Savings Account (HSA) - The only account that is completely tax-free.
b. Taxable Brokerage Account. I.e. a non-IRA investment account.
WARNING: Tracking Roth IRA conversions on your tax return is not easy. Many tax professionals struggle in this area. If you do not document after-tax IRA contributions and Roth conversions correctly on Form 8606 in your tax return, you will highly likely get a letter from the IRS saying you owe some taxes. Even though this situation can be rectified with proper documentation, it is never fun to get a letter from the IRS!
https://institutional.vanguard.com/insights-and-research/report/a-betr-approach-to-roth-conversions.html#:~:text=The%20traditional%20wisdom%20has%20been,investor%20indiff erent%20to%20a%20conversion
In this podcast, we discuss steps to maintain a high-performance, high-energy lifestyle as we get older. More specifically, creating a life where you feel great, more fulfilled, and more joyful as well as creating a legacy with not just your wealth but your health and outlook on life for generations to come. Our audience is high-performing professionals and pilots, BUT we all go through times where we are not performing at our peak; mentally, spiritually, physically. Especially as we age... Now is a unique and stressful time for airline pilots, corporate, cargo, and commercial pilots. Most major airlines are under contract negotiations –stressful! Flights have been full, chronically late with angry passengers. Flying has not been a fun place to be in the last 2 years –post-Covid. Ron Broyles is our guest today because he is walking the walk. He is 69 and full of life, energy, joy, and fulfillment. How do we as pilots maintain the mental and emotional toughness to maintain our quality of lives, enjoy our families and feel a sense of joy and peace during these difficult airline times? Why bother with health, nutrition, positive mental attitude? 1. We are in a race...we are meant for growth. It is as if we are in a highly competitive game or fighting for our peace of mind, focus, finances, health, and joy and we don’t even know it. 1. Every entity in our lives is fighting against us having those things, and we are not fighting back. We know this as being intentional or proactive. 1. Marketing agencies, social media, news media are fighting for your time, money, attention –your mind and they are playing with PhD level minds and huge supplies of money. 2. We are not equipping ourselves to win! 3. We need to be intentional about training to win the fight. 2. We need to take proactive, aggressive steps to live a life of purpose on purpose. 3. Why not? Choose your “hard”...Life is hard when you eat right and exercise and choose to be joyful. Life is much harder when you simply drift along allowing life to happen to you. 4. You will leave a legacy in every aspect of your life whether you know it or not. 5. Your health is your wealth!
Seven practical steps for maintaining physical, spiritual, and mental health:
- Realize you are one or two choices away each day for either building a great life or living a life of mediocrity or worse chronic unhappiness and bad health.
- Healthy relationships and accountability partnerships.
- Ask someone to help you stay on track. Similar to AA and Weight watchers. More importantly, someone you can share your feelings with –seriously!
- Men are especially bad at this and it’s bad for your health.
- Get a workout instructor.
- See a counselor.
- Ask someone to help you stay on track. Similar to AA and Weight watchers. More importantly, someone you can share your feelings with –seriously!
- Don’t minimize your emotional health – Do not try to John Wayne through it!
- Be intentional about the feelings you want – Happy, joyful, peace, love, anger...
- Studies have even shown that unhealthy anger in its repressed state has been linked to cancer.
- Sigmund Freud – “unexpressed emotions will never die. They are buried alive and will come forth later in uglier ways.”
- This is one of the most underestimated keys to our quality of life.
- Nutrition - Read the labels on your food and understand what you are eating.
- You can’t outwork your bad eating habits as you get older!
- An attitude of gratitude leads to a healthy life!
- Write down three things a day
- Give! Give away some of your money, some of your time or both. Your perspective will change.
- The importance of physical activity and exercise!
Links to some of Ron’s Adventures:
- https://coronadotimes.com/news/2013/07/17/1986-flashback-thrill-junkie-ron-broyles-jumps-from-coronado-bridge-from-limo-roof-video/
- https://www.youtube.com/watch?v=iaXM7WmIuQg
- https://www.latimes.com/archives/la-xpm-2003-oct-15-me-bike15-story.html
- https://www.nytimes.com/1983/03/15/us/stuntman-scales-tower.html
- https://www.knoxnews.com/news/local/mad-jack-fielden-turned-furniture-sales-into-stunt-work-ep-360004879-356614601.html https://newspaperarchive.com/altoona-mirror-mar-15-1983-p-24/
Books or Podcasts that we mentioned or recommend on this topic:
- Atomic Habits by James Clear
- The Power of One More, The Ultimate Guide to Happiness and Success
- Ed Mylett
- The Infinite Game by Simon Sinek
- Salt Sugar Fat: How the Food Giants Hooked Us
- Michael Moss
- Sickening: How Big Pharma Broke American Health Care and How We Can Repair It.
- John Abramson, MD, MSc
- Can’t Hurt Me
- David Goggins
- Favorite podcasts
- Ed Mylett –The Ed Mylett Show
- Jon Gordon –Positive University Podcast
Leading Edge’s own, co-founder and CFO, Kevin “The Professor” Gormley, CPA, PFS, CFP® is our special guest today.
We think of a 5-year runway to take off for retirement. It can take that long to mentally prepare for the end of your career. It also may be enough time until retirement to make significant course corrections if necessary. At a minimum, this is the time to make sure you run that last Before Takeoff (retirement) checklist, and you are ready for a great retirement!
A quick peek into the discussion with the Pilot Money Guys and “The Professor.”
Understand the difference between risk tolerance and risk capacity. You may not have the capacity for investment risk at age 60 due to your income requirements in retirement.
You should have an idea, the more clarity the better, on how much you want or need to spend in retirement. You need to know if your portfolio and other sources of income can support your desired level of lifestyle spending in retirement.
What is the best way to ensure you do not run out of money in retirement? One way is to use a Monte Carlo analysis. But you must understand what the results actually mean.
As you head into retirement, it may be beneficial to have the required spending needs in retirement covered by guaranteed sources. This includes military pensions, social security, and possibly annuities.
The good news is the annuity marketplace now offers commission-free annuities!
In this episode, the Pilot Money Guys are talking about Value investing. We describe what value investing is, and talk about lessons learned as investors in value companies.
Value Investing and Lessons Learned
- Even though past returns are not indicative of future performance, Value investing has shown to do well during periods of higher inflation.
- The recent poor performance of Value investing is almost unprecedented. Therefore, making it difficult to stick with a disciplined, diversified portfolio.
- Do not give in to FOMO when selecting your investment strategy. The recent run-up in Growth Stocks was partly fueled by FOMO. Most of the time when investing based on your emotions instead of a disciplined strategy, investors end up buying high and selling low.
- There is no evidence that investors can use investment timing techniques to switch from growth to value to take advantage of higher returns. You have to stay diversified even when it feels painful to own underperforming asset classes.
- It is very dangerous as an investor to assume that you know things that are unknowable. For example, we do not know for certain which asset classes will outperform in the future. Investors must remain humble, be prepared to be wrong and understand that there will always be information in the news, social media, YouTube, etc. that may seem to confirm our false beliefs.
- When markets are volatile you may have opportunities to rebalance into the pain. For example, when international or value asset class is performing poorly, you can sell your winning asset classes and purchase assets classes that have not performed as well. This is counter-intuitive, and takes discipline but results in buying low and selling high.
In this episode of the Pilot Money Guys we sit down with Peachez, aka Micah Porter. Micah is a former Top Gun Navy fighter pilot turned Air Force fighter pilot and current UPS pilot who sheds light on what its really like in Top Gun and how he rates Tom Cruise's performance in the new movie. We hope you enjoy a break from the financial topics - this is a fun one!
We'll be back next time talking Value Investing on the next episode.
Thanks for listening!
The Pilot Money Guys
We’re calling this episode of the pilot money guys “Forever in Blue Jeans” because as the famous song goes:
“Money talks
But it don't sing and dance and it don't walk
And long as I can have you here with me
I'd much rather be forever in blue jeans”
In this episode we discuss the Florida man who lands a plane with no experience, we have a Q&A segment, and we have a heart felt discussion about creating lasting and fulfilling success with finances.
Thank you for listening!
In this episode of the pilot money guys, we are talking about the yield curve inversion that has been the topic of many new articles recently. If you’re unfamiliar, an inverted yield curve is supposed to be the magic predictor of a looming recession. Recently the yield curve inverted, so is a recession on the horizon?
Charlie and Rob dive into the yield curve topic and cover in this discussion:
- What is a yield curve?
- What if it points to a recession every time?
- If it was 100% reliable, would that change how we invest?
Are there any actions steps that we can take now that the curve has inverted?
With recession talk ramping up, inflation continuing to rise, and investments dropping rapidly, now is a good time to review your saving, investing, and retirement plans. If you are nervous about the current situation, please give us a call. We’d love to talk about your situation and how a plan will help give you peace of mind.
Thank you for listening to our podcast,
The Pilot Money Guys
We’re all going to die... Someday.
Yes, this is not a fun topic to cover, but unfortunately we’ve dealt with a few deaths over the last 12 months and we want to talk about the lessons we’ve learned. We get philosophical in this one, but we think it’s extremely important!
Top 5 things to do to make sure you take care of loved ones when you’ve gone:
- Beneficiaries
- Life Insurance
- How do you access each account? Where are physical documents located?
- Accounting – Financial Assets and Liabilities
- Develop a Plan for Minor Children.
- Bonus: Write a letter...
The majority of 401(k) plans are invested in Target Date funds. These funds give diverse exposure in stocks and bonds, and as we get closer to the target retirement date, the fund automatically adjusts as to be more conservative. This has helped many people to avoid the stress of picking funds in their retirement plan, as well as helping to protect the funds as retirement gets closer. Many times, these funds has low expenses, and they often get close to market returns.
So, are these funds right for you? In this episode, we are diving into target date funds and giving reasons why they may or may not be right for you.
Thank you for listening!
The Pilot Money Guys
In this episode of the Pilot Money Guys, we discuss the Frontier - Spirit Airlines merger, where investment returns come from, and why Cowbell should permanently replace Rubber Mallet. (Ok maybe not this...).
In this podcast, we are joined by Carson McLean, CFP®. Carson is a regional director with Dimensional Fund Advisors, and a true expert in the industry. We're so excited to share our conversation and want to give a big thank you to Carson for joining us.
We cover everything from callsigns to the history of index funds, so sit down, buckle up, and enjoy the flight!
If you have any questions, concerns, or feedback, please give us a call at 865-240-2292 or send us and email to info@leadingedgeplanning.com.
If you feel uncertain about your financial future, we'd love to connect. Schedule a time to talk at https://www.leadingedgeplanning.com/bookmeetings/
Thank you so much for listening!
The Pilot Money Guys
In this episode, we are joined by The Professor aka Kevin Gormley CPA, CERTIFIED FINANCIAL PLANNER®. Where we discuss:
The airline news segment for this podcast is on China’s Eastern Airline flight 5735, where we break down what we know so far.
When rising inflation is coupled with slow economic growth and increased joblessness, that is known as Stagflation. Just recently the billionaire investor Ray Dalio said that we he believes we will have a period of Stagflation. So, is stagflation looming on the horizon? We share our thoughts and look at economic data to try and wrap our heads around this problem that is dominating the news as of late.
Our financial topic today is on buying the recent best performing stock, index fund, or ETF. How does this strategy typically perform, and why do we avoid picking stocks through the rear-view mirror? When we see stocks or funds continue to grow in value, it can feel obvious that it will continue to go up. If you don’t invest in the fund or stock, it feels like you are sitting on the sidelines and missing out on returns. Today, we dive into the performance history of the most famous ETF from the last two years, the ARK Innovation ETF (ARKK). The fund rose to fame during the pandemic for its large investment in Tesla and the fund manager Cathie Wood, who was picking high growth stocks and making huge returns. We give insight into the investment flows into the ETF and how the typical investor performed.
Thank you for listening! If you have any questions, thoughts, or concerns please give us a call at 865-240-2292 or send an email to info@leadingedgeplanning.com.
We’re back in action with a new episode (recorded 3/11) of the Pilot Money Guys. In this episode Rubber Mallet is replaced by Cow Bell, the topic is the news of the markets: Russian’s Invasion of Ukraine, and Charlie tells us about getting chased by a lion, a water buffalo, and a hippo.
On Ukraine and Russia:
- What can history tell us about investing through conflicts?
- What is the economic scale of the conflict?
- What do we expect from the markets going forward?
- What is the real risk in the markets?
- How to avoid scams when donating to Ukraine.
We’d love you feedback and any topics you would like us to cover. Please email your comments to info@leadingedgeplanning.com or give us a call at 865-240-2292.
Thank you for listening!
A special episode of The Pilot Money Guys featuring an interview with Amelie Riendl:
Amelie is a Financial Coach at Mil Money Coach and has spent years studying the best methods for budgeting. She graduated from Michigan Technological University, where she gives back to every year. She has a Master of Engineering in Chemical Engineering from Princeton University.
She's worked for Johnson and Johnson as a Senior Scientist and Quality Engineer where she won multiple awards. She is a Project Management Professional® and worked as a Project Manager for FMC corporation and at Integrated Project Management, where she consulted for companies such as Dynavax technologies, PDL Biopharma, and Walmart.
She was awarded a FINRA foundation Military Spouse Fellowship Scholar, through which she is an Accredited Financial Counselor® candidate. She's now a Financial Coach at Mil Money Coach in Colorado Springs, Colorado where she helps empower military families with information to help them eliminate debt, increase savings, and create a plan to reach their military retirement goals.
If you or someone you know would like help with creating a savings, debt, and/or financial plan you can contact Amelie at https://ccfinancialcoach.com/schedule-discovery-call/.
We want to say thank you to Amelie for being on the podcast. It was a great conversation, and we will have you on the podcast again soon!
We often have clients contact us with unique investment ideas. We will evaluate them and give out honest thoughts and concerns. One of the more popular ‘investments’ that we have seen lately is insurance products that are pitched as investments. So, is it possible to use insurance as an investment? That would be the best of both worlds, right?
Today, the Pilot Money Guys are joined by Kevin Gormley, aka the Professor, to discuss the idea that you can use insurance as an investment. We talk about how these products are pitched, sold, and the risks that come along with these ‘investments’.
As Fiduciary financial planners, we do not sell insurance for commissions. However, we are able to advise and even connect clients with non-commission insurance products if they would like to get an insurance plan started.
If you have questions on insurance, we would love to help. Please reach out to us with any questions that you have about insurance and we will give you our honest thoughts and concerns.
As always, thank you for listening!
The Pilot Money Guys
Why are the markets down year to date and what can we do about it?
In this episode, the Pilot Money Guys reflect on the volatility that has been going on in the markets this year. We discuss the craziness with the ongoing situation in Ukraine, the Fed’s new changes, and inflation and how those are affecting the market.
We are talking about 7 action items that you can do to in a market downturn.
- Tax loss harvesting
- Roth conversions
- Rebalance AND rebalance into the pain.
- Accelerate savings – 401k, IRA, Brokerage
- DCA works great too...
- Rely on your plan.
- What are your plan’s assumptions – often investment return of 6-7%. A bad year is expected.
- Diversification works – foreign markets current outperforming US, Value currently outperforming Growth, Bonds, etc.
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What are two reasons we recommend bonds?
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Shallower losses
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Quicker portfolio recovery times
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Keep the faith...The economy will survive.
- Even if Stock Market Crashes, Dollar Crashes.
As always, we are happy to discuss these topics with you. Please give us a shout if you have any questions or concerns.
Thank you for listening,
The Pilot Money Guys
Over the years, Charlie has tracked and compiled financial news headlines that made bold predictions. Looking back on them is comical - only in hindsight - the predictions were ridiculous. However, at the time of the articles were published, these headlines were straight-up scary. In this podcast we are talking: * How do people get their news - specifically financial news? CNBC, FoxBusiness, Twitter? + What are the biases? What about the Confirmation Bias? * How can this biased information be a detriment to your financial plan - hint: fear, emotions, etc. * How do news algorithms work? They feed you what you want to hear. * What are the results of the prognosticators - 50-50...basically a coin flip. What does the research show? * What do the prognosticators have to lose by making bombastic predictions? Nothing. Are they help accountable? + What do you have to lose by listening to and taking action on their predictions? Everything! * There will be a correction this year! We average -13.8% downturn every year!
Thank you for listening! If you have any topics or information you'd like us to talk about please send your idea to info@leadingedgeplanning.com.
Y'all take care now!
The Pilot Money Guys
Happy New Year! It’s time to review our mission!
Our mission is,
“To help our clients build and protect wealth to achieve their dreams and goals.”
Building wealth may actually be the easier part of that equation. Of course, it may not be easy but saving for the future is often started by default. 401(k)s are automatically set up with companies from the get-go and investing is automated. Social security is automatically deducted from your pay checks and will be paid to you in retirement. Most of our clients were savers from the start, they just may not have known exactly where the money should go.
However, building wealth is only part of the equation. Creating goals, or even dreaming of the future can be a challenge. Looking ahead can be scary. It can bring up regrets, fears, and insecurities. However, facing those challenges and developing a vision of the future can free you from many mistakes that the average investor makes. If you can allocate dollars to a vision, you are much more likely to succeed in your goals.
Today we are focusing on the last, often hardest, part of the mission: achieving dreams and goals. In this New Year’s podcast, we discuss our successes and failures with setting goals, and why goal setting is so important for living happily today and in the future.
We would love to help you “build and protect wealth to achieve your dreams and goals”. If you would like to discuss more, please reach out to us at info@leadingedgeplanning.com or on our website leadingedgeplanning.com
Happy New Year!
The Pilot Money Guys
We're back with another checklist! But first, we honor the women listeners of the Pilot Money Guys podcast with a call sign reveal for a special listener Dr. Jane, aka call sign Arc! Since you loved the Quick Reaction Checklist so much, we thought we'd keep with the trend and bring you a podcast on the End-of-year Financial Checklist. Every year there are things you should consider doing before the end of the year, here's what we think you should review before the end of 2021! 1. Max contributions to your tax deferred accounts. 2. For 2021, consider buying I-Bonds. 3. Tax loss harvesting - more on this in the podcast! 4. Have you taken your Required Minimum Distribution? 5. Simplify your accounts - rollover your old 401(k). 6. Check your beneficiaries. If you are enjoying the podcast, please share it on your next trip! We'd love to hear any comments, questions, or concerns. info@leadingedgeplanning.com - https://www.leadingedgeplanning.com/ https://www.pilotmoneyguyspodcast.com/savings-priority-checklist/ Thank you for listening!
- Emergency Fund - 1 months savings in the bank, cd, money market etc. (FDIC insured)
- Contribute to matching 401k
- Set aside savings for Health Deductibles and perhaps max out of pocket if a lot of healthcare needs. If you are in an HSA plan, contribute. $3,600, $7,200 per couple, if over 55, $1,000 catchup contribution.
- Set aside savings for Life Insurance Premiums (10x Income per year) and Disability Insurance
- Payoff all credit card and high interest debt.
- Emergency Fund (6 months to a year) If in a high furlough or layoff industry consider longer Emergency Fund. Also consider I-Bonds for the more sophisticated investor (very flexible 1-30 years).
- Fund your 401k, 403B, and/or 457s. 401k 19,500 some states protect retirement accounts more than IRAs (look at Roth and non-Roth. Over 50 6500
- Education Savings (529 usually better than Coverdell, can out more in and more
- Fund Traditional or Roth IRA $6,000 (+$1,000 catchup)
- ESPP (not more than 5% of wealth) don’t want all eggs in one basket. Take advantage of the discount. Also consider your stock options, RSUs, ISUs and their tax implications here.
- Brokerage Account tax buckets for retirement (cost basis increases yearly)
- Real Estate Investments
- High Income/At Risk Plans
- Payoff low interest debt (Cars, Mortgage, etc.)
- Speculative Investments (Art, Cars, Bitcoin). No more than 5% of total wealth.
Thanksgiving is right around the corner it’s a great time to evaluate what is truly important to you. For us, we want you to understand what is important about money to you.
In this podcast we discuss how you can think about money to use it to accomplish the things that are important to you.
We are talking about:
- Generosity versus scarcity - fear
- Be generous and have a mindset of abundance.
- Understand your higher purpose and get involved in contributing to something larger than yourself.
- Know what you want; set meaningful goals and write them down.
- Develop an attitude of gratitude.
“There’s a lot of money to be made from financial newsletters that give investment advice. But the money comes from selling the newsletters, not from taking the advice.” ~Paul Merriman
Investment newsletters are getting more popular every year and the returns they promote are extremely tempting. So, should you ditch your financial plan and subscribe?
We’re diving into newsletters to give you our honest opinion and concerns.
Unfortunately, anyone can create an investing newsletter, and because they are not actually managing your investment accounts, they have no regulatory agency monitoring their recommendations or investment performance accuracy.
Investment newsletters only fall under the 1st amendment right of free speech, so they can claim any returns over any time period regardless of actual performance.
From the article “The Truth About Financial Newletters” by Paul Merriman.
https://paulmerriman.com/the-truth-about-financial-newsletters/
“In a 35th anniversary edition of The Hulbert Financial Digest, publisher Mark Hulbert noted that when he began tracking newsletters in 1980, there were 28 of them. Of those 28, only nine have survived. The rest are gone.
Of the nine newsletters for which he has continuous data back to mid-1980, only two have beaten the market (measured by the Wilshire 5000 Index) on a risk-adjusted basis. One newsletter has matched the market for 30 years, and the other six have lagged behind.”
This podcast is all about helping your kids take the first steps to financial freedom and independence. We discuss some of the steps we all wish we would have taken when we were first starting out as new savers and investors. We believe we should help our kids learn from other's successes and mistakes - We do not have time to make them all ourselves! In fact, life is a series of building off the successes and failures we all experience. Sharing those lessons with our kids is easy in some areas but with finances it can be tough. Don’t let that stop you from preparing them for a great financial future. “Children are sponges—they are going to absorb whatever is around them, so we need to be intentional about what surrounds them.” — Dave Ramsey
Our kids will learn from our money habits whether we like it or not. We encourage parents to communicate money matters to their kids as well as be honest and transparent as much as possible, so they don’t make the same money mistakes we made.
In this podcast we cover the most important financial topics for getting started. We believe this content can help you have great conversations with your kids. They still won’t think your cool, but I bet they’ll listen and learn something.
Our goal for our clients is to help their kids build a foundation of financial knowledge that will set them up for success in the future!
Thank you for listening!
Check out the market timing game here:
https://www.leadingedgeplanning.com/money-advice-to-share-with-your-kids
In this episode of the Pilot Money Guys, we are joined by the Professor, Kevin Gormley CPA & CERTIFIED FINANCIAL PLANNER, to discuss the latest proposed tax changes.
Although these are subject to change, there are things that you need to know to be prepared. Some changes we discuss:
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Capital Gains tax increases.
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Roth Conversion changes
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Child Tax Credit Changes
We would love to discuss these tax changes with you! If you have any questions for us, please send them to info@leadingedgeplanning.com. Or visit LeadingEdgePlanning.com to schedule a 1-hour consultation.
As always, thank you for listening!
In this podcast, we are talking about a commonly used rule-of-thumb for taking retirement income distributions. The 4% rule is meant to help you easily determine how much you can withdrawal from your retirement accounts each year, without running out of money in retirement.
The 4% rule goes like this:
- The year you retire, add up all of your retirement accounts, and withdrawal 4% of the total.
- Each subsequent year, take out only the 4% (of the total balance at time of retirement) + adjustments for inflation.
- At this withdrawal rate, your money should last 30 years.
So, should you keep it simple and use the 4% rule? We don’t think so!
In fact, this podcast is dedicated to help you understand why the “4% Rule” may not be the best solution for taking retirement income distributions.
Your domicile is defined as your permanent home where you pay your state income taxes.
For most people, your domicile is straightforward, however, for those with multiple residences domicile can be hard to establish. And maybe even a little tempting to lean toward the lower tax state. Our goal in this podcast is to help you understand how to have multiple homes and stay out of trouble with Uncle Sam!
Furthermore, the IRS says your domicile is based on your intent, which can be tricky to prove. A famous example is from a New York corporate executive moving to Texas. Even after getting a Texas driver's license and registering to vote there, the New York Division of Tax Appeals performed an audit and found the man to be liable for thousands of dollars in New York state income taxes. The man had to use the veterinary records of his dog in Texas to prove that he was intending to stay in Texas for the long haul!
Thank you for listening! If you would like to have a conversation with us about tax domicile questions you may have, please email info@leadingedgeplanning.com or call 865-240-2292.
www.LeadingEdgePlanning.com
I’ll admit I’m a sucker for survival reality shows, particularly shows about people living in Alaska and the Arctic. It’s always amazing to watch as spring starts, these folks must jump right into preparing for the next long winter. With months of darkness, freezing weather, and almost no food available to catch, these folks need to be proactive to have a chance of making it through a successful winter.
There’s a winter coming in our financial lives too. Indeed, there is a chill in the air! It’s time to start preparing now, so that we not only survive the next market crash but thrive. There are plenty of actions we can take now to not only protect us from losing everything, but take advantage of the next crash.
In this episode of The Pilot Money Guys podcast, we are going over how we go from reacting to acting, from surviving to thriving, from freezing and starving to sitting inside your cabin with a nice fire and a moose steak to boot.
Thank you for listening! If you’d like to have a conversation with us about your financial life, please reach out at info@leadingedgeplanning.com or calling 865-240-2292.
www.LeadingEdgePlanning.com
1 in 3 airline pilots will experience 90 days or more of disability at some point during their career! (Disability Insurance Statistics Bank)
Luckily, most airlines have good disability benefits available to help provide some relief and income. However, it doesn’t mean 100% of your income will be replaced if something happens. In most circumstances, even if you are able to pay bills and put food on the table, many people will NOT be able to continue saving for retirement once disabled without extra disability insurance.
In part 3 of our estate planning series, "I'm Dead Now What", we are talking about the biggest risk that pilots face - Airline Pilot Disability.
Let’s make sure you are protected and know what to expect if something were to happen to you! Give us a shout to schedule a complimentary, no-obligation phone consultation and learn more about how we help you achieve your personal financial goals (865) 328-4969 or email us at info@leadingedgeplanning.com to go over your disability plan.
In part 2 of our Estate Planning Series "I'm Dead, Now What?" we go over 3 steps to make sure you're estate is prepared. If you are unsure whether you have a good plan for the unexpected, this is the podcast for you.
We discuss what documents you need to have in place, why getting organized is important, and how beneficiaries and trusts go together to protect your family.
You heard us right! We are giving away copies of our Estate Planning tool "I'm Dead, Now What?" to the first 10 people to email us at info@leadingedgeplanning.com. We have also put together an Estate Planning Checklist, which is available to everyone. If you would like us to mail you our Estate Planning checklist, email us at info@leadingedgeplanning.com.
As always, if you have any questions, comments, or would like help with your financial plan - reach out at info@leadingedgeplanning.com or call us at 865-240-2292.
Thank you for listening!
We apologize for interrupting your regularly scheduled podcast program. We have BREAKING NEWS! What is up with the new American Rescue Plan (ARP) CHILD TAX CREDIT payment?
There is a new increased Child Tax Credit Payment via the American Rescue Plan (ARP) that's paying out right now. Like many of us, you may have received a payment that you weren't expecting.
- Will you have to pay it back?
- Will it cause your tax bill to be higher in April?
- Should you spend it now?
- What's the difference between the new increased ARP Child Tax Credit and the previous version of the Child Tax Credit?
Typically, taxpayers with income under $400,000 MAGI, married filing jointly, received a $2,000 tax credit per child under the age of 17 to offset your tax bill. This year, instead of getting the credit on your taxes, a portion of the credit will be paid out in advance over the next 6 months. If you count on the tax credit to offset your tax bill, you could be in for a big surprise! In this podcast, Leading Edge's Co-Founder and CFO, Kevin Gormley CFP®,CPA aka "The Professor" covers all the details of the new increased Child Tax Credit as well as the existing credit. Plus, everything you need know to NOT be surprised at tax time!
Hello folks! We are excited because this is the first podcast in a 3-part series called “I’m Dead, Now What?”. That’s right, we are covering the exciting topic of death!
- I've Inherited Money, Now What? – Should you spend it, save it, tax implications, your family legacy?
- I’m Dead, Now What? – A discussion on estate planning. How can you pass on money to your heirs in the most tax-efficient manner possible?
- I’m Disabled, Now What? – A discussion on becoming disabled during your career. What if you lose your medical? How much income will you have to live on? For how long?
Although a very difficult subject to face, these topics are important to plan around. In this first podcast of the series, we discuss what happens when you inherit money. We talk about the emotional decisions that must be made, the tax consequences, and how we believe inheritances should be handled.
We’re thankful for the feedback we have received on the Pilot Money Guys podcast. We are striving to bring useful insight on important financial topics to you. If you have suggested topics, questions, or comments for us, please email us at info@leadingedgeplanning.com.
See you next time!
You are on a trip and your fellow pilot says they have a new investment strategy that’s getting amazing returns. You are skeptical at first, but after talking about it for the next five hours on the way to LaGuardia you become convinced you must be missing out.
We hear these stories often; we even experience it ourselves! That’s why we are starting a new podcast segment where we discuss some hot topics circulating the pilot lounges, crew vans, and cockpits. We are calling these episodes the Pilot’s Crew Lounge!
In this episode, we are taking on the hot topic of Options Trading. We’ve had a few pilots come to us with questions about Option Trading after hearing about them on trips. We are here to address these questions and give our thoughts!
Are you missing out by not using options? In this podcast we discuss our Top Five Considerations Before Trading Options.
If you have questions, comments, or topics that you would like us to cover, send them to us at info@leadingedgeplanning.com.
Get your peace of mind back this summer with a comprehensive financial plan! Give us a call at 865-240-2292!
Are you thinking about investing in Real Estate? In our 8th podcast, we discuss the major challenges and considerations to look out for when you are deciding if rental real estate is right for you. We discuss:
- Tax advantages
- Using leverage for your rental
- Becoming a landlord
- Costs of owning rental properties
- Owning rental property in your self-directed IRA
If you are considering investing in rental real estate and have questions or concerns, please reach out. We are happy to review and discuss how your rental property affects your financial plan!
LeadingEdgePlanning.com
info@leadingedgeplanning.com
The Danger Zone is not a specific place (I checked on Google Maps), but rather in the song "Danger Zone", Kenny Loggins describes a state of mind.
In the movie Top Gun, Maverick is always in the Danger Zone. That’s what makes him one of the best pilots in his class and arguably the most epic movie character of all time.
Always being in the Danger Zone, however, is also what is keeping Maverick from actually becoming the best pilot in the class. Eventually, he understands this and realizes his subconscious desire to always ‘push the limits’ is indeed holding him back. Unfortunately, this behavior leads to the death of his best friend and navigator, Goose, before he ever realizes it.
We all have behavioral biases which are defined by irrational beliefs or behaviors that influence our decision-making process. As with Maverick, these biases can be extremely hard for us to recognize and can lead us to make decisions that can have devastating negative consequences. This is especially true when it comes to our financial lives.
In this podcast “Highway to the Financial Danger Zone”, we talk about behavioral biases we face as investors. We discuss what these behavioral biases tend to be, how we can recognize them, and what we can do as investors to avoid allowing them to drive our decision making.
“I’m not going to blow sunshine up your ass... A good pilot is compelled to always evaluate what’s happened, so he can apply what he’s learned.”
In this episode of the Pilot Money Guys, we are talking about what its like to fly the Boeing 737 MAX in 2021. We also take on the top 5 Government Debt and Inflation Myths.
Rob has returned from the Sim and recaps his experience flying the highly scrutinized 737 Max. After 9 days of training, here is what Rob has to say about the plane.
For the financial topic today, we are talking about INFLATION. What can we do as investors to prepare for the possibility of rising inflation? Do we expect hyperinflation to crash the dollar? Will government debt ruin our economy? Does China ‘own’ the US? How much should we worry about inflation if at all? Thank you for listening!
Let us know what you think! We are happy to discuss this topic more with you. Give us a call or shoot an email with your thoughts and questions! – info@leadingedgeplanning.com
Find out more about Rob, Charlie, and Ben at LeadingEdgePlanning.com
Folks, we have a good one for you today. In this Pilot Money Guys episode we take on the topic of Bitcoin. Our token millennial and office wonderboy Ben, faces off with Charlie and Rob. Will he convince them to get rid of US Dollars and join the Crypto Revolution?
We hope to provide insight on these questions: How do we view Bitcoin as an investment? Should you make bitcoin apart of your portfolio? How should we think of Bitcoin as long-term investors?
We hope you enjoy our discussion. Please subscribe, share this podcast with friends, and let us know what topics you would like us to cover next!
This is podcast #4. We discuss what investment bubbles are, are we in a bubble? How would it affect us as investors, why being an envious investor causes one to continuously buy high and sell low, thus underperforming the actual investment we're invested in.
Finally, we discuss how diversification can help but is the least "sexy", the most boring ways of investing thus the attention-getting title "diversification sucks." We finish up discussing the potential gotchas of index investing and warn investors to use caution with new, complex, and unnecessarily expensive index funds.
In this episode, we dive into the intricacies of 401ks, HSAs and more. We cover the differences between Roth vs non-Roth 401(k) and what might be right for you. We cover the Health Savings Account and the top things to consider when creating your investment gameplan. Let us know any topics you would like us to cover, robert@leadingedgeplanning.com.
Featuring Special Guest Shane Rosenthal! Now the new administration is in, do you want to know more about the Biden tax proposals?
In this episode, we talk about the Kobe Bryant helicopter crash with a guest helicopter pilot (Shane Rosenthal) and the potential Biden tax proposals.
The discussion delves into spatial disorientation, VFR flying, donut hole Social Security taxes, long-term capital gains, and more!
In this inaugural episode, our financial planner pilots talk about the American Airlines and JetBlue agreement and why all financial planners are not the same. If you are looking to hire a financial advisor and want to know the differences between the various types, this episode is for you.