Mailbag | Backdoor Roth IRA, 4% Rule & 401k Strategies for Retirement Planning | With Rachael Camp | 521
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Hey, before we go in into the epsom, I have two quick announcements. First, we're recording our east annual year and winds episode, which is my absolute favorite episode the year. And if you want to be featured on this, send your twenty twenty four winds in via new feedback cage.

I choose of how to come such feedback so you just go there, click on share win and then urine wins and you can leave a voice mail if you want to be featured on this episode or there's an option to write in a response. And i'm actually going include some of those in one of my newsletter. Err, so yeah, I would definitely appreciate voice meals because I really want to feature them on that actual episode.

So that'll be a lot of fun. And the second announcement is for the first time in years, we actually have choose of my t shirts and now hooded sweat arts available for sale. So if you listen the podcast, do you know i've been trying to make my life simpler er over last couple years, which is why we went away from selling two shirts on our sites.

But i'm working with the company that our cross pitch um uses and they make IT really easy and Frankly, they do all the work. I truly voted the shirts. You know how much I care about this, their top quality travelin shirts.

They fit, they look great. And I lowered the Price as much as possible to make this essentially break even for us. Because if you want to proud me, show you, remember of the truth of our community.

I do not want to profit off that. The way this works is the store is actually only open until sunday, december first. This isn't a scarcity thing, is just the way they do this batch ordering.

We have to hit a minimum number. And when the store closes on twelve one, they printed t shirts, they ship them out and we're good to go. I'm planning to do this about twice a year, so now a really good time. If you want to get A T shirt or hood a switch, just go to choose, find that come a shirt and that i'll redirect you to the site where you can purchase. And now onto the show.

Hello, and welcome to choose up I and the show. We have another melt up. A i'm lucky to have my friend rich of camp to C, F, P.

Joining me to answer the questions and answer questions. We did think this is the most questions we've ever tackled on a mail bic. So among other things, we talk about acid allocation.

The back door, rough, real city of us singer is four percent all. And what do you do if you don't have four N K at work? Is going to be a really, really good to me.

I think you're going enjoy IT. And with that, welcome to choose. So fine.

Raco, welcome back. As always. Thanks for you. Thanks, brad.

Happy to be here again. Yes.

so you highlighted a little bunch of questions as usual on and I want to put A A little disco out up front, which is you are A C, F, P. I am I guess theoretically as C P, I, we are not giving financial vice anybody. Of course, there's no way that we've just a email ed question that we ve got that we could dive into everyone's very specific information and give the perfect.

But that said, we're very unusual. And I think we try to do the broader application possible when we answered this. So we think, obviously, we won't be recording this and wasting everybody that we didn't think was really, really good.

But you know, we have to give that like please don't rely on this for absolute iron clad. And other thing I wanted to say with this is kind of a public service announcement. And this is really interesting.

I put this in my news letter couple, though, and people were like shocked that this existed. But there is this for will be beneficial ownership information form and it's print that gov, so H B O I, so F I N C E N that such B O I we were talking, we record. And allegedly this is due by december thirty first of this year by essentially, as i'm reading in, I want a bunch of legal entities, but pretty much every legal entity in the U.

S. There are a bunch car outs. And this is actually part of the ambiguities right now is accounts don't know if this is due or if they should send IT to people's attorney is attorney is aren't giving a visp, there's a lot of ambiguity. But what I wanted to do with this P S.

A, since isn't really he giving too much specific info, is if you own a legal entity in any way they perform, oh, you have an L L seed for some business that you formed or oh, you have an l seed for maybe some real rentals. Just got this website will have IT in the showers and just take up there's a whole lot of information. And honestly, IT actually takes about two minutes to submit.

This is really quite easy and the penalties for non filing are like the crazier thing that I first in great one matter was like five hundred hundred dollars a day or something like that. And I think we're both dubious as to whether the december thirty first deadline will get push back and up. But regardless, there are some significant repercussions if that dead mine is in existence and you don't file IT.

So if you're a business owner in anyway, just please take this P, S, A, art, and just at least look this up, up. Okay, P, S, A, over, Rachel, let work first. You have any feed back on that? Or you think that .

covers I think that covers that. I mean, there are exemptions from this like apparently i'm exempted from a bigger financial adviser. Yeah, but even that remains a bit unclear. So I would reach out to accountants and hopefully they are familiar with this, and I can at least point in the right direction if they're not willing to do IT. But that's what i've seen a lot of my clients doing is just reaching out to cps, how EMS and getting a dumb .

that way sounds sounds good. So okay, let's get into the melt question. So i'll read the first one, the highland. So this one came in from said hybrid.

I've been listening to the protest since may of last year, and it's made a huge impact on the way I think of a saving investment. I've been on a journey to get to five and maximizing all the latter ers to invest. What's been shared in the podcast.

I A question for you. My wife is working for A W two for an employer, doesn't have a formal form case set or any retirement account set out in this case. Do you know how to invest in protect retirement account? This is something we get a lot is what do I do if I don't have access to a form? Please do I have any options? Or am I just kind of that a luck?

I think there is a lot of confusion around this as well. I've actually seen some people um they've have one spouse who's covered at work with a retirement plan, the other spouse that is not covered. So they assume with the as fast that's not cover that they could go and contribute a traditional ray, get the full deduction.

That's kind of what I see that the common misconception here is that if you have one spouse, in this case, we have one spouse covered by a workplace retirement plan, there are still income limitation. So taking a step back, just thinking through what are my options for pretax retirement accounts, first thing comes to mind is, okay. Can we do the traditional ira and what you will want to do? And I have the numbers in front of me here as well, but you want to see what the income limitations are on this because, well, technically, anybody can contribute to a traditional ira.

The actual ability to take a tax deduction for that is a different story and depends on your situation. So if neither you or your spouse or covered by a workplace retirement plan, we don't have to worry about income limitations. You are both eligible to contribute and get a full deduction for a traditional area now becomes different if you have one spouse who is covered by workplace retirement plan.

So if you are married filing jointly, you ve got one spouse cover by workplace plan. The other one is not. Then you want to look at those income limitations.

Like I said, I have them in front of me. So verified jointly, the full phase out is at two hundred twenty eight thousand or more. So if you make at least two twenty eight or above, you actually are faced out.

You do not get to take a deduction for a traditional ira contribution. The face out starts at two eighteen. So if you're under two hundred eighteen income, again, married, finding joy, then you're good. You can contribute to that traditional array and get the full deduction. So I want to magine that.

And all of this is available in IOS website can send you the link brand for these updated numbers, but that some of the important things to look at when you are considering traditional iraq, because that's typically the first place we go when we realized we don't have access to a workplace retirement plan. Few other things we can mention, a few other accounts. Here is things like a held savings account, one of my favorite retirement accounts of all time, because of the triple tax advantage that we take.

Adventist of that if either if you have access to IT, there is a limit, there's a single limit or family limit. And the family limit is for both spouse. So it's eighty three hundred for twenty twenty four.

So we don't get to double dip. We don't get one spouse that get eighty three hundred and the other spouse gets another eighty three hundred and eighty three hundred total. So that's another question. I come up a lot, but if you have access to the age of say, that's another thing I would look at.

Finally, just to kind of like check all the boxes on this one, if you have any type of side hostel or income coming from self employment, then you can look into solar phone case or self self employ. Retirement accounts are great. That being said, you do have to have a legitimate business, legitimate revenue. The contributions for these accounts depend on how much revenue is coming in the income from self employment. So it's not a hack where you can open up an elsa and I have access to self played retirement accounts, but I want to mentioned that because side hustles are are really common now and if you have access to one, it's it's worth looking into self often played retirement accounts .

to yeah very comprehensive matter. And interestingly, I just email in our feedback. She's a come email address that has a similar question. So it's the other side of, okay, it's not that I don't have a okay, but I actually have a bad one.

And Rachel, i'm throwing this and you just kind of spit back up your head, but just said, I just took a job with a terrible form. M, K, and wonder if you have an episode and where to park your money until either investment options change or you with the company. I'd hate to leave cash on the table from the match, but in the other hand, I just can't stomach high fees and bow return.

And what do you haven't heard this question before, right? The second, because I would really just came what he told somebody and we're assuming I don't know what janis saying here exactly. Does every fund have a one point five percent expensive o or something crazy like that? Like is there still the case to be made to getting your match depending on what the terms of that company match? How would you refine? Just quick.

yeah. I think when IT comes to a company match, no matter what the fees are, is worth IT. So the company match is just one of the best deals you'll ever be handed in your lifetime.

Often you get a hundred percent return on your investment. Like if you can tried three percent, they match three percent. I don't care what the fees are at that point. I'm going to take that hundred percent return on my investment. Now after we get the match, we can start expLoring, okay, what's next?

I still think there's a really good argument to be made for those pre tax dollars when you consider the tax savings you're getting with a retirement plan that might more than make up for the fees that you're paying. And you know to the point of of the original question that we were answering, other options are really limited. I mentioned the traditional way, but that has a couple of seven thousand dollars.

If you over fifty or eight thousand, if your fifty or older. So still, we're not really getting a ton of dollars into that traditional ira. I find the foo in k workplace retirement plans really competitive even with the fees.

Yeah, we can look at brokers account, we can look at how savings account. We can look at different account takes. But that tax savings, I think you need to quantify that and see if that makes up for the fees.

Totally read. yes. So the company match unquestionably. I think almost any case that I could ever think of you really want to get that much right. So racial, just call IT essentially the best deal you could ever get, totally free money.

John passed IT out because essentially once it's got, it's got it's the same with any like once that year passes is by OK the ability for that much you can so you can, however, upon separation service, you can roll your into an ira, getting into a low, low fee. But let's be clear, if you don't have the money something there, you can do anything. So which are the other thing, which is a total aside.

We've actually had a lot of people who have listens to this podcast so the last seven and eight years who have seen their terrible workplace for gays and said, i'm actually going to try to make some change in the world. Tap, yeah I hate like, which is awesome. The'd, go to the H.

R. department. They maybe take my old article of the vampires and the impact of fees on your investments over the rich man. S, I come and show them. Like, I look, having these expensive shoos of one to two percent, this is going to cost all of your employees, including you and including the people who run this company, especially half their network. So maybe it's time for us to not have these ridiculous if lets get some index pots and i've had countless emails come in from people that, wow, I can't believe I did this. I went to H, R, and they listened and now we have this new product options so don't just give up and I mean, not to be but be the change you want to see in the world .

yeah you help about your fellow employees as well. I've actually drafted emails for some of my clients to into their hr because it's just to be on as it's a pretty simple change most of the time for the employer to find Better investment options and IT also, you can phrase IT in a way of this will make you a more competitive employer where people want to work here.

Because, of course, we look at salary, we look at wages, but we also look at and benefits when considering where to work or where to start working somewhere else. So if the employer cares about remaining competitive, and you can kind of phrase IT that is in their favor as well, then that could be a really good argument that you make. I want to give one clarification here because I have the numbers in front of me, but I was looking at twenty three.

The publication for R A deduction is I want to say five ninety eight for the I S. And they don't have like the updated tables, but they do have up data numbers I was able to find. So I mentioned before the phase out for an I ra deduction, if you have one spouse covered by a workplace plan, starts at two hundred eight thousand and is fully face out at two hundred twenty eight thousand.

The updated numbers for twenty twenty four starts at two hundred thirty thousand, fully faced out at two hundred forty thousand. So you're looking at IT for this year. You want to pay attention to those numbers.

Great clarification. And I think we move into the next crush is came in from Scott and Scott started saying, book more this for the next time and you talk about back door rough options for those of us, he said.

My account told me last year during a console that there's some grumbling among accountants about half fast books due the roll over to rob a after funding the non deductable, you often dly mention that I I wants to consider reading a while before moving the money from the non, the doctor I R A to the roth ira. I usually just see what lunch, some in january, and when hit, I immediately do the roll over. But in twenty twenty three and twenty twenty four I ve scribe to adding a month plus day once the money hits.

So now IT effectives happens in february. I D love to see what you know, what you 跟 这个 up 主 保。 So make sure that what are your thoughts on that? A lot of thought. Sung shine first, maybe like a quick overview for a lot of people who don't even have any idea what we yeah.

So a back or rough ira is used when your income is too high, where you can't make just a regular rough ira contribution. So roth ira contributions aren't technically available for everyone. There is a income limitation on IT.

And when you make too much money, you are faced out of being able to do is what I call direct route air a contribution? The back to rock, I ray, is a way around. This is a legal looper.

Each step in that is completely legal, and that's what I want to talk about here, is the different steps that IT takes. So just to go through quickly to do a back to a, you make a non deductable I R A contribution. So you're going to send money to your traditional ira.

You won't deduct IT at tax time and then you do a rough conversion where you transfer the money from that, I ray, to the roth ira. And because the dollars in the traditional river post tax, that conversion should not be a tax event. And you're gna report all of this attacks time and form eighty six o six tell your count what you did or if you file yourself, just remember to fill out that form eighty six thousand six so you can document the steps that you talk.

Now the question here, I actually I do get IT sometimes, so it's something i've thought about. I thought maybe we could talk about just for a second. But the point is, like I said, every step here is legal.

You can make a not deductable I ray contribution. You can do as many or as much rough conversions as want. But what happens is, is this rapid procession of events where hypothetic ticals a court could look at this and say, your intent was to make an impermissible rough ray contribute.

And so the solution here is to not make IT a rapid accession of events to add some time between each step. Um now this is completely opinion base, and i've seen people have different opinions on that. Some people say that draft is legal to legal looper.

Congress is aware of that. They could close that at any second. They talk about closing IT. So there's not much you need to worry about. Some people say, let's just be safe.

And between the noddle ira contribution in the rough conversion at a little bit of time, how much time that is completely subjective. We don't know what qualifies as enough time. Some people say to this listeners point about a month in a day.

Some people say a year, and during that year you should invest the funds in your traditional ira. So that is not a clear, rapid succession of vans to get IT over to the raw. Personally, the way that I ve gone about this is it's changed most of the time.

I just do IT pretty quickly with the assumption that there's tons of people doing this, and i'm just not that concerned. And this is a looper that they are familiar with. But for anybody who is a little bit more concerned, I think like a month to a year, depending on your tolerance for risk here, I guess, is appropriate. But that kind of the point behind that is that, that rapid succession of events, they could argue that your intent was to make a rough ira contribution rather than in noted up for ira contribution. And then later you decided to do a rough conversion.

right? And the funny sub taxes, of course, that was doing right, let's be clear. But right, like you said, this is legal. And certain of hundreds of thousands to millions of people do this and we rich is funny, like we all have our comfort level when IT comes to certain things. And the back to a roth ira has fAllen below that bar for me for a comfortable vel.

And I just it's not even like an equal, more like a IT never seemed right to me, but it's i'm not not doing IT because it's just like there's just something about IT that just doesn't sit well with me. And I like the juice never seem to be worth the squeezy, I guess because there's also some other complexity, isn't there? Like if you have other array accounts, there's some like significant complex.

Oh, I mean, you don't want to touch us if you have any pretext dollars in traditional I R I, that's what subjects you to the protection IT makes that rough conversion partially toxic. Not worth that. If you have pretext dollars in a traditional way to do this clean, you need an F D I, A and F D, I R everywhere because they consolidate the I rice.

Some people try to get around IT by saying, well, i've got an M I right here. Let's just consider that one and ignore the hundred thousand I have in this other. I write that's not how IT works.

And then I see people not reported at tax time and four matic six o six, they've done IT like five years and have never reported IT, which makes things even more complicated. So it's something that I see some people wanting to do. But you would definitely have to make sure that you get IT right if there is any confusion or you worried about the complexity. To your point.

IT might not be worth IT. yeah. And I do wanted, just as we close this out, make a simple distinction also between this back door brought I R A and the rough conversion letter, because I think a lot of IT you you set in there really quickly.

Congress is aware of this and they talk about closing this lobo. And I think people complete the two of this, the rough A A conversion letter, which we talked about a lot. And this back to rock I right.

So this is my own kind of editorial is, yes, of course they're gona close the backdrop, right? Like it's ridiculous, right? Like he was here, never meant to be this way.

You're making a non deductable contribution and then you're moving over to rough just to circumstance these rules that very obviously exist. Lets be clear, like visual said repeatedly, this is legal. This is my editorial of like, come on, guys, let's use our common sense.

This was not the intention. So of course it's eventually going to get close. You have to expect that IT may or may not I mean, congress moves at a glass al peace.

So like i'm not saying definitive way, it's onna happen next year, even ten years, that if you use logic, it's going to be good. Now contrast that with the actual important thing for the five community, which is the roof I conversion matter, which which is I think a very subtifly different thing. Now I could be wrong, them just one person, this is my opinion, but you are doing something where you're saying, hey, I have a traditional I R A.

I am essentially making this conversion to rob and paying the taxes. Do you not circumventing anything your essentially saying to the government, this is a taxable event? I'm paying tax on IT and then IT ends up in this rot iron and then it's subject to the rather rules like to me that very eloge ble thing like, okay, I have IT in this one.

I'd like to make the conversion to this other format, the raw format. I'm very legally appropriately paying attacks or not as a maybe, but i'm putting IT on my tax return as a taxable event. And that's that like that to me, just from a logical standpoint, why would that go away?

Congress wants to raise rabbit on so why would they ever take away a perfectly valid way of saying like, hey, guys takes me on this. He just doesn't stand up to scrutiny. So I did want to create that separation here, rich, over between the and again, we can never forecast the future.

Logic doesn't hope his work when he comes to the government and congress, right? But just using my logical side of the brain, I think that makes sense. So I love to hear you up.

No, I I agree. I R S, congress, once their tax revenue is quickly as they can get IT, that's why we have required minimum m distributions at a certain age. That's why when you inherit a traditional array, a lot of new rules are forcing you to take our money out within ten years.

They want that tax revenue so they don't want to delay IT. So I agree that rough conversions is a way that they can get this money taxed even quicker. Er although tear point sometimes it's not actually tax, they were really strategic with how we do IT.

But I don't see that closing the back or off I A loophole loophole to get around. This is to me just silly. They either need to close IT or remove income limitations on off fires.

The intent was never to allow higher earners to contribute to a rough I right the limit is a little though the seven thousand dollars to me. My thought process is if you're not onna, raise the limit significantly, just take income limitations off. I mean, I don't think anybody skinning really healthy off of a seven thousand dollar contribution every year.

So IT is a looper. Probably going to be close at some point. I don't know what's onna happen once they close IT. But to your point, yacht, rough conversions, I see, stay on the table. I think they make sense.

alright. Well, we will stay too and as oman. So thanks for listening to choose A Y and for all your support of our mission here, the absolute best way to support choose to five is when you sign up for your next rewards credit card to use our cards speech.

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and for your support. I read. So I next questions. We have two actually that are both asset allocation related, but I think we'll split them up here. So start with chains. So listened for a while with we listening to be of one seventy six with the three point five percent or four percent rule.

What are the percent of your equity slashed bonds for your taxable account to never do window down your main principle, do you leave IT in vt S A X for ever? And since IT follows us in people by hundred, IT will give a eight to nine percent average usually return. Therefore you'll never run out.

I know some years may have a two percent or even negative return, but then others will have a plus twenty percent to counter bonds right now. Invest monthly in B, T, S, C, X. And I didn't know if I should stay.

And that for, right, for I need to switch to more bonds that they are closer to my five number and five days. So which I think this is like the most fundamental. This is as broad of a question about asset location. And i'm so fascinated to see how you got a big one here. How are you going?

answer. Curious how many too. This is the hardest type of question to answer, and it's also one of the most common questions I get because asset allocation is really important.

Timing IT correctly to some extent is important as you approach retirement. And I notice most people delay IT probably a little bit later than they should know they might come to me within five years or one year away from retirement. There's still a hundred percent and equity that they say, one to retire what I do, my asset allocation.

And it's difficult because he really is customize to each person. And I was actually just listening to your drawdown episode with carson and fritz. And even though I could tell how a really difficult time giving any deep rule of dub brass and allocation, there's so many different ways we could go about IT and IT.

IT does depend on how much somebody is going to rely on the portfolio for income because somebody could have other income sources coming in. IT could be pension. IT could be just side hostel, IT could be anything.

And then other people might have a longer time horizon and retirement where some people are traditional thirty years, some people are sixty year time horizon that has a massive impact on what your ask allocation needs to be. Important thing is when you think about IT, the ten years leading up to retirement and then the first ten years of retirement are really important for how your retirement is going to play out. So we do need to pay closer attention there.

And within ten years of retirement, we do need to start adding bonds. How much bonds completely depends on the person, their time horizon, other income sources, how big their portfolio is. But we do need to start creating safe buckets or just safe assets within your portfolio because what happens is when you're preparing and you're leading up to retirement, that, that ten years if we enter a deal market, ten years leading up to retirement.

Now what depends on when that happens, but that could have A, A negative impact on retirement. But then we know because we've talked about this so much, that when you start retirement, what really matters is that first five to ten years with sequence of returns risk. And what we mean by that is if you have a bad order returns, if you to retirement and we experience a depression or just a few years of a dam market, you can have a really negative impact on your portfolio.

So the way that we solve this is by having different assets that are stable. So equities, as we know, we have about years big down here. So shame here, talks about can I stay in V T S, A X.

The risk of staying in one hundred percent equities and drawing on your portfolio is that you're drawing on your portfolio in a potential dot market. We all know how great dollar cost averaging is into a dot market. We love getting those cheaper Prices in the stock market works really, really well when you're in the accumulation phase.

But when you're in the retirement phase is potentially dangerous, really dangerous to your portfolio. So imagine how powerful dollar cost averaging is when you're buying into the the market. It's really, really dangerous when you start taking money out of the market.

So the way that we protect is by using bonds and cash as a sort of insurance for your equities. So we have a really rough first five years. I mean, what I see a lot of retirees doing, what I think makes sense, is built up a few years of a cash bucket.

So they go in the retirement first few years of rough they can pull from that cash bucket. And then we have maybe another five, eight years of bonds. Five to seven years depends on the person where if we continue to have a rough time in the market, we can pull from bonds and we can leave our these alone.

That's a really high level discussion on acid dal location. But to shame point here, I think it's easy for me to say leaving IT in one hundred percent equities is dangerous. And I would not recommend that as you approach retirement.

That is certainly is sing to IT putting in like the like I said I didn't know where you going to go with that that the of and yeah, I think you know, when IT comes to this type of financial discussion and I hate quit, but this is not Rachel. I mean, i've been doing this for a long time, you know, and the fear for me is when we make things too complex that people throw their hands up and they say, I can do IT.

And I think that's part of the a war of index on and m as because he talked to A B, T as x, we are not dogmatic about B, T, S and track. I tried to scream from every hill that I can B, T, I benger ds etf is to me, a slightly Better option than B, T, S, X. Because they people do silly things, and they think of this dogma.

B, T S X. So they tried to buy IT IT like fidelity or swab, and they get hit by these crazy fees. Like please, if for some reason you've heard B T S A X on the show or some other show or anywhere, essentially, like you could just buy B T I at this point and it's as good or Better and you're not going to get to hit with feet.

So please, just like remember that if nothing else. But I think my fear is that even mean try to make us too complicated again, that like people just give up. And I think for most of us, one of the beautiful things is that the patch fy is the simple where it's just if I can see if a significant amount of my income and I can invest in, in low cost in next ones I can essentially set in and forget.

And I think there is a huge board to that. But like this question gets to and my gradual answer. So elections says, like you can't just blindly do that forever. And I think that's where there is a little more complexity, but I don't think that needs to be overwhelming because of the story.

Like my skin crawls when I think about like how many funds do I need to have? Do I need to start having pocket? So is like Frankly, I don't really want to deal with that all the belly.

So i'm find keeping the vast majority of my personal network in V T I, I think a good friend of mine, like Frank baccus, who has the incredible August risk parody radio, P A R I T Y risk parody radio. I mean, you are looking to dive into like real complexity. Go there, go to somebody like carston at early retirement now, like if you want that the information is out there.

But like which are saying, like there are things to think about for me when you're, let's say, five years before five. I think that is where, in my own mind, if I had zero dollars in income coming. And this is another faction also is for people who have what's say, pensions, for people who have real state income or people who have businesses in some way like IT does change the calculus entirely because you are not relying on one hundred percent of your five income, if you will.

I'm just your network. So I think like that. Yet another layer of this is if you have other income services, well, IT mitigates the need for, like your sequence of return risk and your.

A jobbery to be exactly picture perfect. You have a lot more potential aggressiveness because as I see, IT doesn't necessarily change your timing. But like in my mind, it's like changing my timeline and sense of like when I truly need to rely on my network to cover all of my expenses.

I don't fracked. A lot of us are going to be in a situation like that where we have some extra income coming in. So how would you think about that as the strategy changes when you have other income? I'll be IT. IT could be a small portion but in non insignificant portion .

yeah you know it's difficulties. I do run simulations, but also there are a lot of simulations out there that people can access for free to. And I know carson has some to that you can look into, but I think that point is so important because when we blindly follow rule of firms, IT can really, you know, delay retirement or push us to be too afraid to do something because we don't have IT perfectly set out.

I have clients where we start off with the higher withdraw rate might be like a five percent withdraw rate, but then they have rental income really kicking in because their mortgage are going to be paid off on the rental properties in five years. And once that rental income really kicks in, almost one hundred person of their expenses are covered. So we can afford to start off with that higher rail.

But for that client, we might need to also start off pretty heavy and cash and bonds to make sure we can make IT. To that point. What we want to be able to do is to participate in a recovery.

If we enter a job market in retirement, we need to have cash. We need to have money equities in order to participate in the eventual recovery. So the way that I I think about that, I actually do like to back into acid allocation.

And I think a lot of time as people confuses like the bucket strategy, but I think it's a helpful exercise to say, are eight I haven't come kicking in a year eight of retirement. I need eight years living expenses that I can really rely on and then we can break that up. Three years cash, five years of bonds, something like that.

And I do find, from a psychological perspective, I had client to love that. They love talking about. I've got eight years where I don't have to worry about IT. And then i've got my pension kicking in or i'm age fifty nine and a half at that point and I can start accessing retirement accounts.

I know next question, we're going to get into taxable versus retirement accounts in the context of this question, but I think it's a helpful strategy to just start with your situation. How many years of living expenses do I want to make sure that I have? And we can't make IT like fifteen years because we might start getting too conservative at that point.

But first five to ten years, if we can make sure that we've got that covered between cash and bonds, that helps with a lot of the risk here. So when we talk about in carston mention this kitchen has great research on IT, but IT says rising equities, light path. So something I think people get confused quite a bit is if you look at at at a target date fund, like can you look up vanguard or fidelity target date funds and you can do this, you can see how the target date fund shift and they get more conservative as you enter retirement.

And even through retirement, they continue to get more conservative. But if the first ten to fifteen years of retirement are the riskiest, we actually should start most conservative for those first ten to fifteen years, and then we can start adding equities and get more aggressive later retirement. That's kind of a difficult idea to bring up because IT goes against so much knowledge that's out there, goes against what target date funds to.

But kitchen has research on this for the thirty year time horizon in the traditional retirement. And carson expanded on that research, and he looked at IT for the early retire. They both kind of came to the conclusion that, yeah that makes sense to start off conservative and start off with more cash on bonds and then increased equity throughout retirement as we get out of those risky ten to fifteen years of initial retirement.

You can look at how they do IT. But if you say I want to eventually get to a seventy, thirty portfolio, start out know fifty, fifty calculate, I want to get to seventy, thirty and fifteen years. And when you do, you're rebalancing every year.

You start to add equities every year. So this works really well because in a down market, your dollar cost averaging into equities, you're buying more equities if your retirement starts off a little rocky. Now on the upside, say you you want to retirement in market is really well.

Well, you don't get to participate in the upside as much. But then we're just we're gambling with our games there where it's a difference of am I going to end with five million or seven million at that point. So it's really a risk mitigation strategy, but I find that really interesting. The research is out there and I I don't see many people follow that yet.

That is really appealing to me. That super interesting, right? We're gna have to follow up on that. Yeah, we could do a rampant with them about that because that would. So okay, really, I think we it's funny.

We actually loosely answered a little portion of each of the next three questions, but let's go through them, never or less. So you alluded to Jennifer question, which was either question about funding earlier retirement with a broken count. I'm hoping to retire early and about ten years at eight fifty tip, i'm planning to fund my early retirement from the brokerage.

I have a rough I A and a traditional retirement account that I can access of yin a half plus. I will have tension in each sixties ince on the government employee. So my question is, if I experienced down market in my girl in retirement, where should I funds?

If I don't want to sell when socks are down, should I create a large cash account? I like the simplicity of jail cosplay, holding just one stock fun and one band fund in your portfolio. But how does that work when you're funding early retirement from a proof of account since we know it's not wise from a tax perspective to hold bonds and action?

I was really excited to tackle this one because asset location, I was your escape kind of your opinion on this because we talk all the time about, you know put your bonds and traditional race shelter the interest. It's a tax efficiency strategy when we're using that. Now I find a lot of people ignore municipal ones, which the interest is exempt from federal tax and state tax.

The bone is issued in the state that you live in. So looking at municipal violence and placing them in a broker account could be a strategy. But to take a step back here to really answer her question, and again, we're kind of piggy backing off for the last one.

But he says, if I experience a down more in an early retirement, where do I pull funds from? So we just talked about this, but that's what your cash in your bonds are for. You could think about them in terms of bucket.

You could think about them like about thirty percent of my portfolio in cash on bonds doesn't really matter. But I like to look at them as insurance for your equities. If equities are down or stocks, another word for equities of those are down, we don't want to touch them. We want to let them recover because we don't want to do reverse dollar cost averaging.

So a lot of people a strategy I like and I see in practice that makes people feel really comfortable is in the final years leading up to retirement, they start to really build up their cash and they like to go in the retirement with two to three years of cash. I like that strategy. I don't think throughout retirement you need to keep two to three years of cash.

I think one year of cash is fine as you go in rebaLance every year. But I know that makes a lot of people feel comfortable, especially if they don't want to go back to work. If we're really trying to eliminate that scenario, you have to return to work and we want to make sure that you can stay retired, then we have to be a bit more conservative, build up the cash, introduce the bonds. And so just to answer that question very simply, for Jennifer, you put from bonds or cash in that situation, evacuations are down and then evacuations are up. You kind of have the option to take some games off the table if you want, or still you spend on that cash bucket depends on the person.

Yeah, there's so much here. So first off, when you say one to three years of cash, so just for anybody who's new to the podcast that mean essentially you look at your life expenses, so that's what one year cashes. Okay, this is what my life costs an entire year.

How much is the cash I would need to cover that for one year or in this case, two or three? So is very simply, which I do want to ask you about, reverse dollar cost averaging. You snuck that in their report.

I'm sure that picked some interests because that i'm sure a lot of people don't know what that means. But yeah, this was so interesting about a question like this, is there are so many layers, and that's what makes this fun doing episodes like this. But IT makes IT really frustrating and complex because you want to give the perfect answer.

But you really, you just can't like Jennifer in this instance. Just knock in there. Yes, I will have a pensioned eight sixty since our government employee, and I assume as well would have social security, which would either cook in some time in her sixties as well.

So just during the mafia, she's forty two, SHE has a pension. And so security coming in under twenty years. I mean that if you were sitting down with her as a client, that changes the entire completion of how someone would look at their four percent, their sample jewellery, because I suspect that will never know.

I suspect Jennifer has enough network to cover her five number just in network. Not to mention this mention in social current, right? In which case SHE doesn't have to worry about. I really and a half percent able draw, berate and the money like SHE to do dramatically higher. So I suspect strongly.

And this is just because that he could reach five well in events of ten years from now, just based on back of the envelope, knowing how conservative people are, I think like that actually one of my concerns. And again, this is what it's talk, because I know most people in the world are not saving anything. So the funny thing about the five community is.

We are the exactly opposite. We always say we work too many years where worried about getting the chance of success as close to one hundred percent as possible. When replicability run ten thousand simulations in a Monica, and you get a ninety one percent success, really like that, essentially a hundred, because you're going to make tiny little changes like you're not going to learning style run off a Cliff to zero dollars.

There's no chance of that. So I fear in the back of my mind that people are one more years syndrome. They are staying too long as their there are being too conservative in every way possible.

So like, that's actually a bigger fear of mine. Then I just running off a Cliff and running out of money and being destitute and eating cat food. I find that so hard to believe.

And that's why what i'm taking this couple of minute here real to talk about is like I want us to think about our holistic financial situation. And I think a lot of us just assume, oh, zero dollars of so security likelihood. Zero dollars of so security is almost zero, right? IT might be cut from the current benefits, but it's not can be caught that much to account. D to zero is really silly in my a lot of us don't consider any of this other income that's coming like you have to consider IT. The whole point here is to like you've said repeatedly, IT was first five years is where the issue is once you retire and you're making no income, and that's when sequences are returns.

But if you could mitigate that by having ten, twenty, fifty percent of your expenses covered, IT changes the entire game of this because as chain said, and we didn't really go over this, but chain said this in the prior question, like kind of the whole back at the unable mouth of this of compounding and our fine numbers is that we're expecting a rough eight percent annualized return every year. Of course, we can guarantee, like he said, there could be some years with fantastic c plus twenty. There's some years or its minus one, right? But we're expecting that rupa percent and you're pulling out IT three, four maybe fibers and at most.

So you're counting a little bit for inflation and there there's some way over, right, like that kind of again, very back at the above. I'm not giving like this is not a math someone on here. This is just trying to specially understand there is some with the room for and maybe those first couple years were not that great, but if you can mitigate that by not needing to cover one hundred percent of your senses from your network, IT just makes IT dramatically easier. So conventional frame over I D love to hear your .

your thing yeah I mean, I think the worst thing we could do here is scare. And you want away from retirement because of sequence of returns risk because to your point, in a practice I was like laughed sometimes as when we obsessed so much about withdraw tes because when I see what people are actually spending and retirement when social security kicks in and sometimes pensions or any other types of income that come in, there were jewelery is so, so low.

I never think about IT in terms of we're taking out three percent of your your portfolio every year because they have other sources coming in that that cover that. Now that being said, I do think we start to pay attention to without W A little bit more because not many of us have punctions anymore. Many of us don't have guaranteed and come.

Yes, we have a social security, and I know there's concerns about that. But I agree with you, brad, the likelihood that we have been paying into those security our entire careers and that we're not going to ever see a dollar from that, if you think is a little silly. So I do think we can reliance security to some extent, but we are getting more concerned because we are having to create income ourselves out from our portfolio.

So I get the concern and I get the stress. Pensions were were great because they were able to take some of the mental load off of all of this. We're all thinking about a lot more because we are the ones that have to create our pensions now.

So I think it's important. But we also can not ignore income that's going to come in. And we always ignore that. We say I need twenty five years of expenses saved, and that assumes that you will be living a hundred percent off your part fully all through our retirement when I see happen. In practice, a law is when slow security starts and when pensions kicking IT covers such a large percentage of their living expenses that the likelihood failure is extremely low. So just again to point out, I kind of try to answer Jennifer question here.

What we are doing in that first five to ten years because a matter if if pensions coming in our social security, many people have a good ten years where they need to bridge to something, bridge to those security, or bridge to age fifty, ninety and a half when they can start taking from retire metic counts. That's where we want to make sure. And you ask about reverse dollar across averaging, all that means is we retire.

We entered down market, say one hundred percent equities, and now I need my income. So my million dollar portfolio o is where seven hundred thousand. Now I need to take out forty k from the for example.

We are really exaggerating the problem there because portfolio is is dropping and we are selling shares and we're taking that back out. So that's what I mean by reversed across averaging, if you're you're saving for a retirement, you're buying those low Prices. If you're in retirement, you're selling at those low Prices.

That's the situation that we want to avoid that was really dangerous to your portfolio. But like I said, I don't want to scare you, want to hear because it's a fairly simple thing to solve for. There's A A solution there. And that's why we have bonds and cash in our portfolio is to protect against the sequence of returns risk, not to optimize returns. Equities are always gonna bonds and cash, but I just encourage everybody to think about bonds and cash as insurance for your equities.

awesome. Thank you for the clarification. I think this can be very helpful for a lot of people. Let's move on. I think we can do kind of a quick hit answer on the next two will see, have the thing to we convey here. So bob's Christian came in and both said, okay, love your opinion.

And to shoot holes in my plan, my wife and I have forty six SHE has a million dollars in retirement, mostly for a three b four fifty seven. I also have a million dollars in retirement. We on five retto properties that will be paid off in a couple years, they will generate about five thousand dollars per month in that income.

After expenses, we currently spend about fifteen thousand dollars a month in a high cost of living state where we will stay, I thought, is that if I save up a million dollars in my broker account and have the five paid Operators, that we can both retire roughly at forty eight years old, we'll have the five came rental income. And i'd have to pull out about ten thousand dollars a month from that million dollars in break age. According to online calculators, that means a broker will be depleted in about thirteen years, but by that point will be over fifty nine and half and can access our retirement accounts, which hopefully at that point should compound to over four million dollars.

Combine, which would at a three percent withdraw RAID get us the other or ten thousand hours, right? They have the the five thousand and rental income they need to cover another ten thousand smoth. I like this plan, but my wife is concerned about drawing the book to count so much in that time.

What I am I getting right? And what am I missing? I'm usually missing something, but that sap, yeah, what are they getting right? What are they missing?

Yeah, this is, it's funny. And I was telling you beforehand, I actually had a client where almost not the exact same, but very, very similar situation where they had rental properties. I mentioned this earlier that we're gonna fully paid off in a couple years, so that income was gona kick in and really help them.

And then they had decent amount retirement accounts and then dec amount and broker. But in order to get them to fifty nine and a half, we basically had to deplete the broker account. And at that point, the retirement accounts we're gonna worth.

And to this point, that looks like they're going to be work double when he gets there, which makes sense, and then you can start taking from there. This is a really hard thing to do. And in my simulations, I like to show the clients like your broker account going to be to delete.

And unless we have like a great secrets overturns, market really does well. We're probably going to have a zero dollar baLanced by the time we get to age fifty nine and a half. But the important thing is to always look at your portfolio as a whole.

So we're considering the fact they've got these retirement accounts there that we probably should leave one hundred cent equities what we have at at least ten years or at least close to IT. Again, say for sure, that way they can really, really grow. Like the whole I would poke here is this might not work well if your retirement accounts lean conservative.

We need them to grow for the next ten years so that they can take over an income. Other thing here, we could poke a hole in is I I want to get this exact amount. He said, thirteen years.

Yeah, thirteen years. So high chance those retirement accounts are gonna grow. Low chance that we hit a bad sequence of returns risk and they won't grow very much.

That being said, we have had flat decades before. We've had decades where the return has been really minimal. You can look at two thousand and two thousand and ten, and we have the dog on bubble and the great recession, really bad decade.

So that kind of like a whole. Or suggest to look at if we hit a decade like that could be difficult, but that's the case for everybody's retirement plan, right? Like if anybody enters into a decade like that, we might be in a little bit of trouble.

We might have to decrease with draws. Or you look at some other type of income. But just back of the envelope math here, I don't see a problem with this.

And in fact, like I said at a client that almost is doing this exact scenario, but that would be the one thing why I say, okay, brokers count got a little a bit more conservative so we can get through those thirteen years entirely accounts. Yeah, they should hypothetic ticals double in thirteen years. But we have to make sure that they're invested correctly, invested aggressively to do that.

Yeah, agreed. And so right. I am with you that on the surface, this plan seems sound to me.

You can never tell, of course, where life in the markets are going to take us. But on the surface, the plan sounds good. IT makes sense.

Anything also, it's not even factory in two things that we voluted to episode in the past, which are a you can access retirement accounts before fifteen and half. So we have talked about that in depth with shama leni on episode four seventy five. So it's not like you literally can't touch that money until you're exactly fifteen and have like they're clearly or ways to access that money.

So but not be worried of about that. There are also not everybody is doing the map along with us are racheal, but but they are assuming so once they reach up in half, they need another ten thousand million months. So that's one hundred and twenty thousand dollars a year.

And interesting. Ly, the four million that they're expecting is the three percent of draw rate from that four million get you to one hundred and twenty thousand. So Frankly, three percent withdrawal is very, very low.

I mean, even carston has said three point two five is basically like an absolute certainty. And basically i'm putting words in his mp, but every scenario is ran again. My editorial is boring as zombie pocalypse is you're going be fine with that.

So realistic can be higher. They're not counting security at all. So that almost doubled is a couple two thousand million a month. So that changes the calculus here entirely too and not for nothing. But again, with my kind of like you're not can be lendings just running off a hill when you spend fifteen dollars a month, one hundred and eight thousand years year in odd bizarre way, you have more flexibility, right? Because where is somebody who is saying like i'm only spending thirty thousand hours a year like they really can't cut that much.

There's not that much to cut if something terribly arrive where somebody spending one hundred and eighty thousand thousand a year, almost undoubted if the option was going back to work or running out of money to unpalatable options, maybe spending and ten thousand hours less a year, twenty thousand years last year is a much Better option than either of those two. So they have, in this bizarre way, a little more flexibility there. So I think, again, back the ar's plan seems to work for me. Yeah, yeah. I I was gonna .

say the econic comes back to us allocation. That's the other thing. They need to make sure they get right to the point of of the client that i've been of talking about. One thing that I asked them that I asked a lot of clients when IT comes to early retirement is or IT, let's say you retire terrible market that brokers account really drops. And again, that depends on the asset allocation.

By how much gonna drop would you go back to work? Or could there be a way you or another income because that will influence the asset allocation that I recommend here? In their case, they said, yeah, I would definitely go back to work.

So we were able to be a bit more aggressive. And early retirement is difficult because we have to be conservative to protect for that first ten years for the sequence of returns risk. But if you have a long a time horizon, you can be too conservative.

IT starts to get really risky if throughout that time horizon, you are really low on equities. So that's why I would encourage everyone to go read carsons research on this because he talks about the rising equity line path, and he runs simulations here, assuming you start out at eighty twenty and then you get IT up to one hundred. The other one he he mentioned has a high successful is sixty forty.

You eventually get IT up to hundred percent equities. Those two had the highest access rates with the rising are critical light path. So those would be some other questions I would ask myself in the situation because that will inform asset allocation IT will inform how conservative do we have to be because a very answer is, if we retired, I don't want to assume that we ever have to make and come again, I don't everyone to have to go back to work that will make a difference on their acid allocation. And I would drag them to curse in to research if they want to start final alizon their acid location to see what's what a good plan for them.

Wonderful, totally great. I let's move on to our second last question here. So movement symptoms and and said I have a burning five question that I can find an answer to.

Traditional al fight thinking is predicated on the four percent role, assuming of portfolio of index ones, except what if I have mass, her real city for folio that generates a six percent net yellow post management fees. Insurance agent, in theory, this reduces in this party. H, I am a little unclear.

In theory, this reduces the need to save twenty five x of annual span to around sixteen x six percent and therefore the number of years working drastically produces is this feasible? And if there's something i'm missing occurs to know why everyone isn't following this exported strategy and said six percent that year isn't too hard to come by as places like dubai where they are, would love your thoughts. And if I missing something that could radically alter my work in life.

So my first lot, and this actually goes back to what we said in our the most recent now bag eissa, which was episode five thirteen, we call that make your own different. We ve got a, we, and by we, I mean, me mostly got a little bit. This is when you think you found some grand answer.

And this is not about which i'm not saying, but I would counsel when you believe that you found some gamest way that like circumvent all the other rules. I would just assume that there are like millions of other people who are really, really smart to and like the likely who of you haven't come up with like this grand answer that you're outsMarting like dividend socks or bitcoin or really investing. I have never i've looked at these number of so many times like there's no just silver bullet answer, like all if you put all your money a bit going IT guaranteed to double every couple of there's no guarantees in life, guys. There's really I promise you there's not so okay, I don't want to get another so bacteria, but let's just talk, I rebel. What is you'd rising IT.

So there's really two different questions here because they talk about real estate and then they talk about like just trying to get a six percent that yield. Now it's impossible for us to comment on there. Will A A portfolio here sounds great.

I after rely on numbers here, you get a six percent that yellow, great. But when we talk about four percent rule, we have to remember we are talking about stock market there. We're not talking about real state, not talking about a business.

Four percent rule relate to bonds and stocks. So that's what we have to distinguish here. First, when I have clients that come in with the real state portfolio, know I really have to rely on them to give me the numbers.

This is what the cash flow is. This is what IT is after expenses. And so with real estate, I just rely on on that cash flow that they tell me.

I don't look at and say, okay, you on two million and real stay, let's assume four percent off that you can take because IT IT depends on the market, depends where you you're located. They're dubai here. So I no idea with the real estate market is like there to know this is typical if this seems higher than Normal.

But for real state yet, I do rely on that. The cash flow. Now the question of why does that everybody just go after a six percent net yellow is something we did talk a lot about in the dividends episode because that's what a lot of dividend investors say.

Like what you're doing, a four percent withdraw. I i'm building up a six percent divided yields. So my portfolio has to be much lower than yours has to be, and I get to retire much quicker.

We poked a lot of holes into that. And what is not necessarily a great idea, and i'll just reiterate the point. But returned safe withdraw rate, there are two different things.

I think i've sad sequence of returns risk in this episode one hundred times already, but that's why they're different is because it's not the average return that matters. It's the order of return that matters. So there's a low correlation between a safe jewelry and an average rate of return.

So that's why we can't just say i'm just gonna SE the six percent dividin yld and that is what I will live off of. That's fine if you can get the six percent divided year, but there's other big piece of puzzle here, which is appreciation or depreciation that we simply cannot ignore. And so yeah, I mean, like I said, these are two different things.

Realest is one thing. Never get a good cash flow on that. That's great. But to recommend that everybody go chase and easy, six percent met, yelled is just not realistic.

Yes, totally agreed. I think so. Let's sugar IT this in terms of that six percent and yelled first and then in terms of what we talked about before.

So i'm going to start there actually, which is let's assume that your annual expenses are sixty thousand ops and you have twenty thousand dollars of real seat rental income, net rental income. So after all expenses, yes, the five calculation is very different. That right? And that's that's fine.

And this gets to the heart of the question, I think, which is you don't have to do any multiple ation of separate generates. It's a totally different thing. As racially said, you will take all my life cost sixty thousand dollars.

I have twenty thousand dollars coming in. So I actually now only need to cover another forty thousand OK. And now we will be true if that twenty thousand dollars was were not we're not talking about dividend because you and I think those are separate. We're talking about if he was a pension, if he was a side hustle, if he was social charity, if he was, in this case, rental income that subtract IT.

And then what's left over is what you need to then cover by the asset you have in stocks and bonds that so that's really important yet to the question, if your life cost sixty thousand hours and you had sixty thousand hours of rental income, you're in fine as far as I can tell in barring as something else that we just simply don't know and you're not talking about like, okay, this is the absolute best year and i'm not accounting for vacancies and i'm not accounting for any expenses and i'm not accounting for this. And add, if you're being smart with the actual business. Income station for your rental business, which is what IT is.

Let's be clear, that's a really rental business if you are accounting for all those things. And what we like to say, and i'm very liberally borrowing from bigger pockets here is in a perfect world, I think for a lot of real of esters here in the U. S, you're looking for that one percent over, okay, which is i'm getting one percent of the purchase Price in gross rent per month.

So let's say i'm buying a hundred thousand other house and i'm getting a thousand dollars in rent every month. okay. So Rachel, that one percent per month is a twelve percent ropes return to per year.

Know most people anywhere in the U. S. Find IT very difficult to find the one percent royal house there.

Obviously places in the south and where you can run those. But if you just look at your neighbor od, you're not even close. So let's be clear, these are not just falling off trees.

They exist but are not falling off treats. So this gets to the question as well. We can just like hint the next house next door and say i'm going to get one percent ple doesn't work.

So you have to find that and you can find IT so that get two twelve percent growth return and then bigger packets is you should generally say fifty percent of that is going to be expensive of all the expenses are incurred. Property management taxes, like I said, these vacancies is the air condition of breaks, have insurance, everything that goes along. So if you're just saying like pie in the sky, I have no expenses or just a couple box that I spent this year, you know those expenses are coming.

You have to account. So that gets you down one fifty percent. That could you down to a six percent net income? Now that so can be wonderful if you can find that one percent rule. And that does change the game but because he said then on, let's say you have two million dollars and you just happen to find a bunch of is that me that rule, you could get six percent on that, which would be one hundred and twenty thousand dollars of net income every year. We're as if you put two million dollars in market and you relied on a four person, real as eighty thousand and out.

So at the heart of the question, I do understand, like put this conceivably, and this is not even talking leverage, which almost that person would instantly be yelling at me, taking like the fire accounts version of this right, and saying, like, I look, yeah I get that. I mean, like there is a case to be made for us, not even counting any of the equity, obviously, because that's a separate thing or appreciation like yeah, your nett ork might be going up, but we're just talking about that income, the income stream from this property. So that's how I approach yeah quite potentially export, but I think it's very different way. And the question .

yeah like I said, it's it's kind of two different questions here, which is why I think we had to answer both of them. And my mind, real estate should give you a Better deal because it's more work and there's more risk and there's so much more due diligence you have to do. So I am going in a real say, IT Better beat the stock market as far as what I can rely on for returns.

But that's why I emphasize that these are are two different things. We've got your index fund investors going in the stock market. They don't want to touch IT.

They don't want to do any work. And then you've got really state investors who do you want to try to get Better return. They feel comfortable going into real estate, both sound methods. But in my mind, yeah, we can expert F I by going into real estate, but it's also just gonna be more work.

So there's a lot of people that don't want to go down that road cause real state makes them nervous or they don't want to be landlords or there's a lot of different issues with IT. But the overarching point here is that these are separate things that were talking about. So yeah, we could chase a six percent net iee.

I mean, I could chase IT a great yield of my business. There's multiple different types of investments that we could go after that could beat the stock market, but we have to look at them separately. And we can't conflict a six percent and that yield with a six percent and divided yield. That's the real important point here.

nice. I think we covered that nicely. So the last question and you said this was going to be a landmark record for the the revue of the answer, so Roberts question you might take longer to ask. I was listening to your deep dive and rough conversion with drops work for a local municipality, and they offer multiple retirement plans for k roth 4， k four, fifty seven and fifty. I also contribute to a rough array, which has been open for twelve years. If I contribute to a rough or N K and or around four, fifty seven and brow those funds into my rough ira after leaving my employer to those funds in any earnings, immediately can as a great contribution and can be pulled out at any time for my rap. I, since my broth area has been open for more than five years.

so they don't count as a contribution, is just a roll over. But the funds adopt the age of the account. So to answer this really quickly, your roth I has been open for twelve years. Those funds are going to be seen as that having bit in there for twelve years. So you're good to go that five year requirement has been met OK.

好， Rachel. This is we .

answered .

other questions. And as always, I appreciate you. Being here has been .

a great time. I hope nothing was too complex. Some of these questions are so hard to answer because IT IT really depends on the person. But if you are, are willing to reduce the research, especially an acid allocation, and I think everybody can get there and decide on a framework that works for them.

totally great. So as always, and as you can tell, we are building these questions. I quite literally got that other question essentially while we were recording this and was able to read IT.

So currently, feedback could choose me about economy, the best way to send them in, or really to reply to my newsletter that comes straight to me. We are going to a navy. By the time this was alive. We might have a new feedback poem on our website, which is going to be really and enable you to categorised where the feedback goes to and the specific types of questions. So i'm hoping to make IT easier to stream and everything so keep I am that choose of I I come should be a much Better uh, viewing friends in the coming days, weeks and months so a stay tuned that Rachel, where can people find you?

Yeah website is Rachel can all come cap underscore wealth on x or twitter and camp wealth basically on every other social .

media platform. Beauty until next time. Thanks for being.

thanks.

Thank you for listening to today show and for being part of the choose by community. If you haven't already the best week to get involved are first subscribe to the podcast. We are listening to this on a podcast player just hit subscribe and then subscribed to my weekly newsletter.

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