#59 – Retirement Readiness: Roth IRAs, the 4% Rule, and Practical Investment Strategies

Krista Dibias [00:01:18]:
Thank you so much for having me on the show. I really appreciate it. I’m really grateful to be here. We have some great questions for you today. Joan in Pennsylvania wrote in with this one. The majority of our retirement is in my husband’s name. Should we take some of the money from his Vanguard account to continue fully funding my Roth IRA until I retire? We’re concerned that the money in his name would need to be used if he were to require long term care at some point, leaving me less financially stable. To give you a better picture of the situation, he’s 61 and I’m 53.

Krista Dibias [00:01:49]:
He received a lump sum of approximately 500,000 from his employer when he retired. He rolled that money into a Vanguard Life Strategy Moderate Growth fund. He also has a monthly pension that I will get 75% of when he passes. I will be working for about five to seven more years. I have a rollover IRA of approximately 52,000 and a Roth IRA Target retirement fund of around 80,000. I’ll get a small pension as a Pennsylvania public school employee and I’m a paraprofessional about 15 years at the time I retire.

Wes Moss [00:02:20]:
I wish I knew where Joan in Pennsylvania was from.

Krista Dibias [00:02:24]:
You’re from Pennsylvania?

Wes Moss [00:02:25]:
Because I grad from Pennsylvania public schools.

Krista Dibias [00:02:28]:
I know you did.

Wes Moss [00:02:29]:
Maybe Joan was probably no, I’m too.

Krista Dibias [00:02:31]:
Didn’t you grow up on a farm?

Wes Moss [00:02:32]:
I did, yeah. Kind of like I would call it a working farm. Not or I don’t know. My dad has lots of chickens, pigs, horses and A couple acres that he has to Mow on his 1952 John Deere.

Krista Dibias [00:02:49]:
Wow.

Wes Moss [00:02:49]:
Tractor. One of those green old school looking tractors. He still mows the field. He loves it. The, the. So let’s say for Joe. So big age gap, Joe, There was about an 8, 9. I think it’s a 9 year age gap between the two.

Wes Moss [00:03:05]:
And I’m assuming her husband, when she said rolled over what I believe she probably. And it’s a pinch or a lump sum that 99% of the time that means it went into an IRA, not a after tax brokerage account. So he’s got money. This $500,000 is in an individual retirement account. Now he’s of the age, he can take it out and there’s no penalty to do. So she’s young enough. How old is she again? 53.

Krista Dibias [00:03:33]:
53, yeah.

Wes Moss [00:03:34]:
So she would be even too young to use IRA money without a penalty. So there’s a big age gap here. But the first thing I would say, Joan, is that that money’s in an IRA and anything that comes out is taxable. So anything that comes out of that is you really need. That should be. If you need spending money, then it sure can come out of the ira. But you really wouldn’t want to pull money out of the IRA to fund your Roth account. So what I would do instead is think of it this way, because he’s already got his retirement savings and you’ve got a nice pension.

Wes Moss [00:04:07]:
Even if he passes 75%, then what I would be doing here is really trying to defer as much income as I could possibly defer so that she can play some catch up and think about. The numbers are pretty big. So the new roth amounts are $7,000 for 20, 25 and $8,000. If you’re 50 plus the maximum 401 contribution. And I would assume Joan has a 403 because she’s a teacher. $23,500. It’s $31,000 with the catch up because she’s 50 plus. So think about this.

Wes Moss [00:04:41]:
You’ve got 30, almost $40,000 a year that a big chunk of that she could defer, have low income because it goes into the 403B and then another 7,000 into the Roth. That’s four, that’s, that’s called. Now she may not be able to do that much in savings, but imagine she does that over the next decade until she’s 63. It’s 10 years of 30 or $40,000 a year in savings she could have. That’s 300 to 400 in savings plus growth, half a million dollars. So she gets to play catch up. And that’s how I would do it. I wouldn’t be pulling it from his accounts to put into her savings.

Wes Moss [00:05:22]:
I would just really try to maximize what she could defer when it comes to her income. And I think that’s how she plays catch up. The other thing for Joan is that they could look into long term care insurance. She’s worried about that. Typically though, by the time you get into your 70s, long term care insurance is so expensive that a lot of times it’s not worth it, particularly when you’ve, when you’ve got some retirement assets and you have a pension that to me, creating that annual income stream, which is the combination. And this is a trait of happy retirees. I do a bunch of research on happy retirees have three plus different sources of income here. They’re going to have her social, his social, his pension, her accounts paying some sort of cash flow.

Wes Moss [00:06:13]:
His accounts make cash flow. So there’s a lot of different income streams. And I think that a lot of times can be how you’re insuring your health care over time as opposed to buying an ultra expensive policy that a lot of times is just cost prohibitive.

Krista Dibias [00:06:29]:
Great. Sean in California says, my wife and I are both 57 years old. We have $3.8 million saved. We’re both 100% in the S&P 500 and we have no debt. The problem I have is when do we have enough? When do we move on to a more conservative investment selection? I think we plan to retire at 62 or so. And once we reach $4 million, we can pull 4% and receive $160,000 per year.

Wes Moss [00:06:57]:
Again, this is a great example. They probably did a retirement. Sean and his wife did a retirement plan and it said, hey, we want to be able to spend, let’s call it 200,000 a year when we stop working or close to that. And they’re pretty much there. I would assume this. So first of all, again, great example. They get to their goal and then now they think they need more. Almost everybody feels that way.

Wes Moss [00:07:22]:
And that’s why I think planning is so important, is that it really kind of continues to reinforce, well, hey, if we get to 4 million, that’s 4% of that, which is using the 4% rule. 4% of that initial balance plus inflation over the course of time. And maybe I’ll start here. The simple answer is yes, they’re on track and they can do this. Period. The other thought is that they probably at Least will have $50,000 worth of Social Security. Maybe not at 62, but if they wait a couple of years, could be more than that, because it sounds like they’ve been making a fair amount of money. And so I would look at this as they have not just the 160 for the 4% rule, but they have another 50 come in.

Wes Moss [00:08:02]:
So that’s 210. They can, if you can live on $210,000 in particular, if there’s mortgages paid off, then that plan works. And here’s why it works. They’re, they’re really predicating and their retirement. And I would say this is the most important number in all financial planning is that 4% rule. I call it the 4% plus rule because there is no perfectly set number. But William Bangan back in the 90s, essentially went back and studied every market. If I retired In January of 1929, February of 29, March of 1932, and then played it out, if you were withdrawing 4% increasing for inflation every year, how often did the money run out and how soon? And I’ve redone these numbers.

Wes Moss [00:08:48]:
So Bengen did it in the 90s. Our team has done it every year now for the last almost decade. It still works. And if you have a balanced portfolio, it works 99% of the time. And the one scenario where you can find that it actually runs out where you’re never adjusting and you’re just taking your 4% plus inflation, it still lasts 30 years, meaning that they would be able to take that 160 plus inflation. So by the time they’re in their 80s, it’s probably more like $200,000 a year. So this is all about adjusting for inflation. And that’s why the portfolio though has to be based at least 50% to 75% in diversified equities.

Wes Moss [00:09:32]:
In the studies Bingham used the S&P 500, we’ve done the same thing, but the market growth over time has allowed for the inflation adjustment and not running out of money. Now, interestingly, this is their question about when do I diversify? It also works the 4% rule 97% of the time if you have 100% in stocks. The only problem is that 3% of scenarios gets pretty dour dire. If you end up retiring and you’re 100% equity is in a really bad market for the first several years of retirement, that’s when the rule can kind of go sideways and you can run out as short as 15 to 17 years. So how do you adjust for that scenario? That’s the balance of the portfolio so that most of the time staying 100% stock still works over 30, 40 plus years. But to kind of account for that scenario where you get unlucky and you retire and we have a bad stock market for a long period of time. That’s where that safety zone of the 40% in fixed income or safety assets dampens the overall portfolio coming down because we’re using a little bit every single year. So I would say that they’re 58, they’re probably really close to their goal.

Wes Moss [00:10:52]:
I would start heading towards that balance as opposed to 100%. Maybe they start today and they add 20% and still have 80% in stocks. But the long run, the 4% rule is predicated on 50 to 75 at the max. Because beyond 75% in stocks, if you’re really trying to take out that 4% every year, increase it for inflation, you, you can run into some scenarios where we have bad markets and the diversification is really set to get us from 97% to close to 100 over time. So I would try to be diversified into fully diversified, meaning 60% stocks, 40% of bonds by the time they start taking money.

Krista Dibias [00:11:34]:
Got it. John in Connecticut says my daughter and son inherited money from a kind old lady. When she passed away many years ago, the money was placed in trusts for each of them. They’re now past the age of 25 and per the terms of the will, the trust can be ended and the money turned over to my children. Is there a way to do this without triggering a taxable event? Perhaps we can roll over the money from a trust to an individual brokerage account. I’m not sure. All the money’s been in Fidelity funds for many years. Neither of my children make a lot of money.

Krista Dibias [00:12:03]:
They are not in high tax brackets. Perhaps it would be fine to have all the gains taxed now when we’re close to the trust. When we close the trust accounts and then open up new brokerage accounts for them with a brand new cost basis and this. And my daughter is 34, my son is 32. And do you want the amounts of the accounts?

Wes Moss [00:12:20]:
Yeah.

Krista Dibias [00:12:21]:
My daughter and son inherited about 50k each in 1995. Some was used for college and some was used by my daughter after she reached age 25. His son son’s account is worth about $150,000 and the daughter’s is worth about 60.

Wes Moss [00:12:36]:
Okay, so he’s really saying that. So a, I love this Email A kind old lady. It’s like something you see out of. That’s like out of a, I don’t know, a Lifetime movie. A kind old lady left us funds. The, the. There’s a couple things. So back in 1995, it’s been a long time.

Wes Moss [00:12:55]:
The mar. The stock market, the s and P500 by the way, is up something like 2000% since then. So these have obviously grown and they’ve used some of it. The other thought here is he’s saying, hey, do I just take the money out, pay the taxes and then they’ve got fresh cost basis. The answer there, this is very likely a grantor type trust. With a grantor trust, they have the basis of when they inherited the money back in 95. So it’s still a pretty low basis. Even though they’ve used some of this and they don’t just for it to get into their brokerage account doesn’t mean they need to sell anything, which doesn’t mean they need to pay any taxes.

Wes Moss [00:13:41]:
So there’s no reason to just go ahead and do that. And everybody gets long term capital gain and there’s a bunch of tax implications. What I would do, because it’s again, probably grantor and the basis is from the 90s is that the money can move into their brokerage accounts. And then particularly because they have lower income right now, they can choose to sell a little bit at a time. And if you’re in a lower tax bracket, if you’re in the 15% and lower tax bracket, then your long term capital gain rate is zero. It’s zero. Now you selling a whole bunch of stock in itself can put you up into the 15% tax bracket. But if $150,000 and $60,000, this sounds like money that could kind of supplement their lifestyle and they can just slowly say, well, I really need $10,000 this year.

Wes Moss [00:14:37]:
I really need $20,000 this year. And you go through this exercise of looking at your accounts and there’s a tab in everybody’s brokerage, whether it’s Fidelity, Schwab, Vanguard, that’s called Unrealized gain Loss. It’s my favorite tab. Is it my favorite tab?

Krista Dibias [00:14:55]:
I’ve never clicked on that tab because.

Wes Moss [00:14:57]:
It shows, first of all, it shows you how much money you’ve made in any position or it shows if you’re not making position, but it has everything to do with managing your, your taxes, your long term capital gain. It’s the best tab that nobody ever looks at. So you. They’ll get this new money that they don’t need to sell it all of the cost basis from what they originally bought. Let’s say there’s a basis of $10 for this stock and now it’s worth 50. They have a $40 gain. But maybe there’s a few stocks in there that aren’t up 2000%. And guess what? If the basis is relatively flat, if the basis is 10 bucks for a stock and it’s trading at 11, then selling that doesn’t have a whole lot of tax implication.

Wes Moss [00:15:42]:
So that unrealized gain loss tab is a way for you to say, well, I really want to sell something. Let’s sell. Also looking at the different investments, but you can have a lens to well, if I sell these two things, then I’m not going to have a whole lot of capital gains. If I sell the biggest winners, then that’s when I have the biggest capital gain. So it’s essentially the trust to a brokerage account. Then they get to manage what they sell over time. From what I can tell here, a lot of that might not even be taxed if they’re staying in that lower tax bracket income wise, which gives them the potential for the 0% long term capital gain bracket. So that’s how I’d be looking at this overall situation for.

Krista Dibias [00:16:24]:
Awesome. I’m going to click on that tab.

Wes Moss [00:16:26]:
More questions right here on Money Matters. Straight ahead. If you’ve ever done a Jane Fonda workout or if you remember as a kid Rocky running the steps and if Michael keaton is still Mr. Mom to you, then guess what? It’s officially time to do some retirement planning. It’s Wes Moss from Money Matters. Weren’t those the good old days? Well, with a little bit of retirement planning, there are plenty of good days ahead. Schedule an appointment with our team today@yourwealth.com that’s y o u r your wealth. Com.

Krista Dibias [00:17:03]:
I’ve got more questions for you.

Wes Moss [00:17:05]:
All right, let’s dive right in.

Krista Dibias [00:17:06]:
This one came in for you from Andrew in Iowa. I currently have a Roth 401K with one employer, a traditional 401K with another employer, and a Roth IRA through a brokerage. By looking at general market growth and looking at my current earnings, I think my wife and I may be fortunate enough to retire as millionaires in the distant future. My question is for retirement accounts or even for short term stock holdings. Are those funds and investments in my name specifically, are they at risk if the brokerage goes under? If is there any sort of government backing similar to fdic that I should be aware of to protect my hard earned savings for retirement. I can’t imagine spending my whole life working to become wealthy and then losing the majority of my money due to a company failing.

Wes Moss [00:17:50]:
Who is this again? Who’s this?

Krista Dibias [00:17:52]:
This is Andrew in Iowa.

Wes Moss [00:17:53]:
Andrew, that worries me too. I’ve had, I’ve woken up many a day over the last 20 some years and thought that same question. Well, wait a minute. All this money in a big brokerage company, what happens if something goes wrong? The shorter answer is there’s no perfect, there is no FDIC when it comes to brokerage money. However, and this is probably where I got most educated on this was during the financial crisis 060708 we were, we were all very worried that some of the big banks were actually going to go under. And when I say big bank, most of those big banks also brokerage companies. So you’ve got the banking institution, but then they have a brokerage side as well. And some of them did go out of business and then some of them had to be taken over and rescued or else they would have gone out of business.

Wes Moss [00:18:42]:
So it’s a very real worry that can. Absolutely that has happened. It’ll probably happen again. So wait a minute. Well, that’s scary. Well, it’s not that scary because brokerage firms, investment companies do have insurance. It’s called sipic. It’s Security Investment Protection Corp.

Wes Moss [00:19:01]:
They all pay in kind of like banks pay into FDIC. They all, they’re members and that gives us that $250,000 per account protection for FDIV Federal Deposit Insurance Company. Well, the brokerage companies do the same thing with SIPIC and they’re all paying in and that gives us $500,000 per named account in insurance. Now that insurance, Andrew, is not for your investments if they lose money. That has nothing to do with the insurance. You’ve got a $500,000 account and it goes to zero because the investments are bad. SIPIC doesn’t care about that. They only care if the brokerage firm fails.

Wes Moss [00:19:43]:
Someone new takes over. Just like what happens with banks fail. Someone new takes over, usually immediately or over the weekend if there’s any money missing from that account because of something nefarious or something happened. That’s what SIPIC covers, that something went wrong with the SIPIC insured bank or the brokerage company. So it’s not going to protect your bad investments, but it will protect if the company fails. The other thing I think is really important to note and again I remember Studying this for really years to feel confident about this. So no wonder people worry about this. Is that your money at a large brokerage firm? Think all the big names, Vanguard, Fidelity, Schwab.

Wes Moss [00:20:29]:
The money you have in your account is not their money. It’s separated, it’s not on their balance sheet. So even if the company operationally does something terribly wrong and it goes out of business, it really shouldn’t mean that anything needs to come out of your investment account. It’s your money and what SIPIC does, just like FDIC does in the case of a failure, it comes in and just make sure those accounts are now custodian by someone new. And it’s really. It’s hard to find examples except for the. It’s really hard to find examples where big institutions went south and people’s investment accounts got hit at all. It’s very hard to find examples around that.

Wes Moss [00:21:12]:
So you can feel. I feel very comfortable whether you have a million dollars or 20 or 50 or $100 million in these big institutions. It’s not. Nothing in the world we live in is perfectly guaranteed. But it doesn’t keep me up at night having lots of capital in these big reputable firms. And I would also say if you’ve never heard of a firm or they’re not in the world we live in and it’s not a multi trillion dollar firm, then I’d be nervous about that. But there’s plenty of big solid firms to choose from for sure.

Krista Dibias [00:21:47]:
Well, that makes me feel better. This one came in from Holly in Arizona. Our question may be basic, but it has really been overwhelming to try and figure out an answer. Here’s the gist. Our son is 18 and headed to college next year. And we also have a 15 year old daughter who’s a high school sophomore. In the near future, we’ve been told that we will likely inherit one to $2 million. Even writing that number is surreal to us.

Krista Dibias [00:22:10]:
Our kids will each receive Approximately an additional 60k to be used mainly for college. There are a lot of moving parts with regards to various accounts, money from various sources, et cetera, and we’re concerned about making costly mistakes. In essence, however, our question is this. We are hoping to get ahead of this new financial situation we will find ourselves in. Who do we need on our team? We know that finding a fiduciary is important and we understand that concept. But who will we ultimately need on our team? A financial planner? An estate planner, A cpa? An attorney? We are already overwhelmed thinking about it and don’t want to make mistakes or ultimately hire the wrong people. We’re in our 50s and want to be careful since retirement isn’t too far off either. In PS, the kids have a small 529 under our name, $15,000 each, but grandparents will be unable to open other 529s for them.

Krista Dibias [00:23:01]:
Long story, but I mentioned it since you’ve suggested this in a previous show.

Wes Moss [00:23:04]:
Oh, I did.

Krista Dibias [00:23:06]:
It could have been Clark. It could have been Clark who suggested it in this case.

Wes Moss [00:23:09]:
Here’s the good, good news, Holly. This is so. This is really solvable for Holly, the. But it is a. It is overwhelming, right? If you’re. You’re looking at, well, wait a minute, I just met with mom and dad, and they’re starting to talk about inheritance. And it’s a million. Now, that’s a big range.

Wes Moss [00:23:28]:
A million to 2 million. These are big. These are. That’s a big range, but still a lot of money. And I know, I seen. I. I’ve had so many families over the years go through this, and if you’re not super financially savvy and you haven’t been the person that’s been investing in different accounts or maybe helping mom and dad, and you’re new to all this and you’re in your 60s or 50s, it feels really confusing. Like you’re bombarded.

Wes Moss [00:23:54]:
You’ve got all these accounts, and then maybe it’s real estate. And then how do you appropriately do the transfers and death certificates and letters of testamentary and probate court? It’s a lot. So she sounds a little overwhelmed. And I would start out by saying the team. And I love this concept. I think a lot of the questions over the last couple of months have made me think about this cadence. It’s quarterback, cfp, who then drafts your. Maybe your offensive line, which is your cpa, and then you’ve got your defensive line, which is your estate planning attorney.

Wes Moss [00:24:35]:
And if you’ve got that team, that whole team, then the quarterback, which is your CFE or fiduciary certified financial planner, can help you find these people, pick them, and then start with a plan, Financial cash flow retirement plan. Sure, they’re going to be able to do the investments, but then coordinate the taxes and the estate with the estate planning attorney, taxed with the cpa. Now, in this situation, Holly, I think it maybe calls for some special teams. And the special teams would be the probate attorney. Now, not everybody needs to do this that you can handle as an executor of a will or an estate. A lot of times People can do this on their own. If assets are in trust, it becomes pretty clear where they’re going. IR retirement accounts that usually have listed beneficiaries that should be quick and easy.

Wes Moss [00:25:30]:
You deal with a financial institution, but it’s not always that simple or straightforward. And if you’ve got a scenario where you’ve got lots of different assets, different accounts, maybe real estate, different beneficiaries, maybe the documents aren’t fully updated and the beneficiaries aren’t listed as they should be. And there’s these wealth transitions are rarely perfect. So what do you do? You call in special teams here. And I think that’s a probate attorney. So within the state of. In your home state, wherever we live, we’re going to want a probate attorney in that state.

Krista Dibias [00:26:08]:
So in Hollis, Kiss, Arizona.

Wes Moss [00:26:10]:
And she’s in Arizona, so she’s going to find someone there. And that person can help make sure all the documentation gets set for the wealth transition. The go go into the court hearings. And if you’re sitting in before a probate judge and trying to adjudicate where what goes, where it’s not going to cost a fortune typically to hire a probate attorney. And it sounds like for Holly, it might really be worth the peace of mind to do so. So I still think it’s the same structure. Your CFP is your quarterback. You’ve got your CPA and your state planning attorney.

Wes Moss [00:26:45]:
But here, this particular situation calls for some special teams. That’s the probate attorney that’ll make sure she’s not worried about missing something in a time of transition when the time comes.

Krista Dibias [00:26:56]:
Okay. Charlotte in Arizona says, I recently lost my parents seven months apart. So sorry to hear about that, Charlotte. Which led me to inheriting some money from their estate. I inherited Both a traditional IRA and a Roth IRA. I know I need to exhaust both within 10 years. My plan is to let the Roth ira sit for 10 years and grow as I’ve been told I don’t need to, to make RMDs. My plan for the traditional is to take only the minimum RMD until I have a year where my income is lower, maybe even by design, like a sabbatical.

Krista Dibias [00:27:27]:
And then take the bulk of it out then. Is this a good strategy? Is there a better way to withdraw? With regards to the taxes, The Roth is 38k and the traditional IRA is 160k. I have to start my RMDs by this December of 2025. Any input for a different strategy is appreciated.

Wes Moss [00:27:45]:
I love the sabbatical idea. So Charlotte from Arizona, this is also about managing your tax rate. So we’ve a lot of finance and investing is around understanding what your tax rate is today and then what your tax rate may be in the future. And she’s got. I’ve seen this has worked out really well for some folks. Let’s say Charlotte knows that she’s. Some companies allow six months off. Now, granted, usually you’re still getting paid for that.

Wes Moss [00:28:15]:
Those are sabbaticals. But if she just. If you Charlotte taking six months off and you know you’re going to do it or a whole year and that’s still okay with your big picture retirement plan, you know your income is going to be virtually zero except for some of these required minimum distributions. So you end up let’s say Charlotte’s income falls all the way down to $10,000 a year. Well, she’s got a lot of room while she’s still in a really low tax bracket to do some of these RMDs or more than the required minimum distribution. So A. I would yes. I like the strategy what she’s considering.

Wes Moss [00:28:55]:
You don’t need to take out anything from the roth until the 10th year. So let that thing grow and then if God willing, it doubles triples. It’s still tax free. So you’re great. So let the inherited Roth go the full 10 years. Once you distribute it, it’s still tax free. On the traditional IRA, the $160,000 A, she can wait and take a bigger chunk out during the sabbatical year. But again that quickly fills up her tax bracket.

Wes Moss [00:29:28]:
Remember we talked about different the lock system in Denmark. The boat has to go from here to here. And in each point you’ve got to fill up the new chamber of water. That’s your tax bracket. New chamber of water, that’s your tax bracket. So Charlotte, if you know you’re going to do a sabbatical, great year to do more distribution from the regular ira. If you don’t know and you think you are going to end up continuing to work, then you don’t want to be stuck with taking the 160, which could be 260 in 10 years out all at once. So I would spread out knowing that you’re probably going to have to take out more than 160, more like 200 over 10 years is it should grow.

Wes Moss [00:30:09]:
So you’re going to be looking at probably averaging around $20,000 a year to make sure it’s done by the 10th year so that you don’t get a Giant amount all in that same year that pushes you into the 35 tax bracket.

Krista Dibias [00:30:21]:
And this question is from John in Florida. I like your idea of having three years of dry powder in retirement.

Wes Moss [00:30:27]:
Is that my idea or Clark’s idea?

Krista Dibias [00:30:29]:
You, he’s talking to you.

Wes Moss [00:30:30]:
I do have that dry powder principle.

Krista Dibias [00:30:31]:
I love at this point. Since money market funds are paying roughly the same as a diverse bond fund like BND and bonds can down in value, but cash does not, is it necessary to have bonds in a retirement portfolio at all? And if so, why?

Wes Moss [00:30:48]:
This is a question about. There’s two quick things. One, dry powder is really helpful because if you think about three years worth of money that’s safe or stable and when the market, the stock side of the market or your portfolio goes down, you can use the safe stuff. It’s your dry powder to get us through market corrections and a rebound. That’s important. But the assets do have to be stable, not perfectly stable necessarily. And that’s why I put bonds into that category. Bonds are not perfectly stable.

Wes Moss [00:31:17]:
They can go up and down in price. But really, I think the crux of this question is what’s going to do better over time, cash or bonds? And I can totally see, I’ve had the same sentiment in the last couple of years. If rates are at 4.5% or 5% of the money market and the bonds paying the same, why take any risk in the bond? I get that. However, over time, if you go back over the last 40 years, Bonds, the return on a diversified bond index or portfolio, they’ve been better than cash. So today, cash, let’s say in any given day, the cash may be at 4. But what happens if the Fed lowers rates to 3? Your money market will immediately adjust lower to 3. Your bonds will keep the same coupon until they mature. So there’s a little bit more.

Wes Moss [00:32:06]:
There’s typically either similar interest or a little more interest in a bond and you get to keep the interest longer. So this is really an asset allocation question. Well, what’s going to do better over time, my cash or bonds? And if you’re a longer term investor, history has shown us in, in all, in most, most, most scenarios and time periods, we’re looking at bonds over time should give you an overall better rate of return than money just sitting in cash. And that I think is at the crux of this question.

Krista Dibias [00:32:39]:
Great.

Wes Moss [00:32:40]:
Krista, I love having you here. I love all the questions you bring to the table. You’re making us work and I love it. So thank you as always. For being in studio.

Krista Dibias [00:32:50]:
Thanks Wes.

Wes Moss [00:32:51]:
You can find me easy to do so@yourwealth.com that’s y o u r wealth.com have a wonderful rest of your day.

Speaker C [00:33:05]:
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Speaker C [00:33:53]:
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