Money Talk with Carl Stuart

Carl Stuart takes caller and text questions on payment plans with the IRS, retirement timing and asset relocation in retirement, sector funds vs. broad-based ETFs, and asset division in divorce.

The full transcript of this episode of Money Talk with Carl Stuart is available on the KUT & KUTX Studio website. The transcript is also available as subtitles or captions on some podcast apps.

KUT Announcer: Laurie Gallardo [00:00:02] This is Money Talk with Carl Stuart. Carl Stuart is an investment advisor representative of Stuart Investment Advisors. Call or text him with your questions at 512-921-5888. Now, here’s Carl.

Carl Stuart [00:00:21] Welcome to Money Talk. I’m Carl Stuart and you’re listening to KUT News 90.5 and the KUT App. We’re now in our 32nd year here together. Money Talk is about the world of financial and investment planning. We always determine our agenda by calling or texting 512-921-5888. It’s a great idea to call earlier or text earlier in the broadcast. Which will give me ample time to do my best to answer your questions. I take today’s telephone calls first, and then today’s texts, and then texts from previous weeks that I’ve been unable to answer or answer fully. I’m gonna do that number one more time, and then I’ve got a text from last week. 512-921-5888. This is a long one, and I really didn’t have time to get to it at the end of the broadcast. Love your show, Carl, thank you. Thanks for helping us, you’re welcome. You don’t have to read this out loud, but I’m going to. I wanted to provide lots of details. Do you have some overall suggestions for me? Should I see a financial advisor at my credit union? I will retire in August of 2027, close to age 73. I am a widow. I will have a retirement pension before taxes of about $5,200 per month. I started collecting my Social Security benefit at age 70 at about $3,000 a month, so that’s $60,000 plus $36,000 per year after 12% withheld for taxes regarding our Social Security. I have about $37,000 sitting at savings at my credit union and only about$ 3,100 in the 403B account with TIA, which is Teachers Insurance Annuity Association. I won’t pay off my townhome. I still owe about $120,000 at 3% interest, congratulations, before I retire. I have $64,200 in debt, including $30,270 at 5.99%, remaining on a new hybrid car I bought in spring 2025, after selling the car, the 2012 car. I have three credit cards. One totaling $14,000 at 24.74% interest and then she writes ouch, followed by one totaling a $6,870 at 16.5% ouch and one total $33,000 as 6.5%. I have a line of credit and loan totaling 3,300 at 15.9% another ouch. I need to quote wake up and work on paying down my debt and paring down my spending. I do need to do some repairs on my townhome that might cost $7,000 or so and I actually don’t know the total amount yet. My plans after retirement are uncertain. I may move to France and join some friends who have moved there. I paid $350,000 for my town home when it was a seller’s market and now it’s worth about $370,000. I wouldn’t sell it and move until I have visited to any place I might relocate. That’s my story and I’m sticking to it. Well, I don’t think in initially that you need to talk to your financial advisor or a financial advisor at your credit union. I think you already know that what you have to do is eliminate the high interest cost debt. Frankly, eliminate all of the debt, and that’s easy for me to say, and it’s hard to do. If you were listening last week, you know that we had a caller who was deep in debt and was thinking about taking money out of her IRA account. So when people tell me about their credit card debt. The first question I ask is, if you had no credit card debt today and you continue to live the way in which you’re living, would you have credit card a year from now? And if people are honest with themselves and with me, frequently they say yes, because they got into credit card not because they had a medical emergency, but because they have been spending more than they’re making. And that’s the case with you apparently. You’re going to have a pension which you can’t outlive. That’s terrific. You’re going to have social security, which you can’t outlive. That’s terrific, but you need to eliminate the debt. Granted, you’ll pay off the car note over time because you don’t have any option, and you’ll payoff your mortgage over time or sell your house or condo and payoff the mortgage. But these others have to be paid. And so you start with the most expensive one, the highest one, and you begin to make extra payments on that. Now, that’s easy again for me to say, but I think the best thing to do, when I’ve been. Recommending this to listeners for probably decades, which is most of us who get into credit card debt are really not aware of all of our expenditures. And the only way that we can change our behavior is to measure our current behavior. And the way to do that is keep tracks of every receipt from your credit card or those rare cases cash receipts and sit down right before Money Talk on Saturdays and look at that and put it into categories. Food and entertainment, travel, gasoline, groceries, rent, whatever the case is, and look at the places that you’re spending money. Frequently, listeners tell me that they find, oh gosh, I didn’t know I spent that much money on food and entertain. I can make some changes there. What you’re trying to do is bend the curve of your expenditures, and unless until you do that, that will never go away. Making a minimum payment on a 16 or 20% credit card. Simply is not going to work. So yes, you’re right, you need to bring that down and in my view, bring it down to zero. It’s okay, they have a lovely mortgage rate, it’s fine with that. You’re gonna pay off the car whether you like it or not, so I’m fine with it. But to keep money in savings and have that other interest, if you have a solid position, which you clearly do, you ought to reduce your cash position, reduce your savings. I know that may make you anxious, but you’re losing 20 plus percent and even when you add it all up in the other ones. You should reduce your savings and begin to change your behavior and move to reduce and eliminate that credit card debt. Thanks for your text. You’re listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text 512-921-5888. We have a call. Hello? Lawrence? Lawrence, you are on the air!

Lawrence [00:06:59] Thank you carl thank you carl carlson allocations i know you think you spoke about that before but i’m i’m a bit challenged by it you know it’s warm up warm up for for example recommended allocation of ninety ten i’d be likely to present bonds in part because he feels that that note ever got rich by this combined and people have got a rich by best inequities and at the same time I’ve heard, you know, people say, you should have… A 60-40 allocation or 80-20, you know, so how does one determine what asset allocation is appropriate? And once you determine that, it is something that’s in stone or to be changed time to time.

Carl Stuart [00:07:47] I think the best way to think about this is twofold. One, some people have all the money that they want or need and they’re in a preservation mode. Most people, that’s not the case, most people I encounter want to make the money grow, have the money to grow, but they want to do it with an acceptable level of risk. And so the way to determine that risk is to do a hypothetical example. Of a sharp decline in the stock market, okay? And then put that in dollars. So if I had, I’m gonna use a big number because it’s easier for me to do the math. If I have a million dollars to invest, and I have 90% in the Stock Market and 10% in The Bond Market, and the Stock market drops 20%, which happens on a fairly regular basis, drop more than that in April. When President Trump announced the tariffs. I have a portfolio that drops eight, that would cause my portfolio to drop 20%. That’s $180,000 on a million dollars. Then I have to have an honest conversation with myself, Lawrence. Now I’ve got, instead of a million dollar, I’ve gotten $800,000, $820,000. How is that gonna be for me? Can I stand that? Because if we go into a long bear market, is no guarantee that it will come back quickly. In fact, I read a piece this week that I thought was really interesting and sobering. And that is, if you look at the decline from March of 24th of 2000, which was the peak of the dot-com craziness, until October 9th of 2002. So now think about it, the length of time. The S&P 500 declined 49.1% from top to bottom. So your million dollars goes to $500,000. It can take you years, maybe a lifetime, to come back from that. That’s how I think about asset allocation. If you want it to grow, you have to have more of the money in stocks than anything else, but you also have to it at a level of risk that you can tolerate. And so you can’t assume that your bonds are always gonna protect you. They did not four years ago in 2022. So stress test it by playing with various other allocations to equities and assume the bonds are flat. Meaning they contribute to return, and then that will determine what level of risk you’re willing to accept because we are psychological or emotional beings and we generally, the science indicates that we experience a 10% gain in our portfolio as a 10 percent gain and we experience the 10% loss in our portfolio as a 20% loss. The secret to Warren Buffett’s success, in my view, or at least one of the secrets, is he’s a remarkably patient person. And he’s perhaps very willing to sit in cash until he finds something he wants to buy. And then he’s a very, very long-term holder. So that’s how I would look at it if I were in your shoes, Lawrence.

Lawrence [00:10:51] I’ll give you one last time for a second, very fast question.

Carl Stuart [00:10:55] Yes, quickly. I have another call coming in, please.

Lawrence [00:10:57] Sure quickly on another radio program they mentioned something about uh… But i guess they call it a kind of uh… All and it’s an annuity and uh… Whereby you can uh… Kind of a boy uh… Security taxes have you heard anything like that before

Carl Stuart [00:11:22] I don’t trust anything like that. That’s a life insurance product. And so what you’re doing is putting money into life insurance policy and then taking it out as a policy loan. When it comes out as policy loan, it’s not considered income. Therefore, it doesn’t affect your social security. And I would run away from that as fast as I can, Lawrence, and thank you for your call. You’re listening, you bet. You’re Listening to Money Talk on KUT News 90.5 and the KUT app. Call or text 512. 921-5888, okay, another call. Dan, you were on the air, how may I help?

Dan [00:12:00] I can’t uh… Hi carl hi i have uh… Had some uh… Uh… Stuff i traded back in two thousand eight during downturn and i kinda do a lateral movement so i ended up with uh… New huge gains on quote unquote stuff that wasn’t a huge gain but it looked like it and i think i took the tax loss during the time so you know that’s cool But now I’ve sold some of that stuff off and I have a bunch of cash on hand and I’m trying to figure out when I should step back into the market because of all the turmoil in the Middle East and so forth. You know, it’s really a tough

Carl Stuart [00:12:43] Yes, it is. Yeah, it is

Carl Stuart [00:12:47] To say that I think about this every day all the time would be accurate and an understatement. I’m going to tell you what, I’ve been doing this 48 years, and I have been humbled by the inability to make investment calls based on the headlines. Bad things happen on a regular basis, and they last longer than you expect. However, good things last longer, too. The market bottomed at $8.88 for the Dow in August of 1982. And it peaked in March of 2000. That’s a long time. And there were some down years in there. So, and you know, we had COVID and everything collapsed and 43 days later, it was the same, everything was, the market was at the same level as it was before COVID. Who would have predicted that? And then the president put the tariffs in and everything collapse in April and it came back. So if I had a lot of cash, and stocks, equities were my asset of choice, fit my overall asset allocation, and I was heavy in cash, I would not invest at all now. Let me give you the bearish case of why I would dollar cost average. If you think about the fact that we are three and a half years into a bull market, as of yesterday, the S&P’s up close to 9% this year. Most investors, if they’ve invested for very long, Dan, would be happy with 9% per year forever. And so the last down year we had, excuse me, was 2022. So if you go back over the last 50 years and you ask this question, how many times have we had four consecutive up years, which it would be this year if it finishes in the positive territory. If you exclude the dot-com communications bull market of 95 through the end of 99 actually till March of 2000. The other times that we’ve done four years in a row out of 50 years, two times, twice. So just historically, you would think that that would make you cautious this year, unrelated to the war in Iran. Let me give you another reason to be cautious. If you look back over many, many decades at presidential cycles and you say, what’s the weakest year for the S&P 500? It’s the midterm year. What is 2026? It’s a midterm. Having said that… I think that it’s a good time to dollar cost average. Take what you think your asset allocation is. Take what your think your total allocation to equities are, okay? Take that and divide it into six pieces. And if you wanna be, I wouldn’t call it aggressive. Put it in equally amount every month. Or if you want to be more conservative, put it in an equal amount every two months. The thing about this, you’ve got to be disciplined. You cannot look at the Wall Street Journal headline. Or the news and say, well, you know, it’s time to put it in. It’s the 15th of the month, but things sure look bad in the Middle East. Don’t do that, because that’s not how professional money managers work. They look for good prices. We’re gonna have volatility in here. This AI trade starting to look a little shaky. As you point out, this war could go on for a long time, but there’s always good reasons not to invest. And you really wanna invest in human ingenuity. So take that amount, divide it into six pieces. Either put it in every month on the same day or every other month on this same day and call back and tell me you lost a lot of money when it’s over.

Dan [00:16:16] All right. Well, I know, because I do have a spreadsheet and I do take care of that. And I figure out where I am not invested, where I should be. I’ve been trying to get more invested in international. So good. Good. And yeah, and I’m looking at rebalancing my portfolio. And I so I have like a a nine segment reinvestment schedule across my stuff. Good for you.

Carl Stuart [00:16:43] You bet. Get back in a little bit of time, Dan.

Dan [00:16:46] I’ll let you know how it happened.

Carl Stuart [00:16:48] Okay, all right, thanks for calling. You’re listening to Money Talk on KUT News 90.5 and the KUT app. Call or text 512-921-5888. Okay, here we go. Robin, you’re on the air. How may I help?

Robin [00:17:12] I think i think that you might call you walk on who are you know i am in my sixty my spouses and his seventies and we uh… Have uh… Home that we have about the seven thousand more to pay off on and we three uh… At and we’ve got a low interest rate three point two five Great.

Robin [00:17:34] We don’t have any kids and we’re so we’re really seriously thinking about doing a reverse mortgage and getting some of our equity out of the house so we can enjoy our retirement. Yeah. The value of the house is going down post pandemic that was a had an incredible rise. Right.

Robin [00:17:55] Any advice on whether to keep a mortgage, keep paying a mortgage when the interest rate is low or going in for the reverse mortgage when interest rates are higher? Yeah.

Carl Stuart [00:18:11] Reverse mortgages were intended for people who had no other assets and their Social Security income was inadequate for them to live and they had a lot of equity in a home they bought 40 years ago and the. When you get a reverse mortgage, you have to think about this from the lender’s point of view, not the borrower, you, but the lender. The lender doesn’t know when they’re gonna get paid off because you can stay in that house and as long as you pay the property taxes, you don’t have to pay it back. And then when you move out or you die and the lender gets it, they pay it. That means the interest rate has to be high because they’re taking a risk. You might live to be 100 and never sell it. So it’s gotta be a high embedded interest rate. And the idea of getting a reverse mortgage would only in your case be necessary if you believe that you and your spouse don’t have enough money to do what you wanna do. Because you do have equity in your home, there’s no question about that. But it’s a variable higher interest rate, and I’m not fond of it, frankly, and would I keep a 3% mortgage? Absolutely, absolutely keep a 3% mortgage. So are you telling me that you and your husband do not have enough income to go off and do what you want to do without borrowing money?

Robin [00:19:39] Well we could uh… You know spend a little more freely if we had after cash uh…

Carl Stuart [00:19:47] Yeah, okay, it’s expensive. It’s not my favorite thing, but I mean, I understand and you have equity and go ahead if that’s a quality of life thing. From a financial planning standpoint, borrowing to go out and consume, you know, that’s not a good idea. And you’re gonna have, it gonna be expensive. And as long as you know that and you’re going into that with your eyes open, Robin, then. That’s okay with me.

Robin [00:20:19] I mean we otherwise we can’t really access the equity or if we felt that we don’t want to tell we want to live here you love our house

Carl Stuart [00:20:26] Yeah, well have you talked to about getting a second lien on the house, which would be a home equity loan? Have you looked into that?

Robin [00:20:36] Well, that loan would have to be paid back, and we don’t necessarily want to burden ourselves with an additional loan, and my understanding is that the reverse mortgage, if we have a loan, we can do it as a line of credit, it’s that because it is a loan, it doesn’t count towards our taxes as income, so it seems like a reasonable course for us.

Carl Stuart [00:21:01] Yeah, I just don’t like taking on liabilities. I just like taking financial liabilities, I don’t think that’s a way to financial independence. But everything you say is absolutely true, I’m just not fond of it. But good luck, okay? Thank you. Thanks for calling. Yes sir, Mr. Conservative, it’s time for me to take a break and time for you to call or text. Have you noticed we haven’t gotten any texts today? I love these calls. 512-921-5888. I’ll be back.

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KUT Announcer: Laurie Gallardo [00:22:12] This is Money Talk with Carl Stuart. Call or text him with your questions at 512-921-5888. Now, here’s Carl.

Carl Stuart [00:22:26] Welcome back to Money Talk. I’m Carl Stuart and you’re listening to KUT News 90.5 and the KUT app. And I forgot to mention in our first segment that you can catch past shows at kut.org slash money talk. They have the dates on there. So you can go on there and listen for the last gosh over a year. And that’s at k ut.org, slash money. Today, you can call or text with your questions. At 512-921-5888. Okay, let’s go to the lines. David, you’re on the air, how may I help?

David [00:23:08] Hi there. My question is about how to diversify AI and tech related stocks, drive more of the big indices and ETFs and funds. Yeah. I recently read about ALO, ETFs, high asset, low obsolescence like energy and utilities. And what do you think? Yeah.

Carl Stuart [00:23:27] I’m not a fan of sector funds. I learned a long time ago that they can get, you get the volatility of an individual stock without the diversification. There was a period of time when, for example, the Vanguard Health Science Fund was great and then it went out of favor, it was horrible. They’re selling them in communication, sell a fund. Then there were country funds, Mexico Fund, et cetera. I think for most investors, I’m not sure that I like that. I like the total stock market. Now your point is interesting because the indexes, the S&P, the NASDAQ, the Russells, are market capitalization weighted. And we do have a concentration in tech stocks, although the MAG-7 by and large have been flat to losers this year. You probably know that. I like a lot better looking at two things. I would look at being sure I had a ex-US fund. Generally speaking, with the exception of South Korea probably and Taiwan, the international equities are selling at lower values than domestic equities. So I’d want to have a broad-based international ETF rather than picking by country. The other thing you may want to look at is. It is small caps. They had a good year last year and they’re having a good Year this year, but boy they have really had a lot like international They’ve really underperformed the domestic market for many many many years And if you want to stick with the ETFs the question then becomes do you want a passive ETF that follows The Russell 2000 or the Russell 2000 growth of the Russell 2,000 value That’s fine. Or do you an active one where you want small cap value? Where you have a concentrated portfolio, where you’re likely to get more volatility but more upside. So I like those better than trying to move away and do other industries. I think the guessing where the next move is can be a really a loser’s game. And it’s not because the companies are bad. It’s because the market, I’ve always thought of the stock market as being like a lighthouse. You and I are in a boat offshore and we’re heading into the shore and it’s a very rocky shore. It’s very dangerous. And when the lighthouse shines upon it from our perspective, we can see exactly where we’re going. But then the lighthouse keeps moving and we’re in the dark. I’m gonna go back a long time ago and share an anecdote with you. Back in the late 90s, what happened was the tech stocks took off. And I remember Whole Foods Market was a public company and people would call me on Money Talk and they would say, Carl, what the heck is wrong with Whole Foods? I go down there, the place is packed, but the stock’s just a dog. It lays between 15 and 20. Then we had the collapse of the NASDAQ, it took 15 years to come back. And Whole Foods took off, it was just a great stock for six or seven years. That’s the risk you have is when you get in, you may get into a really quality company or a quality industry, but your opportunity costs can be really high because they may underperform for a number of years. I like being broader spread by asset class and there’s no doubt that international and small cap, especially a small cap with a value tilt. Would be a way to offset the risk you have in AI, in my opinion, okay?

David [00:27:00] Good, thank you.

Carl Stuart [00:27:01] You bet, thanks for calling. You’re listening to Money Talk on KUT News 90.5 and the KUT app. Call or text with your questions at 512-921-5888. Richard, you are on the air, how may I help?

Richard [00:27:20] Hi carl thank you love your show i have a friend who’s a working-class guy and he has gotten into huge debt with the irs and i don’t have no it’s terrible and by the way it’s the second time he’s done this and i understand you know i difficulty working- class guy he’s got to put money aside he works for himself you know and he doesn’t do it every month and i dont know what he owes but it’s probably in the nature of eighty thousand dollars my big question is What do they, what should he do? Like, my belief is he should just call the IRS and say, look, what can you do for me?

Carl Stuart [00:27:56] Yeah, I think that’s great advice. I think it really is. There are some nonprofit credit counselors, but that typically is for people who are in credit card debt, not who owe money to the IRS. I think you’re giving him very good advice. He just needs to become clean, go to the irs, explain what’s going on, and work out a plan. They don’t want him in bankruptcy. They don’t want to take his assets, which they could. Uh… And i think that you’re giving a very good advice he just has to step up and and bite the bullet and do it i think it’s good advice and that’s exactly what i would recommend if i were you richard

Richard [00:28:38] and they would just set up some kind of payment plan.

Carl Stuart [00:28:41] It’s exactly right, I mean the man can’t pay $80,000, they’ll set up some kind of payment plan and frankly, I suspect, I don’t know this, but I suspect a competitive interest rate unlike say Visa or MasterCard. Yeah, okay Carl, thank you so much. Okay, thanks for calling. You’re listening to Money Talk on KUT News 90.5 and the KUT app. Call or text 512-921-588. Eight here we go Randy you’re on the air how may I help

Randy [00:29:17] I’m just wondering, I’m in my late 70s, and I’ve got an IRA standard brokerage account that kind of stays up and around 300, 310, something like that. Anyway, and I was just wondering at this age, at this advanced age, should I be planning on taking it easy on my heirs by moving it all into a rock.

Carl Stuart [00:29:45] Yeah. That’s a great question. And if I didn’t have calls today, I wrote here on my notepad that I was gonna talk about this. I think Roth conversions are one of the most interesting options and one of topics that I get a lot of questions on. So for everybody else, because Randy’s already figured this out. If you have money in an IRA, and you can, if you want, do what is called a Roth conversion. You can take the money from your IRA and move it to a Roth IRA. That is a taxable event. In other words, you pay income tax on it. You can pay it out of your pocket and convert the whole thing, or you can convert an amount and hold an amount out to pay the tax liability. You’re not going to have any other tax liability, no penalties or anything like that. Here’s what I’ve decided, not decided, here’s what I’ve observed. People who are in a situation like yours, where they believe that they’re never going to spend the money and either their heirs are are in a lower bracket, or they just want to give their non-spousal heirs the opportunity, they can do a Roth conversion, then their non spousal errors have 10 years to take the money out tax free. And I would suggest that if that’s your view, it’s a great idea, you just want to keep your eye on what the tax is on that. So you don’t throw yourself into a really high bracket. For example, the brackets go. From 22 to 24, but then they have this big jump to 32% and it’d be good to stay out of that. Now, someone’s gonna call me and say, ah, yes, but that’s gonna mean Randy’s gonna have, he’ll have to worry about the Irma deduction on his Social Security. My reaction is, so what? You’re being generous and I think it’s a great idea as long as you know you’re not gonna spend that money. It’s a wonderful legacy to leave a pool of tax-free money for your heirs and I suggest you go ahead, in my view.

Randy [00:31:45] Thanks, Carl.

Carl Stuart [00:31:46] You bet, thanks for calling. You’re listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text 512-921-5888. Okay, let’s just see here. Here we go. Scott, you are on the air. How may I help?

Scott [00:32:07] Well, Carl, first of all, I’ve listened to you from the get-go, and you’ve offered great advice to me over the years. Thank you. And you just, I think you just answered my question with that RMD, but here’s the situation for me and my wife. I’m 68, she’s 69, we have about 600,000 in a traditional IRA. Yep. Um, it’s, you know, I understand it’s best to convert it to a raw. My question is, obviously, it’s for tax purposes, but what’s the timing for us to do this? Can we do it gradually? Do we have to do it all at once? No, I’ve got to- And how do we actually do it?

Carl Stuart [00:32:52] Yeah, I’ve got great, great news for you. You’re totally in charge. So you have a custodian for your IRA, a securities firm somewhere. Yeah, we do. Okay, you go to them and you say, I wanna open a Roth IRA. They already have all your personally identified information. They can send you a form to sign up via DocuSign and you tell them how much you wanna convert. They will then, and you can tell them what securities to sell. And they will convert that to your Scott Roth IRA and you can reinvest. And I’ll just give you a, let’s just go walk through this. What do you anticipate before you do any conversion in 2026, married, filing jointly, what do you participate your taxable income is going to be?

Scott [00:33:42] Uh… Two hundred and twenty five thousand dollars

Carl Stuart [00:33:45] Okay, so you’re solidly in the 24% bracket. From $211,400 to $403,550, you pay 24%. And then it jumps big time over $404,000 up to $32,000. So you have a lot of runway there. To keep your taxable income under $400,000, you’ll pay the 24%, straight across the board. So you decide how much you want to take out. And pay the 24% and whether or not you’re gonna pay that out of your pocket or you’re going to take part of it out of the conversion and not convert all of it, but you can take it as little or as much as you want. You’re totally in control, Scott.

Scott [00:34:25] Okay so we could do that incrementally up until the required r m d

Carl Stuart [00:34:30] Yeah, exactly. And you can do it when you can have, you can have the RMD and take more out than they RMD and do a convert. You can’t do a conversion with the RMB. You got to pay the taxes on that, but you can take money in addition to that and convert it and pay taxes on it if you choose to.

Scott [00:34:45] Okay, well frankly we’re, and fortunately we’re in a situation where we’re probably never going to need that money anyway, you will be left to our kids.

Carl Stuart [00:34:55] Right.

Scott [00:34:55] Though

Carl Stuart [00:34:56] Yes, you’re creating a legacy. I love this. This is a legacy and you can say, look, we’re going to bite the bullet today because we can afford it and give them 10 years of flexibility to take the money out tax-free. I think that’s a wonderful legacy, right, Scott?

Scott [00:35:10] Well thank you i appreciate your carl you’ve been a great or that grateful for information for all of the here

Carl Stuart [00:35:17] Thank you. You bet. Thanks for your compliment. You’re listening to Money Talk on KUT News 90.5 and the KUT app. Call or text 512-921-5888. Lynn, you are on the air, how may I help?

Lynn [00:35:41] Hello, I am Elizabeth Dura and I just discovered your program today and it is delightful. Thank you very much.

Carl Stuart [00:35:47] Well, Lynn, you said you’re from Missouri, aren’t you?

Lynn [00:35:51] Yes, Ivan the Bunnies in North Missouri. Soap.

Carl Stuart [00:35:54] Uh… My family’s from missouri and the reason i know that is because everybody else calls in missouri but my family from ross county uh… Just south of hannibal

Lynn [00:36:03] Okay, well I’m in Livingston County, a couple of counties away from Iowa, and I fluctuate between Missouri and Missouri depending on who I’m around.

Carl Stuart [00:36:14] Yes, yeah, if you’re around the snooty type, you say Missouri. If you gotta go to Kansas City, you say, Missouri. Otherwise, when you’re home, you’re say, Missoura. Ha ha ha ha.

Lynn [00:36:24] Well, I think the farther south I get, I had friends from St. Louis and that area in college and so I kind of stopped drinking pop and started drinking soda and went from Missouri to Missouri.

Carl Stuart [00:36:36] There you go! Okay, well how may I help, Lin?

Lynn [00:36:41] Well, a lady called in a little while ago wanting to discuss the reverse mortgage issue. The thing that I thought about in terms of spending, and she wanted to be able to be more flexible and fluid with her spending now, but I’m almost 72, my dad did a wonderful job getting an excellent long-term care policy for my mother many years ago, and it was blessings. She couldn’t spend all he left and she didn’t have to because of that long-term care policy. But long- term care policies have turned into god-awful expensive things.

Carl Stuart [00:37:21] Exactly.

Lynn [00:37:22] And so I’m probably going to spend down daddy’s money at this point in my life sometimes. Right But, and I’m very blessed, I’m very solid, I don’t have any outstanding debt, but when this lady called in talking about the reverse mortgage, the red flag for me was, oh, what if you need long-term care at some point in time and you’ve dumped all of that into a reverse mortgage and you don’t have home equity anymore?

Carl Stuart [00:37:49] I totally agree. Yeah.

Lynn [00:37:51] That leaves you Medicaid if you’re lucky.

Carl Stuart [00:37:54] Yeah, and you don’t want to do that. That’s not good stuff. Yeah, absolutely. No, that’s a very good point, Lynn.

Lynn [00:38:01] I guess if you, because you have a much broader experience, if you have any other thoughts on those kinds of things, maybe giving some other folks who aren’t as blessed as I am some things to think about in terms of reverse mortgages, long-term care expenses, those Yeah.

Carl Stuart [00:38:18] Well, first of all, you’re absolutely right. A lot of people don’t realize this, but I remember when long-term care insurance policies were first offered and some big companies got into them like Genworth, which was a subsidiary of General Electric and Connecticut General. And after a relatively short time, they stopped. And the reason is the life insurance industry knows how many people are gonna die this year and they know them by gender, they just don’t know them name. And when the long-term care insurance started, they didn’t know how long the people were gonna use it, the insured people, and they didn’t know what it was gonna cost. And they discovered that it cost a lot more than they anticipated and they were losing a lot of money. And so consequently, to your very point, Lynn, today long- term care is extremely expensive. And while your mother needed it, and frankly my mother needed, the percentage of people that need it and need it for many, many years is quite small. And so part of your financial plan. Is not only to prepare for your financial independence in retirement, but prepare for financial independence with long-term care. And only if you’ve exhausted your financial assets, then that’s what a reverse mortgage is for. That’s why I discourage the woman, because it’s not meant to enhance your lifestyle. It’s meant as a backstop. So you’re right. That’s exactly, I completely agree with you. You’re right, Lynn, okay?

Lynn [00:39:43] Well thank you very much and I appreciate your show and it’s going to go on my regular schedule for Saturday afternoon.

Carl Stuart [00:39:49] Terrific Lin, thanks for calling. You’re listening to Money Talk on KUT News 90.5 and the KUT app. It’s time for me to take a break and a time for you to call or text. 512-921-5888, stick around, I’ll be back.

Jimmy Maas [00:40:12] Money Talk airs every Saturday at five o’clock on KUT News 90.5 FM on the KUT app and at KUT.org. This podcast is produced by KUT and KUTx Studios as part of KUT Public Media, home of Austin’s NPR station and the Austin Music Experience. We are a nonprofit media organization. If you feel like this is something worth supporting, set an amount that’s right for you and make a donation at supportthispodcast.org

KUT Announcer: Laurie Gallardo [00:40:44] This is Money Talk with Carl Stuart. Call or text him with your questions at 512-921-5888. Now, here’s Carl.

Carl Stuart [00:40:58] Welcome back to Money Talk, I’m Carl Stuart and you’re listening to KUT News 90.5 and the KUT app. When you have a financial or investment plan in question, call or text 512-921-5888. Let’s go to the call. Catherine, you are on the air. How may I help?

Catherine [00:41:21] Yes. Hello, Carl. Hello. Thanks for taking my call. Yes. My son’s grandfather, my father-in-law has been giving my son U S saving bonds for occasions ever since he was born. Yes. He is 28 years old and he’s asking me if he should keep them or sell them. And if we should sell them, how do you do that?

Carl Stuart [00:41:50] He probably, it’s actually what you’re doing is you’re redeeming them. And they may even have not continued to grow. They were bought at what we call a discount and then at some future date, they’re worth what’s called par value. And it’s possible since it’s so long ago that those bonds are not growing in value. So yes, they should be redeemed right away in my view plus at 28. They’re frankly paying a low interest rate and a 28 year old needs to take greater risk for greater return. You have to find, and this is where I’m not going to be very helpful, you have to find a bank that will redeem savings bonds. You can’t call a brokerage firm, they can’t sell it. You can call Fidelity, they cant sell it or specific commercial banks who are authorized to sell it, about the only thing I can think about. When I’m stuck like this, is I Google, where in Austin, Texas can I redeem U.S. Savings bonds? That’s where I would start. Now, the other thing is, frankly, a lot of people listen to Money Talk, and we may have someone listening that will know the answer to this, and if they do, we’ve got another 15 minutes, maybe they’ll call, but if not, that’s where would go. It’s a commercial bank, and what you wanna do is redeem those bonds.

Catherine [00:43:15] Okay, very good. Is the amount you purchase it, how does that relate to the amount that you redeem it for?

Carl Stuart [00:43:24] Usually it was a double. You bought a $50 bond for $25 and it matured at $50. That’s my recollection.

Catherine [00:43:33] Oh, okay. Very good. Thank you so much for your time.

Carl Stuart [00:43:36] You’re very welcome Katherine, thanks for calling. You’re listening to Money Talk on KUT News 90.5 and the KUT app. Call or text 512-921-5888. Chris, you are on the air, how may I help?

Chris [00:43:56] Local high thank you for taking my call you walk carl i’m looking at the wall street journal from that this past wednesday i’m working at the back page of the business section under heard on the street and there is an article there called buying gold dip makes sense and i read the article and i I kind of understand this, I grew up in an era of you know fiat currency as we all did now uh… The question i have is i kind of understand this but there are gold bugs still circulating in society and i’m thinking steve forbes is one yeah who who really wants to bring up they really want to bring us back to where the dollar is fixed in gold Right. I’m not sure I understand. I’ve read some of these arguments, but they may be a little bit beyond my kin. Can you tell me how this works and if it is a good way to do it? I mean, we’re in fiat currency. I don’t see us ever going back to gold. No. As a standard, but why do these people feel it should be that way?

Carl Stuart [00:45:11] Well, and for everybody else, what Chris is talking about, up until, I think it was in the 70s, you could, the dollar was worth an ounce of gold, and the price of gold was fixed at $35 an ounce. And we went off what was called the gold standard and basically said the dollar value will float in value versus gold and versus other currencies of other countries. And the value of the currency, the safety of the currency, not the value, is the full faith and credit of the United States government. That’s what Chris means by fiat currency. And because we’re the largest economy in the world, we’ve gotten away with that. The people in Argentina have gone belly up at least two times since 2000. We’re not going to go back to the gold simply because We spend more than we make at the federal level and it’s getting worse all the time and we can’t afford to go back to the gold standard. So anybody who says that makes sense is making an intellectually valid point, but politically and economically is simply not going to happen. So I’m with you, Steve Forbes or anybody else who wants to do that is reenacting Don Quixote as far as I’m concerned, Chris.

Chris [00:46:40] Carl won a side on that at the bottom of that page. It has a short square that says, This Day in Market History.

Carl Stuart [00:46:51] Yes, yes, I read that some days.

Chris [00:46:53] Right. Right. Do you know who our representative was at Bretton Woods? The English representative was John Maynard Keynes, he of Keynesian economics. Yes, of course, famous. The American representative, and this is going to blow some minds, Harry Dexter, Harry dexter White was shortly after Bretton woods was revealed to be a Soviet agent. And that was the man who was representing

Carl Stuart [00:47:22] You can’t make this up, it’s a movie.

Chris [00:47:24] No, and it’s in Paul Johnson’s Modern Times. He’s an historian from England, but I’ve read this in a number of sources He was declassified later, but yeah, he was a Soviet agent

Carl Stuart [00:47:37] Okay, Chris. Thanks for the call. You’re listening to Money Talk on KUT News 90.5 and the KUT app. When you have a question, call me or text 512-921-5888. Let’s just see here. Get the computer to work. We’ll get down here to the one who’s been waiting. Here we are. Ruth, you are on the air. How may I help?

Ruth [00:48:09] Um, actually I want to help you where to cash in savings funds.

Carl Stuart [00:48:14] Terrific.

Ruth [00:48:16] Okay here’s the deal you are going to have to have an account with whoever you are catching in the baby bond there are a number of places that will do that but some of them want you to have been a count with them for six months before they’ll do anything and the one i’ve had the best luck with no elite amount of wait time at the university federal credit union often

Carl Stuart [00:48:39] That is fantastic. I’m gonna remember that. And that just shows you the people who bought these for these young people had no idea how difficult this was going to be. University of Federal’s been your best experience.

Ruth [00:48:54] The other thing is you can set up an account on treasury direct and you can convert your paper bonds into electronic bonds and then they will deposit them wherever you want. But that is kind of an interesting thing that makes me really uncomfortable because I have to mail all of my bonds.

Carl Stuart [00:49:15] Think of that.

Ruth [00:49:15] And I don’t want to put things in the mail.

Carl Stuart [00:49:17] I don’t blame you. I don’t blame you well thanks for the update and thanks for the information Ruth. I really appreciate it. Sure. Thank you. You’re listening to Money Talk on KUT News 90.5 in the KUT app and by the way you can catch past shows at KUT.org slash Money Talk. Today call or text 512-921-5888. We’ve got some calls here I just need to get down to find this one. Here we go. Working on the software to get down to where I can get everybody. Steve, you are on the air, how may I help?

Steve [00:49:58] Oh, Carl, I’ve been listening to you for years and you’ve helped me tremendously.

Carl Stuart [00:50:01] Thank you.

Steve [00:50:02] Yep, kept me owning my own home and living in central Austin, frankly, due to your investment advice.

Carl Stuart [00:50:08] Oh, thank you so much.

Steve [00:50:10] I just wanted to point out to folks, I’m a retired state employee, and God forbid, they have not had a COLA or anything on their retirement in 16 years.

Carl Stuart [00:50:24] I had no idea.

Steve [00:50:25] 16 years hasn’t been increased by one penny. So do the inflation and you’ll see that they’re now making about 45% of what they made in their retirement and it’s really a bad thing. And they, Sarah Eckhart had a bill to deal with this last session. And our good friends over there that run the big circus would not even let it get out of committee.

Carl Stuart [00:50:50] Oh, my. So, you know, that tells you that you’re right. Well, that tell and I know you know this is people who have a pension. The good news is that they’re not subject to stock market risk and they don’t have to worry about not getting paid. But your very good point is they also can’t call up and get an increase when inflation goes up. And that’s why they have to all have money on their own, whether it’s in a four or three B four or one K or in their own account. They have to invest. In stocks that will help them offset the increased cost of living.

Steve [00:51:24] Well that is exactly what I have done based on your advice over the years, and it has been great advice. I’m really glad you’re no longer on K-O-B-J, that station just about drove me insane, waiting for you to come on there and build their gold bug after gold bug, such great shows like Bobby Gray, Texas Crypto. Wonder what ever happened to old bobby gray you might want to look that one up online and see what’s going on with bobby gray these days that’s right steve i sure take the time to look that one out all right anyway thanks so much

Carl Stuart [00:52:02] Okay, you bet. Thank you. Thanks for calling. You’re listening to Money Talk on KUT News 90.5. I love this show and the KUT app. Call or text 512-921-5888. Umi, you’re on the air. How may I help?

Umi [00:52:23] Hi carl i don’t like to thank you michael

Carl Stuart [00:52:26] You bet.

Umi [00:52:26] I had a question. I’m going toward divorce. I am pretty much at the tail end. Then I keep the house and some of my 401k and all that. I mean IRAs and what not. I will not have a house. I need to buy a house, so here’s what I have in assets. I’ll have about close to a million dollars in my 401K. I’ll about half a million in IRA. And I’ll have about 600K in my, in my rock. And then I’ll happen to cash. I, what, what do you recommend in terms of a mortgage, right? I’m 66, I’m not gonna work, you know, for long. I, I, am waiting for my daughter to graduate from college in grad students. So another year and a half, probably, and then she’ll be done. And I can quit my job at this point. Okay, so You know, what are my options in terms of getting a mortgage? I don’t, you know, a 30-year mortgage would be difficult post, you know, not working, right? I mean, I’ll have my social security available and the IRA and the Roth. Any suggestions?

Carl Stuart [00:53:46] Yeah, I mean, I think to your point, you don’t want to get too large a mortgage. The first thing I would do is I would go to a mortgage lender and lay out my financial situation, my income, my assets, and ask them how much would they uh… Loan me because that’s going to and and what would the down payment they would require and you’ve got to get that to a point where you can afford the downpayment my understanding is that lenders don’t look favorably on roth and and ira’s and four oh one case because in the case of you defaulting on the mortgage my understanding is those are protected assets now not a lawyer but that’s my understanding and so. If you’re going to get a house and you’re still working, is that correct with me?

Umi [00:54:45] I am working, yeah.

Carl Stuart [00:54:47] You want to do this while you’re gainfully employed. And then upon retirement, upon retirement you’re gonna take that 401k and roll it into your IRA. And then you’re going to take money on a regular basis out of the IRA to make the mortgage payments and hold on to the Roth as long as you can because that’s your future tax-free money plus You don’t have to take a required minimum distribution and you will from the IRA rollover. It seems to me you’ve got a million, a lot of money over there. If you can qualify for a mortgage at 66, get the mortgage at a level that you can afford to take money out of your future savings and not run out of money to live in the house. I’m making an assumption that you really want to own a house. I mean, you can. Right now, according to what I read in the rental market, because we have an abundance of apartments, you get a really nice place to live, that you get nice place to live and not have to have a mortgage and be debt-free. And then when your child graduates from college, you’d have maximum flexibility as to what you do. So I might think about kicking the can down the road of getting a house right away if I were in your shoes.

Umi [00:56:07] Yeah, the only reason I was trying to do that was because while I’m still working, I could qualify for…

Carl Stuart [00:56:13] Yes. Yes, I agree. Yes. If you want a house, yes, now’s the time to do it while you’re still working. I agree with your analysis there. And I would just find out what I could afford with my income, how much would people lend me, frankly, and could I afford to live with that, and then retire and fund the mortgage out of my retirement savings.

Umi [00:56:36] Yeah, but wasn’t there, somebody told me that there was some kind of scheme where you could use the IRA money as sort of collateral or…

Carl Stuart [00:56:48] No, no. Yeah, no, that’s my understanding is you cannot do that. You’ll have to look into the my understanding as you cannot do that, because if you defaulted, they can’t come get your IRA is my understanding.

Umi [00:57:02] Okay. Okay. Yeah. Thank you so much. Appreciate it.

Carl Stuart [00:57:06] You’re welcome, good luck. Well, it’s time for me to go, lots of fun. This is the best we’ve had calls throughout the day. I’ve had a lot of fun, I hope you’ve enjoyed the broadcast. I wanna thank Alyssa for doing her usual great job as my producer, and to tell you to be sure next Saturday at five, tune in to Money Talk.

KUT Announcer: Laurie Gallardo [00:57:32] You’ve been listening to Money Talk with Carl Stuart. Carl Stuart is an investment advisor representative of Stuart Investment Advisors. And this is KUT and KUT HD1 Austin.

This transcript was transcribed by AI, and lightly edited by a human. Accuracy may vary. This text may be revised in the future.