Money Talk with Carl Stuart

Carl Stuart handles questions on a lot of personal finance topics, including what to do with health savings accounts (HSAs), investing in indexed funds or ETFs, and some advantages to paying down your mortgage. He also talks a bit about the news that Warren Buffet is stepping down as head of Berkshire Hathaway – and, no, Carl was not named his replacement!

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] [00:00:02] This is Money Talk with Carl Stuart. Carl Stuart is an investment advisor representative of Stuart Investment Advisors. Now, here’s Carl.

[Carl] [00:00:13] Good afternoon and welcome to Money Talk. I’m Carl Stuart and you’re listening to Money Talk on KUT News 90.5 and the KUT app. Thanks for listening. Money Talk is a broadcast now in our 31st year about the world of financial and investment planning where you drive our agenda by calling or texting 512-921-588.

It’s always a terrific idea to call or text at the beginning of the hour. If I get a text, you will hear the bing. And I take today’s calls first and then previous then actually today’s text second and then previously text after that.

So we had a lot of good texts and calls last week. I think you’ll enjoy the broadcast. I’m going to start with last week’s text, but let me give you that number one more time, call or texts with your questions at 512-921-5888.

This question came in.

What is the cutoff and the maximum amount for contributing to an HSA? That’s a health savings account in the year that you go on Medicare if your 65th birthdays in August of 2025.

Well, I went to the IRS tax tables and I went through the health savings account and it did not talk about it did NOT talk about some point where you couldn’t contribute it says This health savings account, if you’re an individual, you can contribute up to 4,300. And if you are a family, up to $8,550. And if your over 55, which you are, in 2025, you may contribute an additional $1,000 or a total of 5,300 for individuals and 9,540 for families. That doesn’t really get exactly at your question. But that’s what I can see, so that’s why I put that up there.

You’re listening to Money Talk on News Radio KLBJ. Call or text 512-921-5888. Let’s see. Let’s go to some more texts here. OK. Here we go.

[Text] I have invested in stocks and the SPY ETF. But how does one get into bonds? So what this person has done is invested in an exchange traded fund and the SPY follows the S&P 500.

So I’m gonna infer from your question that you’re interested in passive investing and in exchange traded funds. And if that’s the case, then I’m always say this, but if you’re a new listener, you don’t know this. I do not make recommendations on money talk. And the reason I do is because I don’t want you to say, you told me to do this, and then it goes down 25%, and my lawyer will be giving you a call. So I am going to do my best to answer your question and to share with you the 46 plus years of trial and error, mistakes that I’ve made in financial investing.

So if you want to get into bonds and you do not want active management, you want passive management. It’s my understanding that the largest passive bond fund is the BND, which is the Vanguard Total Bond Market. It is designed to follow the Bloomberg AG, which is primary index.

The other one you can purchase is the AGG. That’s the iShares aggregate. Both of these are very, very inexpensive. ETFs are tax-efficient.

Obviously, if you buy a bond fund, and the bond fund pays dividends, and you reinvest those, which is the wise thing to do. Nevertheless, you’re going to have to pay taxes on that.

512-921-5888, here’s one from today.

[Text] What will the new beautiful tax bill mean for my soon to be installed solar panels? I think every time there’s been a tax bill, beautiful or otherwise, I can remember almost no retroactivity.

What I believe you’re asking about is that there are tax credits, I believe, for purchasing solar panels. I know there are for purchasing electric vehicles. And I just based on my experience, they are not gonna go away for things that you have already purchased. Now they may say, we’re not going to do that going forward. The tax bill goes into effect January 1st of 2026. I don’t think that you have any risk in that.

You’re listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text 512-921-5888.

[Text] Hi Carl. What are your thoughts about so many people in index funds? Does this— Does overcrowding cause any concern? And how will traditional mutual funds compete in the future?

That is a terrific question. So what this person is talking about is, when I got started in this world, mutual funds were under the Securities Act of 1940 and they were called open end funds. And the reason was you could put money in any business day and take money out any business date and the price you paid for your purchase and the price that you received for your sale was the value of the portfolio determined at the end of the business day, divided by the number of shares outstanding. That’s called the net asset value. So whether you placed your order at 10 a.m. or 2 p.m., you got the same price.

A man named Jack Bogle who worked for a company in Boston named Wellington came along and said, “you know, we have these high-priced people making buy and sell decisions for stocks, and later for bonds. What if we just created an opened-end mutual fund that didn’t try to determine which stocks would do better, but just followed an index like the widely followed standard and poor 500 index? And because of that, we don’t have to have that high-powered human capital, and we can do these dirt cheap.”

And they were dirt cheap, and they are. And a lot of academic studies were done around the impact of indexing versus active management and when it comes to the equity market, not the bond market, to the equity market by and large over longer periods of time active equity managers tend to underperform the passive indexes.

I say that it’s not true 100% of the time, but it leaves you or your advisor to come up with a strategy if you’re going to use actively managed funds. And so this person knows that trillions of dollars have gone into index funds, and he or she is wondering if that’s gonna cause what he calls properly overcrowding.

I think what it does is because the index, I’m really digging in the weeds here, is something called market capitalization. What does that mean? What that means is every minute of every trading day, the price of the company’s stock, whether it’s NVIDIA or General Motors or Coca-Cola, times the number of shares outstanding, then the multiplication is done, and then the result of that, the product of that multiplication, that however many billions of dollars that is, that goes into the index in a representative fashion. So if a company has a low price and a few number of share outstanding, its market capitalization is simply going to be lower. And it will have less of a percentage in the index. Now, this doesn’t mean overcrowding, but what it does mean is if there is a sustained period of a particular type of company, which is doing very, very well in the stock market, it will gain larger and larger market share. Think today, a company like Apple Computer. Think in the 1990s, a company Austin-based Dell Computer. When a company is large and has a sustained period of moving up, it takes on larger and larger percentages.

So while you can say you’re diversified, and you are in the sense that you have, in my example, representation to 500 companies, it’s not like you have one 500th of each one. If you want to avoid this market capitalization concentration, you can buy an equally weighted index fund, say the S&P 500. Microsoft or Apple or Nvidia aren’t such large proponents.

However, I would tell you by based on the assets under management, the vast popularity is the passive index fund. Those were 40 act funds and then several years ago Wall Street invented exchange traded funds which are even less expensive than the 40 act fund and they trade throughout the day. You don’t know what you’re it till the end of the day with an open-end fund. But you absolutely get the price just as if you were trading a stock. So I think, I would say the challenge isn’t over trading. I would the challenge is concentration over crowding. It’s really what I think is that you end up thinking you’re more diversified than you might be. That’s a great question and thank you.

You’re listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text 512. Nine two one five eight eight eight. Okay, let’s see here look at

[Text] Hi, Carl you mentioned the etf spy which is the s&p 500 etf i recently moved most of my portfolio from spy to ivv that’s the i shares due to the lower expense ratio my question is is there any substantive difference between different S&P tracking ETFs.

In my experience, the answer is no. And the reason I use the SPY is because when I look at the various indexes, I don’t want to use just Vanguard or just Fidelity or just the Spiders. And as a result of that, I use Vanguard Total Stock Market, the SPy 500, Fidelity’s ONEQ, which is the NASDAQ, and Vanguard XUS, which is the International. I’m not suggesting that one’s better than the other.

You’re listening to Money Talk on KUT News 90.5 and KUT app. Call or text 512-921-5888. Kelvin, you’re on the air, how may I help?

[Kelvin] [00:11:27] Hi carl i’ve got some information a little bit further information on the HSA eligibility uh… Uh… Turn 65 and so i’ve uh… I’ve had to approach this kind of head-on and there’s—

It’s a tricky, tricky situation the income doesn’t matter your income is not a problem and what you stated is correct the iris doesn’t uh… Limited eligibility for that however there’s an interaction between Medicare and HSA  And if you are registered for Medicare And the best I can tell, because I don’t have my notes with me, and I’ve been doing a lot of digging, you can be, as soon as you register for Medicare, you cannot contribute to an HSA.

[Kelvin] And there is a window before and after, I believe, that I’m trying to get straight on that. The register doesn’t mean you’re paying for Medicare and being, you know, served by Medicare. A lot of people I know as soon as they turn 65 you sign up for Medicare and that way you’re ready to roll into it when you leave your job. I don’t plan to leave my job soon, but you never know, and you want to be signed up. So I talk to an HSA expert on it who came to our company.

[Carl] [00:12:41] Mhm.

[Kelvin] [00:12:41] And what I’m doing is I’m not signing up for Medicare. That’s a little bit of a risk. The day I get laid off, perhaps, I will sign up for medicare and I’ll have to do a bunch of pay out of pocket and I listen until the paper score comes through.

[Carl] [00:12:54] Right.

[Kelvin] [00:12:55] Which is really going to be a little bit of a pain because I think when you get delayed off over 65, you often can’t do the, what do you call it? The Cobra. Anyway, the HSA guy had a bunch of kind of complicated convoluted solutions. But when I told him, I said, well, what if this happens to me and the company’s putting money in and I put money in, can’t I just pull the money right back out and pay tax on it then?

[Carl] [00:13:23] The HSA money, right.

[Kelvin] [00:13:25] All of the HSA money, yeah. My company gives us $2,600 a year for HSA. And he just smile and he says, oh, heck yeah. If you want to do that, that’s great. Now, there’s some forms to do. If you put your money in and you make a profit, you’ve got to do a bunch of forms and you have to pay extra tax on the profits and stuff like that. But it is doable. In some cases, if it weren’t for the big company contribution, I might not bother with it. Although, I love putting the money in the HSA because it just stacks up and invests. You invest it and you invest it. It’s great. But that’s something for anybody in that situation. Research is good. I think I’ve done a lot, but not every single thing yet.

[Carl] [00:14:07] Okay Kelvin, thanks so much for your call. I love this broadcast because we have smart people and experts who can help me out. You’re listening to Money Talk on KUT News 90.5 and on the KUT app. I’m going to take a break and when I come back I’m gonna visit with Maureen. I shall return.

[KUT] [00:14:43] This is Money Talk with Carl Stuart. Now, here’s Carl.

[Carl] [00:14:48] Welcome back. You’re listening to Money Talk on KUT News 90.5 and on the KUT app. I’m Carl Stuart and when you have a financial or investment planning question, call or text 512-921-5888 and you can catch past shows at kut.org slash Money Talk.

Here we go. Uh-oh, Maureen, you’re on the air. I thought I hit it. I may have hit the wrong button, but I do know your question.

What do I think of buffered exchange traded funds?

It’s a great question. If you want to call back and make sure you get on the air, but I’m going to answer it. So this is a bit complicated. Buffered exchange-traded funds. So an exchange-traded fund, I just described a few minutes ago. And so you can buy an exchange traded fund that say follows the S&P 500.

There’s been this new innovation called buffered exchange traded funds and the idea is that you’re willing to give up some of the upside gain for protecting against big losses and it’s a pretty sophisticated strategy uh… In which the provider buys and sells options to both reduce your downside risk But to do that, they also have to sell call options. To pay for the put options they buy, and therefore, it also reduces the upside potential. So what do I think of that? Well, in my career, what I have learned is that the stock market doesn’t go up a nice, easy 6% a year or 8% a a year, but it goes up as well as down in sometimes violent actions. So let’s take the last three calendar years. In 2022, The S&P was down over 20% and in 2023 and 2024, it was up over 20%. Now, 20% is nowhere close to the historic return of the S&p 500, which may be eight, seven, eight to 10%, depending on which time period you look at.

Okay, let me get here so I can get this. Maureen, have you been able to listen since I dropped your call? I apologize.

[Maureen] [00:17:10] I have not but thank you for taking my question. So you might have already covered what I had called in to ask about but I had recently been advised to consider buffered ETFs because they can help protect the downside and the volatile market.

[Carl] [00:17:27] Yes.

[Maureen] [00:17:28] I don’t know how risky those are.

[Carl] [00:17:31] Sure, I’m glad you asked that question. It turns out they have become very popular recently. What they’re doing is they’re taking an index like the S&P 500, then they’re implementing a strategy with options where they buy options called put options so if the SMP goes down, they can get these put options grow in value which helps offset some of the loss. But to do that, they have to pay for those options And so they sell something called call options. Which if the S&P goes up, those ones, they lose money on.

So the idea is they’re trying to smooth out the returns in the stock market. It’s been my experience over the last 46 plus years that the stock doesn’t move in nice smooth fashion. And what I was saying is you take the last three calendar years where in 2022, the index was down over 20%, and in 2023 and 24, it was up over 20%.

All three of those are way away from the historic long-term average of, say, 8 to 10 percent. But what I’ve learned is it happens in those violent fashions. And when you have something that, say gives you the first 8 percent of gain and it goes up 20 percent, you’ve left that 12 percent gain on the table. And in my experience, over time, that reduces your overall return.

Would you have been better if you had the patience to simply have owned the index? In my experience, the answer is yes. We’re all human beings, we live in scary times, and you might think, well, I’d rather give up some of the upside for saving some of the risk on the downside, then okay. I’d better see you own other assets, like investment grade bond funds, which would not always, but usually hold value, and if we get into a recession, may even grow in value, rather than giving up the upside. So I’m not a fan of buffered ETFs. I understand why they’re popular. I would not tell you they’re risky. There’s something in economics called the opportunity cost, which is how would I have done if I hadn’t made this decision? I think if you own the S&P 500 today versus the S& P 500 buffered, ETF, and you called me back five years from now, and you had $10,000 in one and $10 thousand in the other. If I had to bet, I would bet that the one that was not the buffered ETF would have a better overall return. So if you can stand the risk of the stock market and buffer it with other assets like quality bonds, that would be my preference if I were in your shoes, Maureen.

[Maureen] [00:20:12] Okay, that makes sense.

[Carl] [00:20:14] You’re very welcome, 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. Here is the text.

[Text] Hi, Carl, there’s a company up there called MicroStrategy and as best I can tell, their main business is owning a bunch of Bitcoin. What’s strange is that their stock price trades are much higher than the value of the underlying Bitcoin. A, why does this happen? And B, not that I’m sophisticated to short sell, well, anything, but isn’t this the type of situation that is ripe for a short sale?

The answer is absolutely. So what this person has observed is that this company that didn’t do any of this in its past has become a buyer of Bitcoin, they will sell shares, raise capital, and turn around and buy Bitcoin, and put it on their books and they own Bitcoin.

But what this person has identified is if you just went out and bought the Bitcoin on your own, you’re gonna get the value of the Bitcoin. Up or down, day to day, but micro strategy, you’re paying the company to keep your Bitcoin, which makes, in my view, no sense whatsoever.

No, I’m not a short seller either, and I’m gonna sell short, but this just shows you what can happen in the financial markets is that people can do silly things, they can read stuff online, they can get involved in chat groups and go out and run up the price of a stock or sell off a price of stock unrelated to the underlying fundamentals. And so I would say to you, run as fast as you can in the other direction.

You’re listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text 512-921-5888.

Let’s see. Oh, this is a wonderful one. This is from last week. And this is just so important to so many people and it’s long. So if I get a call or a text, I will interrupt myself.

[Text] Hi, I have a question. I’m 38 years old, married with two kids. What are the smartest financial moves I should focus on right now to build long-term security, like balancing retirement savings, college savings, and paying off our mortgage?

Well, sir or ma’am, you are in a common situation, and the way I think about it is this. First of all, you can postpone retirement, but you can’t postpone your kids turning 18, and you don’t wanna say it to your daughter when she’s 18 and graduates high school. Well, come back when you’re 26. I think I’ll have enough money by that time to be able to help you go to college.

So it becomes a question of two things that are important, but one’s more urgent than the other. The best, in my view, the best investment you can make is in a quality education, whether that’s a trade school, a junior college, or a four-year university. The data are very, very clear. The people with four-year degrees have much higher lifetime income than people without them.

And so if you believe that your son or daughter would prosper in college and you’re thirty eight years old, that’s your number one objective because it’s the most urgent.

Now, building for retirement is a big deal because what you want is what I call financial independence. You want there to come a time in your life that when you get up in the morning, Whatever it is you do that day You do because you want to. Maybe it’s go to work because you love working. Maybe it is working in the garden or travel or whatever it is. Well, your expenses don’t stop when you retire and you may have a bucket list that costs money as well. So you’ve got to save a whole lot.

So that’s your next objective. Now about paying off your mortgage. Obviously it was easier for me to answer this when people had 3% mortgages or 4% mortgauges. You may have a 6% or 7% mortgage. Nevertheless, the odds are that your house is going to appreciate in value over time. It’s not an investment, because you’re not gonna sell your house and live in your car when you retire, but the historical appreciation of homes is around 3 1⁄2 to 4 1⁅2%. So at least you know that you’re paying that off, it’s a forced savings, and that would make that my third thing. If you, am I opposed to paying off mortgages?

Of course I’m not. If someone listening has a bunch of money in the bank and they’ve got a 7% or 6% or a 5% mortgage and they pay that mortgage down or off, they have that imputed return. But in your situation where you’ve gotta come out with priorities, that’s what I would do. Now, your next question.

Oh, by the way, Call or text 512-921-5888.

How aggressive should someone at 38 be with their retirement investments if they feel a little behind on savings?

The answer is aggressive. 38, I don’t know if you’re a male or a female, but you could live to your 90. That makes you, by definition, a long-term investor. And if you ask yourself the question, what are the asset classes in which I can invest that outpace inflation over long periods of time? Income producing real estate, not your house. And common stocks investing in human ingenuity.

So if aggressive means overweighting common stocks, then that’s aggressive. I don’t think it does. I think aggressive means picking individual stocks or narrowly focused mutual funds where you will have much more volatile performance and much more risk. But do I think that you ought to be aggressive in the sense of having largely equity portfolio at age 38?

The answer is I do.

Now there’s some more, but here I have a text. Let me get this.

[Text] Hi Carl, what are your thoughts about so many people, and—

Oh, that’s not the one. Let’s go back and see. I thought I got a new one, but it looks like this came in three minutes ago. So let’s see here.

[Text] Thoughts on your friend Warren Buffett’s retirement. Well, a friend of mine emailed me today and said he was disappointed that I didn’t get the job. I’m right. Warren Buffet lost his good friend Charlie Munger and Warren said that Charlie’s gave him, gave the best stock picker and the best investor.

Warren Buffett is doing the right thing. He has brought along these two people Mr. Jane and Mr. Abel over many, many years and has given them enough rope to either hang themselves or succeed and what he understands is that what he’s doing is for the shareholders.

Imagine this, what would happen if he didn’t do this and a year from now he had a heart attack and died? What do you think would happen to the price of the stock? It would really come under pressure. But what he’s accomplished by doing this is taking people, in this case a person, Mr. Abel, who he thinks is Abel and put him in place while Warren is still there.

That is so smart, because it’s trying to give the existing shareholders comfort. I’m not immortal, but when I pass away, it doesn’t mean that this company somehow is going to go south or that the management is going to suffer. So this is exactly the right thing to do.

You’re listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text me 512-921-5888. And also remember you can listen to past shows by going to KUT.org

All right, let’s go back to, let me find our 38-year-old person. Here we go. Let’s see.

I’ve got a bunch of them here, so I’m going to make sure I get to all of them.

[Text] If I have extra money each month, should I put it towards paying off the mortgage faster?

No. For the reasons I said earlier, you invest it because you have the kids’ college to think about and your financial future.

[Text] What types of investments are smart for a 38-year-old who wants growth but is cautious about risk?

There is, if there’s one law, it’s like physics, it is like, I don’t know, gravity. There’s a relationship between risk and return, and risk and reward. There is no such thing as a good return, low risk investment. And when people tell you they have it, you should run as fast as you can in the opposite direction. You have to decide how much risk you can take. But here’s the good news. Time is on your side. If you invest in the stock market for one day, what are your odds of gain? 50-50. But if you invest for three… 15 years, it’s remarkable. How many times in a five year span, if you started and held it for five years, would you have a loss? It’s very, very small. And by the time you get to 15 years and I’m using the S&P 500 for those of you who are stock market followers, there aren’t any 15 year periods where you would have had a loss. Now you’d had some 15 years with good returns and some with mediocre returns, but if you’d kept the money in cash, after inflation and after taxes, you’d have lost money. If you put the money in bonds, probably after inflation you’d lost money, but even if you hadn’t, you wouldn’t have accomplished your objective. So there are investments that are smart for a 38-year-old who wants growth, but there’s not for a 30-year old who’s cautious about risk. You simply can’t do it. Time reduces risk. And if you have time, which you do, and you don’t have a big lump sum, which you don not, by putting money in. Every month, getting an automatic withdrawal into the index fund on your own or with your advisor and slowly building it up for your kids and for yourself is the thing to do. It’s time for me to take a break. It’s a great time to call or text 512-921-5888. I’ll return.

[KUT] [00:31:17] This is Money Talk with Carl Stuart. Now, here’s Carl.

[Carl] [00:31:23] Welcome back, I’m Carl Stuart and you’re listening to Money Talk on KUT News 90.5 and on the KUT app. When you have a question, call or text 512-921-5888 and if you didn’t have a chance to hear today’s show or previous shows, you can go to kut.org slash money talk and download those programs.

By the way, I see in this long email that I’m talking to Jeff, so thank you for Let’s see, what, here’s one about your kids. Let’s just see.

[Text] What’s your advice on balancing savings and investing while still spending money on experiences with young kids?

Boy, that’s tough. I think, here is my answer. One of the two best books I have ever read for my personal was a book that was considered a business book called The Seven Habits of Highly Effective People by a man named Steve Covey. And it was extremely, it was on the bestseller list for business books for many, many years. And I read the book several times, even taught a couple classes on it. And I will tell you the first habit of a highly effective person in Mr. Coveys view is begin with the end in mind. Begin with the ending mind. And we already determined your end in mine is to get your kids a college education. And to get yourself financial independence. Luckily, we live in an area where there are lots of experiences for kids that can be very inexpensive, and I think that really matters. And so, I read in the local paper and online all of these activities where they’re free, and you can take your children to that. They can have a great experience, and you’re not going to have to spend a lot of money. So I think that call those experiences. Taking them to Disney World? Forget it. Costs a fortune? It’s like cotton candy. It tastes good, but pretty soon it’s gone. You may even have some indigestion. So look for ways to get quality time and quality experience for children that are free.

You’re listening to Money Talk on KUT News 90.5 and on the KUT app. Give me a call or text 512-921-5888. Okay, here we go.

[Text] Hello, Carl. Could you help me decide when to pull out my Social Security as I’m 60 years old now? Love your show, Caroline. Thank you, Caroline, here’s the deal.

Unfortunately, a huge percentage of people take Social Security at 62. That’s a very, very bad mistake. I would say unless you are disabled, Taking it out of 62 is a bad idea. People say, well, I don’t know how long I’m gonna live. Well, of course you don’t. But the odds are you’re gonna live a long time and Social Security is not gonna be worth as much because of inflation. And you can’t call up the Social Security Administration and say, this is Caroline. I’m a little short this month. Can you increase my payment? No.

Now there is the Social Security cost of living deal, but you don’t know what that’s gonna be and it’s been quite volatile. So I would not take it at 62.

Then your full retirement age is a function of your date of birth, but it’s probably for you around 67. Should you take it a full retirement date? Because if you take it at the mandatory age of 70, guess what happens to that benefit? Between your full retirement age, let’s just pretend that’s 67, and 70, the Social Security benefit grows, believe this or not, at 8% a year. There is no investment that you can make that I can tell you about on Money Talk that will guarantee you over a three-year period that you will make 8% per year for over 25% increase in the benefit. Doesn’t exist.

Unless you have other problems that you must take the money out, postponing it as long as you can is a terrific idea and that’s what I would recommend that you do, Caroline. Thanks for the text.

You’re listening to Money Talk on News Radio KLBJ. Call or text 512-921-5888. Here’s another text.

[Text] Hi Carl, I’m about to move from Austin. I bought a house at my new home. But I’m now faced with selling my Austin home in a soft market. My agent is suggesting lowering the price significantly to sell, but I feel like there’s a line where I’m leaving too much on the table. Any suggestions on how I set the line of sell low or hold on, hoping the real estate market will be better in a year? I have no mortgage on either, but money tied up in a second home, hoping the market will improve as money not invested in a diversified market. Any words of advice?

Yes, you can’t predict the market. I don’t care if it’s a stock market or the real estate market. We have more homes for sale in the Austin market and mortgage rates are high compared to where they were a couple of years ago. And you’re right, the opportunity costs of not having that money working for you. People get emotional about their homes and they allow their emotions to stand. It’s like owning a stock. And the fundamentals go bad and you just can’t bring yourself to sell it. My advice to you is sell the darn house. Having a house while you live somewhere else is not a good thing. Renting it out until you sell it is not good thing. One of my favorite authors and pundits, Tom Friedman said, no one ever washes a rental car. No one’s gonna take care of your home here like you did. Bite the bullet, take the advice of your agent, lower the price and sell it. Good luck.

You’re listening to Money Talk. KUT News 90.5 and KUT app. Call or text 512-921-5888.

Albert, you’re on the air. How may I help?

[Albert] [00:37:54] Yes, sir. And I’m so happy to talk to you. You- you’re just so knowledgeable. Thank you for us and I appreciate you.

[Carl] [00:38:00] Thank you.

[Albert] [00:38:01] Well, I’m 67 and I’m a little late in savings and…

[Carl] [00:38:07] Uh-huh.

[Albert] [00:38:08] For retirement and all that good stuff.

[Carl] [00:38:10] Mm-hmm

[Albert] [00:38:11] Haven’t I haven’t drawn any social security and I’m gonna wait till maybe I’m 75 or something

[Carl] [00:38:17] You wait till you’re 70. They make you take it at 70, Albert, but you’re doing the right thing. You wait until you have until 70, please.

[Albert] [00:38:24] Okay okay i’ll do that i’m sixty-seven thousand that and uh… So uh… I travel a lot but i do this on i do that i do have a for a uh… Hotel so I  get the travel for free

[Carl]  [00:38:38] Okay.

[Albert] [00:38:39] And so I’m enjoying my life and the whole thing is that it’s about the money, you know, it’s always about money. So I’m trying to save as much as I can and I’m in the stocks and I I’m doing that but with this AI going on it’s just crazy, it just drives me crazy trying to invest in maybe Bitcoin or or something like that. So yeah, I’m in there, you know

[Carl] [00:39:10] Well, my advice to you, first of all, is to agree with you to postpone your Social Security to 70. Secondly, if you have a solid job and you’re investing in stocks, I think that’s a good idea. I would tell you that investing in individual stocks or in cryptocurrencies is a high risk, high return situation. And we had a text last week where someone had invested in… Bitcoin and put in $15,000 and now it’s $10,000. So that’s a 33% decline.

And I would tell you, personally, I don’t think for myself and for most people that that’s the definition of an investment. I think it’s more of a speculation.

AI is a huge factor across the global economy. Everybody in business is working on, and or how to use AI, or is currently using it. I would not try to invest specifically in AI. I wouldn’t buy an AI company, because I think it’s like buying a semiconductor company when everybody who has computers has semiconductors.

So I think you’re much better off because you need to buy stocks because you got a late start. You’re gonna have social security, which will be like the base of your retirement pyramid. You need to have stocks for growth, I agree with you. The cheapest, most tax efficient way is if you’re gonna do this on your own, you go to a big provider like Vanguard or Fidelity or Schwab, they have something called exchange traded funds, they’re very cheap. You can buy a total stock market fund or an S&P 500 for 0.03% cost. That’s three one hundredths of a percent.

[Albert] [00:41:03] You’re not going to invest in and i believe that they’re going to have to be part of it

[Carl] [00:41:08] Good, do the same thing, get an international ETF. We have had a long period of domestic stocks outperforming foreign stocks. That has changed this year. It’s entirely plausible, I can’t see the future, that we’re getting into a time where international will do better. So for example, as of yesterday, the S&P ETF is down 3.01%, and the Vanguard XUS, which is at ETF. Is up 10.68. That’s a 14% point difference. So if you’ve got the S&P 500, good for you. Start investing in an international ETF. That would be my advice to you, Albert.

[Albert] [00:41:52] International, okay. SCMI, you know, you have to go with these electric cars going on and stuff. Yes. I’m invested in that because I’ve seen that grow. Okay. I know it’s a risk but it’s growing. It’s a future stock.

[Carl] [00:42:13] Well, good luck then. Thanks for the call. Thank you, bye bye. You’re listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text 512-921-5888.

Gary, you’re on the air. How may I help?

[Gary] [00:42:33] Hi Carl, can you hear me okay?

[Carl] [00:42:35] Yes, I can. Please proceed.

[Gary] [00:42:37] Yes, you had a lady who called, I think, a couple of weeks ago, and she had had a relative who had had another relative that’s a lawyer, right, a will. And now this lady is the executor and she’s afraid the lawyer is coming in and trying to demand a whole bunch of money out of the estate. And she was worried about it and asking what to do. And I just want to say, and I sent a long text if you read this, tell me and I’ll stop. But if I was an executor, and the estate was substantial, I would make a copy of will. And read through the copy redline it if i where i had questions write down the questions making a point with another lawyer who represented me not be a state email the will and my questions to the lawyer meet with the new lawyer and write down whatever the new lawyers says because the executors for fiduciaries like trustworthy ran can be held libel ran if another error beneficiaries issue if that lawyer a whole bunch of money out of that state that should come to me And I’m going to sue you and I want you to pay me out of your own pocket and they might win.

[Carl] [00:43:40] Did you happen to hear my answer after I talked to two lawyers about contested and uncontested?

[Gary] [00:43:49] Idea that i don’t remember exactly what you know so here’s

[Carl] [00:43:51] So here’s what the lawyers two lawyers said When you go to an attorney to have an estate have they have that the attorney handle it The attorney is gonna you’re gonna tell the attorney. It’s a simple process The heirs are all in agreement and the attorney is going to quote you a fee But if you go an attorney and say my sister is gonna fight it and my brother doesn’t want this such as such That’s a contested one The attorney doesn’t know how long it’s going to take her to do it, and they will then negotiate a percentage rather than a dollar because they don’t know how long that’s going take, and at their billing rate, if it takes 10 days instead of one day, they lose a lot of money. If that has happened to this woman, and she’s signed the contract according to the attorneys with whom I visited, the probate court is not going to even take a look at it because it’s contested and she signed it. The only time the court will take a look at this contesting is if it’s in what’s called a dependent administration as opposed to independent administration where there’s a minor child or a disabled person as a beneficiary, they will look at the lawyer’s fee to make sure that it’s fair and reasonable. So that’s per, I’m guessing, and you and I don’t know, but I remember in her comments she said something about there being some disagreement among the family. I’m inferring it was a contested situation and that’s why the lawyer charged the fee. The other thing is we don’t know the size of the estate. 35% sounds high if it’s a $2 million estate but doesn’t sound so high if it’s $10,000 estate. So I appreciate your comments. I think there’s a lot of stuff there. Absolutely.

[Gary] Thank you so much, Carl. You bet, Gary. Thanks for calling.

You’re listening to Money Talk on KUT News where we have really smart listeners. 90.5 and on the KUT app.

Let’s see, what time is it? We got seven minutes, if you call now, you’ll get on the air at 512-921-5888. Here is a text.

[Text] Carl, I will have $300,000 to roll over or cash out and pay taxes in June. I don’t need a baby income. What to do?

Well, I’m gonna assume when you say roll over that it is in a tax deferred. Account, probably the way you talk a 401k, if you mean that and you have that to roll over into an IRA, then I don’t see a reason to pay the taxes. If you roll it into an IRA, you retain control, you can be as conservative or as aggressive as you want, you pay no taxes on any growth, interest or dividends, and until you’re subject to the required minimum distribution, you don’t have to take the money out. And since you don’t need the immediate income, don’t take it out and pay taxes on it if you don’t have to. So that’s, using the word rollover, I infer from that that it’s in some form of retirement account.

You’re listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text 512-921-5888.

[Text] My 10-year fixed annuity from my TSP, that’s the savings plan, matured this year. Should I roll over the annuity to TSP since their fees are lower and the G account in the TSP which is government bonds is like a money marketplace to hide this away until the stock market settles? I took the money for the annurity out of my T SP. No, what you should do is you got that, you have the money. You leave it in a safe place that may be the G fund, but you should start investing in the stock market. Because if you wait until the stock markets settles, you’re not gonna know when that is. They’re not going to ring a bell and say, guess what? The stock market, Carol, has settled. It’s now time to invest. We don’t know. Think about COVID. March 13th, we closed down the economy. The stock markets absolutely collapsed, and then it took an immediate turn and went straight up. It went down something like 35% and from the low it went up 70%. That’s because stocks are liquid. You can’t do that with real estate, but that’s the case with stocks. Do you wanna take advantage of the volatility by taking that money, whatever that is, if you wanna put it in the G account, if it’s like a money market fund, I’m surprised if it is, I would think it’d have some volatility, but if it did, good. And you wanna say, okay, I’ve already got this annuity, which I took out. That’s a guaranteed income.

My risk is I live a good, long, healthy life, the cost of living goes up, and the annuity is insufficient for me to live on. What am I gonna do? If you invested over time in one of the stock accounts the TSP has, and you’ve got three, four, five years or longer than what you wanna do is you wanna be putting that in the stock market slowly. Preferably in an index fund, perhaps 75% in stocks and 25, I’m sorry, 75% domestic and 25% in foreign, okay? Because you’ve got this big bond fund, it’s called an annuity. So you don’t have anywhere close to all your money in stocks and good luck.

Here it looks like I’ve got two minutes, so let’s just see if I can answer this.

[Text] Please discuss using required minimum distributions for charitable donations, great question. Here’s the deal. If you’re 70 and a half or older, you can do this. If you are getting required minimum distributions, you can this as well. You have a certain amount of money that the government says you have to take out and you’ve got to pay taxes on it. So you can set this up to make a donation to any 501C organization. A social service organization, your church, synagogue, mosque, whatever you want to do. You can have your custodian. Send it directly to the nonprofit. I personally like to have them get the checks to me and I send them to the non-profit.

What happens? The non- profit gets the money because you’re philanthropically inclined and you don’t pay income tax on the required minimum distribution. Now you don t get a deduction. You can’t double dip like that. But if you took the required minimum distribution, put it in your checking account, and then paid the non profit. Depending on your tax situation, you might not get the full benefit of the tax deduction, but you would get the whole non-benefit liability of paying the income tax. I think this is a terrific idea, and I think anybody who is philanthropically inclined ought to look at what’s called, these are called QCDs, Qualified Charitable Distributions, and you can make them as small or as large as you want. The maximum you can do in any year is $100,000.

So you would have to have a multimillion dollar, probably a multimillon dollar IRA before you would to worry about wanting to take out more than 100. And if your required minimum distribution was $125,000, you could do 100 of the QCDs and take the other $25,000 and pay the taxes.

Well, we’re at the end of the hour. I wanna thank Mark for doing his usual terrific job. And to remind you next Saturday after the news at five. Be sure and tune in to Money Talk.

[KUT] [00:51:31] 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.