Money Talk with Carl Stuart

Carl Stuart takes caller and text questions on investing in silver and gold, required minimum distributions from retirement accounts, asset allocation strategies for retirees, and considerations around taking a pension lump sum versus monthly payments.

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 [00:00:01] 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 [00:00:20] Welcome to Money Talk, I’m Carl Stuart and you’re listening to News Radio, no you’re not. I always do that because I’ve done that for 30 years and I’m very happy to be on Money Talk at KUT News 90.5 and the KUT app. Money Talk is a broadcast about the world of financial and investment planning where you always determine our agenda by calling or texting 512-921-5888. In fact… I think next Saturday is the 31st anniversary of Money Talk. I remember going to the studio, having never done radio, and finding someone to give me some earphones and sitting there in the quiet studio and the red light went on, meaning I was on the air live and I thought, holy moly or something like that, what the heck am I going to do? And it’s been a lot of fun because You always determine our agenda by calling or texting 512-921-5888. I always take today’s calls first and then today’s texts and then previous texts that I have not had the chance to answer. You will hear the texts come in, so I’m going to go back to those texts, but first what I wanted to do was say one more time, let’s call or text 512-921. 5888 and you just heard that, so let me take that text. Hey Carl, my great grandfather left me his silver coin collection and with the recent rise in silver prices the collection is now worth about $10,000 according to a local Austin rare coin and bullion dealer. My knee-jerk reaction is to transfer it to gold and hold it long term, but is there a smarter move to make? Maybe just keep it as silver First of all, we’re having a remarkable moment for silver. The silver exchange traded fund last year was up 144.66%. And believe it or not, in just the first period, January up through yesterday, was up 44% this year. So it’s just a straight up move. And one can never know how long these last. Back in the 1970s. When we had rampant inflation, we’d had the OPEC oil embargo and gold skyrocketed as did oil and stocks went down, unless they were related to energy, farmland went up and there was a great decade for investors who held gold. It peaked in 1980 and I remember reading that until it crossed about 2,200, it peaked at 800. Until it crossed about 2,200 per ounce, it actually was a money loser on an inflation adjusted basis. So these moves happen. Silver is considered to be kind of a quasi-precious metal and the reason I put it that way is it has lots of industrial uses. So historically it’s also been seen as a sensitive to the economy, as a proxy for the outlook for the economy. Whereas gold, frankly, doesn’t have a lot of industrial uses and really is seen as a store of value. Silver is a more volatile asset based on my experience. What I think I would do if I were you is if you choose to hold the coins or silver ingots or bullion, I would liquidate half of it and buy gold if that’s your other choice. The other thing you can do… Which I like is you can own the exchange traded funds technically they’re in exchange traded trusts Because you get daily liquidity They’re extremely inexpensive the you can buy the gold trust for as little as 0.09 percent expenses per year and you have the ability to add to or reduce in Small increments. So let’s suppose that you had half in a silver exchange trade to trust and half in a gold one, and these moves continue to go up, you could take a little bit off of the table as they go up and book those gains, and when you have the illiquid asset of the bullion or ingot, or you have the coins, it’s expensive. To sell it, you pay a significant commission, and in the case of the gold coins, you’re also paying the minting price, Whereas the ETFs really own the underlying metal. You can see it on their websites and you get that kind of low cost ownership. But if I were in your shoes I’d sell half of the silver and buy a gold ETF for those are the those are the choices that you have. You’re listening to Money Talk on KUT News 90.5 and the KUT app. Call or text, 512-512-7000. 921-5888, we have some calls, so let me just go to that. Catherine, you’re on the air. How may I help?

Catherine [00:05:51] Yes, hello. Thank you for taking my call. I am wondering if you could talk to me about the pros and the cons of putting my assets in my home in a trust so that it would be beneficial for my two sons when I pass away.

Carl Stuart [00:06:16] Be happy to do that. So if you have financial assets, mutual funds and stocks and bonds in your name, you can add the add to the account, transfer on death, T-O-D, and upon your death, those assets will go pursuant to your wishes and you will not have to probate those assets. If you have a retirement account like an IRA, You already have designated beneficiaries. That will transfer. You don’t need to go through probate. So the only question would be about your house. And I would talk to a knowledgeable person about how to style the deed on the house so it would go to your children. I don’t think you necessarily need a trust. There is something called a living trust. You have to put your assets in the trust, and then that means you don’t have those assets. You benefit from them, but they pass outside your trust. My frankly, most people don’t need that, and I would put transfer on death, and then if I have money in the bank, or a savings and loan, or a credit union, I would go to them and ask them to put a transfer on death. Uh… Or whatever they call it at the bank and if you do all those things i do not believe that you’re likely to need a trust in my opinion katherine

Catherine [00:07:53] Okay, very good. That helps a lot.

Carl Stuart [00:07:56] Okay. You’re welcome. Thank you for calling. You are listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text 512-921-58. Helen, you’re on the air, how may I help?

Helen [00:08:18] Hi, thanks for taking my call. I am 70, and I’ve always been a saver, so I have quite a bit saved up in various types of retirement accounts, and they’re all in various mutual funds. So I’m wondering, when I turn 73 and have to do the minimum distributions, is there any way that that can be capital gains, or does it all have to come out as, you know, income and tax at the income rate?

Carl Stuart [00:08:43] First of all, because you’re 70, the government has been raising the required minimum distribution age pretty much every year or so. So by the time you get to 73, I haven’t memorized the table. It might be even higher, but in any event, I’ll answer your question. This is a common concern, as you might imagine. And frankly, with one exception, there’s no way you can get around the income tax. The only way is if you were. In addition to being a saver, if you also had philanthropic intent, if you give away money to your church or synagogue or nonprofit, the Girl Scouts or Pets Alive or Food Bank or whatever, you can take money out of there in what’s called a qualified charitable distribution and you can do that once you’re 70 and a half. And when you do reach the required minimum distribution age, Helen, you can take your RMD up to $100,000 and the custodian will either send you the check payable to the nonprofit or they will send it to the non-profit and you won’t get the tax deduction for the gift but you’ll pay no taxes on the money you take out. But if you take the money out for yourself, like most people do, then you’re gonna pay income tax on it. There’s no way to convert that to a. There’s no way to convert that to capital gains, I’m sorry to say.

Helen [00:10:17] Okay, well, thank you.

Carl Stuart [00:10:19] You’re very welcome, thanks for calling. You’re listening to Money Talk on KUT News 90.5 and on the KUT app. We don’t have any incoming texts, call or text 512-921-5888. Let me go down here. Oh, good, see, a minute I say that, here we go. Hi, Carl, I have, huh, this is your on-air co-engineer, Mark at KUT. I have a question. Have you ever assisted clients who were living overseas but had assets in the USA? Specifically, what’s the best, least expensive, least tax liability way to transfer money made in the U.S.A. To, say, a Japanese overseas bank? And do folks sometimes have to pay taxes twice in different countries for income made in one country? Boy, that’s a complicated question. Here is what I have learned. Each country has its own tax rules. Regarding assets. So I actually have some friends, clients, who live in the UK. Their parents lived here, and the children grew up in the UK, and they earned money in the U.K. And the way in which investments are taxed in the U. K. Is different than the way they are in the United States, and the kinds of investments that they can make. So for example I’ve discovered that they can’t buy US mutual funds. They can buy exchange-traded funds. And so I would tell you that whether it’s Japan or the UK or France or Australia, what I would do if I were you is do some online research. I know you can transfer the money. The question is, once the money is there, what are the tax consequences? And if you transfer securities, as I saw happen, With an adult heir all of a sudden the taxes on those securities Which were purchased in the United States are taxed in a very different way and not a positive way in the UK As they were in the united states, so you got to do some homework mark because there really varies per country Thanks for the question You’re listening to money talk. It’s going to be time for me to take a break It’s a perfect time to you for you to call or text five one two 921-5888. Stick around.

Jimmy Mass [00:13:02] 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 non-profit 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 [00:13:39] This is Money Talk with Carl Stuart. Call or text him with your questions at 512-921-5888. Now, here’s Carl.

Carl Stuart [00:13:54] Welcome back to Money Talk. I’m Carl Stuart and you’re listening to KUT News 90.5 and the KUT app. I forgot to mention in our first segment that you can catch past shows at kut.org slash Money Talk, or you can recommend that to your friends and you and they can listen to those shows at your convenience. 512-921-5888. Carl, this is David, a long time listener. We have money in 401Ks and IRAs with a couple of different companies. They each have sizable sums, but no one will give me a good overall strategy of the combined assets. What is my next step? In early 60s and not knowledgeable on how required minimum distributions will affect us later on and if we need to convert qualified assets as we go. Lots of information there. What will happen when you reach the required minimum distribution stage, Dave, is that each custodian of the IRA, or if it’s a 401k, presumably, where you no longer work, they will give you, they need to give you and they will know your required minimum distribution from the assets there. Generally, the first week of January, why is that? Because the required minimal distribution is determined by the value at the end of the previous calendar year, and your age. I really like the idea of consolidation. If they’re in 401Ks and you’re not working there, I like the idea of doing a trustee to trustee transfer into an IRA rollover, can go into your existing IRA. If you have multiple IRAs, I like to idea of consolidating those. Because then you can have an opportunity to have an overall strategy of your combined assets. Asset allocation, the mix of the various investments in there is the single biggest determinant of how much risk you’re taking and how much return you hope to get. Until you do that, it’s really complicated. So the first step I would do if I were you is consolidate everything in one IRA. You then can look at the. Classification of the assets. Lots of custodians will give you pie charts, let you know whether you’re in domestic or foreign equities, fixed income, commodities, real estate, investment trusts. And then you need to get to work. Or if you work with an advisor, you and she need to to get work to determine what the right asset allocation is for you. But if you don’t do that, I gotta tell ya, it’s really, really difficult to combine all those. On your own spreadsheet, so that’s what I would do if I were in your shoes. Thanks for the text. You’re listening to Money Talk on KUT News 90.5 and the KUT app. Call or text 512-921-5888. Chris you’re on the air, how may I help?

Chris [00:17:02] Hello Carl, thank you for taking my call. You bet. Carl, I have a question that I’m referring to two things. I’ve got a magazine article from Kiplinger’s talking about the ratio of investments from different ages going all the way from the 20s to the 70s and I’ve often heard you That It’s a good thing to have about 65% in stocks, 35% in bonds. I’m looking at this one thing, I have officially achieved ancient status. They have the 60s and the 70s on the page that I’m looking at. In the 60’s it says 45 to 65% stocks, 30 to 50% bonds, a little bit of cash. The 70s, it’s 40 to 60%. BOMBS!

Carl Stuart [00:18:04] Uh-huh.

Chris [00:18:05] 30 to 50% equities. Now, I’m looking at my two portfolios here, and I’m pleased with them. I think they’ve done well for me, but I have equities in probably a little bit over, almost Two-thirds is inequities.

Carl Stuart [00:18:25] Right.

Chris [00:18:26] I have a quarter in municipal bonds.

Carl Stuart [00:18:29] Right.

Chris [00:18:30] I have some cash in one, a little bit less cash in another. I have fixed income that applies, amounts to a sliver. I have told my investment people, I’ve told my doctors that I intend to live to about 100 years old. And the reason I’ve said that is because I come from a long lived antecedent and I think I can live to 100. I’ve told them, prepare me to go to 110. Now I know I’m not gonna make 110, but I think I can make 100. What do you think of this ratio that I’ve got on these?

Carl Stuart [00:19:12] So that terrific question, and I’m gonna, as you know I do, because I know you’re a regular listener, I’m going to expand on this. What I’ve learned in my 47 year career is that that formulaic approach is in my view too conservative. And the reason is that people who are investors and obviously dealing in stereotypes tend to be healthier, they tend to not be smokers, they have access to quality healthcare. And their longevity exceeds their life expectancy. Life expectancy, as I understand it, is a median age of all the men and all the women in the country. Longevity is a much different one. We have read that, at our office, that people born today could live to 110. And so I really believe in having greater risk in the portfolio. Now there’s one exception to that. For somebody who’s got, I’m making this up, 10 million dollars invested, and what they want is $200,000 a year of income, they can be more conservative because that’s such a low distribution rate. The other thing that I’ve talked about, and I know you know this, is you can reach a certain age, let’s say 75, and you realize you’re not gonna spend all your money, but you wanna make a difference in the world, a difference for your family. Or for your alma mater or for you religious organization and you’re really not investing just for yourself but you’re investing for a legacy. So I’m a big fan of having greater risk at an older age based on my experience. Now that you have the ability to deal with the emotional component of that. Clearly I get calls and texts where people say I’m 62, I’m gonna retire at 65, I need to put my money in CDs. And unless they have… Millions of dollars, that will not work out because they don’t know three things. How long are we gonna live? What’s going to happen to the cost of living? And what’s gonna be returned on our investments? So I really like your asset allocation, Chris, and I would stick with it, particularly in your personal situation where you have good genes and longevity in your family. So I disagree with Kipliger as it relates to your situation.

Chris [00:21:38] That’s pretty much what I figured, Carl. I do appreciate your wisdom again today.

Carl Stuart [00:21:46] Okay. 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 we have a call. Whoops, Diane went away. Diane, I dropped the call. I hit the wrong button. I apologize. Your question was, you have out-of-state property. Can a lawyer in Texas? Draw up a trust for that. My understanding is yes, not every attorney does everything. And so you ask a very reasonable question. I’ve never tried to do that, but I have encountered clients who have trusts with property, I’m actually thinking one instance where the client lived in Florida and had a trust. And owned a farm in Missouri, or as we say in one part of it, Missouri, and that could happen. So I think the answer is yes. You just wanna make sure that you’re not going to an attorney who specializes in divorces or in litigation, but rather in estate and family planning. So I the answer yes, and I apologize for hanging up on you. You’re listening to Money Talk on KUT News 90.5. And on the KUT app, 512-921-5888. Anita, you’re on the air, how may I help?

Anita [00:23:23] Hi, Carl. It’s always good to hear your voice.

Carl Stuart [00:23:25] Ha ha, thank you.

Anita [00:23:27] I love listening to it on the podcast, everybody should play the podcast.

Carl Stuart [00:23:34] Thank you. I love it. Thank you

Anita [00:23:37] And especially us old timers that we’ve been listening for about 31 years.

Carl Stuart [00:23:46] That just proves that I’m gonna start making a health claim that if you listen to Money Talk, you’ll live longer. I think I’ll make that unsubstantiated claim.

Anita [00:23:57] Oh well, we’re in this together.

Carl Stuart [00:24:00] Yeah, we sure are.

Anita [00:24:02] But one of the best things, Carl, that people need to remember is that they can repeat it if they need to because sometimes you get into the weeds on how complicated this can be. Yes. And so it’s good for us. Yes. Especially if we’re going to go and talk to all of our friends about what we’ve learned.

Speaker 8 [00:24:24] That’s right.

Anita [00:24:24] Okay, so here’s where we are. I am, we both waited till we’re 70 to collect Social Security and I’m going to get my first check next month. And my husband switched to part-time, he waited like I said to 70, so he gets his Social Security check. And then he’ll be 73 next month now. Is he still in the ballpark that he has to start taking the minimum required?

Carl Stuart [00:25:01] Yes. Yes. My understanding is he is there’s a sliding scale, but my understanding is he will take the required minimum distribution. And as I mentioned earlier in today’s broadcast, his custodian for his IRA already knows what it is. Um, and he can contact them and they will tell him, and if I’m mistaken and he could wait till 74, well then that they’ll know that as well, but yes, they have, I can look at any. Person eligible for a required minimum distribution on my computer at the office and tell exactly how much it is? So the answer is yes, his custodian will know precisely how much it is, Anita.

Anita [00:25:41] Okay, now the second thing is, and you warned everybody, that you don’t necessarily make less money when you retire.

Carl Stuart [00:25:48] That’s exactly right.

Anita [00:25:50] And so that’s going to jump up, because I haven’t worked in about 30 years, so that is going to increase. I don’t even know all the questions that we should ask our custodian. I know you just covered some of this on rolling everything into one bucket. Mm-hmm, mm-hmm.

Anita [00:26:12] What you know within reason just that it’s all their visible on the screen and then you can see what you have and how to allocate but with the uh… Under earned income we’re just you know we’re gonna need to make uh… Uh… Tax payment

Carl Stuart [00:26:29] Yes, yes, you might have to make quarterly tax payments. That’s true. You might have to do that.

Anita [00:26:34] So so is it quarterly or do you take it out of the Social Security monthly? Do you know that?

Carl Stuart [00:26:40] What I do know is on required minimum distributions, we typically hold 20%. The custodian holds 20% out, and you can tell the custodians hold out 10 or 15 or 20% or hold out nothing, and the custodean will then send that to the IRS for you. I think that’s a really good plan, so I would recommend, if in fact your husband’s subject to the required minimum distribution, I would hold it out. And then you don’t have to do quarterly tax payments and you’ll file your taxes for 2026. And if it turns out that you have to do quarterly, you’ll find out next year at that time. That’s how I would handle it if I were you, Anita.

Anita [00:27:23] Okay, sounds great. Thank you so much.

Carl Stuart [00:27:25] You bet, thanks for calling.

Anita [00:27:26] Bye!

Carl Stuart [00:27:27] You’re listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text 512-921-588. Shanna, you’re on the air, how may I help?

Shannon [00:27:45] Hi there, thanks for taking my call. I’m gonna kinda try to stumble through this because I’m 55, have three kids, two of them are still in the home, one is still in high school, one is going to the ACC program for free and living at home. It’s incredible.

Carl Stuart [00:28:05] Wonderful, let me interrupt you. I hope everybody heard what Shanda just said. We have the most wonderful Boston Community College that you can go there for free. And it’s a fantastic program. So thanks for mentioning that. Okay, please go ahead with your question.

Shannon [00:28:21] Yes, I’m very grateful. He is doing the HVAC program. So he’s started that this fall and doing great and I’m really grateful for it. I’m glad you did a plug for him. So unfortunately, my husband and I are divorcing. We would have been married 30 years in March. We have we don’t really have any assets besides our home and our home the CMA or the CDE. I think it’s the district appraisal says our home is worth a million dollars, which is not because it needs a lot of work. It was built like 2012. The air conditioners are like they’re gift to. We need them, we need them replaced. That’s a lot of money. There’s just lots of repairs. Mm-hmm And when we went to mediation, we are trying to divvy up everything. The only other things that we have are 401Ks. I have a pension of like $75,000. And then my 401B, because I worked for Seaton Ascension, it’s not a 401K, it’s a 401B is like 360 or so. Okay.

Shannon [00:29:46] 401K is about 475.

Speaker 8 [00:29:49] Mm-hmm.

Shannon [00:29:50] Um, he wants to sell the house, I’m not calling you for marital advice by the way. I’m good. But, I think it’s an awful time to sell a house. I think that’s really the only way with, I guess the way he sees it, that we could split things up. However, I would like to stay here for my children. And we’ve got about $220,000 left on the mortgage. Um, I am able to stay here and keep them in the house and in, in the environment, you know, in their. Childhood home unable to do that i would have to scrape a little bit but i could do it I think I think for him, he is wanting, you know, basically half his $400,000, which is, I guess he’s assuming our house would cost $800,000. You know, we could flip it for $800k. Right. Right. So, I think I want to keep it, but I just don’t know how all of this should work in terms of how, you now, if he gets the 401k, I understand that you get taxed on that. Another

Carl Stuart [00:31:00] Actually, actually that’s not true. You can have what’s called a qualified domestic relations order where you can take money as a result of the divorce decree and put it in an IRA without having to pay taxes. So you could even up the 401K plans based on my experience. I’m obviously not an attorney without taxes. But the question that you have is Can you get enough money to buy him out of his share of the equity? Can you do that? Now, you could take it out of retirement plans, but you have to really look at that because you’re 55 years old. You may be subject to a tax penalty if you take the money out of that because you are under 59 and a half. But you could do that. The other thing you could possibly do because you have a lot of equity in the home, is you could see, you could go to a lender and see if you could borrow more against the equity in the house to pay out your former husband so you could stay there. Now whether or not that’s a good idea depends on whether you can afford to live with your two children and your pension and have additional payments for the house. So I don’t know whether you could do that or not. If you could get him the money any other way than from your retirement. What you want to do is you want talk, probably since you’re working a mediation, you want to talk with your attorney or ask for a tax accountant, a CPA referral, to see if there are any special rules about taking money out of a retirement plan before 59 and a half that avoid the tax penalty. But if you take the money out… Whatever you take out will be added to your income. So if you took out, I’m making this up, 300,000 or $400,000, that’s taxable income. That’s gonna be really, really painful for you. Otherwise, since you have a lot of equity, I would go talk to a lender and see whether or not I could borrow the additional amount against the equity of my home. Now, you understand. That because this would be a second lien on the house, you already have the first lien, which is the mortgage, that means that it’ll be at a higher interest rate. So you’re really gonna have to find out what all the costs are to meet your goal, to determine whether or not it’s practical for you to be able to do this. Talk to the attorney, get expert tax advice about taking withdrawals for this very specific purpose because there are some rules. Like for medical emergencies and for first-time down payments. I don’t know the rules regarding a divorce, but if you take the money from one retirement, his retirement and put it in your retirement, that’s a qualified domestic relation order, not taxable. If you take money out to buy off his half of the equity, that may be a taxable event. It may be so expensive that you should look at borrowing the money. Those are the choices that I can think of today, Shannon.

Shannon [00:34:19] Okay, well, I guess really what it boils down to is if he takes my 401B at $350,000. Mm-hmm

Shannon [00:34:29] that he puts it in his 401k yes I think the question is here how do either one of us get liquidity for it are is there a liquidity at all for you know what I’m

Carl Stuart [00:34:40] No, not without paying income taxes. Your money’s tied up in retirement plans. That’s why I want you to talk to a CPA to make sure, but to my knowledge, no.

Shannon [00:34:51] Okay, thank you very much.

Carl Stuart [00:34:52] Thank you very much. You bet. Good luck. Thanks for calling. You’re listening to Money Talk. It’s time for me to take a break and a great time for you to call or text 512-921-5888. I’ll be back.

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KUT Announcer: Laurie Gallardo [00:35:47] This is Money Talk with Carl Stuart. Call or text him with your questions at 512-921-5888. Now, here’s Carl.

Carl Stuart [00:36:01] Welcome back to Money Talk. I’m Carl Stuart and you’re listening to KUT News 90.5 and on the KUT app. We’ve got about 17 minutes left here together. So if you’ve been thinking of calling or texting, now would be a terrific time to do that at 512-921-5888. Here’s the text from this afternoon. I’m going to be leaving money to my daughter who is very impulsive and cannot handle money. Keep her from blowing through at all, I’m thinking of buying an immediate annuity now so she will have a steady income. Can I own it so she can’t turn around and sell it? What are the income tax treatment issues for immediate annuities? This is a complicated question. I think there is an answer for this. I’ve been through this. And the advice I got from an insurance professional is this. I believe that you are the owner during your lifetime. She is the annuitant. And at some point, if you’re going to leave it to her, that means after your demise. It will annuitize and provide lifetime income. This is complicated. You can do this based on my experience. I haven’t actually done it, but we have clients who wanted to do this, and we went through all of this. And what I would consider is, first of all, be very, very careful about purchasing an annuity. There are a lot of annuity choices, and frankly, there are a lot of people selling annuities with really expensive commissions or sales charges and really expensive internal costs. Avoid something called index annuaries, and because she’s got a long, I have to assume, a long life longevity expectation, you would want a variable annuity that invested in various They don’t call them mutual funds, they call them variable accounts, but they’re like mutual funds. You’d wanna have either, if you know enough about investments, an annuity where you can instruct the company how to do which investments, or if you have a fee-based investment advisor who can manage the portfolio for you, I think that’s an excellent idea. You want an annuity with a broad menu of low-cost mutual funds? And there are, I don’t know that they’re called no-load annuities, but there are annuaries available through registered investment advisors that have much lower costs than the traditional annuites. And again, Lindsay and I saw a case where a person put $90,000 in annuity in 2023, stock market was up over 20% in 23 and 24, up 17% in 25, and her surrender charge. Was so great that if she cashed it in, she’d get $89,000, really. So these are very opaque products. You wanna be absolutely certain when you talk to someone that you have real clarity about how they’re compensated and what ongoing role they will play, but you could do that. And then when it annuitizes, she will get units, not dollar amounts, and so. Those units will go up and down with the value of the underlying portfolio. But as Chris and I were talking about in earlier today’s broadcast, that’s frankly what you want, because we don’t know how long she’s gonna live, and we don’t know what will happen to the cost of living, but we can reasonably anticipate it will go out. And if she gets a fixed amount and lives another 30 years, that could turn out not to be enough money to live on. Do your shopping, do your homework, and deal with people you trust and have full and clarity about how they’re compensated, and good luck. You’re listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text 512-921-5888. Bob, you’re on the air, how may I help?

Bob [00:40:37] Hello Carl, how are you doing?

Carl Stuart [00:40:39] Good, thanks, how may I help?

Bob [00:40:42] It’s been a while since we talked back in the KLBJ days, but anyway, good to hear your voice again. I’ve been listening to you all the time. I have a kind of a weird question, but I’ll run through those details and get on with it. I’m 68 now and I’ve basically ran all my money for about 40 years, and about five years ago, I left about a third of the money to some wealth builders. And, uh… They’re doing a good job, they’re charged about 1% and which is within reason. I said they’re doing everything I knew they would do but my wife is surprised by the way it was her idea to give her the money but anyway that’s neither here nor there. And we’re all good friends with the advisors. I’m still very active in investing. What I really want to know is, I want to draw back the third of the money I gave them, and I just want to the best way to do that, and basically I’m asking you, how would you like to be fired, I guess?

Carl Stuart [00:41:56] What I would do is I would have, because you’re friendly with these people and you’re happy with their returns and the service, then I would just have a straightforward talk. They’re professionals and I would say, I really appreciate what you’ve done. It was my wife’s idea and you’ve delivered and appreciate it. I’m a do-it-yourself investor, as you may know. And I’ve decided that I want to take complete control of all of our financial assets. I want it to be absolutely clear that this has nothing to do with you, with your service, with your integrity, with the returns we’ve had. That’s just what I would like to do. And if they are the professionals that I hope they are, they should say something like, well, you know, Bob, I’m really sorry to learn this. I’ve enjoyed our relationship and I appreciate that you. Have appreciated what we’ve done, and I understand, and you would then go through what’s called the ACAT process with your current custodian, and you deliver a recent statement from your existing advisor, and then you would sign a transfer request form, and those securities would come over in very short order, and that’s how I would handle that if I were you, Bob.

Bob [00:43:19] Well, it’s all under the Schwab account, so basically it’s just a matter of taking them off of the account because they can’t do any of the transactions.

Carl Stuart [00:43:29] I don’t know about that. I’m not going to say that because I don’t t know that.

Bob [00:43:34] Well, thank you.

Carl Stuart [00:43:35] Thank you, Carl. You bet, you bet. Thank you for calling. You bet. Thank you. You’re listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text 512-921-5888. All right, let’s just get to another text here. Hi, Carl, I will be retiring from the federal government later this year. Congratulations. I have been happy with the performance of my Thrift Savings Plan. Which is like a 401k for government employees, but in light of the drastic changes that have occurred in our government, I’m becoming nervous about leaving my money under the management of a federal government affiliated entity. It is my understanding that I can take those funds and roll them into an IRA in the private sector. I’m just wondering if you would be willing to give your opinion about my concerns or if in general, you have an opinion on retirees leaving their TSP funds where they are. We’re moving into a private investment firm. Many thanks, John. Well, I can tell you in the private sector, let’s say you have your money at a Charles Schwab. And Charles Schwaba, for whatever reason, goes broke. Your securities are still safe because your securities are segregated. They’re not on the balance sheet of Charles Schwabe. Okay, and I’m not suggesting Charles Schwabs is gonna go broke. I’m just giving you an example. So your securities in the Thrift Savings Plan are separate assets from the federal government. The federal government cannot take those assets from you. And so from that perspective, I’m comfortable leaving it at the TSP if you’re comfortable with that. Now, if that affects your comfort level, and I use that term carefully, if it affects your sleep at night, because you’re anxious because of all the crazy things that may occur with the government that you allude to. Then doing a trustee to trustee transfer into an IRA rollover is a perfectly reasonable thing to do. I’m not talking you out of moving it. I’m just saying that in the private sector, the custodian of your assets is not able to take your assets away from you. So I’m comfortable leaving it at TSP. If it creates real anxiety on your part, then you have kind of a two-part decision. I’m going to roll this into an IRA rollover. Number one, am I doing it myself or am I engaging somebody to help me? If you’re doing it yourself, then you can go to the big names and do it yourself investing like Fidelity and Vanguard and T. Rowe Price and Schwab and there are no doubt many others. Or if you’re going to engage and you want an advisor, obviously she or he gets paid for that, then you want to go through the interview process. To find someone that, number one, can explain their investment strategy in everyday English and it makes sense to you and you agree with it. Number two, you have real clarity about what a happy, healthy client relationship looks like in terms of contact and information and education. And number three, you absolute clarity about how they’re compensated and what their legal responsibilities are to you. And that’s the process I would go through if I were in your shoes. Thanks for the text. It is close to time for me to get off the air, so I’m gonna take these texts rather than ask for a call. I retired early and managed my retirement accounts myself. I am 64 years old and married. I have about $1.8 million in my accounts, mostly in individual stocks, but about 20% of it is in bonds and other fixed income investments. Most of the bond investments are in the Fidelity US Box index fund. I have 400,000 Roth IRAs with a remainder in a traditional pre-tax IRA. Most of my stock holdings are in large companies that pay high dividends. I hold a lot of real estate investment trusts, energy stocks, pipeline companies and financial firms. I also have a small pension. Although I anticipate a nice payment from Social Security once I start taking it, I am hoping to hold off until I hit 70. As long as I don’t take a significant dividend hit, I have enough income to meet my minimum living expenses without selling my assets. I have sold a bit since I retired two years ago to cover trips and golfing. Good for you. I have very little of my money in cash or money market funds at the moment, about 3%. I believe that eventually the stock market will correct. I agree with that. It may happen next week. I also agree with it. It may not happen for a few years. I also will agree with. But it will correct, and the market is pretty high by most measures. Should I be holding more cash to be ready for a correction, or should I just stay where I am. Perhaps should I move from an 80-20 stock bond ratio to 70-30 or 60-40? Okay, so what you have is an interest-sensitive, dividend-based portfolio. If interest rates rise, that portfolio by and large will go down. You also have a commodities-based portfolio because of the pipelines and oil and gas stocks, and you have an economic-sensitve one because you have real estate investment trusts. So you have to be prepared Because when things go very bad, you have a lot of stuff that’s gonna move in the same direction like it did in 2008. Market focus changes over time. You don’t have any international. We had a great year last year international. It’s entirely plausible we could be in a multi-year process after all US stocks went up for 13 or 14 years. We could see foreign stocks go up for 13 or 13 years, so I don’t think you’re properly. I just don’t think you’re properly allocated there. Also, we could be in a period where small cap stocks could come back. Value stocks could back. So I think that you’ve chosen good income and I agree with that, but I think I would make some changes. I think 70-30 is better. You don’t have to take your income from dividends. That’s not what retirement plans do. That’s what foundations and endowments do. They take it from the total portfolio. So I think you’re overweighted in income producing assets, which puts you at real risk for rising interest rates and rising inflation. And I think your underweighted internationally, and you’re probably a bit overweighted at 80, 20, but you’re a young person, probably long longevity. So I’d probably go to 70, 30 if I were in your shoes. That’s about just as fast as I can talk. Let me see if I can do this one. Hello Carl, I’m about to retire and I’m 59 years old. Most of my retirement income will come from a 401k account. However, I have a small pension. How can I decide whether to take the lump sum of my pension and invest that myself or take the monthly pension payments for life in 20 years certain? I’m gonna tell you this. I’m going to cover this briefly and depending on call volume and text next week, I’m go to spend more time because this is a common question, particularly in central Texas with a lot of people who have pensions. It all depends on all of your assets and liabilities. The benefit of that pension is You can’t mess it up and it doesn’t matter whether the stock market goes down or not. So, and you may not have social security, so you need to think through the, kind of the pyramid of guaranteed income and then income that will keep up with the rate of inflation. So we’ll probably talk about that more next week. I’m gonna thank Mark for being a great producer and I’m going to thank you for listening and to remind you, as always, that next Saturday at five, or perhaps after the news at five tune in to Money Talk.

KUT Announcer: Laurie Gallardo [00:51:33] 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.