Money Talk with Carl Stuart

Carl Stuart and Jimmy Maas discuss the importance of saving and investing for retirement, providing practical advice on how to get started and build good financial habits.

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 a special broadcast of Money Talk with Carl Stuart. He is not live this week, so he’s not able to take your call. Text anytime though, and your question could be answered on a future episode. Carl Stuart is an investment advisor representative of Stuart Investment Advisors. Now, here’s Carl.

Carl Stuart [00:00:22] Welcome to Money Talk, I’m Carl Stuart, and you’re listening to KUT 90.5 and the KUT app. So this is where I normally say call this number or text, and I prefer you do it earlier in the broadcast to give me ample time to answer your questions, but not today. We’re going to have a lot of fun because my friend Jimmy Maas, probably along with Warren Buffett, one of the world’s great investors and I, will be talking today. Jimmy, what are we gonna talk about? 2026.

Jimmy Maas [00:00:54] Is right around the corner.

Carl Stuart [00:00:56] Yes, certainly is.

Jimmy Maas [00:00:57] And now is the time that we like to, you know, some of us think about what we should be doing financially.

Jimmy Maas [00:01:04] Yeah, ha ha ha!

Jimmy Maas [00:01:05] We’re at the end of the year. There’s no real good answer for this, but I feel like some of us need some umbrella things that might make us feel better about it. What should we be thinking about for our own retirement and just retirement in general? And what are some easy steps we could?

Carl Stuart [00:01:25] Could start the year doing? So I will answer that question, but let me just start by saying that I’ve seen a lot of data, some of it quite recent, about how Americans are unprepared financially for retirement. We live longer, which we need more money, and we’re not saving it, and we are not investing it. So this is a huge, huge deal. And I don’t think, given where we are with the government. Fistful situation with increasing debt, with social security under pressure, that we ought to assume that we can align ourselves with the tooth fairy approach, which is it all going to be okay and I’ll find the money under my pillow. So this is a great and timely topic. There is one thing that most people can do. You can contribute to an individual retirement account. Up to April 15th and take the deduction for 2025. Now there’s an income limit as to how long, how much you can make and do that, but a lot of people can do that. Also, you can have a 401k or an employer sponsored plan and still have an IRA. Perhaps it’s deductible, perhaps part of it. The other thing. And this is gaining in popularity, and that’s Roth IRA. The rules are the same. You have until April 15th, but it’s not tax deductible. But boy, does it help your retirement planning. Because in both cases, if you make good, solid investments, the money grows, you pay no taxes on it. When you take it out, if it was tax deductable going in, not surprisingly, you pay taxes coming out. If it was not deductible, because it was a Roth, you don’t pay taxes coming out. Now there’s more nuance to it than that, but that’s something that you can do right now to start yourself going. I could talk about giving away money and philanthropy, which is huge, and I deeply believe in it, but it’s not gonna help your retirement. How…

Jimmy Maas [00:03:40] What is a minimum, what is a fair minimum that I could at least start with?

Carl Stuart [00:03:46] I mean, you can go up to, I think it’s $7,000 this year, or $8,000 if you’re over age 50, then in recent history, they tend to raise that every year by $1,000. And let’s suppose you’re married and your spouse doesn’t work. Your spouse can do this also. So you could do, if you are under 50, $14,000, as long as you have income of $14000. So that’s the that’s frankly The easiest and most impactful thing, Jimmy.

Jimmy Maas [00:04:18] Is there. We’re all in different stages in life. And maybe there is something that is, maybe $1,000 is, you know, it curbs that savings, the rainy day fund a little bit, but it also recognizing that it could go farther. What about a, is there a lower threshold that someone can just step into building habits? Yeah.

Carl Stuart [00:04:44] Yeah, oh absolutely and this is something that it’s obviously habits. It’s about our behavior You know, I’ve noticed, the other day, I actually forgot to take my driver’s license and my credit cards with me, and I wanted to go out for lunch, and I thought, I can’t go out for lunch and I looked and found some cash in my desk drawer, but it just came home to me. I use cash so seldom. Well, one of the challenges is when you use a card, it’s just magic. You just put down that card. Whether it’s for Starbucks or for lunch or for a piece of furniture, whatever it is. And then you get the bill, and they don’t ask you to pay the balance. They just say, pay this minimum. And unless you turn over that statement and go through pages of small print, which you don’t. First of all, you don’t want to do because you don’t really want to know the answer. You discover you’re paying 20% plus interest on stuff that you likely consume. You know, I tell people changing behavior is difficult. If it were simple, we’d all be over six feet tall and slender and look like movie stars, but wishing it doesn’t make it so. And so we have to measure our behavior. I did buy a supplement though, that’s gonna work on that. I look forward to seeing it.

Jimmy Maas [00:06:17] It was a late night ad. I was really caught up in it. I’m sure it’ll work. I charged it. I’m not worried about how much it’s going to pay.

Carl Stuart [00:06:25] Should have. So, I learned this a long time ago from a behavior psychologist professional. If you have a sincere desire to change your behavior, you want to quit smoking, you wanna drink more alcohol, there’s one that you might to consider. You want to lose weight. First you have to measure your current behavior. And so I happen to have digital scales at home. And every morning I stand on the digital scales. And I can tell you, during the holidays, it’s pretty obvious I’m- A creep. Yeah, I’m consuming more calories than I was before Thanksgiving. If you use your charge card, of course, but get a receipt, they always offer a receipt and we always say no because we’re gonna throw it away. Get a receipt. Come the weekend, just before you listen to Money Talk, which by the way is another excellent habit to develop, while you’re listening to KUT, take those receipts and put them in categories. You know, you’ve got some normal expenses like fuel for your automobile, utilities, right? And then you have other expenses. The great one is you go buy a at Starbucks on the way to work. You got it. Discretionary expenses. Yeah, sadly you don’t necessarily think of discretionary. I guess, by golly, you’re God-given right to go to Starbucks and spend six dollars on a cup of coffee. Spoil myself. That’s right. You have a chance to observe. You’re looking and if you have this North Pole goal and you’re over here you know in on the west coast you can begin to alter. You can say gosh I didn’t realize I spent so much money going out for new for for lunch or for dinner right. I didn’t t know I spent so much on on coffee. Whatever it is you begin to There are ways in which I can change my behavior. Because what you’re really cultivating is financial self-awareness. And because credit is so available, we don’t think that through. But sadly, credit is expensive. Now, you’re never gonna save enough money to buy your house. You’re likely never gonna save enough to buy a vehicle. But there’s a lot of stuff that you don’t need to have that will start to build your savings account. And once… You’ve got something in your savings account versus just getting to the next paycheck, then you can start talking about, well, let’s put this in a money market fund, not a money-market account, where we earn a little bit more interest, and let’s just continue to build this up, right? And now, if I’ve got steady work and I’ve started to change my behavior on the expense side, then I can start taking about, maybe I can do an IRA, or maybe I could do a Roth IRA. It’s slow at first. The other thing is start. We know the so-called, I don’t know what people call it, I call it the January Fitness Gym Phenomenon. Sure, yes. The whole business of- New Year’s Resolutions. Right, the whole business of selling gym memberships is fundamentally based on the fact that you’re not gonna stick with it. If everybody stuck with it, they couldn’t sell that many memberships, there wouldn’t be that much capacity. So the number of people who stick with this, Obviously, it’s not very many, but that’s the fundamental way to begin to save for retirement.

Jimmy Maas [00:10:18] I have my $6 a day coffee habit, and sometimes that includes family members, so that’s $350 a month when you start working it out. I cut that in half, and that is a modest amount of money, but it’s $1,000 over a year, 1,000 us. Yep. Yep. And then. That habit will then stick with me, theoretically, and then what is, and my next step is, you mentioned a second ago, a money market fund. I’m taking that savings, and then I’m gonna splinter it again. I have a sizable amount in there, like maybe $2,000, $3,000. And then I take that.

Carl Stuart [00:11:10] And I do, what’s my next step? So I’m gonna answer that too, but you brought up something else. When you start getting into this, I’m going to spend less than I bring in, what you might call a savings mode, the odds that you’re gonna buy a $65,000 pickup truck become lower because you’re beginning to be aware. I have a good friend in central Texas whose family’s been in the automotive. Sales business. They have car dealerships. I asked him once, he’s about 65 years old, but it’s a family business, it’s older than he is. What did you notice has changed in your career? He said, one of the things I noticed is the ability to finance a vehicle for a longer period of time. He said so we will sell somebody a Ford F-150 or a Chevrolet Suburban with a five-year note. They’ll come back after two years, I want a new car. And they say, we can’t sell you a new car because your vehicle is worth less than the amount you owe. And I say, really, what do they do? He said, they go down the road to the other dealer who gives them a seven year note so that they can pay off and move on. That’s pernicious to your future. That’s a big deal. So I’ve observed. Particularly, I’ll tell you an interesting observation about this. I know people who are first-generation Americans. They come from India, Pakistan, China. They are wired, and I know this is doing the stereotypes, so it’s not true for everybody, but I’ve just observed this among my friends who are a first generation. They’re wired to save money because they came from uncertain economic circumstances. Averse to debt. Averse to that. Totally averse to it. No counting chickens before they hatch, none of that stuff. Exactly, exactly. So I know it’s possible, and I know what’s plausible. Now let’s go to the next step. So now I’ve built up a cash reserve. I know unless there’s some remarkable, unanticipated emergency, I’m not going to need the money, and you don’t leave it in the bank in your checking account, because the bank takes the money that you and I have in the Bank, and they lend it some other. They make money by keeping what they pay you as low as possible and lending the money at the highest rate they can. That’s what’s called in my business, the spread. They wanna keep the widest spread. They have no incentive, if they can get the amount of deposits they want, to somehow just be gracious to give you more. So you need to go to, so they have money market accounts. The benefit of that is what? They’re FDIC insured. Great. Money market funds are not. You’ve got three kinds. They’re called Prime, Government, and Treasury. They, in my career, with one exception, have never failed. The one was because it wasn’t backed by any company except the company that owned it. But now Charles Schwab has one, Fidelity has one. Vanguard has one and Maryland’s UBS. They are not gonna let these things fail because clients have millions and millions of dollars in there. You can get the money with one day’s notice. And before this recent reduction in interest rates. They were paying four or four and a quarter percent. So that’s the next step before, and then the question becomes, to use a fancy word in my profession, liquidity. What does liquidity mean? How easily can I get my hands on the money? Because if you put money in your Roth IRA, that’s illiquid. You do not want to take it out. You could get a tax penalty, possibly, but you’re building that for your return. We’ll be back right after this break.

Jimmy Maas [00:15:15] 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 [00:15:47] Welcome back to a special edition of Money Talk with Carl Stuart. Just a reminder, he is not live this week, so he is NOT taking calls for this show. Now back to Carl, joined by KUT’s Jimmy Maas.

Carl Stuart [00:16:03] Welcome back, you’re listening to Money Talk on KUT 90.5 and the KUT app. A special broadcast today with my good friend, Jimmy Maas. We’re here having a lot of fun talking about whatever Jimmy wants to talk about. It’s up to you, go right ahead.

Jimmy Maas [00:16:20] I’m actually now going to get to the very first question that I prepared for this This whole last segment. I don’t know where that came from, but no What does what does a good retirement look like? What what is a good return? Is there is there something that like why?

Carl Stuart [00:16:36] I have a great definition. I know what it looks like. Good retirement looks like this. When you get up in the morning, whatever it is you do that day, you do it because you want to and not because you have to. So what you have get your mind around is during my working lifetime, I think of myself, and I’m going to use accounting terms here, As an income statement, I have revenues and I have expenses. And as long as my revenues exceed my expenses, everything’s fine. But when the revenues stop, the expenses don’t stop. And so where do you get the money? You can get some from Social Security if you work for a government entity or a police officer, a firefighter, a schoolteacher, and you’ve worked there long enough, you may have what’s called a pension, the real term is defined benefit plan, but that’s- Very few people. People who are in the private sector have maybe an employer sponsored plan, but maybe they don’t. The vast majority of businesses in America are small businesses. We don’t even know the names of these businesses. They may have five employees. The odds that they have a robust retirement plan, probably not very good. When you retire, you have expenses, you have to look to your assets to provide income in addition to if you have social security. So those assets have to grow because there’s some discretionary expenses you can control but there’s a lot of, you can’t. What if you are 60? You have to have health insurance. If you’re 65… You have Medicare, but you’re probably gonna have to have a supplemental policy so that you don’t end up with a huge medical expense. You’re still gonna have utilities, you’re still going to drive your vehicle, all those, you still gonna go eat, go have groceries. So you’ve got to have a pool of money, what we call a pool capital, and it has to be invested. Why? Here’s the really big deal. When you decide to retire There’s three things you do not know. Number one, how long am I gonna live? Number two, what is going to happen to the cost of living? And number three, what will be the rate of return on my savings and investments? So I always tell people, this is, I can’t overstate its importance, but I can overstate how humble we have to be when we look at this. The magic of compounding is the sooner we start, the better. It’s better. I got a call recently on Money Talk, happened to be a male, a young man, I’m 35, and I wanna start saving for retirement. I wanted to say this to him gently. First I said, congratulations, I’m really glad you’re doing this. Please understand, you’re getting a late start. You and I would think 35 is pretty young. Sounds really young to me right now. Really young. You know, I graduated high school in 1935, so I get it. So.

Jimmy Maas [00:20:05] Ah, what a time.

Carl Stuart [00:20:05] Ah yes, those were the days. Starting modestly. And let’s hope your income grows over time. What we normally do is we adjust our lifestyle as our income grows. We grow from buying a used car to buying a new car. We go from a one bedroom apartment to a two bedroom apartment. This is, this fuels the American economy, largest economy in the world. 70% of it is guess what? Us, it’s called consumption. We are encouraged at every opportunity to consume and not to save. I’m going to give you the answer. It’s ugly and it’s frightening people, but it’s the math, which is you can draw down. If it’s in the bank, it won’t work because the bank return is going to be less after taxes, less inflation based on history. If you’ve properly invested in your 401k, your IRA, your own Jimmy Maas account, you can take 4% a year out that pool. To supplement Social Security and live on that. Now, why is that depressing? Because if you want $40,000, it’s a million bucks. How many people walking around have a million dollars in savings? The answer in investments, a tiny, tiny percentage. So I don’t wanna be, what people do when they encounter this is they frankly say, well then to heck with it. I can’t possibly have a $1 million, So I’m just not even going to worry about it. Eat, drink, and be merry, fine. So I don’t want to spend too much time on that and get people to say, well, just throw up their hands. You gotta start, start with what you can. A lot of people, let’s say you have a 401K plan, and let’s your employer makes what’s called a match. It’s a voluntary contribution into your account, and you have the opportunity to put money in as well. When you do that, let’s say that they will match up to four percent of your compensation. You ought to put four percent in because you just doubled your money. Right. Now what we encourage people to do is to increase your contribution by one percent a year. We don’t think you’re going to notice a difference, but if you get from four percent to eight percent and they’re still putting in four, now you’re putting in 12 percent because the later you start… The greater the amount you have to put in. Should you put in more than 10%? Yes. But it’s a little bit like telling you, I’d like to have you lose 20 pounds by next Thursday. I mean, it’s just- Get on it. Yeah, it interesting. Get on. Yeah, but you gotta get started. That’s the answer.

Jimmy Maas [00:23:01] I guess other choices like lifestyle, where you live, all that stuff can contribute to. But that 4% supplement, that is a reasonable rule of thumb.

Carl Stuart [00:23:14] Yeah, that is. I’d like to say it’s you could take out 10% but you can’t. I prefer you took out three, but the standard kind of financial planning most common number you hear around is 4%. The problem if you take out more and your investments decline 15% while you’re taking out 10%, then you’ve got one heck of a hurdle to just get back where you were beforehand. How do you know that you’re on track for that if you are? Yeah. Well, that’s a great question I would say that there’s there’s the technical answer which is

Jimmy Maas [00:23:53] I mean, aside from checking your account daily, which…

Carl Stuart [00:23:55] No, you can’t- you can-

Jimmy Maas [00:23:57] I don’t think I would recommend that that would just doing what we’re checking your account daily. No my goodness. I’ll make you insane

Carl Stuart [00:24:02] make you insane. I don’t check my account daily. You can’t, no way. Um, so depending on your level of comfort online, uh, there are retirement planning tools where you can plug in your age, your anticipated, um, rate of return. If you’re getting a social security statement, your future benefit, and then it’ll plug in. Based on whether you’re a male or a female, what your life expectancy is, and then it will tell you how you’re doing. If you work with an advisor, that kind of stuff is available to every advisor. There’ll be different colors of it, different approaches, whether it’s an income-based approach, this will go, how much income will I get, or it’s what we call a kind of goal-based approaches. For example, I see people say to me, who are in their fifties, we wanna be able to help pay for our child’s college education. We wanna help pay for their down payment. We wanna pay for the wedding. I mean, so you can put that in there too. So there’s a lot of technology where if you have enough incentive and you’re committed, you plug in and then it’ll run a bunch of simulations and tell you the odds of success.

Jimmy Maas [00:25:32] What if I just wanna buy a van and drive around? Ha!

Carl Stuart [00:25:38] I’m sorry, but you’re fifty years too late.

Jimmy Maas [00:25:42] Um There is, there is one thing that can cut into your retirement savings opportunity. What are the habits, debt habits, et cetera, that kind of keep us from having that extra at the end of every month, or the beginning of every month, however you want to look at it, too. What is, how much can debt cut into our opportunity to say?

Carl Stuart [00:26:14] Oh, it can cut it into it and it can eliminate your chances to retire. We recommend that you think about three buckets of your income. There’s the necessities, the groceries, gasoline, there’s the discretionary, the six dollar coffee, and there’s savings. And that’s how to think about when you get your paycheck. And you can even take, say that savings is 20% and move it out of your checking account. At the bank or credit union, move it into what they call a high-yield savings account. At least you’ve segregated the money for the future. And then you go back to what we talked about earlier today, which is once it gets large enough, you can start thinking other things. So if you can think about that, stuff I absolutely don’t have a choice, I gotta pay for. Stuff that I don’t have to pay for that I’d like, and my future. If you can do that and segregate those while you’re keeping track of your, going back to my earlier answer, keeping track of your expenses, that’s the fundamental, in my experience, the fundamental way to start.

Jimmy Maas [00:27:30] Can I? Can I imagine? Debt maintenance, paying off debt as almost like an investment, because I am getting a 30% return. Yes, yeah, on whatever I’m putting in.

Carl Stuart [00:27:48] It’s like the stool with legs of the stool, right? You wanna pay down and reduce and eliminate debt, but you also have to increase assets. It’s not that one’s better than the other, but you’re gonna start with your credit card debt because traditionally that’s the most expensive. And so you want, if you’re accustomed to paying the minimum, you wanna pay more than the minimum because you’re never, ever gonna get out of it. Then, if you have an automobile note, you gotta pay it or they’ll repossess your car. But what you wanna do is once you’ve paid off the note, most people go, huh, time to buy a new car. No, it’s not. It’s time to keep making the car payments but make them to yourself. Make them to, again, if want to think in different buckets or categories, this is my savings for my next video. I buy a vehicle, I get five-year financing, I pay it off, I take care of my vehicle, I mean. Cars at least 10 years personally and so they’re nice cars what they are

Jimmy Maas [00:29:01] Yeah.

Carl Stuart [00:29:02] They are. Yeah.

Jimmy Maas [00:29:03] They’re well-maintained cars.

Carl Stuart [00:29:04] Yes, that’s exactly right. So if I, if I in my

Jimmy Maas [00:29:10] I’d live in your cars. Those are not how nice they are. They’re spacious interior.

Carl Stuart [00:29:15] It’s right, right.

Jimmy Maas [00:29:16] I think there’s a coffee machine going.

Carl Stuart [00:29:17] Well and you know, and you just got to tell the chauffeur to go away when it’s time to go to bed. So if I do that, the next car I buy, vehicle, whatever, I’m going to either pay a lot of it in cash or all of it in cash. That’s a lifetime change. That is a very straightforward thing to do. So make your car payments and don’t buy a new car or a car, another vehicle. Increase your credit card payments. Now, I would tell you, and this won’t surprise you, if you’re lucky enough to be a homeowner, maybe you’re unlucky to be homeowner. If you want to be the homeowner you’re gonna have a mortgage. You gotta pay it off, you don’t have a choice. A lot of people say, well I’m gonna pay off my mortgage early. I’m going to make an extra $100 or $150 a month payment. Is that a good idea? The answer is that it depends. If you’re making extra payments on your mortgage while you’re running credit card debt, that doesn’t make any sense. Your mortgage is somewhere between two and 7%, and in your credit card it’s 20%. Right, three times that. Yeah, so don’t do that. If you are lucky enough that you have, you don’t have credit card, you don’t have auto or vehicle debt, and you have good retirement savings, and we have listeners who, believe me, there are a lot of people like that. I’m not saying. The majority of Americans, because there aren’t. But I’m saying listeners to Money Talk, because of the kinds of questions that they ask me, they have that position. Then, should they pay down their house? Yeah, yeah, because would it be nice to be retired and have no debt? Would that be the goal? Of course it would be a goal. But you don’t want to be in position with no debt and no savings, because now you’re really up the creek. So, it’s complicated, but in order of magnitude… Do that with your vehicle and you attack that credit card debt and you have that 401K or that IRS.

Jimmy Maas [00:31:26] There’s a whole world of things that I can invest in. I’ve got a little nest egg, let’s pretend. It’s total pretend. Where can I, what should I do with that money first to give me some security? And then what are some dalliances I can take part in? You know, I don’t know, Bitcoin. I’m making that part up. I know you are.

Carl Stuart [00:31:53] Um, where, where’s, where am I?

Jimmy Maas [00:31:54] Where am I going first with my, my.

Carl Stuart [00:31:55] Right yeah this is a if you’d asked me this question decades ago the answer would have been very unsatisfying because there were barriers to entry to be your to invest your money sure back in the day we were called stock brokers and we held the keys to the kingdom and long came a guy named Jack Bogle who invented

Jimmy Maas [00:32:26] With that meaning like brokers determined who got to buy stocks in what order they got to

Carl Stuart [00:32:32] They had to pay the, not that, but I mean, it was the same model as residential real estate. If you use a real estate agent, she will get paid when you buy and when you sell. And that’s the whole concept of being transaction-based compensation. And those transaction- based compensations were relatively high. Along comes this fellow, Jack Vogel, who starts a company called Vanguard. Now, there are others like fidelity. Eliminated the barriers entry. If you have a very small amount of money, let’s just, the reality is, if you have $1,000 to invest, an advisor can’t make a living on a $1000 transaction if you’re gonna pay a percentage of the $1 000. So, what I tell people on Money Talk is go to the websites of the do-it-yourself firms. I always mention big names like Fidelity Schwab. Vanguard, but there are others. And they all have educational stuff on there because they’re competing. And they have a list of their offerings and you can start there and you don’t buy an individual stock. That’s not buying Bitcoin, but it’s not far from it because I learned the hard way that if you decide I’m gonna buy XYZ, if you’re lucky and right, it’ll do better than a broad-based fund. But if you are unlucky, it’ll a lot worse. And I’ve learned doing a lot worse is a lot worst. And I was around when people had all their money in the 401k in Enron, which went to zero. So you go to one of these places, they have a minimum, you wanna know what the minimum is, minimum dollar purchase. These funds are cheap, cheap, cheap, low expenses, and very tax efficient. And that’s where you start, right? You don’t have to be a hot stock picker. You don’t have to be an MBA graduate from UT Austin. You just start there and you put that money in. We call it a taxable or an individual or a joint account. It’s totally liquid. You can get your hands on it in case of an emergency. You can add to it. The stock market in 2022 had a bad year. Let’s say you lost 20%. Then in 23, 24, and so far in 2025, you have good years. Now, in 2022, had you been doing this, you could have said, oh my goodness, I look at it and I just put that money in and it disappeared, it’s gone. But if you kept doing it, then when it came back in 2023, 2024, you had some really attractive purchases because you bought more shares because the prices were lower. Later on, you bought fewer shares because the price were higher. Guess what you’re doing? Mr. Buffett, you’re buying when others are selling. He likes to say… I am fearful when others are greedy, and I am greedy when others were fearful. Dollar cost averaging allows the average person to do that. Okay, time for us to take a break. Stick around, Jimmy and I shall return.

Speaker 5 [00:35:59] If you’re a regular KUT listener, you know by now that members’ support makes everything we do possible, and you know all about becoming a sustaining member, but you might not know about another way to support the reliable news on KUT. If you have a donor-advised fund, you can support the station by recommending a grant to KUT! It’s a great way to show your support and to help ensure that KUT is your reliable news source, and it is way easier than it sounds. Find out more at KUT dot org slash legacy.

KUT Announcer: Laurie Gallardo [00:36:33] Welcome back to a special edition of Money Talk with Carl Stuart. Just a reminder, he is not live this week, so he is NOT taking calls for this show. Now back to Carl, joined by KUT’s Jimmy Maas.

Carl Stuart [00:36:49] You’re listening to KUT 90.5 and the KUT app. Having a lot of fun this afternoon with my friend Jimmy Maas talking about taxes and retirement and I have no idea what we’re gonna talk about now, Jimmy. Well. Jimmy?

Jimmy Maas [00:37:01] Well, you’ve got something, I have some bad news.

Carl Stuart [00:37:03] Uh oh.

Jimmy Maas [00:37:04] My aunt Marge and Uncle Eustace passed away. They had no children and their state found me as the sole heir and I have somehow inherited a sizable, the proceeds of a modest home in central Illinois. So I have. $250,000. Yes, I come to you because I’ve never had this kind of lump sum before. Of course you have. What do I, what do I owe? Yeah. Who do I own it to? Yeah. How do I maximize this opportunity for my future?

Carl Stuart [00:37:48] Actually had this happen so I’m sorry yeah our son at the time lived in Alpine Texas and then he went on by the way to co-found Marfa Public Radio and one day he called me and he said I have a friend in Alpine who has a daughter uh… School-aged daughter Her great aunt passed away, and this young lady is inherited oil and gas revenues. What, will you talk to her? Yes. So, and what should she do?

Jimmy Maas [00:38:32] I mean that can be kind of overwhelming especially like I mean your first thought is you know party tonight, but then

Carl Stuart [00:38:38] Exactly right. Well, I’m glad you brought that up because there’s a phenomenon I’ve read about, about when people win the lottery and they’re low-income people, it’s very common 12-18 months later they’re broke. We see all the time professional athletes get a big signing bonus they’re surrounded by quote friends unquote they buy everybody up car, they do all this sort of stuff.

Jimmy Maas [00:39:13] They’re not armed with the tools that are that are not there for them.

Carl Stuart [00:39:19] It creates, I think a psychologist would call it dissonance, that they feel very, very uncomfortable. And so, let’s be aware of that. The first thing you do, if you are, you receive this, first thing that you do is you don’t tell anybody. Because all of a sudden you will be the most charming, witty, intelligent person, and you’ll be surrounded by friends. So, don’t anybody, and don’t do anything right away. Because you have no experience, the odds of doing this well on your own are probably slim and none. Now, if you are someone who has the time and the interest and the desire, of course you can do this yourself. What I talked about earlier, no barriers to entry. But let’s say that you don’t have the time, the interest, and the desired. You’re married, you have kids, you have a full-time job, you want to spend time with your family. You don’t wanna become your self-taught investment advisor. Well then, you gotta go find somebody. So, that’s the first hurdle. And is it okay if I talk about that? Yeah, yeah. Okay, so I have a methodology because this is a common question over the last 31 years. So the first thing you do, you’re welcome to go online and shop for different people, that fine. But if you live like we do in central Texas, There are a lot of people who do this. And no one’s going to say I’m a really mediocre advisor. Come, then I’ll charge you a lot of money. That’s not a very winning marketing plan.

Jimmy Maas [00:40:59] And so I tried it. It doesn’t work. That’s what landed me here.

Carl Stuart [00:41:03] Yeah, there you are. A life of professional, non-profit work. That’s great. So you want to have face-to-face. I mean, if you’re going to have someone do your taxes, it’d be nice to go have a visit with them. If someone’s going to write your will or whatever, you’d like to go talk to the attorney. So

Jimmy Maas [00:41:23] So all of these kind of semi-permanent, you know big decisions huge matchmaking whatever

Carl Stuart [00:41:30] stuff. You know, we ought to have Yentis. Whatever happened to Yentiz, I tell you, that was a great idea. Anyway, so you go interview this person. Now, there are probably websites that tell you or chat GBT will tell you what to ask. Fine. I don’t know what they say. I haven’t looked. I will tell what my experience is. And because we’re human beings, we make snap decisions about other people. That’s probably why we’re still here on the planet. And it’s okay to acknowledge that. And I would say unless his name is Lucky and he has a big pair of dice hanging over his computer, you’re probably, that’s nice to have that first impression and then move on. This person should ask you stuff about yourself. It’s like going to the doctor. If you go to the Doctor because you’re not feeling well and he says, hi Jimmy, it’s good to see you. Take these pills. And he never asks you about your symptoms or et cetera, et cetera. Probably not a good experience. So the first thing is he ought to say or she ought to, say help me understand your situation, tell me your story, however they articulate it. And so you’re gonna tell them about this inheritance, she ought to ask you about your personal circumstances, your profession, your income, single-married, children, etc etc etc. The kind of things you would want to know about somebody else if you were trying to help them. Become financially independent. So number one, they ought to ask you questions. Now, that comes to an end, and then they oughta be able to tell you three things. You oughta say to them, well, I have this capital, I had this money, tell me, how do you see the world? What’s your investment strategy? What’s you investment philosophy? If they cannot articulate it in a way that makes sense to you, you need to keep looking. Because they can overwhelm you with jargon. I mean, one of the things that I think has been great in my lifetime is I find physicians today will sit down with me and explain what it is that they’re diagnosing and what the treatment is. I grew up in an America where the doctor was a god, and they were men, by the way, and I’d go to when I was sick in an elementary school, each kid with my mom, the doctor would look at me and either give me a shot or prescribe pills and out the door we went. That’s not the experience today, thank goodness. So they ought to be able to explain to you, how do they see the world of investments? How would they invest your money based on their understanding of your situation? Number two is what is their legal, as well as moral and ethical, what’s their legal responsibility to you? There’s a word that bounces around called fiduciary, and that’s your accountant has fiduciar responsibility, your attorney, your advisor has it as well. And what it means is that they have to put your interests before theirs. That’s a legal obligation. And they don’t receive compensation by the transaction. And they have what the law calls a duty of care. Now, I wanna interrupt myself and say there are people who are compensated by the transactions, who are fine people. They’re called financial advisors, they’re not called investment advisors. I know these people, I’ve known them for decades, they’re fine people, so I’m not talking against that. I’m just saying if you had a choice. I’ve been on both sides of this, and I have a choice, I prefer the investment advisor. So I just wanted full disclosure here. I’m not saying they’re bad people. Okay, so you wanna understand what they’re.

Jimmy Maas [00:45:13] But their, their model is slightly different.

Carl Stuart [00:45:17] And then you wanna know, if I engage your services, what does a happy, healthy business relationship look like? I read years ago that when people are surveyed who are unhappy with their lawyer or unhappy with the accountant or their architect or their investment advisor, it’s frequently not necessarily about the results of the advice, it’s a mismatch between what I thought you were gonna do for me and what you did for me. It’s a lack of clarity of expectations. And that’s true in all professions. If you work for somebody, you need to understand what their expectations are, because you may think you’re doing a great job, but you don’t understand what they want you to do. So you wanna be clear about how they invest money, how they see the world, what their legal responsibility is. And the way I phrase it is, what’s a happy, healthy relationship, client relationship look like? When are we gonna get together? How do you return calls? All the things, all that kind of stuff. How often do you return calls? Yes. Yeah. Right.

Jimmy Maas [00:46:22] No, that’s my expectation. Yeah, right.

Carl Stuart [00:46:24] So, I mean, I think…

Jimmy Maas [00:46:25] That’s the way uncle used to swear while I’m well.

Carl Stuart [00:46:26] Well, and that’s probably why Uncle Eustace got all that money, but the fact is, I think if you have a professional relationship with a professional servant, like the ones I mentioned, they ought to be able to return your calls within 24 hours, or if they’re out of the office, as soon as they return. I just think that’s reasonable. In today’s. So if you get those things, if this person truly asks you and understands your situation, and also does those three things, then you have really spent a productive hour with this person. If it feels good to you, proceed. If you think, you know, I wanna check this out with two or three other people, it’s a free country, you can do that. Now, now that you’ve got this relationship and you’ve gotten this $250,000. Now we get down to investment strategy and implementation. There’s some really important rules here. The thing about investing in financial assets is how long will you be investing the money? If you move to a new town and you know you’re gonna be there for 18 months, you shouldn’t buy a house. You don’t know if somebody bought a house in Austin 18 months ago, based on the data that I share every month with Money Talk listeners, it’s down two or 3%. Well, that’s money, and if you need a real estate agent to help you, that down another three to 6%. So the way you invest in real estate is it’s a long-term asset. Then it works, okay. Now, the same thing is true of the stock market. The reason real estate works is because if you are investing in rental properties, based on history, rents go up over time, equal to or above inflation, so that value of the property goes up because it’s throwing off more cash. If you invest in the stock market, I like to say this and listeners will remember this, I say you’re investing in human innovation. My colleague and daughter Lindsay points out the iPhone didn’t exist before 2007. Imagine that, it seems like we’ve always had one, but we haven’t. And so, if you are investing in the stock market and you’re in for 12 months, your odds are maybe a little better than 50-50. That’s not so good. If you invest for three to five years, they’re much better, because it’s entirely likely that one, if not two of those three to 5 years, two of the five years let’s say, you’re gonna have negative returns. But if you say, to the teacher’s retirement system, the employee’s retirement system, that the firefighter’s pension. How do they invest money? They don’t leave it in the bank because they’ve got to pay people’s retirement today and into the future forever. So they’ve got to take risk. And the way you take risk prudently is the time period over which you’re going to have the money at risk. The longer it’s in, the better it is. And one of the common mistakes that I is people say, you know I’m approaching retirement, I’m 64, I need to go put everything in cash. Huge mistake, because the cost of living keeps going up, they don’t know how long they’re going to live, back to our three things, and they don t know the rate of return. So the first thing is you match your investments with your anticipated time horizon. Sure. That’s what you do.

Jimmy Maas [00:50:02] This has been, it’s always an education. I feel like you get like, you know, it it’s graduate. It’s a graduate level course.

Carl Stuart [00:50:10] And it’s a wonderful combination. I tell my listeners, my two best teachers have been trial and error, and so plenty on the error side, and so while this is all based on historical data, it’s also my own painful personal experience. Well, that’s it for the week. Thank you for listening to Money Talk on KUT 90.5 and the KUT app. A lot of fun, happy holidays, and to you, Jimmy, thanks and happy holidays.

KUT Announcer: Laurie Gallardo [00:50:42] You’ve been listening to a special edition of 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.