Money Talk with Carl Stuart

Carl Stuart takes caller and text questions on stocks, bonds, and international equities, with advice on building a diversified portfolio with non-correlated assets to help avoid large declines during market downturns, which can be difficult to recover from.

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 [00:00:21] Welcome to Money Talk. I’m Carl Stuart and you’re listening to KUT News 90.5 and the KUT app. If you’re a first time listener, welcome. If you are a regular listener, welcome back. Money Talk is a broadcast about the world of financial and investment planning and you always determine our agenda by calling or texting 512-921-5888. It’s always a terrific idea to call or text at the beginning of the broadcast, giving me ample time to do my best to answer your question. My policy has always been that I will take today’s calls first and then today’s texts and you will hear those coming in on the phone here and then any previous texts that I have not had the opportunity to answer. Well, we live in interesting times, certainly what’s going on around the world, but I thought what I would do today uh, until, unless you call or text is take a look at 2025, what happened in the financial markets and most importantly, what does it mean to you and to me and how do we handle our investments and what do we do in 2026? Oh, by the way, if you like to listen to this broadcast again, or you have friends who you think would enjoy it, you can always go to the past shows at kut.org slash money talk. So before I begin to bloviate, let me just give you that number again, 512-921-5888. So let me run down some numbers for the financial markets, and here I always use something that you can invest in. You cannot invest in an index, but there are mutual funds and exchange-traded funds that provide very close to index returns. And I also try to use, sponsored by different companies, because I’m not making any recommendations. I’m saying this company’s exchange rate of fund is better than that one. So here we go. The total stock market, as represented by the Vanguard Total Stock Market, for the year was up 17.1%. The, that’s the SPYRS SPY, which is, follows the S&P 500. Was up 17.72%. The Fidelity ONEQ, which follows the NASDAQ, another exchange-traded fund, was up 20.89%. And the international market, and I use as a proxy for this, the Vanguard XUS Exchange-Traded Fund, up a remarkable 32.35%. It was also a good year in the bond market. The index that most people follow to understand what’s going on in the bond market is the Bloomberg Aggregate Bond Index, and there is an iShares Exchange Traded Fund, AGG, that follows that index. It was up 7.19%. So across the board, a very, very good year. A couple of things really stand out before I get into how I would look at portfolio strategy for 2026. By the way the number to call or text is 512-921-5888. Probably the most significant, to me anyway, is the performance of the international markets. There was something in the financial markets called US exceptionalism, where year after year the US equity market significantly outperformed foreign markets. And that worm turned this year. There may be a lot of reasons for it. One may simply be that of what we call a reversion to the mean after a long period of outperformance of one asset perhaps, the other one starting to play catch up. Also a lot of analysts on wall street pointed out and have pointed out for quite some time that taken as a group international equities tend to sell at lower valuations on their earnings than U.S. Companies and then the other piece is the dollar which dropped about nine percent in 2025 and when you own international equities and then they are translated back into U.S. Dollars, that’s a lot like having a tailwind, it is having a tailwind. You’re listening to Money Talk on KUT News 90.5 and the KUT app. Call or text 512-921-5888. We have a caller. Bob, you’re on the air. How may I help?

Bob [00:05:02] Carl, because of your good advice and my daughter’s getting some scholarships, they have completed their education and we have some money left in their 529 plans and isn’t there something new in the new tax laws about being able to convert that to Roth IRA?

Carl Stuart [00:05:23] Yes, yes, I think it was part of what was called Securac 2.0 and you’re absolutely right and it’s complicated. I have not put that to memory but you’re right. I’m glad you called because other people may be fortunately in the same situation. There are a number of criteria if you have money in a 529 plan and I’m really doing this off the top of my head. It had to be there for considerable number of years. I suspect that’s in the statute. To keep people from just using this as a way to get into a Roth. Oh, I’ll put money in our daughter’s 529 plan and then six months from now, I’ll take it out and put it in a Roth, so you wanna look into this. There’s a dollar amount limit. I, again, off the top of my head, Bob, $35,000, so the two things that I remember is that the 529 had to be in existence for a longer period of time and secondly, there’s a $1 amount that you can. That you can’t go above, but it’s a terrific idea because she doesn’t need the money now. It can grow without any tax liability. And then once she’s 59 and a half or older, she can take it out without any income tax. So congratulations on her getting scholarships. This is a terrific and I recommend you look into it.

Bob [00:06:43] I appreciate that, and one of the daughters has now a Roth 401k, and I was seeing that her contributions to that do not count against her contributions to a regular Roth IRA, is that correct?

Carl Stuart [00:07:00] If that’s my understanding and the reason the distinction is a 401k, whether it’s pre-tax or Roth, is by definition an employee-your-sponsored plan, whereas a Roth IRA, as the letters imply, is an individual retirement account. So about the only test that would preclude her from having a Roth IRA is if she, or if she were married, she and her spouse made too much money to qualify for a Roth. But if she’s doing a Roth 401k at work and she meets the income test, she can do her own Roth IRA as well. Yes, you understand that correctly, Bob.

Bob [00:07:40] Okay. And we opened Custodial Roth IRAs for them when they were younger. And now, is there any reason I have to change that, or can they stay custodial?

Carl Stuart [00:07:53] My understanding is they can stay as custodians because once they hit 21, your name disappears and they fully are owners. You don’t have to open a different rot. That’s my experience.

Bob [00:08:04] Okay. And is there any other, uh, things to do with left over money and four and five 29 plans? I’m going to go ahead and take care of these Roth IRAs, but is there any other new things out there to do over 529 money?

Carl Stuart [00:08:19] Good question. No, nothing new, but there are a long list of beneficiaries. So this may not at all pertain to your situation, but there are other people, other humans in the line that can be beneficiaries where you could change the beneficiary on a 529. But other than that, I’m not aware of anything else that’s new, Bob.

Bob [00:08:40] So my grandson could use his mom’s money.

Carl Stuart [00:08:44] That’s exactly my understanding.

Bob [00:08:47] Thank you for your help. I appreciate it.

Carl Stuart [00:08:49] You bet, thanks for calling. 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. We have another caller. Melissa, you’re on the air. How may I help?

Melissa [00:09:10] I call so good to talk to you i think that all the great advice you’ve offered and i started listening to you about a year ago thank you uh… I have a question my husband and i have uh… Different opinion may be on this we have heard that the number of years ago some honeywell box

Melissa [00:09:30] Mhm.

Melissa [00:09:30] And now Honeywell has split, but on top of that, they’ve had a couple of divisions they’ve spun off. So we were issued shares of Solstice Advance, which I guess is one of the subsidiaries they had. And we decided we didn’t want to keep that and sold it. And my question is, how do you figure out what your basis is in that stock?

Carl Stuart [00:09:55] This is complicated that I’m, I’ve been around so long, but I said, I remember when AT&T broke up and there was something like seven different telephone companies and AT&P was a widely held stock and turned into being Southwestern bell and Pacific, tell us this and bell South and on and on, and on. What they did was they assigned a percentage of the value to each of those spin-offs. So what you’re going to have to do is do some either chat GBT or Google homework to discover when Honeywell spun those off, how was that valued as a percentage of the Honeywell stock. You can also, because it’s a large company… Honeywell will have an active investor relations department, and you can get that 800 number and call. You may get a bot, but you may also get a human being. That you can’t, a lot of shareholders have this question because every shareholder that held it during the time that y’all did is gonna have this. So you have to get the company said this percentage of value of the shares was assigned to the spinoff. That you input that. To determine your cost basis, so then you will know whether you have a gain or a loss on the sale of the spinoff melissa.

Melissa [00:11:25] So when you say they, you mean somewhere on the Honeywell, you know, public relations side or something?

Carl Stuart [00:11:31] Yes, yes, yes. I would say that big companies have a division, have a department called Investor Relations, not public relations or marketing investor relations. And so the first place I would go, if you want to go directly to the company, is I would go to Investor’s Relations. They may have their, you know, a list of FAQs. I wouldn’t be surprised because you are not the only shareholder who needs to know this information. That I’d go to the source first if I were in your shoes. Yes.

Melissa [00:12:04] And then if I have no luck there, you said call, there are customer relations.

Carl Stuart [00:12:09] Yeah, I’d go to, again, it’s not customer relations, it’s investor relations. Investor relations, yeah. I just want to make sure you don’t get somebody in marketing who wouldn’t have no idea what we’re talking about. Yeah, it is investor relations

Melissa [00:12:22] Okay, great. Well, thank you so much for the help.

Carl Stuart [00:12:24] You’re very welcome. You’re listening to Money Talk on KUT News 90.5 and the KUT app. Call or text 512-921-5888. It’s time for me to take a break. I’ll be back.

KUT Announcer: Jimmy Mass [00:12:41] 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 [00:13:17] This is Money Talk with Karl Stuart. Call or text him with your questions at 512-921-5888. Now, here’s Karl.

Carl Stuart [00:13:32] Welcome back to Money Talk. I’m Carl Stuart and you’re listening to KUT News 90.5 and the KUT app. We may be having a technical issue with my phone. During the break I just called the number that I always give you and I’m not getting it. It’s not going through. So we’re going to have to work on that during the week but I will give you the number. You can try it and if it doesn’t work, I sure hope you call. But anyway, you can reach us, KUT News, 90.5. You can catch pass shows at KUT.org slash Money Talk. And you can text at 512-921-5888. Perhaps we don’t have a problem. It’s just we’re not getting any text, which is fine. I just want to make sure that that’s the case. So if you have an idea, text me, and then I’ll know whether that telephone is working properly or not. Okay I see, oh good, it says the phone has been rebooted. Okay, so it should be able to get two callers after that. Terrific, okay. All right, so I gave you some information, data, and numbers about what occurred in the financial markets in 2025, and also some interesting differences between US equities and foreign equities. We also had a good year in the bond market, I mean a 7% return. For the Bloomberg Ag is a good bond return. So the question then is looking at, say now’s a good time to get, you’ll get your December statements, a good to look at your 401k or your own investment account or with your advisor, and to ask the question, how are we doing? And I think this is one of those questions in life that’s simple to answer, simple to ask and difficult to answer because it really is how are we doing compared to what. And so I’m just going to give you some examples of things that I’m obviously not going to get specific securities, but that are in my portfolio, because I think it’s very, very productive in figuring out what it is, how you want to invest. So let me go back to a long time ago, when I started in this profession. And in the 1970s, we had a huge bull market in oil. We’d had the OPEC embargo. Commodity prices were skyrocketing, gold prices were skyrocketed, energy prices were skyrocket. And the economy was basically in a recession. And the economists invented a phrase called stag inflation with a stagnant economy. At the same time, we had inflation. Classic macroeconomic theory says that’s not supposed to occur, but it did. And so the great consensus was since we didn’t have control of the global supply of oil, that oil prices would continue to rise. And of course, the opposite occurred. And as I often say, Houston went from a boom town to where you could shoot a cannon through Houston and not hurt anybody. Then for those of us who were old and had been around the Southwest, we had a big boom in real estate, both commercial and residential, but let’s just talk about commercial. There was even a moment I remember reading that some journalists said that on a per capita or size of a city basis, Austin had the best commercial real estate market. Money was flowing in from all over the country, and there was common belief that with growth in what was then called the Sun Belt, that real estate was a perennially good investment. And then the whole thing collapsed, and the federal government during the George H.W. Bush administration came in. And basically closed the savings and loans all over the state and a lot of banks. And did that in New Mexico and in Arizona as well. And put in what’s called the Southwest Plan that in some ways was a precursor to what happened during the global financial crisis during the Bush administration with Ben Bernanke and the Fed. And then we had, just as I alluded to, the global finance crisis. And there were stories of people making $15,000 and $20,000 a year in California and qualifying for a $350,000 mortgage. And that all ended badly. And many people, just good, solid citizens who weren’t speculating, found that their homes were worth $100,000 or $150,000 less than their mortgage. And the financial markets basically collapsed. The standard and poor 500 was now 40%. International market, 50%. High yield bonds down 25%, public real estate is measured by real estate investment trusts down 55%. Now why do I share with you all of these woes? Because I can guarantee you that as those prices went up, whether it was for energy or real estate, residential real estate whatever the case was, while there may have been few people who were saying, boy, this looks bad, the vast majority of investors. I said, this is a terrific deal. And so when bad things happen, you don’t see them coming. And so in my view, when you have, let’s just say you have $100,000 in your 401k and you experienced a 40% loss, which could have happened if you owned the standard of poor 500 in 2008. Now your $100000 is $60,000. So you’ve got to make 40,000 on that amount. To get back to where you began at the beginning of the year. That $40,000 on a $60,000 investment is a 66% return. That can take a very long time. When the NASDAQ peaked in March of 2000, it did not come back to that level for 15 years, 15 years. So what I’ve learned the hard way through trial and error is that the key to growing your assets over time is by avoiding really bad declines. Because it takes so long to dig out. That’s number one. And number two, you can’t see these things coming because I will just use 2022. If I’d said January 3rd of 2022 that the S&P would be down 19% and the NASDAQ would be done 33% and the bond market would be 13% in 2022, you might look to me and go, really? Why would you say that? But that’s precisely what occurred. So when you think about your 401k, you think about the college savings plan, you think about you own investments, and you ask yourself, what is it that I’m trying to accomplish? I’m try to become financially independent, or perhaps stay financially independent. And to do that, I want my capital, my money, over time, not every year, over time to grow faster than the rate of inflation. But I wanna do it with an acceptable level of risk and it’s that last phrase, acceptable level of risk that I really wanna focus on. By the way, you’re listening to Money Talk on KUT News 90.5 and on the KUT app. Call or text 512-921-5888 and you can catch past shows at kut.org slash Money Talk. So to me, the trick is not doing great and good times. I think that’s frankly relatively simple in the stock market. There’s something called momentum, and we’ve had several years where if you just own growth stocks, you look like a genius. The trick is, when that goes in the other direction, is not to suffer that. Now, if you’re not an experienced investor, you might say, well, Carl, I’ll just sell before the decline. Trust me, that doesn’t work. And while I’ll wait till the market bottoms, I’ll get back in. Trust me again, that doesn’t work. Someone once said, trying to catch the bottom is like trying to a falling knife. You don’t know where the bottom is. The other problem is that when it starts back up frequently, it’s a violent move. It’s not nice and calm, you know, 5% here, 6% there. The best recent example was when COVID occurred in March of 2000. And not surprisingly, as we closed the economy and closed the schools and we didn’t know how many of us were going to live and how many were going die, the financial markets went in the tank. And 43 days later, they were back to where they were in the middle of March of 2020. You just cannot predict these things, but what you can do is you can two things. You can diversify your 401K, your college savings plan, your own personal investments. But that doesn’t stop there, in my opinion. You also have to look at something called correlation, which is how did these various assets respond one to another? For example, it’s pretty logical that over time, income producing real estate and common stocks are positively correlated, income producing in real estate because rents rise over time and unless interest rates rise also, the underlying value of the real estate appreciates. And stocks over time, because they represent ownership of going concerns, as I like to say, human innovation, tend to go up over time as well. But when it comes to real estate, when we have a bear market, it can last years because of the illiquidity of real estate. Just because you want to sell your rental property doesn’t mean there’s a buyer. And in the stock market, we have much shorter periods and much more volatile because you can say, Uh oh, here’s COVID. I’m just going to sell everything and go sit on the sidelines, and you can push a button, call your advisor, however you’re set up, and accomplish the objective. So we have similar returns over those two asset classes, and yes, they do outpace inflation, but the return profile, if you will, is very, very different. So when you’re looking at your portfolio, it was common for many, many years to say that a balanced portfolio would have more or less 60% in stocks. And more or less 40% in bonds. And I think that I’m not opposed to that, but I think it oversimplifies things. Occasionally, not always, but we have a year like 2022 when stocks go down and bonds go down. We actually have a decade, the 1970s, where stocks went down and the bonds went down and interest rates went up. You’re listening to Money Talk on KUT News 90.5 and the KUT app. Call or text. 512-921-5888. So what I would recommend is you think about various asset classes that you can own. One of the really wonderful things that’s occurred during my four decades plus of being in this profession is that a lot of investment strategies that weren’t available to you and to me in say 1980 are available today and they’re available in mutual fund format. In exchange trade format. They are frequently tax efficient, and their expense ratios are very, very low. So really the barriers to entry for those of us as individual investors have really significantly fallen over the time. And so when I build my portfolio, I wanna have various asset classes. Do I wanna to have stocks? Of course I do. If I want the money to grow, I have to have money at risk. I can’t sit in CDs or money market funds or treasury bills and expect the money to grow because history shows that after inflation and taxes, I have a negative real return. So I have to have money at risk. The question is how much and what do I do with the balance? So let me start with the how much part because I think this is helpful. I live in the world of percentages, but sometimes it’s good to think in terms of dollars and cents. So if I have, let’s just go back to my $100,000 in my 401K, $500,000 of my 401k, and I have 60% in stocks, and stocks decline 20%, and let’s say the other asset, whatever it is, we’ll get into that momentarily, is flat, and 60% going down 20%, my overall portfolio is down 12%, that’s $12,000. So now at the end of the time period, I have $88,000. Can I take that risk? Can I stand it? I would tell you if you’re trying to grow the money over time, the answer is yes. But then you have to deal with your emotions. There’s a whole area called behavioral finance and also behavioral economics. And some famous people who won Nobel Prizes have shown in the lab that when you and I experience a gain, let’s say of 10% in our portfolio, we experience it as 10%. But when we experience a 10% decline in our portfolio, we experience it as 20%. So we have to think about that emotional experience when we have that $12,000 decline on the value of our 401K plan. Not that we, we just need to live through that so we can be prepared. We need to understand that we are risk averse beings and we emphasize loss versus gain. Okay, that’s really, really important. Now, the big deal, when you think about your savings and investing. What’s the right mix of all this stuff for me? That’s called asset allocation. It really matters. As I go back to that terrible year of 2008, you could have had diversified U.S. Stocks and foreign stocks and real estate investment trusts and high yield bonds and commodities. And now it’s five different asset classes. They were all different, you were diversified, and you still would have had a terrible year. So what you wanna do is you wanna look at Not only are these diversified, but how do they respond one to another? Do they go up when the other goes down? Do they stay flat? Do they down with it? That’s a big deal. Now, when you do that, when you identify those mutual funds and those exchange-traded funds, then you have a good year like 2025, and you say, well, gosh, the S&P 500 was up 17.7, but my portfolio wasn’t. Does that mean that some of your funds are somehow bad? The answer is no. The question is, how did they do versus their particular type of investment? That’s what matters. And how have they done in other times when, say, stocks have done poorly? So I’ll give you some specific examples. In 2022, as I said, bonds were down 13, and I owned a strategy that gives bond-like returns. Last year, 2025, it was up 8.3 percent. But in 2022, it down 0.66 percent. Now, when bonds are down 13 and it’s down 0 .66, that’s what we call a contributor to return. You might say, well, Carl, I still lost money. Yeah, but you lost a fraction of what your bonds did, which means that the depth of your portfolio value will be less. Then there are other strategies. That was a merger arbitrage strategy. There are other that I think are really interesting that basically are institutional type strategies that those of us as individual investors can do our research on and actually invest in. One is called a market neutral strategy, where the portfolio managers follow hundreds, if not thousands, of U.S. Stocks. They use things like AI to evaluate what’s going on. I visited with the portfolio manager. They look at the number of cars in Target and Walmart parking lot. They take the public statements of the CEOs of the various companies. And look at what they have to say. They gather all this data and they tend to own those companies that they think have positive outlook, and they tend to sell short those companies that have a negative outlook. And the reason I bring this up is in 2022, the strategy was at 1.80. Again, you can say, well, Carl, I could have done better in the bank than 1.8. That’s true. But this is a way to build a non-correlated portfolio. And then, of course, we talk about commodities. Probably six, seven years ago, I had been listening to all kinds of people tell me that I should own gold. And I noted that it had peaked in 1980 and had been just a great investment in the 1970s. But from 1980, well into 2000, it was just a terrible investment. And I kept listening to smart people, visiting people. One of the things that occurred in the financial markets was that we could buy gold or silver, actually own the metal, but own it in an exchange traded fund where it actually traded on a daily basis. And in 2022, when I owned it, the gold exchange traded was down 0.49%. Again, these are contributors to return. So what I’m trying to get through in my thinking is… That when everything goes down and you own assets that don’t go down or barely go down, your overall portfolio doesn’t go as much and you will have the opportunity more quickly to come back. It is time for me to take a break, no calls or no texts, 512-921-5888, I’ll be back.

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KUT Announcer: Laurie Gallardo [00:32:47] This is Money Talk with Carl Stuart. Call or text him with your questions at 512-921-5888. Now, here’s Carl.

Carl Stuart [00:33:01] Welcome back to Money Talk, I’m Carl Stuart and you’re listening to KUT News 90.5 and the KUT app. When you have a question, call or text 512-921-5888 and you can catch past shows at kut.org slash money talk. I recognize that this uh, bloviation that I’ve been involved with here for the last minutes may not be of everybody’s interest and I won’t do it. On a frequent basis, I just, we’ve had three very good years in the stock market and I’ve learned in observing human behavior that we can easily confuse luck and brains and we can think, boy, we’re really great investors and this thing is going to continue and that’s a dangerous place to be. So building a portfolio of not only diversified but non-correlated assets. Is really a big deal. I’ve got a call coming in. Let me give you those numbers. 512-921-58. Chris, you’re on the air, how may I help?

Chris [00:34:11] Hello, Carl. Happy New Year.

Carl Stuart [00:34:13] Thank you.

Chris [00:34:14] I am wondering, I am looking at the journal from Friday, their journal report, the year in review, and there is an article on page B3, or it’s on the third page. Title says, after huge celebration, crypto investors face the hangover. Carl, what is going on with crypto? Why is it so controversial? Yeah, well, we have people who think it’s… We have people who think it’s the greatest thing. Yeah. Others don’t. I don’t understand this.

Carl Stuart [00:34:51] I can talk about the phenomenon and I’ve listened to a description of say Bitcoin many many times It’s still over my head, but I remember that article. I think on a year-to-date basis for 2025 I think Bitcoin was down between six and seven percent and the article went on the journalist went on to suggest that People were more interested that the kind of speculative buyers who had become much more enamored with artificial intelligence, and less with cryptocurrency. And so some of the buying activity had really slowed down, and some of them mining activity, and I’m really out over my skis here, Chris. But apparently, the amount of new coin being created also subsided. And that appears to be, I don’t know if it’s a loss of confidence. In cryptocurrency but the loss of enthusiasm in cryptocurrency. I will tell you that over the last three years it’s gotten to be much more uh… I don’t know if legitimate is the right word, certainly acceptable when you see companies like BlackRock, the world’s largest asset manager, offer uh… An exchange-traded fund that owns bitcoin and I understand fidelity also offers securities. That own cryptocurrencies, but I think calling it a cryptocurrency is frankly a misnomer because you wouldn’t want to deal in a currency that has that kind of volatility. If I’m your customer and you are selling me something that you’re going to make and deliver in 120 days, and we agree upon the price in dollars, we pretty well know what that exchange is going to be and I’m going to pay you when I get the product. But if we do it in crypto, and crypto either rises or falls 15%, that’s an unacceptable risk for us to use it as a currency. So it’s certainly more accepted on Wall Street as an investment, but not as a currently. I still think it’s in its early days. I don’t pretend to understand it. There’s some almost not kind of religious type thing where people believe. That they don’t want to own the dollar or euro or yen, and that we’re all going to, things are going to go to heck in a hand basket and cryptocurrencies, it can’t be hacked. There’s a limited amount of it. And it will be where people will go, when Armageddon happens. I just don’t buy that. I mean, gold was told that way, in the early eighties, get your gold coins in your your dehydrated food and get yourself a shotgun and sell your house and head to the head to the hills. So I just think right now it’s going as that article implied, it’s going through a natural decline in interest after becoming such a hot thing. And I think for most investors, you and me included, it included. It’s interesting, but I wouldn’t touch it with a 10 foot pole.

Chris [00:38:13] It seems to me as if Armageddon were truly to happen, we’d lose most of our power. Just say an EMP went off over the United States, you lose power. All that stuff is gone. The other thing that bothers me about this is it seems to be being used in illegal activity. And I read about North Korea stealing bitcoins, you know, regularly. So. It strikes me as more than just a speculative thing, it strikes me as a disruptor maybe in the wrong way.

Carl Stuart [00:38:49] I don’t disagree with you. I mean, I think there’s got to be a bunch of criminal activity there too, which is one more reason to stay away from it. I completely agree with your analysis, Chris. Carl, good to talk to you. Happy New Year. And same to you, Chris, thanks for calling. You’re listening to Money Talk on KUT News 90.5 and the KUT app. Call or text 512-921-5888. John, you’re on the air. How may I help?

John [00:39:22] Hi. I’ve been starting to save for retirement. I started a little late in life. I was self-employed. I was doing, I had a VAROP IRA after tax that I’ve built up over the last few years. I got about $25,000 and that, but I’m now not self- employed. I’m working for a company who offers a 401k which I’m about to start and that’s going to be pre-tax and they’re going to match me. Little bit, 25%, but only up to 4% a year. So it’s not going to add up very fast. So my concern is now that I’ve finally got $25,000 and I’ve got something that actually will compound a little bit. That’s started from scratch again with this new account. Is there any way to combine those since one’s already established an after tax and one’s a new pre-tax or should I just you know suck it up and start this new one and try to build that up and leave the other one as it is Yeah.

Carl Stuart [00:40:26] So, great question, so the Roth IRA is an IRA, it’s an individual retirement account, and you have a custodian and you’re in charge of it. The 401k is an employer-sponsored account, and the employer sets it up, they set up the rules, they either provide a matching contribution like yours does, or they don’t, but they’re totally separate, they cannot be put together. Because one’s an individual and the other’s employer-sponsored. And as long as you’re in the 401k plan as a plan participant, under almost all rules, it has to stay there. So given the fact that you have this matching contribution, that’s free money. And I would absolutely, if you can’t do both, then I’d leave that Roth IRA alone and I’d put my new money into the 401K. What will happen is, If like most Americans you don’t work in one place all of your career, when you move to the next place, whether you go back to self-employment or to another employer, if the employer has a plan, you can transfer over the 401k from one plan to another, or if you go on your own, you could even do what’s called an IRA rollover and take that 401k money and put it in an IRA. Uh, and so you want to do the 401K because of the match. If in the fullness of time You can get the a hundred percent match. You put in 4%, they put in four percent. Now you have an 8% on your, that’s a terrific return. You could go back if you had the cash flow at some future date and be adding back into your Roth IRA, but you can not combine the two, John.

John [00:42:10] That’s what I was wondering.

Carl Stuart [00:42:12] You bet. Thanks for calling. You’re listening to Money Talk on KUT News 90.5 in the KUT app. Call or text 512-921-58. Gary, you’re on the air. How may I help?

Gary [00:42:29] I carol at happy new year thank you

Carl Stuart [00:42:31] Thank you, you too.

Gary [00:42:33] I just got a, well, uh… Few weeks ago i got a letter from the social security in that ministration that they reviewed my uh… Twenty-four tax returner they were sent to my twenty-four tax return and it’s concerns are ma yes my wife died in twenty three i filed her you know uh… Uh… Death certificate and then all the whole edges but you know the date she died down on the tax return and all that and might tax return for twenty four I filed a single again. And in the meantime, I had transferred her IRAs and stuff over to me, which, you know, I took the minimum requirements and all that because we’re both over 65. And now I’ve got this letter, they’re reducing my social security check by about $250 and putting in the Part B and Part D of Medicare. Is this normal?

Carl Stuart [00:43:48] You know, I have never encountered this, and I’m sorry it’s happening. I wonder if because you’re filing as a single taxpayer, you’ve moved into a higher bracket as it regards Irma. So for everybody else, and this is confusing, when you are a social security beneficiary, the amount of Medicare tax that you pay. Is determined by your taxable income. And so the more taxable income you have, the more they take out of your social security for a monthly Medicare premium. It’s I-R-M-A-A, and I can never remember what that stands for. So if you make, let’s say you’re on Medicare, but you’re 70 and you’re working and you make a high income, you’re gonna pay a much higher premium than someone who’s 70 and retired and has a much lower income. So the only thing I can conclude, Gary, is that when you went from being a joint filer to being a single filer, that your income did not drop a substantial amount, that puts you in. And one of the bad things about Irma is it’s like a cliff in the sense that once income goes above a certain amount. That you get into the next higher bracket. It’s not like it’s progressive. It’s just one dollar over a certain amount of taxable income, and you move into the higher one. And I’m afraid, just based on what you’ve told me, that that’s exactly what’s occurred with you, Gary.

Gary [00:45:31] Yes income-related monthly adjustment thank you so much you can’t and what uh… Looking at their charts here and stuff you know i’m well not a high income earner but you know hundreds seventies or whatever right but you know there is a you know what quite a difference between married and uh… Single There he is. Household. Yeah, as far as that. So I guess my only recourse is to go out and find another wife. I don’t know.

Carl Stuart [00:46:09] There’s all this not all this paper rustling here is I’m getting out the tax rates and When you are single tax, but when you are married finally jointly and you make 170 You are everything over ninety six thousand up to two hundred and six thousand taxed at twenty two percent But when you’re single anything from 103 up to 197 is taxed to twenty four percent And I’m guessing that that’s exactly what it is, and I’m not sure.

Gary [00:46:44] I sort of thought that also but you know in my haste she had a small part of the IRA was in the bank like 13,000 or something I said well I just want to get rid of that.

Carl Stuart [00:47:01] I’m sure you did, yeah.

Gary [00:47:02] You know, so that added on to the…

Carl Stuart [00:47:06] Well I would say my piece of marital advice is $250 a month more expenses is not worth finding a person to get married to.

Gary [00:47:16] Well i don’t know i i i got house cleaning expenses couple of other jazz you don’t you know i uh… Carlton the wife of the whole lot of stuff here that will learn to have in the learn how to do well or but there is a

Carl Stuart [00:47:32] You are, and you and I are on very thin ice, so I’m gonna say goodbye, Gary. Happy New Year. Thank you. You’re listening to Money Talk on KUT News 90.5 and on the KUT app. If you’ve got about another five minutes, if you’ve been thinking of calling or texting, now would be a good time to do that at 512-921-5888. So back to my non-correlating. So when the global financial crisis occurred and everything went to heck in a handbasket, that’s called a risk off environment. Everybody wanted to run away from risk. And about the only thing of traditional asset classes that I could find were that US treasuries went up in price. Now why is that? Because it looked like things were coming unglued in the global financial system. And whether you think, whatever you think about our US government and our debt, nevertheless, we were the cleanest dirty shirt in town and people were buying US treasonries because they appeared to be safe. And there was a strong non-correlation to equities. But I also looked around for other strategies that might hold value or even possibly appreciate when other asset classes decline in value. And I came upon something called trend following. And you can own these in mutual funds, and you can on these in exchange rate of funds. I would never talk about these things if they were not available to the average citizen. And what they do is they trade, this goes way back to the beginning of commodities trading. But they trade the four most globally liquid assets, which are currencies and commodities and stocks and interest rates for bonds. And because they can do this with the advent of computers, this has become a really big deal around the world. And they can benefit from a sustained trend. And it doesn’t matter whether the sustained trend was up. Or down, and so the two that I happen in my own portfolio to own, in 2020, in 2000, I’m gonna go back in 2022, remember the S&P was down 19, the NASDAQ down 33, bonds down 13. These two were up respectively 16.8% and 17%. Now, I look at them this year, and they aren’t worth a darn. Up 2.4 and 1.6 when the stock market’s up so much. And the point here is, if I look at that and say, well, those are horrible investments, I’m gonna sell them, I am making a major mistake because I have to go back and say why are these investments in my portfolio in the first place? They’re in there because they’re not possibly correlated to equities, to stocks. And so when you think about your portfolio and you’re judging at the beginning of the year, Do I want to hold this investment or not? Why is it in there in the first place? Profile of the investments that I’m looking at. So if bonds are down 13% in 2022, does that mean bonds are bad? No. What it means is that when interest rates go up, bonds go down and vice versa. But that doesn’t mean you shouldn’t own bonds. It’s where do they, how do they fit into your portfolio that really matters? Well, it’s been a lot of fun this afternoon. I want to thank Corrin and Mark for doing the usual terrific job and to remind you that next Saturday at five o’clock Be sure and tune in to Money Talk.

KUT Announcer: Laurie Gallardo [00:51:29] 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.