We’re barring the doors, closing the shades, and not answering any house calls because today we’re answering YOUR letters. From paying down a mortgage principle or investing, to allocations, backdoor conversions, and even the best strategies on giving kids an allowance… this show has it all, thanks to YOU!
Plus, in our headlines segment, what can we learn from the life of a day trader? Long time listeners can probably imagine the whole team’s collective groans when we first broached this topic, but the more we discussed this headline, the more we found LOTS of great ideas that everyday investors can use. We love some of the lessons we can distill when learning what separates a good day trader from a bad one. In our second headline, we’ll wonder out loud where is the future of financial advice is headed. We’ll look over one report from Hartford Funds on important financial considerations you need to keep in mind and give our two cents while we’re at it.
Later, after we take a break during Doug’s trivia, we’ll queue up a voicemail from Pete, who no longer works at a job with 401k access. What are his options for investing with tax benefits? Can he still max our his Roth IRA through a backdoor conversion?
Thanks to MetPro for supporting Stacking Benjamins. Get a complimentary Metabolic Profiling assessment and a 30-minute consultation with a MetPro expert at metpro.co/sb.
Our first letter comes from an anonymous listener. They have the following questions for us:
1. Do you think I should invest in a back door IRA, or put that money towards my mortgage principal?
2. Do you pay taxes on a back door roth? So, I would have to take after-tax dollars and get taxed on them again by doing back door IRA route?
3. My brokerage firm manages my current IRA. They have me in 25% bonds, and 75% stocks. Is that he right mix for my age (52)?
My current situation:
-I’m 52, and would like to retire in 3-5 years.
-I have $1.5M in retirement accounts, and about $200K equity in my house.
-I have $360K left on my mortgage
-I am still contributing the max to my 401k and max out my HSA as well.
-I have a 6 month emergency fund, and no other debt except my mortgage.
-I am an HCE so don’t qualify for a separate Roth.
-I have no kids and I’m single
-I would like to pay down my principal, but also want to set myself up for what could be considered early retirement.
Thanks!!! I LOVE your show and I listen all the time. Thank you for all you do for this community.
p.s., I don’t need any more t-shirts which is why I didn’t make a voicemail.
Dave and his wife have a multitude of investment accounts. Dave writes with some ideas on how to best simplify their portfolio:
Hi Joe and OG,
I’m a huge fan of your show, not for the financial knowledge but for the entertainment. I always look forward to new episodes every, single, day. Thank you for what you do.
I’m from Vancouver, Canada. My wife and I are in our early 40s and have kids. Except for our mortgage we currently do not have any debt. We have sufficient emergency fund that will cover 6-8 month’s living expenses (the foundation you have been talking about). We live below our means and will stay away from debt.
My wife and I have been trying to simplify our investment accounts. Here is what we currently have:
-I currently have a Registered Retirement Savings Plan (RRSP) with my employer, similar to your 401K. I have contributed to get the maximum match by our company.
-My wife works for a company in the private sector that has a traditional defined benefit company pension.
-My wife and I each have an RRSP account outside of work (similar to your IRA)
-My wife and I each have a Tax-Free Savings Accounts (TFSA, similar to your Roth IRA)
-We have Registered Education Savings Plan for our 3 kids (RESP, similar to your 529 plan)
That’s a total of 7 accounts between my wife and me. I find it too many, and it makes it a little bit more work to monitor and maintain. Except for my company-sponsored RRSP plan, we have started to move our accounts to a self-directed brokerage and we just invest on 3 index ETFs such as Vanguard Canada All Cap ETF, iShares World Except Canada ETF, Vanguard Universal Bond Index ETF. These are one of the low-cost ETFs that are offered here.
I have 2 questions:
(1) What are your thoughts about having these same 3 ETFs across all of our accounts (except for company-sponsored RRSP, where we are offered a limited selection of mutual funds)? What do you think are the advantages and disadvantages of having the same 3 ETFs across all accounts? Is this keeping our portfolio simple or redundant?
During rebalancing, we plan to rebalance maybe 2-3 accounts at a time, but taking into account the overall allocation. This is to minimize trading costs.
(2) Our overall portfolio allocation is, I would say, balanced-to-growth (65% equity and 35% fixed income). We are much wiser with our finances and investments since we started investing 10 or so years ago. We are also more comfortable with our finances. And with the help of my wife’s company pension, I think we can stretch our investment horizon a little bit; we can afford to take a little more risks.
We are thinking of switching our allocation to Growth, say, 70% equity and 30% fixed income. How do you suggest us making the switch? Is it better for us to convert the 5% as lump-sum, or dollar cost average it for a period of a few months, or wait for the next buying opportunity before making the switch (yikes, market timing!)
Hopefully I finally learn something today. If I don’t, I’ll copy and paste my questions and ask the next podcast 😉
Thanks again. Please send my regards to mom. Regards to Len too, he’s so hilarious and I enjoy the show more when he’s around.
Jayme has recently started listening to the podcast and wants some feedback on her asset allocation after hearing some of our comments:
Hi, just found your podcast and love it! I am self employed and do my own investing.
My strategy is Vanguard low cost index funds with an asset allocation that I am comfortable with which is about 70/30 stock/bonds.
I’m currently 44. You mentioned Vanguard on the podcast and sort of sounded like you didn’t like their method. Is this correct or am I doing ok? Thanks.
Lauri wants to know what’s going on with the BUZZ ETF:
I owned shares of the BUZZ ETF and I recently saw that my shares were liquidated in my account. Other than the obvious google search that says ALPS Advisors closed the fund, what happened?
Paul writes in with his thoughts on allowance strategy’s for kids:
Hey guys, love the show. I’m actually listening right now as I type this. Beatles trivia, a little out of my realm of experience.
Anyway, the reason I’m writing is to contest something Susan Beacham said. While talking about kid’s allowances, she suggested having kids present receipts to their parents for everything they spent.
If they were given $100 and only presented $80 in receipts at the end of the month, they’d only get $80 for the next month.
This might make for a great government employee, but it encourages kids to spend their entire budget without saving any of it for future purchases.
The idea isn’t terrible, but there needs to be a feature to encourage the kid to save. Keep up the good work, and I’ll keep not learning anything.
<45:23> Doug’s Trivia
- Who is considered the greatest cyclist in American history?
<50:15> Haven Life Line
- Pete has invested about $75,00 in his 401k. Now that he doesn’t have a job with a 401k, what options does he have to invest with tax benefits? He also maxed out his Roth IRA through the backdoor conversion and would like to continue that.