The 3 Money Mindsets: Which One Are You? [LIVE from Vegas]

money mindsets from dot dot dot vegas that's right we are actually in las vegas right now brian i think you had mentioned when we found out that we were going to have to be traveling this week we're trying to figure out okay well what should we do should we not have a stream should we not do a show should we do a rerun uh and you didn't i practically i twitch from missing hanging out with you guys doing these live streams so i told bo as soon as we got this this this call that we we're coming out to vegas take care of some things it's like we're doing the show on the road yep so bear with us from all the technical side but i do think there is some some great financial things specifically behavioral mindsets that you can think about when you think about vegas and the type of people that come to las vegas now and what we're not saying and don't miss here is that oh you can learn everything you know about investing from vegas because a lot of people try to make that very poor connection that investing is like gambling well i argue they they could not be more different however the psychology that goes into and certain type of gambler and a certain type of investor there's a lot of overlap there well and here's what i think because i think this is a great differential to make on the front end there is speculating and then there is investment that's right investing is something that if you get enough time meaning you have a long-term mindset that you can let your the patience the discipline to let your money actually do the work for you you have a very strong um chance that it's gonna be super successful absolutely speculators you're kind of trying to capture momentum or being at the right place that's actually a great way of saying it and that's what i anybody who comes to vegas thinking you're going to beat the system in spite of all these huge buildings they've built off of the good fortunes are whack up that's right for the people that is definitely speculative yep so let's go through a few of these what i consider kind of behavioral mindsets that i see both with gamblers but you can probably glean some benefit from comparing this to what should you do with your money mindset with how you just invest and and do things now what i think is so interesting brian is uh the very first time that i ever came to las vegas was like 2013 2012 2013. and it was with you so my very first lens i ever got to see through las vegas when we got back we said hey we should talk about some uh things that we learned or what are some things that we observed so this time when we came i was thinking about it through that lens to say okay do i know and it's amazing like when you actually think about seeing these types of people and seeing these types of things when you're looking for it you can see it pretty clearly so the first one safety player now truthfully coming to vegas a safety player is probably a very healthy thing because you shouldn't come here thinking you're going to win money but i do think when you you you have the the person who's scared because what's the saying i even had somebody yell it out of scare money doesn't make money money don't make money but that's horrible advice when it comes to gambling by the way but but it is one of those things i think that if you were trying to think of your mindset when you invest or have money there is something when you're super young you should take long term risks that's why we talk about doing index investing with you know target date retirement funds index target date retirement funds that are many years out so it captures a lot of equities a lot of things that are going to give you a lot of upside potential so so take those type of things into account and what i think is interesting is even as you age and as you change in your investing life cycle oftentimes what we perceive as being safe or perceive adding safety to our financial situation aren't necessarily the things that are really adding safety right so a lot of folks when they retire they think okay well i've made it i hit my number i left the workforce i'm just going to take all of my assets and you know put them under the mattress well you don't realize that while you think you're making a safer decision for your long-term sustainability or financial plan you've actually made the more aggressive the riskier decisions so sometimes you have to understand how risk and reward are related and what is safe and what's truly not safe yeah and i i'll kind of close out this point with i grew up in a household my parents thought investing with cds that's definitely a safety player but i always that's that's the problem you're taking actually just as much risk if you're too conservative when you're young as think about your 25 year old self talking to your 50 year old self they're going to be very disappointed if you didn't go capture what you should be doing with investing your money letting your army of dollars work for you while you have the time frame that you can absorb whatever may come your way so that's one end of the spectrum there's a safety player well obviously you know here we are in las vegas and there are these huge buildings built that means there must be some other personality type on the other end of the spec well that's that's the wild things here's the thing about the wild things is that um and by the way these are the most entertaining group that you see for sure i mean i think every group whenever you come out with a group back when you know when things are a little more normal and you're actually coming to vegas for pleasure and other things like that there's usually one person in your group that just you're like who is what's that this person is not the normal person that lives down the street right because you know you see them make all kind of wagers you see them bet way beyond what it what is comfortable that is something that the wild things is something we see that also and you kind of alluded to this when we were talking about the safety player when i'm talking about investing this is what we talk about risk tolerance versus risk capacity there is a point in your life say in your 50s your 60s you're at that stage four level of wealth where you have built up enough capital enough investments that they can cover your living expenses comfortably for the rest of your life as long as you don't screw it up right but a lot of people will take on tremendously more risk because they're trying to maximize every dollar so there's going to be a shift at some point in your success that you have to think about do i need to be as wild as i as i am as i've had more and more success and i think a lot of it similar to the way that uh vegas or when you're gambling there's this idea of i'm gonna make it big i'm gonna hit it rich a lot of people take that into their investing practice they think i've got to go buy the next hot thing i've got to get into cryptocurrency i've got to start day trading i've got to fill in the blank of the different things that you may want to do sometimes it doesn't actually reward you to go that far out on the risk spectrum we always talk about that the more risk you take the greater your rate of return but it's not a given just because you're doing something incredibly risky risky does not mean the rate of return will always follow suit well yeah well that's where that risk capacity is you're worried you get caught in those two out of 10 years that the market's down while you're actually pulling capital out to live off of that's very dangerous that's right so that leads to our third and this is this here's what i think is interesting these systems are horrible if you're a speculator great if you're a long-term investor that's a system player that's right because the system player out here in vegas terms is somebody who comes and thinks hey i'm going to beat how they built all these casinos because maybe on craps i'm going to have a different way of gambling with a system maybe i'm just doing six and eights if you're a blackjack player you're this close to being a card counter you think you've got your little your card telling you how to do things truthfully i have never seen a system that works that way but here's the good news on investing if you can create an automatic for the people systematic savings plan take advantage of force scarcity where your army of dollars is put to work automatically i'm talking about in the financial world that is going to be super successful in the long term and when i think about the system player i even think about it a little bit differently i think about the system players the person who comes in and says you know what here's my trip allotment that i'm going to gamble here's my daily allotment and this is all i'm going to spend but i'm going to go into this thinking i'm going to lose all of this so if i end up walking with any money then i've actually won and it's actually okay they understand where it's okay to have losses where it's okay to cut and not try to do more than they should do so i think even the system players who begin with the end in mind they're the ones who know the outcome before they go hey if i end up losing this 200 it's going to be okay i'm not going to think i'm turning this 200 into 2000 into 20 000. investing is the same way you may not need to go make 14 15 16 20 per year you may be able to do all the things you want to do in your financial life with a very conservative consistent stable long-term rate of return return to grow your assets because in our opinion investing is a marathon not a sprint when you're gambling if you try to turn it into a marathon it always usually works for the house's favor yeah well it's a great point to kind of close it out with with investing time is your your ally i mean because the longer you can give it for compounding growth the better for you to let the army of dollars just continue to build there's a reason when we talk about 88 times over for the 20 year olds it's still incredible for 30 year olds it's still incredible for 40 year olds take advantage of those things that's what whereas when you come to some place like las vegas time is actually your innovation because that's why why do you think they give you so many comps so many perks is because they're trying to keep you engaged the more time they know they have access to you the more time they probably make money so flip it on its head make sure you understand the difference between investing versus speculating we're big proponents of investing we're more of just in small minute you know quantities should you do any type of speculating but focus on what your priorities are and make sure you always respect the behavioral components that are going to create success in your financial life so one of the reasons you guys like to hang out with us on tuesdays and one of the reasons we said the show must go on is we absolutely love being able to answer your questions we want to make sure that we're allowing you to continue to learn and apply these concepts so that you can grow so one of the things we're going to do is we're just going to get some questions rolling for you so if you have questions give them a live chat we've got the team piping them through to us right now uh so we'll start out with this one and this one is from phineas thinus phineas thinness this is from i love your cartoon on disney that's it that's not phineas this is what he says he says hey i'm maxing out my roth tsp and roth ira and have another 2 500 per month to save first of all that's great you're already interested you still have some financial mutant for sure he said i'm putting in a taxable brokerage account now is there a better place to put it i'm not eligible for an hsa so i feel like i get this question all the time someone will say i've maxed out my roth and maybe i've maxed out my 401k and i'm either maxed out hsa or i don't have an hsa and but i have some extra left over and i want to do something with it but all that's left is this like plain old boring after-tax brokerage account is there something else i should be doing first of all i don't think when you get to the level of hyper accumulation that you've already remember the bucket system we've got your tax free with your roth assets you got your tax deferred which are you know kind of your that's your traditional savings in a 401k 403b 457 it's also your employer match and all those type of plans and then the last bucket is that after tax brokerage account and yes it may seem boring on paper but i actually think it's it's sexy i think so because here's the cool thing about that after tax account once you get to the hyper accumulation stage of your financial order of operations is that that money's liquid meaning that if you have any opportunity that comes your way and you need to have access pre 55 pre 59.5 now this person said they had a 457 right that's right so they don't even have an early withdrawal penalty but they still might have some restrictions to getting access the after-tax brokerage account is going to be very easy to get access to that's one key benefit realize there's also some good favorable tax rates right especially if you're in a lower income tax situation we actually have a zero capital gains rate for up to like 40 000 for individuals 80 000 for married filing jointly that's a great benefit so and then even after you go past the taxable the zero it goes to 15 so still a much favored tax rate dividends or a lower tax rate those are good things to have access to and it doesn't have to it's not like i think this is something everybody always needs to realize in the beginning now look we talk about tax location as you get to a graduation point but in the beginning just focus on getting the money in there and you can buy the exact same investments you're buying in your roth in your pre-tax tax deferred accounts as well as your after-tax we're talking about index target retirement funds some of the biggest players is fidelity vanguard go check those things out another thing that we really love about after tax or regular brokerage accounts is it does afford you not only just the liquidity to be able to get access to those dollars sooner than 55 or 59 and a half it also allows you to do some advanced planning so as your portfolio grows you can do things like loss harvesting if we go through i don't know something like a global pandemic where maybe the market really decides to freak out there are opportunities where you can actually actually go harvest those losses and perhaps if that pandemic year turns out to be a pretty good investing year all those harvested losses you get to use against any gains that you incur and you can even carry it forward not only that if you are a long-term investor and you are buying some of those low cost indices and over time you have a lot of embedded games where it's just keeps going up and up and up in value you can do things like charitable giving where you can gift appreciated securities you can't do that sort of thing from an ira or from a 401k so it provides a lot of opportunity even from a financial planning standpoint even from a tax efficiency standpoint so we love those after-tax brokerage accounts one final point on this you nailed it on the current side i also got excited thinking about as a financial planner does or a financial mutant would when you get to actual financial independence and retirement that after tax account is also going to give you the ability to legally manipulate the tax code system because you know how we're able to do roth conversion strategies for our retired individuals who retire in their 50s before age 72 is because they have usually a big enough after-tax brokerage type account that they can live off of that to keep our tax rates low so that we can do some of these legal strategies that let us turn some of those tax deferred assets into completely tax-free assets it's just a really valuable thing yep love it so uh thinus thinnest that was a fantastic question all right here's our next one this is from david uh oh man this one this one's an interest uh yeah this was gonna be a fun one okay so this is what david said he said do you think it's good idea do you think it's a good idea to convert some portion of your tax deferred savings before the expiration of the trump tax cuts in 2026. so i'm going to reframe this question a little bit because this is what i think he's asking when it comes to making financial planning decisions right and when it comes to like tax policy specifically right should we begin to plan or make changes on things that we think might happen in the future or is there perhaps a better way to think about working through making those decisions i think you have to be careful i mean look i do want you to keep up on things this is why you guys have often probably wondered why haven't we done a tax policy analysis on president-elect biden's tax plan because i know a lot it's very hot in the content sure marketplace right now i'm a little nervous to do that type of stuff when i know in politics especially there's a lot of back and forth and what is usually proposed in the beginning isn't what the final product is because we've gotten this call from clients emails from clients where they're worried about like the estate exemption sure where you know currently it's over 11 million dollars a person there's some discussion in the in the the president-elect's plan that it would go down to around 3 million but the thing is is that you first have to have that level of assets to even be impacted and then i just hate to absorb that much of a hit and make adjustments when you too early yeah when it's it's too fluid there's too many changes that go occur i think you can drive yourself crazy think about i mean because this pandemic has actually created a very accelerated you know kind of a seat to see the process and think about the cares act and everything else it has evolved so it moved so fast that if you got too ahead of yourself you were giving out bad information the shifting sands of tax policy are always shifting and so one of the things that we try to be very careful of is when we do make decisions or when we do develop strategy we try to base it on things that we know are present today for example we know right now we have favorable long-term capital gains rates we know that we have a zero percent capital gains bracket so if there are strategies we can implement today to take advantage of policy we know is in place today we're going to do that so perhaps roth conversions is a great one but the thing you have to ask yourself is all right where do i think that tax policy may be in the future that's really less about policy and it's more about your unique income situation if you do think that you'll be in a higher tax bracket later in life or perhaps you feel like you are in a very low tax bracket now maybe you are that retired person who does have a lot of after-tax assets and you can control your marginal tax bracket perhaps roth conversions does make sense but i would base it more off of your personal situation than what you think could potentially happen with policy well i think it's here's what i i think is interesting presidents come and go political changes meaning which parties in control comes and goes but you are only going to be in your 20s one decade you're only going to be in your 30s 40s and 50s that's why we do the by age series we do is because instead of focusing on look it's important i'm not saying don't underestimate the value of doing good planning take into account current tax laws but don't focus on some of that minutia when realistically what you ought to be thinking is in my 20s i've got the most years before to let my compounding army of dollar bills grow so i should probably focus on roth because that's valuable get in there get that tax-free growth as soon as possible same thing if you're in your 50s if you're in your 60s and now you're on the starting to consume your assets instead of being a saver your mindset's going to be completely different on the strategies and that's what look if you get to a level of sophistication this is when taking it to the next level we help clients navigate this all the time because it's not easy to read the tea leaves to know especially with something as unscientific as political winds because that's kind of what we're facing and you guys know we don't cover religion we don't cover politics on the show but every now and then politics will weave its way right into our lane and we will cover that as soon as we feel like it is heavy enough or deep enough and it's firm enough we will bring you our thoughts so you always get the money god take love it love it all right our next question is uh oh it's from that dude it's his name uh here you go that dude welcome dude uh he says when you say save 20 do you include the x percent your company is putting into your 401k so if the company puts in 5 and i put in 15 is that good first of all yeah that's great saving money is always great but i think what he's asking is is my savings rate 15 or do i get to count that 5 match and call my savings rate 20 yeah we've covered this before but i always think it's worth because we're picking up new family members all the time so i like kind of reviewing this remember a lot of people are scared to give you advice on stuff and they make it they give one size fits all i don't i try to nuance it because i know every one of you are a little different i want to give you enough value here's what we've said on this i do want you to include your employer contributions as long as your income is not getting so far from the social safety net of social security and all the other benefits you get so here's the rule if you're an individual and your income is under a hundred thousand dollars gross include your employer if you're a married couple if your household income is less than two hundred thousand dollars include the employer contribution once you go over those numbers it's great that you're getting those dollars but don't count them because i want you to be as conservative as possible with your own savings goals because you are getting further and further away from the the living expenses in retirement being covered by social security and and other things so you need to make sure you carry that weight by building a strong army of dollars in the background so it's going to fall on your shoulders so you better be saving enough to make sure you get the job done now you're obviously doing great you're saving 15 your employer is putting in five percent we do have a lot of listeners a lot of folks out there right i said guys i hear you say that i should be saving 20 to 25 percent but it's just hard and we get that it is hard don't let that recommendation be something that discourages you from doing something because when you're just starting out or maybe you've had unique life things happen if all you can save is three percent that's great figure out how you can bump it to four percent next year if all you can save is five percent that's great figure out how you can get it to seven percent if you want some motivation go to our website go to moneyguy.com resources and we have an illustration there called how powerful are your dollars and what we want you to see is that when you are young or when you have a long time horizon maybe you're not someone who wants to retire in your 60s maybe you want to retire in your 70s if you have a long time horizon the amount of time you can give your dollars to grow is going to affect just how powerful it can be that's why every one dollar that a 20 year old invests can turn into 88 by the time they get to retirement let that be your guiding light and say you know what guys i can't do 25 this year but i can do something and next year i can do a little bit more and the next year i can do a little bit more and if you can approach it with that mindset you're going to set yourself up for crazy long-term financial success no doubt all right last question this one is from david and he said hey guys i've heard that it always makes sense to wait until 70 to begin drawing social security is that true so the first thing is there's a reason why people say you should wait till 70. right well here's what social security here's the thing that frustrates me about this and i'm going to share my own personal i lost my father when he was 55 i was in my 20s and um it broke my heart when i knew he had social security had been taken on him his entire life and then basically my mom got the survivor benefit which i believe 255 dollars i mean it's just and they made about the same amount of income so what does that really impact effect so i think that that knowledge that you got to use it or lose it because if you die prematurely it's just basically a win for the system not for your family so a lot of people feel pressure because of that that they ought to take it at 62. yeah as early as possible guys i got to be honest unless you have very unique circumstances 62 is a pretty it's a very discounted rate of your safety net because not only is social security especially for somebody who's a financial mutant you've been building assets in the background social security is actually a longevity insurance protection program because the longer you defer taking it the more it's building in the background and you live to be in your 80s 90s that's still going to be coming means no matter what happens to your assets you're not going to zero on income because you have the maximum amount of social security so there's a balance there so we always when we do retirement plans this is one of the biggest questions absolutely and we're always trying to figure out when we're walking that tightrope of hey if we defer too much on social security and we're burning through our assets that we've been building what's the opportunity cost on all those dollars we're pulling but then we also on the other side of it is that we don't want to take social security too early and decrease and decrease that longevity protection as well as kind of juicing what the you know the taking the pressure off of the income in retirement so here's what we found a lot of times by the way i feel like i got to give this disclaimer this is not generalized advice this is general for everybody because everybody's a little different this is why we run plans off of this so be careful that's a disclaimer but here's what i do know for a lot of you if you have good income you have good savings full retirement age is going to be your friend in a lot of aspects now once you hit full retirement age for some of you it's 66 some of you is 67 once you hit full retirement age from that age date and tool 70 every year you defer the government gives you a guaranteed 8 increase in your benefit which is one of the best uh in adjusted guarantees i can think of them most things won't pay you eight percent per year annualized to weight so it's a pretty sweet benefit if you can wait from fr from full retirement age until age 70. but i i think you have to it's very nuanced i'm just going to leave it at that because it really depends upon what you have in assets what your goals are what your health record for your family is all these things as well as the earning records for you as well as your spouse as you can see there's a lot of variables going on here so this is something you definitely should measure twice cut once don't try to do this on your on your own if you feel overwhelmed especially if you have a decent level of assets as well as if you're working past full retirement age there's a lot of things that need to be taken into account um that's probably when you want to consider taking the relationship to the next level too yeah that's i was going to say financial planning we all know it's like part art part science i would say that social security strategies fall into the art size because it is not one size fits all no matter how many blogs you read and how many articles you go find that say there's always one answer that answers to wait till 70. we've seen it in practice that that's not always the case a lot of times it is but it needs to be individualized to your unique circumstance and your unique situation and i think you're right brian that's one of those things as you are beginning to make some of those decisions they're going to have a long impact perhaps you should think about reaching out and getting professional advice and wanting to help counsel you through that guys thank you for joining us from las vegas i mean this was this was kind of i think we freaked the content team out i really freaked him out because i had crazy ideas he wanted to do uh pyrotechnics and he wanted to have uh spinning slides he was gonna make it really exciting i don't know if i freaked the content team out more by the technical ask or the fact that i said why don't we have two camera angles we'll have the studio with ribby and fte daniel and then us here and like whoa well you know let's just make sure we can do a mobile live stream so that as we continue to grow the show as we continue if you know if we ever had meetups in the future it doesn't stop us from being able to continue to bring you content because that's our goal we love doing this like i said i kind of start getting twitchy or antsy that if i'm not doing content with you guys because i really do look at you as the money guy family thank you thank you for making all of this possible we love coming to you every week creating content so that you can continue to grow prosper and reach that level of independence or financial freedom that you need to consider the abundance cycle that's where we can you've heard several times on today's live stream that there will come a point that you've learned applaud and grow to a level of success that you probably want to co-pilot and we'd love for you to think of a bound wealth because we work with clients all across the country and we just thank you for being a part of the money got family i'm your host brian preston mr bo hansen coming live from viva las vegas show them the pyramid there you go guys thank you thank you thank you we'll talk to you soon and we'll be in normal studio terms next time we see you

Channel: The Money Guy Show

Views: 11,361

Keywords: money guy show, debt, budget, cash, real estate, insurance, how to make money, save, credit card, compound interest, buying house, buy stock, success, personal finance

Id: 7gddYf-Y8G0

Length: 28min 29sec (1709 seconds)

Published: Tue Dec 08 2020