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Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
Welcome to How to Retire On Time, a show that answers your retirement questions. We're here to move
Mike:past that oversimplified advice you've heard hundreds of times. Instead, we want to dive into the nitty gritty because, well, frankly, there there's no such thing as a perfect investment product or strategy. There are certain things you just need to know, so we wanna dive into that. As always, text your questions to (913) 363-1234. And remember, this is not financial advice.
Mike:This is just a show, so do research. David, what do we got today?
David:Hey, Mike. What are some safe places to put money that can still grow other than cash?
Mike:It's a great question.
David:Is this where the mattress comes in? What if I throw under a mattress? Yeah. Is that what happens if
Mike:I do that? The worst.
David:Okay. So the worst option, we got that out of the way.
Mike:If I had to guess, a reason why this question's here is because the United States dollar is depreciating. It's not going the right way. Okay. It's losing its value.
David:Losing so that means if I went on vacation somewhere, it doesn't spend as far?
Mike:Yep. Europe just got more expensive. Mexico just got more expensive. I should gone sooner. Yeah.
Mike:So there's a lot of talk about gold, silver, precious metals as a cash alternative, and there's a good argument for that. If you look at turbulent times, gold typically does really, really well. When you look at prosperous times, gold doesn't do very, very well. So it's it is somewhat cyclical, so be careful of that.
David:Is that all, like, psychological? Why does gold not do well in in prosperous times?
Mike:Where's the best place for your money? That's where the money goes.
David:Oh, okay. So depending on what's happening out there, where's the best place for it to go? Yeah. And if everybody's having a good time and all is well.
Mike:Well, yeah. And there's a big push right now. It's interesting in the push. If you're a conservative, there's some very politically charged language on why you should buy gold right now. And if you're left leaning, you're more liberal, there's some very politically charged language for you to buy gold.
Mike:Either way, people are being scared into buying gold. Now gold has done extremely well over the past couple of years. I'm not knocking it, but it's not protected. It can go up and down in value, and the intrinsic value isn't like a business. It's the perceived value of a rock that has a finite amount on this planet.
David:So do you actually have to get the gold bars in your home, or are you just who's holding on
Mike:People do, and they get conned in all sorts of things like, oh, well, this is gold, so you could melt it down and do it. But this one was stamped in a weird way, so it's worth more. Oh. Yeah. And beanie babies were worth more at some point.
Mike:Right. My opinion is if you're buying gold, I have no problem with that, but don't get caught up into the collector's version of gold. Buy gold for the value of gold. You can do it through an ETF if you want, or you can buy gold bullion and put it in your safe, or if you're like Ron Swanson from Parks and Rec, you know, bury it in obscure places around your property or whatever. But you need to understand that gold is not principal protected.
Mike:So usually cash is intended to have protection with growth potential. When I say growth potential, to hedge against inflation. Yes. That's it.
David:Yeah. So under the mattress, it's losing money because of inflation.
Mike:Yep.
David:But if you put it somewhere else, well, tell me where
Mike:I should put it. There's there's really two groups when I consider protection with growth potential, which is a lot of what people would want when it comes to cash. There's three things we all want with investment, growth, protection, and liquidity. If you want growth and protection, you have to give up liquidity for a certain period of time. Mhmm.
Mike:Now do you need access to all of your money at any given point? No. Because this year you need to live, and next year you need to live, and the year after that you need to live. So you can kind of ladder out liquidity, but still protect parts of your portfolio so that you know it's there in the future.
David:So if you had like your emergency fund, I gotta have that now. That is somewhere you can grab it. It's very liquid, but the rate's lower. Exactly. But the money that I need to live off of in five years Yeah.
David:If if I have it tagged as such, it can be earning more, but it's just not liquid.
Mike:Yeah. So Okay. Here are some options. You've got really two camps. You've got fixed, and you've got indexed.
Mike:Okay. So in the fixed camp, you can get a fixed rate from a CD. You can get a fixed rate from a treasury or a bond. Just be careful. The better the rate, the more risky it is.
Mike:So I mean, if you bought, let's say, a treasury, you're getting 4% or so. Maybe you buy a corporate bond, you're getting 5%. I'm making up numbers just to prove a point. If you buy a corporate bond at 10%, that would be called a high yield bond, aka a junk bond that's at risk of defaulting to where you don't get your money back. So be careful of how much risk you're actually taking for that.
Mike:K? But a bond is as good as the creditor that backs it. So a treasury is as good as the United States government's ability to pay. A corporate bond is as good as the entity that pays, you know, the bond, the debt. Mhmm.
Mike:Private credit is a private version of a bond. You have to meet certain accreditation requirements, but that's a possibility. So you've got that and then you got fixed annuities, which is basically a CD from an insurance company. Mhmm. Then you've got index products.
Mike:You've got buffered ETFs, which anyone can buy it on their own. You don't need a licensed financial adviser to buy buffered ETF. There's a couple of companies that are really, really good. Kalamos, First Trust, couple of them out there. I have no allegiance to any of them.
Mike:Just do your research. You've got fixed index annuities, which are more appropriate for those that are 60 plus, because you can't take the funds out unless you're older than 59 years old, or else you get penalized. Mhmm. Structured notes, as long as the principal's protected, there are some triggered notes that could blow up in your face, so be careful of that. But those are some options where you've got protection built in.
Mike:It's illiquid for a certain period of time, but you've got maybe more growth potential than a cash account. Build your plan first, then you need to go into the efficiencies, tax efficiency specifically, and so on, and then you can start to build out your portfolio. How much needs to be protected? What's right for you? What's gonna help you sleep better at night?
Mike:What's the liquidity you need in different seasons of your retirement plan? What's the growth look like? Can you outgrow inflation and have more flexibility in the future? I mean, what if in ten years we all wanna buy a very expensive robot that follows us around all day long? Yeah.
Mike:That's a reality. Twenty years ago, we didn't think we'd have personal computers in our pocket that we live off of.
David:Right.
Mike:So we don't know what's gonna happen in the future. I believe in growth and flexibility, not locking up assets for lifetime income. Though you may want some of that. I recognize some people want some guaranteed income. That's fine as long as we define things as they are, but there needs to be some sort of flexibility and growth overall.
Mike:That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for How to Retire On Time. Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist. Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility.
Mike:Is not your ordinary financial analysis. Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date, go to www.yourwealthanalysis.com today to learn more and get started.