Radical Personal Finance: Financial Independence, Early Retirement, Investing, Insurance, Financial Planning

Q&A today and I handle these four questions!

  1. Does tax-loss harvesting really offer the kind of benefit that companies like Wealthfront, Betterment, Personal Capital, et al claim? And can a person do it on their own without relying on a firm to do it for them?
  2. Thought you should know something I recently found out. California child labor laws no longer apply once you have graduated from high school.  In addition, California has a method to graduate by exam (similar to a GED, but GEDs are only available to those 18 or older).  The high school proficiency exam (which is easy) can be taken by anyone who is 16 or older or who has completed 10th grade or will have completed 10th grade by the end of the academic year in which they take the test. My son, who is 15 1/2 and in 10th grade, took the exam and passed it. Nothing prevents him from continuing on in high school, but he's no longer subject to child labor laws. He's seriously considering switching to community college in September, doing that for 2 years, and then transferring to a University of California campus to finish off his college.  That'd get him a solid college degree by the time he's 19. During that entire time, he'd be eligible to work whatever hours he wants. Another option we're considering is self-study (with my help; I used to be a Computer Science professor), taking a bunch of AP exams, and then entering UC at age 18 with at least one year (and possibly more) of credits. 
  3. Joshua, Can you weigh in on your thought about being an accredited investor and the legal limitations around it?  As I understand it, I do not qualify as an accredited investor.  And certain investments cannot be invested in by those who are not accredited.  however, apparently the rules were supposed to have changed to allow people to make investments of these kinds without the government saying that I have to make X amount or have X amounts of savings.  but, as I learned by listening to the podcast Startup (episode 7) by alex blumberg, these rules have changed with the JOBS ACT, but the FCC has been sitting on the ruling and is way overdue for implementing it so that someone like me can invest in these previously off limits investments without being told that we can't.  That episode of startup really explained a lot to me, because I had wanted to invest a large amount with alex after listening to the very first episode of startup (i assumed he would be very successful because I've loved his stuff for years and he's leveraging some seriously big friends for his new venture), but I couldn't invest in something I really thought was going to be a huge success (or at least provide me with good cashflow) because of these rules.  I'm also about curious why these rules exist.  Were they implimented to protect people from being scammed out of their  money?
  4. Joshua, As a young engineer, who is single, making a salary of over $80,000 in Texas (no state income tax): Should I max out my 401k if my goal is to become very wealthy, before age 40? Or, should I invest some in my 401k and invest the rest in REITs/other, more risky assets. Of course, along the way, I will be very frugal, and live way below my means. Thank you, love the show. 

Enjoy the show!

Joshua

Direct download: RPF0205-Friday_QandA.mp3
Category:podcast -- posted at: 5:00am MDT

One of my goals for Radical Personal Finance is to bring more transparency to the world of professional finance. Today, I'm glad to shine the light on the life insurance industry.

I've invited a friend of mine onto the show to discuss his 30-year career as a life insurance broker.

Todd Simpson CLU®, ChFC® is a veteran of the life insurance business. His specialty is high-risk underwriting, so he brings not only a long career's worth of experience but also a unique perspective to the difficult-to-place cases.

I think you'll really enjoy this conversation. We cover:

  • The incredible changes that have occurred in life insurance product design over the last 30 years.
  • The most common medical problems that cause problems with life insurance underwriting.
  • The impact of drugs and drug use on your ability to get a life insurance policy.
  • And more!

Enjoy the show,

Joshua

Direct download: RPF0204-Todd_Simpson_Interview.mp3
Category:podcast -- posted at: 5:00am MDT

Many of find ourselves in a situation where we are concerned about the financial well-being of our parents. Obviously, we'd like to help, if possible.

But, this is rarely easy. There are many, many challenges that can emerge. In essence, to truly answer these questions you'd not only have to have all of the skills of a financial planner, but also the background of a relationship counselor, a life coach, and more!

It ain't easy!

I created this show as an overview of ideas that may be able to help you get involved and to help your parents. Some of the ideas are technical financial suggestions, others are more practical and relationship-oriented.

The show is structured around:

  1. Ideas to help create a great life of good health.
  2. Ideas to help in case of the need for long-term care.
  3. Ideas to help plan your parents' estate to make the estate settlement process smoother.

I hope it's useful to you!

Joshua

Direct download: RPF0203-Caring_for_Older_Parents.mp3
Category:podcast -- posted at: 5:00am MDT

My guest today is a author named Matthew Bracken. Matthew is a sailor, writer, and former Navy Seal. He's the author of four novels (all of which I've thoroughly enjoyed.)

Most importantly for our purposes, he is an expert on the topic of achieving a lifestyle of freedom through sailing.

He wrote an excellent essay called "Get Yourself a 30-Footer and Go!" which advocates a quick entry into the sailing world as a way to build economic opportunity for yourself.

During the course of the interview, we cover three primary topics:

  1. How to go about getting started in sailing and how quickly it's possible to achieve a lifestyle of freedom.
  2. Matt's experience establishing himself as an independent, self-published novelist in the semi-dystopian genre.
  3. The potential impact of societal changes and how to prepare for them.

Enjoy the show!

Joshua

Links:

Direct download: RPF0202-Matt_Bracken_Interview.mp3
Category:podcast -- posted at: 5:00am MDT

Q&A show today and I answer these two questions for you:

  • Joshua, My parents just moved to Florida last year and got wooed by an advisor that bought them dinner, gave them a free round of golf, etc. and now they're in an annuity and I can't figure out how badly they are getting screwed (not because there's anything inherently wrong with annuities but because the advisor is sadly not a fee-only advisor so I imagine he's taking a big cut of the action). I'm trying to convince them to find a good fee-only advisor to help them get set up for retirement but I'm not sure how to go about finding a good one. Thanks for the help!
  • Joshua, I can't thank you enough for starting Radical Personal Finance; been a fan since you did the interview with Jacob Fisker :) I have learnt so much from you and others in the personal finance community - I'm unable to quantify with an exact figure yet, but I know it's going to compound to a huge amount (possibly millions?) over my lifetime. This morning I just signed up via Patreon to support your show. It's a small amount, but one important thing I've learnt on my PF journey is learning to pay for value rather than simply focusing on cost. I have a question which relates to the investment part of building wealth. How should I invest an idle USD$20,000 that's sitting around in my savings account for maximum returns? I feel I'm sufficiently exposed to the stock market at this stage and diversified enough within and outside the publicly traded securities realm. I don't want to pour money into publicly traded stocks as due to mean reversion, future returns tend to be lower when markets are at highs. Please feel free to suggest the most radical ideas you have - that's why I love the show! Some background on myself: I'm 28 years old living in Singapore. My marginal tax rate is 7% but we are forced to contribute 20% to our own tax-free housing/medical/retirement accounts. Annual take home salary (post taxes and retirement etc contributions) is about USD$50,000. Invested USD$60,000 in semi diversified stocks, ETFs and REITs. USD$20,000 in alternative non-publicly traded investments. Have 6 months emergency fund. Have a 30 year level term insurance for USD $400,000. Time horizon: >20 years. I consider myself an aggressive investor willing to take large risk on small sums of money for the potential return, if the mathematics are in my favor (eg NO lotteries, YES to EM stocks). I know it's hard to provide investment suggestions without knowing the nuances of each individual situation. Right off the bat I know I should be focusing on: increasing my salary/earning potential and starting a side business. Should I be getting more insurance coverage? Should I be maxing out retirement accounts when my marginal tax rate is only 7%? Is there anything else I'm missing? As a goal oriented person (and my goal is to reach FI fast!), I can't stand the fact that my money is idling in my savings account earning a negative real rate of return. Keep doing great work!

Enjoy the show!

Joshua

Direct download: RPF0201-Friday_QA.mp3
Category:podcast -- posted at: 5:00am MDT

From time to time, I receive questions from listeners about the equipment that I use to produce my show. I also get questions about the mistakes I've made and what I would do differently if I were to do it over again.

Today, I share the workflow that I use to create my show and some of the lessons I've learned in 200 episodes of podcasting.

This show does not contain any specific financial planning or personal finance content. It does include a discussion of my thought process in creating the show and how I selected my Unique Selling Proposition for the show.

Resources mentioned:

Enjoy the show!

Joshua

Direct download: RPF0200-Podcast_Equipment.mp3
Category:podcast -- posted at: 5:00am MDT

Today, we continue the life insurance series with the valuable background of whole life insurance. Exciting stuff!

This show is an introduction to the various product features and design ideas. We cover:

  • Ordinary life insurance
  • Limited pay life insurance
  • Cash values
  • Policy loans
  • Nonforfeiture or Surrender Options:
    • Surrender for cash value
    • Reduced amount of paid-up whole life
    • Paid-up term
  • Annuity or retirement income
  • Policy conversion
  • Participating versus nonparticipating policies
  • Policy dividend options
    • Cash
    • Applied to premium
    • Used to purchase more insurance (fully paid up)
    • Left with insurer to earn interest
    • Used to purchase more insurance (term)
    • To overpay premiums until policy is fully paid up

Enjoy the show!

Joshua

 

 

Direct download: RPF0199-Whole_Life_Insurance.mp3
Category:podcast -- posted at: 5:00am MDT

I received a question from a listner which I decided to answer for you on today's show:

  • Joshua: So, this is a "fun question" that everyone loves to fantasize about. I hope it will be fun for you to answer, but it could have a really boring answer, but I'm sure you'll surprise me somehow! 
  • What would you do if you won the lottery?
  • As a financial planner, what advice would you give to a client who had won the lottery? What would the most optimal tax strategy be? Do you take the payments or the lump sum? Would the up-front tax hit be worth it for the long term capital gains? -Micah

So, today I tackled the question! Be prepared...my answer is a bit different from many people's answers to this question.

I do share very specifically with you what I would do. I share what I would buy and what I would invest in. But, I felt it was important to go ahead and address a few of the reasons why I feel the way I do.

This show is very personal to me and it involves a lot of how I see the world. I hope you enjoy it!

The show is divided into three parts. Feel free to pick and choose if you want to, but give it a shot listening straight through:

  1. The first 47 minutes of the show are about lotteries in general and why I'm not a fan.
  2. Starting at 47:00, I share the underpinnings of my worldview and the framework for how and why I handle money.
  3. At 1:41:00 I share specifically what I would buy and what I would invest in.

Enjoy!

Joshua

Direct download: RPF0198-If_I_Won_The_Lottery.mp3
Category:podcast -- posted at: 5:00am MDT

Today, I have a tightly focused show for you with a few key points from the CFP® Board curriculum. You will need this information on the CFP® Board exam and it will be useful for you as an individual.

First, I share with you how to choose between needing a 3-month emergency fund and a 6-month emergency fund.

Next, I share with you the manageable percentages of your income which you can allocate to debt payments.

Enjoy!

Joshua

Direct download: RPF0197-Size_of_Emergency_Fund.mp3
Category:podcast -- posted at: 5:00am MDT

Today, I'm cleaning out the voicemail inbox for my Friday Q&A show. Here are the questions for today:

  • What strategies for student loan payoff did I forget last week?
  • How do we help our young kids without enabling them?
  • Thoughts on consolidating retirement accounts.
  • What are the limits on retirement accounts for a stay-at-home spouse?
  • Thoughts on various retirement income distribution strategies.
  • Do I have additional services and options to help with coaching individual people?

Enjoy!

Joshua

Direct download: RPF0196-Friday_QandA.mp3
Category:podcast -- posted at: 5:00am MDT