It would have been interesting if they had mentioned the data going back to the 1930s or 1950s shows that average GDP growth and stock market returns historically have been better under Democratic Party Presidents vs Republican Party Presidents in the United States. That said, the past is no guaranteed indication for the future, and there is more to vote on than the economy. But I think this phenomenon is surprising, even to a lot of Democrats, because the Republican Party probably has a better reputation for being good for the economy and caring more about the economy than Democrats, even though the data would suggest that Democrats over the last 70-90 years have been better for the economy in those two key metrics.
I think an underrated part of The Money Guy show is the humor…. Not only are we getting great financial content/advice, but I usually find myself laughing at some point every episode!
I like @The Money Guy Show because (1) Brian feels like my dad and has had some similar experiences to him, (2) Bo is like an older cousin, (3) Rebie (sorry about spelling) is basically my age and feels like a stand-in for me or a sister or friend, (4) the advice makes sense to me as someone who has a math background, (5) it is not about getting rich quickly (because that is too good to be true) and is instead about slow amd steady winning the race, and (6) the advice is actionable and has had good results in my life already. Send me a viewer survey. I am ready!
Yeah can't go wrong with that.. Basically the only time it isn't worth it (right now) is that unless you make more than the income limit, you should pretty much always invest in it.
@@rayzerot You are limited to 7,000-10,000$ for a Roth IRA (I'd treat the Roth 401K differently).. You really can't go wrong with just maxing out the Roth IRA each year and then at the same time invest employer match / anything additional into a 401k. Yes you want a 401k in retirement, but you also have to realize that social security will eat up a portion of the lower tax brackets especially if you have 401k withdrawals you need to make to stay tax efficient. If you invest too much into a 401k you can start hitting different income penalties in retirement. Since the contribution limit for 401k's are much higher, and there are catch up periods, you are able to retroactively invest more later in life to help balance your 401k to roth assets in retirement.. You can't retroactively increase your roth assets to balance them to your 401k in retirement.. Once you have too much in a 401k it will continue to compound and then you may be forced to use a lot of those funds in the same tax marginal tax rate (or higher) than when you invested the money in the first place, which makes it worse than the Roth.
Would this be a fair description for a 3rd grader? The reason for investing in a Roth is that paying taxes on a small amount (current income) is cheaper than paying taxes on a larger amount (retirement income), assuming tax rates don't change and you actually withdraw more annually in retirement than you were making while investing.
Please forgive me in advance for my small soapbox dialogue It leaves out that you're paying your marginal (highest) tax rate up front vs your lower effective tax rate in retirement. It's not a 24% tax rate now vs a 24% tax rate later because our tax system is progressive. It's closer to 24% upfront vs 15% in retirement An example of effective tax rate in action: What account is truly tax free? Your traditional IRA or 401k. It's tax free going in, tax free growth, and tax free withdrawals up to your standard deduction. That's $27,700/year for couples right now. That's huge Then you pay only 10%, then only 12%, then 22% on the withdrawals before you get to your marginal rate of 24%. The Roth you paid 24% for all of it. With Roth you're losing return both as taxes paid and in the opportunity cost of a lower initial investment amount. You lose sooooo much compounding due to having 24% less to invest!! Not to mention that the taxes you pay now will cost more than the same amount later- inflation Roth and traditional accounts each have their own important uses. Don't go into retirement without both!
@@rayzerot @rayzerot thank you for that soapbox diatribe! Ha. I very often get lost in the numbers and went a little cross eyed with your comment, but you did a good job carrying me through. Does that mean you could pull the standard deduction amount from a traditional 401k and then $50k from a Roth and it would all be tax free on the back end?
Thanks for the great content. I've been tuning into you guys for many years now. This Roth vs. Traditional question made me think - specifically for your guys' target audience (mutants:) for most of them (me included) income in retirement will probably not be less than during working years. And once you factor in kids as exemptions, it's likely that eff tax rate in retirement will be the same or higher. Thoughts?
As somebody currently stationed overseas, I can tell you the majority of the world'seconomy is in flux right now, whether they are under conservative leadership or liberal leadership. As a mutant though I've never been wealthier, my market portfolio is way up, I have profit margin on my real estate ventures, cash is making me a decent return so I really can't complain about the current situation.
Honestly I'm low paid FL Hospitality worker and Rent has doubled but so has everyone's income. As long as you didn't buy a new car or take a vacation on credit everyone has actually been doing better the last few years. But feels like Trump may win so elections may not be a concern in the future. Project 2025
@@juanvaldez7279 agreed, people seem to no longer pass the rational person test. I can't think of too many people who would actually benefit from another T presidency. But I know many who believe they would. Small business owners voting for the party who has let big business run rampant to squeeze out the little guy, people who have less than $15 million believing "rich" that the R party is trying to help. Christian's voting for the party that doesn't believe in feeding the hungry and clothing the poor. Sorry, if you don't have at least high eight figures you're not "rich rich" you're just very well off.
Been taking in a bunch of financial content….youd think I’d have more of an understanding than when I started but I found I just have more questions but I’m farther ahead than when I started
I did buy 3 copies. My kid aged 20, my ex co-workers age 23 and age 40. Ex co-workers, because I retired at 56. And we're personal finance people but our company didnt do this sort of education.
If you look at the history of the stock market, some trends are fairly evident. The current political party, world wars, great technological change all do precisely nothing to the great trend of 10% annual growth going on since 1929. The only thing with a strong effect is demographic bubbles. If there is a big baby boom (boomers, millennials, etc.) they are a drag on the market for the period when they are young adults and later when they retire. These are time when we are spending heavily on them and getting little return.
Taking distributions from Roth vs. Traditional, currently at least, can mean you pay less in taxes on Social Security benefits and for Medicare premiums (IRMAA). Also, since there aren't RMDs for Roths, you have more control since you don't have to take out a certain amount (and pay taxes on it) if you don't need it.
Only 10% of the US households generate over $206,000/yr which is the threshold needed to be affected by IRMAA. Considering the brackets adjust with inflation, the large majority of people who worry about IRMAA will never be impacted by it
Why would I want to plan on my taxable income being less than my current income once I get to retirement. My goal is that my assets are paying me More in retirement than my current income
When you retire, you might not need to save for kids' colleges, contribute to retirement funds, pay off a mortgage, etc. When you back out all those things, your taxable income could be less than your current income... even with extra padding for fun spending.
Keep politics out of your money 💯 I lean conservative and all the conservative people I follow are always pushing gold or bitcoin, neither of which is a good investment.
I lean left. But I agree that a long term big picture plan is more important to stick-to than trying to get rich quick, aggressively insure against a crash or anticipate a big crash or bubble by trying to time the market.
I lean liberal and know that it doesn’t matter who wins the presidency. If one doesn’t have the self control to save/invest, no president/office is going to save you.
Doesn't the highest deductible usually decrease with age? A new driver will have a high deductible, a young person's health insurance is likely to be a high deductible plan for that HSA... I mean life insurance rates will increase with age, but that's not a deductible.... Or am I missing something?
There is nothing “unique” about a year being a presidential election year. “Unique” means literally one of a kind. What Bo probably meant was “rare” rather than “unique”. It’s a common mistake, but a mistake nonetheless.
I’ve been investing in my Roth 401K for 10 years now! Age 22-32. What a great 10 years it’s been! My avg yearly return Is a little over 11% so far from 70% index target retirement fund and 30% S&P 500 index.
I have a pension from a large state and I have no fear that it won't be there. If it isn't there the whole market is in trouble. It allows me to be very aggressive.
Unemployement is now record low, stock market is up. Election proofing could mean saving a buffer now and in the case of Trump victory selling all shares and hunkering down for four years.
Trump's economy was objectively better than Bidens. Low inflation, negative inflation in a couple of quarters and sky high consumer confidence. The data on inflation is cherry picked to not include the cost of fuel, housing, food and insurance. High inflation means high asset prices. It's all a mirage.
The current economy is a mirage. Highest inflation since he 70s. The economic Data does not include housing, groceries, gas and insurance.. the books are cooked. Trump's economy was better, sky high consumer confidence, low and even negative inflation in some quarters and affordable houses.
The current economy is a mirage. Highest inflation since the 70s. The inflation data does not include the cost of housing, food, fuel and insurance. The economy from 5 years ago was objectively better. Low inflation and even negative inflation in some quarters, sky high consumer confidence and affordable houses.
I think one thing we all can all agree on, no president will make you achieve your goals, you are going to have to it yourself
I dunno. The self-proclaimed "Chosen One" tells me otherwise
Seems like Trump may win so this is probably the last time we will need to worry about elections. Project 2025
We all know that George W doesn’t know how to play chess!😂
It would have been interesting if they had mentioned the data going back to the 1930s or 1950s shows that average GDP growth and stock market returns historically have been better under Democratic Party Presidents vs Republican Party Presidents in the United States.
That said, the past is no guaranteed indication for the future, and there is more to vote on than the economy.
But I think this phenomenon is surprising, even to a lot of Democrats, because the Republican Party probably has a better reputation for being good for the economy and caring more about the economy than Democrats, even though the data would suggest that Democrats over the last 70-90 years have been better for the economy in those two key metrics.
I think an underrated part of The Money Guy show is the humor…. Not only are we getting great financial content/advice, but I usually find myself laughing at some point every episode!
And it's usually me laughing at how uncomfortable Bo gets when Brian goes off script 😂😂.
@@AK_AF_LBwhich is often. 😂
I like @The Money Guy Show because (1) Brian feels like my dad and has had some similar experiences to him, (2) Bo is like an older cousin, (3) Rebie (sorry about spelling) is basically my age and feels like a stand-in for me or a sister or friend, (4) the advice makes sense to me as someone who has a math background, (5) it is not about getting rich quickly (because that is too good to be true) and is instead about slow amd steady winning the race, and (6) the advice is actionable and has had good results in my life already.
Send me a viewer survey. I am ready!
I will make roth simple... do it till you make too much that you can't.... using my biggest crayon for this!
at what point do you make too much that you can't contribute? Backdoor roth is a thing.
Now if you have another IRA, that becomes potentially an issue
You can do back door Roth IRA if you make too much. Also Roth 401ks have no income cap
Yeah can't go wrong with that..
Basically the only time it isn't worth it (right now) is that unless you make more than the income limit, you should pretty much always invest in it.
Sigh. Do the math instead of listening to your feelings guys. Marginal tax rates are a lot more that Effective tax rates. Just give it a try?
@@rayzerot You are limited to 7,000-10,000$ for a Roth IRA (I'd treat the Roth 401K differently).. You really can't go wrong with just maxing out the Roth IRA each year and then at the same time invest employer match / anything additional into a 401k.
Yes you want a 401k in retirement, but you also have to realize that social security will eat up a portion of the lower tax brackets especially if you have 401k withdrawals you need to make to stay tax efficient. If you invest too much into a 401k you can start hitting different income penalties in retirement.
Since the contribution limit for 401k's are much higher, and there are catch up periods, you are able to retroactively invest more later in life to help balance your 401k to roth assets in retirement.. You can't retroactively increase your roth assets to balance them to your 401k in retirement.. Once you have too much in a 401k it will continue to compound and then you may be forced to use a lot of those funds in the same tax marginal tax rate (or higher) than when you invested the money in the first place, which makes it worse than the Roth.
Would this be a fair description for a 3rd grader?
The reason for investing in a Roth is that paying taxes on a small amount (current income) is cheaper than paying taxes on a larger amount (retirement income), assuming tax rates don't change and you actually withdraw more annually in retirement than you were making while investing.
Please forgive me in advance for my small soapbox dialogue
It leaves out that you're paying your marginal (highest) tax rate up front vs your lower effective tax rate in retirement. It's not a 24% tax rate now vs a 24% tax rate later because our tax system is progressive. It's closer to 24% upfront vs 15% in retirement
An example of effective tax rate in action: What account is truly tax free? Your traditional IRA or 401k. It's tax free going in, tax free growth, and tax free withdrawals up to your standard deduction. That's $27,700/year for couples right now. That's huge
Then you pay only 10%, then only 12%, then 22% on the withdrawals before you get to your marginal rate of 24%. The Roth you paid 24% for all of it. With Roth you're losing return both as taxes paid and in the opportunity cost of a lower initial investment amount. You lose sooooo much compounding due to having 24% less to invest!! Not to mention that the taxes you pay now will cost more than the same amount later- inflation
Roth and traditional accounts each have their own important uses. Don't go into retirement without both!
This is great thought and insight. Thank you
@@rayzerot @rayzerot thank you for that soapbox diatribe! Ha. I very often get lost in the numbers and went a little cross eyed with your comment, but you did a good job carrying me through.
Does that mean you could pull the standard deduction amount from a traditional 401k and then $50k from a Roth and it would all be tax free on the back end?
Thanks for the great content. I've been tuning into you guys for many years now.
This Roth vs. Traditional question made me think - specifically for your guys' target audience (mutants:) for most of them (me included) income in retirement will probably not be less than during working years. And once you factor in kids as exemptions, it's likely that eff tax rate in retirement will be the same or higher. Thoughts?
man I wish I was old enough to understand investing back in 2008
As somebody currently stationed overseas, I can tell you the majority of the world'seconomy is in flux right now, whether they are under conservative leadership or liberal leadership. As a mutant though I've never been wealthier, my market portfolio is way up, I have profit margin on my real estate ventures, cash is making me a decent return so I really can't complain about the current situation.
Been overseas, it broadens your understanding of your own country..
Honestly I'm low paid FL Hospitality worker and Rent has doubled but so has everyone's income. As long as you didn't buy a new car or take a vacation on credit everyone has actually been doing better the last few years. But feels like Trump may win so elections may not be a concern in the future. Project 2025
@@juanvaldez7279 agreed, people seem to no longer pass the rational person test. I can't think of too many people who would actually benefit from another T presidency. But I know many who believe they would. Small business owners voting for the party who has let big business run rampant to squeeze out the little guy, people who have less than $15 million believing "rich" that the R party is trying to help. Christian's voting for the party that doesn't believe in feeding the hungry and clothing the poor. Sorry, if you don't have at least high eight figures you're not "rich rich" you're just very well off.
Is the bourbon Blanton’s?
Been taking in a bunch of financial content….youd think I’d have more of an understanding than when I started but I found I just have more questions but I’m farther ahead than when I started
Brian's playlist should be in every show description.
"I'll try to make a candy analogy" 🤣 Love it... and my 3rd grader would too!
I did buy 3 copies. My kid aged 20, my ex co-workers age 23 and age 40. Ex co-workers, because I retired at 56. And we're personal finance people but our company didnt do this sort of education.
sounds like you all should do a qualtrics survey to viewers
If you look at the history of the stock market, some trends are fairly evident. The current political party, world wars, great technological change all do precisely nothing to the great trend of 10% annual growth going on since 1929. The only thing with a strong effect is demographic bubbles. If there is a big baby boom (boomers, millennials, etc.) they are a drag on the market for the period when they are young adults and later when they retire. These are time when we are spending heavily on them and getting little return.
Taking distributions from Roth vs. Traditional, currently at least, can mean you pay less in taxes on Social Security benefits and for Medicare premiums (IRMAA). Also, since there aren't RMDs for Roths, you have more control since you don't have to take out a certain amount (and pay taxes on it) if you don't need it.
Only 10% of the US households generate over $206,000/yr which is the threshold needed to be affected by IRMAA. Considering the brackets adjust with inflation, the large majority of people who worry about IRMAA will never be impacted by it
15:22 wait what? You just told people paying 30% now (Roth) in taxes is better than paying 12% later in retirement (IRA)
(Brian’s troll here)
For real for real
Feels like he misspoke.
@@zackcinq-mars2129 Brian tried to roll it back with the idea of tax increases… it’s way more nuanced than presented.
Why would I want to plan on my taxable income being less than my current income once I get to retirement. My goal is that my assets are paying me More in retirement than my current income
When you retire, you might not need to save for kids' colleges, contribute to retirement funds, pay off a mortgage, etc. When you back out all those things, your taxable income could be less than your current income... even with extra padding for fun spending.
@@coffeeplease1103 yes but why would I not want my income to be as high as possible?
if you switch from save to spend you no longer need to fund it, so you will definetely need less money
ABB
I am soooo excited for this episode!
Great stuff! Would love for you all to upload these on the podcast feed also!
Keep politics out of your money 💯 I lean conservative and all the conservative people I follow are always pushing gold or bitcoin, neither of which is a good investment.
I totally agree go for the long hall not fad investing
I lean left. But I agree that a long term big picture plan is more important to stick-to than trying to get rich quick, aggressively insure against a crash or anticipate a big crash or bubble by trying to time the market.
I lean liberal and know that it doesn’t matter who wins the presidency. If one doesn’t have the self control to save/invest, no president/office is going to save you.
Doesn't the highest deductible usually decrease with age? A new driver will have a high deductible, a young person's health insurance is likely to be a high deductible plan for that HSA... I mean life insurance rates will increase with age, but that's not a deductible....
Or am I missing something?
Rangers average 40k
There is nothing “unique” about a year being a presidential election year. “Unique” means literally one of a kind. What Bo probably meant was “rare” rather than “unique”. It’s a common mistake, but a mistake nonetheless.
I’ve been investing in my Roth 401K for 10 years now! Age 22-32. What a great 10 years it’s been! My avg yearly return Is a little over 11% so far from 70% index target retirement fund and 30% S&P 500 index.
I have a pension from a large state and I have no fear that it won't be there. If it isn't there the whole market is in trouble. It allows me to be very aggressive.
The one thing to look out on election year is immediate policy changes! This has immediate impact on some stocks.
The response to Sam’s question had me in tears of joy.
I gotta know what Brian's burbon of choice is!
What is considered high interest debt? Above 5%
❤❤❤
TIMESTAMPS. PLEASE, GUYs.
Brian desperately wants to be a radio show host🤣
11:20
I just foreclosed on my house to make Joe Biden look bad this November.
Invest in banks then
A bit like people have answered me why Biden would have been bad, despite the good statistics: "Well, I have more credit card debt than ever"...
@@mrjuvy49 I just defaulted on my bank account to make Biden look bad.
He doesn't care if you don't want to have success. We all make choice in this country , no welfare for me.
1st
Unemployement is now record low, stock market is up. Election proofing could mean saving a buffer now and in the case of Trump victory selling all shares and hunkering down for four years.
Trump's economy was objectively better than Bidens. Low inflation, negative inflation in a couple of quarters and sky high consumer confidence. The data on inflation is cherry picked to not include the cost of fuel, housing, food and insurance.
High inflation means high asset prices. It's all a mirage.
🤡
Stay invested in America.
The current economy is a mirage. Highest inflation since he 70s. The economic Data does not include housing, groceries, gas and insurance.. the books are cooked.
Trump's economy was better, sky high consumer confidence, low and even negative inflation in some quarters and affordable houses.
The current economy is a mirage. Highest inflation since the 70s. The inflation data does not include the cost of housing, food, fuel and insurance.
The economy from 5 years ago was objectively better. Low inflation and even negative inflation in some quarters, sky high consumer confidence and affordable houses.