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Speaker 1: Josh Pick is a registered investment advisor representative with Simplicity Wealth Advisors Columbus. Investment advisory and financial planning services are offered through Simplicity Wealth LLC, an SEC-registered investment advisor. Exposure to ideas and financial vehicles discussed should not be considered investment advisor recommendation to buy or sell financial vehicle. This information should not be considered tax or legal advice. Individuals should consult with professionals to see if any ideas expressed would fit their specific situation. Past performance is not a guarantee of future results. Securities can fluctuate and when redeemed may be more or less than when originally invested.
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Speaker 2: Thanks for your time. I'm Bruce Hooley.
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Speaker 3: This is the Simplicity Wealth Retirement Blueprint Radio Show. I'm here with Josh Pick of Simplicity Wealth and also his colleague, Logan Harris. They're located in Lewis Center. Their firm just off Route 750. And for your purposes, retirement information, very important. It should be very important to you. Everybody kind of has a vision of retirement, but everybody's vision of retirement might be a little bit different. You don't necessarily even have to quit working in retirement. Maybe you work in a different position. Maybe you go into some kind of service work. Maybe you travel. Maybe it is golf every day and all that. But as I say, everybody's vision is different. What they can help you with at Simplicity is providing you the investment vehicles that will supply you an income stream so that you can recognize that vision as it applies to how you see retirement on the horizon for you. 614-917-1040 is their office number. 614-917-1040. You are not obligated to anything. If you go in and speak with them, they offer you that free no-obligation consultation.
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Speaker 2: 614-917-1040.
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Speaker 3: You can also reach out to them on the web. Their web address is simplicitywealth.com backslash Columbus. And I think when people think about retirement, they're thinking about.
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Speaker 3: Do I know enough myself to handle this? Do I need a fiduciary investment advisor, which means somebody who's legally obligated to do what is best for them? And maybe they're watching the financial headlines, and maybe they are making conclusions off the headlines that they see on a finance page at USA Today or Yahoo or anywhere else. And one of the things that they might see is, for instance, a company buying its own stock back. And you might think, oh, the company's buying its stock back because It's struggling, and other people aren't investing in the company. So is that a warning sign that people should be aware of and talk about if they're invested in a certain stock or in a certain, maybe a market of stocks? If those companies are buying their stock back, is that something that would concern you?
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Speaker 4: I think in general, if a company buys back its stock, it's seen as a favorable thing. Because in general, if you think about companies... you'll have a company that makes a bunch of money. So insert company name here, right? Nvidia, whoever it might be. And they're making a ton of money. They have a couple of choices on what they're going to do with that revenue. They can issue a dividend back to you because there's two ways. Remember that you can make money off of a stock and that's whether the stock appreciates in value, meaning it goes from $ 10 a share to $ 20 a share, and then you sell it or that company issues you a dividend. And typically the Growth companies do not pay dividends and value companies or dividend paying companies do. So if you want to think of kind of names in that category, you would look at, think Home Depot, Coca-Cola, Procter & Gamble. These are typically dividend paying companies. And the reason they do that is because they're making so much money that they're making more money than they have new ideas. And they have more money than they need for research and development projects. So they send that money back to you and I in the form of a dividend. And that's good because we can generate income off of that. Growth companies, on the other hand, think Elon Musk's companies, that gentleman never runs out of ideas. He's going to take all the money they make and reinvest it back into new opportunities, thinking that these new ideas will generate more share value. The other way we make money in a stock, more share value back to you. But then there's a third option. And the third option is, and Warren Buffett's done this with his own stock in the past, We think that our stock is undervalued and the future potential of our stock is the most advantageous place for us to put the money to drive up share value.
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Speaker 2: So it's usually viewed as a good signal.
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Speaker 4: If you think about some of these companies that have been meteoric over time, like the NVIDIAs of the world, a lot of investors are thinking, how long can they continue to do it? When a company comes out and says, we think that the best value for our investing of our own money is in fact, our own stock. That traditionally means they believe that their stock is undervalued, meaning they think it's going to shoot up better than any other idea they have.
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Speaker 2: So it's typically viewed as a good idea. I would add some caveats to that, though.
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Speaker 4: Certain times, a company, I'm just going to keep on picking on NVIDIA here, when they hire people and they want to hire tremendous talent.
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Speaker 2: They will give them stock options. We've heard this before, right?
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Speaker 4: If you hit your metrics, we will issue you stock. If you stay with us for a period of time, we will issue you stock. Well, when they do that, where's the money coming from? They're diluting their stock value. It's coming out of thin air. So when we do a stock buyback, it decreases that dilution. So sometimes the buying back of stock can stabilize a stock as well and add more value as a result of dilution, not necessarily market timing.
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Speaker 2: I would suggest this though.
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Speaker 4: Before you immediately think that it's a good idea, you have to answer some questions. And the question is, not how much they're buying back or anything like that. It would be, where's the money coming from? And is this just some sort of structured financial engineering to make it us look better than we really are? And we've seen this with other companies like Facebook, et cetera, and kind of where are they getting the money? Is this just a financial engineering balance sheet shift? And I know this is starting to get a little deep in the weeds here, but A lot of times we can play some trickery inside of balance statements. And, you know, perfect example is if you look at, you know, General Electric at one point over a period of like five years, its most profitable.
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Speaker 2: Department was its accounting department.
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Speaker 4: Because they're just doing this financial engineering of taking numbers from one place and moving it to the other place to make it look good.
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Speaker 2: But I think in.
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Speaker 4: Most cases, it's a very good signal that a company is buying back its stock.
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Speaker 3: How does a company make a decision? Let's say they own I can think like Yum! Brands, they own a couple different fast food restaurants. Or Elon Musk, I think he split, didn't he split SpaceX off of whatever his umbrella company is? How do companies decide to go public, to issue an initial public offering on their stock? Or how do they make the decision? What should people infer from the decision to split off a division of their company into its own separate stock?
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Speaker 2: They're all so individual.
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Speaker 4: To answer the first question, because there's a few in there, why would a company want to go public? There's a myriad of reasons, and there's benefits and pros and cons to being public versus private for sure. When you go public, there's certainly a higher scrutiny on your earnings. There's definitely a board that makes more decisions than just unilateral decisions by the owner of a company. But in general, the reason a company would want to go public is to get equity value out of the company, meaning the Let's say I have a company I grew from scratch and now it's worth a billion dollars. How do you sell a company that's worth a billion dollars?
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Speaker 2: Well, you're going to find somebody with a billion bucks, right?
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Speaker 4: And there's not a whole pile of them, but there are plenty of private equity companies that will come in and purchase that company. However, oftentimes when a private equity comes in and purchases a company, the leadership, which remember if I started this company, this is my baby. And now you're going to come in and you're going to tell me you're out. We control the company. We do whatever we want. I don't like that idea. So how do I create, how do I take the company public? Allow a lot of the people that came up with me that have ownership in this to retire and get out. Cause just saying your company's worth a billion bucks.
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Speaker 3: All right.
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Speaker 2: Well, I'd like to retire.
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Speaker 3: It's not worth it until somebody pays it.
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Speaker 2: I'd like my 5 million out of the company, please. Can I do that? Well, no, just hold on. Well, I'll be dead if I hold on too long.
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Speaker 4: So it allows you to, exit certain people that have been very instrumental along the way. And also there's huge upside potential, right? I mean, once a company, once you release the animal into the wild, that is the market, you have the potential for a meteoric rise beyond just the sale. If I sell to a private equity company and they say, here's your billion dollars, or there's my billion. Now I'm, now I got to go invest that money. If you give me a billion dollars with a stock, and then that stock goes from a hundred to $ 200 a share because the market likes it. well, that's a whole different ballgame. And now there's also, you know, there's tax benefits. There's a whole bunch of reasons, but that's why a company wants.
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Speaker 2: To go public.
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Speaker 3: Yeah, Logan, let's bring this down to like maybe a more realistic level for the people who might be listening to this, where for instance, social security is going to be a big piece in their retirement and they don't want to make a mistake. And one of the mistakes people can make is taking their social security too early. You know, so you guys have a calculation. Is that a different calculation for everybody? Like in terms of like eliminating some of the personal mistakes that people make in retirement, Is social security when to take it part of the thing that you consult with your clients about?
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Speaker 5: Social security is probably one of, if not the biggest concern that most people have when they enter retirement, right? It's the money that they knew that they were going to get. It's the anchor piece of their income stream. The determination of when to take it, the beauty of it, and this is a joke, so just follow me here. If you call a social security office, they will give you all the information you need to make an educated decision about when to take it, right? That's just not going to happen. So they need an outside person to tell them, To your first point, I mean, taking it early, possible mistake. Taking it late, possible mistake, right? We have to kind of look at everything that you have in totality to determine, hey, am I here to get the most money possible out of Social Security? Or am I looking for the most stability of my income over that time period in retirement? And how do those two, what's the gimme and the gotcha between those two things? And then there's ultimately just what, feels best to the client right that's part of the last check that we do with people is hey here's the math from all of our expertise but you're the one that's got to live this life what do you think is going to happen.
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Speaker 3: One of the things too that i think can be a mistake for people is making assumptions about i've always been healthy so i'll always be healthy uh long-term care i don't have to worry about that because nobody in my family has ever had it um or that you know um I'm not going to worry about, I'm going to work forever.
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Speaker 2: That's just, my plan is I'm just going to work forever.
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Speaker 3: And so I don't know how you talk somebody down off the fact that, hey, life can intrude. And just because, you know, you come from a long line of people who lived into their nineties and were healthy as a horse. I mean, there are a lot of things floating around out there now that you could catch and life can happen and life can happen fast.
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Speaker 2: I mean, you can't ignore statistics, right?
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Speaker 4: And there's a greater than 50, but I'll just use the examples that you just brought up in long-term care and working forever. statistically speaking, there's a greater than 50% chance that you're going to need some sort of healthcare help towards the tail.
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Speaker 2: End of your life.
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Speaker 4: And I'm not talking about getting antibiotics. I mean, I'm talking about some sort of, uh, kind of end of life care. Uh, and unfortunately also statistically speaking, the timetable of how long that will last is a difficult one to predict because although we can say it's somewhere between 12 and 18 months worth of care, which is typically not crippling financially for a family, It's one of the few things in life that appears to be more of an inverse bell curve than a normal bell curve. Meaning that a lot of people, we know scenarios like this, they go in for a few days, a few weeks, a few months, and then it's.
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Speaker 2: A quick decline.
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Speaker 4: But then there's that dreaded memory unit where we hear stories of people being in there for eight, nine, 10, 11 years. And if you're thinking about a family unit of a husband and wife, and you're looking at, you know, 12, $ 13, 000 a month over 10 years. that can leave this surviving spouse absolutely destitute. So are you going to be, you know, an ostrich and stick your head in the sand and just go, that'll never happen to me, even though there's a greater than a coin flip chance of it happening to you. Um, and similarly, and this is the one that is, is also, I think even arguably more silly is I'm just going to work forever.
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Speaker 2: Yeah. It's a great plan.
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Speaker 4: If you're married and over the age of 65, there's a greater than 50% chance that one of you is going to live to 90. So I guess your work forever means until 90. And also there's a significant chance greater than almost 50%, not greater than 50% chance that you are going to have to retire before the time that you planned on because of health, taking care of someone in your family and health being displaced from your job through either your position eliminated or company downsizing, whatever it might be to say that my plan is to have no plan. is not a plan. That's a lot of using the word plan, but.
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Speaker 2: I mean, like, what do you say it a lot? Doesn't mean you have one. Yeah.
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Speaker 4: I'm going to, I'm going to go to Florida. How are you going to get there? I don't have any gas money, but it'll work out. And I don't know if I should head North or South first.
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Speaker 2: It's not a plan.
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Speaker 3: Yeah.
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Speaker 4: You should at least have some semblance or idea of where you're going. And, you know, I'm going to expand a little bit, Logan on, you said we're talking about social security because I think it applies to everything that we talk about on this show. If it were as simple, and I'm not trying to overcomplicate it. If it were as simple as saying, this one factor is how I make the decision on social security. This one factor is how I make the decision on where I invest my money. This one factor, it's just not. Social security, when you take it, can impact the amount of money you receive over your lifetime, but it can also impact the amount of taxes that you pay on other investments and assets, including social security. It can have an impact on survivor benefits that result from social security. It can have an impact based upon when you take it on when your requirement distributions from other investments come out and whether or not that affects the cost of your Medicare, it can impact. And the list just goes on and on and on. And so fortunately, as we were talking even earlier in this segment, um, about, um, the value of having technology, the value of having a big company like simplicity behind us is that we have the technology to, Thank goodness we've gotten so much better over the years just because we're not doing this longhand on paper or even using an Excel spreadsheet. The implementation of AI, for example, has been an absolute game changer. And our ability to take these complex things like when should you take your social security involves a dozen different variables. It would take you a lifetime to do 100 plans that way longhand. We can quite literally do that in a matter of minutes and give this specific answer on exactly how you, Bruce, you, Logan, not somebody in your scenario, but you should collect your social security.
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Speaker 2: How should you invest your money? I mean, it's so specific now. It's remarkable.
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Speaker 4: But unfortunately, our industry as a whole, you're either at the tip of the spear or you're just calling it in, waiting until your time is over and you're just collecting fees and hoping you don't uproot the apple cart. I would be very cautious in working with somebody that doesn't constantly come to you, not with new sales, but with new ways of verifying and calculating what we're doing.
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Speaker 2: It's always about improving your situation.
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Speaker 3: Yeah, it is a very complex and also very individualized thing, retirement. And that's why, in my view and in my wife's view as well, we became Simplicity clients by going in for our free no-obligation consultation. We were at the point where we knew we had more time to work, but we also knew we didn't have time to make a big mistake and not have a way to kind of plug the hole that we might create by our indifference or by our ignorance or whatever. So now we feel like we're in great hands. We don't have any concerns. We go in, we meet with Josh and his team, I think it's twice a year, we get an update. And one of the things that, you know, people can have a plan. They can meet with you guys when they're in their 30s. But, you know, one of the things, Logan, is people have to always be adjusting their plan as they age. Market conditions can change. Life conditions can change. You can have a plan and it can be a great plan, but it might be a plan that worked great in your 30s, your 40s, your 50s, but it might not be the same exact plan that's going to work later on in your life.
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Speaker 5: Yeah, I think just the variables changing, all the numbers that we kind of just described, the market conditions, all those things are going to change and be in flux. And luckily we have tools and software to just to house all that data and do the math. But I think one thing that gets overlooked is how you as a person change over that same time period, how your values evolve, how your family changes over time, your needs. I mean, you know, to have a parent care fall to you, you know, at the drop of a hat, I mean, how does that all going to work? You know, what we were talking about earlier is when people think that they're going to work for this long or not have to do X, Y, and Z, I always say, maybe, I mean, I have the software. Let's, let's see exactly how you think it's going to play out. Let's put this into the software and let's just see if you're right.
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Speaker 2: You might be right. I don't know.
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Speaker 3: Right.
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Speaker 5: But, but also it's my job to say, Hey, maybe there's a little bit of a more conservative plan. Let's try that one out too and see if that also works. And then you get to choose as the person who's in control of your retirement which one of those two paths you want to go down.
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Speaker 3: Yeah, I remember when we came in for our consultation, you presented us like a couple different scenarios and the arcs on both. We were able to make the decision ourselves. Like you're not cramming an idea down someone's throat. You're providing us education so that your clients can make a decision. And also, I've learned I don't make a big financial investment in anything without consulting with you because it can have consequences. And one of the things that people might encounter in this realm of life happening is they need money for maybe their kid's college education, maybe for a catastrophic medical event or something like that. If they have retirement investments, they might run a question by you in terms of, hey, is it smart for me to borrow from my retirement investments rather than go through a bank. You guys can help people with that kind of a decision as well.
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Speaker 2: Yeah.
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Speaker 4: I think, you know, you had even mentioned earlier just a few minutes ago about how critical it is to make, you know, wise decisions. And sometimes we look at all of these things and we go, well, what's the rule of thumb? Should I borrow from my 401k or not? Again, if it was only that easy to answer it that way, you have to look at all of the decisions that you make on a net to net basis.
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Speaker 2: Let me give you an example. If you said, I want.
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Speaker 4: To invest my money for the next five years in something that I cannot lose any money, guaranteed, and I don't need the money for five years, I have XYZ coming down the pipe, and I'm 50 years old. Well, if you put it in a CD, that would work. That fits the bill, right? Treasury bill, five-year treasury, that would work.
00:19:19
Speaker 2: Good old bank.
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Speaker 4: A five-year multi-guaranteed annuity, that would work. In five years, it's completely free and clear, guaranteed interest rate.
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Speaker 2: But here's the one rub. You'd go, an annuity doesn't.
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Speaker 4: Make any sense because I'm only 50, and in five years, I'll be 55, and there's a 10% penalty if you pull money out of a non-qualified annuity before the age of 59 and a half. But what if the interest rate on the annuity is 50% higher?
00:19:40
Speaker 2: It's worth it. I'll pay the penalty. Yeah, of course.
00:19:45
Speaker 4: I don't care because net to net, it makes sense. But people just go, oh, that doesn't make sense because there's a penalty on it. I shouldn't pull money out of my 401k because of X reason. Well, what if you can pull money out of your 401k to 1% interest rate and the bank is telling you it's going to take you 9%? Well, then I should do the 401k. Well, not necessarily because we also have to look at opportunity costs in the future off the 401k money.
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Speaker 2: So we have to do some math.
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Speaker 4: And that doesn't mean that feelings doesn't enter into this equation because it certainly should. You need to be comfortable with the decision. But you can't make a logical decision of any level of comfort unless you know the math behind it. So to your point, yes, people should ask us those questions. We should do the math so that we can equip them and empower them with the information so that they can make the best decision.
00:20:29
Speaker 3: 614-917-1040. Reach out to Simplicity Wealth and talk with Josh and Logan and the team. Make a plan for your retirement, 614-917-1040. You can also reach out to them on the web at simplicitywealth.com backslash Columbus.
00:20:43
Speaker 2: Where are they located?
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Speaker 3: They're in Lewis Center, just off Route 750. That's about 10, 15 minutes, depending on the traffic, from 270 and 23. So very easy to get a hold of them. Josh joins me on Mondays. Well, not early Mondays anymore. Now that the Bruce Woolley Show has shifted from 11 to 1 to 8 to 10 a.m. We typically catch up midweek, but make sure you're locked in for the Simplicity Wealth Retirement Blueprint Radio Show Fridays, either at 4 when it airs originally each week or at the replay at noon on Saturday. So if people come in, they have a plan. Is there a need for a backup plan? Like most things in life, we say, well, we need a backup plan. But I would assume that your plan is has some ability to adjust and not lock people into something that is going to be difficult for them to adjust to market conditions, volatility, and all those things.
00:21:31
Speaker 2: Yeah.
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Speaker 4: I mean, I think a perfect example, and this is with any good, you know, Logan, you're in the, in the, the reserves in the military, I'm sure you don't enter into an operation with just one plan because it, you know, we know one thing about plans. They always go according to plan, right? The only thing that that's, that's obviously a joke and, you know, the old adage is, you know, we make a plan and God laughs, right? So it's so critical to have backup plans.
00:21:52
Speaker 2: And I'll use an example. We were talking earlier about how people say, I'm just going to work forever. I hope you do.
00:21:59
Speaker 4: And I hope you find a ton of enjoyment out of whatever occupation you choose to do. However, there's a significant chance that that's not going to work out. So I think it would probably be logical to have a backup plan. And that applies to a lot of different things. For example, our plan might be, you're going to retire at 67. It makes the most sense for us to collect social security.
00:22:18
Speaker 2: At 67, let's say.
00:22:20
Speaker 4: What if you retired 65? Does it still make sense to collect the 67? I don't know the answer to that because I don't have enough information yet, but we have to make sure that we have levers that we can pull in case of emergency, right? In case of emergency break glass. Also, Logan, you said it so clearly earlier that people change. You know, you might retire at 65 and go, I'm completely comfortable with having 70% of my money subject to market risk. And then fast forward, and now you're 75 and And you go, yeah, I don't need it anymore and I don't want to pay attention to it and I don't care. Or maybe you go, I just realized over the last 10 years I haven't been spending any of this money. This isn't really 10-year money. This is really money for my grandkids. So now it turned into 50-year money and I'm going to invest it differently. So times change, plans change, but you better have backup plans.
00:23:10
Speaker 3: That's what they specialize in, Simplicity Wealth Columbus, 614-917-1040. What would you say to somebody who's hesitant to come in? Oh, I don't like going to the dentist. I don't want to disclose any of my personal information. I can do it on AI. You've heard every excuse in the book. Sure.
00:23:27
Speaker 4: Well, I mean, we're obviously not right for everybody, so it's okay. However, I would suggest that AI is a very useful tool. The internet is a very useful tool. There's other planning softwares online that are I would say adequate. If you want to learn from somebody who's dedicated their entire life to a very specific category of investing, and that's providing predictable tax-efficient income at that transition between your accumulation and retirement phase of your life, and you want to make sure that you optimize to the highest capacity, then I think it makes sense to come in. If you're happy with just getting by and doing it yourself, then feel free. We're not everything to everybody.
00:24:10
Speaker 3: Yeah, well, that's one of the mistakes people can make, too, and it's on me that we didn't get into this, is that it can make a huge difference in terms of your tax liability, where you're taking your money, where you're investing your money, when you pull it out, and all those things. All these things are matters they can help you with at Simplicity Wealth, Columbus, 614-917-1040. 614-917-1040, their web address, simplicitywealth.com, backslash Columbus.
00:24:38
Speaker 4: The airing of this program by this station is not an endorsement or recommendation by the station of the products or services discussed in the program. The station does not guarantee the results of any investments made by a listener to this program.
Speaker 1: Josh Pick is a registered investment advisor representative with Simplicity Wealth Advisors Columbus. Investment advisory and financial planning services are offered through Simplicity Wealth LLC, an SEC-registered investment advisor. Exposure to ideas and financial vehicles discussed should not be considered investment advisor recommendation to buy or sell financial vehicle. This information should not be considered tax or legal advice. Individuals should consult with professionals to see if any ideas expressed would fit their specific situation. Past performance is not a guarantee of future results. Securities can fluctuate and when redeemed may be more or less than when originally invested.
00:00:40
Speaker 2: Thanks for your time. I'm Bruce Hooley.
00:00:41
Speaker 3: This is the Simplicity Wealth Retirement Blueprint Radio Show. I'm here with Josh Pick of Simplicity Wealth and also his colleague, Logan Harris. They're located in Lewis Center. Their firm just off Route 750. And for your purposes, retirement information, very important. It should be very important to you. Everybody kind of has a vision of retirement, but everybody's vision of retirement might be a little bit different. You don't necessarily even have to quit working in retirement. Maybe you work in a different position. Maybe you go into some kind of service work. Maybe you travel. Maybe it is golf every day and all that. But as I say, everybody's vision is different. What they can help you with at Simplicity is providing you the investment vehicles that will supply you an income stream so that you can recognize that vision as it applies to how you see retirement on the horizon for you. 614-917-1040 is their office number. 614-917-1040. You are not obligated to anything. If you go in and speak with them, they offer you that free no-obligation consultation.
00:01:42
Speaker 2: 614-917-1040.
00:01:43
Speaker 3: You can also reach out to them on the web. Their web address is simplicitywealth.com backslash Columbus. And I think when people think about retirement, they're thinking about.
00:01:55
Speaker 3: Do I know enough myself to handle this? Do I need a fiduciary investment advisor, which means somebody who's legally obligated to do what is best for them? And maybe they're watching the financial headlines, and maybe they are making conclusions off the headlines that they see on a finance page at USA Today or Yahoo or anywhere else. And one of the things that they might see is, for instance, a company buying its own stock back. And you might think, oh, the company's buying its stock back because It's struggling, and other people aren't investing in the company. So is that a warning sign that people should be aware of and talk about if they're invested in a certain stock or in a certain, maybe a market of stocks? If those companies are buying their stock back, is that something that would concern you?
00:02:40
Speaker 4: I think in general, if a company buys back its stock, it's seen as a favorable thing. Because in general, if you think about companies... you'll have a company that makes a bunch of money. So insert company name here, right? Nvidia, whoever it might be. And they're making a ton of money. They have a couple of choices on what they're going to do with that revenue. They can issue a dividend back to you because there's two ways. Remember that you can make money off of a stock and that's whether the stock appreciates in value, meaning it goes from $ 10 a share to $ 20 a share, and then you sell it or that company issues you a dividend. And typically the Growth companies do not pay dividends and value companies or dividend paying companies do. So if you want to think of kind of names in that category, you would look at, think Home Depot, Coca-Cola, Procter & Gamble. These are typically dividend paying companies. And the reason they do that is because they're making so much money that they're making more money than they have new ideas. And they have more money than they need for research and development projects. So they send that money back to you and I in the form of a dividend. And that's good because we can generate income off of that. Growth companies, on the other hand, think Elon Musk's companies, that gentleman never runs out of ideas. He's going to take all the money they make and reinvest it back into new opportunities, thinking that these new ideas will generate more share value. The other way we make money in a stock, more share value back to you. But then there's a third option. And the third option is, and Warren Buffett's done this with his own stock in the past, We think that our stock is undervalued and the future potential of our stock is the most advantageous place for us to put the money to drive up share value.
00:04:18
Speaker 2: So it's usually viewed as a good signal.
00:04:21
Speaker 4: If you think about some of these companies that have been meteoric over time, like the NVIDIAs of the world, a lot of investors are thinking, how long can they continue to do it? When a company comes out and says, we think that the best value for our investing of our own money is in fact, our own stock. That traditionally means they believe that their stock is undervalued, meaning they think it's going to shoot up better than any other idea they have.
00:04:46
Speaker 2: So it's typically viewed as a good idea. I would add some caveats to that, though.
00:04:51
Speaker 4: Certain times, a company, I'm just going to keep on picking on NVIDIA here, when they hire people and they want to hire tremendous talent.
00:04:58
Speaker 2: They will give them stock options. We've heard this before, right?
00:05:01
Speaker 4: If you hit your metrics, we will issue you stock. If you stay with us for a period of time, we will issue you stock. Well, when they do that, where's the money coming from? They're diluting their stock value. It's coming out of thin air. So when we do a stock buyback, it decreases that dilution. So sometimes the buying back of stock can stabilize a stock as well and add more value as a result of dilution, not necessarily market timing.
00:05:28
Speaker 2: I would suggest this though.
00:05:30
Speaker 4: Before you immediately think that it's a good idea, you have to answer some questions. And the question is, not how much they're buying back or anything like that. It would be, where's the money coming from? And is this just some sort of structured financial engineering to make it us look better than we really are? And we've seen this with other companies like Facebook, et cetera, and kind of where are they getting the money? Is this just a financial engineering balance sheet shift? And I know this is starting to get a little deep in the weeds here, but A lot of times we can play some trickery inside of balance statements. And, you know, perfect example is if you look at, you know, General Electric at one point over a period of like five years, its most profitable.
00:06:13
Speaker 2: Department was its accounting department.
00:06:16
Speaker 4: Because they're just doing this financial engineering of taking numbers from one place and moving it to the other place to make it look good.
00:06:22
Speaker 2: But I think in.
00:06:22
Speaker 4: Most cases, it's a very good signal that a company is buying back its stock.
00:06:28
Speaker 3: How does a company make a decision? Let's say they own I can think like Yum! Brands, they own a couple different fast food restaurants. Or Elon Musk, I think he split, didn't he split SpaceX off of whatever his umbrella company is? How do companies decide to go public, to issue an initial public offering on their stock? Or how do they make the decision? What should people infer from the decision to split off a division of their company into its own separate stock?
00:06:59
Speaker 2: They're all so individual.
00:07:01
Speaker 4: To answer the first question, because there's a few in there, why would a company want to go public? There's a myriad of reasons, and there's benefits and pros and cons to being public versus private for sure. When you go public, there's certainly a higher scrutiny on your earnings. There's definitely a board that makes more decisions than just unilateral decisions by the owner of a company. But in general, the reason a company would want to go public is to get equity value out of the company, meaning the Let's say I have a company I grew from scratch and now it's worth a billion dollars. How do you sell a company that's worth a billion dollars?
00:07:35
Speaker 2: Well, you're going to find somebody with a billion bucks, right?
00:07:39
Speaker 4: And there's not a whole pile of them, but there are plenty of private equity companies that will come in and purchase that company. However, oftentimes when a private equity comes in and purchases a company, the leadership, which remember if I started this company, this is my baby. And now you're going to come in and you're going to tell me you're out. We control the company. We do whatever we want. I don't like that idea. So how do I create, how do I take the company public? Allow a lot of the people that came up with me that have ownership in this to retire and get out. Cause just saying your company's worth a billion bucks.
00:08:13
Speaker 3: All right.
00:08:13
Speaker 2: Well, I'd like to retire.
00:08:15
Speaker 3: It's not worth it until somebody pays it.
00:08:16
Speaker 2: I'd like my 5 million out of the company, please. Can I do that? Well, no, just hold on. Well, I'll be dead if I hold on too long.
00:08:23
Speaker 4: So it allows you to, exit certain people that have been very instrumental along the way. And also there's huge upside potential, right? I mean, once a company, once you release the animal into the wild, that is the market, you have the potential for a meteoric rise beyond just the sale. If I sell to a private equity company and they say, here's your billion dollars, or there's my billion. Now I'm, now I got to go invest that money. If you give me a billion dollars with a stock, and then that stock goes from a hundred to $ 200 a share because the market likes it. well, that's a whole different ballgame. And now there's also, you know, there's tax benefits. There's a whole bunch of reasons, but that's why a company wants.
00:08:58
Speaker 2: To go public.
00:08:59
Speaker 3: Yeah, Logan, let's bring this down to like maybe a more realistic level for the people who might be listening to this, where for instance, social security is going to be a big piece in their retirement and they don't want to make a mistake. And one of the mistakes people can make is taking their social security too early. You know, so you guys have a calculation. Is that a different calculation for everybody? Like in terms of like eliminating some of the personal mistakes that people make in retirement, Is social security when to take it part of the thing that you consult with your clients about?
00:09:28
Speaker 5: Social security is probably one of, if not the biggest concern that most people have when they enter retirement, right? It's the money that they knew that they were going to get. It's the anchor piece of their income stream. The determination of when to take it, the beauty of it, and this is a joke, so just follow me here. If you call a social security office, they will give you all the information you need to make an educated decision about when to take it, right? That's just not going to happen. So they need an outside person to tell them, To your first point, I mean, taking it early, possible mistake. Taking it late, possible mistake, right? We have to kind of look at everything that you have in totality to determine, hey, am I here to get the most money possible out of Social Security? Or am I looking for the most stability of my income over that time period in retirement? And how do those two, what's the gimme and the gotcha between those two things? And then there's ultimately just what, feels best to the client right that's part of the last check that we do with people is hey here's the math from all of our expertise but you're the one that's got to live this life what do you think is going to happen.
00:10:28
Speaker 3: One of the things too that i think can be a mistake for people is making assumptions about i've always been healthy so i'll always be healthy uh long-term care i don't have to worry about that because nobody in my family has ever had it um or that you know um I'm not going to worry about, I'm going to work forever.
00:10:45
Speaker 2: That's just, my plan is I'm just going to work forever.
00:10:48
Speaker 3: And so I don't know how you talk somebody down off the fact that, hey, life can intrude. And just because, you know, you come from a long line of people who lived into their nineties and were healthy as a horse. I mean, there are a lot of things floating around out there now that you could catch and life can happen and life can happen fast.
00:11:05
Speaker 2: I mean, you can't ignore statistics, right?
00:11:06
Speaker 4: And there's a greater than 50, but I'll just use the examples that you just brought up in long-term care and working forever. statistically speaking, there's a greater than 50% chance that you're going to need some sort of healthcare help towards the tail.
00:11:19
Speaker 2: End of your life.
00:11:20
Speaker 4: And I'm not talking about getting antibiotics. I mean, I'm talking about some sort of, uh, kind of end of life care. Uh, and unfortunately also statistically speaking, the timetable of how long that will last is a difficult one to predict because although we can say it's somewhere between 12 and 18 months worth of care, which is typically not crippling financially for a family, It's one of the few things in life that appears to be more of an inverse bell curve than a normal bell curve. Meaning that a lot of people, we know scenarios like this, they go in for a few days, a few weeks, a few months, and then it's.
00:11:52
Speaker 2: A quick decline.
00:11:53
Speaker 4: But then there's that dreaded memory unit where we hear stories of people being in there for eight, nine, 10, 11 years. And if you're thinking about a family unit of a husband and wife, and you're looking at, you know, 12, $ 13, 000 a month over 10 years. that can leave this surviving spouse absolutely destitute. So are you going to be, you know, an ostrich and stick your head in the sand and just go, that'll never happen to me, even though there's a greater than a coin flip chance of it happening to you. Um, and similarly, and this is the one that is, is also, I think even arguably more silly is I'm just going to work forever.
00:12:27
Speaker 2: Yeah. It's a great plan.
00:12:30
Speaker 4: If you're married and over the age of 65, there's a greater than 50% chance that one of you is going to live to 90. So I guess your work forever means until 90. And also there's a significant chance greater than almost 50%, not greater than 50% chance that you are going to have to retire before the time that you planned on because of health, taking care of someone in your family and health being displaced from your job through either your position eliminated or company downsizing, whatever it might be to say that my plan is to have no plan. is not a plan. That's a lot of using the word plan, but.
00:13:08
Speaker 2: I mean, like, what do you say it a lot? Doesn't mean you have one. Yeah.
00:13:13
Speaker 4: I'm going to, I'm going to go to Florida. How are you going to get there? I don't have any gas money, but it'll work out. And I don't know if I should head North or South first.
00:13:20
Speaker 2: It's not a plan.
00:13:20
Speaker 3: Yeah.
00:13:21
Speaker 4: You should at least have some semblance or idea of where you're going. And, you know, I'm going to expand a little bit, Logan on, you said we're talking about social security because I think it applies to everything that we talk about on this show. If it were as simple, and I'm not trying to overcomplicate it. If it were as simple as saying, this one factor is how I make the decision on social security. This one factor is how I make the decision on where I invest my money. This one factor, it's just not. Social security, when you take it, can impact the amount of money you receive over your lifetime, but it can also impact the amount of taxes that you pay on other investments and assets, including social security. It can have an impact on survivor benefits that result from social security. It can have an impact based upon when you take it on when your requirement distributions from other investments come out and whether or not that affects the cost of your Medicare, it can impact. And the list just goes on and on and on. And so fortunately, as we were talking even earlier in this segment, um, about, um, the value of having technology, the value of having a big company like simplicity behind us is that we have the technology to, Thank goodness we've gotten so much better over the years just because we're not doing this longhand on paper or even using an Excel spreadsheet. The implementation of AI, for example, has been an absolute game changer. And our ability to take these complex things like when should you take your social security involves a dozen different variables. It would take you a lifetime to do 100 plans that way longhand. We can quite literally do that in a matter of minutes and give this specific answer on exactly how you, Bruce, you, Logan, not somebody in your scenario, but you should collect your social security.
00:15:07
Speaker 2: How should you invest your money? I mean, it's so specific now. It's remarkable.
00:15:12
Speaker 4: But unfortunately, our industry as a whole, you're either at the tip of the spear or you're just calling it in, waiting until your time is over and you're just collecting fees and hoping you don't uproot the apple cart. I would be very cautious in working with somebody that doesn't constantly come to you, not with new sales, but with new ways of verifying and calculating what we're doing.
00:15:38
Speaker 2: It's always about improving your situation.
00:15:40
Speaker 3: Yeah, it is a very complex and also very individualized thing, retirement. And that's why, in my view and in my wife's view as well, we became Simplicity clients by going in for our free no-obligation consultation. We were at the point where we knew we had more time to work, but we also knew we didn't have time to make a big mistake and not have a way to kind of plug the hole that we might create by our indifference or by our ignorance or whatever. So now we feel like we're in great hands. We don't have any concerns. We go in, we meet with Josh and his team, I think it's twice a year, we get an update. And one of the things that, you know, people can have a plan. They can meet with you guys when they're in their 30s. But, you know, one of the things, Logan, is people have to always be adjusting their plan as they age. Market conditions can change. Life conditions can change. You can have a plan and it can be a great plan, but it might be a plan that worked great in your 30s, your 40s, your 50s, but it might not be the same exact plan that's going to work later on in your life.
00:16:39
Speaker 5: Yeah, I think just the variables changing, all the numbers that we kind of just described, the market conditions, all those things are going to change and be in flux. And luckily we have tools and software to just to house all that data and do the math. But I think one thing that gets overlooked is how you as a person change over that same time period, how your values evolve, how your family changes over time, your needs. I mean, you know, to have a parent care fall to you, you know, at the drop of a hat, I mean, how does that all going to work? You know, what we were talking about earlier is when people think that they're going to work for this long or not have to do X, Y, and Z, I always say, maybe, I mean, I have the software. Let's, let's see exactly how you think it's going to play out. Let's put this into the software and let's just see if you're right.
00:17:25
Speaker 2: You might be right. I don't know.
00:17:27
Speaker 3: Right.
00:17:27
Speaker 5: But, but also it's my job to say, Hey, maybe there's a little bit of a more conservative plan. Let's try that one out too and see if that also works. And then you get to choose as the person who's in control of your retirement which one of those two paths you want to go down.
00:17:42
Speaker 3: Yeah, I remember when we came in for our consultation, you presented us like a couple different scenarios and the arcs on both. We were able to make the decision ourselves. Like you're not cramming an idea down someone's throat. You're providing us education so that your clients can make a decision. And also, I've learned I don't make a big financial investment in anything without consulting with you because it can have consequences. And one of the things that people might encounter in this realm of life happening is they need money for maybe their kid's college education, maybe for a catastrophic medical event or something like that. If they have retirement investments, they might run a question by you in terms of, hey, is it smart for me to borrow from my retirement investments rather than go through a bank. You guys can help people with that kind of a decision as well.
00:18:31
Speaker 2: Yeah.
00:18:32
Speaker 4: I think, you know, you had even mentioned earlier just a few minutes ago about how critical it is to make, you know, wise decisions. And sometimes we look at all of these things and we go, well, what's the rule of thumb? Should I borrow from my 401k or not? Again, if it was only that easy to answer it that way, you have to look at all of the decisions that you make on a net to net basis.
00:18:55
Speaker 2: Let me give you an example. If you said, I want.
00:18:57
Speaker 4: To invest my money for the next five years in something that I cannot lose any money, guaranteed, and I don't need the money for five years, I have XYZ coming down the pipe, and I'm 50 years old. Well, if you put it in a CD, that would work. That fits the bill, right? Treasury bill, five-year treasury, that would work.
00:19:19
Speaker 2: Good old bank.
00:19:21
Speaker 4: A five-year multi-guaranteed annuity, that would work. In five years, it's completely free and clear, guaranteed interest rate.
00:19:28
Speaker 2: But here's the one rub. You'd go, an annuity doesn't.
00:19:30
Speaker 4: Make any sense because I'm only 50, and in five years, I'll be 55, and there's a 10% penalty if you pull money out of a non-qualified annuity before the age of 59 and a half. But what if the interest rate on the annuity is 50% higher?
00:19:40
Speaker 2: It's worth it. I'll pay the penalty. Yeah, of course.
00:19:45
Speaker 4: I don't care because net to net, it makes sense. But people just go, oh, that doesn't make sense because there's a penalty on it. I shouldn't pull money out of my 401k because of X reason. Well, what if you can pull money out of your 401k to 1% interest rate and the bank is telling you it's going to take you 9%? Well, then I should do the 401k. Well, not necessarily because we also have to look at opportunity costs in the future off the 401k money.
00:20:07
Speaker 2: So we have to do some math.
00:20:08
Speaker 4: And that doesn't mean that feelings doesn't enter into this equation because it certainly should. You need to be comfortable with the decision. But you can't make a logical decision of any level of comfort unless you know the math behind it. So to your point, yes, people should ask us those questions. We should do the math so that we can equip them and empower them with the information so that they can make the best decision.
00:20:29
Speaker 3: 614-917-1040. Reach out to Simplicity Wealth and talk with Josh and Logan and the team. Make a plan for your retirement, 614-917-1040. You can also reach out to them on the web at simplicitywealth.com backslash Columbus.
00:20:43
Speaker 2: Where are they located?
00:20:43
Speaker 3: They're in Lewis Center, just off Route 750. That's about 10, 15 minutes, depending on the traffic, from 270 and 23. So very easy to get a hold of them. Josh joins me on Mondays. Well, not early Mondays anymore. Now that the Bruce Woolley Show has shifted from 11 to 1 to 8 to 10 a.m. We typically catch up midweek, but make sure you're locked in for the Simplicity Wealth Retirement Blueprint Radio Show Fridays, either at 4 when it airs originally each week or at the replay at noon on Saturday. So if people come in, they have a plan. Is there a need for a backup plan? Like most things in life, we say, well, we need a backup plan. But I would assume that your plan is has some ability to adjust and not lock people into something that is going to be difficult for them to adjust to market conditions, volatility, and all those things.
00:21:31
Speaker 2: Yeah.
00:21:31
Speaker 4: I mean, I think a perfect example, and this is with any good, you know, Logan, you're in the, in the, the reserves in the military, I'm sure you don't enter into an operation with just one plan because it, you know, we know one thing about plans. They always go according to plan, right? The only thing that that's, that's obviously a joke and, you know, the old adage is, you know, we make a plan and God laughs, right? So it's so critical to have backup plans.
00:21:52
Speaker 2: And I'll use an example. We were talking earlier about how people say, I'm just going to work forever. I hope you do.
00:21:59
Speaker 4: And I hope you find a ton of enjoyment out of whatever occupation you choose to do. However, there's a significant chance that that's not going to work out. So I think it would probably be logical to have a backup plan. And that applies to a lot of different things. For example, our plan might be, you're going to retire at 67. It makes the most sense for us to collect social security.
00:22:18
Speaker 2: At 67, let's say.
00:22:20
Speaker 4: What if you retired 65? Does it still make sense to collect the 67? I don't know the answer to that because I don't have enough information yet, but we have to make sure that we have levers that we can pull in case of emergency, right? In case of emergency break glass. Also, Logan, you said it so clearly earlier that people change. You know, you might retire at 65 and go, I'm completely comfortable with having 70% of my money subject to market risk. And then fast forward, and now you're 75 and And you go, yeah, I don't need it anymore and I don't want to pay attention to it and I don't care. Or maybe you go, I just realized over the last 10 years I haven't been spending any of this money. This isn't really 10-year money. This is really money for my grandkids. So now it turned into 50-year money and I'm going to invest it differently. So times change, plans change, but you better have backup plans.
00:23:10
Speaker 3: That's what they specialize in, Simplicity Wealth Columbus, 614-917-1040. What would you say to somebody who's hesitant to come in? Oh, I don't like going to the dentist. I don't want to disclose any of my personal information. I can do it on AI. You've heard every excuse in the book. Sure.
00:23:27
Speaker 4: Well, I mean, we're obviously not right for everybody, so it's okay. However, I would suggest that AI is a very useful tool. The internet is a very useful tool. There's other planning softwares online that are I would say adequate. If you want to learn from somebody who's dedicated their entire life to a very specific category of investing, and that's providing predictable tax-efficient income at that transition between your accumulation and retirement phase of your life, and you want to make sure that you optimize to the highest capacity, then I think it makes sense to come in. If you're happy with just getting by and doing it yourself, then feel free. We're not everything to everybody.
00:24:10
Speaker 3: Yeah, well, that's one of the mistakes people can make, too, and it's on me that we didn't get into this, is that it can make a huge difference in terms of your tax liability, where you're taking your money, where you're investing your money, when you pull it out, and all those things. All these things are matters they can help you with at Simplicity Wealth, Columbus, 614-917-1040. 614-917-1040, their web address, simplicitywealth.com, backslash Columbus.
00:24:38
Speaker 4: The airing of this program by this station is not an endorsement or recommendation by the station of the products or services discussed in the program. The station does not guarantee the results of any investments made by a listener to this program.
