How to Reduce Fees and Keep More of Your Hard-Earned Money

9.1.23: Audio automatically transcribed by Sonix

9.1.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Retire 360 with your host, Dwight Mejan. Dwight is a licensed fiduciary and financial advisor who always places your needs first. Dwight works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here's Dwight.

Dwight Mejan:
Hey, I want to welcome everybody back to the Retire 360 show. I am your host, Dwight Mejan, Alongside me, Mitchell Keiser. We are glad to have you joining us. This is your program, as we always say, where we teach you about ways to win with your money, how to invest it wisely, how to responsibly grow your wealth, and frankly, keep more of it from this lurking enemy known as the IRS and also other expense areas that try to come after your money. In fact, some of those expense areas we're going to talk about on today's show. But just want to welcome you if you're a first time listener of this show. Our goal simply to have you come back and we hope we provide the value that you're looking for because it is your money. Most of us have worked and are working 30 to 40 year career to save it, and we want to protect it and we want to be able to live comfortably on it. And everything that pertains to you as the listener. Many people call in to this show and want to hear certain topics, so I want to thank our listeners for doing that. We love to hear from our listeners know we've been hearing from folks up in the western part of the state, which is one of the areas where we broadcast up in the Watauga Avery County area.

Dwight Mejan:
So welcome. If you're listening from that area, we're broadcasting today from the Moore County area. We have offices in both areas, Southern Pines, North Carolina, and an office in Banner Elk. So glad that you're calling in. I know we have some folks. Mitchell's going to tell you here in a moment about a workshop that we have coming up in September. You're not going to want to miss that if you're in retirement or you're getting close to retirement. The topic of taxes. I'll let him tell you a little more about that. But hey, we're glad you're here. Title of today's show is Inspect What You Expect, and that is How to Reduce fees and Minimize Risk. So we're going to be talking about that today. But just welcome to the show, everybody. Shout out to our listeners in those areas I just mentioned. If you want to hear a little bit more from us, maybe this is your first time listening. We have podcasts, so anywhere where you download podcasts, you can find us retire. 360 is where you go. We are on Facebook and Instagram. If you want to reach out to us during today's show, you can call us if you're in the western part of the state. At (828) 278-7814. And if you're in the Moore County area, call us at (910) 235-0812. Mitchell, how are you doing today?

Mitchell Keiser:
Hey, Dwight. I'm doing pretty good. How about yourself?

Dwight Mejan:
Doing good. Got a got a lot of energy this week, so I don't know if it's the I'm starting to take these amino acids. I think you've been taking them, but I put them in my pre-workout mix. So I think I'm always says I'm kind of like a raccoon on dope, but I can I can think I can tell that the amino acids are doing something in my chemistry here a little bit. So that's a good thing. Our energy is 54, right?

Mitchell Keiser:
Yeah. There you go. Well. But so, yeah, I heard you saying there just a second ago, right, about our upcoming events here at the Watauga County. Just want to let our folks know we have had quite a few calls for that event. Our seats are just about full. So if you guys are interested in attending that event, it is pretty important that you do call us sooner than later. That class is going to be on on September 21st and we are going to have a morning and an afternoon class. So the morning class is going to be at 11 a.m. and the afternoon class is going to be at 6 p.m. So if either one of those classes you think you can make it or you want us to save you a seat, give us a call. Dwight just gave it to you a second ago, but I'll give you guys our number one more time. It is (828) 278-7814. Yeah.

Dwight Mejan:
Thanks, Mitchell. That's. It's a great class. We have just tons of great reviews when we do that. Whether you're a beginner and your knowledge and understanding of taxes or whether you're more advanced, I can promise you you are going to take more than one thing. You're going to take several things from that class that you can begin to implement into your wealth management strategy and frankly, your tax strategy. And if you don't have a tax strategy, I can almost assure you you're going to want to come out of that class putting one together. And that's one of the things that we help all of our clients do. It's one of the things we'll help you as a listener do because as we always say, at the end of the day, it's not just focusing on what you make and what you're earning with your portfolio and your investments. It's how much of that you keep. And I'll tell you an exciting thing that I got to participate in with a person that attended that class. They knew a modest amount about taxes and within a couple of meetings of visiting with us complimentary, we laid out a plan. And this person has become a client as a result of this that is going to take them over a 6 to 7 year period from the 32% tax bracket, which is where they were estimating where they're at and where they were going to estimate their retirement down to the 12% approximate tax bracket that's under current tax bracket laws. So again, we don't have time in the show today to talk about the strategies that we're helping this person with, but we will discuss those strategies in that class. So particularly if you're listening in that area, sign up because seats will go quick for that. And yeah, we just get an opportunity to meet you. Also as a listener of the show.

Mitchell Keiser:
Of all the classes we do, if you guys have been listening to us for any amount of time, we teach classes on Medicare, Social Security and taxes and retirement and will say the what? I find it interesting how all of those areas stem from taxes. For example, your Medicare. It depends on how much you're going to pay for Medicare. Depends on how much you pay in taxes, your Social Security. You're also to look out for taxes, how much of that Social Security is going to get taxed. So if you guys are about to retire or, you know, you're looking to get into some of those courses, it is probably the best first step that you guys want to get involved in because everything, unfortunately, does stem from the taxes.

Dwight Mejan:
Well, Mitchell, you bring up another great point. As I heard you mention what you said there to our listeners, there's a lot of big decisions that take place right around 64.5, which is when people start having to think about their Medicare. And, you know, we see people just, you know, their heads are overflowing with information because they're thinking about their health care, they're thinking about their investments, they're thinking about Social Security and the timing of all of that. And that's one of the reasons we have classes to address all of those. But, you know, it's definitely easier if you can break it up in sections and in pieces. So yeah, totally agree. Love to see you all there. And we love to teach and that's the heart of what we do. We are a fiduciary wealth management firm. That is who we are. So we, we look at things holistically. It's not just managing money and building wealth. That's a big part of it, but it's managing a tax efficient plan in your retirement because taxes do get more complex when you go into retirement because there's different buckets of money that people start pulling money out of. You know, most of us still a lot of listeners to this show have most of their money in these tax deferred buckets, pre-tax money. They've got to, you know, get deductions to contribute to. But there's ages lurking down the road where money's got to come out of those accounts and you want to make sure you're doing that in a tax efficient way so you're not jumping up in higher tax brackets when you least expect it. So a lot of gotchas, as we like to say out there, right, Mitchell.

Mitchell Keiser:
Very.

Dwight Mejan:
True. But hey, look us up. Another thing, I always want to direct people to our website. You can go to retire 360. Show.com I highly encourage you there you can find out a little bit about our philosophy, what we believe. I think that's the most important section. Our beliefs. You can find out a little bit more of some of the members on our team. We've got a deep bullpen. You're just listening to two voices within our company, but we've got a great investment committee and a great team of people behind us and the technology area so you can get to know them on our website as well. And then also go to our our. Mejan, vision and as always like to stress here, go to the core values. I like to say everything that we do here at 360 capital, to a certain extent, it's negotiable. Okay. What is not negotiable are those core values. As I like to say, I'll die long before those, right? I hope I'm here for a while in 54. But those core values, we try to live those out each and every day that we serve you, the client, the listener, and we're going to continue to do that. But I always say, you know, my dad used to tell me, do what you get hired for what You know, You get fired for who you are. So make sure you have a good set of core values that you stand behind and live those values don't just have them written. Those values are who we are.

Dwight Mejan:
That's why I take this moment in this segment just to direct you there and see if you resonate with those. If you don't, my goal when when we wrote those values decades ago was to have it polarize people. You're either, you know, agree with those values or you don't. And if you don't, hey, if you want to still listen to the show, that's great. But that is who we are on those core values and on that that Mejan page. So but hey, we're glad you're with us today. And we want to dive into today's show, but we have a report that we always like to put out there early in the show that's available to you as the listeners. I like this report because it's on tax free investments for a better retirement. So if you would like to get your hands on that report just for being a listener, you can reach out to us at Retire360Show.com or call us at one of the numbers that we mentioned earlier and we'll give you that number out more throughout the show and just ask for the free Tax Free investment report for a better retirement and we'll make sure we get that in your hands. So we want to talk about today, we're going to get into the quote of the week. We're probably won't have time to get in all the topics we have on today's show because we didn't finish with part of last week's show. So we're going to pick up there where we left off.

Dwight Mejan:
But, you know, we've been trying to help our listeners understand their investments by understanding some key terminology that some people just take for granted. A lot of advisors take for granted sometimes that people understand certain terminology, and we never want to talk above our clients or our listeners. So we want to make sure that you understand some of the key terms that we talk about frequently on the show. So we're going to define some more of those here in today's show. Mitchell's going to get to the quote of the week. We're going to talk about a major US bank that was overcharging millions of dollars and some of the details that came out of that hearing. And we're going to talk about your fees. We've been talking about that in a series of episodes here about whether or not you're paying too much in fees for your portfolio. So we're going to explore a little more of that today and how to keep more of your hard earned money. And then if we have time today, we'll get into beating the banks as far as CD rates, although those are up pretty good right now with higher interest rates, there might be some other opportunities out there. If you're a risk averse and are looking for more safety instruments, we'll talk about some ideas for that. And then we're going to talk about those terms of the week. So, Mitchell, take us through the quote of the week here.

Producer:
And now wholesome financial wisdom. It's time for the Quote of the Week.

Mitchell Keiser:
This week's wisdom is brought to us by the famous Albert Einstein, and that is, compound interest is the eighth wonder of the world. Those who understand it earn it, and those who don't pay it think that's good. So those who understand it earn it. Those are the people that are investing their money and the ones who don't pay it. So those are the people that are choosing not to invest their money and they're choosing just to live day by day, just keeping their money on the sidelines. And they're going to end up having to pay the cost of inflation, which ultimately ends in a digression in their lifestyle. At least that is my interpretation of that quote.

Dwight Mejan:
Yeah, well, it's it's great if we have any younger listeners. Mitchell Listening to the show, there's a lot of if you Google any compound interest calculator if you've never played around with that, I highly encourage you to go do that. You know if you're in your 20s or 30s or you're behind the ball as far as your retirement goes, go to one of those compound interest calculators and it'll have you plug in a sum of money that you're starting with. If it's zero, you just plug in zero and then it'll tell you, you know, assume a retirement may be, let's say, to age 67 and then just assume how much you're going to start saving right now with an interest rate just put in like 7% and then delay it and start ten years later and do the same thing. It's we're talking, you know, depending on how much you're able to save a month, hundreds of thousands of dollars difference by delaying just a year or two, 5 or 10 years. So we encourage people to use take advantage of that compound interest. But don't fear if you're listening to the show right now and you're like, Man, I am way behind the eight ball in my retirement. We're going to get to a segment here right now. In fact. Mitchell, do you have another quote or proverb for the week so we can just hop right into it here? What we're going we're going to talk about kind of leads right up.

Mitchell Keiser:
So another proverb I got for you guys is the best time to plant a tree was 20 years ago. The second best time is now. And again, my interpretation of that, if you guys are late to the game or if you think, Oh, well, I should have been doing this all these years or I should have been investing in that, or my mom will always send me these things. Oh, well, I heard Suzy Orman posted this video that said you can have $1 million if you invest X, Y and Z at the age of 20, which all of that could be very true. But if you did not do that when you were 20 or you didn't do that and your prime years, it's definitely not too late to start. It's never too late to start accumulating wealth for yourself and for your family.

Dwight Mejan:
Absolutely. Well, that's where we're headed right here. Mitchell is we want to talk about that. If you are listening now and you feel like you're behind in your retirement, we want to give you some ideas of some things you can be doing to catch up because it's never too late. So if you're perhaps a younger baby boomer who perhaps has maybe five to 9 or 10 years until you reach your full Social Security or retirement age, which is going to be typically age 67. If you're in that category, you still have an opportunity to boost your retirement savings. These practices that we're going to talk about here could help you reach your goals. And we're always available here to speak with you for a free consultation of where we can maybe help you get started and personalize a plan for you. So, Mitchell, why don't you take them through the first one and was I always want to say something here. I think we've got some people perhaps listening that own a business and maybe your business is your retirement plan. You know, a lot of business owners, that's what they do.

Dwight Mejan:
They keep growing their business and that's the retirement plan. But perhaps you're looking maybe you have a buyer for a business that you're ready to sell. Those are one of the areas that we specialize in here at 360 Capital Management, our firm working with high net worth clients, working with business owners. So if you're perhaps getting ready to sell a business, you're not only going to want to get to that taxes and retirement class, you're going to want to talk with us before you sell that business because we can give you specifically some strategies that you could do to get a lot of that growth off the current year's tax return and strategize a plan to take that profit over the business over, you know, several different years. And anyway, we don't have time to go into that strategy today. But if you are a business owner, make sure you reach out to us. But Mitchell, what's a simple, practical way that somebody listening who fits this description that we've been talking about, what's a simple step they can take one of them?

Mitchell Keiser:
Yep. So getting into some practical steps because we talk about a lot of strategies. So what are you guys what are you supposed to do with that? So the first tip I have for you guys is to save more. The quickest way to add to that retirement nest egg is to increase that eventual compound interest. We know compound interest is our friend. As I just said a little bit ago, reviewing your household budget to cut those expenses, finding ways to increase your rate of saving. I've also heard quotes just from Elon Musk. I think everybody knows who that. Is talking about how sometimes it's easier to increase your income. Think he used the example of $12,000 a year? $1,000 a month. It's easier to increase your income by $12,000 a year than it is to cut your budget by $12,000 a year. So increasing your income, cutting your budget and finding ways that you can sock more of that money away.

Dwight Mejan:
Yeah, the great, great tip there. Number two would be add an IRA so you can add an individual retirement account, an IRA. Even if you participate in a 401. K plan at your work and the 401. K, the maximum you can contribute there if you're under 50 is $22,500. If you're over 50, you can contribute up to $30,000. But did you you may not have known that you can also contribute and participate if you do a 401. K at work. You can open up a Roth or a traditional IRA. So if you do a Roth, we talk about that a lot on this show. That's where you can contribute after tax dollars. You'll pay taxes on the contribution, but you won't be taxed on that money while it grows. And when you take it out. So you can add another $7,500 after maxing out your 401. K deferrals. If you're over 50, which is, like I said, 22,500 a year in the 401. K and actually 30,000 if you're over 50. So keep in mind that you can you can do that. And you know, 6500 is what you can do if you're under 50 for an IRA and 7500 if you're 50 or older.

Mitchell Keiser:
Yep.

Mitchell Keiser:
So that was good for and catch up contributions. The next tip delaying Social Security. So your Social Security every year that you guys delay that, it will increase by 8% each year and that will be for the rest of your life. So depending on when you and your spouse are going to retire would probably depend on when the best time is to take it. We say that's different person to person, situation to situation.

Dwight Mejan:
Yep. The other thing you could do here is you could work longer. You can stay. Staying on the job is going to make it easier to delay collecting Social Security. Hopefully, if you like what you're doing. Perhaps you like who you're doing it with. You won't need to tap that savings earlier to pay for some of that living expenses. So working part time during retirement also reduces your retirement withdrawals. So it's going to stretch out your savings. So just consider your work situation. And also, you know, Mitchell had just mentioned this. You know, there's a lot of Social Security claiming strategies out there. We teach a class on that. We don't have one yet on the schedule. But even if you're listening to the show and you listen to it often, you say, Hey, I'd like to get into your next class, reach out to us, you can email us or call us and just give us your name. We've got some people we're calling for the next class that we're doing for that. So if you want to be added to that, just let us know.

Mitchell Keiser:
Yep. And then the last tip we have for you guys is creating a pension. You can create your own pension that you guys cannot outlive. That would be with if you guys are selling a business or you have an IRA and you'd like to use a portion of that to make sure that you will never run out of money, even if the stock markets go to kaput, or you are worried about that now or spending down a certain amount of money, there is a way that you can guarantee that we won't get into specifics on this show. But if that's something of interest to you, that is definitely an option that you have available.

Dwight Mejan:
Yeah. Well, there you have it. There's several ways that, you know, you can catch up a little bit if you're nearing retirement that you may think of some more. But those are some big ones that we see and a lot of strategies that we have, people that we meet with on a day in, day out basis that we give for folks that they can, you know, do to try to hang on to a little bit more of their money and build it up a little bit before they go into the years of, you know, taking income. So just want to give our listeners an update here on something you might remember that happened a while back between a major brokerage firm, Wells Fargo. They had a hearing that took place recently that basically they charged almost 11,000 investment. These were advisory accounts that they managed approximately 27 million in fees. That's what the regulators alleged. This past Friday, Wells Fargo agreed in this hearing to pay 35 million in civil penalty to settle the matter. And they wouldn't admit or didn't admit or deny the charges. I always find that interesting.

Dwight Mejan:
They wouldn't admit they wouldn't deny it. They just wanted to settle it. But I always say if they were not guilty of it, they would have probably paid a lot less than 35 million to defend themselves. So you can read between the lines there, what you what you wish. But the agency basically said Wells Fargo paid account holders about 40 million, including interest to reimburse customers who had been overcharged. Some of you listeners might be a recipient of that if you did business with Wells Fargo during that era. But regulators said that Wells Fargo failed to use compliance systems and designed basically to ensure billing systems contained accurate data and didn't effectively monitor that the bank was not overcharging clients. The SEC also said Wells Fargo overcharged some clients who opened accounts prior to 2014 through the end of 2022. So there was quite a lengthy period of time there before they got caught, but they did eventually find some things that were going on wrong there. And hopefully if you were one of those, you saw some money go back into your account or saw some reimbursement.

Mitchell Keiser:
But, you know, always whenever I hear something like that, that happens just makes me think what fees are coming out of my account that I'm not aware of. I think I told you it's just a couple of weeks ago we were at a restaurant and a couple days after I saw the bill on my credit card statement for what it was that for our food. And I saw that there was a tip that was like quadruple what I wrote on the thing. It was like over what our bill was. Somebody added like it was like 45% of a tip on to that. And obviously we call and contested it. But, you know, how often would you just not check to see and to like match those receipts or know another one is like Amazon like. Everybody uses Amazon and Walmart and all these things that you just look as a common charge. But, you know, how do you know that somebody's not denying or committing some form of fraud like on your credit card or and in this instance, it's in your your statements, fees, expense charges. I mean, you really don't know all that's coming out. So it is good to make sure that you're, you know, auditing your personal, your financial, all those different statements because, you know, knowledge is power, especially when it comes to what you've got.

Dwight Mejan:
I remember when you found that Mitchell, and they they did make it right and said it was they claimed it was a mistake. Right. Which it very well could have been just an honest mistake. But if you didn't look for that, you wouldn't have found it.

Mitchell Keiser:
Yep. Correct.

Dwight Mejan:
Oh, but yeah, you know, we Mitchell, we've got a lot of listeners who come to our office and they just don't understand their charges, you know? And one of the things that we help our listeners do is we analyze your portfolio to make sure that you're not being overcharged for anything that you haven't agreed to. We can also help you identify areas of your portfolio that can be adjusted so that you can keep more of your hard earned money. You know, we talked a lot a week or two ago about expense ratios was one of the terms we were talking about. We had some listeners who took us up on that offer to to run just, you know, they didn't send us account numbers or anything like that. They just said, here's the here's the funds that I hold in my portfolio and had met with somebody yesterday who had a had an expense charge. That was, we thought about a half a percent more than what it should have been. It just seemed a little bit high because the types of funds they were using. And one of the things that we did is we, you know, this is just to so people have a perspective, an idea of what a half a percent is.

Dwight Mejan:
If you're getting charged, you know, 0.5% or in the case I'm describing here, half a percent too much for every $100,000 that you have invested, and that's $500 that you're paying just in for the investment costs for the positions that you hold. So imagine having $1 million and being charged a half a million or half a point too much. That's $5,000. So it can add up. And that's just one area, which is the expense ratio. So you've got to be careful of that. If you'd like to take advantage of our portfolio X-ray, as we like to call it, where we look at those holdings to see what it is you're paying and maybe uncover some other charges you're not aware of. Just reach out to us today. You can call us if you're in the Moore County area. You can reach out to us at (910) 235-0812. If you're in the western part of the state, up in the mountains, we're at (828) 278-7814. And just tell us you'd like to have us look at that and we'll be glad to set up a complimentary time with you to go through that. There's no cost to you. We'll find out exactly how much you're paying in fees.

Dwight Mejan:
We can help you cut unnecessary costs that are in your IRA or your 401. K or other retirement plans. We can also help you look at Social Security planning. We talked a little bit about that earlier. We'd be glad to help you with that. We'll analyze your whole situation. We'll look at what fee you're paying your advisor. That might be too much. All of that. And we'll we'll lay out for you what it would look like if you were to work with us. And one of the plans that we would recommend will strip it down for you to show you what the fees are and just lay it down side by side and compare. So it's your call. It's your money. You can't change the past, but you certainly can change your future today. So we encourage you to pick up the phone and call us. But we're going to take a brief break. And when we come back, we'll pick up where we left off. We're going to go into this week's Cost Cutter of the Week, and we're going to continue our conversation about how much you're paying in fees. So we'll be right back.

Producer:
At 360 Capital Management. We know you've worked hard to earn your money and you've worked even harder to save it. When it comes to wealth management and planning for retirement, Dwight Mason is passionate about helping people protect and grow their wealth. Visit Retire360Show.com to schedule your free consultation today it's a $1,500 value provided at no cost to you. Book yours now at Retire360Show.com. You're listening to Retire 360 with Dwight Mejan. Now back to the show.

Mitchell Keiser:
Hello, folks. We are back and you guys are listening to the Retire 360 show brought to you by 360 Capital Management. We are going to hop into a segment here called Cost Cutters of the Week. Are you paying these fees? What just got done reading an article about a major bank and how some people got frauded out of a bunch of different fees. So, Dwight, what are investment fees for our listeners to be aware of?

Dwight Mejan:
Yeah. Well, Mitchell, one of the things we talk about with fees is, you know, they're they're hidden in a lot of investments. Sometimes they're disclosed. They're easy to find. Other times, you got to really be dissecting your portfolio to see what's coming out. Right? And, you know, nobody works for free. We don't do this for free. You know, you can't work that way. But there becomes a point where what you're paying either for the investments you have, the advice that you're receiving, or maybe lack thereof, plus the price that you're paying, it just begins to be excessive or not getting the value that you could get. I know one of the things that, you know, we say here at 360, Capital Management, you know, a lot of firms, you know, they invest your dollars. That's what you rely on them to do is to build an investment plan and create a portfolio strategy that's in line with your time horizon and your objectives, your financial goals. Okay. That's the investment plan we build. Our company is built on five pillars. Every client gets the same attention in all five of these pillars. So we do the investment plan like we're talking about, okay, within that investment plan, you know, there's fees for the assets that you own unless you own a stock portfolio. Okay? But typically, if you're using any other investments, typically there's like mutual funds, exchange traded funds, someone has to pick the funds that are going in that basket, if you will.

Dwight Mejan:
It's a basket of securities. There's fund cost to do that. So that's called your expense ratio. And mutual funds have that in there. They have operating expenses. We'll get to those in a minute. So you have an we build an investment plan. Second thing that we build for every client is an income plan. Some clients don't need income right away, but we still come up with an income flow plan because if they have tax deferred money in their portfolio, if we allow that client or don't have the conversation with them about just waiting, maybe they're retiring in their mid 60s. And currently RMDs for a lot of people are age 73. That's an eight year period of time before someone has to start pulling money from that portfolio based on RMDs. So it could be that, you know, if you wait that long waiting that long with some assumed growth on that portfolio, the amount of money that you're forced then to take is going to be subject to what the IRS requires you to take out at the minimum level. That could thrust you into a significantly higher tax bracket. So the reason we call it an income plan or an income flow plan is it may be to your advantage.

Dwight Mejan:
Even if you don't need that income, it's, you know, in your 60s when you retire, you might still be a good candidate to start pulling money out and shifting those dollars into a tax free bucket. Okay. There's a strategy around that, not for this part or this segment of the show, but that's why we always say every client client should have an income plan whether or not they need income or not. It's just shifting money over to a tax free bucket. The third thing that we do is we talk about a tax plan. How do we build a tax efficient strategy to not only grow the wealth, making sure that we have the right investments chosen for each tax bucket because there's only three tax buckets, right? There's tax free, there's tax deferred, and then there's taxable. We've got to make sure we're holding the right investments in each of those buckets. That's part of building the tax plan. But it's also looking forward down the road to what could be coming in terms of more income on the tax return due to that required minimum distribution and other factors that might change as you age deeper into retirement. So that's the third pillar for us.

Dwight Mejan:
We got investment plan, we've got income plan, we've got tax plan. Then we've got your your estate and your legacy plan, right? What's going to happen when you get your wings and fly out of here? You don't figure that out when you're gone. You figure it out before you go. So we help clients structure their assets, titling their accounts properly, getting them connected to make sure. Do they need a will? Do they need a trust making sure all the durable power of attorney, the medical directives, all of that needs to be put in. Place. So we focus on the estate and legacy plan. And then finally the fifth area. And we do this all in house with people here. We look at the health care piece. That's your Medicare, that's your drug coverage, that's your long term care. We have these discussions with everybody, whether they decide to use a long term care strategy or not. We want to show them all the different opportunities because as fiduciaries, that's what we are called to do. So we look at things from a very holistic standpoint. So you just got a little bit there. Of the five pillars that we do here at 360 Capital Management. And I would just ask you to ask yourself how many of those that I just mentioned, investment plan, income plan, tax plan, estate plan and health care plan, How many of those does the current advisor that you work with, do you sit down and discuss those? Have you had a conversation around all of those? If you haven't, you may want to be thinking about picking up the phone and saying, Huh, I just want to hear what they have to offer.

Dwight Mejan:
Maybe run a comparative portfolio analysis and tell me, yeah, what am I paying in these fees? So what are those? What are those fees? Well, the investment fees to be aware of are mutual funds. Charge operating expenses. Okay. Some types of mutual funds have higher expenses than others. It's a percentage of the fund that you have that you own. Investment management fees are charged as a percentage of the total assets that are managed. Many brokerages also charge a transaction fee each time an order to buy or sell a mutual fund or stock is placed. So question is, do you get charged transaction fees? If so, how much? You know, there's a reason that a lot of the fees on a statement aren't listed on the front cover. They'll get your attention Right. Where you find these charges is more towards the back side. And some of them are disclosed where it's easy to find them because it'll say advisory fee and it'll be disclosed somewhere on that statement.

Dwight Mejan:
That is, typically if you pay a fee advice for advice that you get, that has to be disclosed on your statement. It's going to show on there. But some people only have it on their quarterly statement, some will have it monthly. The mutual fund operating charge or operating expense charge. That's not something you're going to readily find. That's only going to be found through looking up each fund. You can find it by keying in the ticker symbol. We'll do it for you by just plugging in the funds that you own and give you the, you know, the amount for the total portfolio. Because if you had to do that individually, you'd have to wait the percentage of each fund and our software will do that all for you really quick. So you just got to understand if you're paying transaction fees on top of those other fees and you got to look for also another fees, a front end load or a back end load, which is basically a comMejan that you're paying on the front end to purchase mutual funds or you'll pay it on the sales side when you exit. So you got to understand, you know, what are you paying in terms of loads on those funds? And brokerages may also charge an annual custodian fee.

Mitchell Keiser:
Dwight, question for you that a lot of our listeners might be asking. So what is a reasonable expense ratio charge?

Dwight Mejan:
Yeah, that's a we get that question quite a bit. Mitchell You know, at the end of the day, you know, we'd like to see in a portfolio expense ratios of less than one third of 1%. Certainly, I think, you know, ours are under 2/10 of 1% to some of them being, you know, either zero or, you know, 0.05 or 1 10th of 1%. But, you know, at the end of the day, what you're looking for, if you're paying a half a percent, certainly the next thing we're going to look at is what's the track record of this fund or these funds that are charging higher expense ratios? Because if the fund is performed above average, you know, at the end of the day, it's how much you're keeping. So if what you're making net of that expense ratio has a really good track record of consistent years, outperforming other funds in that same class that you own, it, you know, may not be a big deal, but still something you have to consider. You have to understand and we find frankly, Mitchell, you see this all the time. You know, if we ask people what is the total expenses of your portfolio, I don't think I've ever had anybody through the years tell me what that is. They have no clue. When they add it all up, they add up what their advisory fee is and all of that, all those fees we're talking about. Very few people know what that number is.

Mitchell Keiser:
A lot of those fees that you just kind of went through. I'm kind of thinking about where it is on the statement. And, you know, the average person that doesn't look at financial statements for a living might think, well, my fees aren't that bad. I know that I'm not paying all that well. The fees, I think it's notable to say they're probably, you know, on the third page in the small print. I mean, it's not like you get your statement and they would highlight the fees for you, you know, circle it and red and, you know, point to it with an arrow that's usually embedded within your statement pretty well. Is that fair? Exactly.

Dwight Mejan:
Exactly. 100%. Yeah.

Mitchell Keiser:
And my question to you is, when we have people coming in that would take us up on that and say, Hey, Dwight, just tell me how much am I paying on this? Or what does this look like? What are those expense ratios within the mutual funds that I hold? What would you say is the average person that's not with us that just comes in and asks us that question? What would you say the average person has as their current expense ratio if.

Dwight Mejan:
They if they're in a mutual fund primarily portfolio, which is what we tend to see a lot with people that walk in here, heavy mutual funds, I'd say it's better than 75% of most portfolios have the majority in mutual funds. The average expense ratio for the entire portfolio that we see is ranging anywhere from 0.5, 0.55% to just slightly in the low 1% range. That's a lot of money.

Mitchell Keiser:
Yeah, that's what I was thinking.

Dwight Mejan:
It's a lot of money. You know, it was a half a percent range. But you know, there's other there's other asset classes that we can get those expenses down that have similar investment characteristics from a risk reward return standpoint. And that's, you know, again, for a different day, different subject that we'll be talking on regarding the show. But yeah, that's good. Good questions. Mitchell And questions that we get from a lot of our listeners for sure.

Producer:
Need a higher rate of return from your safe money. Listen up. It's time to beat the bank CD rates.

Mitchell Keiser:
Yeah. So turning gears here, Dwight. So beating the bank CDs with my GS during periods of high interest rates, such as? Now, these banks, they're increasing their CD rates. Now I see CD rates pop on my Facebook. I get it from my bank. My bank sends me letters. Another similar form of CD is a meiga. I know a lot of our retirees use Mica's, which stands for Multi-Year guaranteed annuity. Dwight Why would somebody want to consider a mica rather than a bank CD?

Dwight Mejan:
Yeah, so just good question from you, Mitchell, and a lot of our listeners ask that again, the Mica multiyear guaranteed annuity. It's very similar. If you think about a bank that's going to lock you in for more than a 12 months. Think of a 24 month CD, a 36 month CD, a 60 month CD. You know, we're in an interesting time right now because we have, you know, inverted yields happening right now where the short term yields are actually higher than the longer term ones. Kind of crazy. Different reasons why that happens. Again, we won't get into those today. But, you know, the reason you might want to consider multi year guaranteed for then we're talking about your safe money. Okay. So if we take a person's age and they're listening to this and they're 60 and their goal is to have half of their principal protected, which I think is a good, you know, percentage to to shoot for. If you're listening to this and you're 60 years old, you want to have half of that investment portfolio completely sheltered from downside volatility. So if the market drops, that 50% of your money is completely insulated from that and protected. So that's the money I want you to think about as you think about your own portfolio.

Dwight Mejan:
While we're talking about this, the reason you'd want to consider a Miga for some of that money is there's higher interest rates typically in these miga's, more so than a lot of banks are offering, and they provide higher interest rates compared to traditional CD rates. This can result in substantially more returns over the life of this fixed annuity. So let's just say, for example, there is a fixed yield out there. I know there's a product right now in the low 6% range for ten years. So if you're one that says, Hey, I'm happy with 6%, I don't think the feds are going to move anymore in the next ten years on interest. That's a pure speculation. If you think that way, you might be right. But if you like that offering, you know, you can lock in today rates in those 6% ranges for ten years and that rate is going to be the same throughout the ten year period. So you can virtually calculate to the penny if you put in, you know, $10,000 how much it's going to be worth in ten years. If you know the interest rate. So higher interest rates is one reason why you'd want to consider a Miga over a CD, because typically you're not going to get that those same interest rates.

Dwight Mejan:
If you compare the same term, the miga's are typically going to pay more. The second reason would be tax deferred growth. So if you're sitting on a pile of cash in your checking account or your money market and you're like, Man, I've got to do something with this money, like bank CDs, these miga's, multiyear guaranteed annuities, they offer a guaranteed return of principal, but they also provide the advantage of tax deferred growth. So the interest that you're earning in the given year, like if you put that in a CD, what's the bank send you at the end of the year? You're going to get a 1099 to report that interest even if you let it accrue in the account, don't even pull it out. You're going to pay the tax on that. But in Omega, that interest that you earn, it's not taxed until you withdraw it from the account which allows the annuity to potentially grow faster over a period of time. So those would be two reasons. And I think, Mitchell, you've got a couple more about why you might want another one.

Mitchell Keiser:
I would probably just add to that is creditor protection. So a CD with the bank is backed up by the FDIC up to $250,000. Mca is backed up by the Guaranty Association up to $300,000, $50,000. Big deal, right? Well, I'll also say the FDIC, with a bank, they're only required to have 10% of Federal Reserve funds backing them up where the Guaranty Association is required to have 100% financial backing. So less likely for it to go belly up again. Anything can happen. You know, we're not in a risk immune world. They also have flexibility. You could do a partial withdrawal without surrender charges. And a lot of times bank CDs, you aren't allowed to withdraw any money out of them unless you take some form of interest penalty or I don't think there's a principal penalty. But a lot of times you have to forfeit interest where my goes. A lot of those will allow, depending on the situation, they'll allow you to take out withdrawals.

Dwight Mejan:
Financial security would be another reason. Again, we're talking here, if you just joined us, folks, about your safe money, money that you've got that you don't want to take risk being in the market with. And we're talking about multiyear guaranteed annuities compared to certificates of deposit that might match the same term whether you're looking at one year or two years or three years. You know, Midas can provide retirees with a sense of financial security as they offer guaranteed returns and guaranteed income options. This can help alleviate concerns about volatility that's in the market that affects their retirement funds. And then lastly, the other thing I would tell you is diversification, including migas in a retirement portfolio. What it can do is enhance diversification, which is important for managing risk and achieving a balanced investment strategy. So we we like considering these for that reason for diversification. So if you're interested in any of the points that we've talked about, about what migas, you know, what they are and rates that are currently available, we encourage you to give us a call. So reach out to us. If you're in the Moore County area at (910) 235-0812. Or if you're up in the mountains, call us at (828) 278-7814. We'll look at your goals identify which option would be best for your specific situation, and we will be glad to help you on that. But hey, let's take another break. And when we come back, we'll finish up today's show. We'll be right back.

Producer:
You're listening to Retire 360.

Dwight Mejan:
Thanks for being with us today at the Retire 360 show. I'm your host, Dwight Mejan. Alongside me is Mitchell Keiser. Hey, we've got another term that we want to go over with you. We've been defining some financial terms. We've been trying to do this slowly each week to not, you know, put too much of this on your plate, because some of these terminology that we use is new to people. But one of the things one of our jobs, when we do an analysis of someone's portfolio and we lay that against their risk that they're comfortable taking and some of their financial goals, we want to look at a new term that we may have used it before on the show. We don't use it a lot, but it's called the correlation or correlation of your assets. And we want to take a look at that because it is relevant. What we do here day in and day out, I know I'm looking at correlation virtually on a daily basis. You know, when we're looking at clients portfolios, it's not something typically a client is thinking about, nor should they necessarily be thinking about, but they want to know that their advisor's thinking about it. But some of you won't want to know what that is. But correlation in its simplest explanation, it's a statistic that measures the degree to which two securities move in relationship to each other. Okay, so correlation of assets is crucial for retirees and investors to understand because it it directly impacts the diversification and risk management strategies within their retirement investment portfolio.

Dwight Mejan:
And we have a few reasons why proper correlation is important, but had an interesting question from somebody actually this morning before we came on the show. I was we were talking about his portfolio and we were looking at his his risk. And he had a great question. Nobody ever asked it to me before. He said, Dwight, I assume that correlation, if it's if you have a portfolio that's highly correlated, you might hear that term. You have a highly correlated portfolio. What that essentially means is the assets in your portfolio all move the same direction in a given market cycle. So if the market's in an upward movement moving up and you have a highly correlated portfolio, it means you're going to get a lot of boost out of that portfolio because everything in it is has a tendency to move. Virtually the same amount, the same direction with the market goes up, all the assets in the portfolio are going up. That seems ideal, right? But when the market's moving down, it's the same thing. So it can work really well. A highly correlated portfolio in an upward market like we saw for ten years prior to 2022, many of you saw some great gains and really didn't have to think about correlation. It was like, well, great, everything's moving up together. But when you have a down year like we had in 2022, if you have a highly correlated portfolio, those losses get felt to the same degree.

Dwight Mejan:
It could be very steep depending on how aggressive that portfolio is. So but this individual said, Dwight, that correlation may not be as critical if it's highly correlated. If you're a new investor and you're young, just getting started and that's 100% accurate. It was a great observation that he had, and he's right because you can stomach more losses when you're younger or you should be able to tolerate more because you have more years ahead of you. You know, Mitchell on the show here, you know, he's got 40 years ahead of him. And if I crack the whip on him harder, he might have 50 years left to work, you know, And that's just, you know, he's got more time to have a portfolio that's highly correlated. So he should have a highly correlated portfolio. He should be heavy in equities. Somebody like myself at 54, I want to have some negative correlation in my portfolio. And I'll give you an example of what two assets if I owned a fund that mirrored the S&P 500, let's just say on an ETF or mutual fund with the S&P 500 and I owned gold. Those two assets are going to have negative correlation with each other because as the market goes up, typically the value of gold and other commodities is going down. Okay, and vice versa. When gold is going up, the market's typically going down or when the market's going down, people tend to grab more, you know, solid assets and commodities, gold and silver, it's going to go up.

Dwight Mejan:
So as we get closer to retirement, and particularly as we need income, if you're listening to this and you're an investor that needs income from your portfolio, you want to be very, very, very cautious about how correlated your assets are. You want some moderate correlation in your portfolio so that when some assets go up, the others, you know, drop a little bit and vice versa. When there's big drops in the market, if you've got some negative correlation, you'll have some assets that are going up. So even though you have moderate correlation, you still want to get some growth. You just want to avoid the steep, steep losses. And that's what having a correlation that's, you know, somewhat, you know, moderate to slightly negative. The closer you get to retirement or when you need income, that's why you want to have that. So one of the things that it does, why correlation is important, number one is risk management. Correlation, as I mentioned, is going to measure how two assets move in relationship to each other. Assets with lower negative correlation tend to move independent from one another by investing in assets with different correlation patterns. A retiree or an investor is going to reduce their overall portfolio risk. If one asset class experiences a downturn, another may perform well, which is going to help mitigate the losses from that one that went down.

Mitchell Keiser:
So in mitigating the downturn, we are going to, which is, number two, diversify diversification. So when you have one asset going up, one asset going down, you have two different assets with two different jobs essentially. So that's kind of what you want. You want to have your portfolio, your buckets of money, all you know, all at work, but all at different jobs, doing different forms of work, getting you interest in different types of environments and different types of industries and so forth. So with that, the last one is the stability of return. So when certain investments in certain strategies are going up and certain strategies are going down, that kind of goes in cycles as we've seen over the course of the stock market. So if you continue that course, you're going to continuously be catching the returns of different industries, different strategies, and you're not going to have to worry about such drastic swings as you would if all your assets were highly correlated.

Dwight Mejan:
So yeah, and and the goal here, ultimately, folks with correlation, the ultimate goal is we want to capture as much of the upside of the gains and minimize as little bit of the losses. And you know, this is very much, you know, a science that's at play here. And one of the things that we'll do if you've never seen a correlation matrix and you're a visual, you know, you like pictures, you like graphs, you like charts. One of the things that we do and we do this for our listeners of the show complimentary, will run as part of the fee analysis I was talking about earlier. If you want to see, you know, other possible costs that you're paying that you're not aware of or you maybe didn't think you authorized for your portfolio, we'll run that as part of that will run a correlation matrix where it takes all of your holdings and it matches each holding to the to a different holding in the portfolio. And it's really cool because it's in color and you can see there's a there's a legend of five different colors on this matrix. And you can kind of see is my portfolio all dark, dark blue. That would be a highly correlated portfolio. If you've got a lot of orange in there, that's a negative correlated portfolio and it's not necessarily, you know, going to be equal colors or that's not necessarily the goal.

Dwight Mejan:
The goal is to get as much of the return that you can when markets are on the upside and mitigate or minimize the losses on the downside. So we'd love to help you with that. We'd love to run that report for you. It doesn't cost you anything as a listener, so I will just give you our numbers. Anything we've talked about on today's show, we'll be happy to go over in detail with you. If you want to reach out to us by email, just go to retire 360 show. That's all one word, retire 360. Show.com you can click on a link there and say, I want to schedule a complimentary meeting with you. We don't need your account numbers. We're not going to prod you for private information. We'll just run an analysis on your report and it will probably engage you into a deeper discussion when we explain some things to you that come out of that analysis. So we can do that. If you want to call us, reach out to us at (828) 278-7814. Or call us if you're in the Moore County area at (910) 235-0812. And Mitchell why don't you and closing out the show here why don't you give everybody one more time, particularly our listeners up in Watauga Avery County area our next taxes in retirement workshop.

Mitchell Keiser:
Yep. If you guys are in the Watauga or Avery County, we are going to be doing a class there on September 21st on taxes and retirement. That is our big class. It's the starter class. It's something that affects everybody, how we handle our taxes headed into the golden years. So September 21st, we've got a morning class and an evening class. Again, they do fill up and we actually only have a few seats left. So if you guys are interested in that, give us a call ahead of time so that way we can reserve you a seat. All of our seats are named and the best number to do that at is (828) 278-7814. Again, if you're interested in that class, call us at (828) 278-7814.

Dwight Mejan:
Absolutely. Hey, and maybe just closing out the show today, just something that was kind of on my heart at the start of the show here. You know, we're heading into Labor Day weekend. It's kind of the last weekend here of summer. And, you know, just have a burden on my heart right now for kind of where we're at as a country. You know, there's a lot of negative there's so much division right now in this country. I don't do this myself, which is probably why the good Lord put it on my heart. Um. Regardless of your political affiliation, whether you're independent, whether you're Democrat, whether you're a Republican. Let's take some time this weekend and just let's just pray for this country. Let's pray for our leaders and let's pray that we could get a true uniter that leads this country down a better path because we're so much better than what we're showing the rest of the world. I can't help but see that when, you know a little bit of news that I try to get these days, I want to stay current on things. But when I watch politics, it just makes me want to turn the channel off because it just it's so divisive and it just works people up.

Dwight Mejan:
It works me up sometimes when I see it. Just take some time. Be thankful for this land that we live in. Be thankful for those that gave the ultimate sacrifice. Those men and women in uniform, past, present and future. Thanks for your service. Thanks for allowing us to do what we do and thanks for spending some time with us. And we will be back next week and we will pick up where we left off. We're going to talk about some other good things. We didn't get to some stuff today which we didn't think we would. We're going to talk about sequence of return risk, and we'd love to answer more of your questions. So if you have ideas for our show or different topics that you'd like us to talk about, we get feedback from our listeners. We welcome that. It helps shape the show and we'll do the deep dive and explain things in more detail to you, the listeners, because chances are, if you're thinking about it, we have other listeners as well that want to hear about the same thing. So until then, I'm Dwight Mejan, your host, and Mitchell Keiser alongside me. Thanks for being with us today and have a great Labor Day weekend.

Producer:
Thanks for listening to retire 360. You deserve to work with an experienced and licensed expert who will strategically work to protect and grow your hard earned assets. To schedule your free no obligation consultation with Dwight, visit Retire360Show.com or pick up the phone and call (910) 235-0812. That's (910) 235-0812.

Producer:
Investment Advisory services offer through Brookstone Capital Management, LLC. Bcm A Registered Investment Advisor. Bcm and 360 Capital Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.

Producer:
Fixed annuities, including year guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity. Contract guarantees are backed by the financial strength and claims paying ability of the issuer.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including generate automated summaries powered by AI, automated translation, upload many different filetypes, world-class support, and easily transcribe your Zoom meetings. Try Sonix for free today.