Ask HTM - Ending A Car Lease, Velocity Banking Tricks, & When Index Funds Are Too Risky #769
Jan 1, 2024
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Topics discussed in this episode include velocity banking, risks of index funds, ending a car lease, using digital platforms to teach kids about money, and the benefits of having cash on hand. The hosts also talk about setting financial goals, diversifying a portfolio for high net worth individuals, and the downsides of leasing a car.
Leasing a car is generally not recommended from a financial standpoint and finding someone to assume the lease payments through websites like swapalease or leasetrader is the best option for getting out of a car lease.
Seek unbiased financial advice and ensure that the incentives of the advisor align with your best interests to avoid overly complicated advice driven by a desire to sell products.
Assess your risk tolerance and past behavior during market downturns to determine if adjustments are necessary, and consider adding small cap value to investment portfolios for diversification purposes.
Deep dives
The Downsides of Leasing a Car
Leasing a car is generally not recommended from a financial standpoint, as it is a costly decision that rarely provides significant benefits.
Options for Getting Out of a Lease
If you want to get out of a car lease, the best option is to find someone willing to assume the payments by using websites like swapalease or leasetrader. Terminating a lease early at a dealership often incurs hefty fees.
Consider Buying the Leased Car
If the leased car is in good condition and has a reasonable residual value, buying it can be a practical option. However, make sure to compare prices and determine if buying the car is more cost-effective than getting a similar vehicle for less money.
Simplicity is Key in Financial Advice
The podcast discusses the importance of simplicity in financial advice. It highlights the Hello Nectarine model, where individuals pay for an hour of someone's time to get their opinion on their financial situation. The podcast emphasizes that simplicity is a feature, not a bug, and that overly complicated financial advice is often driven by a desire to sell products. The key takeaway is to seek unbiased advice and ensure that the incentives of the advisor align with your best interests.
Considerations for Market Downturns and Adding Diversity
The podcast explores two important considerations for investors. Firstly, it discusses the potential impact of market downturns on investment portfolios. It emphasizes that larger portfolios can be more significantly affected by market drops, and investors should assess their risk tolerance and behavior during past market declines to determine if adjustments are necessary. Secondly, it mentions the insights of Paul Merriman, who advocates for adding small cap value to investment portfolios for diversification purposes. While past performance may not guarantee future results, considering different asset classes can provide exposure to potential increased returns. Overall, the podcast emphasizes the importance of understanding market risks and seeking balanced investment strategies.
Let’s dive into the week with some fresh listener questions we have lined up for you! And don't just stand on the sidelines- if you have a question you’d like us to answer, toss your voice memo our way. It only takes about 90 seconds to record and you can find a step by step guide over at HowToMoney.com/ask . Regardless of how random or bizarre you might think it is, we want to hear it!
1 - What is velocity banking and should it be something I consider doing?
2 - Are index funds too risky as my net worth has grown?
3 - Should I take advantage of an Employee Stock Ownership Plan as I consider saving for retirement?
4 - How do I get out of a car lease?
5 - Does it make sense to use a digital platform like GoHenry to teach my kids how to handle their money?
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During this episode we enjoyed a Remain Restless by Hidden River Brewing- a big thanks to Rhiannah for sending this one our way! And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!
