Afford Anything

#377: Today’s episode is sheer retirement nerd bliss.We talk to the creator of the 4 percent retirement safe withdrawal rule, Bill Bengen.If you’re new to retirement planning, you might not yet grasp the gravity of this. Let’s cut to the chase: the 4 percent rule is one of the most revolutionary, groundbreaking insights in the field of retirement research in the past 30 years.To understand why, let’s climb in our time machines and return to 1994.Back then, many financial advisors were telling their clients that they could safely withdraw 7 percent of their retirement portfolio each year.After all, the simplistic logic went, the stock market has historically yielded between 7 to 9 percent returns, so that type of withdrawal rate shouldn’t dwindle the principle … right? ⠀Bill Bengen, an MIT graduate and former rocket scientist, decided to build a better model. He looked at the performance of investment portfolios across 30-year time horizons, beginning in 1926.Under the assumption that the portfolio is invested 50 percent in an S&P 500 Index and 50 percent in intermediate-term bonds, in a tax deferred account, he found that retirees could only withdraw 4.2 percent of their portfolio in the first year of retirement, and that amount adjusted for inflation each subsequent year.He called this the “safe withdrawal rate” that gave people a reasonable chance of not outliving their money, based on historic performance.He published the results in the Journal of Financial Planning and caused a stir. This was revolutionary. It upended the assumptions that dominated the field at the time.And it remains a cornerstone of retirement planning to this day.We talk to Bill Bengen about his discovery – and his latest research – in today’s episode.For more information, visit the show notes at https://affordanything.com/episode377 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#376: Meghan’s mom is 64 years old and suffering under a toxic boss. It’s tough to switch jobs at her age. How should she think through the next steps?Ellen has a 20-year-old son with physical and developmental disabilities. Her other child, age 21, will need to look after him for the rest of their lives. How should she handle their inheritance?Joe wants to start working part-time in four years, and fully retire four years after that. He worries he’s investing too aggressively for his retirement date.In today's episode, former financial planner Joe Saul-Sehy and I tackle these tough situations.Enjoy!Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it at https://affordanything.com/voicemail and we’ll answer them in a future episode._______For more information, visit the show notes at https://affordanything.com/episode376 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#375: Here’s the deal:The majority of people who write about personal finance repeat the same tired aphorisms and cliches.“Millennials aren’t investing enough,” they’ll lament. “Millennials are amassing wealth at a slower pace than previous generations!”But when you ask for their source, they turn up blank. Each writer points to a headline, which sources another headline, in a neverending circular secondary-source-citation that fails to point to any primary data source.Nick Maggiulli doesn’t play that game.If you haven’t heard the name Nick Maggiulli yet, prepare to meet one of the most original, insightful voices in the media landscape of personal finance and investing. (His last name is pronounced “ma - julie,” and his godfather refers to him as “paper hands,” but that latter point is a different story for another day.)Nick is a data scientist with a knack for clear written communication, a rare Venn Diagram intersection of skill sets. He holds a laser-focused interest in the arenas of personal finance and investing, and he’s eager to share fresh, nuanced, evidence-backed takes about savings, spending and investing with anyone who will listen.He recently released his first book, Just Keep Buying; the title reflects a user-friendly reminder to continue dollar-cost averaging. It also speaks to the main idea behind wealth creation: accumulate income-producing assets, consistently, for as long as you possibly can.It’s an honor to welcome Nick Maggiulli onto the Afford Anything podcast for what I hope is the first of many appearances. In today’s episode, we discuss actionable strategies for managing your money, including assessing your spot along the save-invest continuum, implementing the 2X rule into your spending decisions, and saving half of your inflation-adjusted future raises.Enjoy!For more information, visit the show notes at https://affordanything.com/episode375 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#374: Andy in Palm Springs wants to create an income stream through a taxable brokerage account. What strategy should he use to minimize the tax impact of withdrawing his gains?Jake wants investment cash flow until he’s eligible for his military pension in 10 years. Should he buy small multifamily properties right now, wait a few years and invest in syndications or should he invest in index funds through taxable accounts?Anonymous is a US Citizen, lives in London, and can’t invest in index funds. How can he invest while reducing his risk?Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.Enjoy!P.S. Got a question? Leave it at https://affordanything.com/voicemail Learn more about your ad choices. Visit podcastchoices.com/adchoices

#373: How do people make money in real estate?Many focus on rental income, but this is only one of five ways that properties create wealth.We explain five surprising ways that real estate builds your balance sheet: cash flow, appreciation (market-based and forced), tax benefits, principal paydown, and instant equity at closing.Why does this matter for long-distance investors?If you’re investing out-of-state, you’ll need to choose a city or town. How do you decide? First, think about how you want to bias your returns. Do you want to optimize for cash flow? More appreciation potential? Identifying this will help you align your city/town selection with your financial goals.If you’ve been thinking about investing in real estate – especially if you might invest long-distance – you’ll love this episode.Enjoy!For more information, visit the show notes at https://affordanything.com/episode373 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#372: Eve has been investing in her brokerage account and the tax liabilities are starting to add up. She wants to retire in 12 years and is wondering if she should invest in after-tax contributions and plan on a Roth conversion.Anonymous has rental properties and wants to start building his kids credit histories. Is it a good idea to add them as co-borrowers on the mortgage?Lily is really excited about investing in real estate, but househacking wasn’t the right fit. She’s looking for advice on investing in opportunity zones through crowdfunding platforms.In today's episode, former financial planner Joe Saul-Sehy and I tackle these tough situations.Enjoy!Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it at https://affordanything.com/voicemail and we’ll answer them in a future episode. Learn more about your ad choices. Visit podcastchoices.com/adchoices

#371: Psychology professor Bill von Hippel explains the evolutionary science behind how we’re hardwired as humans.We’re wired to be social, to connect, to communicate and cooperate.We’re wired to want to learn and teach, to build a collective body of knowledge that stretches beyond what any single individual could ever learn in their lifetime.We’re wired to feel surges of happiness that fade, so that we’re intrinsically motivated to keep repeating behaviors that lead to additional surges of happiness.Once we understand the evolutionary science behind what makes us happy, Dr. von Hippel explains, we can apply this knowledge to making better decisions for our work, money and lives.Bill von Hippel is a graduate of Yale University and the University of Michigan. He’s currently a psychology professor at the University of Queensland in Australia. He joins us to share his insights into the history and science of happiness.For more information, visit the show notes at https://affordanything.com/shownotes Learn more about your ad choices. Visit podcastchoices.com/adchoices

#370: Kristen is 32, and she and her husband want to retire in less than 20 years. They make too much to contribute to a Roth IRA. Should they use back door Roth conversions to speed along their path to early retirement?Michelle makes $190,000 and is going to switch to a career that pays $40,000 on average. To prepare for this lower salary, she's selling her current home and buying a different one. Should she pay off her new home with the proceeds from the old one? Or should she invest her profits?Anonymous lives in a high cost-of-living area and is wondering where to keep her down payment and emergency funds. Should she use I-bonds, TIPS, or some combination of these two?In today's episode, former financial planner Joe Saul-Sehy and I tackle these tough situations.Enjoy!Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it at https://affordanything.com/voicemail and we’ll answer them in a future episode. Learn more about your ad choices. Visit podcastchoices.com/adchoices

#369: To answer these questions, we need a deep, tree-trunk understanding – a core, fundamental understanding – of how the stock market operates.What, exactly, IS a stock – and how are stocks valued? What’s the difference between the Dow Jones, the S&P 500, and the Nasdaq? Why is the market a voting machine in the short-term, but a weighing machine in the long-term?Brian Feroldi, the author of “Why Does the Stock Market Go Up?,” joins us for a Stocks 101 explainer episode.If you’d like a deeper understanding of the world of stocks, you’ll enjoy this explainer episode.And if you have a friend/spouse/coworker who’s said, “I need to learn more about investing,” share this episode with them.Enjoy!For more information, visit the show notes at https://affordanything.com/episode369 Learn more about your ad choices. Visit podcastchoices.com/adchoices

#368: Grace wants to buy a manufactured home for rental income. Should she calculate her returns differently for a manufactured home?Alex is curious about cryptocurrency. How should she analyze the returns promised by different platforms and where can she go to learn more about crypto in general?Thomas and his wife have parallel goals of saving for a down payment and contributing to retirement accounts. How should they balance both of these goals?In today's episode, former financial planner Joe Saul-Sehy and I tackle these tough questions.Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.Enjoy!For more information, visit the show notes at https://affordanything.com/episode368 Learn more about your ad choices. Visit podcastchoices.com/adchoices