E6: Things Your Crazy Uncle Was Wrong About at Thanksgiving

Executive Summary

This week’s episode gets into the holiday spirit as advisors Abrin Berkemeyer CFP® and Tyler Hafford dive into the common questions they get from relatives at the Thanksgiving table, as well as the financial planning tools they are most thankful for. Tune in and see the Things your crazy uncle might have been wrong about at Thanksgiving!

Question #1 – Should I invest my money or pay down debt?

Abrin tends to get this question quite a bit around the Thanksgiving table and is fairly common in any financial planning discussion. Making the decision to invest or pay down debt comes down to a couple big things. What is your expected rate of return in the market vs the guaranteed amount of savings you would earn by paying down your debt. An example would be that you have some outstanding debt with an interest rate of 3%, but your moderate investment portfolio is earning 6% a year. By keeping your money in market, you would be earning more than if you chose to pay down the debt. The flip side of that is if you had a credit card balance that had an interest rate of 20%. There is no investment out there that would guarantee you 20%, so your best financial move would be to pay that down!

Question #2 – How much do I need to retire?

This popular question comes up quite a bit for both Abrin and Tyler. Relatives and clients alike tend to think there is a certain number that will get them to the promise land of retirement. Abrin and Tyler discuss that while having a number in mind might help people save for this goal, the amount you need is completely determined by what type of lifestyle you live in retirement. $500,000 might be enough for someone, while another person may need something closer to 3 million. Working with a financial advisor to figure out what your number is can be extremely beneficial.

Question #3 – Should I refinance my Mortgage

Another common question in today’s interest rate environment is, should I refinance my mortgage? To determine if this is a good financial move requires us to take a look at a few different factors:

  • What is the length of the new loan?
  • What is the savings in interest (if any) on the new loan?
  • What will the new payment do to my monthly cashflow?

If you refinance at a slightly lower rate but extend it out quite a few years by getting a new 30-year mortgage, you may actually end up paying more in interest. However, if you are looking at either reducing your monthly payment or saving on interest, refinancing could be a powerful tool under the right circumstances.

Question #4 – What should I do with my old work plan?

If you have ever left a job, you may wonder what you should do with your old retirement plan? Should you keep it where it is, roll it over to your new work plan or move it to an IRA. Tyler highlights that in almost all circumstances it is more beneficial to move the old retirement out of the work plan and into an IRA. The reason behind this is that when you invest in an IRA you can choose from any investment in the world, rather than just the few funds selected for youby the work plan. Additionally, you can make annual IRA contributions and continue to grow the old plan.

Question #5 – What is an HSA and should I use it.

If you have a high deductible health insurance plan you are eligible to use a Health Savings account (HSA). This is the only account that you can put pre-tax money into, and if you use the money on healthcare expenses you can draw money out tax free. No other account allows pre-tax in and tax free out, so if you can use an HSA it can be a difference maker. In addition to the tax advantages, you can also carry money in the account over each year (unlike a flexible savings plan), as well as being able to invest the money!

What Tyler is Thankful for – ROTH IRA!!

Abrin and Tyler shift gears and start to explore financial strategies they are thankful for. Tyler is thankful for the Roth IRA. He discusses how a Roth IRA allows you to put after tax money into the account today and if you wait until 59.5 years old you can withdraw the earnings tax free. In addition to this great tax tool, you can always take the principal in the account out without incurring a 10% penalty or owing any taxes. By using this type of account in your financial planning you will add some good diversification to your tax picture in retirement!

Abrin is thankful for High-Yield Savings Accounts

These types of accounts are online lenders that credit savings accounts at rates much higher than your traditional savings account. While your bank account is probably earning .01%, these online high yield savings accounts are earning .6-.7%. They tend to credit interest equal to a 3-month CD, all while keeping the money completely liquid. They can be great for short term savings, or that emergency fund.

Lastly, we are thankful for 529 Plans

This type of account is very similar to a Roth IRA but for education savings. You invest after-tax money, but any growth can be withdrawn tax free if it is spent on “qualified higher education expenses”. They can be a powerful way of trying to keep up with rapidly rising tuition rates. One downside of the account is that if you don’t spend the earnings on education, you will be subject to a 10% penalty. However, like the Roth, you can always access the principal tax and penalty free.

DISCLAIMER: The foregoing content reflects the opinions of Penobscot Financial Advisors and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security.


You can subscribe to have episodes delivered straight to your device by clicking the links below:

Google Podcast
Apple Podcast
YouTube Channel

Full Transcript

Abrin: Welcome. On today’s episode, we’re going to change it up a little bit with Thanksgiving being last week. And we’re going to reflect on some of the financial planning tools that we’re thankful for. And also, Thanksgiving is just one of those holidays where generally, you get the family together. Obviously it’s a little bit different this year with COVID, but those dinner table conversations that you have with your uncle, arguing over the cranberry sauce. Those financial planning arguments you get in with family, and also just some of those things as financial advisors, people try to pick our brains about when we get the family together.

Tyler: If you’re not throwing bows at Thanksgiving, you’re not doing it right.

Abrin: I’m Abrin Berkemeyer.

Tyler: And I’m Tyler Hafford.

Abrin: And this is Financial Discretion Advised.

Tyler: Welcome everyone, thanks for joining us. I hope everyone had a nice Thanksgiving, we’re recording this after Thanksgiving. But since you’re full on turkey and starting to hunker down for the holidays, you can find us on YouTube, any podcatcher, find us, Apple, Google, Spotify, we’re out there. But definitely check out the videos. We’re going to start getting a little more interactive in the videos, and want people to pay attention on YouTube. So, like us, share, leave some comments, we’d love to see what you guys are thinking. But like Abrin said, we’re going to talk about what we’re thankful for this year in financial planning, and kind of what comes up around the table. But Abrin, let’s start with just, how was your Thanksgiving and what are you thankful for?

Abrin: I’m thankful that with smaller Thanksgivings, you have just about the same amount of food. So, there’s a lot of leftovers in the household, a lot of turkey. I know we were talking before the podcast, you also have surplus of turkey hanging around.

Tyler: Yeah, I cooked a bird for 14 people, and we had four.

Abrin: Exactly.

Tyler: I’m putting Turkey into everything. Awesome, awesome. And I hope everyone out there listening had a great Thanksgiving. I know this year’s strange, in the way that things are going, but hopefully everyone’s safe and healthy, and had a nice Thanksgiving. But kick off and chat about some of those things that come up at the table when you’re at Thanksgiving, talking with your relatives. Because everyone has different things going on in their lives and their financial pictures. And there’s always some questions that come up. So Abrin, I’m sure with your wealth of knowledge, everyone asks you those questions. Give us a couple of them, let’s chat about them.

Abrin: Sure. Yeah, probably one of the most common ones that I deal with within my family, is the whole invest or pay down debt question. It’s one of those timeless questions that trips up a lot of people. Like, I don’t know, should I put my money in the market or should I pay down some debts? And generally it comes down to two main things: what’s the expected rate of return if you do invest it, versus how much are you guaranteed to save if you decide to pay down debt?

Abrin: So, just a quick little example. You might have a debt that’s got a 3% interest rate on it, so fairly low. And you might have a moderate to aggressive risk tolerance, where you think you can earn six or 7% a year in the markets. So, what’s the difference there? We’ve got the 3% interest on the debt. If you decided to pay down that debt more aggressively, you save yourself 3% in interest, and that’s your savings. That’s guaranteed, because they’re going to charge you that 3% if you don’t pay it down more quickly.

Abrin: If you decide to invest that money, now you think you can earn six or 7% with a moderately aggressive portfolio. You might be able to achieve that, you might not be able to achieve that. Over the timeframe that you’re paying down the debt, you might only earn a 2% rate of return and you would have benefited more by paying down the debt. So, it is a big question. A lot of it has to do with what’s that difference in how much you expect to make, versus how much you will guarantee to save yourself, and how long of a timeframe do you have?

Tyler: I think this is one of those things that, take a look at how much interest you’re paying on that debt, right? So, if we’re talking credit cards and you’re paying 19, 20%-

Abrin: Right, the conversation gets real quick. Real short.

Tyler: Yeah, I can promise you, there is nowhere I can guarantee you 19 to 20%, guaranteed. Take the cash savings on paying down the debt, and then think about investing at that point. And actually as financial planners, one of the first things that we’re looking for is all right, is there some debt out there that we need to be clearing up that has high interest rates on it? So, I think that’s a good one.

Abrin: Yeah, that does come up quite a bit. I get the question a lot where it’s, how much do I need to retire? What number do I need to retire? And I think it’s funny, because a lot of folks think of it in that way. It used to be, I need a million dollars to retire, or I need $2 million to retire.

Tyler: Right, it’s easy to conceptualize. You need this figure to attain.

Abrin: Right, I just need to save and get there, and then I’m all set. The real answer to that is what kind of lifestyle are you looking at in retirement? Because everyone’s answer to that question is different. A million bucks may be able to do it, if you aren’t living [inaudible 00:05:11], half a million might be able to do it. If you’re gallivanting off to Europe, and hitting four or five countries a year while you’re traveling, we may think more like three or $4 million to do it. So, I find that to be an interesting one, where everyone’s kind of, “How much do I have to save?” Well, what’s life going to look like?

Tyler: Right. And for some people, that dollar target can be good, because they understand, “I’m going to reach this, and then this is what my picture is going to look like,” and hopefully it all unfolds that way with the markets. But, you get a general sense. Yeah, I’d say the other big one from my family is refinancing decisions.

Abrin: Especially right now.

Tyler: Especially right now. And I became a homeowner about three years ago, and then my brother-in-law and sister became a homeowner, and then my folks have a couple houses. And that’s the one that always comes up, is like, “Oh, should I refinance?” And recently it’s obviously been a big topic of conversation, because interest rates are pretty much near the floor at the moment. At least with the Fed, they are at the floor with mortgage rates. Mortgage rates fluctuate a little bit, but we don’t need to get into that.

Tyler: So, I get the question, “Should I refinance this?” And generally that’s where we’re looking at a couple of different things. One, we need to look at length of the loan. We need to look at what the payment’s going to be under the new loan, and how much interest savings you’re going to get. And there’s just a lot of different factors that go into it that don’t always make it a clear picture. So, if you had a 30 year mortgage that was at four and a half percent, and you’ve paid that off for 10 years and mortgage rates are now at 3%, some people might think, “Oh, I need to go get a new mortgage and go get it at that 3%,” but if you refinance and get another 30 year mortgage, you’re resetting that clock. And now you’re paying the bank the interest upfront again. And maybe that’s something that we need to talk through, why lower the interest rate and bump it out 30 years? Maybe lower the interest rate and get a 20 year loan, that coincides with your current timing.

Abrin: And a lot of times, especially in the environment we’re in today, when we’re looking at refinancing for clients or having this discussion, a lot of it comes down to, “All right. Do you want to save interest on the back end of this?”

Tyler: Yes, please.

Abrin: Do you need more cash flow today, in your day to day life? By lowering your payment, are we going to avoid taking on other debt by freeing up some cash? Or are we comfortable paying, and this goes back to saving the interest, but are we comfortable paying what we’re paying today, but we can reduce the amount of time we’re going to pay on this loan, if we go from a 30 to a 15 year?

Abrin: And a lot of times, if you need cash flow today, we’re looking at refinancing, I don’t know, to 30 years, and how much can we lower our payment? The 15 year we may see in rates, a lot of times that it is, do we refinance the 15 year and keep the same payment, and just chop some years off the back end of this and save a little bit of interest, or do we go to like a 10 year, and really maybe up our payment every month, and really drop down that interest on the backend.

Tyler: Right, yeah. You’re accelerating both. You’re getting a lower interest rate, and you’re paying it back quicker. And those are all things that just the natural course of the economy has now put this refinance decision on your lap, and you’re realizing all these other things that you could have been considering beforehand, that now you’re taking into consideration now, and it’s kind of like this little perfect storm of, you’re getting really in depth and making good decisions with a refinance decision.

Tyler: And then the last big thing that always walk through family with, is there’s an opportunity cost. That’s the one that a lot of people always forget about. If you’re lowering your payments, your amount of payments, so, say you went from a 20 years of payments left, and you’re going down to a 15 year mortgage, and you’re paying more, and you have a lower interest rate. It kind of goes back to our initial conversation where we said, hey, you’re paying down debt at an aggressive rate, you’re guaranteed savings on that interest. But what if you’re younger, and you could deploy that amount that you’re going to have in an increased mortgage payment, because you’re going from a 20 year to a 15 year, and actually save that, instead of applying that to your mortgage?

Tyler: That’s the opportunity cost that you could be missing out on, and something that you need to think about and consider, not just, oh, the bank’s not getting my money, it’s like yeah, the bank isn’t getting your money, as much of your money, but you could be using your money, and making more money on that.

Abrin: Yeah, and I think the big takeaway on that one is, it’s not as easy as oh, interest rates dropped. Should I refinance right in this moment? Well, what are we trying to do? What’s our end game here? And doing that calculation, see what the savings are, exploring opportunity costs and investing. What are we earning, how is the market doing? Those types of things are important.

Abrin: Another thing that comes up quite a bit for me, is I’ll get a relative who changed jobs. And they always kind of ask, “What should I do with the old retirement? Should I just roll it right into the new retirement plan? Or should I just keep it where it is? What should I do there?” And I’m always a fairly big proponent of moving things out of a work plan if you have the opportunity. So, if you have a pre tax qualified work 401k, for example, you can roll that out to an IRA, and the benefits of that are you’re no longer handcuffed to what the employer plan was offering for your investment choices. Which probably aren’t terrible, but they’re very limited in scope, the employer-

Tyler: Well, less choices or more choices. Generally folks are going to go, “I want more choices, expand my horizons.”

Abrin: Especially if you’re looking to diversify out the portfolio, and lower your risk and put your eggs into different baskets, by moving it to the IRA, you can invest in anything in the world, and allow yourself that full diversification.

Tyler: And that really comes to the next big question that I get around the holidays. “Hey Tyler, hey Abrin, what should I invest in? I heard really good things about this stock.” And you’re like, okay, I see where this conversation’s going. Gold’s the next big thing, you heard it all before.

Abrin: And diversification is always going to win out that conversation unfortunately. So, even in that work plan setting, you have your options there. And what I always tell people is you got to look at it, but almost 99 out of a hundred times, I’m going to say you should roll that out to an IRA and start to manage it. Whether you do it yourself, or have someone help you, you’re just going to have better options. Leaving it at the old work plan, you’re not going to be putting more money into it, you can go in and make some changes to where you’re allocated, but you’re still limited to what you’re offered.

Abrin: You could move it to the new work plan, but you run into the same issues you have with the new work plan, that you had at the old work plan with your investment options. They may be a little different, but generally it’s going to be a smaller list. So, exploring rolling out to an IRA, I always think is beneficial. And a lot of that diversification, because every time someone asks me about a stock at Thanksgiving, I tell them, listen to this podcast and listen to our… No, don’t listen to our stock picks at the end. No, no, no. Just kidding. And that’s exactly it. Picking one winner is so difficult to do, it’s nearly impossible. And any type of research around diversification will show you, that every year there’s a different winner in the stock market, at least stock types. And trying to figure out which one that’s going to be, is a problem.

Abrin: And I always think about it from the standpoint of being a fiduciary, like this is my family. I’m not going to advise them any different than I’m going to advise a client. This is what I believe is in your best interest to do, don’t pick one or two stocks to throw all your money into. And maybe you were right for the first three months, and the stock goes up. Maybe you’re right for the first six months and the stock goes up. Maybe you’re right for the first two years, and the stock goes up and you rubbing it in my face as the financial advisor in the family. And I’ll just be like, okay, well when do you get out? You keep watching it go up, maybe there’s volatility along the way, but you’re still so sure.

Tyler: And then eventually something catastrophic happens. Think earlier this year, COVID, so many stocks plummet. Not all of them do, and maybe you got lucky and you picked the right one, but do you really want to be the person that one out of who knows what chance, and be super lucky? When you could actually use statistics and reason to diversify your portfolio, and add some insulation and guard yourself from risk.

Abrin: Do you want to gamble or do you want to invest?

Tyler: Right, it really is a gambling question. That’s what’s it’s coming down to.

Abrin: I’m like, I’ll go to the casino. We can go gamble, but I don’t want to gamble your life savings.

Tyler: And when you go to the casino, you know you’re gambling, you’ve made that decision.

Abrin: Oh yeah, blackjack, 50, 50, you know the rules.

Tyler: I find that sometimes in investing, people believe that it is not gambling, because I’m doing it in this investing manner, and I’m doing it over a platform. If you’re just selecting one stock and putting all of your money into it, you’re gambling at that point, you’re not investing. It’s completely speculative, and it’s a fairly reckless way to invest your money if you’re looking over the longterm.

Abrin: Yeah. But hey, if you want to have some fun, I’ll talk stock picks, and just be like, you can invest what you want to lose in that, and then we’ll talk fun. I’ll have that conversation with family members, and just be like, “Yeah, that stock, I like the company, I’ve done minimal research on them in the past and enjoyed it,” or, “Don’t like it for this reason,” and talk through that. But still, it’s not a sound, long-term financial strategy for investing. It’s just a conversation, I think. One of those dinner table conversations.

Tyler: I get this one a lot, tell me if it comes up with you. With these new high deductible plans people are being offered at work, what’s an HSA, and should I use it?

Abrin: I don’t get that one, but that’s the one that I bring up to family members. I’m like, “Hey, do you guys have a lot of health expenses? You can tell me, I’m family. Oh no? Use this great tool called an HSA, this is the only money the government will never touch with taxes if you use it right.”

Tyler: So, and Abrin just hit it. Anyone who doesn’t know what an HSA is, it’s a health savings account. If you have a high deductible plan for your health insurance, you’re allowed to use an HSA to save money for medical expenses. But it is the only account that acts in the fashion where they let you put pre-tax money in, if you spend it on qualified medical expenses, they don’t tax it on the way out. It’s the only account that doesn’t see any taxation. It can be a powerful tool. And the money you put in there, they allow you to invest. So, it can even grow while it’s sitting in there every year. So, if like Abrin said, if you don’t have high medical expenses, certainly do not write off a high deductible plan with an HSA.

Abrin: And with that plan, generally your premiums are lower. And if you can save throughout a full year with minimal medical expenses or none, then by the end of that first year, you might have enough money saved up to pay for that deductible, or pay for the maximum out of pocket on the plan. And then you’re back to square one.

Tyler: And it’s great, not like a flexible savings plan, which a lot of people probably are more familiar with.

Abrin: They call that one the evil cousin of the HSA.

Tyler: Yeah. So, at the end of the year, any money you have left in the HSA, they don’t take it from it. You can roll it over to next year, you just keep adding on. Where that flexible spending plan is going to force you to pay it out, or you lose it. The other nice thing about the HSA is you can spend it on your family. I know just personally my wife, I have two daughters, both of them I had HSA’s for. I planned accordingly and put money in there, and when the bills came for the expensive diverse, paid it off with my HSA, tax-free, and was happy about it. So, very powerful tool. So, if you want to learn more about this, this is one of those things. Reach out to Abrin or I, we can talk to you about it. But an HSA can be a powerful tool in your financial plan.

Abrin: Definitely, definitely. Yeah, why don’t we go switch gears, and go, what financial planning tool are you thankful for this year? And if you don’t have one I can go first, because I’ve been thinking about mine for a while.

Tyler: Yeah, this wasn’t on the script for the podcast. Let me… My favorite financial planning tool, and it’s probably because I’m younger, but I love the ability to use a Roth IRA.

Abrin: Ah, nice.

Tyler: Did I steal yours?

Abrin: Yeah, you stole it. I’ll think of another good financial planning tool.

Tyler: A Roth IRA, I know we talked about this in the last episode, but I’ll just run through it real quick for folks again. A traditional IRA works just like your work qualified pre-tax work plan. You put money in today, they give you a tax break on it, it grows deferred until you get into retirement, when you pull the money out, you’re taxed at that point. The Roth IRA works in the opposite. We’re going to pay taxes on the money we invest in there today, it’s going to grow throughout, and as long as we’re 59 and a half, and we take money out of that Roth IRA, it’s going to come out tax-free, any of the growth on there?

Tyler: But there’s some other nice things about the Roth that I love. One, you can always touch the principal that you put into it, if you ever need it. Believe me, I’m not advocating to touch your retirement accounts. I’d rather sell a kidney than start tapping into my retirement account. But if you needed it, you can always grab the principal, no penalty, no taxes, so it’s almost like a double savings account in some sense. And when you get into retirement and you’re 72, like we talked about in the last podcast, they’re not going to force you to take money out of this thing, you can let it grow. And ideally that would be the last money you ever touch. It can grow out, and it’s a great estate planning tool down the road. So, if I had to pick one that I was really thankful for, it’s the Roth IRA. And you’re welcome, I stole that.

Abrin: Yes, yes you did. I was really trying to go first, because that’s such a good one. But while you were talking, I did come up with another financial planning tool that I’m thankful for. I’m going to go with high yield savings accounts. It’s another one that I personally utilize a lot. High yield savings accounts is just what it sounds like, it’s a savings account, and it’s liquid and you earn more than your traditional savings account. So, interest rates like we talked about with mortgages are floored, and that means that no one is earning anything in their cash sitting in their savings account. Which a lot of people know when they look at their statements and they’re like, “Oh good, I made another three pennies this month.” That’s because a lot of banks out there are only giving you a 0.01%, 0.1% in interest, and that’s just super low. It’s practically nothing. You look at the pennies and you laugh.

Tyler: I’d almost rather put it under the mattress at that point. Don’t do that.

Abrin: At least at least you get a little something. But with a high yield savings account, you actually get to earn more than that. And there’s a bunch of different banks out there that offer these, and two that are notable for me are Allied bank and Citibank. They tend to be in the top tier of ones that give the highest interest rates. And right now, they’re giving around 0.6, 0.7%. So, obviously that’s still not a lot, but it’s much better than being at that 0.01% or that 0.1%. you’re multiplying it six times more. It’s a lot.

Tyler: It is. And they’ve come down quite a bit.

Abrin: They’ve come down quite a bit over the past year.

Tyler: Mostly because…

Abrin: The interest rate drop.

Tyler: Yeah, the Fed’s trying to save the economy and keep things afloat.

Abrin: But I’m just glad I can be out there, and know I’m getting the most for my money, but also have it be liquid. That’s the other big thing, is if you want guaranteed interest rates, the higher the guaranteed interest rate, the more restrictions you’re going to have on that money. So, people tie up money in CD’s because they can get higher interest rates on their cash savings. And you can’t touch it unless you want to pay a penalty to touch it early, that’s why they have the lengths on them. Or if you wanted an annuity, maybe a five-year annuity that gives you one or 2%, it’s a higher interest rate, but now you can’t touch the money for that four or five year period that you’re getting it. So, this high yield account’s a good balance of able to go get a higher rate, and have it be liquid, and you get the insurance. So, don’t forget that these are still FDIC insured up to a quarter million.

Tyler: Good point, and they’re great. So, they tend to target a three month CD, fully liquid, whatever that rate ends up being. Like I said, it’s come down, but it’s still always going to be more than your traditional bank’s savings rates, mostly because these are online lenders, or online banks that don’t have the overhead of keeping physical locations, so they can do these nice things. But it’s also a great place to park some cash, because this is another question that comes up at Thanksgiving all the time, is, “I’m looking to buy something in the next nine months, where should I invest my money right now so I can have it available to me?”

Tyler: And a lot of times my answer to them is, you probably don’t want to invest that money if you need it in that short of a time period. Because the market could do anything, and you could lose money when you’re trying to take this out. But the high yield savings account is a great place to park it in the meantime, earn just something on it, so it’s not sitting there doing nothing for you. But you have the full liquidity, you can access it, you know in nine months you’ve got at least what you put in there, plus whatever you’re making on that interest.

Abrin: Yeah, certainly.

Tyler: So, that’s a really good one.

Abrin: Cool.

Tyler: I’m going to throw another one on there, that’s kind of in the Roth realm a little bit, but for education savings, and that’s a 5.9 plan. I have two kids as I mentioned. The 529 plan, it’s very similar, it’s like a Roth but for education. You’re going to pay your taxes on what you put into it today, you can always access the principal and not be penalized or taxed on it, but any growth in there, if it’s spent on qualified higher education expenses, which the IRS will break those down for you, or a good financial planner can tell you what those are, that money can come out of that account tax-free. Powerful tool for saving for college, because when we look at inflation rates on college these days, it’s almost astronomical.

Abrin: Not almost, it is astronomical.

Tyler: It’s mind boggling to think, there’s no way I’m going to save in the next 18 years, $350,000 for my kids to go to school. But if I can invest it along the way and get some tax-free growth, that makes a big difference.

Abrin: It’s working on your side.

Tyler: Yep. The one big caveat in that, is if you do access that money for things outside of higher education expenses, you’re going to pay that 10% penalty. So, if you’re children go off-

Abrin: Only on the growth though, right?

Tyler: Only on the growth, right. So you can always touch the principal, but only on the growth. Now, if you have kids who just get to 18 and say, “I don’t want to go to college,” and you’ve been saving in this account, can be a bit of a pickle, because now all your money is in this account that’s set aside for qualified higher education purposes. But if you know your kids are going to go to college, it can be a really powerful tool. You can also change the beneficiaries on them, so if you have two children, one of them gets a scholarship, you’ve been saving for both, you can change the beneficiary to the second child on both of the 529’s and use the money for them. You can use it for yourself, and you can change it to a grandchild down the road.

Abrin: Imagine you’re saving all this money for your kids, and then you’re like, “Ah, I’m going back to school. You guys can fend for yourselves, I’m taking this 529 money.”

Tyler: I can tell you that you don’t have children yet, because you don’t realize things like that happen. But I do, I think it’s a great tool. I like it. You’ll notice a theme in the things I love, and most of it is tax-free, those tend to be my favorite.

Abrin: Nice. Well, in the being on the thankful side, I think people would be thankful if we wrap this up, since we could go on forever. But we’ll be back obviously with more podcasts to come. We do have to run through this stock, get it in real quick.

Tyler: I was going to say, let’s not run out of here before we talk about how the stocks did this last two weeks.

Abrin: You just want to put your W on the board, I know.

Tyler: I do think Disney outperformed Monster, you’re the one who pulled up the numbers.

Abrin: Yeah, so Disney had a nice little run of 3.4% over the past two weeks, while Monster had a… They were doing great, I don’t know what happened. They just fell apart right at the end. No, I’m just kidding. They were pretty lackluster this two week period, but they were only up 1.3%. So, Tyler W to you.

Tyler: Thank you, sir.

Abrin: So I tip my hat, but now we’re totally tied, where I won the first one, we tied last last week with 9% each, and now you’re up. So, one win to one win, to one tie.

Tyler: Sounds like Monster needed a little bit of a pick me up. What stock you going with this session?

Abrin: That’s a good question, let’s see.

Tyler: I’m going to go with AT&T, coming into the holiday season here, 5G seems to be a thing people are paying attention to. Everyone hopefully is buying new phones for the family over Christmas, I’m going AT&T.

Abrin: All right, let’s see. Clearly, I didn’t put a lot of forethought into this.

Tyler: That works in my favor.

Abrin: Yeah, it does. Well, it kind of doesn’t because I’m only thinking of big names right now. I kind of want to keep it fair. I’m just going to take the W, I think Walmart is going to outperform AT&T.

Tyler: That’s a good one.

Abrin: They’ve been obviously killer throughout the pandemic, so I’m going to go with Walmart. I feel a little cheap about it, but a W is a W, so we’ll see how it turns out.

Tyler: Listen, they roll back prices. One of the things that was interesting through the pandemic, is they kind of picked up their delivery, especially through March. Which would play well if-

Abrin: I’ve had a lot of good conversations with friends about Amazon being such a titan because of their delivery power, but we get into these over, can Walmart take away some market share? They’ve got all these warehouses everywhere. It seems like there’s a good argument for it there.

Tyler: And I don’t want to tout your stock here, because I’m hoping you lose, but talking about delivery, Walmart has a little bit of a leg up because of they have all these physical locations close to everyone, where they they have this infrastructure to do really quick delivery. And if things are trending the way they are, coronavirus-wise-

Abrin: And just in general, Cyber Monday sales every year keep getting bigger, even before the pandemic.

Tyler: Seems like we’re shifting that way. But hopefully they have a couple of weeks here where they don’t do well, and let’s go AT&T. I want to thank everyone for joining us. Like I said, find us on YouTube, check out all the podcatchers, subscribe, like us. Tell some friends about us. I promise there will be some episodes where Abrin’s not even here, so I guess that’ll be fun.

Abrin: I can’t wait for the one that you’re not here.

Tyler: Well, I’m going to go try to stuff my face with more Turkey.

Abrin: All right. I hope everybody had a nice Thanksgiving, and we’ll catch you next time.

Tyler: The foregoing content reflects the opinions of Penobscot Financial Advisors, and is subject to change at any time without notice. Content provided herein is for informational purposes only, and should not be used or construed as investment advice, or recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Thank you.