E9: Investment Planning Strategies
Executive Summary
On this episode of Financial Discretion Advised, Tyler and Abrin tackle Investment Planning Strategies.
Getting on a Routine Investment Plan
Abrin explains how creating a routine investment plan can help set you up for success. By setting up automatic contributions, you can start the “baby steps” to building your investments. Tyler mentions that this form of “paying yourself first” can help save yourself from not putting money away and spending it on other things, as well as help re-enforce the habit around saving and investing.
Additionally, an automatic contribution plan allows you to use the technique of “Dollar Cost Averaging.” This is the strategy of investing the same amount of money at regular intervals over time. This will have you buying shares in the market when they are up and when they are down, but over time it will reduce the impact of volatility on investments.
Avoiding Fads
Tyler brings up the recent Gamestop fiasco, and what was happening behind the scenes to cause the massive run up for the stock. Essentially, a large number of smaller investors found positions (like Gamestop) that had large “short” (people betting against the stock) positions on them and pumped a ton of money into those stocks. By doing this they forced anyone holding a short position on the stock to then buy the stock and cut their losses, creating what is called a short squeeze. This caused a massive run up in the stock price and an artificial valuation for Gamestop.
What is important to pay attention to here, is first and foremost, avoiding investing strategies like this. These strategies are extremely risky and have led some people to lose their entire life savings in gambling on them. The second thing to take notice of is for everyday investors, and that is taking the time to see if any of the positions you hold have high percentages of short positions on them. You may find that you hold a stock that has a large number of people betting against it, and it may be in a precarious position that you were unaware of.
Active Management vs Passive Investing
Tyler explains that Passive Investing is simply buying something like an Index and holding it for a long period of time, where active management is building out portfolios that try to “beat” the index.
Abrin talks about how Investment managers and individual investors tend to fall in the middle of both of these strategies. Where you can take a passive investment strategy but making some active changes to help make sure the portfolio is correctly positioned for the economic environments. Active management does not need to mean day trading, but instead can be a good compliment to your passive investment strategy.
Tyler also explains that individual investors may benefit from paying higher expense ratios for active management in the form of mutual funds, especially in areas that the investor has limit knowledge.
Withdrawal Planning
Abrin and Tyler talk about why it is important to create a plan surrounding how much you can sustainably pull out of your portfolio over the rest of your life. Financial Planners will use Monte Carlo Analysis to determine what that number is, but there is an old Rule of Thumb that can be a good starting point for investors. This is the 4% rule, which used to be the 5% rule. Abrin describes that the 4% rule is basically the ability to withdrawal 4% from your retirement accounts and have that last 30-35 years.
Tyler highlights that this rule might be a good place to start, but there are so many other variables that will determine how much you will be able to pull out of your accounts over the long term.
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.
Subscribe
You can subscribe to have episodes delivered straight to your device by clicking the links below:
Google Podcast
Apple Podcast
Spotify
AnchorFM
YouTube Channel
Full Transcript
Abrin Berkemeyer: Welcome to Financial Discretion Advised. I’m Abrin Berkemeyer.
Tyler Hafford: I’m Tyler Hafford. Let’s cue the music.
Tyler Hafford: Hey, everyone. Thanks for joining us. First podcast that Abrin and I are in different locations. Abrin’s in the Portland office. I’m up in the Bangor office. Abrin, how are you?
Abrin Berkemeyer: I’m doing well. I’m doing well. I’m happy to have some nice paintings behind me like you have some nice paintings behind you.
Tyler Hafford: Yep. It looks like you’re part of the team now. It’s a good thing. I’ll do a little segue for everyone who pays attention to our podcasts. We do a stock pick at the end of it. We did one last podcast when we had Craig on.
Abrin Berkemeyer: I’m saying we didn’t. I mean, yeah.
Tyler Hafford: Yeah. I’m saying we skip that this week, and we’re looking to have Craig on an upcoming podcast. Maybe we can extend it out until then, mostly because Craig is winning at the moment and hoping that his stock takes a nose dive. So everyone, thanks for joining us. Today we’re going to go over investment planning strategies, some things that are out there, some kind of rules of thumb that the industry has put out. We’re going to address some different strategies, especially if you’re kind of a do it yourselfer, things to pay attention to. But Abrin, why don’t you kick us off?
Abrin Berkemeyer: Yeah, I think the first one that comes up in every financial plan is getting on a routine investment plan. It’s pretty simple. It’s just setting up a schedule that you’re going to contribute to your account. So that way, it’s going all the time throughout the year. It keeps you accountable. So that way, you’re not going in and manually doing it, say, once a month or every two weeks or whatever the schedule might be. Just setting that up keeps money getting pumped into the market over time, and it makes it easy on your budget, because now you’re not looking at what’s left over at the end of the month. You’re building it into your budget, because you know this money’s coming out on a predetermined date, so it helps keep you accountable and really leads into one of the big, major investment principles, which is dollar cost averaging into the markets.
Tyler Hafford: Yeah. Yeah, there’s a couple things before we get into the dollar cost averaging that I like about kind of routine investing. One, if you listen to our end of the year podcast, Abrin talks a lot about baby steps and starting to build those behaviors. If you are creating a routine system to get money starting to be invested, you’re going to, one, build that behavior, and, two, you’re going to build behaviors around your cashflow of, “All right, this is something I need to spend money on.” I also like to think of the idea of paying yourself first when you get paid. So if you’re setting aside this as almost an expense, right, “X amount is going to go into my investment account every time I get paid,” put that at the top of the list and work around it. As you start to build those strategies and those behaviors, you’ll start to see those accounts grow. It will start to become a little easier to say, “All right. I’m going to put this extra amount in there.”
Tyler Hafford: But we can get into the dollar cost averaging, because every time you’re starting that behavior, you’re putting the same amount of money in in a regular interval into the market, and we’re not really paying attention to what the prices of the market are, where the market’s at at that point. We are just going to put that money in there, and that’s going to benefit us, because we’re going to buy some shares higher. We’re going to buy some shares lower. But what we’re going to do over the long-term of that is get the average kind of buy-in price, and it eliminates … You hear the old saying, “Time in the market will always beat timing the market.” Staying regimented like that, staying disciplined will benefit you as you kind of build out that strategy,
Abrin Berkemeyer: Right. Yeah, it really goes down to the whole concept of if you had $10,000 today and depending on where the market’s at, if the market’s at all-time highs, it could keep climbing higher. Maybe you put the money in. Maybe you make the best of your money, because you put it in, and the market kept going up. Maybe the market goes down over the course of the next year, and you put your money in. You didn’t really hit the best timing. So if you spread that out, the $10,000 out over the course of the year and you put a little bit in at a time, if the market keeps going up, then the initial smaller amount that you put in still benefits the most, because the market continued to go up. Everything [inaudible 00:04:37] putting in still benefits, because it’s going up. You wouldn’t make as much money as if you put the whole sum in in the beginning, but you have to realize that you don’t know what the market’s going to do.
Tyler Hafford: Right, right. Yeah. You kind of reduce your risk on it, and I think this is a good thing to talk about. It wasn’t on our list, but trying to time the market is impossible, right? It’s so difficult to do. If you were to talk to me last January and said, “Hey, is coronavirus going to tank the stock market in March?,” I’d probably say, “No, I wouldn’t expect that.” If you talk to me in March, when the market was down 35%, if you told me, “Well, by year end, the S and P will be back up 70% from where we are today,” and I’d say, “No, that’ll probably be too quick,” I would have been wrong, very wrong in both of those cases. I don’t want to say I’m an expert, but Abrin and I live in this world. We pay attention to it every day. As a do it yourselfer, you’re probably not spending eight hours a day talking and researching the stock market. Trying to get that right is going to be detrimental.
Tyler Hafford: So using these types of strategies, yeah, like Abrin said, you may not see the giant run-up if we just invested at all right at the right moment in time, but you’re limiting your chances of losing it all, of putting it in at the wrong time.
Abrin Berkemeyer: Right. Yeah, that’s where if the market does go dow,. You’re going to be really happy about you dollar cost average-
Tyler Hafford: Right.
Abrin Berkemeyer: … because right you can put a little bit in at the top, and you’re buying in as the market continues to decline, which is going to give you a greater long-term rate of return. So that whole dollar cost averaging really, like you said, it doesn’t shoot for the stars, doesn’t say that we’re going to lose the most, either. Kind of the best middle ground that you can take through an investment strategy approach.
Tyler Hafford: Yeah. I think avoiding time in the market falls into the next thing we had on the list here, and that was avoiding fads in the market. Most recently, I mean, it would have been difficult to turn a TV on in the past few weeks and not see GameStop kind of flashing in the headlines, right? Anyone who listened to the market commentary that came out from Penobscot Financial Advisors got some good insight from Sam and Jim on this. But essentially what was happening is that the GameStop … There’s a number of positions out there or stocks out there that have a large short position on them. What that means is when you buy a stock, you can buy it, and you are long the stock. You want that stock to go up, or you can short the stock. By doing that, you are essentially betting against it, and you want it to go down. That’s how you’re going to make your money.
Tyler Hafford: Reddit, these Reddit boards, so a bunch of retail investors, smaller investors found stocks out there that had large short positions on them and organized and threw a ton of money into that stock. The stock went up, and then by doing that, the short positions, people who were betting against the stock, then have to turn around and purchase the stock to get out of their positions, to hedge their bet and cut their losses, which creates this giant artificial run-up. Very dangerous, not something as a long-term investor you want to be playing in. But I think it’s important, too, to take a look at your portfolio and say, “Do I own anything that has large short positions on it?,” because you may be seeing some leveraging that you weren’t expecting, or at least you weren’t trying to get that exposure.
Abrin Berkemeyer: Yeah, and you see the stories in the news of the people that made X amount of dollars on the GameStop scenario. It sounds like it’s too good to be true, and that’s because it is, for the average investor. The whole scenario with GameStop, there are definitely people that got in late, bought GameStop really high, thinking it’s going to keep going up, because they think the strategy and the fact that the big hedge funds have to purchase more of the stock, they just see that as a sound thing, or maybe their friend just told them, “Just buy it, and it’s going to keep going,” and things like that. So those people that eventually, they bought it high, thinking it’s going to keep going higher, and then the stock comes back down, those are the guys that are holding the money bags at the end of it and lost a lot, lost plus their shoes.
Tyler Hafford: Yep.
Abrin Berkemeyer: They use the strategy too late. It really is a really big timing thing. It’s really not something that anybody should be doing for any long-term, sound investment. It’s something that don’t put more money in than you’re willing to lose in a scenario like that.
Tyler Hafford: Yeah. Well, it gets lost in those headlines. If you kind of do a little research on these online boards and people that are trying to use these types of strategies to hit kind of big gains is for every one GameStop situation, there are thousands of bad investments that are made and people losing significant amounts of money, trying to hit a home run on one stock position, people losing their entire life savings, entire retirement savings trying to kind of hit this home run. Like you said, Abrin, we saw this move up. The big talk, and I think a lot of this was that retail investors could move the market in a way that larger institutional big money tends to do it. I think, one, that spooked larger institutional investors, and we saw a bit of a pullback in the market because of it, but it was short-lived, right? It was a few days of being able to do this. We saw GameStop run up and then completely fall back down.
Tyler Hafford: Now, still, is it valued higher than what analysts think GameStop is? Probably, but there’s too much volatility there to make it a sound investment. The valuation on that company just doesn’t line up with the fundamentals. You’re getting into a lot of dangerous spots when you’re trying to play that game. Certainly I think if you’re looking at a long-term strategy, that’d be something you make sure to avoid.
Abrin Berkemeyer: Yeah. For all the talk of these companies like GameStop and the others that have been thrown into the mix, like AMC and more, but all those, they really aren’t representative of the market. Everybody talks about it as the market, just because [inaudible 00:11:08] happening in the market. It’s not [inaudible 00:11:11] market, over the whole breadth of investment options that you have, really not making a big impact on your average portfolio just because this was happening in a certain scenario with the extreme cases.
Tyler Hafford: Yeah. I think, and like I said at the beginning of kind of talking about the fad stuff, taking a peek at your stocks, if you have a few stocks that have done really well, take a peek and see if there is short positions out there, if there’s a high percentage. If you’re seeing 60, 70% of short positions out there on that one position, you may be getting into something that’s a little more dangerous, because there’s going to be a lot of different influences on that stock that are not going to be, “Jeez, I really like this stock because of the fundamentals, and I bought it.” I know in a review of some of the stocks that we take a look at, we noticed there was higher short positions that we just weren’t expecting. It caused us to have some conversations of, “All right. Should we be holding these? Are these actually good investments?” So I think even if you’re doing this yourself, maybe take a peek at what you’re invested in and just make sure that everything’s kind of lined up the way you think it is.
Abrin Berkemeyer: Yeah.
Tyler Hafford: Awesome. Well, let’s dive into … This is a little bit in that same vein. It’s the discussion around active management versus passive investing. So in the passive investing world, you’re looking at buying indices. You’re not going to be in there every day, making changes, your long-term buy and hold, the old Warren Buffett kind of strategy, where you’re going to buy something like an S and P index and let it sit. The contrast to that is hiring someone or doing your own active management, where you’re in there, trying to kind of beat those benchmarks of the market and take advantages of things that are going on.
Tyler Hafford: We are an investment advisory firm, so we subscribe to a bit more active management in our strategies, but I think it’s important for a number of reasons to have active management. There’s a number of things that happen. Today we’re in the lowest interest rate environment that we’ve seen, making sure your portfolio is set up to take advantage of that, to make sure your duration on the bond side is ready to take advantage of that. Are you setting up to hedge against inflation, which may be coming down the road? Those types of things can really be benefited from an active management style, where the passive is going to not necessarily ignore it, but you’re not really paying attention to kind of situational events that you want to make sure you’re positioned for.
Abrin Berkemeyer: Yeah, and I’d say probably some of the best investment strategies are a bit of a hybrid with active and passive, I think. On the most polar extreme, you can think of active as somebody that’s in their account trading every week or every day. That’s been statistically proven through various studies that you don’t actually get a premium on your dollar. You don’t generate any excessive returns through active management. Then generally, the people that are more passive end up making more money over the long run. But there is an argument to be made that you can take a passive approach while still making some active management decisions, which I’d say is probably more where we line up as a firm.
Tyler Hafford: Yep.
Abrin Berkemeyer: We are definitely a long-term buy and hold company. That’s definitely our investment philosophy, but it doesn’t mean we shouldn’t be making changes, because any mutual fund is going to have a period where they might be at the top of their game compared to their peers, and they might be the best fund out there. Then they might go through a period of two or three years with a manager change, and maybe their performance suffers because of that, or they increase expenses and they’re no longer competitive compared to their peers. That sort of management has active components to it, where you need to be routinely monitoring those things, making changes as necessary.
Abrin Berkemeyer: But overall, you’re still taking that passive approach, where you have your asset allocation that you want to achieve over the long run, because that’s the number one indicator of how much risk you’re taking on, is going to be the first thing, is your percentage of stocks to bonds. Then how do we backfill how much of that stock we’re going to own in US versus international, how much of that bonds are we going to own in investment-grade versus high-yield, and what specific investments you own. Those are things that need to be actively monitored. Maybe you’re not trading out a fund every single day or every week, but you are monitoring it and making changes as appropriate throughout the year. So there is an active component to it. But as far as the two extreme goes, I’d say most advisors are probably operating on some sort of hybrid model there, where you’re mostly passive, but you understand that you need to make those changes as appropriate, because it might be prudent to switch out investments.
Tyler Hafford: Yeah. I think you hit a couple things. Active management doesn’t mean day trading. Active management just means that we’re not buying positions today and not checking on it in the next 30 years. You want to make sure you’re making some tweaks in there, but there’s also another piece of this. Especially if you’re doing it yourself these days, most platforms are allowing you to buy ETFs with no commission. So there’s this high drive, and I’m not saying that’s a bad strategy, but you can purchase a number of ETFs, which normally aren’t actively managed, and build out a portfolio.
Tyler Hafford: It may be worth looking at the expense ratios and looking at mutual funds in areas that are just so difficult or complex that hiring someone in a mutual fund to actively manage that part of the portfolio for you may make a lot of sense. If you’re looking at futures of commodities, I don’t know enough about wheat sales in the middle of the United States to be an expert on that. Hiring an active manager in that space can benefit the diversification of my portfolio, and I understand that, “All right, this may be more expensive for me to incorporate, but it’s going to give me someone who knows what they’re doing in that space.”
Abrin Berkemeyer: Yeah. Certainly. That’s a good point.
Tyler Hafford: All right. Let me pull up that list.
Abrin Berkemeyer: planning is where we’re going next.
Tyler Hafford: There we go. Yeah. All right. So yeah, you’ve been building up your portfolio. Let’s take a retirement account, for example, and you finally call the boss. You say, “I’m out. I’m quitting. I’m done, retiring,” and we’ve got to start pulling money out. How much can we pull out? How much can we sustain throughout retirement? Certainly as financial planners, we use tools like Monte Carlo Analysis and things like that to determine that number. But there are some rules of thumb out there, and you may have heard of the old 4% rule. I think back in the day, it was a 5% rule. Abrin, you want to kind of talk to us about that?
Abrin Berkemeyer: Yeah. So the 4% rule is really simple. You take your portfolio value. Multiply it by 4%. That’s how much you can withdraw every year. Your money should last you for the length of your retirement. In the past, like Tyler mentioned, may have been a 5% rule. If life expectancy’s shorter and you’ve got a sum of money, you can take out more of it, because you don’t need your money to last as long. Now as medical advancements and folks are living longer, healthier lives, it goes down to a 4% rule, since you’re going to be taking less money out of that portfolio. But as a rule of thumb, that’s kind of the standard that people throw around. Might be good, might be bad.
Abrin Berkemeyer: Some folks, definitely 4% kind of ends up nailing it on the head, going through the financial planning process. Some folks, they might not necessarily need that 4%. if they’ve got legacy goals and don’t spend a lot of money, then why take all that money out of your retirement account just to sit in a savings account they want to let it grow and take out less than the 4%, or there might be folks that say, “Hey, I don’t care. The kids will get the house, and I’m going to spend everything that I have in these accounts. If you say I can take out 6% reasonably and live on that, then that’s what I’m going to do.”
Tyler Hafford: Yeah, yeah. I think it seems like maybe a good place to start. But I hate dealing with things that I don’t know. So in financial planning, we do a much more in-depth, “All right. This is how much we think you can spend throughout the length of your retirement,” that 4%, good starting point, but what if inflation really ramps up? Does that 4% cover what we need to anymore? Is it not enough? Can we sustain it? What if we have some one-off items early on in retirement, but they’re just the first few years? Can we sustain purchasing those, and then what can we sustain after that? The 4% rule just doesn’t allow for much modification to what does that mean in the overall kind of scheme of things?
Tyler Hafford: So you may have heard that rule of thumb out there. I think it’s a good place to start, but if you’re really kind of worried about, “Jeez, do I have enough money here to make to the end, or is the lifestyle I’m living today really sustainable, long-term?” I think that’s when engaging someone who can kind of run a financial plan for you may make some sense, and there’s some other rules of thumb out there that you may hear, but it’s still worth talking to someone about. One of those, and Abrin talked about in the last segment, your asset allocation. Your percentage of stocks to bonds is so important in building out your portfolio, and getting that right is so important for your portfolio. There’s the old rule of thumb that you should take your age, subtract it from 100, and that should give you your allocation to stocks in your portfolio. So if you’re 40 years old, you should have 60% in stocks and the rest in bonds and alternatives.
Tyler Hafford:Now , that’s great, but everyone’s risk tolerance is different. Everyone’s financial plan is different. Everyone’s goals are different. While 60% might be a good place to start and may make sense for a 40-year-old, all of the things I just named could drive you to want to be in a different asset allocation. I have plenty of people I work with who are in their forties who are just scared to death of the market, and that allocation actually needs to be closer to 40%. Then I have some 40-year-olds who are just, “I am ready to put the pedal down and see how much money we can make in the stock market,” and that allocation is closer to 90%. So I think the rules of thumb that are out there are good starting places if you’re doing it yourself, but engaging with a financial planner may be beneficial to hammer out, “All right. What is my actual allocation that I should be in?”
Abrin Berkemeyer: Yeah, yeah. That rule of thumb, I think in the 40-year-old scenario and if I’ve got a client that’s playing catch-up and we’re trying to earn as much as we can, we’re not going to hurt as much as we might be able to if we-
Tyler Hafford: Right.
Abrin Berkemeyer: 60% of the portfolio to stocks. Like you said, maybe the 80 to 90% is more appropriate if they can, A, stomach the risk and, B, are trying to achieve higher, long-term rates of return so that they can get that compound interest working for them more so than if they had a lower expected rate of return, which you generally get when you invest in less stocks and more bonds. But yeah, it is all up to the person. There are definitely conversations that I have with clients that still have plenty of time to take on risk prior to retirement, but they might be well-funded enough where they don’t need to, and they just want to see a steadier rate of return going up until retirement. So the rule of thumb ends up not fitting them, and we just take a different approach to it. So very on that one as well.
Tyler Hafford: Yep. I say it a lot. The best financial plan is the one that you feel comfortable with, the one you can put your head on the pillow at night and fall asleep to. If holding onto too much risk in the portfolio, back in March in 2020, we saw a sizable pullback in the market. If you are losing sleep over those types of dips, if you are panicking a bit, if you are working with an advisor and you’re calling them and saying, “Jeez, you’ve got to sell me out,” if that is too much, then you have to make those adjustments to reduce the risk on the portfolio, because it’s not lining up to you as an investor. I also find a lot of clients who are holding onto too much risk to reach their goals, and the conversation is not so much around, “All right. Well, why don’t we increase the risk and try to gain more returns here?” It is, “You are way ahead of track on what you need to earn [crosstalk 00:25:17] to get here.”
Abrin Berkemeyer: Right.
Tyler Hafford: “Let’s take the risk off the table.”
Abrin Berkemeyer: That’s by lowering the amount of risk that you’re taking on, because you’re not putting yourself through the major drops in the market as much-
Tyler Hafford: Yep.
Abrin Berkemeyer: … debating as much.
Tyler Hafford: Yep. So I think, like I said, those rules of thumb, and you’ll see them all over the Internet, good places to start, but don’t kind of treat them as the truth to every situation. It’s going to be really individualized to you, your goals, your situation, your risk tolerance, your investment style. So they’re good to do some research on, but certainly apply them correctly.
Abrin Berkemeyer: The last stuff I wanted to cover today is also along the lines of withdrawal planning. We get clients with accounts, different account tax statuses. Maybe they’ve got their pre-tax assets, their off assets, their taxable account, and they just say, “Hey, it’s my first year of retirement. Which account am I going to pull this money from?” or “I am retired, and I want to aggressively pay off the mortgage to save the interest. Maybe I’m not earning that much more in the markets, and I just want to get rid of the mortgage and capitalize on that interest rate savings. Where do I pull that money from?” Obviously, the conversation might be a little bit different for a lot of different folks who have a lot of different factors that go everybody’s situation.
Abrin Berkemeyer: But just say that that mortgage paydown scenario, if you’re taking out pre-tax assets throughout the year, that’s money taxed as income. You’re going to pay down an extra $50,000 because you’ve got that left on the mortgage. Not a good idea to take that from your pre-tax assets, because you’re going to stack that up and add that onto your income for the year and push you into higher tax brackets and end up paying more. So withdrawal planning strategies, in that respect, we’d start talking about, “Oh, well, you’ve got the Roth assets, or maybe you have a taxable account where you can take money out with a much lower tax liability. That’s going to help you out over the long run, because we’re not going to take a tax hit today and pay the government more money than you need to over the course of your retirement.”
Abrin Berkemeyer: So there’s all those different considerations as well when it comes to withdrawal planning. I just think it’s a little bit more complex and a little bit more fine-tuned to everybody’s different situation and what types of assets they have, like we talked about on the last podcast that I’d recommend everybody go back and listen to, would be Roth conversion strategy, if you’re implementing that in the first couple years of retirement. Taking out income from pre-tax assets after you just took a bunch of pre-tax assets and paid taxes on them for a Roth conversion may not be the best idea if you have other assets to use, such as a taxable account.
Tyler Hafford:Yep. Another scenario that I see with clients in retirement who are required to take their RMDs, where they’re taking their RMDs out of the account, out of their retirement accounts, they don’t necessarily need the money. They’re being forced to do this. They’re in extremely low income situations, right? We’re just taking the RMDs. You’ve got some Social Security coming in, but our overall income is quite low for the household. You can be taking advantage of a long-term capital gains tax rate of 0% if you are in a low enough income situation. So being able to say, “All right, where is our income going to fall?”, that taxable account, if you have long-term gains, if you’re holding positions over a year there can tend to be a good place to start taking out assets if you need it, if you need money, because you’re in that lower tax situation or no tax situation.
Tyler Hafford: So paying attention to that stuff is, I think, really important when you’re starting to figure out, “How much or where should I take money out in retirement?” Certainly anytime taxes are involved, I’d recommend talking with an accountant about that, but certainly something to pay attention to when you’re saying, “All right. Where am I going to take money out?”
Abrin Berkemeyer: That’s probably the biggest area of tax planning that we do as financial advisors, because, obviously, we aren’t accountants. We generally don’t go in and tell you exactly which credits you’re going to qualify for deductions or what’s going to shake out better. But the tax planning piece is generally, “This is what it looks like if we spread out tax liability by doing Roth conversions today and how that can lower your tax liability throughout retirement based on your goals,” and things of that nature. It is a really important piece for folks that are looking to withdraw assets.
Tyler Hafford: Yep. Yeah, for sure. Awesome. Well, we’re going to skip the stock game, like I said, because I don’t want to name Craig the winner just yet. But I want to thank everyone for listening to this. This is just the tip of the iceberg on investment planning strategies, and we will be doing more and more episodes where we start to throw more of these strategies in. But as always, if you have questions, comments, anything like that, please leave them below or feel free to find Abrin and I’s email on our website, penobscotfinancialadvisors.com, and send us an email. We’re happy to kind of respond if we can or point you in the right direction. Please subscribe. Share. Tell everyone you know about us. Hopefully we’re helping some folks out there. Thanks for joining.
Abrin Berkemeyer: Yeah. Take care, everybody.
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 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.
