Latest / The Financial Exchange Show / AI Arms Race, $50K Cars & The Retirement Tax Trap

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AI Arms Race, $50K Cars & The Retirement Tax Trap · The Financial Exchange Show

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1:03
Speaker 1: This is the Financial Exchange with Chuck Zada and Mike Armstraw.
1:11
Speaker 2: Chuck, Mike and Chucker with you as we kick off
1:16
Speaker 2: another week here again. It's gonna be a busy one.
1:18
Speaker 2: We've got a FED meeting on Wednesday, Producer price Index
1:21
Speaker 2: out then as well, jobless claims on Thursday. And this
1:24
Speaker 2: is all happening with the backdrop of the continued conflict
1:28
Speaker 2: in the Middle East. Markets a little bit of a
1:32
Speaker 2: reprieve from what's been weighing them down over the last
1:36
Speaker 2: week or two. SMP is up sixty four points, up
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Speaker 2: about one percent on the day, Dow Jones Industrial Average
1:43
Speaker 2: up four hundred and ten points about nine tens of percent,
1:45
Speaker 2: and the NASDAK composite up two hundred and fifty five
1:48
Speaker 2: points about one point one five percent on the day
1:52
Speaker 2: as well. Tenure Treasury coming back in four point nine
1:56
Speaker 2: basis points to four point two to three six percent,
1:58
Speaker 2: so rates dropping to touch, though they still are up
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Speaker 2: about a quarter percent over the last two and a
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Speaker 2: half weeks, and the Dollar index down point four to
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Speaker 2: six percent as well, to ninety nine to sixty five.
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Speaker 2: Gold off fifty seven ninety one ounce to five thousand
2:14
Speaker 2: and three dollars and eighty cents. Can it continue to
2:16
Speaker 2: hold that five handle in the first digit. We'll see.
2:19
Speaker 2: I don't know that it really matters, but we'll see
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Speaker 2: if it does. And we've got crude oil West texts
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Speaker 2: Innermedia down three and a half percent today to ninety
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Speaker 2: five seventeen, So again a little bit of a reprieve there.
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Speaker 2: Remember though, last Tuesday crude oil prices fell as well
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Speaker 2: and then rallied about twenty percent for the rest of
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Speaker 2: the week. So just because you're seeing a little bit
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Speaker 2: of a one day pause here, doesn't, you know, indicate
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Speaker 2: that the trend has shifted. It might just be a
2:49
Speaker 2: little bit of a break here. Tripa national average four
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Speaker 2: Gas prices continues to rise as well, up another two
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Speaker 2: point i'm sorry, one point nine cents overnight to three
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Speaker 2: seventy one and eight tenths now, up about eighty cents
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Speaker 2: from where we were a month ago, and about ninety
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Speaker 2: cents off of that two to eighty number that we
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Speaker 2: had been touching near the beginning of the year. Diesel
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Speaker 2: also closing in on a five handle now at four
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Speaker 2: ninety eight and eight tenths. That is up over a
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Speaker 2: dollar and thirty gallon since a month ago, and so
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Speaker 2: diesel price is continuing to outpace the gains that we're
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Speaker 2: seeing in traditional gasoline. Conventional gasoline, conventional, you know, a
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Speaker 2: normal consumer gasoline. I don't know, diesel versus gas.
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Speaker 3: Yeah, done?
3:43
Speaker 2: Then then regular gas that's regular. That that feels right.
3:48
Speaker 2: So let's change gears here and talk a little bit
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Speaker 2: about in video. There's a piece in the Wall Street Journal.
3:55
Speaker 2: It's titled can Invidia's dominance survive the sea change under
4:00
Speaker 2: way in AI computing? And basically what we have going
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Speaker 2: on right now is there is a big technology conference
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Speaker 2: in San Jose. It's called the GPU Technology Conference, or
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Speaker 2: the GtC as it's known in the business, and basically
4:20
Speaker 2: GPUs if you're not familiar with them, that stands for
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Speaker 2: graphics processing unit. And historically this is where in video
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Speaker 2: made its bread and butter. They made graphics cards for
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Speaker 2: personal computers to make games look as good as possible.
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Speaker 4: I would love to see the pictures of this conference
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Speaker 4: a decade ago compared to this year.
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Speaker 2: It's probably changed quite a bit. So the reason why
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Speaker 2: in video has kind of developed into that prime, into
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Speaker 2: that leader for what's known as AI training is graphics
4:57
Speaker 2: processing units needed to have tons of band to process
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Speaker 2: a lot of information to get it on your screen
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Speaker 2: as clearly, quickly and crisply as they possibly could. Sure,
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Speaker 2: and so it's it's a fundamentally different process than what
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Speaker 2: is known as a CPU or central processing unit, which
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Speaker 2: is more kind of the brain of the computer that
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Speaker 2: simply directs all the pieces to work together and handles
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Speaker 2: information flowing through it. So the GPU had to be
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Speaker 2: this this work workhorse. Think of it as you know,
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Speaker 2: the the CPU is the I'm trying to think of
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Speaker 2: like the comparison for a car, but cars really only
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Speaker 2: have one engine. I guess you could think of it
5:36
Speaker 2: in terms of, hey, the CPU is kind of the transmission.
5:40
Speaker 2: It's it's getting the power out to the wheels and
5:42
Speaker 2: it still needs to you know, do what it needs
5:44
Speaker 2: to do. The GPU is really the engine of the thing,
5:46
Speaker 2: and that like, that's where you get your performance from
5:49
Speaker 2: when it's all said and done. So basically in Vidio,
5:53
Speaker 2: because of the need for you know, a ton of
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Speaker 2: power in order to generate the high performance gaming that
6:00
Speaker 2: was you know, demanded over the last twenty years, kind
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Speaker 2: of just fell into that. They were in the right spot. Now, yeah,
6:05
Speaker 2: fell into it. But if you look at some of
6:07
Speaker 2: what Jensen Wang had written fifteen twenty years ago.
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Speaker 3: Yeah, not to say it was unintentional.
6:11
Speaker 2: He saw where the puck was going too. He's like,
6:13
Speaker 2: once we get to the point where you know this
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Speaker 2: kind of stuff is going to be required, we're going
6:18
Speaker 2: to be really well positioned for it. So I give
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Speaker 2: him a lot of credit there. But when it comes
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Speaker 2: to AI, there are two different pieces of the puzzle.
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Speaker 2: There's the one that we've talked about for the last
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Speaker 2: you know, three four years that Nvidios benefited from is training,
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Speaker 2: which is, hey, I'm going to take eight trillion different inputs,
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Speaker 2: run it through all of these GPUs, and be able
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Speaker 2: to basically teach the model, Hey if X, then here's
6:47
Speaker 2: like the probability of what you should say next for
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Speaker 2: each word, And that's that's basically how the transformer works.
6:52
Speaker 2: It takes each question that's input and says, based on
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Speaker 2: what this was, what's the most likely next word that
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Speaker 2: I need to put out there. It's actually really similar
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Speaker 2: to how children learn in that it's like a predictive
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Speaker 2: model saying okay, am I going to do this? There
7:07
Speaker 2: are some differences, but it's by and large set up
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Speaker 2: that way. So that's training and you need just a
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Speaker 2: ton of computing power in order to do that. The
7:16
Speaker 2: question that people are trying to answer now that people
7:19
Speaker 2: are using more AI than ever is okay, so you
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Speaker 2: use these processors for training, which is all well and
7:27
Speaker 2: good because we've yet to figure out, you know, necessarily
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Speaker 2: a better way to do that. But what about inference,
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Speaker 2: which inference is the process for actually determining the response?
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Speaker 2: If X, then Y, what do I say then? And
7:40
Speaker 2: the question that is out there is it's kind of
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Speaker 2: a two part one. Number one is centralized inference actually
7:52
Speaker 2: the best way to go about it. And by that
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Speaker 2: I mean do you need to have all of that
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Speaker 2: AI inference processed using a giant data center or can
8:02
Speaker 2: you do it using what's called edge computing in the
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Speaker 2: AI business, which is basically on device on the edge
8:07
Speaker 2: of you know, you're you touching like the AI processes
8:11
Speaker 2: and everything. And so that's one open question. But the
8:14
Speaker 2: other one is, even if it is still central processing
8:18
Speaker 2: that is going to be best for this are in
8:21
Speaker 2: video chips, the ones that are best based on the
8:24
Speaker 2: combination of upfront cost and ongoing cost, largely through being
8:29
Speaker 2: as efficient as possible in using electricity.
8:33
Speaker 3: Let's answer the question using history as a guide.
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Speaker 4: Okay, I mean, I know that these are different than say,
8:40
Speaker 4: routers or you know, other types of systems, but I
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Speaker 4: can think of very few hardware companies that have maintained
8:48
Speaker 4: their dominant position and profit margins for.
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Speaker 3: A decade or more.
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Speaker 2: Yes, the though, to be fair, one of the few
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Speaker 2: exceptions in the heart hardware space was Intel, and I
9:02
Speaker 2: say was because the company is a shell of what
9:04
Speaker 2: it was. Intel's a big problem in the tech bubble.
9:07
Speaker 2: Wasn't that they started like losing money or that their
9:10
Speaker 2: profit margins evaporated. It was just, hey, the stock was
9:14
Speaker 2: dramatically overpriced, and people were too optimistic about you know,
9:18
Speaker 2: how many computers would be sold on an annual basis,
9:21
Speaker 2: and so the company got caught up in that. But
9:23
Speaker 2: ultimately Intel, for the better part of the nineties, two
9:27
Speaker 2: thousands and twenty tens, the only reason they kept AMD
9:32
Speaker 2: around in the business was so they couldn't be accused
9:35
Speaker 2: of anti trust. They basically kept AMD alive so that
9:39
Speaker 2: they wouldn't get sued by the federal government. Otherwise they
9:44
Speaker 2: were a completely dominant player. Again, one of America's great
9:46
Speaker 2: companies that now is just a shell of itself and
9:48
Speaker 2: has been kind of running into the ground through horrible
9:51
Speaker 2: management for the last decade. In Vidia, could you make
9:54
Speaker 2: a case that they're in a similar boat maybe, And
9:58
Speaker 2: to be fair, some of the stuff that they're doing
10:00
Speaker 2: now is starting to look a little bit anti competitive
10:02
Speaker 2: with how they're doling out money to companies to try
10:05
Speaker 2: to you know, beef up their ecosystem at the expense
10:07
Speaker 2: of competition in some of the ways that their contract
10:10
Speaker 2: language is done.
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Speaker 4: To be clear, they're not the only ones doing this,
10:12
Speaker 4: but the idea is, hey, we are going to invest
10:15
Speaker 4: this much money in your company, so long as you
10:18
Speaker 4: buy this many of our semi conductors, yes, and don't
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Speaker 4: buy them from AMD.
10:22
Speaker 2: And by the way, if you're buying one part of
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Speaker 2: our semiconductor ecosystem, you have to buy other parts too
10:27
Speaker 2: so that we can have you know, the whole boat.
10:29
Speaker 2: Is kind of how a lot of these contracts are looking.
10:32
Speaker 2: So the question is, look, is AMD going to be
10:37
Speaker 2: like Intel the exception that proves the rule, or do
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Speaker 2: they just become like every other computer hardware company where yeah,
10:45
Speaker 2: once people figure out what you're doing, they eat into
10:48
Speaker 2: those margins, they come for you and you have not
10:51
Speaker 2: as much of a mote as you thought you did,
10:53
Speaker 2: because it becomes commoditized.
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Speaker 4: They have a big head start in a world where
10:57
Speaker 4: there are shortages of what they.
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Speaker 3: Design and produce.
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Speaker 4: Yes, So, like you know, it's tough to measure out
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Speaker 4: how how advantageous that head start really is in the space.
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Speaker 2: The other piece is going to be Hey, as models
11:13
Speaker 2: become more and more commoditized, what you better believe is
11:16
Speaker 2: exactly what's happening now. Do companies say, hey, because this
11:19
Speaker 2: commoditization is eating into our potential revenue for these things, Hey,
11:25
Speaker 2: we can't pay as much as you want us to
11:26
Speaker 2: in video, that's possibility too. Just take a quick break.
11:31
Speaker 2: When we return, we've got Wall Street Watch. Nope, I'm sorry,
11:35
Speaker 2: We've got trivia right after this.
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Speaker 5: k dot Boston. Time for trivia here on the Financial
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Speaker 5: Exchange and on this day. Back in nineteen sixty eight,
12:50
Speaker 5: General Motors produces one hundred millionth Automobile and Oldsmobile Toronado.
12:58
Speaker 5: Oldsmobile was the oldest American car brand until its closure
13:02
Speaker 5: in two thousand and four. So our trivia question today,
13:06
Speaker 5: what is the oldest American car brand that is still active?
13:10
Speaker 5: Once again, what is the oldest American car brand that
13:14
Speaker 5: is still active? Be the seventh person today to text
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Speaker 5: us at six one, seven three six two thirteen eighty
13:22
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13:43
Speaker 2: Piece from the Financial Times and a UH companion one
13:47
Speaker 2: for the New York Times, The Times are The Times
13:50
Speaker 2: is Times Is are doing great work on this. This
13:56
Speaker 2: story from the Financial Times, Rising prices push US car
13:59
Speaker 2: ownership cost to breaking point and the New York Times.
14:02
Speaker 2: It's just crazy how car payments make ownership feel impossible.
14:06
Speaker 2: Here's the deal. It's just really sad to see the
14:16
Speaker 2: cases where people are just trying to buy cars that
14:19
Speaker 2: are too expensive for them with cheaper alternatives available. I
14:23
Speaker 2: very much feel for the people that are trying to
14:25
Speaker 2: buy the cheapest cars available and still can't make the
14:28
Speaker 2: numbers work. Sure, for which there are some, but you know,
14:32
Speaker 2: like you look at where we stand today and no surprise,
14:35
Speaker 2: average sticker price for a new vehicle sold in the
14:38
Speaker 2: United States is north of fifty thousand dollars. Now, a
14:42
Speaker 2: lot of that is because the people that buy new
14:44
Speaker 2: cars are typically wealthier, and so it's it's not you know,
14:51
Speaker 2: someone on twenty thousand dollars of income who's trying to
14:53
Speaker 2: buy that vehicle. It's you know, the people that are
14:56
Speaker 2: making one hundred, one hundred and fifty thousand dollars a year.
14:59
Speaker 2: They're the ones who are off and buying new cars.
15:02
Speaker 2: But what we continue to see is the only reason
15:06
Speaker 2: that that price is that high is because people choose
15:10
Speaker 2: to buy those more expensive vehicles. We've gone through this,
15:14
Speaker 2: and like, regardless of the vehicle that you look at,
15:20
Speaker 2: you can generally find unless you're buying like true like
15:23
Speaker 2: luxury vehicles, you can generally find versions that are far
15:27
Speaker 2: cheaper than that. If you're a big pickup guy, if
15:29
Speaker 2: you're an F one fifty guy and you say, hey,
15:33
Speaker 2: you know, I'm looking for you know, an F one fifty,
15:35
Speaker 2: And again, I know that in some cases, like there
15:38
Speaker 2: are reasons why you need X, Y or Z for work,
15:40
Speaker 2: and look, if your truck is your office, totally get it.
15:42
Speaker 2: Because it's a very different world than I live in,
15:44
Speaker 2: and I understand if you know you need some comfort
15:46
Speaker 2: inness in that. But if you're buying an F one fifty,
15:50
Speaker 2: you can get in and out for forty grand. It's
15:53
Speaker 2: not going to have all the bells and whistles. But
15:55
Speaker 2: a lot of the people buying the F one fifty
15:57
Speaker 2: are not buying it just for work. If you are,
15:59
Speaker 2: again I understand and why you need you know, engine
16:02
Speaker 2: X and you know this if you're playing.
16:04
Speaker 3: I get it. Can't even ply with the thing.
16:05
Speaker 2: Yeah, you know, like I get it. If you're hauling
16:07
Speaker 2: stuff all the time and you're like no, like this
16:09
Speaker 2: comes to eighty grand, totally get it. But Ford sales
16:13
Speaker 2: a lot of F one fifties two guys that are
16:15
Speaker 2: just you know, carrying their kids around from you know,
16:18
Speaker 2: to and from sports practices, and you know, might haul
16:21
Speaker 2: like one boat a summer or something like that, and
16:24
Speaker 2: you don't need the raptor to do that.
16:27
Speaker 4: I'm going to uh focus for a moment on the
16:29
Speaker 4: interest rates part of the equation, because that is a
16:31
Speaker 4: big piece of the affordability question.
16:33
Speaker 3: Two.
16:34
Speaker 4: I'm gonna ignore the super prime and the deep subprime
16:37
Speaker 4: and just assume that most people are falling somewhere between
16:40
Speaker 4: prime credit, which would be between six sixty one and
16:43
Speaker 4: seven eighty or sub prime, which would be between five
16:46
Speaker 4: hundred and six hundred. The average APR for a new
16:49
Speaker 4: car on that prime level is six and a quarter percent.
16:52
Speaker 4: If you're subprime, you're looking at over thirteen percent as
16:55
Speaker 4: of March YEP. For a used car, you're looking at
16:59
Speaker 4: close to ten percent even in that prime credit score area,
17:03
Speaker 4: and closer to twenty percent when you're talking about the
17:05
Speaker 4: subprime area, really high, really high interest rates. And again,
17:12
Speaker 4: the point that you make, though Chucky, is an important one.
17:16
Speaker 4: The reason that we have incredibly expensive cars in this
17:19
Speaker 4: country is because there are a lot of wealthy people
17:22
Speaker 4: that decide that's why they put their money, and that's
17:25
Speaker 4: why the car makers pretty much exclusively make those types
17:28
Speaker 4: of cars. But I still get confounded by the idea
17:33
Speaker 4: of people spending fifty sixty seventy percent of their annual
17:37
Speaker 4: income not in the car payments.
17:39
Speaker 3: I don't ever see that.
17:40
Speaker 4: But you know, the justifications that I see of like, oh, yeah,
17:44
Speaker 4: half of my salary is the ticket price the MSRP
17:48
Speaker 4: for the car that I'm buying is very difficult to
17:51
Speaker 4: justify in my mind.
17:53
Speaker 2: The best framework that I've seen online that references that
17:56
Speaker 2: that very idea is the price you pay for your
18:00
Speaker 2: car shouldn't be more than ten percent of your salary,
18:03
Speaker 2: not monthly payment wise, but hey, if you make fifty
18:07
Speaker 2: thousand dollars a year, the most you should spend on
18:10
Speaker 2: a car is five grand, and that means that, like,
18:14
Speaker 2: you're not going twenty year old Civic, right, It's not
18:17
Speaker 2: going to be a very nice car, but it's what
18:20
Speaker 2: you can afford. If you make one hundred grand, you
18:23
Speaker 2: don't go out and get the BMW three Series. You
18:26
Speaker 2: spend ten thousand dollars on a car, which could probably
18:28
Speaker 2: get you a twenty year old three Series, but the
18:30
Speaker 2: maintenance on that's probably going to be awfully expensive given
18:33
Speaker 2: you know what happened is to German cars when you
18:35
Speaker 2: go over one hundred thousand miles. So again, like no
18:40
Speaker 2: one wants to hear this or talk about it very much,
18:42
Speaker 2: but again, the reason why auto prices are so high
18:46
Speaker 2: is because this is what we choose to buy. You
18:49
Speaker 2: can absolutely find vehicles out there in the twenties, thirties
18:52
Speaker 2: and forties, new car buyers are not choosing them.
18:56
Speaker 4: The other wild stuff that bears mentioning is the insurance
19:01
Speaker 4: and repair costs now on vehicles of any sort because
19:05
Speaker 4: of what we demand go into these cars, all the sensors,
19:07
Speaker 4: the backup sensors, the bumper sensors. I mean even a
19:10
Speaker 4: ripped off rear bumper can cost you thousands of dollars easily.
19:16
Speaker 2: Yeah, it's nice.
19:17
Speaker 4: Hence my insurance premium is through the roof. But it's
19:19
Speaker 4: sure as nice that it beeps at me when I
19:21
Speaker 4: get too close to the next car in the parking garash.
19:24
Speaker 3: I do like that, Yeah, I do like that.
19:26
Speaker 2: Let's take a quick break here. When we come back,
19:28
Speaker 2: we've got Wall Street Watch and the trivia answer, and
19:31
Speaker 2: then we'll talk a little bit about four to one
19:33
Speaker 2: K plans and taxes as well.
19:35
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20:04
Speaker 5: No markets the beginning of the week, well into positive territories.
20:08
Speaker 5: We are two and a half weeks into the conflict
20:10
Speaker 5: in Iran, where oil prices are pulling back.
20:12
Speaker 2: Today.
20:12
Speaker 5: Traders are also rating for a FED meeting that concludes
20:15
Speaker 5: on Wednesday afternoon. Right now, the Dow is up over
20:18
Speaker 5: one percent or five hundred and ten points higher, SMP
20:21
Speaker 5: five hundred up one and a quarter percent or eighty
20:24
Speaker 5: two points, hired NASDAC up about one and a half
20:26
Speaker 5: percent or three hundred and twenty eight points, RUSSED two
20:29
Speaker 5: thousands up one and a third percent, Tenure treasreield down
20:33
Speaker 5: five basis points at four point two two eight percent,
20:37
Speaker 5: and Oil pulling back about three and a half percent,
20:40
Speaker 5: now trading right around ninety five dollars a barrel. Breaking
20:43
Speaker 5: news from Meta this morning, after the social media and
20:45
Speaker 5: tech China announced a new partnership with Dutch cloud provider
20:49
Speaker 5: Nebuis to spend up to twenty seven billion dollars on
20:52
Speaker 5: its AI infrastructure. NEBYA shares are surging over eleven percent. Separately,
20:57
Speaker 5: Reuters reported that Meta is planning sweeping light offs. MetaStock
21:01
Speaker 5: is up over two percent meanwhile, and video shares are
21:03
Speaker 5: up about two percent. Ahead of the A and Chip
21:06
Speaker 5: Giants summit this afternoon at two, where investors will focus
21:10
Speaker 5: on a speech from CEO Jensen Wog Sticking with tech,
21:13
Speaker 5: where Micron Technology said it plans to build a second
21:16
Speaker 5: manufacturing site in Taiwan, setting shares up by five percent.
21:20
Speaker 5: In Peloton today announced its commercial series, the company's first
21:25
Speaker 5: bike and tread products built for high traffic gym floors.
21:29
Speaker 5: Peloton stock is up nearly five percent on that news.
21:34
Speaker 5: I'm Tucker Silvan. That is Wall Street watching. On the
21:36
Speaker 5: previous segment, we asked you the trivia question, what is
21:39
Speaker 5: the oldest car brand that is still active? That would
21:43
Speaker 5: be Buick. Mike from Bill Ricord Mass is our winner today,
21:46
Speaker 5: taking home the Financial Exchange Show t shirt. Congrats to
21:49
Speaker 5: Mike and we play trivia every day here on the
21:52
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21:56
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21:57
Speaker 2: Can isk at a quick question, Yeah.
22:00
Speaker 3: To whom both of you?
22:03
Speaker 2: Okay, listeners, what needs to be different about a stationary
22:09
Speaker 2: bike to allow it to operate on a high traffic
22:14
Speaker 2: gym floor. It's a stationary bike, Like you're just putting
22:19
Speaker 2: like new little like sticky things on the bottom, so
22:23
Speaker 2: it what are we talking about here? That doesn't really
22:27
Speaker 2: seem like a huge innovation.
22:28
Speaker 4: But maybe the vibrations from the floor are causing the
22:32
Speaker 4: thing to crumble after sixteen months.
22:34
Speaker 3: Yeah, I don't know, don't have an.
22:36
Speaker 4: Answer for you, you know, like, but you're also talking to
22:38
Speaker 4: somebody who hasn't been inside a gym for so better
22:41
Speaker 4: part of quarter century.
22:44
Speaker 5: This is from the article I'm mariding. So they partnered
22:47
Speaker 5: with pre Corps sure back in twenty twenty one. I
22:50
Speaker 5: guess the machines combine Peloton's digital workout platform and instructor
22:54
Speaker 5: like classes with hardware engineered by pre Corps to withstand
22:59
Speaker 5: heavy day So it's just a more built up bike
23:03
Speaker 5: for heavy traffic.
23:05
Speaker 2: I don't know, Okay, I don't know, man. I mean, look,
23:10
Speaker 2: I'm sure there's something you need to do if you're
23:12
Speaker 2: putting your bike into a gym, but it doesn't seem
23:15
Speaker 2: like it should have taken you six years to get
23:17
Speaker 2: to that point. Well, you just don't understand, Chuck. I know, Michael, Uh,
23:23
Speaker 2: other things. I don't understand. What is the tax bill
23:27
Speaker 2: that's haunting my four one K plan?
23:30
Speaker 3: Uh? This one? You do know?
23:33
Speaker 4: The tax bill that's haunting your four oh one K
23:37
Speaker 4: plan is your required minimum distributions. If there is a
23:41
Speaker 4: tax bill that's haunting your four o one k, which,
23:43
Speaker 4: by the way, by the way, not everybody actually has
23:46
Speaker 4: a tax bill that's haunting their four a one k
23:48
Speaker 4: because in many cases people are withdrawing from their four
23:53
Speaker 4: oh one k or ira about the same amount that
23:56
Speaker 4: they will be required to withdraw from their four a
23:59
Speaker 4: one k ri ira by time they get to seventy five.
24:01
Speaker 4: And if you're in that boat, there's probably not a
24:05
Speaker 4: whole lot that makes sense to change either way.
24:07
Speaker 2: It is true, and again a lot of you listening
24:09
Speaker 2: know this. The fact is the money that is in
24:12
Speaker 2: your four to one k, as you know, pre tax money,
24:15
Speaker 2: a portion of that is going to have to go
24:18
Speaker 2: to the federal government. How much is going to depend
24:21
Speaker 2: on how much you need to take each year, what
24:23
Speaker 2: tax bracket you fall into, like all of these different things.
24:26
Speaker 2: But if you're looking at your four one k being like, ooh,
24:29
Speaker 2: I've got you know, a million dollars in it, well,
24:31
Speaker 2: a chunk of that when it comes out is going
24:33
Speaker 2: to not be yours.
24:35
Speaker 4: It's funny because I feel as though we went from
24:37
Speaker 4: five years ago nobody having any idea what a roth
24:40
Speaker 4: was or how a conversion worked, yeah, to now pretty
24:44
Speaker 4: much everyone believing that they must get a ROTH conversion
24:47
Speaker 4: done soon before the tax bomb explodes and they get
24:50
Speaker 4: hauled off to IRS jail.
24:51
Speaker 3: Which doesn't exist.
24:53
Speaker 2: IRS jail.
24:55
Speaker 4: Jail exists for not paying your taxes, but there's no
24:57
Speaker 4: special IRS jail, no.
25:01
Speaker 3: Go ass. Wesley snipes.
25:03
Speaker 4: The reality is that these things get really complicated. So
25:09
Speaker 4: here's an example that I was faced with recently, was
25:13
Speaker 4: a couple living in California who is intending to retire
25:17
Speaker 4: in a couple of years to Arizona. And they definitely,
25:21
Speaker 4: I think you could argue they have a pretty significant
25:25
Speaker 4: tax bill haunting their future. But we had to really
25:28
Speaker 4: walk through the trickiness of navigating two different tax codes
25:32
Speaker 4: state by state that are vastly different.
25:34
Speaker 3: If you're not familiar yes.
25:35
Speaker 4: And determining okay, when does it actually make sense to
25:38
Speaker 4: do these conversions, because there could be you know, the
25:40
Speaker 4: federal taxes are going to be about the same, but
25:42
Speaker 4: there could be a seven percentage point swing depending on
25:45
Speaker 4: one state versus the other. And people around here, you know,
25:48
Speaker 4: on the East Coast, experience the same thing. I live
25:52
Speaker 4: in Massachusetts, but I might be retiring to Florida or
25:54
Speaker 4: to New Hampshire.
25:57
Speaker 3: These are really.
25:58
Speaker 4: Tricky pieces of the pie to navigate, and there's even
26:03
Speaker 4: more complexities in Massachusetts when it comes to how withdrawals
26:08
Speaker 4: from iras versus four one k's are our tax so
26:11
Speaker 4: we don't even need to get into that part of it.
26:13
Speaker 4: But the point that I would make here is that
26:17
Speaker 4: everyone and their mother is now talking about how beneficial
26:19
Speaker 4: wroth irays are. And don't get me wrong, there are
26:22
Speaker 4: a ton of key advantages, especially if you're using them
26:24
Speaker 4: as an inheritance tool. There's some key advantages they are
26:27
Speaker 4: compared to your traditional four oh one K, but it
26:32
Speaker 4: is not for everybody. And when I've seen people screw
26:36
Speaker 4: this up, it's usually not been these days about not
26:39
Speaker 4: doing enough roth conversions. It's been about doing too much
26:42
Speaker 4: and surprising themselves in terms of the tax bill that
26:45
Speaker 4: they face now instead.
26:47
Speaker 3: Of in the future.
26:47
Speaker 4: And then we line up and say, no, guys, you're
26:50
Speaker 4: going to be in a lower tax rate than you
26:51
Speaker 4: are now, why are you doing this? And so my
26:55
Speaker 4: point here would be everyone has now heard of roth irays,
26:59
Speaker 4: wroth four O one K and roth conversions. Nobody seemingly
27:03
Speaker 4: that I meet with has a coherent plan as to
27:05
Speaker 4: why they're going to do one or not do one,
27:07
Speaker 4: or contribute to one versus the other. And it's pretty
27:11
Speaker 4: important because nobody likes paying more taxes than they otherwise
27:14
Speaker 4: would owe true if you have questions like that and
27:17
Speaker 4: you want a coherent plan around how to deal with
27:21
Speaker 4: your again, your benefit from work that the irs is
27:24
Speaker 4: providing to you for saving money on taxes, you got
27:28
Speaker 4: to have a strategy that actually takes advantage of the rules.
27:30
Speaker 4: The number to call to book some time to talk
27:33
Speaker 4: about your personal strategy is eight hundred three nine.
27:37
Speaker 3: Three for zero zero one.
27:39
Speaker 4: That's for the Armstrong Advisory Group will sit down with
27:41
Speaker 4: you and talk through your overall planning strategy. Then number
27:44
Speaker 4: again eight hundred three to nine three for zero zero one.
27:48
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
27:50
Speaker 1: registered investment advisor. Nothing in the ad or in any
27:53
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
27:56
Speaker 1: your own financial tax into state planning advisors before making
27:59
Speaker 1: any investment decision. Armstrong make contact you to offer investment
28:02
Speaker 1: advisory services.
28:03
Speaker 2: Piece of New York Times What to do if you're
28:05
Speaker 2: a data breach victim, and you probably are, I'll change
28:08
Speaker 2: the probably to definitely because if you are over the
28:10
Speaker 2: age of twenty, if you can read this article, if
28:15
Speaker 2: you can read, there is someone somewhere in the world
28:19
Speaker 2: who has your identifying information?
28:22
Speaker 4: Yeah, heck probably even my nine year old kids. They
28:25
Speaker 4: can read at some point, yes.
28:27
Speaker 2: Right, if you can read, there's someone in the world
28:30
Speaker 2: that has your information. Probably, So this New York Times
28:33
Speaker 2: piece does go through, you know, a bunch of different things.
28:37
Speaker 2: I'll make it really simple at this point, every single
28:42
Speaker 2: American by default, should have their credit file frozen. What
28:49
Speaker 2: I mean by this the three major credit bireas that
28:52
Speaker 2: are out there Experience, Equifax, and TransUnion. Since the who
28:56
Speaker 2: is it that had the breach was Equifax, it was
28:58
Speaker 2: one of the ease. Yeah, one of the ease had
29:00
Speaker 2: to breach ten years ago, and a bunch of reform
29:02
Speaker 2: came out of it, one of which was used to
29:04
Speaker 2: have to pay for a credit freeze and none freeze.
29:06
Speaker 3: Now you don't.
29:07
Speaker 2: So if your credit is frozen, all that it means
29:10
Speaker 2: is that no one can go and take out new
29:13
Speaker 2: lines of credit without that freeze being lifted.
29:16
Speaker 4: So practically speaking, I'm in the car dealership and I'm
29:18
Speaker 4: trying to take out a loan. What do I actually
29:20
Speaker 4: need to do if my credit is frozen at that
29:22
Speaker 4: point in time.
29:23
Speaker 2: And I've done this? So what you need to do
29:25
Speaker 2: is you need to ask the person at the dealer,
29:29
Speaker 2: where do you which one of the agencies do you
29:31
Speaker 2: pull which one of the bureaus do you pull my
29:33
Speaker 2: credit from? And they will tell you we pull from X,
29:35
Speaker 2: we pull from why we pull from Z. You then
29:37
Speaker 2: need to go to the website of that agency or
29:41
Speaker 2: that bureau and you can do a temporary lifting of
29:44
Speaker 2: the freeze. You specify how long you want it, so
29:46
Speaker 2: like for one or two days, so it's a minimal
29:48
Speaker 2: amount of time, and you lift the freeze in order
29:51
Speaker 2: to have that loan authorized and processed, and then after
29:56
Speaker 2: that it goes back to being frozen so that no
29:58
Speaker 2: one can go and take out new credit in your name.
30:01
Speaker 2: The other thing that you can do if you've been
30:03
Speaker 2: a victim of, you know, more identity theft activity actually
30:07
Speaker 2: where like you've like gotten notifications that someone has been
30:11
Speaker 2: trying to open stuff in your name. You can also
30:14
Speaker 2: put what's known as a fraud alert on any of
30:17
Speaker 2: the bureaus as well. If there's an alert on one bureau,
30:19
Speaker 2: they will pass it on to the other two. If
30:23
Speaker 2: it's different from a freeze, where a freeze you have
30:25
Speaker 2: to actually put on each one, but a fraud alert
30:28
Speaker 2: basically what you put on that bureau is it says, hey,
30:32
Speaker 2: in the event someone tries to, you know, even you know,
30:36
Speaker 2: take out new credit, if somehow they get past the freeze,
30:39
Speaker 2: call this number before issuing any new credit and it's
30:43
Speaker 2: your phone number. Like, that's what you will put in there,
30:45
Speaker 2: and so it's another line of defense that you can
30:47
Speaker 2: put in as well.
30:48
Speaker 3: Does this prevent everything?
30:50
Speaker 4: No, Obviously, if you know, the worker at the grocery
30:53
Speaker 4: store rips off your credit card number and you get
30:57
Speaker 4: those fake transactions on your credit card, this doesn't prevent
31:01
Speaker 4: that because your existing line of credit is already open.
31:04
Speaker 4: It doesn't prevent somebody from intercepting a check that you
31:07
Speaker 4: mail and doing something there. It doesn't prevent somebody from
31:11
Speaker 4: attempting to, you know, convince you that there a legitimate
31:14
Speaker 4: authority and voluntarily send payments your their way. But I'm
31:18
Speaker 4: with you that this, this single type of fraud is
31:22
Speaker 4: now so much easier due to the pervasiveness of all
31:25
Speaker 4: of the breaches that have occurred.
31:28
Speaker 3: It's just very easy.
31:29
Speaker 4: If if I want to go get Tucker's so security number,
31:32
Speaker 4: it would just ask me.
31:33
Speaker 3: It wouldn't be that expensive. Yeah, he announces it on
31:36
Speaker 3: the radio twice.
31:37
Speaker 2: Yeah, is it still eight?
31:40
Speaker 4: But you know, it wouldn't be that expensive for somebody
31:43
Speaker 4: that knows what they're doing to go and find it
31:46
Speaker 4: in all likelihood, and so this is at least one
31:50
Speaker 4: step that can be easily taken that I'm with you
31:53
Speaker 4: most people, it wouldn't change their daily lives.
31:56
Speaker 2: Other things, just to have in consideration. The three may
32:00
Speaker 2: credit bureaus deal with taking out new credit. There's a
32:02
Speaker 2: separate one that banks use for setting up new bank
32:06
Speaker 2: accounts called checks Systems ch EX, like the serial that
32:10
Speaker 2: is another one that you can place a freezon to
32:12
Speaker 2: make sure no one's opening bank accounts in your name.
32:15
Speaker 2: If you are a victim of identity theft, the FTC
32:19
Speaker 2: has a website where you can report that, and then
32:22
Speaker 2: that FTC report you can then take to your local
32:25
Speaker 2: police office, police office, police station. They most likely won't
32:29
Speaker 2: be able to do anything about it, but just in
32:31
Speaker 2: terms of being able to file and appropriate police report
32:33
Speaker 2: and have documentation on file, those are things that you
32:36
Speaker 2: should be doing in the event that you actually have
32:38
Speaker 2: any identity theft that is going on. But this stuff
32:41
Speaker 2: is really common, it's really painful. It sucks, trust me,
32:46
Speaker 2: I know. But ultimately these types of things can help
32:50
Speaker 2: you to protect yourself so that you're reducing the risk
32:54
Speaker 2: of any kind of major problems. You can never eliminate
32:56
Speaker 2: it completely, but you can start to, you know, things
33:00
Speaker 2: up a little bit.
33:00
Speaker 4: Oh and by the way, with AI, you'd better believe
33:03
Speaker 4: that it just became a lot easier for the scam
33:05
Speaker 4: artists to perpetrate this sort of thing.
33:07
Speaker 2: Well, that's good because no one's really using AI these days.
33:11
Speaker 2: Let's take a quick break. When we return, stack Lett.
33:16
Speaker 1: Text us at six one seven three six two one
33:18
Speaker 1: three eighty five with your comments and questions about today's
33:21
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33:23
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33:28
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33:35
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33:42
Speaker 5: Hey, we know you have questions and we've got your answers.
33:45
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33:49
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34:09
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34:12
Speaker 2: Mike, what do you got for stuck roulette?
34:15
Speaker 4: Well, it's uh tryout season for anyone that plays youth
34:19
Speaker 4: hockey around this area.
34:21
Speaker 3: I believe it or not. They finished the season.
34:23
Speaker 4: Yeah, they finished the season and then immediately do try it,
34:25
Speaker 4: which is actually a smart idea because the kids are
34:27
Speaker 4: still in season mode and you're you're they're actually like
34:30
Speaker 4: still skating and used to it. So it does happen
34:33
Speaker 4: in March, at least in our town. And the Wall
34:36
Speaker 4: Street Journal has a piece out today the forty billion
34:39
Speaker 4: dollar game of youth sports has only one winner, Dick
34:43
Speaker 4: Sporting Goods. I would debate that a little bit, but
34:46
Speaker 4: Dick Sporting Goods, in terms of their presence nationally, they're right.
34:49
Speaker 3: There is no competitor left.
34:51
Speaker 4: What were some of the other big ones with marathon
34:53
Speaker 4: Decathlon Sports was a big one that went to.
34:57
Speaker 2: Sports authorities, MVP sports, They're all gone.
35:01
Speaker 4: Dix is the last remaining national one that I can
35:04
Speaker 4: really think of there, you know, play it Again is
35:06
Speaker 4: a bit of one, but they're more of a franchise
35:09
Speaker 4: model Dick boarding goods is publicly traded and a huge beneficiary.
35:12
Speaker 4: And the level for those listening that don't have kids
35:17
Speaker 4: in youth sports these days, the costs associated and granted
35:21
Speaker 4: I'm cherry picking ice hockey, which happens to be the
35:23
Speaker 4: most expensive probably of all of them unless you've got
35:26
Speaker 4: an equestrian in your family.
35:27
Speaker 2: As much as ice tennis.
35:30
Speaker 4: Sure, the local town league that my kids play in
35:34
Speaker 4: for you know, a travel team.
35:36
Speaker 3: Is about two thousand dollars each for the season.
35:39
Speaker 4: Oh, when you talk about club hockey, I've got the
35:44
Speaker 4: junior Philadelphia Little Flyers up here. The twenty twenty five
35:48
Speaker 4: to twenty twenty six program for kids starts at eleven thousand,
35:52
Speaker 4: five hundred before equipment. Do you say eleven thousand, five
35:54
Speaker 4: hundred before equipment before equipment?
35:56
Speaker 3: Eleven thousands?
35:57
Speaker 2: Has that come with a car?
35:59
Speaker 4: This this is, you know, this is the level at
36:02
Speaker 4: which parents are spending on their kids' sports experience, which
36:08
Speaker 4: I am guilty. I don't obviously participate in club programs,
36:12
Speaker 4: which is why I did incite them. But you know,
36:14
Speaker 4: these are the types of things that people are investing
36:16
Speaker 4: their money in.
36:17
Speaker 3: And yeah, I.
36:20
Speaker 4: Can see why Dex Sporting Goods would be able to
36:22
Speaker 4: pick up some of the dough on this because compared
36:24
Speaker 4: to the registration costs and the program costs of some
36:27
Speaker 4: of these things, an extra bat or uniform is just
36:30
Speaker 4: kind of a drop in the bucket.
36:32
Speaker 2: I gotta be honest. This piece leaves out the second
36:35
Speaker 2: winner of the youth sporting binge that we're on now,
36:39
Speaker 2: which is all of the administrative bloat in youth sports
36:45
Speaker 2: and all of the organizations that just capitalize on every
36:50
Speaker 2: parent thinking that their kid's going to be the next
36:52
Speaker 2: one in the Olympics, when in reality, if you're listening
36:55
Speaker 2: to this show, your kid's not.
36:58
Speaker 3: Going to be in the Olympics.
36:59
Speaker 2: Oh yeah, your kid's not gonna play professional sports. Your
37:02
Speaker 2: kid's not gonna play D one sports.
37:04
Speaker 5: You'll see.
37:06
Speaker 2: I say, this is someone who was like very like
37:09
Speaker 2: cuspy d one, Like I I was. I had no
37:14
Speaker 2: business actually playing Division one sports, but somehow weaseled my
37:17
Speaker 2: way into it. Sounds like Chuck, Yes, exactly. I made
37:23
Speaker 2: a very convincing case. But like once they're kind of realized, Man,
37:28
Speaker 2: I'm in over my head, Like this is not like
37:32
Speaker 2: where I parked my car, and so I think that
37:36
Speaker 2: sports are great for building resilience. I think they're great
37:39
Speaker 2: for building teamwork, for you know, encouraging competition. I think
37:43
Speaker 2: they're great for all of this stuff. I think they're
37:45
Speaker 2: terrible for spending money.
37:47
Speaker 4: By the way, you know, indications that you're right about
37:49
Speaker 4: that are that private equity has been investing heavily in
37:52
Speaker 4: the space over.
37:53
Speaker 2: The yeast of the last anywhere that pe is. They're
37:55
Speaker 2: not doing it because they really believe in Jim.
37:57
Speaker 3: And the love of the game.
37:58
Speaker 2: Yeah they don't. I don't think that Diane's gonna really
38:01
Speaker 2: make the leap this year. They just want your fees.
38:07
Speaker 2: I'm sorry, Like this is just what it is. Oh boy,
38:12
Speaker 2: let's take a quick break and tomorrow you can all
38:14
Speaker 2: tell me why your kid's gonna be the one who's
38:16
Speaker 2: gonna make it.
38:17
Speaker 3: Actually