DeepSummary
The episode is a Q&A session where the hosts, Bo and Brian, answer personal finance questions from listeners. They discuss strategies for prioritizing retirement contributions between Roth and traditional accounts, based on factors like age, tax brackets, and investment goals. They also offer advice on using emergency funds to pay off debt, the pros and cons of dividend investing versus broad index funds, and whether to pay off a mortgage or invest more aggressively before retirement.
Key points include taking advantage of tax-deferred accounts when in higher tax brackets, doing Roth conversions and backdoor Roth contributions for those with high incomes, considering risk tolerance and income needs when deciding how much to keep in cash reserves, and finding the right balance between paying down low-interest debt and investing for growth, depending on personal circumstances and goals.
The hosts emphasize looking at the big picture, running detailed projections to understand the long-term impact of different strategies, and aligning financial decisions with an individual's specific situation and priorities rather than following blanket rules.
Key Episodes Takeaways
- Consider tax implications when deciding between Roth and traditional retirement accounts
- Take advantage of strategies like Roth conversions and backdoor Roths for high income earners
- Right-size your emergency fund based on your risk tolerance and ability to cut expenses if needed
- For low-interest debt like mortgages, investing aggressively may provide higher returns than prepaying
- Dividend investing alone may be too conservative - focus on total return across income and growth
- Run detailed projections to understand the long-term impacts of different financial strategies
- Personalize advice based on your specific goals, situation and stage of life
- Build tax diversification across accounts to manage taxes in retirement
Top Episodes Quotes
- “There's a really good chance that your 401K has some of those costs where if you go to the Roth IRA, all you're going to pay, especially with the low cost provider, you said, is just the internal operating expense of whatever fund you buy.“ by Bo
- “What we recognize is that if you have a mortgage that's super, super low interest, let's say that it's a two and a half, three, three and a half percent mortgage, it's very easy to go deploy your dollars elsewhere to earn more than that.“ by Bo
- “I think the ability to tap into your basis in a Roth versus a 401K is one plus for the IRA over the 401K.“ by Brian
- “I love that we can, like, now Brian doesn't get to see it. Cause I got the computer.“ by Bo
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Episode Information
Money Guy Show
Brian Preston and Bo Hanson
6/10/24
"We're planning to retire early, starting in about 10 years. We want to pay off our home before early retirement. Would it be smarter to pour all our money into investments and pay off home at the end?"
We'll walk you through that question and more in today's Q&A episode!
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