On episode 65 of Portfolio Rescue, Ben Carlson and Duncan Hill are joined by RWM CFO and tax superstar Bill Sweet to discuss short-term vs long-term bonds, investing in farmland, getting out of concentrated stock positions, utilizing a Roth IRA, and much more! Submit your Portfolio Rescue questions to askthecompoundshow@gmail.com!
►00:00 – Intro
►03:33 – Long-term vs short-term bonds.
►12:18 – Investing in farmland.
►18:30 – Utilizing a Roth IRA.
►24:00 – Best way to diversify out of large single stock positions.
►27:47 – Should I Put Riskier Stocks in my Roth IRA?
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Investing involves the risk of loss. This podcast is for informational purposes only and should not be regarded as personalized investment advice or relied upon for investment decisions. Duncan Hill, Bill Sweet, and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management.
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Investors have a tendency to look for the best investment options to maximize their returns. However, with the rise of the Roth IRA, investors should consider whether they should place riskier stocks in their Roth IRA.
A Roth IRA is a retirement plan that allows individuals to invest after-tax money into it. Basically, the investor does not get a tax benefit for contributing money into a Roth IRA. However, the growth and earnings on the investment are tax-free, and there are no taxes due when withdrawals are made in retirement.
One of the main advantages of the Roth IRA is that it allows investors to hold their investments for a long period of time without any taxes on capital gains or dividends. This means that investors can take on higher risk investments without the need to worry about taxes on their earnings.
However, before investors jump into riskier stocks in their Roth IRA, they should consider a few key factors.
First, investors should consider their investment horizon. The Roth IRA is designed for long-term investment. Therefore, if an investor has a shorter investment horizon, they should not place riskier stocks in their Roth IRA. Riskier stocks may be too volatile in the short term, and the investor may not be able to ride out the fluctuations. Thus, investors need to balance the benefits of holding riskier stocks over the long term with the potential for short-term volatility.
Second, investors should consider their overall portfolio allocation. Investors should not place all their investments in riskier stocks in their Roth IRA. They should have a diversified portfolio that includes various asset classes and investment styles. Investors need to balance their investments between risk and reward. Therefore, investors should evaluate their risk tolerance, investment goals, and investment strategies before placing riskier stocks in their Roth IRA.
In conclusion, investors should consider placing riskier stocks in their Roth IRA because of the potential for tax-free growth and earnings. However, investors need to do thorough research and evaluate their investment horizon, overall portfolio allocation, and risk tolerance before investing in any stock. It is always best to consult with a financial advisor before making any investment decisions.
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so is barebelling the bills a barbill?
Thanks for helping answer my questions fellas! Take care and keep the show going! It's a great source of info for those of us that want to continue learning about financial management and especially helpful for those of us who are creeping up on retirement! Thanks again, RC
All due respect to duncan but how does he know literally nothing lol…
Ben's question about what you would do if you're retiring early made me think.
I don't know how many people are in a similar situation, but I grew up in a household where my dad was constantly getting laid off due to the turmoil in the airline industry from 9/11, as well as the various business cycles aside from it. My wife similarly grew up in a financially challenged household, at one point living with her family of 5 in a small trailer.
Nowadays we both have advanced degrees from a top university, which has translated into a good household income several times the national average. We're absolutely debt free, aside from credit cards which we just use for bonuses and pay off instantly. If that were all you knew about our income profile, you would maybe assume that we'd be living in a McMansion, etc.
But, no. Because of our upbringing both of us are paranoid about losing our livelihoods in unforeseen circumstances. Luckily we were both in school at the time, but the meltdown further inflamed our paranoia. Years later, we're still renting a small apartment. We bought an old used Toyota Corolla for $5k and drove it until it was 18 years old and basically fell apart underneath us. We prioritized paying off our educational debts, max out retirement funds, and invest a large portion of our income besides that, and have basically accumulated a decent portfolio but we're still eating on old Ikea furniture and wearing the same clothes we bought 15 years ago (plus a few holes).
So I guess you could call it maybe somewhat close to a FIRE lifestyle, but not the "retire early" part. But if you ask me if I'm retiring early, no way. I chose my career specifically because it can employ people until advanced old age (if they want to stay), working in a sector with implicit job security. My wife's in a similar boat. We are paranoid about not working, admittedly irrationally so. Retirement just sounds like 20+ years of unemployment to us, if we're lucky enough to live that long. I can feel my chest squeeze at the very thought of being unemployed, even if I'm sitting on a retirement account large enough to drift on indefinitely. That's how painful it was watching my dad go through it, and living with the consequences as a family. Unemployment takes a perfectly happy family and crushes it.
I do see myself retiring eventually, but only when my health becomes poor enough that I can't work anymore. At that point, I'll be helpless to fate and have no choice, but it will probably terrify me to retire even then. I'm self-aware enough to recognize that this is probably a mental health issue, but I also don't feel the need to convince myself not to be careful about money. Especially if I'm not missing it. My job lets me travel on the company card, as does my wife's. Our kids are enrolled in plenty of things. We haven't skimped on them. I just don't see why I would need to convince myself to spend when I'm satisfied now.
had to listen to the Rates talk 3 times to understand if it was an invst or not . all those ishares did bad last yr although rates rose which makes sense(inverse relation) so should i buy it now hoping they rise and then the final conclusion just stay in stocks
I’m Canadian, so have no right talking aboot accents, but the way Ben says the word bonds (bands) gets me every time.
Treasury ETFs have fees, no?
You two are the best at Ritholtz.
The married filing jointly income limit for contributing to a roth IRA is 214k not 153k.
Always fun and educational all at the same time guys.
Great show as usual. Any time Bill Sweet is on the show is good. Its probably also time to give Duncan a thumbs up. He has the best voice on the internet for broadcasting and has to be given credit for all the time and work it takes to keep a beard trimmed up and looking that good.