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The Inflation Enhancement Act Thumbnail

The Inflation Enhancement Act

Ross Marynell  00:00

The Inflation Enhancement Act...I guess we'll talk about it

 Michael Baker  00:03

We call it the inflation Enhancement Act but by its legal name, the Inflation Reduction Act, right? It's government name is Inflation Reduction Act, but we know we know it as the inflation Enhancement Act.

Ross Marynell  00:16

Yes, because spending $400 billion on green energy plans and tax credits is deflationary

Michael Baker  00:23

We live in a world where deficit spending is somehow deflationary.


Ladies and gentlemen, welcome back to the money huddle. This is season four. I don't think we've ever we've never officially done seasons, but maybe we should do seasons. So we're doing seasons, since we kind of we love football. We'd love to get going during football season. And then during the summertime, we just kind of take the time to have vacations and enjoy life a little bit. And so you know, this is unofficially or officially started season four for the money huddle. So we'll we'll run with that. Ross. How are you, buddy?

Ross Marynell  01:32

Great to see you. Thanks to our listeners. We got we got some feedback. Hey, where have you been? It's funny. I went back and checked in on our last podcast episode. And we were talking about our kids embarking on summer break. And here we are. The last week of summer before my elementary and middle school or go back next week. We've got meet the teachers tonight. But all right, we got it. We got to pause here for a second. Can we just talk about how nice your studio is? 

Michael Baker  02:00

My studio?

Ross Marynell  02:02

My goodness, we've got soft and blue lights in the back as well. Michael Jordan poster, the likeness is Oh my I love it.

Michael Baker  02:13

I'm leveling up, man. I'm just doing it. I'm doing.

Ross Marynell  02:18

I'm here in our office in Fort Mill. And there's a mosquito flying around here. blood sucking my head. I mean, honestly, this that mosquito. That's 

Michael Baker  02:28

That's your new IRS agent that's been assigned to you, bro. So just moving in, he's just moving in.

Ross Marynell  02:39

Oh, my goodness. So so to our listeners, obviously, we saw the news come out from the inflation Enhancement Act, I mean, the inflation Reduction Act, we are set to add 87,000 new IRS agents. So we'll have a little closer contact, I guess, with our IRS professionals than we have in the past. It was like

Michael Baker  03:00

one of those Oprah giveaways and you get an agent and you get an agent and you get an agent. Which is you know, to me, it's funny, because, you know, the story behind that is is that they want to ramp up enforcement. And well, enforcement is code for audits, you know, and because obvious and then of course, the argument is, well, if you are not doing anything wrong in your taxes, you shouldn't worry about an IRS audit actually saw that on Twitter. And I'm like, everybody worries about an IRS audit is stressful. It's anxiety driven. And, you know, you know, no one enjoys paying taxes anyway. And so now we're going to add the, you know, increase the likelihood that, you know, you may be audited. And of course, I know a good portion of our listeners are small business owners and you know, people who work for small businesses and you know, you think about all the things that small businesses have to be accountable for now, here's just yet one more thing to make sure, you know, Oh, we didn't slip up on a payroll issue here, or we didn't have, you know, income that was reported incorrectly here. So no one's excited about 

Ross Marynell  04:15

that. I'm gonna get on there real quick. I mean, I think there are instances where people are abusing the tax law, meaning, you know, just think about this last couple of years of the crypto mania investing where, you know, as someone made $600,000, in short term gains on a crypto asset and didn't file a tax return on it. Yeah, I want those people to be audited. Frankly, like I miss, that's just abuse. But you're right. What happens is, you know, a small business owner is audited in the tax system is not black and white. There's there's gray areas there are interpretations of rules, and you could go and visit five tax professionals and get five different answers on how some think should be considered. So even if you believe that you're doing things correctly, you have a tax professional, you're getting guidance, it doesn't mean that you can be audited and not find that an agent has a different interpretation or view. And like you said, even if it may not be the that you end up paying a significantly more amount of income or for or state tax, but the process of going through an audit is time consuming. It's nerve racking. It's but there's no one wants your lie that nobody wants it. And so right. I think everybody that we work with just like, look, I want to pay my fair share. I don't want to, you know, break the rules. But they also don't want to have their privacy invaded in that in that regard. And so I think part of it, the IRS was far far far behind on reviewing tax returns. So from the from the COVID, shutdowns, just people not having Agency office to do the work they were behind. So I think there's probably some legitimate need to boost staffing. I mean, phones weren't being answered a tax accountants couldn't get IRS agents on the line, you'd be on hold for hours. I mean, there was obviously issues there. But this is kind of the flip like this. Is the Pindell pendulum flipping back the other way significantly.

Michael Baker  06:16

Yeah, it's, to me, it's one of those things where, you know, President Biden, whether you voted for him or did not vote for him, one of his campaign promises was he was not going to raise taxes on quote, the middle class. And so this is one of those, in my opinion, like Sleight of hands, where, hey, I'm not going to explicitly raise the tax brackets, but I am going to, you know, step up my agents, for enforcement. So the likelihood of people being audited, is going up. And of course, you know, I mean, there are things like that are can be triggers for audits, like if you are an LLC Corporation, and you make an S election, you know, as a business owner, and then you know, the language in the tax code is pay yourself like a reasonable salary, well, what's reasonable, who now gets to decide, and we do know that that gets abused, but then there are people that are doing it the right way, and now those people could likely see increased risk of audits. Just not a fan of it. I think if we want to, you know, to me, my stance is continually if we want to raise more tax revenue, we need to increase the tax base, meaning that means more people paying taxes. And the way we do that is we close loopholes, we simplify the tax code and we make a fair I think a fair flat tax makes sense. But what do I know I'm I'm nobody so I live in a red state


Ross Marynell  07:48

we can't we can't start our fourth season in a tax spiral so let's get right you're saying it let's let's let's resurface So today, let's talk about inflation. A much more cheery so yeah, so we've got Let's go. High prices. No. So last episode, we kind of left everybody going is this a bear market rallies is sort of the are we gonna see a little summertime bounce. And so just what it is circle back to to our listeners. And so the one month return for s&p 500. Just looking at why charge yesterday was 7.38%. So the s&p 500 bounced. Nice month. It was it was welcome, right. Open Arms. Let's have a little bit of I think the pessimism and negativity was as high as I've seen it in a long time. I mean, every news article, every earnings report, they were picking it apart, looking for any negativity they could find bringing it to the surface, and it just got a little suffocating. And it just didn't make sense compared to where we were at the time. So we sort of said, hey, look, I think we might have a little summertime rally we did. It wasn't like explosive, but we got a little lift, which will take it.

Michael Baker  09:00

Well, I think, you know, to just interrupt you for one quick second. You are absolutely right. It was really dire there for a little while, especially end of May and through June. And so the point that I would make here is a lot of people really started to indulge June 1 part of July when they were getting June statements, getting really frustrated and wanting to pull the plug. But again, this is one of the reasons why we coach people about pulling the plug due to emotions, because July was a tremendous month for the markets. So if you you know if you were really frustrated and July I mean June excuse me, June was the month that just you know broke your back, if you will, as an investor and you and you bailed then we miss July and July was a tremendous month and so that this one the dangers of trying to let your emotions drive your investment policy. All 

Ross Marynell  10:00

right. So as you can see my I've named myself better than feared. Well, that was sort of the the theme I took away from second quarter earnings this year was it wasn't stellar. There were blown away reports, necessarily. I mean, obviously, it's a mixed bag, because everyone's reporting. So you've got some, some disastrous, some great, but I mean, in general, I think it was better than feared we were sort of bracing for impact to see some, some worse revenue numbers and worse earnings numbers, and it didn't materialize, you know, in broad scope with a mark I think was a little bit better than feared. However, the futures is murky, because it guidance in some cases is being lowered or not given. And there is still a lot of talk about, you know, is there more pain to come? So I think we just have to be open minded that there's going to be some undulations here, we've got a lot of things to suss out. And one of those came out this morning. So let's talk a little bit about this inflation report. It just it just posted about 30 minutes before we hopped on here. So right, we actually had a great conversation

Michael Baker  11:03

in the office yesterday about this. And so just for our listeners, you know, CPI came out today. And annually, the year over year number was 8.5%. So it was it was actually less than expected. Core CPI was was up to 5.9%. And it was actually a point 3% increase, I think still a little lower than they expected it to be. But it was an increase in month over month. And I think we're going to start to see a divergence in the story with inflation. Ross, I think we may start entering into a period where we see headline CPI decline, but some stickiness with that core number, because there's some components of the core number that we're going to have to deal with. And, you know, we've talked about home prices, and so owners equivalent rent, food, some of these things that are going to be a little stickier, they're not going to go go away. And you know, completely mitigate if gas prices were to revert downward to an a, quote, an acceptable level. What are your thoughts?

Ross Marynell  12:21

So my big takeaway was that gas prices fell. I think the number I saw was 7.7% or something. Let me let me see if I can't pinpoint that number real quick. Yep. 7.7%. So it's kind of interesting, right? 8.5% inflation increase is a good number. That's a little alarming, right? That's we're in new, new new territory that we haven't been in for two years where we see an 8.5% inflation number go out. It's pretty good. Yeah. But I didn't expect markets rallying on that number, 

Ross Marynell  12:52

right is better than feared. So we're rallying on that number today. But we're seeing gas prices come down. That's one of the major pain points that consumers have. Just because you see it everyday. It's in your face, you go to the pump, you go wait a second, this is insane. It's full of gas was pushing $5 a gallon. Here in South Carolina, you just look at that, oh, this is a sustainable, and it's back down to a more reasonable level, right? I'm seeing gas prices in the three and a half dollar range a gallon here, where we live somewhere in that range, right? We're not too far. The one thing that stuck out to me was food prices. So this is this is the quote from CNBC article, the jump in the food index, put the 12 month increase to 10.9%, the fastest pace since May of 1979. So we'll keep an eye on that. Obviously, that would be that was one of the fears coming out of this Ukraine, Russia conflict conflict that, you know, they're the breadbasket of the world, if they're not distributing fertilizer, wheat, food sources to other countries. I mean, it'd be coming to us, but you know, to other places in the world. So we'll keep an eye on that. And, of course, the housing prices, you talked about rent and just the way they calculate housing increases, it isn't a little bit of a delay. So they smooth those numbers out. So it the effects of that aren't felt immediately in the CPI numbers. So there's going to be a little bit of a delayed sort of bringing those numbers in and that's going to probably help keep that core index elevated for longer because the housing explosion in prices really mean that that's pretty material I actually looked at if I can find that report. Oh, here we go. Oh, 

Michael Baker  14:35

I'll help him really quick. You know, I think again, we're gonna see probably the divergence in these inflation numbers because, you know, gas prices, if they go if they go down, you know, the they're probably not going to go back down to where they were. The other component of that is actually I read an article today by Sam row and I will make the link available for people We want to check out the show notes and the Show page. But this article, he talked about this concept of, I think it was employee or labor hoarding. And the premise was a lot of companies, you know, they lost so many people and late laid off so many people during COVID. And then they tried to rehire talent. And it was really hard. And even, you've heard stories for a while, where people were trying to find job trying to find employees, and they couldn't find them. And there's a little bit of a shortage. And so now that some of these companies have people, they're gonna be much more reluctant to let them go. Even if we do go into recession, just because it just may be more cost effective to hang on to the employees. I thought that was interesting. But it didn't make me think about this other component of inflation. If, if you think about service jobs where people got let go, and then it took, you know, instead of, you know, $10 an hour or whatever you were making, now you had to hire back at $16 an hour, well, those people aren't going to start working for $10 An hour again, they're gonna stay at $16 an hour. And so you've got this wage thing that's happening. So if wages remain, you know, elevated, they don't go down, that might put a little bit of a, a little bit of a floor, on this inflation number about how far I can fall. Because if people are going to have jobs, and they're going to spend, then then it starts to me to look like Well, do you think prices are going to continue to increase? Because if you've got money, then naturally, people are likely to say, well, if prices are going to only increase a better buy today, which buying, maybe get more price increases, so it's going to be interesting to watch play out for sure.

Ross Marynell  16:45

So we so we did officially have two negative GDP quarters.

Michael Baker  16:48

We can't call it a recession anymore. We changed the definition. Right? We had it but this it's a recession.

Ross Marynell  16:59

But this is what makes it confounding. Right. Yeah. So we did have a good jobs number. It more jobs added. This was just so at the end of last week, right? Where that that jobs report came out, it was a little stunning to the to the positive side, there are still 10 million open jobs. And I know the open jobs are changing and in their lower right. And I do think that there could be we may see more of that. But it is a I think confounding is a good word. Excuse me, because good luck predicting what's going to happen over the next six months to a year. This is we're you know, we're in a pretty interesting situation, we have three and a half percent unemployment, we have 2 million open jobs, we have a stronger labor market than before, but inflation is eroding some of that in prices are still eating away at. Well, consumers.

Michael Baker  17:50

So did we I mean, the question that I think, you know, begs to be that begs to be asked is, you know, did we did we know, do we add 500,000 jobs in STEM fields? Or do we add a whole lot of service sector jobs, which if you go back and you look at where we were, you know, in the first part of the year, we talked about inflation, transitioning from goods to services. And we knew, we expected with it getting warmer, more people are going to travel more people are going to go out and be out and about and do stuff, spend their money on services, which you know, allowed, you know, there was demand in these service sector positions. And that's where I think a lot of these jobs have been added. And the question is, is, are some of these seasonal hires? Are they temp temporary? You know, where we have increased demand right now during the season? So we have to add employment? I don't I don't know. I think that that jobs? I think that jobs number might have been a head fake. Personally, we'll see in the months ahead. I think it was it was a great to see a good number, but I think it was a head fake.

Ross Marynell  19:00

Okay. Well, time will tell. Time will tell.

Michael Baker  19:04

And at the end, the last comment I'll say is, you know, one of the things I mean, nobody wants to talk about the, you know, the R word recession. But, you know, recessions are part of, you know, economic cycles. And I think we get ourselves and have gotten ourselves into this idea that, you know, the Federal Reserve is supposed to step in and stop any type of recession from ever happening. In some cases, I feel like it gets made worse. If you look at COVID. And you look at how much demand got pulled forward, because we stimulated demand during that period of time. I mean, we had GDP numbers that were ridiculous. And so I mean, the idea that we can't revert downward even slightly as the as the economy kind of normalizes itself is silliness. It doesn't mean we have to have we're going to see a 2008 2009 type scenario. I certainly hope we don't see anything like that. I don't think anyone's really predicting any thing like that, except for the people who are always predicting stuff like that. So, you know, it's possible that we could have a, you know, a very shallow recession, where the data says, hey, you know, technically we're in recession, but it's not horrifically being felt, you know, across everybody, you know, all these different sectors. And so I think that that would be fine. You know?

Ross Marynell  20:21

So our clients that know us know. So we often like you kind of look at things a little bit more positively sometimes that I do, yes, you're, you're definitely glass half full. And I'm kind of like,

Michael Baker  20:35

that's why we work. 

Ross Marynell  20:36

We work well together. Because I'm thinking, okay, maybe the odds of a deeper recession are 25%. I would prepare for it that just think personally, take some precautions to be ready. In the event that we do see job declines, we do see, people unexpectedly have less income, right, prices continue to, to increase or not level off as fast as we think. And so what would that mean, you know, what are some things that we could do? You're right, the Fed doesn't have a lot of tools. I mean, the Fed can increase money supply, they can, they can increase rates, lower rates, it's really like a blunt instrument, right? There's no scalpel to the Fed. It's it's like,

Michael Baker  21:21

and if you look that right, typically, they they tend to overreact on both sides. Correct. And they tend to keep the spigot on too long. And then they tend to turn it off when they shouldn't, and tighten when they shouldn't, or overtighten. You know, it's

Ross Marynell  21:37

good, the 2020 rebound from COVID wasn't because we had amazing ingenuity and businesses being formed. It was because capital was extremely cheap. And they flooded the market with with we increase money supply, buying bonds, lowering rates, it doesn't create necessarily the right environment for good businesses to be formed, it creates an environment for a business, it's like there's money, now we have to find an idea. It also here's cheap capital. Now let's go find an idea versus Hey, I have a great idea. Now I need to go find capital. We just inverted it. I mean, that's what a SPAC is, right? It's well, that's 

Michael Baker  22:15

what they do, is they took all those, those, quote, angel investing, you know, private equity ideas that, you know, given given time, and you know, having to stand on their own two feet, a lot of those don't make it but when everybody has capital free flow to to invest that cost them nothing, you know, and then you get some ingenuity behind it, like, hey, let's bundle these ideas, and let's just offload them to the public and give our give our people a way to exit using public investors. Yeah, it was pretty dirty. It was pretty dirty,

Ross Marynell  22:51

pretty dirty. And so I. So I don't want to 

Michael Baker  22:55

like that movie, The Big Short where they were, they were the guy, Ryan Gosling, he's explaining to the hedge fund about how the banks have bundled all of these garbage mortgages, you know, into, you know, into these, you know, CDO type of instruments, and they're like, what? And same thing with this bags, it's like, you know, garbage bundled, and, you know, with a nice bow on it, and they let it go out for the retail people to buy. And of course, everybody had STEMI money. So all you had to do was pump it. Right. Right. Good old pump and dump. 

Ross Marynell  23:32

So and I think the swing back, could it be? Good, the Fed was like to move? Yeah, I think that's as obvious as it can be. So now, is it going to be an overreaction to cause more severe cooling off of demand than what was really warranted? 

Michael Baker  23:51

Well, I think that that's, that's, you know, well, the Fed can omit this is part of the conversation we had the other day or yesterday, the Fed can only do so much, you know, the Feds not going to, you know, impact gasoline prices, like the Fed, you know, the Feds not going to be able to, you know, impact some of these things that people are thinking, Oh, well, the Fed the rate the raising rates, so this, but it is going to impact certain sectors of the economy that need capital and can't get it and they choke it off. At a time where we might be moving into a scenario that capital maybe needs to be loosened up a little bit, not because we need to, you know, QE ourselves into infinity, but because, you know, if businesses need credit or some other capital needs to be, you know, loosened up so that they don't have to start laying people off. You know, it is going to be interesting to watch to see because, of course, the Fed is now saying, Hey, we're data dependent. And, you know, we'll see if they stick to the script that they've laid out or if they truly start scrutiny, scrutinizing these numbers. More more carefully,

Ross Marynell  25:01

you got it. Alright, what else you got? 

Michael Baker  25:02

So I wanted to just just because I knew that inflation numbers were coming out today, I did a little digging. And I saw I came across his interview with Howard Marks. And Howard Marks is a well known in our industry, he writes a lot of memos that are fairly lengthy for your average person to read, but they're usually just full of nuggets. But this was a great little interview that he gave us about 11 minutes long, I'll put the I'll put the video or the link up for people, they want to go watch it. But it was funny because it basically the lady that was interviewing him, you know, I was asking him, you know, about how he normally gets questions like, you know, should you buy? Or should you sell? And he and he just said, you know, that's really the wrong question. You know, a lot of people want, you know, should I buy Should I sell, what should I do? And he said that the the number one job for you, as an investor, he says, Every investor should have a sense of their appropriate risk posture. And that is based on their resources, their needs, their goals, their position in life, and their ability to handle volatility. And then once you know your appropriate risk posture, then you start asking yourself, will you maintain that type of risk posture and allocate your assets appropriately? Or are you planning to vary over time? And if you're planning to vary, then it's like, you know, well, how are you varying today? And I just thought, you know, that's, that's kind of goes back to what we tell people all the time is, you know, if you create a plan for yourself, and, you know, you working that plan, and the question isn't, you know, well, what should you do today? The question is, well, how has your goals, you know, how have your goals shifted, you know, how are you know, has something happened in your life that has made you shift, you know, your, you know, the direction that you want to be heading, versus, you know, the buy or sell, you know, should you know, is the market too high or too low? And then he gave this great little nugget, and then I'll kick it over you for your thoughts. But he says, We all he The question was, which is worse, to, to buy high or to sell low, and failed to get back in. And, you know, because a lot of people I hear this all the time, and I know, you've heard people like, they'll say, Oh, the market tie in the market tie. And he said, you know, if you, if you buy high, there is the risk of, you know, maybe seeing some disappointment, because in the short run, you might see a pullback, or you know, things correct a little bit, but the long term trend is positive. And the goal should be to reap those long term rewards as an investor, he said, But if you sell low, and you've failed to get back in, then you run the risk of missing the recovery, missing the trend missing, you know, missing those long term rewards and hurting yourself. And so I thought that was a key piece of insight, because, of course, a lot of people are dealing with that type of thought process right now, especially when, you know, this year has been a very challenging year for markets. So your thoughts on that?

Ross Marynell  28:22

Well, I think the the point I would take away from that is what what should lead our investment changes. So our risk tolerance, our returned, tolerance is probably personal. So something changes in our life, meaning you have an unexpected job change, and you lose, you lose income, that could be a warning, that could be a sign, hey, we need to reevaluate our investment profile or investment. time horizon, it could be a health event that pops up or a constraint, right, it's now applied to your life that wasn't there before. So it can be anything, right? It could be, you know, someone in our family has a disability. Now we have to redirect resources there. That's a major event that should change your investment profile, I think the way we should really focus on our personal investment strategy is what's happening within our life that might change those time horizons or constraints. So for example, if you're used to saying, Hey, I probably won't need these funds for 20 years, I'm going to make some systematic contributions to it. So I know there's going to be periods of time where the price is going to be too high and other be periods of time where it's lower, I'm just going to continue to kind of systematically buy in, but then something happens in your life and changes that. That is a that is the time to go okay, hey, am I what do I need to do differently, if anything, and that's when you should go and seek some guidance and counsel on that. Just because things are happening in the market doesn't necessarily mean we want to deviate from our plan. Because if if all things considered, we're still on our same trajectory, and we know when we're going to need those funds for that It really should, it shouldn't impact us, 

Michael Baker  30:03

right? No, I mean, and I think that that's, that's a big thing that, you know, we get. We get convoluted a lot. And one of the things that that I've been kind of chewing on a little bit is comes from a podcast that I listened to recently. And it's MEB favors podcast and he was talking to Dan Ariely. And I think I shared this with you. But Dan Ariely is a professor. He's written a couple books, very intelligent, on the behavioral psychological side of finance. And anyway, he, he made this comment, and he said, you know, we have just as a culture, as a culture we've taken, we've taken things like consumption, and made it public. Like, you know, like the car, you drive the house, you live in the clothes that you wear, the material things that you own, and can purchase experiences, you think about Instagram, you know, you go to Instagram or, and it's just, you know, everyone's highlight reel of, of what they're doing in life. And he says, but we've taken things like saving, and, you know, proper debt management and investing and insurance. And basically, I'll just a bundle that and say, like, Fine, like wise, financial moves, we've taken that stuff. And we've made it private. So all of our we so if you think about like your neighbor, we know, we know a ton about what your neighbor is, you know, what, they're spending money on their consumption habits, but we know very, very little about their internal financial life, like what they're saving, what they're investing, you know, do they have appropriate insurance? Do they carry a lot of debt, do they not? And he said, it's just it's made, it's such an unfair competition. And when we look at comparison, and so that's what what made me think about that was, I don't know about you. But in the last three or four months, I have fielded more questions that have been generated from conversations people have had with other friends or neighbors. And so I know that the people are out there talking. And I'm like, you know, you don't know a lot of times you might be getting, you know, I call I had all these fun names like Nate, the neighbor, Wanda, the coworker, you know, these people that are giving you financial advice, or telling you what you should do with your money, you have no idea what they're doing with their money like that no idea how healthy their financial balance sheet is, but yet, you want to hear their advice.

Ross Marynell  32:42

That violates rule number one of wealth accumulation, which is you compare yourself to yourself. That's, that's the comparison. So you violate rule number one, it's going to be tough, because you're going to get sucked into the FOMO. Have, I missed this idea, I'm not going to miss the next one. And it's going to be great. And I'm going to make 10,000% return and I'm going to go buy a jeep and I'm going to you just compare yourself to yourself. That's the only comparison where where was I last year compared to this year? What things have I done to help bolster my own financial success or wealth accumulation? And I have a big you know how I feel about this. I say, calculate your net worth every year. You got to have a barometer Where Where am I? Right? You got to celebrate those those periodic milestones. It's kind of like we talked about it a few pods ago about about kind of progressing to a black belt in jujitsu, you didn't walk in what they they hand you a purple belt, like you start at the bottom, and you get beat up. And it's not fun if, you know and, and well, ahead of you to take mercy on you, or you won't make it. And I think that about that a lot, right? So it's a progression, but it's your progression is your pad. Doesn't matter how fast someone else got to a black belt, if you get there. It does it right. Does it matter if someone else skipped that belt or stopped going it doesn't it so it's your journey, and what your success is, should be defined by what you want to achieve. And so you've got to kind of block out all the rest of it. Anyway, Morgan Housel has the best quote on this wealth is what you don't see. Right? Most people want to spend a million dollars, they want to save a million dollars. 

Michael Baker  34:24

That's a great point. Right? It's

Ross Marynell  34:26

two different paths, right? There are a lot of people that want to spend a million dollars, and they will, they will. And there's a lot of in there's a smaller group that wants to save a million dollars. And so again, not to stay on the psychology of money. I feel like we talked about this book all the time. But you know, there is a balance between enjoying today versus being able to take control of your time in the future because really, this is this is kind of the the way I would frame retirement is you you have the ability to do what you want when you want with who you want for as long as you want. Right now. That is retirement. It doesn't mean people reach that goal where they've saved enough to financially retire, they immediately leave work, they don't they do what they want for as long as they want with the people they want. And then when it's not fun any longer they leave, and they go do something else. And that is the time. That's what I'm working toward. Right? How fast can I get to that level where I want to do what I want when I want with who I want for as long as I want. And that's my motivation for doing it. So it's a different perspective, you start looking on Instagram, and all the social media feeds and all the other nonsense. It's just a torment. It's a tormenting process that doesn't lead to any satisfaction any happier. And it doesn't help you achieve what you want. So it's just a waste of time. So just turn it off.

Michael Baker  35:46

Yes, I agree. You know, sometimes it's going on over sorry, sometimes it's sometimes it's easier said than done to turn off the social, but it's kind of like the same thing. Like, you know, you, you, you use the analogy of, you know, people investing, I think about the other thing, you know, we work with a lot of folks that are planning for retirement. And there's a lot of, you know, especially when we just talked about the beginning of the of the podcast, how fear was just running rampant, a lot of people are telling other people you need to get out of the market, you need to abandon your, your abandon your plan, you know, you hit the eject, hit the eject button. And I'm thinking to myself, like, these folks don't don't know anything about your long term plan, like they are a and you don't know anything about how they handle their own money. Most of the time, this is just people talking, you know, talking shop, and unfortunately, people take that type of stuff to heart. And you know, and it's like, there's this, you know, when fear spreads, it's contagious. And so anyway, I'm not saying that there aren't things to be concerned about there are, but there's always going to be stuff. There's always going to be stuff to be concerned about, you know, I mean, I mean, when the next big thing breaks, it'll be all we hear about for a couple of weeks, until the newness has worn off, and we're used to it and it'll be the next crisis of the day that we have to endure. So I have one more thing for you. If you got time for me, man. I do have it. This was

Ross Marynell  37:19

taken off season. Look at this face. card. Oh,

Michael Baker  37:24

you know what, I had not even noticed that you shave. Did not even notice. All these 

Ross Marynell  37:29

mosquito bites on my face, though. Getting a lot of you.

Michael Baker  37:33

Sorry. I saw I saw this question on Twitter. And it made me it made me think you know, and so I oppose it to you hear your response first. Okay. The question is, is $1 million? A lot of money?

Ross Marynell  37:50

So, yes, yeah.

Does it do the majority of people have a million dollars? No. Right. I mean, it's, look, it does $1 million by what it used to 20 years ago, right? Of course, does it mean that that's all you would want to have saved for retirement? Not me. It just depends. Sure. We have met clients retire on half that amount to be completely financially secure, because they are accustomed to living a lifestyle that allows for, you know, the income that you can safely generate between those that that level of savings and social security cover their financial,

Michael Baker  38:34

they live within their means.

Ross Marynell  38:37

not on the end. I'm sure there are people out there who saved two or $3 million in are probably pressing up on the maximum amount they can withdraw to live their lifestyle

Michael Baker  38:46

Yeah, so I thought that about that question, because I had my answer was a two parter. Like is a million dollars a lot of money. Yeah. So like, if someone said, Hey, I'm gonna transfer a million bucks to your bank account today, I would, you know, have a celebratory steak dinner and probably plan my first my first trip, right, but the second part of my answer was, is a million dollars, a lot of money for a 30 year retirement. And the answer to that is it don't buy what it used to. Right. And like what you were saying, and I think that that is something that I want. Anyone that is, you know, listening to our show planning for retirement age, I don't want to discourage anyone. I still think you know, we as financial advisors, our job is to kind of meet you where you're at, and do our best to help you craft a plan that can meet you know, give us a chance at meeting your goals. That being said, I think a lot of folks have anchored to the idea that being a millionaire means you've got it made. And I think that there still are some things that need to be looked at when you if you have saved well You've done a good job. That doesn't mean that, you know, all things are clear, there are still risks out there that could impact your ability to do exactly what you said Ross, which is go where you want with who you want for however long you want, and have that type of retirement lifestyle that you want to plant that you are thinking about when you think about retirement. So, you know, just because you know, if you feel really good about your balance sheet, that's fantastic, doesn't mean you you should not plan, you should still plan you should still be creating investment strategies, processes that you think are going to help you achieve, you know, sustain retirement lifestyle that you want.

Ross Marynell  40:41

What else do we tie? Is there anything else we missed? Are we going to root for the Panthers this year, or as David Tepper just soured everyone,

Michael Baker  40:47

you know, man, I want to be honest as a Rock Hill native. I struggle man, I struggle with it. I mean, the Panthers are still you know, I do listen, I'm probably in the minority on this. I'm probably in the minority on this, but I do have a little soft spot for for Baker Mayfield. They love his attitude. I love I love that he's a scrappy, prickly pear. I love

Ross Marynell  41:10

to go watch him play in the stadium and not getting any money from me.

Michael Baker  41:15

But no, I am a little bit irritated with Tapper and his shenanigans. So I probably will tune in and check out my boy Joe burrow this year.

Ross Marynell  41:25

Buddy, you know, let's go. Alright, we're gonna make a trip to Cincinnati. Go see a football game this year.

Michael Baker  41:32

That would be an interesting road trip now. I don't know. Maybe we get him on the podcast. I don't know they played in the Super Bowl last year. So tickets for Bengals game are probably gonna be astronomical. You know, it's not the bangles of old where they weren't winning any games, you know, might be cheaper to go see the Browns play. We're going to Ohio 

Ross Marynell  41:53

All right. All right. Well, look, it's good seeing ya. And yes, thanks to all of our

Michael Baker  41:59

thanks for everybody for allowing us a hiatus over the summer time to do family things and get out and about and you know and have quality of life like we tell all of you, but we are back. We're excited. And thank you for listening to the show. We'll talk to you next time.

Resources cited:

"Labor Hoarding" article by Sam Ro

Interview with Howard Marks

Meb Faber Podcast with Dan Ariely