How Taxes Impact On Your Investments

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Transcript

Mike:

With what Biden wants to do when you die. Roughly 60% of the value is going to go to the IRS. It’s unbelievable. I mean, that’s what they want. They want like over half of your life effort.

Zach:

Welcome to retirement today. I’m your cohost, Zach Holcomb. And alongside me, we have Michael Reese certified financial planner, retirement planning, expert, and founder, and president of Centennial advisors located right here in beautiful Austin, Texas. Mike, how are you this afternoon? Hey,

Mike:

As always, I am a happy camper of the last week. I was ranting a little bit. I’m not happy with this tax conversation going on in Washington, DC. You know, every time taxes come up, Zach, I just get a little energized. Right.

Zach:

Mike gets a little heated, especially when we’re talking about taxes and the government and you know, all that great stuff. You’d love it. Right. I think I

Mike:

Actually got bleeped out last week. Didn’t I I know.

Zach:

And he like made some like growling noises too, and they believed it too. I don’t know what our studios doing. Well,

Mike:

Anyway, I know this week we want to talk about, Oh boy, this could get a little crazy again. Right? Cause we do want to talk about investing, but I think we want to talk about taxes as well or something. Do you want to do want to lay that out for a sec?

Zach:

Yeah. So, you know, from quite a few of our listeners lately, they really like when we talk about taxes, but more specifically, when we talk about how it fact, how it affects your investments specifically, and a lot of people, they really are hearing that discussion from, you know, on TV, from their investment advisors. They’re not hearing about how these two come together.

Mike:

Yeah. It’s true that the mass financial media boy, they love to talk about investing. Right? And if you talk to your typical financial person, what are they going to tell you? I can reduce your risk. I can get you higher returns. And that’s all they want to talk about. It’s like, they’re all the same yet. What they commonly ignore is how, you know, what do they say? It’s not what you make. It’s what you keep. Right? What good is making, you know, a big rate of return. If you’re going to turn around, just give it to the IRS.

Zach:

Yeah. Writing this, the big check. Nobody wants to do that.

Mike:

Exactly. So, you know, in our office Zach, you know, this, we talk about having a prosperity planning system. Now this is a system that helps you make smart financial choices so that you can live that prosperous financial life. You know, you want to enjoy the three CS. You want to have feel like you have control of your finances. That that includes your taxes. You want to feel like you’re, you have confidence. The second seed that you’re making the right financial decisions. And third, you want the comfort and peace of mind of knowing that, you know, no matter what the tax code throws your way, no matter what the market throws your way and guess what your, your health is going to change. Shouldn’t matter financially. You want to have that comfort and peace of mind that you’re going to be in great shape, no matter what, and this topic, how taxes and investing, how they really work together. I think that’s really important because I do agree with Zach that a lot of people, you know, they, they think about investing, but they don’t think about how taxes affect them.

Zach:

Right. And I think a lot of people avoid this discussion because it’s not so simple. There’s a lot of different things you’ve got to look at when looking at taxes with your investments,

Mike:

You have to be actually you have to spend time as an advisor, educating yourself, which is work heads up, all of you out there in radio land. Financial advisors are like anybody else. They want to be really good at what they do, but at the same time, it’s very common that they don’t want to put in the extra effort. I mean, you know, people at your workplace just like that, I’m sure. But tax planning, that’s complicated and it’s always changing. See, it’s, it’s a lot of work to keep up on it. This kind of goes back to, you know, we talk about how there are three levels of financial

Zach:

Advisors, right? Like the pyramid, right. That’s

Mike:

Right. So at the base level you have custodians the product providers, you know, and this is like the natural progression that we talk about Zach, where, where you start out like Zach, you’re 27 years old. You know, you invest in a 401k and you’re financial advice or investment advice you get right now is, you know, you’d go to your 401k platform here at the office. They have like a little quiz to help you structure your investments. You go through the quiz you’re done.

Zach:

Yep. And I’m 27. So it’s ultra aggressive. That’s what my level is. I like that.

Mike:

That’s just what I want to hear, but it’s a limited level of help. And then eventually that’s level one level two is you let’s say you’re, you’re growing and growing. And next thing you know, you look at your statement. You’re like, Holy cow, I’ve kind of got a, quite a bit of money here. You know, back when you had say $40,000 in your account, if you lost ha you know, 50%, that’s 20,000. And you’re like, well, gee, I make more than that. Not a big deal, but if you get up to 400,000 in your account and you lose half because the market crashes, that’s a lot

Zach:

Bigger number. I’m going to be uncomfortable with that. So

Mike:

That’s when naturally natural progression, you start getting a pretty decent amount of money and you move to a level, two advisor. You’re looking for typically an investment advisor, someone who can help you make better choices with your investments. So maybe you’re not risking so much, but you still want to capture those good returns. Sure. And that’s great as far as it goes, but then, and as you start getting more and more money, and now this is where people get stuck a lot of times, because they’ve been working with this level two advisor for years and they really liked them because they’re a good person. Sure. Right. They’ve done a good job on the investment side, they protected you a little bit in the down markets. You’ve made some pretty good money in the upmarket seeking. Okay. That’s great. But then you start realizing that you have some other questions. You have questions like, well, wait a minute. How are taxes really going to affect me as I get older? What about health care? You know, how has that, like, if my health deteriorates, what am I going to do about that? What am I supposed to do with my state planning? Anyway, do I need a trust? When should I be taking social security?

Zach:

Gotta have an income plan.

Mike:

Yeah. What’s my income going to look, how do I make work optional? Right? These are all questions that an investment advisor, they don’t really have the tools or the expertise to deal with. And that’s when you realize, Oh, maybe I need to move up to the top of the pyramid. The level three advisors level three advisors are holistic planners, the true holistic comprehensive planners. And that’s what we do at Centennial advisors, right? Where we help people make great financial choices, not just with our investing, but tax planning, estate planning, healthcare planning, income planning, and really, how do those all intertwined? How do they all come together in a comprehensive whole? And I know exactly what you’ve been saying is lately, it seems like we’ve been getting a lot of calls from our listeners who are saying, I mean, really, that’s what it falls down to, right? They’re saying, Hey, we’ve got these really good people at level two advisors, but they’re starting to recognize they need help on taxes. They need help on other areas. They’re not getting that.

Zach:

Yeah. I, 100% agree with that in taxes, more than anything, you know, that’s usually the big selling point and kicker for a lot of these people listening. They’re like, Holy cow, these taxes are going to kill me in retirement. And nobody’s been talking to me about this.

Mike:

It’s in the news, right? Taxes are in the news. Oh, here we go. You’re going to get me all red in the face again. I was reading this article and they were saying like, if you own a business or you own a ranch, you own farmland with what Biden wants to do when you die. Roughly 60% of the value is going to go to the IRS. That’s unbelievable. I mean, that’s what they want. They want like over half of your life effort, like, let’s say you start a company and you’re actually how dare you. You’re actually successful. Right. Right. Or you’re let’s say you have a ranch firmly in how dare you actually make good investments in the property goes up in value. You know, that’s, it’s like, you’re from the, from the Biden administration, you are evil and you’re the wealthy, and you must give all your money to us so we can redistribute it in a manner that,

Zach:

Right. It seems like doing the right thing and making the right decisions. Tax-Wise ends up hurting you for a lot of people. Yeah.

Mike:

From if, if you make the right investment, correct decisions, the right savings decisions, then the problem it’s like I say, usually when people are getting to the point where work is optional, they have one of two issues. Either one they’re worried that they don’t have enough money to last. Right. And that’s a very real concern for a lot of people. But if you’ve got, if you saved a pretty decent amount of money, if you’ve done what you’re supposed to do, saved your money, you’re a good saber invested properly. Your problem is not will your money last, your problem is how do you protect yourself from invasive? And I mean, invasive taxation from the IRS, how do you keep what you’ve worked so hard to build for yourself, your family, your loved ones and not fork it over to the IRS. Like, how do you do that?

Mike:

If you’re the kind of person out there, let’s imagine you’re this person you say, gosh, Mike, Zach, Mike, Zach, I saved a pretty good amount of money. And yeah, I’m starting to really worry about taxes. Maybe you have an advisor. Your advisor never really talks about taxes. Then what I want to do is I want to invite you to give us a call and let me tell you why you want to give us a call. So the other day I had a couple come in, they had about one and a half million saved for retirement, almost all of it in their 401k. Do you know that I was able to show them how they could save over $400,000 of tax over their lifetime?

Zach:

It’s a game-changing amount in retirement.

Mike:

That’s huge. Over 400,000 of tax saved. Listen, if you saved a pretty good amount in retirement, you got to understand taxes are gonna be horrible for you. Once you get to the other side of work, you get into retirement taxes are going to get really ugly. And the good news is that there are tax strategies available where if we have a conversation, odds are extraordinarily high that I can make it. So worth your time that you’ll just, you’ll just get off the call and you’ll be like, Holy cow. I’m so glad I called. So if you’re worried about taxes, you’re a good saver, right? You saved a good amount of money. You’ve made some pretty good investment options, but now you’re thinking, man, what about the tax piece? How do I keep what I’ve worked so hard to build, then you want to give us a call, right? Zach, what number do they want to call?

Zach:

Reach out to us at 512-886-5850. Again, that number is 512-886-5850. When he give us a call, it’s just a brief opportunity to set up a 15 minute call with our team. We’ll learn a little bit about your situation. What’s important to you and what you’re looking to get out of a conversation with our team. Hi, and thanks for checking out retirement today. If you like the content we share on our channel, make sure to like comment and subscribe. So you can say notified about all of our latest content and videos. Be sure to share all of our information with your friends and family as well. Thanks for joining us. We’ll see you next time.

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