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Podcast: Wealth & Knowledge with Robert Brokamp


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On this episode of the NewRetirement Podcast, Steve Chen interviews Robert Brokamp, a CERTIFIED FINANCIAL PLANNER™ skilled and key determine on the Motley Idiot. They talk about Robert’s journey within the monetary sector, the dear classes he’s discovered about monetary planning, and the story behind the Motley Idiot.

In addition they contact on matters such because the 4% rule, retirement planning, and the significance of goal in retirement. Robert emphasizes the necessity to consider what you wish to do with the remainder of your life and develop your human capital, together with your means to earn a paycheck, mental curiosity, and bodily well being.

He additionally suggests contemplating alternatives past conventional retirement, akin to persevering with to work in a unique capability or pursuing new pursuits and expertise.

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Hearken to the podcast on Simplecast or proper right here:


[9:35] The Bogle Impact: How John Bogle and Vanguard Turned Wall Road Inside Out and Saved Traders Trillions by Eric Balchunas

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[11:38] A Random Stroll Down Wall Road: The Finest Funding Information That Cash Can Purchase by Burton G. Malkiel

[13:11] David Chen Podcast

[40:48] The New Retirementality: Planning Your Life and Residing Your Goals…at Any Age You Need by Mitch Anthony

Robert Brokamp Podcast

Introduction (00:00):

This episode is delivered to you by the NewRetirement Planner. Create a monetary plan free of charge at

Steve Chen (00:18):

Welcome to the NewRetirement Podcast. At present we’re delighted to have Robert Brokamp with us, an authorized monetary planner, seasoned podcaster, a Bogle head, and a key determine on the Motley Idiot, the place I used to be only a visitor on his podcast. On this episode, we’re going to discover Robert’s journey within the monetary sector, dive into the dear classes he’s discovered about monetary planning, and study in regards to the story behind the Motley Idiot. Welcome, Robert. Respect you taking the time and excited to study with you about what you’ve found in your personal journey right here to turn out to be a CFP

Robert Brokamp (00:50):

Steve, it’s such a pleasure to be right here.

Steve Chen (00:51):

We at all times wish to open up a bit bit about our visitors and the way they bought to the place they’re at present. After I checked out your cv, you had been a instructor for some time, you then had been a working towards advisor at Wells Fargo, and you then joined the Motley Idiot the place you’ve been for fairly a very long time, however would love some colour on the way you went between these steps.

Robert Brokamp (01:09):

Yeah, so I used to be an elementary faculty instructor. After I graduated from school, I really thought I used to be going to be a health care provider, however after I graduated from school, I assumed I’m going to do some service work first earlier than I’m going to med faculty. I joined one thing known as the Instructor Service Corps for the Archdiocese of Washington DC and I taught elementary faculty at a Catholic faculty in Georgetown. And in that course of I discovered I don’t actually wish to be a health care provider, however I additionally discovered that I want to earn more money. I used to be not making an entire lot of cash in an costly metropolis, already had a child at that time. So I figured, wow, I should be extra liable for my cash. I used what was then, that is the Nineties, one thing that was comparatively new known as the Web, and I found an organization that was comparatively new known as The Motley Idiot, and that began me on my journey to essentially changing into extra cognizant in regards to the significance of non-public finance.

Steve Chen (02:00):

[00:02:00] While you had been at Wells Fargo for a bit bit, what was that have like?

Robert Brokamp (02:04):

Properly, so it occurred as a result of I had really taken a job with American Specific Monetary Advisors. As I bought into the world of non-public finance, I’m like, I’d wish to do that as a job. So I known as my highschool English instructor’s husband who labored for Wells Fargo, and I did form of a summer season internship for him as soon as, and I mentioned, ought to I take this job with American Specific? And he mentioned, no, it’s best to transfer again to Florida the place I grew up and work for him, and I labored for him. They’re a pair years, they had been actually good guys, however I needed to put on a go well with daily. I needed to perform a little little bit of chilly calling about municipal bonds each every so often, and it simply didn’t actually go well with my character. And all alongside this time, I used to be nonetheless listening to the Motley Idiot. So in 1999 when the Motley Idiot mentioned they want an editor who additionally is aware of a factor or two about funds, that was the proper factor for me as a result of I used to be a former English instructor who was additionally a monetary advisor. So it was an excellent match.

Steve Chen (02:57):

Attention-grabbing. After which contained in the Motley Idiot, you do a few various things, proper? You’re a podcaster and a author, you take part locally. How is your time cut up within the Motley Idiot?

Robert Brokamp (03:08):

Yeah, after I began, I used to be simply an editor. I don’t wish to say simply an editor as a result of being an editor is essential, however I knew I needed to be a author. I took the enhancing job, however then would taking a writing project they’d let me do, and I did increasingly more writing. After which in 2009, podcasting grew to become a factor. So we launched our Motley Idiot Cash podcast, which I used to be initially only a contributor each every so often, however then I turn out to be a extra common contributor over time. These are actually my two predominant tasks. However as we could talk about afterward within the present, I’ve form of additionally turn out to be an advert hoc member of the HR committee as a result of there’s a lot that an employer can do to nudge workers into making higher monetary selections that I’ve turn out to be part of that group to make it possible for our inner workers, who most of them aren’t, they’re not funding specialists, they’re not monetary planning specialists, they’re techies, they’re gross sales of us, they run the workplace operations. We wish to be sure that our workers are on the best path to monetary wellness.

Steve Chen (04:11):

Positively among the best methods to encourage good behaviors and educate individuals is thru the office or most likely the one finest place. Ideally it could occur in excessive colleges on a regular basis, nevertheless it ought to proceed via your life and be supported in your office. So glad to see the Motley Idiot investing there. I imply, the Motley Idiot is a protracted historical past, proper? I’ve been round as nicely, and I bear in mind within the dot com days they had been like a sizzling firm and there was quite a bit occurring there. What did you discover engaging? After which they’ve survived. It’s form of fascinating that firms have survived and developed, so I’d like to get your tackle what you discover so distinctive about it.

Robert Brokamp (04:43):

Yeah, and I’ll say survived barely in the course of the dot com crash. Anybody who was round within the nineties remembers the mania. The emergence of the web, the world was going to alter, and naturally it did as a youngster, you then needed to be concerned in that in some way. So it was simply the proper marriage of being a part of this new know-how, this actually society altering power. And our objective was to assist individuals turn out to be smarter, happier, and richer, and to do it in a method that was serving to individuals. And that’s actually the founding ethos of the Motley Idiot, which is to assist the person individual make higher monetary selections. The title, the Motley Idiot comes from a Shakespeare play as you prefer it, as a result of the Idiot was the one one who might inform the king the reality about his head getting lobbed off. And within the early days, we appreciated to form of poke the attention of Wall Road as a result of again then Wall Road advised you, you’ll be able to’t handle your cash by yourself. You want us to do it for you, and you could pay us some huge cash to do it as nicely. And the Motley Idiot got here together with this rising know-how known as the Web and mentioned, no, if all of us work collectively, you may make loads of these selections by yourself.

Steve Chen (05:55):

And do you are feeling just like the Motley has been fairly profitable in doing that?

Robert Brokamp (05:59):

I believe so. Yeah. I really feel very assured in that. And it began within the early days, it was actually a chat room in a OL, and it’s laborious for us to think about at present, however how revolutionary that was that you may simply flip in your laptop and discuss to anybody on the earth, and you may discuss a person inventory, you’ll be able to discuss in regards to the execs and cons of indexing. You may say, Hey, I need assistance getting out of debt. What ideas do you’ve gotten for me? And that was the start of The Motley Idiot. It was a chat room in AOL, and that was in 1993. Then we went on the net in 1997, and we’ve been round since then. However in the course of the dotcom days, man, we had been shut. We had been near going underneath. We needed to lay off about 80% of our firm, however we survived.

Steve Chen (06:44):

Yeah, nicely, I like that. Smarter, happier, and richer. I like that ethos quite a bit. And likewise the story behind the Motley Idiot and Talking Fact to Energy, I believe that’s an essential factor. It does nonetheless really feel like there’s part of that the place there’s positively rather more democratization of knowledge, however there’s nonetheless loads of gating controls over it, and it’s good. I imply, it’s additionally fascinating, I imply, you shared that you simply’re a part of the Boglehead neighborhood, and I’m going on that forearm as nicely, and there’s some unbelievable data in there, nevertheless it feels prefer it’s a bit bit, it’s good as a result of it’s on the market and it’s listed, nevertheless it doesn’t really feel as open because it may very well be. I imply, not that they’re proscribing it, nevertheless it feels prefer it’s form of a bit bit hidden off in a single nook of the web, and it’s prefer it’d be nice if that was disseminated extra broadly.

Robert Brokamp (07:30):

Yeah, completely agree. And I’ll level out that some of us, if you realize the Motley Idiot, it’s possible you’ll assume the Motley Idiot is all about choosing particular person shares, which is usually true, however now we have been supporters of Indexers because the very starting. I imply, our workplace now has been downsized like many because the pandemic, however we had an entire room named after John Bogle. We had an ideal image of him within the room, and he got here to the Motley Idiot a few instances to talk. So we love indexing and we really feel like most individuals could be effective with out ever shopping for a person inventory. So I’m simply pointing that out as a result of some individuals listening, they’re like, somebody from the Motley Idiot can also be a Boglehead. However no, we’re huge followers of indexing.

Steve Chen (08:11):

It’s fairly cool that Jack Bogle confirmed up and didn’t wish to discuss to you.

Robert Brokamp (08:14):

Sure. Yeah, no, he was such an excellent man. Such an excellent man.

Steve Chen (08:19):

Yeah. Hopefully his legacy lives on, I imply, it lives on for folk within the Boglehead, however hopefully people take the time to study what he did and the way he drove huge change for [00:08:30] the world by way of aligning himself with the investor and aligning their entire firm with their traders in order that Vanguard would drive the charges down for investing in funds. And that in flip introduced charges down throughout the entire trade.

Robert Brokamp (08:46):

It’s elevated the retirement financial savings and the wealth of Individuals by actually billions of {dollars} by the way in which he structured that firm. And it’s so admirable,

Steve Chen (08:55):

Proper? It’s good that he did that and had that perception and was in a position with me to make it via and in addition construct an enormous firm. I imply, Vanguard has in the end, I imply, it’s mainly, if you happen to take a look at the largest custodians of wealth, it’s Vanguard, it’s Constancy, it’s BlackRock, Schwab. Wealth is getting housed in these locations, and it’s good that the charges are coming down broadly.

Robert Brokamp (09:19):

And even with BlackRock, proper? BlackRock’s bought principally index based mostly investments, perhaps not principally, however an terrible lot, and actually they’ve to offer credit score to John Bogle for that as nicely, and Vanguard for actually bringing everybody else alongside as a result of as I’m certain his story, it wasn’t simple to start with.

Steve Chen (09:35):

Yeah, yeah, for certain. No, we had Eric Balchunas on right here and speaking about his e-book, the Vanguard Impact. We’ll reference that, and it tells the story of Jack Bogle and what he did and the way it affected the entire trade, and it has some nice anecdotes about what he was like. It doesn’t shock me that he would present up at your organization and provides a chat, however very opinionated man, and sadly I by no means bought to satisfy him. However yeah, no, we’ve talked to another Vanguard of us right here and it’s positively his values and the cultural affect for certain. I’ll reside quickly. How do you make these two issues jive? So particular person and inventory investing and indexing, they’re form of reverse ends and the danger focus may be very completely different. How do you make these two issues jive collectively?

Robert Brokamp (10:22):

Properly, to start with, many individuals are going to be choosing particular person shares no matter what they examine investing or indexing or not. And I’m one in every of ’em. I imply, I’ve a big a part of my portfolio into particular person shares, however I praise it with indexing as nicely. And we write about that on a regular basis. We used to jot down an terrible lot about what we’d say, index plus just a few. Most of your portfolio is listed, however you then personal some particular person shares. And by the way in which, that is what loads of the people who find themselves well-known for indexing do as nicely, and I do know you’ve had a few of them in your present, they’re principally listed, however for five% of their portfolio, they’re choosing particular person shares. So there’s room for that too. I’ve to say that the underside line is, for many individuals, investing in firms is identical method. Some individuals strategy following sports activities. They like it, they examine it, it offers them leisure. Hopefully it’s additionally making them cash. That’s how we marry these two. And we at all times say, you don’t have to purchase particular person shares, however the backside line, there’s an viewers on the market for it. And my colleagues on the Motley Idiot, I’m on the investing group on the Motley Idiot, they usually all spend money on particular person shares they usually like it, they usually wish to do it in addition to they will and assist individuals be one of the best traders they are often.

Steve Chen (11:38):

I used to be really simply taking a look at our podcast and I bought it unsuitable. It was the Bogle Impact, so we’ll repair that for the e-book that Eric wrote, the Bogle Impact as a part of the Bogle Heads factor, I noticed Burt Malkiel converse, and he wrote a random stroll down Wall Road. It was unbelievable to get him on the podcast. The man’s 90 years previous, nonetheless a complete dynamo, and he was sharing how he nonetheless buys particular person shares. It’s good. It’s a part of our animal spirits that folks wish to take danger and simply perceive the danger you’re taking and don’t make it an excessive amount of of your portfolio.

Robert Brokamp (12:12):

And I believe it’s essential irrespective of the place you’re on the earth, what you do together with your portfolio to know the financial system, to know companies, to have the ability to analyze companies, as a result of likelihood is you’re working with a enterprise. And I believe that’s one of many issues for me that has been nice about proudly owning particular person shares and staying on prime of them. I’ve discovered how the financial system works. I do know what, or not less than I attempt to know the distinction between an excellent chief and a foul chief, good advertising, dangerous advertising. And I believe that’s helped me simply personally past what it’s finished for me and my portfolio.

Steve Chen (12:48):

Properly, if we had all purchased Apple Inventory once we began utilizing iPhones, we’d all be quite a bit richer.

Robert Brokamp (12:53):

However for these indexers on the market, you do personal Apple inventory, which is what’s so nice about it.

Steve Chen (12:58):

I do know. I believe that’s the place indexing Nvidia spiked and also you’re like, nicely, guess what? Excellent news, if you happen to personal the S&P or some huge indexes, you personal a bunch of Nvidia. What’s driving these items

Robert Brokamp (13:10):

Yup, precisely

Steve Chen (13:11):

We’ll additionally hyperlink to a podcast. We did a podcast with David Chen. That’s what he did. He bought laid off. He needed to pull his cash out of his Hewlett Packard 401k, and he couldn’t do it in Kanye, take it out in money. And he’s like, I like Apple quite a bit, and I’m going to only purchase Apple in 2008 or one thing, or no matter it was 10 years in the past. Anyway, he 10 x himself and now he’s bought different issues, tax issues.

Robert Brokamp (13:36):

After which I’ve a pal who retired early as a result of he wrote choices on Tesla, and it labored out very nicely for him just a few years in the past. As for me, Tesla was my largest particular person holding, and now it’s down, what? I don’t know, 50%, one thing like that. I don’t even wish to give it some thought. So that you by no means know. You by no means know what’s going to

Steve Chen (13:53):

Occur. Properly, that’s the place you get into the entire behavioral facet of this. It’s like when it’s going up, it’s nice, after which it goes down. You’re like, oh, nevertheless it’ll come again and don’t catch falling knives. Lifeless cats don’t bounce.

Robert Brokamp (14:07):

I’m hoping that cat bounces. I’m simply hoping, like I mentioned, most of my cash is listed, however even into my particular person shares, I attempt to offset the dangers. So my different prime holding is Berkshire Hathaway, so that they form of take turns being my prime holding relying on what’s occurring available in the market. After which I’ve to form of pair off different issues additional down in my portfolio,

Steve Chen (14:30):

Understanding human emotion and the way individuals commerce. I do assume there may be the psychology of the market. While you see true capitulation, that’s the Warren Buffet factor. When there’s blood within the is whenever you wish to push your cash in. The factor is it’s very laborious to do. Everybody round you must be like, it’s over. Recreation over. We’re going to go bankrupt. In 2000, nice monetary disaster, 2008, I bear in mind Google tanked completely tanked. I used to be like everybody else, I used to be [00:15:00] like, I’m shopping for some Google as a result of I really feel like that inventory. After which I doubled up after which I did what I shouldn’t have finished, which is like, oh, I doubled up. I suppose that’s good, and I’ll get out as a substitute. Properly experience the winners, proper? That’s one other factor. It’s like, don’t get out of your winners.

Robert Brokamp (15:14):

Sure, that’s true, that’s true

Steve Chen (15:17):

however simply perceive these behaviors about your self. However yeah, I believe that’s the one time the place you probably have money and everybody else is round you is freaking out, one, don’t liquidate your positions, and that’s whenever you purchase. After which I believe the folks that do additionally win, it’s additionally usually rebalanced. So when you’ve gotten Tesla turns into an enormous a part of your place, if you happen to rebalance at that time into indexes or different issues, that’s when you’ll be able to form of protect a few of your wealth.

Robert Brokamp (15:45):

Sure, precisely. And I believe that’s good to have an concept. How a lot would you like a single firm to be a part of your portfolio? For me, the rule of thumb is not more than 10%, most likely even much less if you happen to work for the corporate. And for me personally, I’m very danger tolerant, however I at all times attempt to preserve someplace round 10% of money bonds in my portfolio, and that’s after I do the rebalancing. If it ever drops to five% as a result of my shares did so nicely, I promote some shares. If it ever grows to fifteen% as a result of my shares are down, I rebalance into the market.

Steve Chen (16:18):

Okay, good. Properly, you’re disciplined. Yeah. I noticed an fascinating tweet about somebody who was like, I simply began indexing as a result of it saved me a lot time, the human capital price of doing this. And that’s form of the place I ended up, which is my very own private journey, was via this work getting far more educated and speaking to individuals such as you about how this all works. After which I used to be like, all proper, I’m going to turn out to be an indexer after which I bought to get all my cash and I did all that stuff. And doing that may be very liberating. Like, all proper, I’m typically capturing the returns of the market in a low price method. I’m diversified and I don’t give it some thought as a result of I simply need to spend my time on this enterprise and rising this firm. So I believe you need to resolve if you happen to’re going to be investing and a bit of your cash, then you could study it and concentrate that has a human capital price or a time price, which it’s best to think about.

Robert Brokamp (17:06):

Proper, and that’s the place the Motley Idiot has are available in as a assist to many individuals. They subscribe to our premium providers as a result of they’re on the lookout for concepts, but in addition a workforce of individuals to assist preserve them on prime of these issues. We, I don’t do that half, however the firm does supply promote suggestions and issues like that as a result of lots of people are in that very same scenario the place I wish to spend money on particular person shares, however I don’t have the time to do all of the analysis to remain on prime of it on a regular basis. And that’s the place the Motley Idiot may very well be useful.

Steve Chen (17:37):

I believe what you could recharacterize investing, it’s like both you’re an indexer otherwise you’re an expert investor, that is what I do for a residing, or it is a passion, it is a pastime. You’re having enjoyable together with your cash, nevertheless it issues as a result of it’s your life financial savings. So it’s like flying planes. It may be an costly, harmful behavior or passion that you’ve on the facet.

Robert Brokamp (18:00):

Yeah, I imply, I believe so for certain. For people who find themselves not so skilled and who aren’t up to the mark, I believe it may be very harmful. And that’s why if somebody had been to come back to me who’s by no means invested earlier than, I say begin with index funds if you’d like, particularly these days with no commissions and fractional shares, it’s very simple to construct a portfolio of 10 particular person shares, 20 particular person shares with little or no cash. Simply attempt it. Don’t commit an entire lot of cash to it, and also you’ll discover out in a short time, I really like this and I’m good at it, or I don’t actually get pleasure from this. And at that time you’ll be able to simply maintain onto these or simply promote ’em and go into index funds. However it doesn’t take a lot cash today to purchase a bit little bit of a stake and sufficient firms to really feel diversified and work out whether or not it’s your factor or not,

Steve Chen (18:45):

If you wish to take note of it and whatnot. I suppose if you happen to personal a bunch of Nvidia, you’ll be like, yeah, that is superior. However

Robert Brokamp (18:52):

Even that, that inventory was flat for 5 years after which unexpectedly it took off. So it takes a lot endurance.

Steve Chen (19:00):

Yeah, it’s humorous when these items occurs, individuals additionally present up on Twitter. Yeah. I known as this 10 years in the past once we had been like, it’s going to occur. AI goes to occur. And also you’re like, okay. After which it does occur, however hindsight is 2020. What in regards to the calls you made the place the whole lot tanked or nothing? It’s nonetheless flat. A pair extra matters on the Motley Idiot. So one is you talked in regards to the 401k and well being and the stuff you’re doing internally. Any huge insights which have come to you from doing that work? We chatted a bit bit within the preamble about the way you’re doing it as a result of that’s the lever to assist lots of people internally.

Robert Brokamp (19:32):

Yeah, I imply actually it comes right down to, I believe the employer is the nexus of somebody’s monetary life. It’s the paycheck they supply, the medical insurance present the retirement plan. They could present versatile spending, incapacity insurance coverage, the advantages that an employer chooses will decide somebody’s monetary wellbeing, however then in addition they have the ability to nudge individuals in higher instructions. In order that’s both via schooling, that’s both via defaults whenever you routinely signal as much as individuals to the 401k after which perhaps auto escalate them to a sure level. But additionally one of many points with the Motley Idiot is that we’ve emphasised the significance. So in 2010, we did our first monetary well being day. We spent an entire day saying, we would like you to spend today working in your private funds. We had courses, we had professionals are available in that you may meet one-on-one with, and we had a guidelines of issues that you may simply handle on firm time as a result of we predict they’re so essential and we’ve created this tradition of how that is essential. We would like you to be doing issues which are good for you. And if the workers belief the employer, if the employer goes to say, that is essential, they’ll pay attention. Versus if it’s not a part of the tradition of the corporate and the 401k supplier simply sends out an e mail saying you may attend this reside webinar, it doesn’t have the identical affect as if the CEO says, that is actually essential and it’s best to attend this class. It’ll be higher for you.

Steve Chen (21:04):

That’s superior. I really like that. Placing the corporate sources by way of paying individuals to do the stuff they need to do, how do you measure the affect of the Monetary Well being Day? Are individuals altering issues up, optimizing their advantages, investing, saving extra, contributing extra and issues like that?

Robert Brokamp (21:20):

Yeah, we didn’t measure it immediately apart from to say it was an enormous honors system, however we’d do issues like if you happen to took care of varied issues or did numerous issues, you’d get a ticket, proper? For those who attended a category, met with an expert, checked off issues off the to-do listing, after which you may put the tickets. That is once we had been all in individual in numerous bowls for numerous raffles. And so simply by trying on the tickets, assuming everybody was being trustworthy, we might see that these many issues had been completed. Now that’s within the early days. Now that we’re principally distant, it’s extra digital. However all I can say is that if I’ve a category on retirement planning, for instance, 1 / 4 to a 3rd of the corporate will present up, which is a really excessive participation charge in comparison with if our 401k supplier has a category and it’s perhaps 5 to 10%.

Steve Chen (22:09):

Yeah, I really like the thought of nicely led by inner advocates. We see this in our neighborhood. Individuals in our neighborhood are champions for monetary, private finance. Fairly often their very own households are going round and saying, it’s best to do that, and we additionally assume this might occur within firms. Have you ever seen different firms embrace this type of concept of a monetary well being day?

Robert Brokamp (22:28):

Probably not. I imply, the thought of a private monetary wellness program is choosing up velocity. You could find firms that provide these, and a few of it’s courses, a few of it’s reside webinars. A few of it’s you’ll be able to even have the chance to talk with a monetary skilled, will not be an authorized monetary skilled, however perhaps a monetary coach or one thing like that. However I believe loads of these firms are having bother gaining a footing as a result of I believe what occurs is employers are well-intentioned to supply it as a profit, however then it’s simply one of many no matter 10 advantages which are there on the HR web site and other people don’t give it a lot thought. Whereas once more, at Motley Idiot, they’re like, we’re taking an entire time without work to do that and we actually assume it’s best to attend.

Steve Chen (23:19):

Have you ever ever considered doing it quarterly? Like, Hey, let’s give individuals half a day, as soon as 1 / 4 and we’re going to handle all of the stuff. Let’s replace your property plan. Let’s replace your monetary plan. Let’s tune [00:23:30] up your contribution charges. Let’s prepare for taxes.

Robert Brokamp (23:33):

That will get to a different factor that I’m doing now that I’m on one thing we name the pockets workforce and a pockets workforce is 4 different fools and me who meet each different week to provide you with concepts that, so for instance, subsequent month we’re having, as a result of most of our workers are in Virginia, we’re having Virginia’s 529 plan educate a category, and we attempt to do one thing each month if we are able to. That’s instructional. I really like the thought of the time side. In order that’s one thing I believe we must always most likely think about. To be trustworthy, the Motley Idiot is reevaluating all our wellness issues as a result of we even have a bodily wellness program and a psychological well being wellness program, and we tried to mix them multi functional week and it was an excessive amount of. So we’re now reevaluating the whole lot and perhaps we must always concentrate on issues individually, however I really like the thought of doing the time side quarterly as a result of that offers workers permission to say, I do know I’ve this stuff I’m purported to do, however I’m allowed to spend these subsequent three hours throughout a workday taking good care of this stuff. And the important thing there may be it typically must be throughout a workday if you wish to name an property planning legal professional, if you wish to discuss to an insurance coverage agent, if you wish to attempt to decide on a monetary planner, if you happen to’re attempting to do these on a Sunday morning, you’re not going to get anyone.

Steve Chen (24:51):

Yeah. Right here’s one thing I believe it could be cool to do could be that I believe might assist advantages individuals too, or employers when individuals have life occasions like a child. So I used to be speaking with somebody who was like, the transfer when you’ve gotten a child is fund the 529 once they’re born. You could possibly go to new mother and father and be like, guess what? We’re going to offer you 10 grand in your children 529, however you bought to remain right here for 2 extra years to finest into it or one thing like that. 20 grand, we’re going to offer you that as a bonus. It will be superior. It will resolve a monetary downside for them, get them off occurring their finish and in addition drive retention. You could possibly do this for 529s. You could possibly do it perhaps a bit bit for HSAs, you may do it for Roth IRAs in your subsequent technology.

Robert Brokamp (25:36):

It’s been just a few years since we’ve talked about it, however we as an organization talked about having simply this pool of cash that workers might use in numerous methods, just like the stuff you simply mentioned, or if they’ve faculty loans, they might put that cash to paying off their pupil debt, however mainly some sort of factor as a result of all in numerous conditions, a few of us have children, a few of us don’t. A few of us are empty nesters, a few of us aren’t. A few of us have finished an excellent job of saving for retirement and a few haven’t, and that’s the place they want the cash. However we talked about it years in the past, we didn’t do it, nevertheless it’s one thing to actually think about

Steve Chen (26:08):

For certain. That’s superior. Okay. Yet one more query about, I do know I believe you’ve gotten sturdy opinions on the 4% rule or you’ve gotten some opinions on that. We’d like to get your tackle that after which we’ll go to the final phase.

Robert Brokamp (26:20):

I believe a part of what’s fascinating in regards to the 4% rule is that, as I’m certain lots of you on the market know, it first happened in a 1994 paper by a man named William Bengan who then was a monetary planner. He has since retired. Nice man, literal rocket scientist, went to MIT to check rocketry, however then went into his household’s soda bottling enterprise till it was offered. And he comes out with this report in 1994, and also you’ll learn in there and it says round 4%, nevertheless it actually was 4.15%, after which it was confirmed just a few years later by what grew to become referred to as the Trinity research. However Invoice Bangin to today, nicely into his seventies, remains to be doing analysis. That unique research had simply two belongings, s and p 500 and I believe it was intermediate time period authorities treasuries. After which just a few years later, he added small caps and he moved it as much as 4.5%, after which a number of years later, he included different belongings and moved it as much as 4.7, 4.8%.


So a part of it’s, I simply assume it’s fascinating that 4% is so mounted in our brains when the man who got here up with it hasn’t been utilizing 4% actually from the start. Now, different research have discovered 4%, however the different challenge too is that it’s the tremendous protected, protected withdrawal charge as a result of it assumes, to start with, you’re going to reside 30 years, which is the best assumption if you happen to’re retiring in your mid sixties. However nonetheless, likelihood is you’re not going to reside 30 years. Most individuals is not going to reside until their nineties. It’s a prudent assumption, however you most likely received’t make it. And the opposite side is you are taking out cash in that first yr of retirement, that greenback quantity, and you then alter that greenback quantity yearly for inflation. However for most individuals, they don’t want their spending to go up yearly for inflation.


The truth is, most individuals, their spending goes down on an inflation adjusted foundation as we grow old. So Morningstar did an evaluation of this that got here out on the finish of final yr, they usually discovered they agreed with 4% if you happen to use the unique routine as prompt by banging again in 1994. However if you happen to use precise spending discovered by analysis from of us just like the Worker Advantages Analysis Institute, the protected withdrawal charge is definitely nearer to five%. After which there are conditions the place, nicely, [00:28:30] okay, if one thing occurs dangerous available in the market, just like the market goes down or there’s excessive inflation, you reduce your withdrawals a bit bit, and that’s what most individuals do. If my portfolio’s down, I’m going to be like, you realize what? I’m going to tighten my belt for a bit bit. That additionally might increase your protected withdrawal charge. So I believe if I had been 65 and retiring at present, though frankly I plan to retire a lot later than that, however we’ll see. But when I had been 65 retiring at present, I believe I’d really feel snug with 4.5%, perhaps even a [00:29:00] little greater, however simply being ready that if my portfolio doesn’t carry out very nicely, I reduce when I’ve to.

Steve Chen (29:07):

Yep, is sensible. Why do you assume your retirement age will likely be a lot later?

Robert Brokamp (29:11):

Properly, that is one thing perhaps we’ll discuss, however I’m unsure retirement’s good for individuals and the tutorial analysis is obvious that it’s blended. There are research which have discovered that individuals who retire sooner expertise accelerator charges of bodily decline, psychological decline, as a result of frankly, we’re constructed to  be stimulated bodily and intellectually. We’re constructed to be round individuals and we’re constructed to have a goal. Now, there are different research which have discovered the exact opposite that retirement is excellent for individuals. And I believe actually what it depends upon is what job are you retiring from and what you’re retiring to, as a result of there are some jobs on the market which are boring, which are isolating, they’re anxious, and getting out of these jobs might be good for you. For me personally, I’ve an ideal job. I like what I do and I’m not desperate to retire. So I might see myself working nicely into my sixties after which perhaps part-time nicely into my seventies.

Steve Chen (30:05):

Yeah, I believe goal is such an enormous a part of this. Do you see individuals eager about this earlier and earlier of their lives? I do know that our neighborhood thinks about it as they grow old they usually’re like, okay, I’m on the point of retire. Yeah, what am I going to retire to? They be considerate about this stuff. Are you seeing that one youthful?

Robert Brokamp (30:24):

I see two issues occurring. To begin with, we noticed this in the course of the nice resignation of the pandemic, there was one thing like two to three million extra retirements of what would’ve usually occurred, however then a yr or two later, loads of these individuals went again to work. Now, a few of them, as a result of their portfolios are down and inflation is excessive, however others had been frankly bored. They did the issues that had been on their listing. That they had the day off for some time, they usually’re like, is that this all there may be? They usually went again to work. In order that’s one factor. However the different factor is just too, I believe there’s a larger appreciation additionally partially from the pandemic, that life is brief and you may’t plan on being completely wholesome and residing nicely into your seventies or eighties. So there’s this different facet of it the place individuals are like, okay, I could not wish to be retired ceaselessly, however I don’t wish to put the whole lot off till my sixties or seventies. So that you’re seeing extra of individuals doing, whether or not you name it a sabbatical or altering jobs to a extra versatile workspace, now that we’re working remotely, individuals are perhaps transferring to a job the place, you realize what? I can have this job and I can work from the mountains of Colorado slightly than in my busy metropolis. And that’s the stability for me. I like my work life stability higher if I do this and I can do it for longer as a result of I’m having fun with it extra.

Steve Chen (31:44):

So this concept of diversifying your time, so do you spend it at work? Do you’ve gotten a greater form of job? Do you’ve gotten a greater work surroundings? Have you ever seen any good research on this? As a result of that absolutely is sensible. I imply, I’ve seen it and other people right here moved to Tahoe, they moved to Park Metropolis, they go to those completely different nice locations. All of them went to their trip cities and hopefully have nice lives there. Or they moved someplace method cheaper. They took their San Francisco or New York Metropolis wage and moved to Virginia and their high quality of life jumped up.

Robert Brokamp (32:12):

And I don’t have any research apart from the proof that we all know that is what’s occurred, proper? I imply, america is filled with what had been one small quiet communities that are actually crammed with individuals leaving the coast, leaving the large cities and on the lookout for a unique tempo of life and a unique price of residing, to be trustworthy. However there’s no query that I see increasingly more individuals saying, pay attention, I don’t wish to save the whole lot to the tip, my daughter, my oldest proper now’s a digital nomad in Europe. She doesn’t reside in a single place for longer than two to 4 weeks together with her husband as a result of she will be able to, their jobs permit them to try this. So I believe that there’s extra of a realization that you simply’re not mounted in a single place, in a single metropolis, in a single job.

Steve Chen (32:58):

How lengthy does she wish to do this for?

Robert Brokamp (33:00):

In all probability for one more yr or two. She’s 32. She simply bought married final summer season in Rome, as I wish to say. She needed to make it as troublesome and as costly as attainable on the remainder of us, however she and her husband reside an ideal life. I believe in the long run, once they’re able to have children is once they’ll put down extra agency roots

Steve Chen (33:16):

And having sampled life and all the world over, or not less than Europe, they’ll have a wider selection about the place they go.

Robert Brokamp (33:25):

Sure, completely.

Steve Chen (33:27):

Somebody on our workforce is contemplating transferring to Virginia from LA and he or she’s like, yeah, it’s from Eire. She’s like, it’s nearer to Eire. I may very well be anyplace. So right here we go

Robert Brokamp (33:38):

As a resident of Virginia, I say, come on over. It’s an ideal state.

Steve Chen (33:44):

All proper. Final part right here. Simply interested by among the largest stuff you’ve discovered as you’ve labored with the Motley Idiot neighborhood round monetary planning. What are among the huge challenges or considerations individuals have as they work together with you?

Robert Brokamp (33:57):

Properly, as a result of individuals come to the Motley Idiot principally for funding steerage or discussions or schooling, it’s principally about what to spend money on as a result of it’s a monetary media firm, nearly all of customers of economic media have above common wealth and are frankly older. So these are individuals who typically are of their forties, fifties, sixties, and an enormous query is, alright, how do I transition from this all inventory portfolio to retirement? And each time you’ve gotten a yr like 2022 or for the 2 or three months of 2020 when shares are down, individuals are like, oh, holy cow, what occurred right here? So I believe that’s an enormous dialogue proper now by way of the way you do this. And I believe actually as soon as you’re inside a decade of retirement, it’s time to begin scaling that again and you are able to do it incrementally. A few issues I believe I’ll do as soon as I’m inside a decade of retirement, which is perhaps a yr or two from now, I’ll cease reinvesting my dividends and I’ll begin letting them accumulate as money a portion of my contributions to my 401k and IRAs. They are going to go a bit bit in money after which yearly I’ll rebalance inventory. So it’s not a call you need to make instantly. It’s a great way to step by step construct up your money and bonds as you strategy retirement.

Steve Chen (35:21):

Good. How do you wish to be positioned as you strategy retirement? How would you want your portfolio to be and do you concentrate on it, not simply the portfolio money bonds fairness, however taxable tax deferred and tax exempt. Do you concentrate on it in these buckets?

Robert Brokamp (35:37):

Oh yeah, completely. I imply, I do a reside webinar yearly for our premium subscribers, and all I do is simply reply questions with one other former monetary planner. And so lots of the questions are about how a lot ought to I contribute to the Roth? Ought to I do a Roth conversion? So many questions on the backdoor Roth, IRA, and it’s actually right now the place tax charges are traditionally low. They’re positively going to go up in 2026 except Congress and the President Act, whoever is occupying these places of work at the moment. So it actually is sensible that method as nicely. After which when you enter retirement with these various kinds of buckets, which of them do you faucet first? So yeah, loads of discussions about that.

Steve Chen (36:20):

Properly, we’re engaged on automating all of this.

Robert Brokamp (36:23):

Properly, I’m glad to listen to it. I’ll say one factor in regards to the evolution of the Motley Idiot is once more, within the very starting in 1993 was like, we are able to all do that collectively. We don’t want Wall Road, we don’t want specialists. However what we discovered over time is there are lots of individuals like, sure, I want I had the time for that. I want I had the curiosity for that, however I don’t. I want some form of assist. And that assist may very well be working with a monetary planner or it may very well be a extremely refined software that may crunch the numbers for you, as a result of within the early days, individuals had been making their very own spreadsheets and issues like that, which is okay if you happen to actually know Excel, nevertheless it’s most likely not proper for the typical individual. So you set collectively an excellent neighborhood of educated, well-meaning of us with some good instruments, and I believe you’ve gotten an excellent mixture.

Steve Chen (37:09):

Yeah, that’s occurred right here. Quite a lot of our of us present up with spreadsheets or have them, they usually have advisors too, however then we’re constructing this platform they usually can all feed into it and provides their concepts. And it’s fascinating how the world’s developed from, okay, how do I purchase shares and the way is that finished to how do I index and be sensible about investing? However you then bought to be sensible about asset location whenever you’re accumulating as you transition, after which as you decumulate all these ratios ideally change in live performance to reduce taxes and maximize your return. I believe there’s loads of room to automate this as nicely. So one of many issues we’re taking a look at is we do quite a bit with Roth conversions, however withdrawals. Quite a lot of our customers are doing stuff on our platform to maneuver cash between accounts, withdraw from the best place on the proper time, and I believe there’s loads of house for us to automate it, loads of these items, or not less than floor the right way to do it in a greater method. In order that’s an space that we’re leaning into in an enormous method. Alright, nicely, I suppose my final query could be any huge ideas you’ve gotten for folk in the event that they’re approaching retirement or making this transition, issues that they need to take note of?

Robert Brokamp (38:18):

That is extra philosophical. I like to consider retirement and actually anybody’s scenario. It’s a time to ask your self, what do I wish to do with the remainder of my life? And for some individuals that’s cease work and watch TV and hang around and perhaps go to the grandkids. And as you realize, certain, the stats on the variety of hours of TV watching that retirees do is sort of stunning. However I believe if you happen to change it to what do I wish to do with the remainder of my life? It brings up different questions like, I could not wish to retire or I simply wish to break, or I’d wish to return to highschool and turn out to be a nurse, or I could wish to proceed working, however I wish to work for a nonprofit or a trigger that I’m involved about. It makes you assume extra in regards to the alternatives forward, and that could be retirement or it won’t be.


I imply, I do know of people that took cash out of their 401k to pay for an schooling so they might get a brand new job that they’re pleased to do nicely into their seventies they usually’re rather more fulfilled. So I believe that’s the large query to ask relating to the remainder of your life. I believe one of many matters that’s most uncared for in monetary planning is creating your human capital, and I take advantage of that as a broad time period for beginning together with your means to earn a paycheck and to develop your paycheck and to guard your paycheck, the muse of your funds, nevertheless it’s additionally your mental curiosity and improvement. It’s your bodily improvement, and whenever you ask retirees, what’s the primary ingredient of a cheerful retirement, the very first thing they are saying is well being, as a result of you’ll be able to’t get pleasure from your retirement if you happen to’re not in good well being. Some issues, in fact, well being points now we have no selection over, however anyplace from 30 to 50% are as a consequence of our life-style decisions. So eager about these issues like what do I must develop? The place do I wish to be? What expertise do I’ve to work on to get there and consider all of the alternatives forward of you? I believe that’s a good way to border your funds.

Steve Chen (40:09):

Yeah, I really bear in mind speaking to my mother and he or she was like, nicely, as I strategy retirement, the following decade goes to be about this. And he or she had some concepts about what she simply needed to do and it was nice and chop it up a bit. However yeah, now we have a restricted time horizon, so now we have to be fairly intentional with this and being conscious of it. I see this with extra youthful individuals, they’re rather more conscious of how brief life is and I believe making good decisions and doing issues which are purposeful. So hopefully that continues to unfold and other people do issues they love they usually’ll consequently do higher work.

Robert Brokamp (40:48):

Yeah, I say extra energy to ’em. One of many first interviews I did as a author was with a man named Mitch Anthony who wrote a e-book known as The New Retirementality, and he talked about how now we have this binge society the place once we’re younger, we binge on schooling, after which in our careers we binge on work and that the tip of life we binge on leisure, and I believe it really makes loads of sense to form of combine all that collectively and perform a little little bit of all of that all through the remainder of our lives.

Steve Chen (41:12):

That’s superior. Yeah, the thought of a sabbatical strongly appeals to me. It’s laborious to do once we’re doing this type of work, however I get why of us would wish to do it. Some of us write about mini sabbaticals, simply making them an everyday cadence. Individuals don’t take sufficient trip. Usually, we’re I believe, by far the toughest working society on the market. No query about it. We grind it out, work on a regular basis, and be more healthy for us to construct in a bit bit extra relaxation and time for restoration. Robert, this was nice. I recognize you taking the time, so thanks for sharing your insights with us, and I’m certain we’ll get loads of good suggestions on this. And for the parents listening, positively can take a look at Robert’s work. Robert Brokamp on the Motley Idiot will hyperlink to his writing and the podcast. Thanks for tuning into the NewRetirement podcast. When you have a minute and haven’t constructed a monetary plan, positively take a look at what we’re doing Additionally, you probably have a minute to jot down a evaluate for this podcast or share any suggestions, it’s at all times welcome and we’ll discuss to you subsequent time.


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