Nate Reineke (00:14)
Hello, physician moms and dads. I'm Nate Ranicki, certified financial planner and primary advisor here at Physician Family Financial Advisors. And today we have two other financial advisors that we're very familiar with. We have Chelsea, also certified financial planner, another primary advisor here, and Kyle, certified financial planner again, and our retirement investment specialist. Hello, boys and girls. How are we doing today?
Chelsea Jones (00:39)
Hello, hello.
Kyle Hoelzle (00:40)
Thank
you.
Nate Reineke (00:41)
We have three advisors on this call and I thought that would be fun so that's why we're doing it. What a treat.
Chelsea Jones (00:47)
Yeah.
Nate Reineke (00:48)
Okay, so normally we get into these listener questions, which we will do. And we sound so perfect. We always have what I think are the right answers. And I feel like maybe it gives off this impression that we don't have any fun. So I got a question for both of you. Okay, this is a spending question. What's the last splurge you made that was 100 % worth it?
We spend money, right? We're not perfect over here.
Kyle Hoelzle (01:17)
Mm-hmm. Mm-hmm. got one.
Chelsea Jones (01:20)
Yeah.
Kyle Hoelzle (01:22)
I got one right away. I got one right away. So I just had my 40th birthday this year recently and I got a little birthday money so it was you know burn a hole in my pocket because it's pretty rare to have that that extra money so I I wanted to buy something for my pickup truck and so I bought β I bought a cover
Nate Reineke (01:24)
Okay, let's hear it.
You
Kyle Hoelzle (01:45)
because it rains a lot here. It's like a rolling cover. Not super expensive, but I was really happy with it. I put it on myself and it fit real nice. But the extra splurge was I was in the shopping cart and I was getting ready to check out. They asked me if I wanted to add this $30 hydraulic bar that hooks right onto my tailgate on the holes on the tailgate. And it gives me a soft, tailgate versus like a drop, just slam drop.
Nate Reineke (01:47)
Mm-hmm.
Chelsea Jones (01:58)
you
Nate Reineke (02:09)
β
Kyle Hoelzle (02:13)
And I had a near miss with one of my kiddos with that tailgate. So was like, β 30 bucks. I'm going to try that. they upsold me. But I put that thing on and it works just as advertised. It was a great, purchase.
Nate Reineke (02:24)
So Chelsea, I know how much Kyle likes soft closes because the first time we met he was like, yeah, I'm working on my house a little bit. I'm like, what are you doing? He told me about his soft close cabinets. I was like, ooh, that's nice. Soft.
Chelsea Jones (02:37)
Yes.
I also recently talked about soft close cabinets with Kyle. Well, I don't know how recent it was, but it was since we moved into here because these this house that we moved into soft close cabinets.
Nate Reineke (02:42)
haha
Yeah.
Chelsea Jones (02:51)
And
yeah, I had a neighbor complaining that I was too loud and I was slamming cabinets and I was telling Kyle about it and I was like, but they have soft close hinges. They can't slam. β
Nate Reineke (03:03)
The
worst is when you get used to them and you go over to someone else's house and you get like a glass and you just slam it. Whack! Yep. All right, Chelsea, what's your splurge?
Chelsea Jones (03:07)
Just bang.
Kyle Hoelzle (03:08)
you
β yeah. So true.
Chelsea Jones (03:13)
You
Chash, I haven't really, my spending, my splurges haven't been that exciting for like me. I guess the one, the thing that I did recently was I went and got myself a 90 minute deep tissue massage. Because boy did I need it. Yeah, I needed it. But then a splurge that I've been preparing for for years now is my daughter turns two next month.
Nate Reineke (03:31)
Now we're talking. Now we're talking.
That's great.
Mm-hmm.
Chelsea Jones (03:43)
We've
had a Disney trip planned for literally the past year. Been saving for it. And that's a splurge. Anyone who's been to Disney knows that it's, you're going to spend some money. β But I wanted to go kind of all out for her second birthday, but also because I wanted to go to Disney when I was a kid, but it just didn't happen. So this is for Anna, but it's also for Chelsea and Connor too, but he.
Nate Reineke (04:05)
Yeah.
Kyle Hoelzle (04:08)
you
Nate Reineke (04:11)
Have you? Yeah, so I'm not a Disney connoisseur, but anytime I've ever gone, I've always brought someone that knows Disney really well. I'm like, I'm just following you. They're like, well, which rides you wanna go? I'm like, I don't even know what the rides are. So I won't miss them if I don't see them. Just take me on the best route. Do you have that? Do you know where you're going when you hit Disney?
Chelsea Jones (04:11)
He's just like along for the ride.
Kyle Hoelzle (04:13)
.
Chelsea Jones (04:21)
Mm-hmm.
Yeah.
Yeah.
know which parks we're going to. We have like dining reservations because we worked with a Disney travel agent so we've got an itinerary but we didn't plan it down to the rides. So we're just going to go to the parks and figure it out because with a toddler tooth you're kind of limited on what rides you can get on I think. β So I plan on just going to the rides that Anna can go on to and β eating a lot of good food.
Nate Reineke (04:41)
Mm-hmm. Ooh. Yeah.
That's right.
Kyle Hoelzle (05:00)
I got a pro tip for each else. My wife recently took our two oldest girls to Disneyland. They have an app that tells you the wait lines at each of the rides. So you can see where it's at relative to you and know whether, if I walk here and at this wait time and you can plan your trip around the park. So yeah, that's crucial. Nice. Sweet.
Chelsea Jones (05:07)
Mm.
Yeah.
Thank you.
Yeah, I have the app. That's how we did the reservations. I also did the Disney
dining plan, which I'm sure is a splurge, but the thought of not having to like swipe my card every time that I go out to eat at Disney. I love the thought of it. like, I know. Yeah. I'm like, it's already covered. I'm gonna walk in and eat and I'm gonna walk right back out knowing that I already paid for all this.
Nate Reineke (05:32)
You
Such a planner, you just know how much the food is before you even leave.
Kyle Hoelzle (05:39)
Mm-hmm.
Nate Reineke (05:47)
us.
Okay, we ready to get in some questions?
Chelsea Jones (05:50)
Let's do it.
Kyle Hoelzle (05:50)
Let's do it.
Nate Reineke (05:52)
Okay. All right. So we have obgyn in Illinois. It says, have a mix of pre-tax and Roth accounts, but I'm not sure which ones I should actually be taking money from first when I retire. Does it matter what order I use them in? I think Chelsea should answer this question.
Chelsea Jones (06:16)
Yeah, I got this. So it does matter. It does. β Pre-tax and Roth accounts. So just as a refresher, pre-tax accounts, those are the accounts that like a 401k that gets rolled over to an IRA after you retire. You've put all that money in pre-tax, got a tax break on it. β And so when it comes out, everything that comes out is going to be taxable to you. The Roth accounts.
Nate Reineke (06:42)
Mm-hmm.
Chelsea Jones (06:45)
are the exact opposite of that. You've paid taxes on the contributions already, it grows tax-free, and when you take the money out, you're not going to owe any taxes at all. β And then there's a third kind of flavor of dollars that retirees have, not everyone has though, is taxable accounts. So those have a mix of what we call basis and gains. So basis are the dollars that you've already paid taxes on,
And then in a taxable account beyond that, you have your capital gains, which are taxed at capital gains rates. β so kind of the order of operations, number one rule, you want to let the Roth accounts grow as long as they can get the most out of the tax free growth. β and if you have the, like the three type mix, typically you do taxable money first, then your pre-tax accounts, and then again, save the Roth accounts for, for last.
Nate Reineke (07:18)
Mm-hmm.
Chelsea Jones (07:41)
That's kind of the general rule. β But we could, of course, go deeper into that, depending on the situation with conversions and all of that.
Nate Reineke (07:48)
Yeah, right. Yes.
So the conversions part, it's like there's levels to this planning. That's a big, generalization. Hard to get any better than that without knowing someone's perfect situation. But do some planning around like, what is my income? And would it be more beneficial to take out money that's not going to be taxed this year or next year? But in general, that's the list. Okay.
Chelsea Jones (07:57)
Mm-hmm.
Nate Reineke (08:13)
Yeah, and Roth conversions, strategic Roth conversions after you're retired, really important too. Okay, β next question is from a dermatologist in Colorado. β Says, recently contacted my custodian about weird activity in my Solo 401k. β It turns out my account was hacked. What are some steps β I can take to avoid this in the future?
Kyle, I think this was your question. Cool.
Kyle Hoelzle (08:42)
I'll take this one. Yeah, I'll take this one, Nate. Sounds good.
β
Yeah, they're really the main thing here is when if there's any activity on your account, at least on the modern day custodial platform online, you can you have your preferences on how you receive alerts. You know, you can have alerts. Most of the time it comes by email and tells you have an alert or something like that. So it's really important to when there's strange activity on your account to know when there's activity on your account so you can look into that activity as soon as possible.
and make a decision whether that was you or if that's something that you need that needs further research and attention. So really staying in contact with your account is really important. Making sure that your email's correct on your profile, making sure your phone number's correct, so that they're in your mailing address so that these custodians can reach you and inform you of these activities. And then you gotta get a little curious. You can't just let it go to your spam folder or glance at it and delete it. You gotta be like, there's activity on my account. What's happening on my account? Because activity could be anything. It could be...
β given it being reinvested, which is, you know, no action. could be, β options trading has been turned on in your account and, you didn't turn that on. β and, β there's a bunch of other different strange activities. Worst of all would be like a transfer out that you didn't authorize. That would be an activity that you certainly would want to pay attention to. So keeping yourself in the loop is, is Pam out here and preventing this from happening. β
Nate Reineke (09:53)
Yeah.
Yeah.
Kyle Hoelzle (10:11)
And then, know, acting right away, you know, reporting it right away to the custodian, taking action on getting it, you know, resolved. Most of the time, you know, you want to get a new account number and get your account moved. If there's been something really strange on there, it would be the best course of action.
Nate Reineke (10:18)
Mm-hmm.
Yeah, I've seen a variety of
β basically this is financial cleanliness and financial cleanliness will kind of avoid some of this sometimes. beyond just getting hacked, which is obviously terrible, I see people with the wrong addresses on their account all the time. And usually when they find out it's at a really bad time. Like they need to get a check mailed to them and they have the wrong address on their account. And this isn't fun.
I this isn't like exciting stuff, but when the time comes, you need to be ready for them to be able to get in touch with you or to be able to get in touch with them. So you should probably do this relatively often and something else you do with our clients, Kyle, is you make sure their beneficiaries are all up to date. It's like, get in there, clean your accounts up every year. It's not always the exciting investment stuff that I'm sure you'd like to do with these people, but it has to be done.
It's just part of financial cleanliness.
Kyle Hoelzle (11:23)
Exactly. Exactly. Yeah. I like to think of it
Chelsea Jones (11:26)
And something.
Kyle Hoelzle (11:27)
as flossing your teeth. Like no one wants to do it, but it keeps the cavities out. It's detailed work, but you should do it. You should do it for that cleanliness like you're talking about.
Nate Reineke (11:29)
Yeah.
Yeah,
agreed.
Chelsea Jones (11:39)
And something even more simple to maybe is remembering that email is not secure. If you're working with someone like us as the advisor, it's so tempting for clients to just email us stuff about their 401k, even though we're preaching and pushing use the vault, use the vault. I've had clients who just, I'm sure in the, for the sake of convenience have like have emailed stuff.
Nate Reineke (12:08)
Yeah.
Chelsea Jones (12:09)
about an account and that can put your information at risk because email is not secure.
Nate Reineke (12:14)
Yeah.
And these are people that have secure emails at work. Like you get an email that you got to open with a password β and for medical records and things like that. you know, this is your money. This isn't even someone else's medical records. This is your money. So important. And β I have seen even worse than this, a ton of professionals, maybe like third party professionals that are trying to email me something.
Chelsea Jones (12:20)
Mm-hmm.
Nate Reineke (12:44)
They just fire it off, count numbers and everything and talk about like with the technology, it's coming fast and email is pretty easy to get into. Think of it as public.
Chelsea Jones (12:48)
and
Mm-hmm.
Kyle Hoelzle (12:57)
Yeah, it's like throwing a ball. It's like a secure in your hand, but as soon as it leaves your email inbox, someone can just intercept it and then pass it back forward to the recipient and just take it right out of the air. So that's how I think about it. Once you release it, it could be grabbed.
Nate Reineke (13:05)
Yeah.
Mm-hmm.
That's right.
Chelsea Jones (13:16)
Mm-hmm.
Nate Reineke (13:17)
All right, next question's from a double doctor family in Texas. We're doing well financially, but I'm not sure if we should be putting extra money toward the mortgage, retirement, or other investments like real estate or small businesses. How do we figure out which should come first? So I'm gonna answer this one. β When I hear doing well financially, β
Chelsea Jones (13:38)
Thank you.
Nate Reineke (13:45)
I kind of translate that into something. It doesn't always mean this, but what I hear is we're on track for retirement. We're on track for college, maybe even slightly ahead on both of those fronts, which would insinuate that they do have a plan, which is not always the case, but they have some sort of a plan. They're on track. And usually it also means we spend all the money that we'd like to. Okay. So, β
When I get questions like this is essentially like, have extra money. What should we do with it? And β when it's followed up with, should I buy real estate or should I invest in small businesses? β This just comes down to people getting bored with easy investments, getting bored with index funds.
getting bored with what has worked for them very well as they build up to being financially successful, right? Doing well financially. So you're doing well financially with these index funds, with this simple investing, relatively simple investing, and now you're bored. And when I put it like that, it usually kind of, it should click that this is working.
And there's not really a great reason to do anything different. Right? So β the reality is that everybody experiences this and when you have extra money and you don't know what to do with it, you start to get kind of this FOMO. β So you have this fear that you're going to miss the boat on something. You're going to miss the boat on this real estate surge or miss the boat on some small business idea. But just because your current investments are simple,
doesn't mean they're bad β or ineffective or they won't give you all the money you need in life. β And I would say the opposite could be true as well, where if things are more complicated, it actually could mean that they are bad. And so the argument tends to be about investing is that β real estate's a good investment. And it could be for the right person.
You have to ask yourself, is real estate a good investment for you? And if you have plenty of money to where you don't need to leverage yourself to buy real estate and still have plenty of money for college and retirement, the question is, why would you get all that debt and leverage yourself to buy real estate? If you don't have to put time, energy, and a bunch of cash into a small business so that you can make more money off of it because you already make enough money, why would you do those things?
Chelsea Jones (16:28)
Thank
Nate Reineke (16:38)
So it's less about the β effectiveness of real estate as an investment and of small business as an investment and more about a risk β appetite and a time appetite. I you're a doctor, you don't have a ton of time to be pouring into these small businesses or even being a landlord. So β to answer the question directly, when you have plenty of cash, I would focus on reducing debt.
even if you have a good interest rate because you're way on your way on track and then just keep doing the old simple boring thing and do something better with the money than taking a high flyer. That's my that's my thoughts on it. Chelsea, what's something better? What's something better than buying some random investment?
Chelsea Jones (17:19)
Mm-hmm.
Yeah, top of mind right now school's getting back into session. We all know how important teachers are. You can I did this the other day too because I got bored and I was like, I want to do something that will, you know, help somebody. I literally went to Amazon, looked up lists like you can just go and look up different types of things like baby registries, you can put a state in.
Kyle Hoelzle (17:47)
you
Chelsea Jones (17:53)
I looked up classroom lists in Kentucky, which is my home state. I was like, I'm going to help a Kentucky teacher. I just went and picked a random teacher and picked a list and bought some stuff off of it. And, you know, every little bit helps a teacher too, because they have to spend out of pocket to decorate their classrooms and buy books and all of that, because they don't get a lot of support from their system. So, yeah.
Nate Reineke (18:00)
Yeah.
Yeah.
Yeah. And
it's okay to have extra money and make way more money than you really need if you're happy at work and you're spending time with your family and all that. β I mean, this is a personal preference, I guess, but I kind of don't think it's okay to just take a high flyer if you have plenty of cash. You know what's really fun? Taking high flyers. You know what's even more fun? Giving money to teachers. Right?
Chelsea Jones (18:25)
Mm-hmm.
Kyle Hoelzle (18:27)
.
Chelsea Jones (18:47)
Yeah.
Kyle Hoelzle (18:48)
Hehehe.
Nate Reineke (18:49)
or spending
the money on your family or something. Working less, for God's sakes. Work less, spend more time with your family, but I just have yet to find a great reason for someone to do something like real estate unless they are just to their bones a real estate person. β I get it, the investments can work. It's just not necessary.
Chelsea Jones (18:55)
Yeah.
you
There's a lot of things in life that are complicated and your investments does not have to be one.
Kyle Hoelzle (19:13)
Yeah.
Yeah, I'd say I'd say the only reason why you do anything like that would be just a purely values thing. But I mean, you'd have to really know what that is. Like, like, I want to be a doctor and a real estate mobile, you know, like, that's what I want to accomplish in this lifetime. Like, if that's really core, true to your values, then go for it. But I mean, oftentimes, when you sink so much into one thing, you have to, we only have so much time. So you have to kind of take it from something else, you got to figure out what you value more, you know, because like you said,
Nate Reineke (19:17)
Alright. Yeah.
Mm-hmm.
Yes.
Chelsea Jones (19:34)
Mm-hmm.
Nate Reineke (19:44)
Mm-hmm.
Chelsea Jones (19:44)
Yeah.
Kyle Hoelzle (19:45)
investing time in the real estate and small business could take you away from your family. that's fine, but what do you value doing more? And working less and spending more time here, doing more time there. So yeah, that'd be the only reason, but it's really, you'd have to really be, like you said, like you'd have to really want it.
Nate Reineke (19:51)
Yeah.
Chelsea Jones (19:52)
Mm-hmm.
Nate Reineke (20:02)
Yeah, I
Chelsea Jones (20:02)
Go
Nate Reineke (20:02)
think
Chelsea Jones (20:03)
in with eyes wide open. Yeah.
Nate Reineke (20:06)
And that's a relevant reason to bring it up, you know, and ask this question. So we get to ask these questions. I think that's their edging on like, hey, let's think this through so I can go into it eyes wide open. in the the I've probably I mean, hundreds of times that I've written these plans for physician families, I specifically remember two. doctors that came into a relationship with us and I spoke with them.
Kyle Hoelzle (20:10)
Mm-hmm.
Nate Reineke (20:35)
and they had a vision of one was real estate, one was small business, basically entrepreneurial spirits, and they really wanted to do some of that. And they took their time and they did it in a reasonable way. And it's not what I would have done, but I could tell that by year four when they finally had the money and they're still beating the same drum, this is something they really wanted to do. And so they did it, you know? And they were on track for college and retirement before they did.
Kyle Hoelzle (20:58)
Mm-hmm. Yeah.
Yeah, that's important.
Nate Reineke (21:04)
All right, next question is from an emergency medicine doctor in Georgia. automatic 529 contributions just stopped one day. What do you think could have happened? Chelsea, think this was your question.
Chelsea Jones (21:18)
Yes. β So, yeah, I was meeting with a client. We went in to do just double check their five to nine contributions. They had a recurring deposit set up, but the recurring deposit just wasn't happening. And so when we did a little dug a little further, we found out that she had actually reached the limit for five to nine or five to nine balance in Georgia. So these five to nine.
Nate Reineke (21:33)
Mm-hmm.
Chelsea Jones (21:46)
maximums or the 529 limits, they're set on a state level. So some states have a maximum balance that you can have in your 529. Some states have a maximum contribution, like lifetime contribution that you can make. You add up all your contributions over 15, 18 years, they can't exceed X dollars. Georgia happens to be one of those states that has a maximum balance. And it's like 230, 250, somewhere around in there.
Nate Reineke (21:59)
Mm-hmm.
Chelsea Jones (22:14)
which is...
Nate Reineke (22:14)
That's like two years
of Harvard or something.
Chelsea Jones (22:18)
Yeah, yeah, it was lower than I expected. So I was like, well, shoot, that's what's happened. You've reached this maximum limit. β And so her natural next question was, okay, what now? And just because you max out in one state, it doesn't stop you from opening up a 529 plan in another state. The bummer is that she did get a small tax break for her Georgia contributions.
Nate Reineke (22:30)
Yeah, what'd do?
Chelsea Jones (22:47)
It turned out to be like 200 bucks a year. So it's not like she was losing a significant amount of money in tax break by not being able to contribute to the Georgia plan moving forward. β But she still needed to save for college. I think her goal was to save for private school. β And so she needs more money in her college fund. And so we opened up an account for her at Utah, which is a 529 that we love and her college money is just going to go in there.
Nate Reineke (23:01)
Yeah.
Chelsea Jones (23:17)
until her actual college fund is full. She doesn't get the tax break, which is a bummer, but she can still save in a tax advantage way in a 5-T-9. It's just not going to be in the Georgia plan because she reached the limit there.
Nate Reineke (23:30)
Yeah, it's like the set it and forget it that we all know and love. It works, but you got to pay attention sometimes because imagine you go a couple years and forget that your money's not going into that 529. It'd be hard to miss, but sometimes people do. mean, there's times where I've seen people's contributions, thousands of dollars a month, and they just, they look up one day and there's an extra 20 grand in their account. They're like, where'd this come from? Yeah, identify they're not contributing. And then, you know, you're behind.
Chelsea Jones (23:34)
Mm-hmm. Yeah.
Yeah.
Mm-hmm.
Nate Reineke (23:59)
All of sudden you're behind and I guess you'd go make a catch up contribution, but pay attention so you can stay on track.
Chelsea Jones (24:07)
Mm-hmm.
Nate Reineke (24:08)
Okay, last question, nephrologist in Oregon. When is it beneficial to sell and recognize some capital gains taxes for the sake of rebalancing?
Kyle.
Kyle Hoelzle (24:20)
That's a good question. You know, it kind of makes me, we see a lot of themes sometimes in our work, working with physicians only. It's kind of like, you you see a movie and you kind of know the ending because you've seen the movie before. So.
You know, a lot of times clients will start out funding their taxable account early in their careers and you're able to rebalance with that new money coming in, you know, those new contributions. And that's great early on, but as your taxable account builds momentum, pretty soon your monthly contribution is barely scratching β the surface in terms of buying positions to get you in balance. know, so for example, if you're
you got a $5 million account and you're making a $5,000 month contribution, then that's going to barely move the rebalancing percentages, the allocation percentages of your account and help you rebalance. Versus if you're making a $5,000 contribution into a $50,000 account. You're making a 10 % buy every month, so that's going to move the needle in terms of rebalancing for you. So what happens is...
clients get used to not realizing capital gains in their taxable account because they're able to continue to do that. But at some point in the future, with enough time and enough money in there, that account gets large enough where that's not working anymore and you're out of balance. now you're basically, your risk is wrong. You're either taking, most likely stocks are up and bonds stayed steady. So most likely that's just staying in this scenario.
Nate Reineke (25:47)
Mm-hmm.
Kyle Hoelzle (25:55)
real stock heavy because stocks have been going up and you haven't been rebalancing. you're kind of just drifting now out. Your risk is drifting. You're getting riskier and riskier riskier. Maybe you're getting closer and closer to retirement. So you got to trade and rebalance β to bring that risk down in that scenario. I mean, that would be kind of the main reason to definitely realize some capital gains. mean, without a doubt, that's the time to do it. β But the question really comes, should you let it
Nate Reineke (26:05)
Mm-hmm.
Kyle Hoelzle (26:24)
she let it build that far or should you be rebalancing more consistently and realizing capital gains kind of more consistently in those earlier years? β
Nate Reineke (26:25)
Right.
Yeah.
So, I mean, I don't think they should. And I don't think that's what that you advise people to do. What's a way to kind of make sure this doesn't get too out of hand?
Kyle Hoelzle (26:43)
Well, I think everyone should have β an investment interval for yourself, like a rebalancing interval where you sit down and you review your accounts and you see if you're out of balance or not, you know, and make a decision. I think at the most frequent, it'd be once a year, you you could sit down and take a look at your accounts. I think it's fair. know, I've actually written a book once that you could rebalance every four years. I wouldn't advise that. I think that's too infrequent. β But I mean, you could.
Chelsea Jones (26:52)
Thank
Nate Reineke (27:08)
Mm-hmm.
Kyle Hoelzle (27:13)
somewhere within that frame, timeframe. β And, β you know, it is, it's pay attention to your risk. You need to pay attention to your risk. And I think, I think once a year, just kind of doing a risk assessment of your portfolio and seeing if you're in balance or not is good. And that way you can, you know, have a, hopefully a smaller tax burden, kind of each year, and rather than waiting for this problem to build and then having a large, large tax bill in one year, you know, and, meanwhile, meanwhile, taking on extra risk in those years, you really
Nate Reineke (27:37)
Yeah, I think a lot of times...
Kyle Hoelzle (27:42)
probably shouldn't have been taking.
Nate Reineke (27:44)
Yeah, I think a lot of times too, people see this as sort of like eating your vegetables, you know, like, my gosh, I got to sell stocks to buy bonds and pay taxes. That isn't always the case. Like this has just been the case because we've had an incredible bull market for like a decade. Right. But at some point, it's the opposite. It's like eating your dessert. I mean, you get to sell bonds to buy cheap stocks. So there's always a good reason to
Kyle Hoelzle (27:53)
Mm-hmm.
Nate Reineke (28:13)
review your accounts and see if you need to get in balance. Now that dessert will come on the heels of a down market, so it wouldn't be so exciting. it's just, you have an asset allocation for a reason, and it's not all about maximizing. Oftentimes, it's optimizing. You need to make sure you're in balance. And if you feel like you don't want to rebalance,
then you either set up your asset allocation incorrectly in the beginning or you are getting a feeling of greed. you know, Kyle always says, Chelsea, it's greed or fear. And β that's just all it comes down to. If you don't want to pay taxes on it, well, you're in a taxable account. So it's hard to save a ton of money and not ever have to realize any gains.
Chelsea Jones (29:03)
Mm-hmm.
Kyle Hoelzle (29:06)
Yeah, I always say you have to pay to play, you you earn money on your money. And, you know, you, you, live in this country where we have this capital gains rate and you just have, have to pay to play, you know, but I want to touch on real quickly on what you said about optimization, which is, you know, your stocks are up. Wouldn't you want to lock in those gains and sell those stocks for some gain, you know, lock in those gains. And then like you said, buy bonds, which β
Nate Reineke (29:18)
That's right.
Chelsea Jones (29:19)
And then.
Kyle Hoelzle (29:33)
A slang term we use is dry powder for bonds, know, because the new bonds are easy to sell out of to buy more stocks when the time comes. So when you mentioned the heels of the market, you know, going down and, and that's when your stocks dip and maybe you'll become actually out of balance the other direction by having too much bonds. And that's when you get to sell those, those dry powder bonds for very little gain and buy those stocks. And then when the stocks rebound, you optimize your rebalancing that way by locking in those gains and, giving yourself a little momentum.
Nate Reineke (29:36)
Mm-hmm.
Yeah.
Yeah.
Kyle Hoelzle (30:02)
there
and some dry powder for that future rebalance the other direction if needed. yeah, yeah, that's, that's, that's why I mean, that's those are the two main reasons I can think of.
Chelsea Jones (30:08)
and
Nate Reineke (30:15)
Yeah, that's
Chelsea Jones (30:15)
Yeah,
I mean the kind of the cardinal or like the first rule that everyone I feel like learns when it comes to investing is buy low, sell high. And so if your stocks are up and you're out of balance, it's time to sell high and buy, you know, maybe low bonds or
Nate Reineke (30:25)
Mm-hmm.
Yeah, it's interesting because
a lot of times, a lot of times people want, like I was just talking about these kind of investments, real estate or small businesses or whatever it is, people want an excuse to go do something with their investments. Here's your excuse. Go rebalance. Go do something. Like it's time and it costs money to do this stuff, you know, and to do it right.
Chelsea Jones (30:53)
β Yes.
Kyle Hoelzle (30:58)
Yeah.
Nate Reineke (31:03)
And so, β you know, this is like the time where you make a strategic move. It may not be a maximizing move, but it could certainly put you in a position to where you're not riding the wave as much as everybody else did who didn't rebalance when the wave comes. yeah, rebalance every once in a while. It's hard to pin down exactly how often, but I think one to four years is about as exact as we're going to get.
Chelsea Jones (31:30)
Mm-hmm.
Kyle Hoelzle (31:30)
Yeah,
yeah, and I think the big takeaway is just it's about managing risk at the end of the day, you know? Yeah, you, yeah.
Nate Reineke (31:35)
Yes.
Chelsea Jones (31:36)
Yeah.
Nate Reineke (31:38)
Yep.
Okay. Thanks guys. Can I take us out? Yeah. What?
Chelsea Jones (31:42)
Nate, before you do, I have one question.
What is your splurge that you did recently?
Nate Reineke (31:50)
man.
Okay. So, β so, β have you, I don't know if I've ever introduced you to my alter ego, but, β Brittany calls him vacation Nate. Okay. I think maybe I've talked about vacation and on the podcast, but, so I'm like, I'm like the ultra budgeter. Like I have 15 tabs on my spreadsheet that feeds into YNAB that feeds into software. I'm like,
Chelsea Jones (32:03)
Vacation, Nate.
you
Nate Reineke (32:19)
I have scenarios, I have everything. The second my feet touch an airport floor, something happens to me. And so, and I don't know what it is, but β it gets pretty crazy. And so we went to Hawaii this year β with like in-laws, β my mother-in-law, my brother-in-law, the cousins and everything. And we went to the Alani Disney Resort in Oahu.
Chelsea Jones (32:29)
You
Nate Reineke (32:46)
So β you would be shocked how many, β what is it, β condensed milk snow cones that I ate. I mean, I was eating my condensed milk snow cones and then with a β Dole Whip. And then I was eating the other half of Mateo and Kimo's Dole Whips β when they would run off to the beach because Vacation 8 will just buy you another one.
It's crazy. And so that's what I spurge on and I have zero regrets about it. But much like Chelsea and I'm sure Kyle, I save a lot of money because I know vacation Nate cannot be tamed. So that's what I do.
Kyle Hoelzle (33:18)
you
Chelsea Jones (33:23)
Mm-hmm.
That wasn't you, was Vacation Nate. Remember
that was a saying, I think it was when that movie Split was out, in the movie, it's the guy with multiple personalities, that wasn't me, that was Patricia. That wasn't you, that was Vacation Nate.
Nate Reineke (33:37)
β huh.
Hahaha
Yeah. That's right. But I
Kyle Hoelzle (33:44)
Thank you.
Nate Reineke (33:48)
don't have vacation hangover because I know vacation. So like the worst is when my friends will try to get us to go on vacation. I'm like, no, it's not in the budget right now. We already have our vacations are planned in January. And they're like, they're like, man, we can we can cook in the house. We could go to Costco. I'm like, have you met Vacation 8? Vacation 8 doesn't cook. Are you kidding me?
Chelsea Jones (33:58)
Thank
Kyle Hoelzle (34:09)
you
Nate Reineke (34:12)
And they're like, we'll just do it this time. like, that's not how I vacation.
So I still plan. I have no vacation hangover. I come back. It's just whatever we spent. I'm still looking at the budget a little bit, but I plan some pretty big cushion.
Chelsea Jones (34:17)
Yeah.
Mm-hmm.
Yeah, it's the way to do it.
Nate Reineke (34:29)
Yes. Okay. Let me take us out. We are the advisors at Physician Family here with you today and you can visit us and see if you'd like to interview us. You can go to our website at physicianfamily.com and see if we are a match. You can talk to Chelsea, you could talk to me, you could talk to Kyle if you sign up and we would love to have you if you're a physician with children. If not though,
I would love for our listeners to take the time to rate, leave a comment, subscribe to this podcast. It is the only way we can get out there to all of your colleagues and β get the word out. So that is it for today and until next time, remember you're not just making a living, you're making a life.
