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"Real Estate Investing and Financial Planning: What You Should Know Right Now"
The real estate market can feel like a maze, especially when it's paired with the ever-changing financial landscape. From rising interest rates to recession fears, it's easy to feel like you're playing a game where the rules keep changing. If you’ve been tuning in to our podcast (and thank you if you have!), we recently shared insights on real estate investing, retirement planning, and how to navigate the financial world in your 40s. Here are the key takeaways you need to know.
1. Real Estate is Still a Good Investment—Even With High Rates
If you've been hesitating to dive into the real estate market because interest rates are sky-high, here's a perspective shift: don't let that stop you from making a move. Right now, you might be thinking, "Why should I buy a home at a 7% interest rate when I could just wait for rates to drop back to 4 or 5%?"
Well, here's the catch—so is everyone else. When interest rates fall, there's going to be a surge of buyers flooding the market. That means more competition and, most likely, higher prices. So, while you may save on your monthly payment with a lower rate later, you could end up paying more for the house itself.
The takeaway? If you're looking for a primary home or a long-term investment, buy when it makes sense for you financially—not when the rate is "perfect." You can always refinance when rates drop.
2. Bonds: Don’t Sleep on Them Right Now
Bonds have a bit of a boring reputation. They're seen as the financial version of a savings account—low-risk, low-return, and not exactly the stuff of headline-grabbing wealth. But in today’s market, bonds are having a bit of a renaissance.
With interest rates high, bond prices are low, making this a prime buying opportunity. The math works like this: when you buy a bond at today’s higher interest rates (some even around 7%), you're locking in a solid return. And when interest rates eventually come down, the value of those bonds will increase. This setup means that bonds could generate equity-like returns—think 10-15%, all while being lower-risk than stocks.
The takeaway: If you're looking for conservative investments that still pack a punch, now’s a good time to consider bonds.
3. Stock Market & Recession Talk: What You Need to Know
There’s a lot of talk about the economy heading for a recession (or that we're already in one). That can make anyone anxious, especially when it comes to investing. But here’s a little-known secret: the stock market usually prices in recessions months in advance. While you’re reading headlines about economic doom, the stock market is already thinking about recovery. That’s why even in a so-called “bad news” year, the market could still see gains.
What should you do? Think long-term. Trying to time the market is usually a fool's errand. Stay invested, focus on your long-term goals, and don't let the day-to-day headlines throw you off course. The goal is not to be perfect—it’s to be consistent.
4. The ‘Get-Rich-Slow’ Scheme: Building Wealth for Retirement
You’ve heard about get-rich-quick schemes (hopefully not from your uncle who wants you to invest in his “sure-thing” startup). But the reality is that building wealth is about the "get-rich-slow" scheme—steady, consistent investing over time.
Here’s the general rule of thumb:
- In your 20s, aim to save at least 10% of your gross income.
- In your 30s, that should bump up to 15%.
- In your 40s, it should be around 20-30%.
Yes, it’s easier said than done, but even small steps matter. If you’re not saving at all, start with 5% and bump it up as you go. The key is to treat it like a bill—automate your savings so you don’t have to think about it. It’s the time in the market that counts, not trying to time it perfectly.
5. Real Estate & Retirement: A Perfect Pairing (With Balance)
Real estate is an incredible asset for building wealth, but it’s not the only asset. If you’re putting all your eggs in the real estate basket, it might be time to diversify.
Rental properties can provide reliable income in retirement, but pairing that with a solid portfolio of stocks, bonds, and other assets can help balance risk and reward. Think of real estate as one component of a larger wealth strategy, not the whole picture.
For those who aren’t sure how to start, your employer-sponsored 401(k) is usually a great place to begin. Make sure you’re at least contributing enough to get the company match (that's free money). Then, consider opening a Roth IRA if you’re eligible, which grows tax-free over time.
6. Living Below Your Means & Maximizing Your Savings
If you're in your 40s and realizing that you haven't saved as much as you'd hoped, it's time to get serious. The best way to catch up? Live below your means. This doesn't mean you have to live off ramen noodles and drive a beater car—but it does mean you need to reassess your lifestyle.
Your retirement savings rate needs to match the urgency of your situation:
- If you're behind on retirement savings, aim to save 20-30% of your income.
- Cut unnecessary expenses, reduce debt, and funnel those savings into a mix of retirement accounts and investments.
- Treat saving for retirement like a car payment. If you’re willing to spend $800 on a car payment, why wouldn’t you spend at least that much on your future self?
7. Social Security: The Cherry on Top (Not the Cake Itself)
For many, the looming question is whether Social Security will be there in 20 years. The short answer is, probably—but don’t count on it to cover your entire retirement. Social Security was never meant to be a retiree’s sole source of income; it's more like a supplement.
Even if it’s around in the future, it's not likely to cover all your expenses, especially with rising healthcare costs and inflation. Think of it as a bonus rather than the core of your retirement plan.
8. Buying Your First Home: How Much Should You Save?
Should you save 20% for a down payment? While that used to be the standard advice, it's not a hard rule anymore. Here’s why:
- Putting down less than 20% means you’ll have to pay private mortgage insurance (PMI), but that’s not necessarily a bad thing. PMI can be a small price to pay for keeping more cash in reserves for emergencies or renovations.
- Focus on keeping your mortgage payment affordable. Live below your means, even when it comes to housing.
Practical tip: If you’re concerned about PMI, consider paying it as a one-time upfront fee rather than rolling it into your monthly payment. And remember, in most cases, you can refinance out of PMI once you have 20-25% equity in your home.
9. Inflation & Debt: How Real Estate Protects You
Your mortgage is a built-in hedge against inflation. By locking in a long-term, fixed-rate mortgage, you're essentially borrowing money today to pay it back with cheaper dollars in the future. As inflation drives up the cost of living, your fixed mortgage payment stays the same—meaning you're paying off your loan with "cheaper" money over time.
So while inflation can be scary, it’s important to remember that it benefits borrowers. That makes a 30-year mortgage not just a way to own a home but also a financial strategy in and of itself.
Final Thoughts: Get Started & Stay Consistent
Investing in real estate, diversifying your financial portfolio, and living below your means aren’t just buzzwords—they're the keys to building long-term wealth. If you haven’t started yet, don't worry—there's no time like the present. And remember, it’s not about hitting home runs with your investments. It's about hitting consistent singles and doubles.
Transcription
The transcription is auto-generated by a program and may not be accurate to the conversation. To ensure you get all the information from the video properly, you must watch the video.
Pete
Hey guys, thank you so much for tuning into this podcast. Today we have Chris Hall and he is a local Reading financial advisor. He's with Reading Financial Advisor.
It's his own business. He's been doing this for eight years. He's got a plethora, a lot of knowledge to share about financial advising, about retiring.
If you're in your forties, we talked a lot about if you're in your forties and you don't necessarily have everything saved up or you don't have anything for retirement yet, you definitely want to tune in to get some really good nuggets on what you should be doing right now. So thank you so much for joining us. Chris, how are you doing?
Chris
I'm good, man. Thank you for having me here.
Pete
Yeah, you're welcome. Thanks for being here. So Chris Hall, he is a financial advisor for it looks like eight years.
Chris
Yes, sir.
Pete
Awesome. What'd you do before that?
Chris
I spent the first part of my adult life as a pharmaceutical rep. I worked 10 years as a pharmaceutical rep.
Pete
Okay. Awesome. Yeah.
So Chris is with Reading Financial Advisors here in Reading. He specializes in developing investment strategies and wealth management, including estate planning, which is very important. He was born and raised in Reading, California, right here, and is very involved in our local Reading community.
So super awesome. Looking to help people develop strategies to make their money last longer and to help them live gracefully in retirement. If he can help them change their family tree forever when it comes to wealth accumulation, that's his dream.
Personal passions, he's currently passionate about making sure that all of our local Reading youth have enough to eat. Wow. I'd like to hear more about that.
I put on the Chris Hall half K charity event that has raised well over $60,000 for local kids to eat. I'm also the current president of the Reading Sundale Kiwanis, which helps support those programs to feed those kids. Wow.
Topics of interest. I also like to talk about real estate. I own a handful of rentals and I'm currently developing some land over in Enterprise.
Very cool. Where at in Enterprise?
Chris
So it's over by Enterprise High School, and then you go kind of south towards, like you're going to Save Mart, and there's just some acreage tucked back behind there. You wouldn't know it was there unless you were looking for it.
Pete
Yeah. Okay. Very cool.
Chris
I've owned it for like 20, 25 years.
Pete
Oh, wow. Like building some apartments?
Chris
Originally I wanted to do a subdivision back there, but it's going to be too tough because the neighborhood's like 1300 square foot houses and you just can't make that pencil.
Pete
Yeah.
Chris
Not today. So what I'll probably end up doing is I'm doing some lot line adjustments right now because I actually had some parcels, dedicated parcels to bring most of the parcels up to the front where the road is. Oh, I see.
And then I'll put in some duplexes back there.
Pete
Oh, nice.
Chris
And then I'll have a nice little five acre remainder parcel, and then that might end up being like a duplex subdivision.
Pete
Got it. Oh, wow.
Chris
Very cool. So that would be nice if it works.
Pete
How many acres is it?
Chris
Seven acres total.
Pete
Oh, wow. That's a nice little lot of land in Redding.
Chris
Yeah. And so it's where Grace Baptist Church is, used to be Liberty High School.
Pete
Yep.
Chris
So across the street from there, you look back, there's a bunch of oaks back there. I own the oaks. Got it.
Yeah.
Pete
Okay, cool. And then you also are happy to talk about interest rates and how it affects both the bond market and stock market. Right.
Chris
It's pretty important for- I figured it was pretty important for your clients.
Pete
Absolutely, yeah. I mean, for sure, yeah, interest rates is always a big topic. And I'm sure it's a big topic for you guys as well.
Chris
Yeah. So one of the things that I've been doing this for a long time, I actually started investing when I was 16 years old. I started buying, actually when I was 12 years old, I started buying troy ounces of silver with my tip money from my grandparents' restaurant.
Wow. When I was 16, my grandma opened a custodial account for me and was like, hey, he's going to do the trades. The stockbroker was like, I mean, he's 16, he can do the trades.
And she's like, hey, he's going to do the trades. And he was like, yes, ma'am.
Pete
Wow.
Chris
And so I bought Walmart with my first stock when I was 16 years old. So not a bad pick.
Pete
No, no, I'm sure it's done great.
Chris
So, but I really, for as long as I've been doing investments, I've never really been much of a fan of bonds. Bonds have always been kind of like a glorified savings account. If you track it over the last 120 years, it's like just barely above inflation.
And so I've never really loved it. But in this market that we've been in recently, it's been phenomenal to look at the bond side of things.
Pete
Oh, really?
Chris
So yeah, so I've pushed a lot more bonds into people's portfolios in the last year and a half than I probably ever have in my life.
Pete
Wow, why is that?
Chris
Well, so bonds and interest rates, bond prices, interest rates are basically a teeter-totter. So if you've got interest rates going up, that means bond prices are going down. If you've got interest rates going down, that means bond prices are going up.
So we're at this spot right now where the bond prices are really declined because interest rates are so high. So if you go out and you buy a bond, right? So if you buy a bond, let's just say AT&T or Verizon, doesn't matter.
And it's paying roughly 7%. You're getting 7% guaranteed return on your investment from that bond. And that could be a 20 years, 30 years.
To put that kind of a number on a bond for 20, 30 years is pretty unbelievable.
Pete
Yeah, especially when the target inflation is 2%.
Chris
Exactly, exactly. Yeah. Makes sense.
So even your most conservative people, they love a seven or even a six would be fine. The other cool part about it is since the bonds are down low, right? We're buying them at a discount because of where they're at interest rate-wise.
When interest rates start to drop, you're not only going to lock that number in, but your bond value is going to go up.
Pete
So they could sell it for a profit.
Chris
Exactly. Yeah. And we're, I mean, I don't have a crystal ball.
My magic wand's broken. But I would tell you that we're looking at equity-like returns on those bond purchases. Wow.
15%, 10, 15, 20% possibly.
Pete
Yeah, because as inflation comes down, interest rates get better. And then people are okay with a 3% return, maybe 4% return. And so they're willing to pay a premium for that 7%.
Chris
Exactly right.
Pete
Yeah. That's right.
Chris
So it's been really tight. Like as far as with your market, the interest rates have been kind of clobbering you guys. But as far as my market, it's just a lot of times I think working with a financial advisor is knowing where to go because there's always going to be opportunity.
And there are always going to be obstacles.
Pete
Yeah.
Chris
So it's just trying to find the opportunity, the sort of silver lining, if you will.
Pete
Yeah. And there's always opportunity. Absolutely.
In any market. Yep. In any market, there's always opportunity.
Yeah. That's great.
Chris
I think about your market and I think about how all the people who are sitting on the sidelines right now waiting for a 5%. And they need to know that when that goes down to 5%, them and all of their friends are going to come off the sidelines at the same time. Yeah.
And that's going to push, in my opinion, that's going to push pricing up.
Pete
Yeah.
Chris
So whatever you might save by getting a lower interest rate, you're going to turn right around and pay for it in the price of the home.
Pete
Yeah. I just had this conversation with a buyer this morning actually. So he was asking me the same question.
He's like, Pete, so I'm hearing all this chatter about the feds lowering the interest rates. He's like, should I be waiting for that to happen before I purchase? And I didn't really say whether he should or not because I think that you should be looking at the home really.
But in a long term, it's going to be his primary residence. So it's like long term, look for the great house that you want to find for you and your family. Make sure it's affordable.
Because to your point, if the interest rates do come down, which they have been coming down, if we see 5% or maybe in the fours, I personally think that we'll see another 2021 or close to it, 2022, when you're bidding $20,000, $30,000 more because there's maybe 10 offers. Right. Because there is a lot of buyers and a lot of selling buys on the sidelines.
A lot of people that want to upgrade, a lot of people that need to downgrade. And right now, it just doesn't make sense for someone that's sitting at, let's say, 3% to go to, let's say, six and a half or even seven. But if rates go to four, then that gap comes down.
And remember, income has come up too. Right. Income has raised.
And so the affordability might be similar to what it was when rates were at three because income has increased. Right. Absolutely.
Yeah. Yeah.
Chris
Yeah. I mean, I'm sort of a fan of if you have a house and you don't need a house, then that's one thing. Right.
But if you're out there looking for a house, I would tell people don't let the rate stop you.
Pete
Yeah.
Chris
Because, I mean, I've had real estate now for 27 years now.
Pete
Wow.
Chris
My first house was a duplex. I bought a duplex.
Pete
Oh, wow.
Chris
Lived in one half, rented out the other half.
Pete
Yeah.
Chris
And so I've owned real estate since then. And I've picked up a little piece here and there, a little piece here and there.
Pete
Yeah.
Chris
And I would just tell people, like, if you're waiting for a rate, don't worry about it because the rates are going to go up and the rates are going to go down. And when they go down, refinance. Yeah.
You know, and then you're really only kind of with that rate for... I mean, at this point in the stage of the game, you're going to be... Like, if you've got a six, six and a half percent rate right now today, I mean, you really realistically could probably refi that and enter from 12 to 18 months at that four and a half, five percent.
So once again, but all the other people are going to be off the sidelines then. So now you're going to be in a super competitive market. Yeah.
Yeah.
Pete
No, yeah. Makes total sense. But how'd you get into go from being a pharmaceutical rep to being a financial planner?
Yeah.
Chris
So I loved financial stuff from, like, day one. Like I said, when I was 12, I used to take troyances of silver. I would, like, open the paper.
There was a thing called the paper, you know, and I would open it up every day and I would track what the price of silver was selling for. And I would put it in a little notebook and, like, make my own bar graphs. Like, it was pretty nerdy stuff.
And then, you know, 16 years old, buying stocks. I have, like, had absolute crazy stock purchases that, you know, are super great to brag about. And I've also lost, you know, decent money, too.
You know, when you're younger and you just bet it all on black, it sometimes doesn't come up. So that, you know, it was all learning lessons. It kind of just led me into my job as a pharmaceutical rep.
You know, I put together my 401k. It was doing really well because I had a lot of background knowledge. And it came down to, like, almost everybody on the west coast that got hired by Pfizer would call me and be like, hey, I hear you're the guy to talk to about setting my 401k up.
Oh, wow. Yeah. So I started getting, you know, these calls from Fresno and Bakersfield to, like, hey, will you help me?
Pete
Yeah.
Chris
And so I just I just liked doing it. So it wasn't something I was doing for money. I just liked doing it.
And my opinion was of a financial advisor is that you had to go to, like, some special school. Like, I assume that you have to go to USC School of Wharton if you want to be a financial advisor. Wow.
So after I got laid off from pharmaceuticals, I opened my own company. I opened actually two companies. And both of them were fairly successful.
But I wanted more like of a day job with the health care and things like that.
Pete
You opened up two companies for a pharmaceutical?
Chris
No, just for myself. One of them was an online marketing company.
Pete
Oh, OK.
Chris
And another one was called Gritter and Alumni, which is where I put on alumni football games for people in their 20s, 30s and 40s. Oh, that's cool. So, yeah, it was an amazing event planning system.
You know, I learned a lot about marketing doing that.
Pete
Yeah.
Chris
It was really cool to watch people, like, get so excited about putting football gear back on. We would do full contact, full gear games. Yeah.
Pete
Wow, that's cool.
Chris
I did several games where there was over 3,500 people in the stands, too.
Pete
Wow.
Chris
Just to watch two teams. Like, you know, you go to the South, it's so big. Really?
We went to one time, we went to a game in Savannah, Georgia, and we showed up at like 10 a.m. for a 6 p.m. game to get ready. And there were already people tailgating and playing cornhole at an alumni football game.
Pete
Wow.
Chris
So it was pretty fun. So I stopped doing that one specifically because I had two small children. And the year that I had the greatest year I had, I was gone 17 weeks out of the year.
And I'm like, it just wasn't worth it. I could make less money and stay home. And that's what I was.
So I started doing dental equipment. A friend of mine said, hey, you should do this instead. So I did that.
I hated it. Like, I just really did not enjoy dental equipment and supplies. And then I got recruited for Edward Jones.
They call, it was kind of a weird deal. So a nice guy here in town, Scott Brown, his wife, Jill, and my wife at the time, Ellie, they were at some event. And she was talking about the house that they had just purchased.
And my ex was like, didn't you just get a house like six months ago or something? And she's like, yeah, we upgraded it. Which led to the idea of like, well, what does he do for a living?
And then Jill and me, it was like, he works for Edward Jones. He's a financial advisor. You know, Chris needs to be a financial advisor.
And so she calls me and she's like, do you hear about Edward Jones? I'm like, I don't even know what that is. So I thought they were a real estate company, honestly.
So then they just kind of let me know that they would train me. They would help me get licensed, all the things like that. And I was like, this is perfect.
This is exactly what I wanted to do. And so I joined up and I've never looked back. My only regret is I didn't do it sooner.
Pete
So Edward Jones is an amazing company.
Chris
It's a great industry to be in. I'm a coach at heart. So I coach a lot of sports.
And I'm always interested in the community and stuff like that. So as a coach, as a person who's interested in teaching people things, it's a great way to quote, unquote, make a living. I love Edward Jones.
I worked for him for eight years. I did decide to go out on my own this year. Oh, wow.
I didn't realize. Yeah. So Reading Financial Advisors is my company.
And I left Edward Jones to start it. That's awesome. It really started out as my location was pretty bad where I was at.
I was right next to the Walgreens on Churn Creek in Cyprus. And so we literally had like drug addicts and homeless on our porch like every day. Wow.
And I know exactly that location too. Yeah. Yeah.
We tried so hard to get out of there. I had the support of my local regional leader to get out of that spot. But then, you know, you run into the, you know, Edward Jones is a really, really big company.
And so I had found a really nice location that was like looking over the river. It was like a good size rent. And it took them about nine months just to come back with a tenant improvement quote.
Oh, wow. And we're talking like new paint, new flooring. They wanted some new doors in there.
Yeah. And the quote was $249,000. Oh, my gosh.
Yeah. And so the way that that works is that they'll pay for it up front, but ultimately comes out of my profit and loss statement.
Pete
So you eventually pay for it. Yeah. Yeah.
Chris
Yeah. So I was like at that point, that was when I was like, hey, listen, I'm either going to be stuck here or I'm going to pay a small fortune to move. And if I'm going to pay a small fortune to move, then I'm going to do it for me.
Yeah. Makes sense. Which is what I did.
Wow. Yeah.
Pete
Nice. And where's your location at now?
Chris
It's 5000 Bocelli Lane in suite 104, which is on the ground floor. It's right across the street from the Costco, the new Costco. It's right down the road.
Pete
Yeah. Okay. Very cool.
So do you own that building?
Chris
It's like a business condo. So kind of like your situation here. So I do own the business condo.
Pete
Got it.
Chris
Nice.
Pete
Very cool. Switching gears a little bit. Thank you for sharing that story.
Chris
Sure.
Pete
It's a pretty cool story how you got into the financial planning. What are your thoughts on the current financial market? I know there's a lot of worry about maybe a recession, a lot of worry maybe the stock market crashing.
It's a broad question, but maybe touch on recession fears, economic slowdown. What are your thoughts?
Chris
Sure. Well, to be fair, we are already in a recession. The government has acknowledged it, but we've been in one for a while now.
It's just they kind of moved the goalpost on it.
Pete
They moved the dial.
Chris
Yeah. They're like, this isn't a recession anymore. This is.
And so we've kind of already been in one for a while. It is getting a little bit deeper, and that's what the Fed wanted to see. So that's happening.
And that's why the Fed is now talking about lowering interest rates in the September meeting. But economically, we are already kind of in one. And you can kind of just tell if you don't watch financial stuff and you don't get up every morning and look at Yahoo or MSM or something like that, or MSN, you're going to see people are laying people off.
When you see people like 1,000 people laid off, 10,000 people laid off, 536 stores are closing. You know what I mean? That kind of thing.
That's a recession. And so we're in one already. Economically, the market is typically about anywhere from six to nine months ahead of the economic cycle.
So if you notice, we've had nothing but bad news all year long. Yet the market's up about 15%. Yeah, yeah, yeah, yeah, yeah.
So the market kind of prices things in as they go. And the market, as I see it, is saying, hey, we know the recession's here, and it's also going to get worse. But we also know it's going to come out of it.
The sooner we get into it, you know, officially, the sooner we get into it, the sooner we get out of it. And so that's where my head's at as a financial planner, is like, OK, what are we in right now for the next six to nine months? Not like, what are we in right now so we can be right now?
Because right now, I was planning six months ago. When things started to waffle in November of 2022, 2021, excuse me, when they started to waffle, I started making changes right then and there. I was like, you know, inflation's coming.
We're going to have issues. Let's start moving the stuff around. And part of being a good financial advisor is not only growing people's money, but saving it from loss when it's time to lose.
And the market does go down. It definitely does. But you can make certain moves to make it go down less.
You know? And then, like right now, again, going back to the whole bonds thing, you can also make certain things that you know are a winner. They just may not be a winner today or tomorrow.
I always say, like, you know, it's not timing the market. It's time in the market. And so having that long-term focus, but also kind of like looking quarterly, semi-annually at what's going on with the economic cycle.
Pete
Yeah.
Chris
You know, it's a good blend of it.
Pete
So what I heard you say is that obviously we're still in a recession and the markets are kind of six to nine months ahead. In other words, they're priced in six months in advance. Is that what I heard you say?
Chris
Yes. Other than like, you know, you're going to get some volatility. Anytime there's uncertainty, there's going to be volatility.
So kind of going back to like what we're talking about with the market itself collapsing. Like I, first of all, don't believe in such a thing as collapsing. I mean, it's definitely going to recede.
It's going to come back and it's going to grow. It's going to recede and come back. It's going to grow.
But ultimately, it's going to grow. I always tell people, when you hear the word correction, think sale, right? So if I like a certain kind of soda, right?
Like I like Diet Coke and it normally costs $8.99 for a 12-pack. Well, when it costs $7.99 for a 12-pack or let's say $4.99 for a 12-pack, I'm just going to buy more 12-packs of Diet Coke, right? Because I like that and it's at a good price.
But when we get in the market, we're so emotional about it, right? So we like Google and we like Facebook and we like these other things. And I'm not making a recommendation there just so we're clear.
I'm just saying, you know, we like certain things and then they lose value and we automatically want to turn around and sell them. And I say, well, would you go take all the Diet Coke out of your fridge and go sell it back to the store for $4.99 when it's on sale? It's like, no, we wouldn't do that.
It doesn't make sense.
Pete
Yeah, I agree with you wholeheartedly. And for me, time in the market versus timing the market makes complete sense. Because if you go back from the beginning of the stock market, it's never like, you know, it's consistently growing every, you know, on average every year, right?
So like time in the market, I think with a lot of maybe people my age or, you know, I'm 43, 44. So like these are very important years for my retirement, right? So like any money that I get that's over and above to be able to put away, right?
I think for me and there could be other listeners that also have this same mindset or challenge in their mind is like, you know, I always think I don't want to necessarily invest this money because I may need it. If my business goes down or as reserves or something, what happens if I need to get it, right? I think that's a big question that people may have when investing.
Maybe they don't want to risk the money in the market because what if they need it?
Chris
Right, right. And that is something that we always want to make sure as a factor of investing is what we call timeline. How much time do you have between when you want this money and when you don't want it?
Or when you don't want it and when you do need it. And so like if, you know, you're going, like something I run into all the time is people who are like, hey, I have this money, but I want to use this as a down payment on a house. Oh, yeah.
Well, they can turn around and tell me they need it tomorrow. You know what I mean? They could find that house tomorrow.
Yeah. Or it could take a year. You know what I mean?
But either way, we're not going to put all that into the market and hope the market does well in that anywhere from one day to one year. Yeah. So we need a longer timeline for those kinds of investments.
So with those folks, I typically will say, OK, let's put it into a nice money market. You know, typically speaking, the banks have money markets at like 0.1 now, you know, maybe 0.01 to 0.1. You know, we can find money market funds that are paying 5%. And a money market is just simply a place where you can put your money.
Yeah, it's exactly. It's like the old fashioned savings account. All of the things that you look at is that, you know, let's go.
I used Federated. There's one, there's tons of JP Morgan has them, all those things. And what happens is they invest all the money into things that have real stability to them.
So like T-bills, T-bonds, they buy their own CDs. They do all this stuff with the money. And so let's say that they make like five and a quarter percent on average, and then they're going to basically give you five.
So they're just running the money, kind of like doing it for you. And they take a quarter point for themselves. And the rest of it comes to you in 5%.
Makes sense. So whereas the banks, you know, they're typically doing exactly the same thing, but they're only going to give you 0.1. Correct.
Pete
Yeah, that makes a lot of sense. So what you're saying is timeline, you know, how soon am I going to need that money? Or when do I think I'm going to need that money?
I think for me, I just need to make sure I live below my means. That's true. You know what I mean?
So like, it's conservative as possible, keeping my monthly expenses as low as possible so that I do have extra every month.
Chris
Right. And I mean, the rule of thumb is that if you start in your 20s, as long as you put away 10% of your gross, you'll totally be fine. And then once you get to like mid 30s, then that number needs to be 15% of your gross.
Oh, wow. And so if you are...
Pete
So you keep increasing it.
Chris
Yeah, because you have to catch up.
Pete
Yeah.
Chris
So like...
Pete
If you're starting in your 30s.
Chris
If you're starting in your mid 30s, you need 15% because...
Pete
If you're starting in your 40s, probably like 30, 40%. Yeah.
Chris
So and that can be, you know, like when you're young, you know, you've got a 401k at the local place that you're working at. Let's say, let's call you having a career, not like, you know, like a McDonald's job or something like that. You know, they're going to give you some match too.
So let's say you put in 12%, they put in 3%, then they're giving... That's 15%. That's a good number right there.
Oh, yeah. So those are good numbers to kind of stick with as far as investing. You know, when you get into situations where people have like more money, like let's say they have like a half a million dollars sitting in the bank account.
Well, that's when we go, okay, how much of this do you really need as savings? Quote, unquote, emergency cash. Right.
Then that money we would put into something that we would need. Long term. Like some long term ROI on.
Yeah. Okay. That's cool.
Nice. And I mean, believe me, there are... So when 2008 happened, trillions and trillions of dollars left the stock market and went into savings accounts.
Wow. And has never come back.
Pete
It's still in savings?
Chris
Yeah. No way. That was a huge deal.
2008, 2009 was a huge deal. People left and never came back. And I still have people tell me, I lost everything in 2008.
And I often say, did you have a financial advisor? And the answer is always no. And then I say, did you just take it out?
And they're like, yeah. And I'm like, well, that's why you lost, because you took it out. So if in 2008, which is by far the worst time period of our lives, if you had just stayed in, not made any changes, not tried to take the obstacles and turn them into opportunities, but just left it.
Pete
Yeah.
Chris
You would have had your money back in three years, which again, while you're going through it, when you're going through it, that's a long time, right?
Pete
Three years, yeah.
Chris
But now you look and go, that was 2011. It's 24 now. That wasn't that far ago.
Pete
And then you had a ride. You had an amazing run.
Chris
Yeah. And then I was going to say, three years later, you doubled again. So I try to put it in terms that people can understand.
Say if you had $300,000 in 2008 in a 401k, and it went down to 150, and you were terrified. If you just left it three years later, 2011, you'd have been back to 300. 2014, you'd have had $600,000.
Wow. Roughly. Those are just rough, based on what happened in the market.
Pete
Yeah.
Chris
Everybody obviously did a little bit different.
Pete
So the point to all of this is be patient.
Chris
The term I like to use is get rich slow scheme.
Pete
I like it. And there's many things that I've done where I've tried to get rich quicker, and it's slowed me down even faster. Yeah, I agree with that.
Chris
Yeah. I've done that too. That's what I was saying.
I've really early on in my investing, you know, I think I tell people this too, is like, you know, you're looking, a lot of people sit around and they try to look for the edges. And it really is a slow and steady wins the race type of a deal.
Pete
Yeah.
Chris
Not that you can't find an opportunity here and there, but I mean, I have people who call me and they're like, I want to get this penny stock. And you're like, okay, why? That's, I think, the value of financial planning, like where we focus on the goal of retirement instead of the goal of performance.
So if you focus on performance, you're always going to be looking for an edge. But if I can show you on paper how 6% to 8% long-term gets you to your goal, then we don't have to play with the edges anymore. Yeah.
And it makes for not only a better portfolio overall, but it makes for a better ride.
Pete
Cool. So I got some more questions. This is good.
You work with investors and families saving for retirement every day. Where does real estate fit in for someone that is wanting to retire? Or what's your opinion on real estate in general and for retirement purposes?
Chris
Yeah. So I think you would talk to most financial advisors and they would kind of like shun real estate, right? Because quite frankly, they don't get paid on it.
Pete
Yeah.
Chris
But I personally own real estate myself. I would tell you that, you know, I do this all day long. And I would tell you that most people who are doing well as a retired person will typically have rental income as well.
So I put it in the, you know, we all say don't put all our eggs in one basket, right? So I believe that the stock market is a basket. And I also believe that the real estate market is a basket.
And so I wouldn't tell anybody to put all their money in the stock market. I wouldn't tell anybody to put all their money in the real estate market. Even though you and I both know, like if you're a realtor, all your money is in a realty, right?
I'm like, hey, you want to put any money in that simple IRA? And they're like, no, you know, I can go buy another rental. And so I would say that, you know, it has to be a complementary piece to the portfolio.
And not that everybody has to have rentals. But I would tell you that every time I do a really successful, like I'm talking like successful to where not only are they going to retire fine, but their kids are going to be fine too. Oh, right.
That's almost always including real estate as well.
Pete
Yeah, I definitely agree. I think real estate is a big part. But I also think financial planning and in the market is amazing too.
I mean, for me personally, with real estate, because I'm in mortgages, it's just something I know more. And so I think I'm more weighted in the real estate game than it is that I am in equities or in the stock market personally. There's been times where I've been in the stock market, you know, like right now I'm probably 90% real estate, like what you're saying.
But I think it's because I don't know the stock market and I need to maybe get to know it more. Right.
Chris
And I would say like, you know, again, just diversifying the portfolio, you know, the tool that you have at your disposal is the 401k.
Pete
You know what I mean?
Chris
You can put a lot of money away as a deferred comp, you know, so you don't get paid. Right now, you know, you could be in a tax group. I'm not making any assumptions.
But I mean, you know, if you make decent money, you know, you're looking at 50% tax between state and federal. So to defer that to a time when you wouldn't pay those kinds of numbers. Makes sense.
You know, it makes sense to you right now. But then also, it's also building up that other side of the equation. Yeah.
So that, you know, like that's I would tell people who are heavily real estate. I would say, listen, let's open a 401k. Let's open up a simple IRA.
Pete
SEP would be great. Yeah.
Chris
Something like that. And just, you know, because again, if every dollar you put in yields a 50% tax savings, then why wouldn't you just max that out? Why would you want to give that money to the government when you could give it to yourself?
Pete
I'm wondering what the current statistics are right now for people turning 60 to 65 and their retirement savings. Do you do they have enough or will they have to keep working?
Chris
I don't have the statistics by any means memorized or like that. But I would just tell you the feel for it. You know, there was a generation that saved everything.
And then this generation coming through right now, it's it's hit or miss for sure. This is a generation that's retiring right now that was told by the government, hey, you're paying social security. We'll take care of you.
Yeah. And they believed them. Unfortunately, they did.
They believed them. So I would tell you that there are a lot of people in their 60s and 70s that don't have enough. I would say far more than need to be.
You know what I mean? And we actually have, you know, millennials and Z's even who are saving, who have more savings right now than the average person in their 70s. Wow.
Pete
So why do you think the millennials and Z's are saving more?
Chris
Well, they don't have a lot of costs. So most of those people are actually staying home with their mom and dad still there. You know, they've got a job, but they don't want to go anywhere.
Yeah. And so they're just putting money away or they're buying real estate and not even living in it. They're just buying rentals and stuff.
Pete
So yeah.
Chris
So I think that they're doing better. They've got a better handle on it. Yeah.
Like I said, your generation is pretty good savers. I'm kind of I'm kind of in the I'm on the outside of your generation. I'm right there.
I'm an ex. But OK, but I mean, you know, we're pretty good savers. Yeah.
But the people above us definitely believe that the government was going to take care of them. That's unfortunate. So so I've seen a lot of people working into their 70s.
And that's unfortunate.
Pete
It definitely is unfortunate. And I mean, I see it, too, you know, with I get calls and, you know, housing is a big challenge for some of these retired people as well. Here's a question.
Can the market keep going up? If so, how and why does the market keep going up? I get this question often in real estate for home values.
I'm curious why the market over the last couple of hundred years consistently increases over time.
Chris
Yeah. Well, the base layer to it is good question, by the way. The base layer of all of it is inflation.
Right. So we all have the person in our life that's like, I remember when I could buy candy for a nickel. You know what I mean?
You know, I bought a candy bar the other day. It was two dollars. So the base layer of the growth of the market is inflation.
So the reason we're in the market, though, is because consistently over time, the market has always beat inflation. Why do you think that is? Well, so when we buy the market, right, I think that part of it is the misconception of what the market is.
Right. So we're looking at a 30,000 foot view when we say market. Yeah.
And so you just have to break it down and go, OK, listen, I'm going to buy a mutual fund or some stocks and I'm going to own part of Apple. I'm going to own part of Verizon. I'm going to own part of McDonald's.
Yeah. And so being an owner in those companies, those companies are constantly growing. And so the value of that company grows as it brings in more revenue, cuts its cost, et cetera.
That's why when you see a recession, you see the first thing that goes is jobs. Yeah. Because it's cutting costs so that the revenue can be better.
Pete
Yeah.
Chris
So the company's growing and that's what we're investing in is big companies that are growing. And so that's what the market's doing. It's just an overlay of all these small companies or big companies or middle companies all growing together.
Yeah. And it's the same kind of thing. Like, you know, typically speaking, if you went to a restaurant like five years ago, it was like $60 to go for two people to go have dinner and maybe a glass of wine.
Now it's $120.
Pete
Yeah, at least.
Chris
$100 at least. Yeah. And so that tracks all the way across.
You know, Coca-Cola's cost more money. McDonald's costs more money. You know?
Yeah. You know, so when they increase those revenues, they're increasing their profits. They're increasing the company's growing.
That reflects in their stock price.
Pete
Makes complete sense. I'm going to say it in a different way. So because of inflation, the government has a mandate to do 2% inflation every year.
They have to create inflation is what their mandate is. One of their mandates. Money goes out and eventually the smart people get the money.
Right. Right. And the smart people create businesses and those businesses grow.
And then that money filters up, up, up and into the market. Absolutely. And so in my mind, the way I think of it is consistently more money coming out into the economy and it wasn't there before.
And eventually it ends up in the market.
Chris
Right. Right. A lot of it does.
Right. Investors, 401ks, pension plans, etc.
Pete
It gets spent. We spend it and then it's spent until someone puts it into the market.
Chris
Right. That's right. Yeah.
That's right. Or it goes into, you know, or that money. So I would say like, you know, we give about half our money away in taxes and the other half we give to corporations through purchasing.
You know, that's why if you look, I mean, you know, in your job, like, you know, credit card debt is at an all-time high right now because a lot of people are used to having all the things they want. They're not used to that price increase.
Pete
Right. Right. Right.
Chris
So, and when people talk about 2% inflation, I always try to track it back and be like, yeah, that's on top of the 40% inflation we just went through.
Pete
Exactly.
Chris
It's only 2% on top of whatever. Yeah.
Pete
It didn't slow. It didn't go with the opposite. It didn't deflate.
Chris
Yeah.
Pete
It actually is on top of, yeah, all the prices that did go up.
Chris
Yeah. So the two things I talk about with this huge inflationary period that we went through is the number one thing that people need to understand is that the government just did one of the largest tax hikes they've ever done. So by pumping all that money into the economy and growing all of that inflation up, all of the things that we do are transactional in base, right?
And the government gets a piece of that. So if you're a corporation and you made $200,000 this year, but next year you make $300,000, that might even put you in a new tax bracket. And so they're not only getting the additional $100,000 in revenue of taxes, they're going to get the new tax bracket too.
So that was a giant, that was a very sly way of increasing tax basis.
Pete
Well, not only that, but they're able to take those new dollars to pay off old dollars of their debt.
Chris
Yeah. And it would have been nice when we were at 0%. It would have been nice if we refinanced our debt, but we did not because the person that was in office at the time, everybody didn't like him.
And so they didn't listen to a very smart idea that he had because they didn't like him and they could refinance trillions and trillions of dollars of debt at zero. Yeah. Yeah.
And now we're refinancing at six.
Pete
Yeah.
Chris
Trillions of dollars of debt. Yeah. So yeah, pretty crazy.
But the other thing to kind of like go into with the companies constantly growing and we're investing in the companies is that people will often get into, like we talked a little just briefly about that. We're in election year. The market doesn't like uncertainty.
So you're going to see because like everybody knew when they got Trump, they were going to get this.
Pete
Yeah.
Chris
And when they got Biden, they were going to get this because we've already seen it because they've already done it.
Pete
It's priced in.
Chris
The minute Kamala came into the situation immediately, like market started waffling. Confusion. Yeah.
Because it doesn't know what she's going to do. I mean, we got the left saying she's going to do this and the right saying she's going to do this. She doesn't even say what she's going to do half the time.
You know what I mean? And when she does, it contradicts the last time she talked. So the market hates that.
That's why the market's all over the place. But once whoever they pick the president, whenever it's done, said and done, then the market will settle, usually settle right back down. I don't know if you remember when Trump got elected, but the night he was getting elected was such a huge surprise.
The S&P 500 and the NASDAQ and the Dow, the futures part was just like bottoming out. Like the news was all over. Like the futures were like so bad.
This is going to wreck the economy, et cetera. By the time the market opened, it was actually up a ton. So because like when it was happening, people were like, oh my gosh, what's going to happen?
Uncertainty, right? But the minute it was a done deal, certainty, you know, market goes right back up. So yeah.
Yeah. Wow.
Pete
Yeah. And I actually remember that when Trump got elected, within a very short time, interest rates went up almost a full percent that year. 2016 is when to 15, 16 interest rates went up.
The reason why is because they knew it was going to be a booming economy. And so they were pricing in inflation increasing. Right.
And so that the interest rates went up.
Chris
Yep. And I was pissed. And the other thing to consider, especially since this is the podcast we're on right now, is that, you know, with interest rates where they're at right now, they're stifling the growth and they're stifling inflation.
But it hasn't really changed the monetary policy of the government. It's just the Fed that's trying to control this right now. The government still taxes and spends like crazy.
Pete
They're still spending like crazy. It's actually inflationary.
Chris
Yes.
Pete
The spending.
Chris
Exactly. And so while the Fed's trying to hold it off, it's still happening. On the other side.
And when the Fed does release, you're going to see inflation go almost immediately back up again. I mean, we probably won't see levels that we saw recently because— Hopefully not. I think they said like 60% of the money supply that's in right now wasn't existing in 2020.
Like 60% of our money supply didn't exist four years ago. So you're not going to see that kind of inflationary, but you will see inflation again. And so I try to remind people that the two people that win in high inflationary periods are the government, because they get more taxes, and the people who owe money, because that money is worth less.
So perfect example is if you buy a house that's $600,000 and it costs you a dollar to buy a candy bar, you need 600,000 candy bars to buy that house off. If that candy bar now costs $2, the debt didn't change. Your $600,000 loan that you owe the bank is exactly the same as it was, but now you only need 300,000 candy bars.
So the debt itself is less, even though it looks the same on paper, it's actually less.
Pete
Yeah. I was just on a call a couple of days ago with a super smart guy that's in the business, and he was explaining this. And yeah, a 30-year mortgage is a hedge against inflation, because you're borrowing for 30 years out into the future, and 15 years from now, there's going to be a lot more dollars out there, but you're paying off something that you borrowed 15 years ago.
Chris
Yeah.
Pete
So it's a genius way to short the American dollar. You're shorting the dollar with a 30-year mortgage.
Chris
Right. You really are. I mean, right now, definitely, but three years ago, four years ago, oh my gosh.
Pete
Oh, you were completely- You're really getting free money.
Chris
If you have a loan right now that's in two and a half and three and a half, you're probably getting free money right now.
Pete
Yeah. Yeah, because their income's gone up.
Chris
Yeah. There's this fun trend going around on Instagram, which means it was, according to my kids, which means it went around on TikTok six months ago. But the Instagram thing is people will go into their Walmart cart and they'll reorder everything to see how much it costs now versus what it cost like four years ago.
And it's like $100 versus like $400. It's like a significant jump. It's not just like 100 versus 160.
It's like 100 versus 400. Wow. And so once again, putting that back into debt, if it took $100 to buy groceries, now it takes $400.
Like your debt's really very much lower than you think it is. Yeah. The number may still be the same, but the actual debt itself is much less.
Pete
The challenge I have with this, it makes sense what we're talking about, and I completely get it. But explaining this to a first-time homebuyer is very challenging because there's so many things to learn and so many things. I mean, a mortgage, just that itself is amazing.
Chris
Yeah. You know? Yeah.
I mean, going back to kind of the investment side of it, not necessarily the first-time homebuyer side of it, but the investment side of it is, what other investments can you get that kind of return on it with only 10% or less of the money invested? You know what I mean? You can't buy a stock.
You can't buy $100,000 worth of stock with $3,000. So you know what I mean? So you're leveraging the bank's money to do that.
And again, it's costing you something. But luckily for us, we're in California where that's going to probably outpace just about any interest rate you might pay. Yeah.
At least again, short-term wise, we might be in a bad interest rate market, but we can always refinance it in a couple of years. And again, now California real estate's probably going to outpace your mortgage. So if that's the case, then once again, if I know that my mortgage is going to go down at about the same rate as the market's going up, then I know that I'm actually making money on the deal if not.
Totally. Yeah. And if it's a rental, then you're depreciating it.
You get a bunch of extra tax benefits to it. Yeah. So I would just say the biggest thing to the question you kind of just said was like, just start working with somebody and get a relationship with them.
Let them coach you up because guys like Pete, they know what they're doing and they know how to get you into your first home, but they also know how to get you into your seventh one. Absolutely.
Pete
What are some practical tips as a financial advisor for average person that only has a 401k for their retirement and maybe owns a home? What else should they be doing?
Chris
So I think you had already mentioned living below your means, trying to have some residual income to invest. First of all, most people, I would say 90 to 95% of people that I talk to are not maxing out their 401k. So they're only doing the bare minimum to get the match, which is great.
I mean, you definitely want the match because that's free money. You definitely need to take that. So if you baby step it in, the first thing you need to do is get your match.
The second thing you need to do is, in my opinion, open up like a Roth IRA.
Pete
Okay.
Chris
And the reason I say a Roth IRA is because if you look at how things are taxed, Roth, you put the money in after tax. If you're young, especially, right? If you're older, it doesn't matter as much.
But you put the money in after tax, it grows tax deferred and you take it out later on in life tax free. So again, I always just do simple math. I draw $1, then I draw $2, I draw $4, $8, $16, $32.
That's a doubling effect. Okay. And I say, okay, which one do you want to pay taxes on?
And everybody's like, I always want to pay the dollar. That's a Roth. But we all do the $32 one.
We all put our money into the 401k, which again, you know, if we're talking about compensation and we're deferring it for taxes, it's one thing. But if you can eat the taxes now, you should 100% do that.
Pete
So the question is, will taxes be more in the future or more today?
Chris
That's the second question I always ask. That's the exact second question. And it's always going to be more.
The governments never seem to figure out a way to like cut our taxes. They always seem like they're cutting our taxes, but the next thing you know, they're right back up. So going back to what I'm saying, it's like, so first thing is step, baby step, I would say is like, get your match, you know?
And if you don't work for a company that has a 401k by now, you should definitely look around. Because it's so prevalent. And in California, they have to provide a plan, but it doesn't have to be matched.
So I would definitely look for one that matches. For how many employees? I think it's like four or five employees now.
That you have to have. Yeah, you have to have something in place.
Pete
For retirement.
Chris
Yeah. And California has a plan that you can get into. It's kind of a pain, but you can check the box.
Pete
And that's something new. Correct.
Chris
Yeah, I heard about that.
Pete
OK. Yeah.
Chris
But like here locally, you know, just to give a shout out to them, but like Wind River, you know, the Redco people and stuff like that. I mean, they're matching like 7%. So if you're putting in 10 and they're putting in 7, I mean, that's a huge number.
That's huge, yeah. And so another thing that people don't think about is profit sharing. So a perfect example of that is Winco here in town.
So Winco people, they're making the same wages as somebody at Costco or probably Safeway. Maybe they're not even making as much as people at Safeway. But at the end of the day, they're getting profit sharing.
They're getting all this money from the company growing. It's going right back into their things. So I mean, I know people who worked for Winco for 20 years who have well over a million dollars in their savings plans.
Yeah. So I mean, that's huge. Yeah.
I mean, like, again, if you take somebody at Safeway or Raiders or whatever, they don't have a million dollars typically.
Pete
No, no. And I agree with you because I've done loans for people at Winco. I'm like, you have how much in your 401k?
Did you add a zero? What's going on? But you're right.
It's profit share. It's how they got there.
Chris
And the third piece I always tell people to look at is the government way. Because almost all governments overpay because they're not paying for it out of their pockets. They're paying for it out of our pockets.
So the wage itself is overpaid. And then on top of it, then they're going to give you some sort of 401k maybe. They're all 457.
They're probably going to give you some sort of pension. I mean, we have people right now in the city of Reading who haven't worked in 10 years who make a quarter million dollars a year off their pension. You know what I mean?
And they're still like 60. You know what I mean? You can actually look all that up and see.
But I mean, so consider that route if you have the potential. You want to look for retirement.
Pete
Yeah.
Chris
But going back to your original thing, I would say get your match in your 401k. The next thing I would say is open a Roth. Max that out for you.
Max that out for your spouse. And if you're now sitting there saying, hey, I want to put more money in, I'd go back to the 401k. And then you can choose whether you want that money to go into a Roth 401k or a regular 401k based on taxes.
Max that out. And if you still have money after that, that's when we start opening what's called a brokerage account. So it would operate the same way as a 401k.
It just doesn't have that tax umbrella over it.
Pete
Interesting.
Chris
Okay.
Pete
So the Roth is super important. After you get the 401k, you can still have money left over. Start that Roth as soon as possible.
What's the max right now?
Chris
I think we're at 7,000 for a Roth. And then I think you get another 1,000 if you're over 50.
Pete
Oh, got it.
Chris
They change it so often. I literally check it every single time. Wow.
Yeah. I don't memorize it anymore because they change it every year. Yeah.
Pete
Okay.
Chris
All right.
Pete
Do you recommend your clients to save 20% of their purchase price before they purchase a home? Or when would you advise your customers to purchase their first home?
Chris
So I would definitely defer to an expert. That's not really my area of expertise. So I don't usually go there.
I feel like when I was younger, I always felt like I had to do the 20% thing. And now I don't even think twice about not... I mean, if I can get away with putting zero down, I probably would.
So it just depends on... You guys run the numbers and you know what they can afford. I typically will do believe that the numbers are usually a little bit too generous.
In other words, they say, hey, you can afford a $3,000 payment. Maybe not. Maybe it's more like 2,500.
Pete
Oh, for sure. The bank will approve someone more than what they typically want to spend. Right.
Yeah.
Chris
And then I would tell people, just be really careful with that. Because I know that you know this too, I'm sure. But if you tell somebody that they can spend $500,000 on a house, all they start doing is looking at $600,000 houses.
Pete
Correct.
Chris
So it's like, you know what I mean? Like if you said $500,000, maybe go look at a $450,000 house.
Pete
You know what I mean?
Chris
Be a little bit more conservative, especially if we're talking about a first home.
Pete
Oh, for sure.
Chris
Keeping it down as low. There still are houses in this town for $280,000. You know what I mean?
Pete
$250,000, $280,000. I probably do one or two loans a month for in the $200,000 range.
Chris
And those houses will be tremendous rentals down the road. Oh, big time. You know what I mean?
The ones that are at $600,000 right now probably wouldn't be a great rental five years from now. Correct. But the ones that are $280,000, $300,000.
I mean, I live in a neighborhood where there's houses for $380,000 to $420,000. And I mean, you could buy those all day long and rent them. So I would just consider...
If you're looking at a home buyer, don't... The other thing I think is really odd is when people go try to find the crazy land out on the acreage. And that's cool if you want to live out there for 30 years.
But you got to sell that at some point too. So be careful with those way out in the ways, mobile homes. So this is my opinion.
Pete
Well, that and the insurance cost is bad. The farther away, farther out, the more expensive the homeowner's insurance will be.
Chris
Yeah. Isn't it incredible? I mean, really, I had a client who had $1,200 a year homeowner's insurance at Lake Tahoe.
Not Lake Tahoe, but Lakehead. Lakehead. At $1,200 a year.
And now it's $1,200 a month. Holy cow. And it's like $15,000 a year now.
Wow. So yeah. So people should definitely be careful where they're going.
Yeah.
Pete
I agree. I agree on the affordability thing. Live within your means.
You don't necessarily need to save 20%. If someone asked me, should I save 20%? I always say, no, absolutely not.
Keep the money in reserve. Make sure you have a payment that's affordable. Yes, you'll have mortgage insurance.
But that mortgage insurance isn't saving you the comfort that you have of that reserve and the account.
Chris
Right. I would even say to pay the mortgage insurance upfront as a lump sum instead of paying that monthly because then you pay it the one time and then whereas if you pay it monthly, if they don't check it for you. You're better at this than I am.
But some of them, they say, hey, listen, I'm an 80% loan to value. They go, you're right. Let's just take it off.
But most of the places are like, yeah, so what? You have to refinance it and reappraise it to get that ticket off.
Pete
So FHA loan, you can't get rid of mortgage insurance. You have to. It's for the life of the law.
You have to refi. On a conventional loan, yes. You have to have it for two years.
After two years, once you have 25% equity, you can get an appraisal and the mortgage insurance will be removed.
Chris
So like right now, it wouldn't matter. You just pay the monthly mortgage insurance because you're realistically going to refi it anyway.
Pete
Most of the time, yeah. And I do show customers the upfront versus the monthly mortgage insurance. And most of the time, they'll pick the monthly because obviously we're in a higher interest rate environment.
If they pay... Right now, if you buy out the mortgage insurance that one time, like you're saying, it's about three to four years before it pays for itself.
Chris
Right, which is not too... Again, if you have the idea that this is going to be a long-term home that I either A, own or B, own and rent, you want to pay that upfront if you can.
Pete
Yeah, when rates were at 2% and 3%, I was doing upfront mortgage insurance all day long.
Chris
I refinanced every property that I owned during that time period. And I mean, the only thing that I wish I had done differently and I wasn't thinking about it at the time, I was just so happy to get 2.875 everywhere. But the one thing I wish I'd have bought points, I wish I'd have paid some points and got it down to two and a quarter or whatever because points were cheap then too.
Pete
Yeah, yeah, they were cheap. Exactly.
Chris
Yep. So that's the one thing I did. So if it happens again, I'm going to refinance everything and pay the points.
Pete
I think we talked about this. Basic strategies for someone in their 40s should start doing right away who is behind and does not need, not have anything saved for retirement. So we're talking about someone, what would you call those?
Not millennial, is that a millennial?
Chris
I think 42 still X.
Pete
X, yeah, Gen X, yeah. So Gen Xers that haven't really saved.
Chris
I would say start now. And then what I would say is you don't go to the gym, put 400 pounds on the bar and just go for it, right? That's how you tear your shoulders apart.
But you got to start somehow. So what I would say is if it's not going through your payroll system, just take it out of your payroll. But if it's not going through payroll system, like they don't offer 401k or whatever, treat it like a bill.
Treat it just like a car payment. If you're putting more money into your car payment than you are your 401k, you've got it all wrong. At that age, yeah.
You've got it all wrong. You know what I mean? 750, I mean, it's not, I think the average car payment now is $500 a month.
Pete
No, it's more than that. It's like 800.
Chris
Yeah. So I mean, $800, if you were doing that, if you were just saying, listen, I'm going to just going to drive this trashy car for five years and take the $800 and put it into your 401k, it would drastically make a difference in your retirement. Drastically.
Pete
Yeah.
Chris
Drastically.
Pete
Yeah, that's really, really good advice.
Chris
So I would say like right now, if you've got a car payment and you're getting, you know, 700, $800 a month, don't go buy a new car, just pay that thing down and then drive it for another five years and take that same amount of money you were putting in a car payment, put that into investments. I like it. And it'll make a huge difference.
Plus, it's like I said, you're getting the bar. Now you put a little bit of weight on the bar, you know, maybe $800, you know, the next year you could turn into a thousand dollars. Next year, you can put a $1,200 a month away.
Yeah. People go $1,200 and I go, trust me, you're spending it somewhere. Yeah.
You know, you're spending $1,200. Yeah. It's just not going into your retirement.
Pete
It's true.
Chris
Yeah.
Pete
What are your thoughts for these 40 year olds to count on social security in 20 years?
Chris
I get this question a lot. And, you know, obviously people are afraid that social security will not be there. I believe that it will be there.
I don't, again, I don't have a crystal ball, but I would tell you that no one ever sits there and goes, I wonder if welfare would be there next year. You know, that's an entitlement that we give out as a government, as a community that nobody pays into except for taxpayers. So in this case, they're actually tracking how much money you're putting in.
I can see changes to the system. And what I mean by that is like that just happened. You know, you were putting in 5.5% into your social security and your employer was matching you five and a half percent. Now that number I think is six.
Pete
Right.
Chris
So they did bump it up, you know, roughly 10% to get more money into the system. So I think that they'll continue to do things like that. So I do believe that it will be there.
Will it look exactly the same? No. I would just tell you never depend on it as your retirement plan.
It's a nice little supplement. By the time you get to retirement, it might pay your Verizon bill. It's nice to have, right?
I've done my calculations. I know exactly what I'm going to be getting at 62 and 67 and 70. But I would say like if you're going to depend on social security to be your marker, you're going to be in trouble because it's not going to be enough.
Most people, if they got their social security that they're supposed to get 20 years from now, right now, they still couldn't live on it right now, let alone inflationary period where they get, you know, that's going to cost less. There's actually a thing called the Silver Surfers, and it's a group of women that are kind of supposed to outlast social security. We're seeing a lot of women get to their 90s.
And so if you look at it, you know, if you've got social security is paying this much and Medicare is like down here, right? Social security is growing at two and a half percent. So Medicare is growing at 5%.
So as it gets, they're actually thinking that by the time a lady gets to 90, that her Medicare will cost more than her social security.
Pete
And so the cost of Medicare is increasing faster than what social security is increasing. Correct.
Chris
So there's a whole group of people out there that they think that they're actually going to be negative when Medicare continues to raise the rates the way they do.
Pete
Yeah. So the Medicare might be more than what they're actually getting for social security.
Chris
Oh, geez. Yeah. So, I mean, you know, it's not, it's not, I'm trying to stir it.
Pete
Yeah.
Chris
Put anybody into fear. Yeah. But I'm just saying like, you know, you need to do more.
Pete
Yeah.
Chris
You need to do more than social security. Yeah.
Pete
Let's figure it out. Part of your, your bio. I want to hear about this, uh, the feeding the kids.
Yeah. Yeah. So you, um, help local kids eat.
Chris
Yes. I was looking for something kind of fun to do as a, you know, like there's a lot of golf tournaments in this town. There's a lot of 5k runs, things like that.
We're looking for something fun to do that wasn't the same as everybody else, but also just like, you know, could raise money for charity. I ran across this event. It's in Bernie, Texas, not spelt the same way our Bernie is spelt, but it was a, it was called the Bernie half K.
And I was like, what's this? And it basically is a joke on 5k runs. So instead of going 3.1 miles, you go 0.31 miles. Oh. Yeah. So you go 1600 feet total.
So we, we, we have a setup to where you go 800 feet. You don't run, you walk, you go 800 feet. We have like jugglers and things like that along the way, along the walk at the 800 foot mark, the turn, as we call it, you get a doughnut.
And then you go back 800 feet to the finish line. Everybody who finishes gets a first place medal. Wow.
And they get a beer. Yeah. And you know, we get them a little sticker that says 0.31. They can put on the back of their car if they want to. And it's just like, it's like I said, it's just a goof. And then afterwards we try to like throw a little bit of a party. You know, we have foam pits and DJs and.
Pete
Yeah.
Chris
And things for the kids. We do it in June. We do it the day before father's day, every Saturday before father's day, every year.
Pete
Really? And where's it at?
Chris
We do it at Caldwell Park at the Lake Reading Pavilion.
Pete
Okay.
Chris
Yeah.
Pete
Awesome.
Chris
So we, again, we have great sponsors. Jeremiah Wheeler Landscaping is our title sponsor. Applied Technology, Sabrina Schmidt, myself.
We have like a bunch of people who have been like in from the beginning, you know, putting money in. So it's, we have great sponsors on it. We have a pretty good turnout.
I'd say like, you know, for me, I wanted like a thousand people there, but like we're getting like 300 people there. And so we're raising decent amounts of money. It's super fun.
But all the money goes to, at first I was giving it to Shasta Lake Kiwanis. And they're great. They're great.
They feed 200 kids every Friday. And they give them basically a bag of food that they can take home over the weekend. Because a lot of these kids don't eat over the weekend.
Really? Yeah. 200 kids.
200 kids that don't eat, that would not eat otherwise without these bags of food.
Pete
Wow.
Chris
So that's how we started giving it to them. But they're actually doing really well for fundraising themselves. So because of it, we always wanted to, when I say we, I mean, you know, me and then my people who helped me start it.
But we always wanted to get it to expand. So because of that, we started the Reading Sundial Kiwanis here in town. I am now the president of that Kiwanis group.
And we have now taken that money and we're giving it to the Reading Sundial Kiwanis. And then they're giving it to, right now, the program that we're behind 100% is the Northern Valley Catholic Social Services.
Pete
Oh, yeah.
Chris
They have a pantry program in eight of the Enterprise Elementary Schools. So any kid at any time can walk down there with a teacher, a counselor, administrator, or whatever. They can walk down there and take whatever food they want, and they can take it home with them.
They can eat it right there, whatever they want.
Pete
No way, man. That's awesome.
Chris
Yeah. So in our goal, and we've been doing really well with the Half K. We've got another event coming up in October called the Shake Off, where we're going to do cocktails.
And every restaurant's going to be able to put in a signature cocktail, and we'll vote on who did the best one. Nice. But that should be a good fundraiser.
So our goal, ultimately, is to get it from Enterprise over to the Readings, like the Shaftesbury side, if you will. Got it. I think that's Reading Elementary, and this is Enterprise Elementary.
We want every middle school. The first thing is we've got Enterprise. The second thing is we want the other middle schools.
Once we get all the middle schools involved, then we want to get it up to the high schools. So we just wanted to make sure that, like, you know, I saw something that said, like, we don't have a lack of food. There's no such thing.
We have more food than we could ever make. We have a lack of love, right? And so I think part of the issue is I think a lot of people want to support a program like this.
They just didn't know it existed. Totally. They didn't know that there was 200 kids in Central Valley that don't have food on the weekends.
I had no idea. So that's mostly why we do the goofy events, because the goofy events create awareness, you know, and then ultimately, like I said, we want to make sure I'm not going to rest until every kid in this town has food. Wow.
So yeah. That's awesome. Thank you for asking me about that.
Pete
Yeah, for sure, man. That's super awesome. Thank you so much for being on the show.
Yeah, loved it. Yeah. Oh, tell people how they can get a hold of you.
Chris
Yeah, so if you Google Chris Hall, you can pretty much get a hold of me right away. My company is Reading Financial Advisors. We, our phone number is 530-248-6900.
The website's ReadingFinancialAdvisors.com. And again, if you Google Chris Hall in Reading, California, you're going to find me. Cool.
Awesome. Thanks, bro. Thank you so much for the opportunity to be here.
Definitely.
Pete
Please also like and subscribe if you could. It really helps out the channel, helps us out, get this content out to more people. Thank you so much.
We'll talk to you soon.
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