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<v Speaker 1>Stanton buck Sexton doing their homework.

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<v Speaker 2>Today at noon because you got to make sense of

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<v Speaker 2>it on fifty five KRCD Talk Station.

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<v Speaker 1>Eight oh five.

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<v Speaker 3>And Happy Monday to you, Brian Thomas. Always looking forward

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<v Speaker 3>to this segment because you get to learn about money matters.

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<v Speaker 3>It is time well money Monday with all their financials.

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<v Speaker 3>Brian James. He's a certified financial planners and he's here

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<v Speaker 3>to talk about well one thing, the jobs report. Welcome back,

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<v Speaker 3>Brian James. Happy Monday to you.

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<v Speaker 1>Back at you. Good morning to you as well. Hope

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<v Speaker 1>you had a good weekend.

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<v Speaker 3>I had a great weekend.

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<v Speaker 1>All right.

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<v Speaker 3>So we have this job's report and it looks good

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<v Speaker 3>two hundred and fifty six thousand games. However, it's bad

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<v Speaker 3>cause you get good news. The employment rate is down

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<v Speaker 3>to four point one percent, a lot of additional jobs.

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<v Speaker 3>That all sounds like wonderful news. And yet Wall Street's

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<v Speaker 3>reaction is the stock market to tank or at least

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<v Speaker 3>drop precipitously. How can you reconcile these Brian, Yeah, it

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<v Speaker 3>doesn't make a lot of sense, does it. We really

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<v Speaker 3>want jobs.

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<v Speaker 4>We need as many people to have jobs as we

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<v Speaker 4>can possibly get. If everybody's working. That means everybody has

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<v Speaker 4>money to spend, and money makes the.

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<v Speaker 1>World go around.

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<v Speaker 4>It all moves around in a virtuous circle, and we

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<v Speaker 4>all do better right well, long term, yes, but short term,

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<v Speaker 4>remember what we're battling right now. We've been battling interest

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<v Speaker 4>rates for the past several years, through the whole COVID crisis.

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<v Speaker 4>And while we're not at the over nine percent inflation

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<v Speaker 4>situation that we were out a few summers ago, we're

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<v Speaker 4>not back down to where we want to be either.

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<v Speaker 4>The Fed's goal is normally to keep inflation in the

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<v Speaker 4>two to two and a half percent range, and we're

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<v Speaker 4>hovering just above that, somewhere in the three percent range.

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<v Speaker 4>And what we're making progress, but at the same time

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<v Speaker 4>not where we need to be, and we've been here

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<v Speaker 4>for a while, so the concern is keeping the momentum.

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<v Speaker 4>What that means, though, is that the economy would preferably

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<v Speaker 4>would slow down just for a little bit, so we

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<v Speaker 4>can kind of get caught up on that. And a

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<v Speaker 4>Job's report of two hundred and fifty six thousand new

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<v Speaker 4>jobs created shows that that is not quite happening to

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<v Speaker 4>the Fed's life king just yet.

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<v Speaker 3>So obviously, if you have jobs, you have money, and

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<v Speaker 3>you're there. There therefore creates demand for goods and services,

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<v Speaker 3>which I suppose to some degree are still in shorter

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<v Speaker 3>supply and the ripple effect we're still experiencing from COVID

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<v Speaker 3>and supply chain issues and things of that nature.

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<v Speaker 1>That's correct.

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<v Speaker 4>Yeah, So the concern all along and I don't remember

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<v Speaker 4>the last time I heard the term a hard landing.

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<v Speaker 4>We seem to have avoided that knock on wood, but

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<v Speaker 4>nobody says that anymore. Right, We've been expecting this, this

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<v Speaker 4>fall off the cliff moment where the economy absolutely collapses,

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<v Speaker 4>but that is just not happening. As much as the

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<v Speaker 4>talking heads UH seem to want want that to happen,

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<v Speaker 4>and as much a volume of discussion as there is

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<v Speaker 4>around that that has not come to pass, and nobody

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<v Speaker 4>uses those terms anymore. So this is evident that we

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<v Speaker 4>are not seeing the pullback that we expected we would,

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<v Speaker 4>and that's going to be in the short term.

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<v Speaker 1>As we're talking about that.

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<v Speaker 4>That's a that's a challenge from a standpoint of if

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<v Speaker 4>the real goal is to keep inflation down, then the

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<v Speaker 4>economy has got to stay up on the brakes a

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<v Speaker 4>little bit. At some point but as long as we're

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<v Speaker 4>out there spending money and creating economic activity and creating

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<v Speaker 4>these new jobs, and that's not going to happen, and

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<v Speaker 4>we'll have to continue this fight. So what's looking right

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<v Speaker 4>right now is that the Federal Reserve is not likely

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<v Speaker 4>at this point, as we're sitting here right now with

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<v Speaker 4>the information we have, not very likely that the Federal

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<v Speaker 4>Reserve is going to continue cutting rates in twenty twenty five.

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<v Speaker 4>The prevailing opinion is we're probably going to stand flat

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<v Speaker 4>for the balance of the year unless we get new information,

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<v Speaker 4>which we always do well.

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<v Speaker 3>And I think, as everybody knows by now, California as

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<v Speaker 3>a state is one of the largest economies in the

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<v Speaker 3>globe all by itself. Will I mean, I guess to

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<v Speaker 3>rebuild Los Angeles as much damage has been done and

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<v Speaker 3>it's going to take a lot of work, a lot

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<v Speaker 3>of energy, and a lot of materials and supplies that

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<v Speaker 3>do that, is that going to feed inflation? Do you

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<v Speaker 3>think what have that substantial and effect given the how

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<v Speaker 3>sizable the damages and how much of the California economy

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<v Speaker 3>comes from the greater Los Angeles area.

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<v Speaker 4>Yasolutely so, the state of California is one of the

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<v Speaker 4>largest economies on the face of the earth. Obviously, it's

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<v Speaker 4>ranked above even many other countries, most other countries, frankly,

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<v Speaker 4>And so when we have this big of a hit,

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<v Speaker 4>of course it's gonna have an impact. There are, of course,

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<v Speaker 4>supply chain disruptions that can happen. Los Angeles is a

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<v Speaker 4>major port.

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<v Speaker 1>And while you.

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<v Speaker 4>Want to want to say the wildfires probably aren't going

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<v Speaker 4>to affect direct to all those ships coming in, at

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<v Speaker 4>the end, any kind of chaos in an area where

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<v Speaker 4>goods and services are supposed to be moving through is

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<v Speaker 4>going to have an impact. And then, not to mention insurance,

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<v Speaker 4>this is probably the big one to keep an eye

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<v Speaker 4>on because we all have to the whole purpose of

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<v Speaker 4>insurance is that everybody shares the risks. You pay your premium,

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<v Speaker 4>you're covering not only your own home, but everybody else's home,

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<v Speaker 4>and that because that's how insurance works. So this is

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<v Speaker 4>going to have a widespreading effect over time. It's going

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<v Speaker 4>to remain to be seen exactly what the impact will be,

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<v Speaker 4>but there's no denying that it's going to have an

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<v Speaker 4>impact on people who live nowhere near Los Angeles.

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<v Speaker 1>For all these reasons.

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<v Speaker 3>Well, and I think it's a pretty good time for

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<v Speaker 3>people to maybe take stock in their own insurance. It's

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<v Speaker 3>like a cautionary tale. What's happening out there could very

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<v Speaker 3>well happen to you. And one of the interesting things

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<v Speaker 3>that was reported, for example, the Marshall fire, which happened

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<v Speaker 3>in twenty twenty one in Denver and Boulder, Colorado, they

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<v Speaker 3>found out a study was done after that they found

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<v Speaker 3>thirty six percent of homeowners homeowners who filed insurance claims

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<v Speaker 3>learned that their policies covered less than three quarters of

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<v Speaker 3>their home's replacement cost. So you've got a replacement cost

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<v Speaker 3>policy and you think you're all, well, that's fine. Usually

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<v Speaker 3>the policy will specifically identify what the cap is on

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<v Speaker 3>the replacement cost. And I know I had my home

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<v Speaker 3>evaluated recently because when I saw what the replacement costs

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<v Speaker 3>was valued at on my policy, I'm like, there's no

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<v Speaker 3>way in hell this could replace my house. We've been

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<v Speaker 3>here for twenty five plus years, we have made a

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<v Speaker 3>lot of investments into it on the interior space, and

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<v Speaker 3>nobody knows about this, most notably my insurance company. So

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<v Speaker 3>if it all burned to the ground, how on the

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<v Speaker 3>hell would I prove what the real replacement cost is,

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<v Speaker 3>and would it be subject to some kind of cap anyway.

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<v Speaker 4>Right, you've identified a pretty specific risk that affects anybody

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<v Speaker 4>who has a home.

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<v Speaker 1>You need to understand where you're exposed.

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<v Speaker 4>And so when you use the term replacement cost, what

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<v Speaker 4>you're talking about is the fact that you could find

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<v Speaker 4>a home that is very similar to yours on the

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<v Speaker 4>market right now, and perhaps you could buy that as

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<v Speaker 4>your replacement. But the replacement cost is actually the sum

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<v Speaker 4>total of the two by fours in the dry wall,

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<v Speaker 4>the insulation, and all the other stuff that make up

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<v Speaker 4>your house. That's a lot more than buying a similar

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<v Speaker 4>house elsewhere. So your insurance, yeah, your insurance needs to

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<v Speaker 4>cover that replacement cost, not just another the value of

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<v Speaker 4>a similar home.

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<v Speaker 3>Well, and I suppose it's a cautionary tail. And again

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<v Speaker 3>for people to identify all of the things they own

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<v Speaker 3>in their home, maybe you can take some sort of

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<v Speaker 3>video of it and keep that in a fire safe

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<v Speaker 3>or in a safe deposit box or something. Because in

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<v Speaker 3>the aftermath of a major disaster like this, the likelihood

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<v Speaker 3>you're going to remember everything that was in the house

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<v Speaker 3>is slim to none. And the fact I think you're

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<v Speaker 3>going to have to demonstrate to your insurance company the

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<v Speaker 3>improvements that you made that went up and smoke.

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<v Speaker 1>Yes.

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<v Speaker 4>And remember it's not going to be very right. Right now,

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<v Speaker 4>we're still fighting fires. But what's going to come very

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<v Speaker 4>shortly is the scammers out of the woodwork, oh, making

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<v Speaker 4>claims of things that didn't happen, or offering to help

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<v Speaker 4>people that they actually aren't going to deliver on any

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<v Speaker 4>of those kinds of things.

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<v Speaker 1>All of that is going to drive the cost of

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<v Speaker 1>insurance up as well.

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<v Speaker 3>True that also, I can use that as a little

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<v Speaker 3>springboard to remind people of something that I read this morning,

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<v Speaker 3>and it's a terrible thing to happen. But since you

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<v Speaker 3>brought up scammers, they are targeting people who want to

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<v Speaker 3>help out the victims of these wildfires. And there are

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<v Speaker 3>always scammers out there. That's really prudent of you to

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<v Speaker 3>be very, very very cautious about who you're writing a

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<v Speaker 3>check to in terms of providing some aid. There are

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<v Speaker 3>people that get on the phone and call and ask

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<v Speaker 3>you this solicit It sounds like a legitimate group that

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<v Speaker 3>they're not, so be if you're choosing a charitable contribution,

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<v Speaker 3>and I'm not going to try to steer anybody away

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<v Speaker 3>from helping their fellow Americans in times of need. But

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<v Speaker 3>just make sure you're not dealing with a scam organization

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<v Speaker 3>and go with someone like you know, Matthew Twenty five

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<v Speaker 3>Ministries is one of my favorite to mention because they

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<v Speaker 3>are legitimate and every dollar you give to them is

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<v Speaker 3>going to land in the hands is someone out there

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<v Speaker 3>who needs it. People have forgot about North Carolina too

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<v Speaker 3>by now, Brian Jeeves.

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<v Speaker 1>Yeah, yeah, we do.

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<v Speaker 4>Have short attention spans for our natural disasters anymore. But

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<v Speaker 4>I know you raise a great point one of those things.

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<v Speaker 4>If you are contacted by somebody who is raising funds

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<v Speaker 4>on behalf of these the people who have suffered this misfortune,

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<v Speaker 4>then what the best thing to do really is take

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<v Speaker 4>the information from that organization, then go research it on

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<v Speaker 4>your own. If when you ask for the website or

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<v Speaker 4>some other outside resource, a legitimate organization will be ecstatic

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<v Speaker 4>to give to you over the phone, somebody who is

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<v Speaker 4>not legit is going to insist that you need to

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<v Speaker 4>give them money right then and there at that moment,

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<v Speaker 4>and not let you go to that outside resource.

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<v Speaker 1>So be careful who you're listening.

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<v Speaker 3>To amen that We're going to continue with all our financials,

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<v Speaker 3>Brian James and find out the details on apparently something

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<v Speaker 3>that's very popular. But is it the right thing for you?

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<v Speaker 1>What is this? What are these things called TDT date funds?

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<v Speaker 1>Target date fund, target date fund?

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<v Speaker 4>These are funds that are supposed to be set and forget.

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<v Speaker 3>Let's learn together, because I'm not familiar with target date funds,

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<v Speaker 3>and I always like to point out there's not a

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<v Speaker 3>day that goes by in the morning show where I

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<v Speaker 3>don't learn something. Today, I'm going to learn something from

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<v Speaker 3>Brian James, which is something that usually happens. Come up

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<v Speaker 3>an eight fifteen fifty five KRC the talk station, don't

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<v Speaker 3>go away, We.

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<v Speaker 2>Right back fifty five kransrust Brian James doing that money

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<v Speaker 2>Monday thing. Hey Brian, Before we get onto target date funds,

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<v Speaker 2>what are they and whether we should be in him

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<v Speaker 2>or not? On interest rates, we talked about the idea

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<v Speaker 2>of this in the current inflation rate that the the

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<v Speaker 2>stellar jobs report, which means a lot of people are

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<v Speaker 2>more people are employed, obviously potentially fueling the the the

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<v Speaker 2>inflationary concerns. You mentioned that the Feds probably no longer

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<v Speaker 2>likely to cut interest rates. But I saw this, Matt Rowe,

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<v Speaker 2>portfolio manager over at Norma Capital Management, this article you

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<v Speaker 2>pointed you forwarded along saying that they may even raise rates.

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<v Speaker 4>Now, yeah, that's highly possible because again, remember it's all

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<v Speaker 4>about inflation.

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<v Speaker 1>We want to get inflation under control. And for the

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<v Speaker 1>last couple of years.

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<v Speaker 4>We've been on a pace of having stopped it and

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<v Speaker 4>then driven it down all the way down from that

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<v Speaker 4>nine percent range. But now that we've kind of plateaued,

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<v Speaker 4>there's a chance that it could turn around and go

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<v Speaker 4>the other way. So yeah, I mean, I think that's

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<v Speaker 4>a fairly obvious conclusion for this gentleman to come to,

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<v Speaker 4>just to say that if things start to if we

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<v Speaker 4>see start see prices go up.

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<v Speaker 1>Again, then we may be raising rates.

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<v Speaker 4>Now, what we haven't talked about yet this morning, Brian,

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<v Speaker 4>is the incoming administration and what their thoughts are. It's

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<v Speaker 4>one thing to want to increase the position of the

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<v Speaker 4>United States with regard to its trading partners with tariffs,

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<v Speaker 4>but we can't pretend that that's going to happen in

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<v Speaker 4>a vacuum. Tariffs are the purposeful raising of prices on somebody.

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<v Speaker 4>The goal is or at least on paper, we would

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<v Speaker 4>want to raise prices on people who want to export

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<v Speaker 4>their goods on country who want to export their goods

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<v Speaker 4>to our country. But what that is always going to

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<v Speaker 4>lead to is increase prices because they're simply going to

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<v Speaker 4>recover those from the consumers. If you are a producer,

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<v Speaker 4>you have that control. If you are a consumer, then

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<v Speaker 4>you eat it. So I think there's a there's a

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<v Speaker 4>bigger and bigger drum beat for the fact that interest

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<v Speaker 4>rates are not only going to at best stay flat,

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<v Speaker 4>like you just said, that could also increase. It remains

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<v Speaker 4>to be seen.

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<v Speaker 3>Well, and some people view that as a political measure,

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<v Speaker 3>and I know it was observed in these comments from

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<v Speaker 3>Matt Rowe that, well, the political will of the Trump

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<v Speaker 3>administration will certainly be to keep rates down and be

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<v Speaker 3>upset if they get raised. But that reminds me of

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<v Speaker 3>this of the argument that I believe it was Jimmy

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<v Speaker 3>Carter had with wasn't it Alan green Span at the

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<v Speaker 3>time he begged and begged and begged and pleted to

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<v Speaker 3>lower the interest rates because they were so onerous, but

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<v Speaker 3>what the stagflation that was going on. It was like, no,

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<v Speaker 3>we have to do this in order to bring to

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<v Speaker 3>write the condition. So Jerme Powell may raise rates, but

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<v Speaker 3>it probably won't be a politically motivated I guess is

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<v Speaker 3>the conclusion we must draw.

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<v Speaker 4>Right, So, Jerome Powell as the Fed Chair is not

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<v Speaker 4>subject completely to the whims of the president.

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<v Speaker 1>He's not a cabinet member.

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<v Speaker 4>So if the President wants to get rid of the

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<v Speaker 4>Federal Reserve Chair, he has to prove legal cause. There

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<v Speaker 4>has to actually be something other than I don't like you.

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<v Speaker 4>So he doesn't have to be as Jerome does not

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<v Speaker 4>have to be as politically sensitive as many other cabinet

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<v Speaker 4>members do as a decision maker.

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<v Speaker 3>All right, let's move over and together learn maybe you

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<v Speaker 3>will for the first time. I know I am target

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<v Speaker 3>date funds. What's the story on these? They apparently are

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<v Speaker 3>quite popular for four to one k's.

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<v Speaker 4>Yeah, target date funds the Kellogg's Variety pack of investments.

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<v Speaker 4>So the purpose of a target date fund is one

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<v Speaker 4>fund that owns a bunch of other things, and the

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<v Speaker 4>intent is kind of a one stop shop for a

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<v Speaker 4>properly allocated portfolio according to what your retirement date might be.

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<v Speaker 4>So these frequently appear more and more. They're appearing in

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<v Speaker 4>four oh one CA's and it's believed that they're going

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<v Speaker 4>to capture out two thirds of all four to oh

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<v Speaker 4>and K contributions by twenty twenty seven, and so they're

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<v Speaker 4>already in there. You probably have them in your four

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<v Speaker 4>oh and k R four or three B or whatever

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<v Speaker 4>your employer offers as your retirement plan. And the goal

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<v Speaker 4>here again is to most of them have a number

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<v Speaker 4>in the in the name of the fund. So twenty

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<v Speaker 4>forty five, twenty thirty five, twenty fifty, whatever that may be.

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<v Speaker 4>What that number is intended to be is approximately the

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<v Speaker 4>year you might retire. So the intent is that it

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<v Speaker 4>will build a portfolio with one, one single option.

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<v Speaker 1>You don't have to choose anything.

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<v Speaker 4>It's just going to build a portfolio that is targeted

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<v Speaker 4>toward that date, and then as time goes by, the

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<v Speaker 4>portfolio itself will become more conservative. So, for example, a

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<v Speaker 4>twenty fifty fund is probably you know, that's somebody who's

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<v Speaker 4>gonna be working for another twenty five years. That's a

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<v Speaker 4>long term timeframe that's going to be mostly stocks. Ten

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<v Speaker 4>years from now, are fifteen years from now, in twenty

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<v Speaker 4>forty it's probably going to be about a seventy percent

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<v Speaker 4>stock thirty percent bond type of a portfolio. That's generally

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<v Speaker 4>how they work. It's a set it and forget it approach.

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<v Speaker 4>So these are good tools. I'm not somebody who believes

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<v Speaker 4>that all target date funds are bad. That's what if

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<v Speaker 4>you read the headlines, that's kind of what can come across.

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<v Speaker 4>But it's not something that you can completely, just solely

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<v Speaker 4>rely on. You have to pay attention to the same

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<v Speaker 4>things you would any other investment. First and foremost, what's

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<v Speaker 4>under the hood. Just because it has a number in

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<v Speaker 4>the name of the fund doesn't mean that it's a

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<v Speaker 4>portfolio you necessarily that applies to you. So a fund

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<v Speaker 4>with a twenty year time frame can be anywhere from

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<v Speaker 4>eighty percent stocks to one hundred percent stocks. It's just

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<v Speaker 4>the opinion of the fund firm underneath. So you still

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<v Speaker 4>got to look under the hood to see what it's

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<v Speaker 4>invested in.

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<v Speaker 3>But they are actively managed in the sense that you're

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<v Speaker 3>just not They're not just compiled of one set group

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<v Speaker 3>for all time of stocks. Because I mean the point

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<v Speaker 3>that you made that there's some gets moved over to

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<v Speaker 3>bonds over time suggests that there is some active management.

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<v Speaker 3>Are they constantly shifting and changing what these specific stocks

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<v Speaker 3>are that are invested in this this type of target fund.

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<v Speaker 1>And date fund.

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<v Speaker 4>Great question, So the answer is somewhere in the middle.

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<v Speaker 4>So they're essentially active management of passive indexes. So in

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<v Speaker 4>other words, the S and P five hundred, which we

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<v Speaker 4>all know is basically the five hundred largest United States

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<v Speaker 4>based publicly traded companies that's going to make up a

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<v Speaker 4>good core of all these funds. So they're not really

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<v Speaker 4>target date funds, are not deciding they're going to sell

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<v Speaker 4>PNG and buy more Apple or anything like that. They're

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<v Speaker 4>simply following the index. But there will be ten, fifteen,

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<v Speaker 4>twenty different indices inside this fund. So the active management

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<v Speaker 4>occurs in how much are we going to expose to

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<v Speaker 4>stocks big stocks, little stock, small stocks, and how much

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<v Speaker 4>are we going to expose to bonds. It's not at

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<v Speaker 4>the individual security level of the individual bond or the stock.

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<v Speaker 4>It's really at the index level to control the risk

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<v Speaker 4>and the volatility of the portfolio.

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<v Speaker 3>Well, and I would argue, because my financial planners have

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<v Speaker 3>been over my selections. We have a variety of different

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<v Speaker 3>funds we can invest in here through my four oh

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<v Speaker 3>one k at iHeart, my financial planner has looked at

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<v Speaker 3>what I am invested in and occasionally will make recommendations

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<v Speaker 3>about you should change the percentage allocation, because you know,

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<v Speaker 3>there's international investments, there's currency investments, there's all kinds of

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<v Speaker 3>different options for you. But since this is out of

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<v Speaker 3>my element and I wouldn't profess for a minute to

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<v Speaker 3>know anything about investing, I let you know my financial

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<v Speaker 3>planner make the recommendations for me. I suppose anybody who

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<v Speaker 3>has a four h one K plan should still probably

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<v Speaker 3>have a financial planner to help them make sure that

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<v Speaker 3>they're selecting the right funds.

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<v Speaker 4>Yes, absolutely, because you need somebody in arms length away

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<v Speaker 4>who is going to frankly protect you from yourself.

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<v Speaker 1>Yeah. Yeah. Unless you do this all.

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<v Speaker 4>Day, every day, you'll be tempted to react to whatever

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<v Speaker 4>has happened over the last couple of weeks and months.

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<v Speaker 4>And that's never the way to manage a portfolio, because

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<v Speaker 4>we need to be targeting the different piles of money

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<v Speaker 4>we have for specific goals, whether that's a goal thirty

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<v Speaker 4>years from now means you can be aggressive, or if

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<v Speaker 4>it's a goal in the next year going to buy

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<v Speaker 4>a house, or you got a kid going to college

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<v Speaker 4>or something like that each of those goals is going

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<v Speaker 4>to have a unique solution that's going to be best

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<v Speaker 4>for that situation, and a financial planner can help you

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<v Speaker 4>prioritize which ones are non negotiable, which ones can you

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<v Speaker 4>fudge on? If you can't afford to do them all

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<v Speaker 4>at once, how do you organize it all?

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<v Speaker 3>Phebas is the way to go because that means have

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<v Speaker 3>a fiduciary obligation to you, and that's really important as well.

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<v Speaker 3>Brian James, always a pleasure having you on for the

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<v Speaker 3>Monday segment. Money Monday is what we call it. The

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<v Speaker 3>podcast will be availablet fifty five KRC dot com. We'll

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<v Speaker 3>talk again next Monday. Have a great week, Brian, have

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<v Speaker 3>a good weeks day warm thank you brother e twenty

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<v Speaker 3>six fifty five KRC DE Talk Station back to talk

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<v Speaker 3>about the similarities between the La Fire and the Lehina

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<v Speaker 3>Fire and Maui. Stephanie Perucci. She's the author of the

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<v Speaker 3>books we went over last time. She was on the

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<v Speaker 3>program Burn Back Better Lahaina, A Perfect Storm or a

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<v Speaker 3>Perfect Crime, the follow up book, Sound the Alarm, the

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<v Speaker 3>Maui disaster that sparked a global awakening. Stephanie Perucci be

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<v Speaker 3>up next, Don't Go Away fifty five KRC