Financial Planning Podcast

What is Risk Adjusted Return and Why is it Important?

Information presented on this program is believed to be factual and UpToDate, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personalized investment advice, but is limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented. Certified Advisory Corp is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.

Stay tuned for on the Money Central Florida’s most listened to financial call and show Bronte You by Certified Financial Group in Almont Springs. It’s the only show hosted exclusively by certified financial planner professionals. Monday through Friday, their CFPs provide financial planning and investment advice for a fee, but on Saturdays, the advice is absolutely free and has been for more than 30 years. For their WDBO listeners, if you have a financial question you want answered by real fiduciaries, the lines are wide open. Call five 80 WDBO, that’s 8 4 4 5 80 WDBO and enjoy the show.

Good morning and welcome to On the Money right here on WDBO 1 0 7 3 FM AM five 80, always streaming live inside your very own WDBO app. Sitting in studio today with Aaron Bur and Joe Bur with the Certified Financial Group, one of the top 100 financial advisor firms in the country as named by the CNBC rankings. It’s a fantastic feat and something that we are very happy. I’m very happy to say, Hey, I know them, I know them, so it’s always good to have them in your corner. If you are listening, then you want to know what’s going on in the financial world. You heard some news, you heard from a friend, you got a savvy uncle who’s trying to get a couple bucks out of you. Well then you want to run it by the experts here, Aaron Bur and Joe Bird with the certified Financial Group. Over 400 years of experience inside those walls, they’re at the Certified Financial Group. Aaron, Joe, how are we doing today?

We’re doing great, Josh. Good to be with you and we welcome our WDBO listeners as well. We’ve been here as the intro says, for more than 30 years, providing a sound, hopefully sound, investment advice, financial planning advice to our listeners. This is a financial call in show. This is not a one hour infomercial. We are here to help you out so you don’t become a financial casualty. Aaron and I and the 14 other certified financial planners Monday through Friday provide financial planning and investment advice for a fee. But on Saturday morning we are here for you absolutely free. So if you have anything that’s on your mind, as Josh said in the introduction, things that you might’ve heard, things you’re questioning, questions you have about your mutual funds, about your 401k IRAs, stocks, bonds, long-term healthcare or annuities, reverse mortgages, all that and more. Aaron and I deal with that stuff day in and day out. So if you have any questions, we are here for you. And the good news for you is the lines are absolutely wide open, so you have to do is pick up the phone and dial or text these magic numbers.

That’s right, we do texting now the number to call or text is eight four four five eight zero nine three two six eight four four five eighty WDBO or send us your questions via the open mic. Open up the WDBO app, click the open mic button, give us your best 10 to 15 seconds and I’ll read them for you live on the air. Today’s topic, what is risk adjusted return and why is it important?

There you go, Aaron.

Well, that is a great question and that is why it is my topic for the day. And the reason being is because we get a lot of questions around because we build portfolios for clients. Part of the services that we provide is we do investment management for clients, but we also do financial planning. And during that financial planning process, one of the key things that we’re trying to determine is how aggressively or conservatively people can invest their money and still have a high probability of not running out of money when they run out of breath as we like to say. And so in that process we’re identifying risk profiles, whether they’re conservative or aggressive in somewhere in between and trying to determine how much risk and volatility and return they need again in order to make it through their life expectancy with a high probability of success. The challenge you run into, especially in markets like the one we’ve had the last year and maybe the last quarter, is that clients inevitably are always comparing their portfolios and it’s human nature. You want to know how you’re doing compared to something. The problem is is everyone’s always comparing it to the market. How do they define the market? Joe?

They define it by what’s reported on the news and that’s either the Dow, the s and p 500 or nasdaq, correct some index.

Some index that’s readily available and always reported and flashes either green or red and gets everybody excited depending on the direction that it’s going. And

It’s always a stock index, correct? It has no fixed income in it to maybe mellow out the stock returns. It’s always stocks and that’s okay. It’s an index and it’s just telling you what this 500 stocks did or 30 stocks in the NAS Dow or the tech sector in nasdaq. It’s always stocks,

Right? Exactly. The problem with that is that the clients are not always invested in stocks and if they are, they’re not always invested in what those indexes are measuring or indices are measuring. And so the s and p 500 and the Dow are really measuring US stocks positions within the United States. And NASDAQ again is a different index also measuring US stocks, mostly tech related. And so the challenge is is that when you’re comparing your portfolio, which may have a small portion of US large cap growth or large cap value type stocks, and then you’re comparing it against what you actually have in your portfolio, which is not all large cap US stocks, you’re inevitably going to have different types of returns or results. And so the issue with that obviously is that your returns aren’t going to be the same. And when the US markets are really rising and then your portfolio is not at the same level, clients then are forgetting that conversation that you have about risk adjusted return. And this is happening across not just us, but everybody. Everyone picks up their statements and they say, well, the s and p 500 did this and I did this, and so why aren’t you beating the s and p 500? It’s actually funny, I had a client who wanted to hire us and he interviewed us and he said, I want you to beat the s and p 500,

Thank you, but

No thank you. And he said, can you beat it? And I said, well, with taking a tremendous amount of risk that probably isn’t in your best interest possibly. But no, I mean if you want the s and p 500, then buy the s and p 500. So that’s kind of the conversation we had and I kind of sent him on his way. He did not understand the concept of risk adjusted return. So with all that being said, risk adjusted return is a measure that puts the return of investments into perspective by taking into account the risk involved in producing those returns. So it’s a concept widely used to compare performance of various investments that the returns not just generate, but also the risks that they entail. And so it’s a way to be able to compare against diverse investments. So you’re comparing, so when you’re looking at risk adjusted return, you have to compare the investments that you’re owning in your portfolio against the benchmark for that investment within the portfolio.

And that’s what we do for our clients all the time because we use a system that compares investments against their peer group, right, against their benchmark. Exactly. And so the key is checking how the investments that you have within your allocation and how those investments compare against their peers and against their benchmarks or their indices for which they should be compared against. So in other words, if you’re owning large cap growth stocks, you should be comparing against the large cap growth index. Conversely, if you’re owning foreign large value, you should be compared against a foreign large value index. Or if you’re owning bonds, intermediate term bonds, you should be compared against intermediate term bonds. And then so you’re looking for the best asset classes or best investments within each of those asset classes and then building out your allocation according to the client’s overall risk portfolio. So the idea is is that you’re generating returns, reducing risk, but having the best returns within the different asset classes in order to essentially achieve those returns. And that’s the challenge that we always have is driving home, you have a diverse portfolio and many different asset classes, but you can’t compare that portfolio against one indices. And that’s always the challenge that all investment advisors have with the clients and making sure that they understand that.

And when the market roaring, everybody wants the index because they see it advertised and the new records and so on and so forth, but they forget when the market plunges 30% like it did not too recently. They’re glad that they don’t have that. And so it’s human nature. We always want what we maybe shouldn’t be owning at the moment. And then what that leads to is if you’re chasing those returns, that leads to market timing, which is really the death nail for any investor because you can’t figure out where the market is going. And if we knew that for sure, at least in the short term, but you can long term it’s up, but it’s never a smooth straight line. And that’s I think what smart investors have really realized that you can’t expect if you want better than average returns, you have to expect periods of when you’re going to be down.

There’s no way around it. You got to take a little bit of the bad medicine to get the good medicine in the long run. And we’re putting together portfolios, as you said, it’s a combination of putting together various asset classes to get that risk adjusted return that you want and various asset classes that you alluded to or large cap, small cap, mid cap real estate, fixed income, whether it’s intermediate term bonds, long-term bonds, government bonds, corporate bonds, all those things. I like to use an analogy slot like baking a cake. And once you understand what the recipe is, what it is you’re trying to create, then where we come in is once we determine whether we’re going to bake a chocolate cake or a pineapple upside down cake, then we look at the ingredients and this is where the skill comes in and the training comes in that we have is that we sort through all the ingredients that are out there and find the very best ingredients.

So if you know the kind of cake that you’re trying to make, you can make the very best cake if you have the best ingredients. And the benefit of being independent as we are is we can pick and choose from every shelf in the grocery store to find the best ingredients. Now, that does not mean that it’s just always going to go up. I mean if it always went up, we’d have people lined up from here to Moscow, but that is the way it works. But there’s a high probability of success if you have diversification and if you consistently have quality in your portfolio, you’ll in fact be a successful investor. And that is the understanding that you need to have when you do that, that you have a risk adjusted return to get that return that you need to get you to where you want to go.

As you said in your opening remarks, you don’t want to be more aggressive than you need to be. Why run down the highway to a hundred miles an hour when driving 60 will get you there safely unless you want the thrill of that. And some people like the thrill. Conversely, if you’re in the left hand line driving 30 miles an hour, you’re going to get run over and you don’t want to have that happen to you either. You may not get to where you want to go. So the key to financial planning, and this is how we built our firm over now almost 50 years as we sit down with our clients and determine where you want to go, all the things that you want to do for your remaining lifetime, taking those vacations, putting the roof on the house, buying cars, taking care of your grandkids, leaving a legacy, all those things that factor into what you want to do, look at inflation, look at taxes, look at your sources of income, social security, pensions and your investments.

And then the only things that we can control or help you control are your investments. And then what you want to do is how do we blend that all together, looking at that target rate of return that you need on your investments to have a high probability of success of not running out of money when as you said, we run out of breath. And that’s what financial planning is all about. And this I think is what distinguishes us from many people out there that just want to manage your money. We are certified financial planners first and foremost, strongly believing that good investing requires good planning and that’s how we do it. Well, that’s the topic for the day. There

You go. One thing I want to point out about when we talk about the indexes and what’s going on out there, and Gary uses this all the time and it’s talking about the s and p 500 because that’s what everybody’s been focusing on lately, and that’s really being driven by basically seven or eight stocks right now.

Well now it’s four

Stocks right now. Okay, so it’s changed a little bit. So four stocks in the long term return of the s and p 500 is roughly 10%, 1950 when it went to 500 stocks. The long term, it’s actually 10.26%. And the question is within that range, or since 1956 until now, how many times has the s and p return for the end of the year been within 20% of that 10%? So meaning how many times has it been between eight and 12%, right? And what do you think the number it’s

Five or six times? Yeah,

It’s 10% of the time the s and p 500 returns within 20% of its average. What does that mean? That means that there is massive volatility around the average return of the s and p 500. So depending on when you get into it and when you follow it, you want 10% return every year. That’s what everybody says that they want. They want the s and p 500, but unfortunately they can’t stomach that year when it’s down 40 or it’s down 30, but they love the year when it’s up 30 or 40 and it’s never right in that 10% range. I mean 10% of the time it is. So that’s the idea. You can’t stomach that volatility. And so what we’re trying to do is build portfolios that smooths out that volatility and gives you a reasonable risk adjusted return that will get you ultimately to where you want to go based off of doing in-depth financial planning for clients. And again, that’s what we do day in and day.

That is what it’s all about. So I see we’re up against the clock here. Josh, you want to take it away?

You got it. We got highway analogies and cake analogies in that second. I’m hungry and I’m ready to go fast. If you want to join the conversation, you got a question about your financial future, who you want responsible when your retirement comes knocking, the number to call is five eight zero nine three two six. Same number to text us, 8 4 4 5 80 WDBO. Send in your open mic using that free WDBO app you are listening to on the money where we’re planning tomorrow today with the Certified Financial Group.

Welcome back to On the Money right here on WDBO 1 0 7 3 FM AM five 80, always able to stream this program and all of WDBO wherever you are in the world, as long as you got some wifi or some internet, some 5G some cell data inside our WDBO app on the money brought to you by the Certified Financial Group. We are so fortunate enough to have Joe and Aaron Burt joining us today, answering your questions. If you want to join the conversation, 8 4 4 5 8 0 9 3 2 6 is the number to call 8 4 4 5 80 WDBO is the number to text send in your open mics inside that very same WDBO app. We got a text question during the bright gentlemen from Iggy in Winter Garden. Iggy Iggy wants to know, where is my Starship? No, Iggy is 65 years old on a police pension, just went on Social security and Medicare. I have to pull out 30 K for my 4 57 B to purchase a house for my 94-year-old and I think they meant this, a parent or something. Someone yeah, probably will this affect my social security? I only get the minimum due to government pension.

Well, it depends. It’s not going to affect their social security benefit because they don’t have any additional, it’s not earned income pulling that $30,000 out, however, it is taxable as income. So really the question there is whether or not it’s going to make his social security benefit more taxed more because social security is tax free until you start hitting certain income levels on your tax return. And so it also depends on whether Iggy is married or single. We’ll assume he’s single for this case, but if he’s earning anywhere between 25 and 34,000 around there, he’s going to basically pay 50%. 50% of his social security will be included for tax purposes. So basically 50% is tax free, 50% is taxable. Since he’s pulling 30 grand out, that’s going to bump him up higher, right? And so if your income is over 34,000, then 85% of your social security benefits becomes taxable to you. So pulling that 30 out depending on what his police pension amount is, because we don’t know what that is, but I’m assuming it’s probably a couple thousand dollars a month, I would assume that he then is now in the higher 85% of his benefit being taxable to him.

So you’re not paying 85% tax. The important thing to know is that some of your social security will be taxed and it’ll be taxed at whatever tax bracket you’re in, which based on what I’ve heard, perhaps you’re going to be in the lowest 10% bracket. So it not to be a huge thing, but you’re going to have to pay taxes on that $30,000 that you withdraw to end of the hope. And I would guess at the end of the day it’s probably going to cost you and just to ballpark this, probably five or $6,000 in taxes to do this 30,000 withdrawal.

Yeah, so

That’s my guess.

But from a social security perspective, my guess is he’s probably already paying taxes on his social security benefit because of the fact that he has other income in the form of a pension. This will just definitely put him over the top of that to make that benefit. The social security more taxable to him. Yes,

So Iggy, if you want some more detailed questions, you can call Rodney Obe, who’s a CPA and a certified financial planner. Rodney is taking calls off the air. You can reach him right now at 0 8 6 9 9 8 0 0 4, 0 7 8 6 9 9800 or 1-800-EXECUTORS if you’re executing a legal document. And Rodney will be able to delve more into that for you if you give ’em some more specific information. And that’s why we’re here on Saturday morning. I want to mention that two weeks from today on April the 20th at our offices here in Altamont Springs from nine to noon, we are doing our annual S Shred event, which allows you to bring up to two banker’s boxes. I want to repeat two banks boxes of material. You can bring it by, see it’s shredded right before your eyes have some hot coffee and donuts. And we’ll be broadcasting live right from our front porch. So we encourage you to come on by. That’s two weeks from today, nine to no at our offices, at our

Offices in Altamont Springs right there, Douglas and 4 34 11 11 Douglas Avenue. That is where the shred event will be. Again, two weeks from today from nine to noon here at our offices in Altamont Springs. And

For more information, you go to our website, that’s financial, financial,

And if you want to go, just check out the coffee. The coffee itself is fantastic. I’ve been the pleasure of bringing them. They bring their coffee to some of the events here at the radio station and that coffee is phenomenal. Oh yeah. And the services are next to none as well. Let’s team certified Coffee. Yeah, I’m going to change you guys to Coffee Financial Group now. It’s so good. Now I’m just getting Certified Financial Group is a great organization to work with one of the top 100 firms in the country. Call in right now to get your question live on the air. 8 4 4 5 8 0 9 3 2 6. Same number to text us. 8 4 4 5 80 WDBO. Send in your open mic using the free WDBO app you are listening to on the money where we’re planning tomorrow today with the Certified Financial Group.

Welcome back to On the Money right here on WDBO. I know I’m not Steve Perry, I don’t have those beautiful pipes, but we got some beautiful answers for anybody’s financial issues or concerns. That’s what we do here on the Money. I’m not Steve Perry, but I am Josh McCarthy sitting in studio today with Aaron Bur and Joe Bird with the Certified Financial Group. If you want to join the conversation, you got some questions you may want to inquire about. The phones are wide open, (844) 580-9326. You go to the front of the line, get on the air immediately, 8 4 4 5 80 WDBO or send in your questions using the open mic inside the WDBO app. I also want to let you guys know you the listener, that if you want to get your financial questions on the brains of the team at Certified Financial Group, Rodney OBE is standing by off the air, so if you want to have any questions answered off the air not in front of the radio listening, they do want that available to you too. So call 8 6 9 9 8 0 0 4 0 7 8 6 9 9800. You can text in your question too. 8 4 4 5 8 0 9 3 2 6. This one comes to us from Jim in oto and Joe Aaron. Jim says that he currently gives weekly to his church, but his tax guy says he can’t deduct my contributions anymore. Is there anything Jim can do?

Well, perhaps

It depends. Yeah, so I’m assuming Jim is not contributing enough and doesn’t have enough deductions here to itemize his deductions, which is why his tax guy says that he can’t take the deductions anymore. So with what’s been going on recently, ever since the Trump tax cuts several years back, the standard deduction went way up, which is good for most people because really that means that you are reducing your taxable income without having to itemize your deductions. However, it is penalizing people, well, not penalizing, but basically if you’re giving money away and you can’t itemize it, you’re not getting any sort of tax credit for those deductions. However, with that being said, there is the ability to, depending on Jim’s age, to give money out of his IRA and basically not give it out of his cashflow or out of his savings, but give it out of his IRA pay no taxes on it.

And it also counts towards his required minimum distribution and that is called a qualified charitable distribution, which basically means that if you are at the age of 70 and a half or older, you are able to give money directly out of your IRA to a charity and again, not pay taxes on that distribution. It counts towards your required minimum distribution and basically it’s a tax-free withdrawal. So it’s a way to really kind of get a tax deduction, a very nice tax deduction by giving it out of your IRA and oh by the way, you can still get the standard deduction on your tax return. So it’s basically a tax-free distribution from your IRA, so that’s called a qualified charitable distribution. It’s a great strategy that we’re using with our clients that are very charitably inclined. We’re basically encouraging them to give one large gift or quarterly gifts instead of giving those monthly or weekly checks to the church or wherever they’re donating to. And it’s a way to get money out of the IRA and not pay taxes on it. So it’s a great strategy that’s been very useful. Yeah,

It’s called A QCD and I see you have a caller there, Josh, take it away.

That’s right. If you want to join the conversation, 8 4 4 5 8 0 9 3 2 6. Mike has giving us a call from Orlando. Go ahead, Mike, you’re on the air.

Hello, Mike. Good morning. Hey Mike, what’s up?

Looking to invest and I don’t know much about investing and I’m looking for something that would pay me like a monthly check. I’m 62 and my wife is 60 and I’m on disability income from social security and all that stuff. Yeah, okay.

So you want a monthly check from your how much?

Yeah, yeah. Something that would pay me off, I guess the money we earn or something like that. And I’ve heard of annuities and that’s with insurance companies, aren’t they,

Right? Yes they are.

And I don’t know if that’s good or bad. I don’t know.

Well, they can be. It depends on everybody’s situation. Let me probe a little bit more here. You’re retired, you said?

Yeah, I’m disabled.

Okay, so you’re getting social security. Yeah, any form of pension.


How about your wife? Is she working?

She works, yeah, she’s still working. She’s 60 and she’s going to be six. Yeah.

Okay, so you still have that income. So what you want to do is begin drawing some form of income from this money. I think you told Josh $150,000, you said,

Well, we have 150,000 saved in our savings account and I don’t want to put all that into one thing. I want to keep maybe 30 grand in our liquid to have for whatever we need or an emergency or vacation or whatever.

So let’s look at out there today. So let’s say you have 120 K and what would you think would be a reasonable monthly check on that? $120,000?

I dunno. At least 10% if possible.

Well, I said reasonable. My dreaming, I said reasonable. Okay. Yeah. Now here’s what you got to be careful of. You throw out that 10% number, and I know for a fact that there are folks out there this weekend or next weekend or the following weekend or sometimes during the week that are offering free lunch and dinner seminars, which will show you how you can take that $120,000 and get 10% per year on your money and don’t worry about it.

Oh gosh, no, but

That’s what they are and it sounds good and it is going to be an annuity. And what you fail to realize is that you’re not only getting, when you get that money, you’re getting a return on your principal, but you’re getting primarily return of your principal and you’re giving up your principal. So I want you to get that out of your mind unless you understand what the downside is here for that, okay? Yeah. So in today’s world, you can look at money market accounts or treasury bills probably in the range of 4%, right, Aaron? 5%. 5%, yeah. Right now. So that would give you 500 bucks a month. Now that’s the interest rates. That’s what the interest rates are doing today. Interest rates go down, that’s going to impact your income is going to go down. That’s the bad news. If interest rates go down though, the value of your treasury bill will go up until it matures, whatever it is. So you can plug that in. That’s probably the best guaranteed rates you can get fixed annuities. These are contracts that are issued by insurance companies where your principal is guaranteed like a CD issued by an insurance company. You’re going to get your principal back in three or five years. There’s no gimmicks. However, they’re like a cd. There is a penalty for early withdrawal. The big advantage is it grow for you without being taxed, and it avoids probate, it avoids claims of creditors. So in the range, what are you looking at today?

Five and a half. Five and three quarters on five years for a fixed immunity,

It’s not bad.

So those are the options today I think the most, I understand where you’re coming from, Mike, this is a common question. You’ve got this money stashed away. You’re still in your early sixties, your wife’s still working. Statistically I have 25 years, I got to worry about you. Yeah, right. You got to get some growth on this money and hopefully your wife has got some money socked away in a retirement account as well. Somewhere. She working. Go ahead.

Unfortunately, yeah, her company doesn’t offer anything.

I got, I got you

Own healthcare

Providers. I got. Oh yeah. Okay. I understand. I understand. This is a common situation. What you got, we don’t have much. Well, I understand. Here’s, here’s the point I’m trying to make at this particular point in your life, you can’t afford to put that money aside, lock it up for a period of time and get virtually no growth and suck off all the income because that $120,000 you have to invest in 10 years from now, it’s not going to be worth 120,000 in 15 years from now. It’s not going to be worth that. So to, you’ve got to sit down with a planner and figure out really what you need to do. You can look, and the easy thing is this is a short-term solution I’ve given you. It’s kind of a snapshot in time, but it isn’t something that’s going to carry you for the next 20, 25 years of your life. And that’s what planning is all about. And there are many qualified certified financial planners in town. Be sure you’re dealing with a certified financial planner and have him or her work up a plan for you and we’d be glad to work with you. Give us give of our office a call and we’ll see where we go.

Alright, so you’re saying way it goes like treasury bills and all that stuff.

I’m saying that term, I’m answering a specific question for you. I’m not saying that’s your long-term solution. Right,

Right. Oh, thank you very much guys. Yeah,


Welcome. Thanks for the call, Mike. You’re welcome. Thanks for listening to this. Yeah,

Bye-Bye. Have a great weekend.

You too, man.


Thank you so much, Mike. Let’s go to Antonio, calling from Orlando. Go ahead Antonio, you’re on the air,


Yes. Good morning gentlemen. Thanks for taking my call. Sure. I just have a question because what do you call this? I turned 50 and max up my 401k, so I wanted to start a bachelor Roth for me and my wife. And to my understanding, it’s my first time to do it. I just opened up a Roth traditional IRA and a Roth IRA account with Schwab and I’m ready to fund it in before the tax deadline for this year. So my question is traditional IRA is supposedly pre tax, but if I’m taking the money from my bank, that bank money has been taxed for my salary. So how does that

Work? Wait, we’ve lost you here. You broke up a little bit and I’m not quite sure where you’re going there. So I lost you something about taking money from your bank and salary and so forth, so please repeat it.

Sure, sure, sure. So if I withdraw the money from my bank or do the transfer from the bank account towards the traditional IRA,

Right, this money sitting just in a savings account, checking account.

Yes sir. Got it. So that’s not pretax anymore, it’s post tax. So how does a backdoor Roth, how does that work in that sense as far as tax data is concerned?

So the way the backdoor Roth works is if you do an after tax contribution to a traditional IRA and it’s after tax, if you are able to, usually you do the backdoor Roth because you make too much money to make a Roth contribution, I’m assuming that’s the case, right? You’re earning it too high to make a Roth contribution,

Right? And

You’re maxing out your 401k. So if you are making too much money to make a Roth contribution, basically when you make a traditional IRA contribution, it’s a non-deductible. IRA contribution, you can always make an IRA contribution. The question is whether or not it’s deductible or non-deductible. So if you’re over a certain dollar amount in earnings, then the contribution you make is basically a non-deductible. IRA contribution, which means that it’s an after tax traditional IRA contribution. You’re then able to take that after-tax traditional IRA contribution after a period of time, convert that to a Roth by basically doing a Roth conversion. And since it’s with after-tax dollars, there’s no taxes owed on that contribution except for maybe any earnings that you may have over the period that you held it in the IRA.

So you want to do it shortly thereafter within 30 days?

Yeah, we usually recommend that you hold it in the IRA at least. So it reports for a couple statements. So it shows on the statements that it was in there. You’re not supposed to technically do it the same day, like put it in and then move it the next day. It’s supposed to in there for a period of time

And just leave it in cash so you don’t earn much if anything at all.

Oh, cash. Okay. Is it,

Go ahead.

Yeah. So if I leave it in cash, can I do it for a couple days? I could make it transfer ity for the April 15th,

I’d wait, no,

It has nothing to do with the timing for the contribution is really in the original IRA. That’s when it’s reported. Anytime after it’s put into the traditional IRA, it can then be converted to Roth. So there’s not a April 15th deadline to convert to Roth. It’s really the April 15th deadline to make the IRA original IRA contribution.

Oh, I see, I see. So no matter when I do the back, the Roth transfer, because I’m trying to, what do you call this opportunity for 2026? I couldn’t do another one for 2024. That’s why I’m trying to do it now for 2023. Right,

Right. So you can make the traditional IRA contribution for 2023 before you file your taxes. That goes on your tax return, you can add the money into the account and then anytime after that you can convert to Roth and then it would be reported on next year’s tax return. The other key to all of that too is, and a lot of people get tripped up by this, is that you don’t have another IRA because if you have another IRA account out there, then really you’re supposed to combine the total values of the IRA accounts for the contribution amount. So you got to make sure that you don’t have another traditional IRA if you’re doing a backdoor

Roth and you may run into a mess when you take your money out of your 401k and roll into an IRA and then you’ve got a bookkeeping nightmare. So the backdoor Roth isn’t for everybody. I would suggest that you do some Google research and don’t be sold a bill of goods. Fair enough. Fair

Enough. Thank you so much, Antonio. That opens up a line for you. As the show comes to a close, I want you to write down this number. Maybe even Antonio wants this number down since he may have some more questions. I love that. Once you get a little bit of information, the team at CFG just turns into detectives, okay, how old are you? How much have you made? How much have you saved who you’re married? Are you disabled? Are all these questions that really help them pinpoint a situation specifically for you? That’s the benefit of working with the certified Financial Group. 8 4 4 5 8 0 9 3 2 6 is the on-air number, but more importantly at this hour, the off-air number to speak with Rodney Oby is 4 0 7 8 6 9 9 8 0 0 4 0 7 8 6 9 9800. You are listening to On the Money where we’re planning tomorrow today with the Certified Financial Group. Welcome back to our final segment of On the Money here today with the Certified Financial Group. This is your chance every Saturday morning to hop on the air with some financial experts as the air is nearly closing up for this hour. I want you to write down this number. 4 0 7 8 6 9 9 8 0 0. That’s their office number. They can answer your question live off the air as the show ends. And we got some workshops and all kinds of ways they can test out their financial future.

We do, and we want to remind our listers. We do this kind of, I wouldn’t say as a public service and we enjoy doing it as well, but we are also in the business of doing retirement planning and investment management. If you want to get more information about what Aaron and I and the 14 other certified financial planners do here for our clients, working with them for a fee Monday through Friday, we’ll be glad to sit down with you. Go to our website, that’s financial, financial You can schedule a no obligation visit and you can tell us your ills and we can see how we can patch you up and get you on your way. So that’s financial You can also go there and learn all about the upcoming workshop a week from today from 10 to noon by Matt Murphy. How to plan your taxes with the four stages of retirement and the pitfalls of Roth conversions that we talked about a little earlier, and how withdrawals from your retirement account can affect your social security and your Medicare.

All that stuff Matt will cover absolutely free. Go to our website financial, make your reservation and come to our office right here in Altamont Springs next Saturday and want to also mention that we have score my funds available. There’s an opportunity for our listeners to get the valuation on the mutual funds or ETFs that they might be holding in their 401k, their IRA or their brokerage account. It’s a service that we provide for our clients absolutely free. It’s a report it’s generated from the Center for Fiduciary Studies. It studies or looks at examines, I should say, the quality of the mutual funds based on 11 distinct criteria. And we’d be glad to send that to you as well. Absolutely free. All you have to do is go to score my, that’s score my, put in the information right there, and we’ll send you a report within 48 hours, absolutely free. And if you’d like to follow up with us after you get that information, we’d be glad to meet with you as well. So it’s been good being with you, Aaron. Good being with you today.

Yeah, good seeing you as well. During

The break, Aaron Aaron was telling me about he’s got a bear infestation in his house. I got problems

At my house. I got bears everywhere, so I got low quad trees in the backyard, in the bears. It seems to be feasting time, so be careful out there. People, it’s a jungle. There’s bears everywhere. So anyway, sometimes

It’s better to

Have bears than bulls.

That’s true. No, no, no. It’s better to have bulls if you’re investing than bears.

The bears are out. Maybe that’s a sign. Oh, the bears are eating the loquat. It’s be careful people. It’s a jungle out there. All.

All right, Josh, good being with you. And we will see all of our, I should say, see all of our listeners, be with all of our listeners again next Saturday. And if you come by early for a math seminar, you can see the monkeys here behind the glass too, the radio show. So hope

To see you just listened to on the money where we’re planning tomorrow. Today with the Certified Financial Group. I.


Leave a Comment

Your email address will not be published. Required fields are marked *

Translate »