Today I am answering your most commonly asked questions here at PAX Financial Group. I asked our advisors to bring me questions that they keep seeing from their clients and I wanted to discuss them with you on the show.
Topics covered include:
- The BRICS Summit meeting to discuss developing a currency that can compete with the US dollar.
- The Secure Act 2.0 and changes with Roth 401ks.
- Things to consider before investing in startups that align with your values, using Public Square as an example.
- Best practices for investing with TSP as a government employee.
I hope this show gives you some insight on current hot topics within the financial industry, both domestically and internationally.
I love discussing these types of topics with you on the show. If you work with a PAX advisor, send them your questions and hopefully I can cover more topics like this in a future podcast.
Transcript:
Hey, this is Darryl Lyons, CEO and Co-Founder of PAX Financial Group, and you’re listening to Retire in Texas. Thanks for tuning in. This information is general in nature only. It’s not intended to provide specific investment, tax, or legal advice. Visit PAXFinancialGroup.com for more information. I also want to tell you that you can get a 15-minute intro call with our advisors.
We do. Honestly, we have. I was thinking about it this week. We have ten advisors. We really have the best advisors. I mean, from wisdom to integrity to competency to intelligence. We have an amazing group of advisors I’d put up against anybody in the country. I really love our advisors. So, if you want to meet one of them, you can do that by texting the word Texas to the number 74868, or just going to our website, navigating through there and you can go to CONTACT US, click the CONTACT US button.
Okay, so this show here is slightly different because what I did is I went to our advisors and I said, hey, I want to make the content of the show, which they know relevant to what you’re hearing in the marketplace from your community. And so, I said, What are you all hearing? And I got four different responses, and they said, can you talk about this, this, this and this?
And so, there’s four different items to choose from, and I really couldn’t pick and choose. So, I just decided today we’re going to do all four kinds of them, and just kind of blast through them. So, there’s four questions and four concerns. I would say that people in our community, and I’m going to address all four of them one by one.
So, we’ll spend just a few minutes on each topic rather than covering, as we’ve historically done one topic throughout the entire show. We’re going to cover four topics in this particular show. So, thanks for tuning in. The first topic is going to be or the first question that I got was from the advisors. Should I be concerned about the BRICS Summit?
Well, what is the BRICS summit? The BRICS stands for Brazil, Russia, India, China and South Africa, and they are going to meet for the 15th time in Johannesburg. One of the key issues that they are discussing is developing a currency that can compete with the US dollar. As I quote, this is from the South African minister.
“They want to ensure they don’t become a victim of the sanctions”, specifically Russia, of course. But in order to create this new monetary system that’s transparent, that has the financial supervision mechanisms, that has monetary and policy coordination that’s reliable, that has the technical support for them to do this. There’s a long runway to success, and it’s not starting off strong because that little R in BRICS stands for Russia.
Now, Robert Kiyosaki, you’ve heard him speak and I’m sure he’s a good man, but here’s his quote. And this is what is triggering the question. This is from Robert Kiyosaki. “A giant crash is coming. Fake money, AKA, a fiat currency to die BRICS meeting in South Africa August 22nd to put nail in the coffin of Fiat fake money, get into real gold, silver and bitcoin ASAP.
Take care, the end of fiat fake money is near.” I loved his book Rich Dad, Poor Dad. But what if he’s wrong? Will we all hold him accountable? No longer listen to him. This is apocalyptic rhetoric. I’ve been doing this for since 1999 and I’ve had to work through the apocalyptic rhetoric from people who tend to feel like they are advocates and friends of the Christian community and they make these claims, and I’ve had to work through them over the years because I’ve had clients make very material decisions based upon these claims.
And then the claims do not materialize. And clients have lost millions because they’ve listened to somebody who made apocalyptic claims. It’s really troubling to me, guys, because this won’t happen, this is the end of the fiat currency in August. It’s not going to happen. And people will have shifted an enormous amount of money to his gold sponsor. And then he’ll come up with an excuse why he didn’t happen and make the next apocalyptic claim.
This happens all the time in the Christian community, and I want you guys to start paying attention to it and don’t fall for it. So, the BRICS meeting is a real meeting and there’s a real intent to create an alternative currency, but there’s a long runway to success. And I’d say beginning with having Russia in this group and this little gang is not a good start.
So that’s all I have to say about that. Let’s move on to the next subject. There’s plenty to talk about. You can Google that stuff all day long. You can find stuff on BRICS all through the Internet. And some of it is just ridiculous and some of its facts and you’ve got to make a good decision. You’ve got to use reason and logic to come to a conclusion that makes sense and don’t use emotion because emotion and money don’t mix.
All right, next one. Number two, what changes are taking place in the Roth? In the Roth, in the big Roth. So, some of you guys are familiar with the Roth IRA. The Roth was developed, I want to say, 1994 by Senator Delaware, Senator Roth. Don’t know his first name, but they named it Roth. He wanted a way for people to save money for retirement.
But when they pull the money out, he wanted to be completely tax free. So super, super cool strategy. Love the Roth, but there’s a change happening next year under the Secure Act 2.0. But it doesn’t necessarily affect a whole group of people, or it doesn’t affect everyone. It affects a certain group of people and it doesn’t necessarily affect those with IRAs.
So, if you have if you’re in Roth IRAs, you don’t have to worry about it. The specific people that it impacts are those people who are using the catch-up provision in a Roth 401k. So, if you’re not using the catch-up provision on the Roth 401K doesn’t matter to you. The catch-up provision is it’s only for those that are over 50.
And so for some peculiar reason under secure Act 2.0, I mean, I could, I could suggest the reason it’s not difficult to extrapolate the rationale, but the reality is, is that next year, if you’re over 50 and you have a 401k, and the last component of this is if you have wages, very specific wages over 144,000, you cannot do a catch up of 7500.
It’s 7500 catch up provision into a traditional 401k Okay. Did you catch all that? That’s a lot. Maybe you have to rewind it. But again, if it matters to you, you’ll rewind. If it doesn’t matter to you, you’ll just keep going. But just know that you will not. For those that are over 50 doing a do in a 401k contribution to their Roth 401k your catch up for next year.
If you make over 145,000 in wages, it can’t be a Roth. There’s a few little nuances there to look at, you can look that up on your own, but it’s just a weird thing. And if I were to tell you why Because was there the Roth IRA money is a better taxable situation for those who are in Congress now.
They get the revenue immediately because the participant doesn’t get to deduct the contribution. Okay. So that’s the change that’s taken place. Number three, I think this one’s interesting question about should I buy public square stock? Now, I cannot give advice on stock trading on this show because it’s very nuanced recommendations. But there’s a bigger picture here that I do want to discuss.
So, this company, Public Square, just went public recently. Here’s their values. Very interesting. By the way, I need to frame it up. Their intent is to be a competitor to Amazon. Okay. That’s their intent. Here’s their values. They kind of want to be the anti-Amazon. We are not united in our commitment to freedom and truth, that’s what makes us Americans. We will always protect the family unit and celebrate the sanctity of every life. We believe small businesses and the communities who support them are the backbone of our economy. We believe in the greatness of the nation and will always fight to defend it. Our Constitution is non-negotiable. Government isn’t the source of our rights, so it can’t take them away.
Sounds pretty good. I mean, those values, I think most people would agree with them. But here’s where I get a little bit squirrely. Just because a company has values that are aligned with yours does not make it a good investment just because a company has values and that includes PAX by the way. Look, you don’t come to PAX and say, hey, I really like their values.
I’m going to do business with them. That may attract you, but we still have a job to do, and we have to do it with excellence. And falling short of excellence is not acceptable. There is a cell phone company that recently came out that wanted to be a competitor to AT&T, and they claim themselves to have the same values as, you know, this anti-woke conservative mentality, which is great, but they went under because they couldn’t get coverage.
Now, you’re not going to buy a cell phone. No matter if the values are 100% aligned with you, if the calls drop all the time. That is the same case with these companies. So, here’s how I play this. If you’re thinking about, you know, owning these stocks that you know, and it’s not limited to Public Square, by the way.
I mean, there’s companies out there. I’ve been asked to make private investments in an alternative to YouTube. I passed and I’m very thankful I passed on that private investment. But you’ve got Jitter and Truth Social and Rumble all out there. Be very careful here. They are still startups. They’re competing with giants. And the runway to success is a very challenging one.
So, the people that are investing in these, I’ve met them, they’re investing with dollars they’re willing to lose. Do not make that mistake. You know, if you’re going to consider these companies, be a user way long before you’re an investor. So, if you’re thinking about, oh, I want Public Square stock, go on there, start using it to become comfortable with the community and the resources and the tools and give it a year.
And then if you do invest, just know you could lose that money. I want to support these companies that are innovative, that are trying cool things, that are aligned with my values. I do want to invest in those companies, but not that. Not to the extent that I’m going to lose capital. I’ve worked too hard for it, and you have as well.
So, here’s my commentary on just in general. I don’t have an advice recommendation on these companies, but that should be your attitude as you approach an emerging trend of companies that are growing too big to compete with what has come out of Silicon Valley over the last ten years, It also makes the case that Christians need to start taking risks and starting businesses that are innovative.
That’s another show. Okay, so we’re rounding out here. Last one, last one. This one doesn’t apply to everyone, but it’s interesting. Anyways, the TSP, what’s the default investment for the TSP? So, the TSP is a government program. It’s like a 401k, but for the government and it’s good, it’s generally low cost. My biggest concern with it is the investment options are very, very limited.
So, you get a G fund, an F fund, a C fund, an S fund, and an I fund and that’s pretty much it. So, there’s not much variation in the types of strategies that you get to choose from. Very limited on funds that are, that have a letter to it. And the degree of performance is vast between all of them. So, C Fund, which stands for Common Stock Fund, is going to have a considerably poor form performance difference than that of a G fund.
So, if you accidentally make a mistake and then you forget about it and five years later you look up and you say, I put it in the G Fund and I thought it was a C because it kind of looks the same. You’re going to be disappointed in not only percentage returns, but the dollar amount of returns that are associated with an investment, which is what you’re looking for.
So, the default, though, here’s what you need to know. If you are a government employee or if you have friends that are government employees, they put it in a lifestyle fund for you if you don’t choose. So, a lifestyle fund means they are. It’s also called an L fund. What that means is that it’s going to have a degree of risk that is commensurate to your time horizon.
So, the longer the time horizon, the more risk. What is more risk? More is going to go into that S fund. So, I don’t like having somebody else dictate the amount of risk that I should have. So, it’s my preference to work with an advisor to develop that portfolio that makes sense for my specific situation rather than the government just putting it on autopilot in the L fund.
So, I do not recommend the L fund as an autopilot. I recommend that you customize it for your specific situation because you may find that the L Fund has too much risk or too little risk, depending on your circumstances. So, the default goes to the L fund. Don’t recommend that. I recommend that you do it based on your situation.
So just want to make sure that those that are enrolling in the TSP, if you don’t make decisions that are personalized, the government will do it for you. And they put it in the L fund and that may not be the right fit for you. So those are the four questions today. I had a lot of fun doing this, and maybe we will do four again or three again.
I’ll ask the advisor team what questions they’re getting. If you’re working with an advisor at PAX, say, hey, can you ask Darryl to talk about this on the show? And they’ll bring it to me. So, we want to hear from you in our community and we want to make this show relevant, based on current topics that are impacting all of our lives.
You know, I come at this with a bias that’s rooted in my faith. I have a bias that’s rooted in hope. And I make sure that I don’t overwhelm you with numbers. That’s kind of the way I approach this podcast. So, thanks for listening. Thanks for tuning in. And remember, you think differently when you think long term. Have a great day.
Resource links:
https://www.tsp.gov/bulletins/20-u-1/
https://www.irahelp.com/slottreport/mandatory-roth-catch-contributions-required-2024
https://fortune.com/2023/06/25/dollar-reserve-currency-brics-brazil-russia-india-china-south-africa/
https://www.globaltimes.cn/page/202307/1294900.shtml
https://www.bbc.com/news/world-africa-65784030
https://investorplace.com/2023/07/7-things-to-know-as-publicsq-psqh-stock-starts-trading-today/
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