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Ep. 100: Top 5 Brilliant Money Hacks to Save you Thousands

Ep. 100: Top 5 Brilliant Money Hacks to Save you Thousands

This week we are celebrating the 100th podcast by bringing you the top five most downloaded episodes. Join Matt Robison and I as we countdown the topics most listeners found helpful:

5. Health Savings Accounts – How you can enjoy triple tax benefits by using my favorite all-time account

4. ETF vs. Mutual Funds – This was a hot topic last year when many people were hit with an unexpected capital gains tax bill on their mutual funds. In this episode we talk about the difference between the two “wrappers,” which is best for your portfolio and the nuances and work-arounds to ensure you are getting the most from your money.

3. SEP IRA vs. Solo 401K – Another head-to-head battle, this one for small businesses. Spoiler alert: Solo 401K is the way to go! 

2. Maximizing Employer Benefits – Want to learn how to launder your money, legally and with the most benefit to you? Listen up for a strategy to use more of your paycheck to take advantage of benefits such as after-tax 401K contributions and employee stock purchase plans while spending from your brokerage account to cover your usual monthly expenses.

1. ROTH IRAs for Minors – It turns out my listeners really want to set their kids up for success. In this episode you will learn how to turn your young child’s $3k in earned income (chores) into $50 million for their retirement courtesy of compounding interest. 

Didn’t see a topic that resonates with you? That’s ok. Check out my podcast page for 94 more episodes bringing you the knowledge you need to make the best decisions for your financial success. 

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Transcript

Transcript
Matt:00:00

The big top five episode of all time, hundredth episode spectacular. It’s Financial Planning for Entrepreneurs. I’m Matt Robison with Mike Morton the guest and host and owner of the Mike Morton podcast. Mike, how are you doing?

Mike:00:14

Hey Matt!

Matt:00:15

You’re looking pretty good for a hundred.

Mike:00:18

Yeah, not that 100 man. It’s not bad, man, it’s a good start.

Matt:00:22

Yeah so what we’re doing today is, this is fun, you have gone into the data, you’ve gone into the analytics. It’s not that hard. You counted numbers and we’re going to go through your top five most downloaded episodes. First of all, I’m delighted to see that I appear in only one of them. So my first question to you is, what are we doing wrong?

Mike:00:48

Exactly. Yeah. You and I, it’s not Matt, maybe it’s not working out.

Matt:00:53

Joking aside about me, it’s interesting to me that you’ve been very conscientious about this, you’ve been thoughtful about it, you’ve, you’ve evolved, what you’ve done on the show over time, and you’ve gone from a show that was about financial planning for entrepreneurs that was very much pitched that this is a more technical show, it’s a more let’s get down into the weeds kind of show for a very specific audience. And you’ve broadened it to financial life planning, which kind of encompasses the broader picture of, first of all, what you do and second of all, what your clients talk to you about, and it’s not all finance, it’s, hey, I have to figure out how to manage this thing in my life. But of these topics, I think what we’re going to get into are some pretty technical topics. So it’s just, it’s interesting to me, what did you take from that?

Mike:01:46

Yeah, it is, it’s, it’s a good one, I’m trying to move away from the technical aspect because I feel like what we were talking about in some of these episodes gets very numbers-driven and I think that kind of content is a little bit better to read, you can find anything on the internet, podcast articles, whatever it is, I think some of those are a little bit better to read. And I figure a lot of our talk is a little bit better to listen to. And it’s the life planning the things that are relatable to what you’re doing day in and day out. So it is interesting, I just pulled these top five episode topics. And I just want to hit on the topic. And of course, in the show notes, you can go back and listen to these. So we’ll just kind of hit on the topics and I thought this episode would be good, just top topics that people found most interesting. They’re the most downloaded topics. And so if you haven’t listened to all of one, I don’t, first of all, why have you not listened to all 100 episodes, you should. But if you haven’t, if you’ve missed something, then this is just going to be a quick blast of some topics. And if you find one of these interesting to you that you want to dive into more then there you go. There’s some content you can go and listen to, and of course, research more on your own.

Matt:02:51

So I obviously did not know what these top five topics would be. So you sent me a list. And I’m a rebel man, you sent me a top-five list, but we’re gonna do this countdown style. We’re gonna go from the bottom up, not the top down. The fifth most downloaded topic that we’ve covered. Oh, I might have done this with you. It’s how to use your HSA as a retirement account. Mike, what the hell is an HSA?

Mike:03:20

Yeah, so let’s do this. This is my all-time favorite account, HSA, the health savings account, it is the only type of account that has triple tax benefits Matt, you never pay tax on this money, you know, all that money that you make all the money that I pay you for hosting my podcast, all of that money is being taxed by the government, right? You’re always taxed on, the government’s going to be disappointed, you’re gonna be disappointed in that one. So you’re always taxed on that income, right? And usually, you don’t see it, it’s all for your paycheck and you’re also taxed on capital gains. So anytime that you make money, the government’s in there, you’re taking a little slice of it. So this is the only account that you don’t pay taxes on that money ever. You put money in and you’re not taxed, it grows and it’s not taxed by investing it, and then when you use it for qualified medical expenses, it’s also not taxed. So it’s the only account that has that. That’s why I love this account. So if you have access to a health savings account, you can use it not only for current medical expenses and get that tax-free saving, but you can invest your health savings account in the stock market, basically, low-cost index funds, let it grow for decades at a time and then you can use it in the future once it’s grown to a nice healthy amount and it’s still going to be taxed.

Matt:04:39

So this is a swindle. This sounds like some BS, man. It’s a health savings account, ah, health is right in the damn name Morton. So you’re telling me that when they say health savings account, this is like the Seinfeld routine but you made a reservation. You took the reservation, but you need to hold the reservation. It says help. And what you’re telling me is no, no, they don’t really mean that, you can actually use it for your retirement.

Mike:05:09

Yes. Don’t tell anyone, the IRS comes up with these great rules, oh, we’re going to do all kinds of rules and regulations about medical insurance and stuff. So they came up with this idea to have high deductible plans, make people more responsible for their own health, and so higher deductibles but we’ll give them this benefit of this health savings account so that you get the tax benefit for that. And then, of course, being humans and advisors in the financial industry we’re like, wait a minute, we could play around with these rules, we can use them to our advantage. So yes, it is a health savings account, and you only get the tax-free on the way out when it’s for qualified medical expenses. But you can, as long as you have a health savings account this year, keep track of your medical expenses, and keep those receipts, you don’t have to pay them this year, you can reimburse yourself down the road. And so that’s how you put this strategy together, put money in, invest it, let it grow. And in 20 years, pay yourself back for all those medical expenses. All right.

Matt:06:12

For our audio-only listeners, I am doing that thing where you pinch the bridge of your nose to show that you’re deeply frustrated, and you just can’t believe what you’re listening to. Can I tell you why for a second? And I know our longtime listeners have probably detected this. I’m not a financial expert. My background is, I was a congressional staffer for 10 years, I work in public policy and politics. Do you know where health savings accounts came from? This is why I know that this is all a scam. They were created in 2003 when George W. Bush was president. I’m not about to rip on Republicans. I’m a Democrat, I love Republicans, Republicans are great. I have many Republican friends who are fantastic. But this was a scam from the get-go. Because what they did not want to do was actually give people low-cost health insurance. So the idea behind this scheme was that if you’re in a high deductible plan, you could have a health savings account and the whole political idea was you should just save your own money because in general conservatives, this is a legit political philosophy and I’m not totally against it like I respect this. The philosophy is, we should just empower people to do things themselves. Make your own savings, and put aside your own money rather than have a government program, this makes sense, not another government program. You just save your own money I kind of can understand and respect that. But what you’re telling me, Mike Morton, is that from the get-go this workaround was so that they wouldn’t have to do what the government did 10 years later and say, actually, if you’re going to have like, health insurance, it has to, like insure you and cover you. That should be what it is. They did this thing where they said, No, you can just have this account, and it’s gonna have all kinds of tax benefits, and we’re gonna give it to you. But what you’re now telling me is, this is a super secret thing. It’s just a slush fund. Just save it for your retirement, do whatever the hell you want with it, and get triple tax benefits. Yeah, oh, my gosh,

Mike:08:20

Triple tax benefits, baby. But it’s like everything, it had good intentions at the start and it didn’t figure out how to use the rules. Yes, it did. All right. I don’t know how good I am. I’m in favor of people having lots of choices and being in charge of their choices and what they want to do. And that’s what I like about this is that it is a high-deductible plan. So it puts more of your health choices in front of you. But as we’ve said many times choice is not always the best thing, right? So yes, use the HSA this way, if you have the opportunity, just like we could talk about how the rich have multiple mortgages and how they don’t pay taxes. We’ve had episodes on that. So we’ll always bend the rules, and use the rules to our advantage, whenever we can, alright.

Matt:09:05

Since I just pooped all over the legislative history of this, I do want to commend what you were just saying is true. Like we’ve done episodes on how there is this thing that the rich people do, where they rotate, they can take a loan, and you can arbitrage your rates and all this stuff. And we’ve actually done an episode on like, actually, it’s not just for rich people like you could do this, I could do this. What I do love about this is that there is a benefit that anybody can take advantage of if you just have it and so this is a piece of awesome news you can use here and so I don’t want to give away too many of the mechanics because I now remember we go into this in the episode itself. So the name of the episode is how to use your HSA as a retirement account. And if you’re looking for something like this, I just think people should go back and listen to the episode itself. You can find it on mortonfinancialadvice.com Or if you follow this podcast, if it’s in your feed and you’ve subscribed, just go back and find that episode. Sound good?

Mike:10:09

Yeah, yeah, exactly. And one more takeaway during the open enrollment, which is usually in the fall, if you have access to a high deductible plan with an HSA, I highly recommend that you take a look at that always. Healthcare is first for you and your family. Make sure it’s the right plan. But I would definitely take a look at I’ve worked with a lot of clients transitioning to high deductible plans with HSAs. So there’s another takeaway for you. But Matt, I think we’ve got like four more to get through, man.

Matt:10:34

So that’s what I’m doing. I’m transitioning to the next one. So I remember the next one. Well, it reminds me of the movie, The Wedding Singer. As we talked about it, I was like news that would have been useful to me yesterday, because this is about ETFs versus mutual funds. And before people go to sleep, the hidden secret here is that this episode explains to you explain why so many of us, including me, got a gigantic freaking tax bill last year. It was so painful. And as you’re explaining this, I was like, Oh, can I get out of this? And you’re like, sure if you have a time machine. I was like screw you, morons. So explain what’s the nub of this episode.

Mike:11:20

ETFs and mutual funds. Quick overview. These are two different wrappers around a basket of investments. You’ve heard of low-cost index funds, you own the S&P 500. There are 500 companies, but you can buy one thing and own all 500. So that’s an index fund. Now that index fund could be an ETF version, or it could be a mutual fund version. All right, and think of them as like a wrapper around those 500 stocks, but the wrapper is different. Okay, so mutual funds operate differently than ETFs. Alright, so that’s the background, you can buy either one of them and it says mutual fund or it says ETF usually, there are all different nuances. But let’s get to the chase here. Target date funds are really good to use in your retirement accounts. I don’t recommend using target date funds in your brokerage account, specifically target date funds that are mutual funds. And that’s where Matt got into tax problems, incurring capital gains that he didn’t even realize. So I would shy away from target date funds in your employer retirement accounts. They’re great for doing it yourself but don’t use target date funds in your brokerage account. And then specifically mutual funds. Okay. So that’s the upshot. The other thing is that I really prefer ETFs over mutual funds, in all cases. ETFs are just a newer version. I told you they’re wrappers. It’s a newer version of this wrapper. And pretty much in all cases, it’s a better wrapper. So if you’re out there, and you’re just like, Mike said mutual funds, just choose the ETF version. Okay. The only reason that mutual funds have an advantage, one of the reasons is you can if you do auto savings, we talked about doing auto savings for different reasons, auto savings, you can auto-invest with mutual funds easier than you can with ETFs. But that’s the only caveat otherwise ETF version.

Matt:13:22

That really was the rub of all that first of all, wasn’t kidding about like information that would have been useful to me yesterday, because like many people, I didn’t know about the distinction. The easiest glide path, right like I just put my stuff into the available target date fund and patted myself on the back. So proud of myself and then yeah, like many people last year, I got absolutely walloped by capital gains. And I just, I was like, what the ETF?

Mike:13:50

Yeah, exactly. It’s annoying and frustrating. It’s always been a part of mutual funds. But now we don’t have to, you can use ETF versions. And as I said, they’re just a newer technology. They’ve been around for more than 20 years, but I liked them. So I would just use that version today.

Matt:14:04

So there are two episodes on this too, for people who really want the answer and like a little bit more of that nuance of why might you prefer the ETFs. What exactly went down, why we saw those big tax bills, what some of the nuances are here, and kind of like how to work around the nuances of each of these types of investments. And they’re in two episodes called ETFs versus mutual funds. Okay, let’s move on. Alright, so now we are moving out of the segment of the top five shows that I’ve done with you. And we’re boldly going where no man has gone before, into this next topic. Boy, I don’t know man, you’re gonna have to really try and make this sound sexier than it is on the surface. Because it sounds like basically, let’s call this some droid versus Han Solo. Okay, because what it is, is it’s SEP IRA versus solo 401 K. Okay, George Lucas explain to me why this is interesting.

Mike:15:01

Yeah, I think this might have shown up because it is a topic that people search for a lot. That’s probably why you know why it’s very important when you are a small business and you want to start an employer retirement plan. Your first question is what kind of employer retirement plan. And there are two popular ones, there’s the 401k and there’s the SEP IRA. So this was an episode I did with Megan Russell, shout out to Megan, who’s fantastic. We’ve done quite a few episodes together. But this one SEP IRA versus 401k is just exploring those employer retirement plans, which is better for you. And specifically more like small businesses, once you get to large businesses, they’re usually the 401k stuff. So this is if you’ve got a small business, which of these is better? Here’s the rub, Matt, take away, the solo 401 K, or the 401k, for your small business is pretty much always going to be better. So as Meghan says, every business deserves a 401k. So that’s the kind of takeaway here, but there are some nuances, the SEP IRA can be good for doing Roth conversions over to a Roth IRA, it can be good because you can implement it at the start of the year like here we are before tax season, you could open a SEP IRA, and put money from last year into the SEP IRA, you can’t do that with a solo 401k. It’s got to be open during the calendar year. So there are a couple of nuances. But if you’re just a small business ready for an employer retirement plan, I highly recommend looking at the 401k.

Matt:16:28

All right, so my takeaway here is, just the simple version is to go with Han Solo, not droids.

Mike:16:36

That’s right. Exactly. Yeah. The other day, we mentioned this as solo 401k, which is what we talked about, and I love solo 401 K’s for all those entrepreneurs out there, and also people that just have a little side hustle, where unlike Matt, and his hosting podcast, side hustle, if you actually make money on your side hustle, then I love solo 401 Ks, and so they’re a great opportunity for saving more on taxes.

Matt:17:03

I want to just clarify that I don’t make any money with you. That’s the key point here. It’s my mike Morton Business is a volume business only. So this one is literally called SEP IRA versus solo 401k. They have these hatches, these tools that will help you evaluate how exciting and enticing your headline is, and it’ll give you a score. I am seriously going to enter this one. If you know what I’m going to do I’m going to do this live on the air right now I’m going to do this right now. I’m not teasing about this. I just want to see, my last podcast score which is in beyond politics got an 84 out of 100. So that’s pretty good. As Barak was thinking, if this was pretty catchy, I’ve never seen a score below 59. So let’s see what happens here. Oh, I’m so excited. I’m so excited. 38 you are rocking it. But look, by talking about it this much. We’ve at least made it memorable SEP IRA versus solo 401k. All right. Oh, this next one is awesome. Because all you put in your little note about this is I’m not making this up money laundering with an exclamation point. I want to hear all about this teach us how to money launder, please. Michael Cohen and Donald Trump. This is called how to maximize employer benefit. What’s this about?

Mike:18:34

money laundering, the good kind of money laundering. This is that actually here, let me attribute that where I got it from this podcast was done with my great friend Meg Bartelt. And she has that it’s the good kind of money laundering, where you’re taking your personal money and moving it around from one account to another. And the upshot here is a couple of things. This is how to maximize your employer benefits. And this is really important and I run across this all the time with all of my clients, okay? There are a lot of benefits that you have from your employer. And what are you taking advantage of, you’ve signed up for a health plan, and you’re putting some money in the 401k. But there are many more benefits that they have that you just aren’t taking advantage of. So many times in a couple of them that we discuss all the time in your 401k often you have the opportunity to use the Roth or the traditional or even an after-tax contributions into your 401k. And these are massive savings over each year. And the other is an employee stock plan. Many employers’ public companies have an employee stock plan, and you can take advantage of that and literally just get some free money. Alright, so there’s free money kind of sitting on the table there with these employee stock plans now. So one, take a look at your employer benefits. Make sure you’re maximizing those but set the only thing I run across is, Mike, I pretty much spent, like I put away in the 401k. And maybe I do some Ira individual retirement accounts, and I pretty much spend the rest. I can’t put more money like this after tax 401k. You’re asking me to put more money into there and I spend my money. Okay, fair enough, okay, you’re putting some aside, that’s good, you got some good savings, but then you’re also spending the rest and you can’t save even more. But then I noticed that you’ve got some money that you have saved over the last 10 years in your checking savings and general brokerage account. So you’ve got some money, and this is the money laundering department. So instead of not saving, in the tax-deferred tax-free accounts, we’re going to take from your paycheck and put money into those tax-deferred tax-free accounts. And we’re going to spend money from your brokerage account to make ends meet for 2023. And that’s the money laundering, you’ve got your income at the top of the pyramid, and you’re shoving more into tax-free tax-deferred accounts. But that means you have to spend to meet your expenses this year, you need some more money, you spend it from your brokerage account. So it’s as if you laundered some money from your brokerage account into those tax-free tax-deferred accounts.

Matt:21:13

That actually makes some sense to me, right? Because that’s what money is for to be able to pay for goods and services. So it does sound like there are a few kinds of ins and outs of this that it’s worth understanding if people want to understand this episode is called how to maximize employer benefit. That absolute title, by the way, gets it what kind of score, it gets a 62. So into a good, barely passing territory. If we were in Harry Potter, you’ve gone from troll to dreadful. All right.

Mike:21:50

And let me just highlight that one last time, two takeaways from that. Make sure you know your employer benefits, you’re taking advantage of all of them. And if you do have access to after-tax 401K contributions and employee stock purchase plan, and you’re not already taken advantage of them, do some homework and research and listen to that episode.

Matt:22:09

Absolutely. No, that makes sense. I like the fact that it’s all kind of laid out in that. Oh, look, we’re saying at the top of the show, like there are some topics that you think people want to read through themselves to fact sheets, etc. Some people kind of want to understand the flow of a conversation and it’s great that this episode does that. All right, it’s time to reveal number one. It’s another, I’m not gonna lie to you, man. This title is dreadful. And I’m also doubly disappointed. You talked about triple tax benefits. I have triple disappointment with Mike Morton because first of all, you and I’ve talked about this issue. We’ve talked about this topic before, but for some reason, the more downloaded version of it is that I’m disappointed and crestfallen about the title which get a score of 39. By the way, beats you’re 38. You’re back in troll territory here, but the topic is really amazingly useful. We just talked about it recently. It’s called Roth IRA for minors.

Mike:23:09

Yeah, the Roth IRA for minors. And the reason this is the most downloaded Matt is just Megan’s way more popular than you.

Matt:23:18

Thanks, yes, I did put that together.

Mike:23:21

Are you more crestfallen now?

Matt:23:24

I’m, hold on, I have to switch from headline scores to the thesaurus.

Mike:23:30

All right, while you’re doing that, yeah, this episode is great. And what we get into here is more the ‘what is a Roth IRA for minors’, but specifically around the minors part, and really even young kids. Megan’s started this when she had very young kids. And so we go into that you could start a Roth IRA for a one to three-year-old and that I actually have clients that have done this, but she’s done it in terms of just household chores and making a few dollars and using it to teach finances as her young children grow up. We’ve talked about that as well. So we get into some of the details, how to open these things, custodial, Roth IRA for your minor, how you can contribute to them, and all that, but it’s fantastic. And I highly recommend this. If you have the opportunity. We were just talking in a recent episode about saving a few dollars for your kids, right? Once you can get that into a tax-free forever account. We do have to do an episode Matt around some actual numbers and blow people’s minds in the compounding interest. We said $3,000 turns into $50 million. But you can only do that if it grows tax-free. If I show you if you’re growing that in a taxable account, then it’s going to be half that it’s crazy. Taxes are amazing. Compound interest is amazing. But so is a drag when it comes to taxes. So that’s where the Roth IRA comes in, especially for kids that they can really start getting ahead. They’re young, they have a long time horizon and just a few dollars make a tremendous difference.

Matt:24:59

I do want to just underscore the broader point here, which is what we did in the recent episode. But it was talking about the why of all of this, why this just the concept of money is so useful, is so important, what a huge difference that can make. And then we got a little bit into the, I wouldn’t say the how, what the sort of like the what, which was, you know, how easy this really could be if you just do a few simple steps. What’s great about this episode is that really gets into kind of the mechanics and the numbers, and what this would look like. And I find the whole presentation very compelling that, you know, as I believed it, but super duper believe it when you lay out just the gap that you can get using this pack for lack of a better word like the kids would say today. So it’s called score of a 39. How could you miss it? Roth IRA for minors, but I’m being curious, I’m being tongue in cheek, but I’m being serious. Don’t be put off by the sort of technical-sounding title. It is a let’s walk through this why, what, and how, and that’s super useful.

Mike:26:15

May not be a catchy title, but actually very good for searchability.

Matt:26:20

Alright, so look. Well, we are we’re about to wrap here. This was actually a lot more fun than I thought it would be.

Mike:26:28

Don’t you always show up to these thinking we’re going to have a lot of fun.

Matt:26:31

No, I have a giant ego. And when I saw that I was only in 40% of this. I was like… No this was actually great. So while we were talking, I looked up the headline tool. And you know, we’re gonna call this episode. Top five brilliant money hacks to save you thousands, headlights a score of 85 my highest record ever is 86.

Mike:26:55

We can’t just call the episode Top 5 Episodes?

Matt:26:58

The alternative title that I’m also tempted with is SEP IRA versus solo 401K. Also in the running is droid versus Han Solo. That might actually do better. All right, Mike Morton, used to be financial planning for entrepreneurs. Now it’s financial life planning. Thanks so much.

Mike:27:20

Thanks, Matt. Thanks for joining us on financial planning for entrepreneurs. If you liked what you heard, please subscribe to and rate the podcast on Apple, iTunes, Google Play Spotify, or wherever you get your podcasts. You can connect with me at LinkedIn for Morton financial advice.com. I’d love to get your feedback. If you have a comment or question, please email me at financial planning . Until next time, thanks for tuning in. This recording is for informational purposes only and should not be considered for investment advice or opinions expressed as our of the date of recording. Such opinions are subject to change. We do not guarantee the accuracy or completeness of the data presented here.

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