With Steven L. Pomeranz, CFP
Steve Turns The Tables As Terry Interviews Him!!!
With Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, FL
For their final show together, Steve and Terry Story interviewed each other, sharing some of their personal lives with listeners.
They began the conversation by recounting a funny story about how they first met. After being introduced by a mutual friend, they discovered that they were actually working in the same building, just two floors apart.
How Did Terry Get Into Real Estate?
Terry told listeners that she first got into the real estate business 31 long years ago when she and her husband relocated to Boca Raton from Miami. Although she came from a real estate family, at the time she was working with Norwegian Cruise Lines in the travel industry,. Terry noted, ”I’m grateful not to be in the cruise line business right now.”
Since she had gotten her real estate license while in college, her father encouraged her to give the business a try when she moved to Boca Raton. Terry said, “I jumped in with both feet, fell in love with it, and I did really well. I was ‘Rookie of the Year’ my first year.” That was an amazing feat, given the fact that she didn’t know a single person in Boca Raton when she started out.
Terry mentioned one characteristic of her professional career that she and Steve share. She said, “Starting young really gives you an advantage because when you start in a real estate career, you have to have money in the bank in order to spend the money to do the proper marketing of yourself and get established.”
Steve immediately replied that it was the same in his business as a financial advisor. He said, “In my business, too, it takes at least two years to build up enough of a clientele to even make a living, so starting young is definitely good.”
From Coldwell Banker To Keller Williams
Terry’s been mentioned so many times on the show as being with Keller Williams Realty that it may seem like she’s been there forever, but, in fact, she spent her first 29 years in the business at Coldwell Banker and only the last three with Keller Williams. When Steve asked her about the difference between the two firms, Terry explained her preference for Keller Williams. “The main difference is that it’s almost like an employee-employer relationship when you’re with a company like Coldwell Banker. When you’re with Keller Williams, it’s more of a partnership. We have profit sharing, which is a huge difference—50% of our office profit is shared among the agents.”
Terry’s Personal Life
Steve asked Terry to share some of her personal life. She related that she has two daughters, both in their early twenties. One daughter followed her into the real estate business where she is flourishing and her other daughter is a nurse. Both Terry and her husband are native Floridians—he from Fort Lauderdale and she from Miami. Like many Florida families, much of what they do for fun revolves around the water—boating, fishing, diving, sailing, water skiing. According to Terry, “Our weekend passion is taking the boat out.”
Finally Learning Some Things About Steve
When it was time for Terry to ask Steve some questions, the first thing she noted was that he’s never really talked about himself on the show. She asked him why that is. Steve explained, “Well, the show has really never been about me. It’s always been focused on the listener. It was never meant to be a vanity project or a vehicle to talk about myself. We have enough of that around us today already. I just really wanted to help people, to stick with the facts, and to get a chance to meet more people and learn more.”
Steve’s natural curiosity has been a driving force behind the show, as he’s always had a thirst for knowledge. He shared with Terry: “I love to learn about the world. I travel a lot, and I love to read.
How To Handle Investments In A Low-Yield Environment
With Christine Benz, Personal Finance Editor at Morningstar.com and author of The Morningstar Guide to Mutual Funds: Five Star Strategies for Success
Steve spoke with Christine Benz, Personal Finance Editor at Morningstar and the author of “Morningstar’s 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances” and the “Morningstar Guide to Mutual Funds: Five Star Strategies for Success”, to get some insights for retirees on how to handle the current low-yield environment.
The Bucket Strategy
Steve started off their conversation by asking Christine straight out how, in such a low-yield environment, people expecting to live off their yield income can manage to get by. He laid out the current situation on yields, saying, “The 10-year Treasury is around 0.6., 0.7%. Short-term CDs are in the 1% range, maybe 2%. So, that probably means, after taxes, losing money to inflation.” Christine replied that “It’s been an ongoing challenge over the past several decades where we’ve had yields on safe investments go lower and lower and lower. That’s left income-oriented retirees with the option of either subsisting on less or gravitating to higher risk, higher income-producing securities. I think that there are other ways to think about building cash flow in retirement that don’t involve exclusively income distribution.”
Steve then asked her to explain what she calls “the bucket strategy.” Christine credits Coral Gables financial planner Harold Evensky as a strong influence in developing the strategy which she explained to listeners: “The basic idea is that you’re kind of structuring your portfolio as a series of buckets. In bucket one, you’ve got cash—CDs, money market accounts, what you have in your checking account, etc. The idea is to have in there two years’ worth of expected withdrawals that you can subsist on when your portfolio isn’t kicking off enough income to meet your living expenses.” She went on to explain bucket two: “Once you’ve developed bucket one, then you’re kind of stepping out on the risk spectrum. With bucket two, you’ve got a portfolio of high quality short and intermediate-term bonds. You’re taking more risks, but you’re potentially picking up a little higher income. The goal is to build yourself a runway with buckets one and two of roughly 10 years’ worth of portfolio withdrawals in safe investments.”
To combat the current extremely low-yield situation, Christine further suggested, “I think you can potentially add some corporate bonds into the mix to potentially pick up a slightly higher yield. You might also think about adding some dividend producing equities.”
Seek Professional Advice
Steve remarked about how much the yield environment has changed over the years. “When I started in the business in 1981, the yields on fixed income were considerably higher than the dividend yields on stocks. But in recent history, that has turned around 180 degrees. We now see a higher yield on the average stock, let’s say 2%+, than we do on US Treasuries and on some corporate bonds as well.” He asked Christine if people can manage to keep up with inflation with a 10-year runway composed mostly of bonds paying less than 2%.
Her advice was to get professional advice, explaining that each individual’s personal financial situation and needs are different. “It’s very personal – run the numbers and see how your retirement portfolio sustainability looks. It may be that 10 years’ worth of cash flows in very...
My Last Commentary To You All
Well, folks, this is our final show, and I want to wrap up my long tenure by sharing some of the most important lessons I have learned over these many years.
First, however, I want to thank everyone currently involved in its production. First, there is Brian Zeikowitz, my engineer. Brian has been with me since 2008 and, poor guy, he’s been listening to every word of the show, every week, to make sure I sound much smarter than I am. As a matter of fact, when we were discussing the show’s end, he reminded me of a story I told which made an impression on him, and it’s one that I had totally forgotten. So I would like to share it with you.
Back in 1987, I had been a stockbroker for six years, working at Merrill Lynch at the time and was still struggling to get on my feet and build a clientele. Of course, you may remember that 1987 turned out to be a very challenging year because of the 25% market crash on October 22nd. This crash was totally unexpected and reminded everyone of the 1929 Stock Market Crash which ushered in the Great Depression. So everyone was scared and shaken. Unfortunately, I was a casualty of bad timing because on October 1st, I had closed on a new, bigger home and my costs had risen dramatically. That year and the few that followed created a tsunami of events for me, a combination of high expenses combined with lower income similar to what is going on with a lot of folks today due to the Covid-19 crisis.
In order to keep everything going, I used my credit cards and any other debt I could muster to stay afloat. And I was not alone. A lot of my fellow brokers in the business were in trouble too and some of them decided to file for bankruptcy the following year. I was tempted. It was easy to do, and I noticed that those who did were still able to get a loan to buy cars and other things and it didn’t seem like it had much in the way of serious consequences.
So, I thought hard about it and finally decided not to do it, though it would have relieved me of much pressure and anxiety. My reasons? First and foremost, I felt I owed this money and it should be paid back. Now I know it’s not possible for everyone to adopt this attitude, but I was still earning a living and slowly building a clientele, and I had hope that this difficult time would eventually improve. I hoped it wouldn’t turn out to be a race to the finish however, so it was pretty nerve-wracking.
Also, I didn’t really know what the true future effects of a bankruptcy would be. There’s a lot of unforeseen consequences that can happen when you make big decisions like that.
So, here’s my point to the story. Eight years later, in 1996, after being so unhappy with the sales culture of the brokerage business, I desperately want to change the way I did business.
Fortunately, an opportunity arose which allowed me to start my own fee-only financial planning and advisory business and create my own culture. However, there was one caveat and guess what that was? In order to head up a firm as an investment advisor, I would not have been allowed had I declared bankruptcy. Wow, I thought, I really missed that bullet!
All that followed, a business that I loved, my great clients, and this radio show, would not have happened had I taken the other course of action.
So, the bottom line is: You never know what the consequences would have been for me had I taken the easier way out.
Okay, before I get into today’s commentary, I want to thank a few people who have been a tremendous help to me. First, my producer, Erica Stimolo. We are a small operation here, and Erica is the chief cook and bottle washer, and I have relied on her common sense to help guide me week after week. Happily, Erica has accepted a new position with my former investment firm and all will be okay. My editor, Carol Malzone, who is also my partner in life, has transported our websi
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This May Be The Only Good Thing About Covid Tax Changes For 2020
With Rocky Mengle, Author and Tax Editor for Kiplinger
This week, Steve spoke with Rocky Mengle, author and tax editor for Kiplinger Personal Finance, about the numerous tax changes stemming from the coronavirus pandemic of 2020. These changes are mostly specific to 2020 and can help you out a lot financially.
Due Dates For Taxes
One of the most important things for tax filers to understand is that the due dates for filing federal taxes have changed. Rocky explained, “Any federal tax due date previously scheduled from April 1st to July 14th has been extended to July 15th. This covers, of course, your income tax and your 1040. It also covers estimated tax payments that would have been due April 15th or June 15th.” Additionally, gift and self-employment taxes, as well as IRA and health savings account contributions for 2019, can be made up until July 15th.
But, let’s say that you’ve already submitted your taxes for 2019. It’s not too late to make a contribution to your IRA, but you will have to file an amended tax return in order to get the credit for the deduction. Rocky added, “And be sure that you tell your IRA custodian that you want that applied to 2019.”
The government’s stimulus checks are designed to help ease the burden many families are feeling in the midst of growing unemployment rates. But what do those checks mean in terms of how you file your taxes? Steve asked Rocky to explain it.
“The money you receive in your stimulus check isn’t taxable; you’re not going to be bumped into a higher tax bracket. In fact, there’s a chance that you might even get a slightly higher tax credit for 2020 because it kind of mirrors the stimulus check calculation. But if your stimulus check isn’t as much as your 2020 tax credit, you’ll get the difference back when you file your return,” Rocky said.
Charitable Donations And Student Loan Payments
With all the craziness and hardship that 2020 has brought, there is some good news in terms of charitable donations and for people who are employed by a company that helps pay off student loans.
Rocky informed listeners, “There’s a new above-the-line tax deduction in terms of charitable donations and you don’t have to itemize. It’s for up to $300 worth of cash donations. This only applies to 2020. On top of that, for people who do itemize, the cap on Schedule A cash donations has been removed. That means you can donate and deduct up to 100% of your adjusted gross income on Schedule A itemized deductions for your 2020 return.” Steve added that this is excellent news for charities that were worried about a drop in donations this year.
The good news doesn’t stop there. Rocky noted that “If you’re lucky enough to have an employer that will pay off some of your student loan, that amount will not be taxable income to you, the worker. It’s capped at $5,250.”
2020 Changes For Retirees
There are some changes this year for retirees as well. Retirees age 72 and over normally have to take required minimum distributions (RMDs) from their retirement accounts. However, the government passed an RMD Waiver for 2020. Rocky said, “You get a break from that this year. For 2020, you don’t have to take any RMDs if you don’t need the money.”
There’s also a great change if you need to take a loan from your 401(k). “There’s usually a cap on how much you can take,” Rocky said. “Instead of only being able to take 50% of the account balance, up until September 23rd of this year, you can take out the full balance.”
And penalties for early withdrawals from retirement accounts have also been relaxed for 2020.
How The Real Estate Industry Keeps Changing To Help You
With Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, FL
During this week’s Real Estate Roundup, Steve spoke with Terry Story, a 31-year veteran at Keller Williams, about how the real estate industry is adjusting to innovatively conduct business during the coronavirus pandemic.
Realtors Getting Innovative
Steve first asked Terry to talk about one big change in the real estate industry—big conference calls between agents all across the country. “We have giant conference calls each week. We try to find out what each agent is hearing and seeing. A lot of agents have started doing webinars to show first-time buyers what their options are or straight-out buyers that we can still get them into the home they want, pandemic or no pandemic.” Terry shared. The most important thing about this innovative approach is that the essential information still gets to the potential client while practicing social distancing.
Terry, herself, decided to get ahead of the game by carefully tracking home sales in Palm Beach County. “As realtors, we’re foot soldiers,” she said. “We know what’s going on in the industry before any reports reflect it. With this information, I can spot a trend before it’s reported as a trend.”
How Buyers Can Help Themselves
Getting innovative during this pandemic is something you can and should do, too, if you’re a prospective home buyer.
Terry explained, “You’re going to have an area in mind. You can get a real sense of the neighborhoods in that area without ever leaving your car. Drive around. Use Google maps to find spots of interest such as restaurants, shops, and schools. Pay attention to things like traffic patterns. Remember that once you move, traffic is going to get heavier once everyone can be out and about freely. And use online databases for neighborhood data and statistics.” Steve added that using Google maps to actually see what a neighborhood looks like can be a big help to someone looking for a new home.
Getting proactive now will help you get a sense of what it would be like to live in different areas. This will help you narrow down what homes are actually of interest to you. Then, once you’ve settled on a neighborhood that meets your needs, call a realtor to get professional advice. They’ll be able to help you find homes that will work for you and set up virtual tours.
To learn more about buying or selling a home, check out Keller Williams.
Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.
Customer ReviewsSee All
Very Good financial Information
Very useful and informative
Really great show!
Loving this podcast. Episode topics are interesting, the content is incredibly helpful, and the episode length is perfect. Keep up the great work, Steve.