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PODCAST – What Employees Need to Do to Secure Their Financial Future

| October 29, 2020

 

This episode features financial advisors, Dave and Jackie Hopkins. During this in-depth discussion with Dave and Jackie, we talk about everything from building up savings, developing a financial plan to fund college and protecting your finances during this huge period of economic uncertainty as a result of the COVID-19 pandemic. Dave and Jackie give our listeners a blueprint on how to protect their finances, so that they can build wealth and retire. After you listen to the podcast, feel free to contact Dave and Jackie via LinkedIn.

Jackie Hopkins: 

Welcome to trials and tribulations at work, the podcast where we talk about everything related to the workplace. Join us as we interview leading experts to discuss a variety of workplace related issues to help you learn about your rights as well as how to succeed professionally, personally and financially in the workplace. And here’s your host Jay Stafford, founder of the law firm of jw Stafford.

Jamaal Stafford: 

Welcome to the show. Today we’re going to speak with David Hedrick and Jackie Hopkins. David Hedrick is a licensed investment advisor based in Maryland, David has accrued an impressive 30 years of professional experience in the financial advisory industry. Dave’s diverse background as an owner of other businesses gives him the ability to see how a business needs to operate. From an owners perspective. He has served as chairman of his church Board of Trustees and volunteers his time to financial literacy of youth, including Boy Scouts and local churches. David is the proud father of two grown sons. Jackie Hopkins is a licensed financial advisor based in Maryland. She helps build personal financial security as well as prepares people for successful retirement, Jackie has successfully educated and positioned many clients to prepare for a successful retirement, as well as legacy planning and generational wealth. Jackie is a mother of three grown daughters. With an extensive background in banking and corporate America. She is passionate about preparing, and educating families about college planning and strategies to prepare them and their children financially. Jackie’s passion and focus is also on educating women on financial literacy, and the importance of a dedicated plan that needs to look different for women, both Jackie and Dave, assist clients in all states, and are seeking to educate and impact lives in a positive way. David, Jackie, thank you so much for joining us today. I want to get right into this because you know, this topic is at the forefront. For so many people. As you know, this pandemic has impacted so many people in the workplace in so many different ways. You know, we’ve seen lower wage, and lower skilled workers bear the brunt of the crisis, while many of the higher wage and higher skilled earners have not been so financially impacted by this. But you know, so many people don’t have a financial planner, and they’re maybe trying to do it themselves. He tell our listeners, what value add working with a financial planner gives them great Jay, first off, like thank you for inviting us today. And you know, we’re just so excited to be here, really working with a true financial planner averages about three to 6% return on your portfolio more than trying to do it by yourself.

Dave Hedrick: 

And we have to be very careful out there because there are a lot of folks out there, they’re advertised themselves as financial coaches, which is totally different because those are not licensed professionals. So dealing with someone who is a licensed professional who has passed the rigors of testing, but also the background checks required by the SEC and FINRA is very, very critical. And, you know, I think what we try to do is with us is to make sure that it’s not like a do it yourself project people try at home, you know, they get up on Saturday mornings, and as I boy, I’m going to put into a new dishwasher. And before the end of the day, they wind up calling a plumber and cost them twice as much as would have been if they had just hired a professional themselves. So for us, hire the professional, bring them into the situation so we can assess and not create million dollar mistakes.

Jamaal Stafford: 

Understood. You know, our listeners, you know, everybody’s thinking about, you know, securing their financial future, you know that they’ve seen the stock market go up and down. And I’m just wondering if you could tell us when you work with clients, or just sort of what would you consider the components people need to look at when they think of securing their financial future?

Jackie Hopkins: 

Well, Jay, we need to look at, you know, the two big risks that you have our income and liquidity as you head towards retirement or taking your debts into consideration, and we’re taking entire financial picture, what are your needs? When are you going to retire? What kind of lifestyle Do you want to live when you retire? What kind of things do you want to do? Do you want to travel? Do you still have a mortgage? Do you want a vacation home? Do you have students that you need to take care of still young children. So bringing that all into account is a big part of the financial components you have to look at there’s three buckets you’re looking at, you’re looking at your short term savings, your long term savings, and then the mid range. Those are your things you might be saving up for, in you know, a car for replacement of a roof some big expense that might come into play. So you have to prepare completely and look as far down the road as you can but really when you get to retirement to see income and liquidity that’s that’s what you want to you want to be sure you have enough money to do the things that You need to do, but you also want to be able to put a bubble wrapper around the savings and the investments that you’ve, you’ve set aside for retirement to be sure that they’re protected for you. Absolutely.

Jamaal Stafford: 

Um, you know, one of the things that you mentioned is savings. And I think, you know, everybody with the pandemic is sort of realized the importance of having a savings. And And I’m just wondering, you know, can you tell us? What’s your recommendation in terms of how much savings people should have?

Dave Hedrick: 

Yeah, Jay, we said, we usually recommend between three and six months worth of emergency fund savings. That’s, that’s liquid. And it looks like Jackie said, let’s think about it in the form of a bucket. But we’ve got different layers in the bucket, because we don’t want the six month of emergency fund savings to be as liquid as the first month. Because the situation where we’ve gone through all six months of emergency fund savings probably won’t happen because you know, we have to find another job or sit, you know, the financial situation will change. So within that bucket of emergency funds, you know, you want probably the first six to eight weeks, you want them, you know, pretty liquid where they’re in a bank account. But then as we get deeper into that bucket, let’s say if we’d have to tap into months, three, four, and five, we want them maybe in some bond funds or something where it’s going to be generating some sort of interest for us, you know, we want to at least beat the inflation rate. So when we’re looking for emergency funds, beating inflation, so we’re not actually losing value with our actual investments.

Jamaal Stafford: 

Another thing I think you mentioned, Jackie, was debt. You know, so many employees are dealing with debt, whether it be credit card or student loans. Um, let’s first talk about credit cards, you know, what strategy should people be thinking about, is part of sort of securing their financial future as relates to dealing with credit card debt?

Jackie Hopkins: 

Well, I think the first thing that people need to consider is that the credit cards are not a addition to your salary. You know, people use it as if it’s their salary, and they can continue to spend, they’ve got to look realistically at what what that cost is really how it’s impacting their future. Is it really something that’s a need? Or is it more of a want? And how do you get if you’ve already got the credit card debt? What are the strategies behind getting out of that? Many people have multiple credit cards for various reasons, there may have been something that was an emergency and they truly had to have credit card debt. What’s the best way to get out of that? And it’s taking a look at the time the interest rates? And then just what kind of strategies how to how do you restructure what is already coming into the household so that you can pay down that debt quicker and get out of it.

Dave Hedrick: 

And, Jay, I’d like to add to that, too, the way to avoid credit card debt is operating within a budget. Because if we operate within the budget, and we know exactly what our income is, and we work within parameters of the budget, because there are benchmarks within the budget, we should be spending a percentage towards housing a sprint, percentage towards food percentage towards entertainment, we know we want to live our lives, and we want to live fruitful lives, but operating within a budget is one of the most important things you can do to avoid the credit card trap.

Jamaal Stafford: 

Exactly. No. Dave, one of the conversations we’ve had offline has been around student loans. And you know, so many parents right now, you know, had to, with the pandemic have had to, you know, they’d have kids in college and sir, make a calculation of the do we send our kids back? And what have you do send them back to college and all the things associated with that. But you know, one of the biggest sort of debt drivers seems to be student loans. And it seems to be such an issue for some for a lot of parents, because the cost of college is so expensive. What advice do you have for parents about student loans?

Dave Hedrick: 

Well, J student loans are $1.7 trillion. it’s larger than credit card debt. And what most folks don’t realize is that student loans compound daily.

Jackie Hopkins: 

So you know, you have you’re making payments on student loans, and you’re thinking I’m not, you know, decreasing my balance. But really, the way to avoid student loans is leverage if you’re leveraging the system that we have, because many students in the state of Maryland, for example, you can actually start attending college at the age of 13. And I’m going to, I’m going to brag on Jackie for a second. She has three daughters that graduated here from Maryland high schools, but two of them actually graduated from community college with a degrees before they graduate from high school with dual enrollment, transferring credits back and forth. So it’s learning the system. It’s learning leverage, but also to they don’t have to go to out of state schools. We have some great community colleges. We have great in state schools, and I think Jackie, she does a phenomenal job of understanding how to fill out the FAFSA form and those situations there. There is so much money out there surrounding College and the best way I can tell you one of the best ways is get your students involved. In the process. Students are sponges but they love winning a game and if you can, first show them what the problem is and how great it is when they get out if they have student loan debt, but not only that, leverage, like he said, leverage the system College has the ability for you to leverage in a lot of areas. And students are the best, the best in the best position to do that they get excited about it, they like kind of winning that game of I didn’t have to pay this someone else paid for it, or I want a scholarship. Those are the leveraging that you have to do to think about and it’s, it’s having that conversation with your kids who get excited, they’re with other kids, they want to go to these schools with high dollar names, and that may not be the best fit for them. So it’s looking realistically as what that student loan debts going to do down the road.

Dave Hedrick: 

And I think Jay, you know, we’re spending some time on college, but I think we need to, but leveraging not only just the spring in the fall sessions, but leveraging the winter in the summer sessions, because, again, I’m gonna brag on Jackie, because she did a phenomenal job with all three of her daughters, but they were on to three year track, you know, it wasn’t the five year track. So again, when you shave off that much time of spending time in colleges, and also leveraging it’s not how many degrees not what degree do you want, but how many degrees can you get while you’re there, and leveraging you know, your your classes to where you come out with certifications, you come out with licenses. So you want to be ahead head and shoulders above the rest of the crowd, you don’t want to be just the person that graduated with a BA, or an A or, or even a master’s degree. So again, separating yourself from the hurt,

Jamaal Stafford: 

great, great, and the stain on the student loan peace for just a second on if you are a Sheree younger parent, and you know you’re looking at kids, you know, maybe 10, seven years old, something like that? How should they be, you know, obviously, you know, you want to do everything you can to, you know, make sure your kids get scholarships and credits as early as possible to go towards the college degree. But is there what should they be doing to save for those college costs that are going to come up another seven, eight years down the road?

Dave Hedrick: 

Yeah, 529 are great plans. They allow that they allowed to put the money in and it actually grows tax free to where you can actually use that for for the students. And there, they have a great place with that. So again, sitting down, establishing with the budget, what we can, along with saving for retirement, it’s a multi faceted plan. So yes, the savings for college is very, very important. But also taking care of our retirement needs, you know, has to be priority as well.

Jamaal Stafford: 

Gotcha. And speaking about retirement, I want to turn there because so many employees, they go to work, and they’re they’re working, you know, towards retirement, you know, every day, and you know, they they sort of have visions of you know, once they retire, they’re going to you know, go to Florida go to a beach somewhere. And you know, but so many of them, I think with the pandemic, and you know, the 2008 financial crisis, so many of them have felt like that is out of reach. Can you tell us what should average employee, you know, is making, you know, middle middle wage, middle income? What can they be doing right now to help make that sort of vision, a reality, a vision of a true secure retirement? What can they be doing right now?

Jackie Hopkins: 

Well, I’m gonna say the first thing they need to do is get educated about what they have and what opportunities they have. And you know, all retirement plans are not Do not look alike. And so many people will go into a job. And they’ll take a look at what they think what we’re seeing so many people that think they have a pension, it really isn’t a pension, it’s what they believe is a pension. So understanding that getting an outside view of what they have, just because you’re sitting in front of someone, and they’re talking to you, or retirement coordinator doesn’t mean they’re licensed, and they have the the knowledge, the financial knowledge behind what they’re talking about. So getting a second set of eyes and then time I can’t tell you time is the greatest factor in having a successful retirement, you need to start early and you need to be consistent and have it automated. And then where you put those buckets of money is so important. You know, your growth is dependent, you know, your retirement is dependent on the type of growth that you’re going to get in a retirement account. And being in the right vehicle for you. For your age, for your risk tolerance for your place in life is so critical in being successful,

Dave Hedrick: 

right. And also to you know, because 401 Ks Four, Three B’s are great retirement plans, and they’re set up by the IRS. But in one thing we have to remember is when we were inside of those plans, you know, we call it our money’s technically in jail, because there’s only two ways really to get it out. We either under the age of 59, you either have to leave employment, or you have to borrow your own money. So again, accessing and using it, especially if you have a company match, you definitely want to get the company match, but you also want to have you know, retirement resources on the outside to where you’re in full control. To where you control the investment options, because again, understanding that target funds, which are very popular in your, in your 401, K’s usually aren’t the best option for you because it’s the mixture of bonds and stocks. So again, understanding exactly where your money’s being invested, how’s it being invested, and the growth is so, so important. And that’s where a professional comes in place. You know,

Jamaal Stafford: 

great, great, Dave, let me ask you this. You know, in thinking about the 401k, Can people hear a lot about this, you know, acorn, and Robin Hood, Can people save for retirement in those accounts? Like what? Tell me a little bit about that, I don’t know a whole lot about those apps, but I hear so much about them.

Dave Hedrick: 

Yeah, it’s they’re very popular with folks, let’s say in their 20s, or even early 30s. And it’s become kind of a fashion statement almost to have the app on your phone. But in reality, they do not qualify as retirement accounts, they don’t get the same qualifications from the IRS. And a lot of cases, what they are, there’s very high fees associated with that they may see some seem small, you know, within pennies of what you’re doing. But if you look at the actual percentages, it actually is very, very expensive. And when we had him back in March, when the market was in turmoil, you know, you had those apps that were actually they were down for days, when people couldn’t get access to their money. And you don’t know who to call, it’s an app. So you can’t pick up a phone like with jack, you know, you have our cell phone numbers and pick up say, Hey, I have a question. I, you know, I’m concerned about the market, because that’s what our clients have, they have our cell phone numbers, so they don’t have access to anyone there was days when they didn’t know where their money was. So it was very critical. And, you know,

Jackie Hopkins: 

Yeah, I was gonna say, and who is behind these apps? Are they licensed? Are they you know, if you look behind some of these, they’re literally a couple, a couple of kids that went out and created something and put it together. And you’re hoping that it’s going to do what it’s going to do? What happens if they tomorrow, if they shut down the app? Do you have access to your money? Do you even know where to look? So when you’re dealing with your money in retirement and financial professionals, you need to know who the brokerage houses are that are holding your funds and where they’re at how to get to them?

Jamaal Stafford: 

Great, great, you know, one want to go back to something you guys just mentioned about your employees sort of touching their 401k. You know, with the cares Act, which Congress just passed, as relates to the coronavirus pandemic. You know, it allows individuals with certain retirement plans to tap into their retirement savings before they reach the age 59 for I guess Coronavirus related distributions, up to $100,000. Without the 10% penalty. Do you guys have any recommendations about you know, people, you know, look, they’re going through a hard time should they tap their 401k? for, for resources at this point? What’s your recommendation on that? If you have one?

Dave Hedrick: 

Yeah. And Jay, I’ll tell you, it’s probably, that’s the last thing you absolutely want to do is touch your retirement savings. And I understand there’s a lot of folks that are hurting out here, you know, with jobs and with situations, and we’re trying to make sure that they’ve got, you know, resources to pay the mortgage. And we understand that, and sometimes you have to make decisions, you know, that you really don’t want to. But as Jackie said earlier, time is the great equalizer. And you know, we teach something called the rule of 72. And it tells you how long it takes money to double. And so once you know, you lose those compounding periods, it is so critical for you to keep that money working for you, no matter what’s happening here in 2020, or what happened back in 2008. You know, we can’t take our eye off the prize of retirement because unfortunately, as healthy as we are today, and as active as we are, one day our bodies are going to wear out, and we’re not going to be able to work and you know, one of the other things we sit down we work with our clients about his long term care, you know, you know, we don’t have that we don’t have, you know, the the programs in place that previous generations did. So understanding we’re not only planning for our retirement years, you know, the golden years of traveling and spending time with grandchildren. But we have to look at Long Term Care one attitude, people are going to need a long term care event. Average Long Term Care event lasts about 24 months and a long term care facility, whether it’s a nursing home, assisted living, right around the average of about $10,000 a month. So understanding, you know, and you know, in a Jackie, you know, does a phenomenal job with women. So, understanding that we’re not just planning for today, we have to look 20 3040 years into the future. So I guess the answer the original question is, you know, we’ll sit down, we’ll strategize with him. We’ll do whatever we can to make sure yes, we are taking advantage of the cares act and what we can do with that. But also, let’s not take our eye off that ultimate prize,

Jamaal Stafford: 

Jackie? I want to touch on your the work you’re doing with women investors, you know, it’s interesting, you have a niche focus on it. So tell us a little bit about the work you do with women and the considerations. What makes planning for maybe women different than men?

Jackie Hopkins: 

Okay? Well, women, women actually have to plan differently. women, women are historically out of the workforce longer than men, they tend to be the caregivers, in in relationships, and in families, they’re watching young kids and later in life, they tend to be watching parents or even grandparents at this stage of life, they work part time so that they can, you know, manage the family and so their their opportunities for growth inside of 401, K’s and retirement plans at work tend not to be there. And they need to have another strategy. Women live tend to live longer than men, and they’re generally younger in a relationship. So they need to strategize differently, even as a couple, you don’t want to create a retirement plan, and then spend it all down on the first spouse or first person in the relationship, and then have nothing for yourself, you still need a place to live, you still need to live in retirement, women, on average, live about six to 10 years longer in retirement than men and tend to live alone. You know, the average age of a widow is about 65 years old. So you know that but yet, the two fastest growing generations we have right now are 89. And over a 90 and over. So women are living longer alone in retirement and they’ve got a plan differently and take a look at that differently. Women tended not to be involved in finance in the relationship. So getting education is very critical. You don’t want to be in a in a stressful situation, a divorce or a death or a medical emergency, trying to figure out finances and what it all means. Just so being involved as a couple and understanding what where everything is what it all means how it all works. And having the relationship with the financial advisors as well. So that you have a place to go to ask the right questions is very key.

Dave Hedrick: 

Yeah. And Jay, I like to dovetail into a little bit, what Jackie said is, is making sure if you’re if you if somebody is older, they have their children involved in their money if their 70s or 80s. You know, making sure that their children know where the documents are, they know what accounts that they have. Because again, unfortunately, we have dementia, we have Alzheimer’s, we have all these different things in our society. So you know, unfortunately, we’ve seen it even on our own practice, to where you know, a wife was because the husband, he didn’t write anything down. And he never thought anything would happen to him. But unfortunately, dimension took over and there were accounts that were lost that they never could find. So again, understanding that, but another critical part is making sure that they have their legal documents in place, whether it’s a will a trust, their financial medical power of attorneys. So again, helping the folks to understand how important these are and I can’t tell you how many times and literally this week with a client and found out her father died unexpectedly at 74 years old. And no will no documents no nothing. So as you know, as an attorney dying intestate. So again, it’s going to take years to sort out this estate. So having those pre planning and planning for the future is so critical on every aspect of it, got it and

Jamaal Stafford: 

stay on that point. You know, when do you guys recommend people get through wills and power attorneys in places? Is there an age or life event? Like? What’s your recommendation on that?

Dave Hedrick: 

Actually, Jay, great question. And we tell our folks, once once, you know, someone turns 18 years old, because at that point in time, there are legal adult, they need to have, at minimum, their medical and financial power of attorneys, because let’s say for example, someone has a student that goes away to another state to go to school, okay, they’re in the hospital, they can’t speak for themselves medically, even as a parent. If someone calls up because of HIPAA policies, they can’t help they can’t when they can’t get you know what the position is of the student that’s in the hospital, they can’t find out their condition. But also they can’t make any medical decisions because they’re a legal adult. So if they’re in a coma or something, there would be a court appointed advisor for that person to make those medical decisions, not the parent. So, you know, 18 years old the day they literally turn 18 you want the medical and financial power of attorneys in the wills really, if it’s even if it’s only a basic will, starting after that. And just kind of dovetailing him with that is one thing that we’ve seen in our particular practice, kind of dovetailing these two subjects of student loans, but also, on top of documents. If a parent takes out a Parent PLUS loan, or if a student takes out a student loan, and either one of those pass away prematurely, okay, if the parent passed away away, the students not only responsible for their student loans, but also the Parent PLUS loan. Same case, if a student passes away, and they have student loans, and the parent has signed on those student loans, the parent is now responsible for those student loans. So making sure if there are loans out there, that life insurance is used to cover those two loans, making sure that it’s not a burden if someone passes away prematurely. So using life insurance as a planning tool is very critical, especially in those situations with younger people, but also, you know, within families and making sure we are protecting our income. So there’s a lot of strategies that we employ within our practice, and making sure folks are protected from that, you know, God forbid, if somebody passes away too soon, but also, you know, making sure we don’t outlive our money.

Jamaal Stafford: 

That’s great. That’s the first time I’ve heard, you know, someone say, you know, look, you know, the life insurance strategy with the student loans, but it makes so much sense, because, you know, it’s my understanding that student loan debt is not dischargeable in bankruptcy. So, you know, like, in the situation you just mentioned, if a parent passes away, and that this student is, you know, the students still on the hook for the loan, just just unbelievable, to me, in terms of, you know, and I want to stay on the student loan piece for just one, one second, if you’re a parent who has already signed on for the student loan for your kids can is it’s too late for them to think about that life insurance strategy, or what can they do now, I guess, really are already sort of full in with the student

Jackie Hopkins: 

loan. Yeah, it’s, it’s not too late to sign on as far as the life insurance and I just want to touch a little bit all life insurance is not the same. Okay, so standing, getting educated about what what truly is the best type for you, because you don’t want to again, you don’t want to spend all your money on something that’s not appropriate. But inside of the student loans, the first thing I can tell you is understand inside the plug Parent PLUS loans understand what a student loan is. There are several pieces inside of a student loans subsidized unsubsidized, you’ve got the federal and Stafford you’ve got all these Pell Grants, and people really are signing documents, and they don’t really know what they’re signing. So it’s sitting down with someone, and getting that explained to them, and then developing a strategy for the best way to pay that down. Because, you know, the the federal loans and that the loan providers are going to give you a plan to this is how much you pay, but they’re not going to tell you the best strategy to pay it down in order to get out of that debt quicker. So it’s again, sitting down with a financial professional that’s willing to walk you through. And that’s what our philosophy is our our core belief is to educate you on what you already have, so that you understand what you have and how it all works. And then it’s developing a strategy to get you to the place that you need to be, which is debt free, and financially independent.

Dave Hedrick: 

And Jay, just real quick to touch on student loans just a little bit more. So we’ve worked with hundreds and hundreds of people, you know, and like Jackie said, we’ll break down the loans. We got federal, and we got private and subsidized and unsubsidized. And we’ve got so many different loans within loans. And I asked them exactly the same question. And I get the exact same answer every time because well, I asked him, I said, Did you have any idea what you were signing? Did you? Did anybody explain to you what compound interest were you taught compound interest in high school college with any? Did you understand what this meant to you and what it was going to mean to your financial future and to a person, every one of them said, No, I had no idea. I was pushed a pile of papers in front of me. And unfortunately, Mom and Dad are just as naive as they are. They’re signing two Parent PLUS loans to. So that’s where it goes back to the education, we have to educate people starting in elementary school, starting in middle school, starting in high schools, to understand what it means just the basics of Finance. So they don’t make these financial mistakes, whether it’s with credit cards, or whether it’s with student loans. So again, the core of our business is the education, implementation, and the relationship that we have

Jackie Hopkins: 

with all of our clients and can’t stress enough that you do not want to retire Rob retirement to pay for college. Those are things you will never get back. And it’s having those conversation with the children and getting them evolved to understand you’ve still got to be secure in your own future before you can help. Everyone wants to help their two children and do what’s best for them. But you can’t do that if you’re not financially secure yourself. So it’s developing a strategy that’s going to get you you know, the entire family. They’re creating legacy planning. That’s amazing

Jamaal Stafford: 

that you know, thank you guys so much. We’ve got some questions from our listeners. I wanted to ask you guys on we’ve got three questions. First question is three 35 year old parent with two children, ages five and two. And she’s trying to figure out the best way to save for children’s education. And it goes what you talked about earlier day, she safer the children’s education of five to nine account, or just a regular investment account or a mix of both? What’s your recommendation on that?

Dave Hedrick: 

Yeah, um, the 529, because of its the taxes that you don’t have to pay because it’s growing tax free, is if you’re saving for college, it’s where you do want to save, you don’t want to save in a regular investment account. Because with that, you’ll have taxes due every year on the growth of that account. So for saving for college, yes, the 529 has the tax advantages towards that. But again, looking within the budget, seeing exactly what you do, because if we start early enough, we start young enough. And this with this particular situation, they have two children. So they really don’t need to 529 they need one, because the 529 are transferable between siblings. So it’s actually by blood relatives. So they really want because the one child may be really a very gifted athlete, or may have very, very gifted, you know, academically to where they’ll qualify for more scholarships than what another child would. So you can transfer that money back and forth. So you really don’t want to establish to establish the one, let’s fully fund that as much as we possibly can. And then use the strategies based upon what the needs are going to be of the student.

Jackie Hopkins: 

And, and I would also say there are several different 520 nines out there. So it’s taking a look at what one has the best advantage to you just because you are in Maryland doesn’t mean you can’t use a plan that’s out of New Jersey. So it’s taking a little bit of a comparison and seeing what might be a little more beneficial to you as you open these plans.

Jamaal Stafford: 

That’s great. That’s great. I did not know that the five to nines were transferable. That’s great. That’s great information.

Dave Hedrick: 

Each state has their different investment options. So you know, there, there are many states, because again, Maryland may have the best one. But like Jackie said, New Jersey, Colorado, because you can invest in those, and you can use them for different states.

Jamaal Stafford: 

Awesome, awesome. Another question. My wife and I, this is from a listener, my wife and I are thinking about buying a vacation home in the Caribbean, with COVID-19. And the lockdown, the desire to get a vacation home is only increased, they probably want to do it in the next five to 10 years. Do you have any recommendations on how they save for that home? And should they pay for it in cash or finance it with a mortgage?

Dave Hedrick: 

Well, first off, they’re going to have to have an extra bedroom. So Jackie and I are the winner. So we’ve got to make sure we put that into the plan? Well, no. And Jay, really, if we’re going to be doing something like this, let’s leverage other people’s money, because mortgages right now are in the high twos, the low threes. So and again, if they’re looking at five to 10 years, the economic conditions, of course, you want to save as much as you can, when you have a big ticket item and we talked touched on earlier, that’s kind of our middle bucket of you know, we know we’re gonna have a big ticket item, let’s get it the larger downpayment because we can avoid, you know, some of the the fees that are associated with it. We have mortgage insurance and things of that sort. But at that point in time looking at it, and again, I you know, I came from an era, my first mortgage that I had was 13%. And when you sell that to people today, they think that’s unrealistic, you know, and just shows how old I am. But it just but it what it what it does is, it’s and again, that’s one of the keys to finances that we sit down and we strategize with is leverage, how can we leverage the system that we have to our advantage? So again, I would say you know, again, you know, looking at leveraging, you know, the mortgage.

Jackie Hopkins: 

Yeah, and I there’s nothing wrong with having cash set aside for a mortgage, but taking out a mortgage and leveraging that money. Now you’ve got leverage on both sides. But if you truly needed to pay it off, you have the capital to do it. So it’s, again, it’s leveraging what’s best for you and talking it over with someone that can show you the pros and cons to

Dave Hedrick: 

it and just kind of touching base on it real quick is, but you know, think about it if we’ve got a mortgage, that’s 3% Okay, that we have investments over the last 15 years that have averaged between 11 and 12%. You know, we’re giving away 9% in growth because we’re paying off the 3% mortgage, because that’s our philosophy we want that bill paid off we want that mortgage paid off because it’s it’s security to us, but sometimes we have to look outside our security because you know, we haven’t seen the motion sensor nerve in the bodies, the ones attached to the wallet. So we kind of have to desensitize that nerve a little bit. And so and then really look at you know, what is the most important thing that we can do as far as the leverage. It’s awesome. Yeah, no,

Jamaal Stafford: 

look, they’ve got a they’ve got to get that extra room for jack. Adam, I don’t blame you. With this lockdown. This sounds great. Um, last question for you guys from one of our listeners on there. 10 years away from retirement, generally speaking What should their portfolio look like in terms of the investments that they’re in, they don’t want a lot of volatility. And they don’t want to be in a position where they have to work longer, because another financial crisis happens right? Before they retire. Do you have any suggestions on that,

Jackie Hopkins: 

right. And so this is where, you know, you’re within 10 years, you still got some time on your side, but it’s critical that you are positioned in the right place, there are products out there where you can essentially put a bubble wrap around your money and protect what you’ve grown and still have growth. volatility is what drives the market is is a good thing. But you need to protect what you’ve grown, so that you can still retire. And so it’s, it’s working with someone, it’s not really a one size fits all, but you’re a little more conservative, and we’re taking you in a direction where you’re not gonna feel the effects as as much in the volatility, but you still want some of it for growth as you head towards retirement.

Dave Hedrick: 

So in Jay, also, too, with that is as we get older, you know, our sense is to be a little bit more conservative. But what we want to be able to do is to create a passive stream of income. And that’s the ultimate goal for us is how many it’s not which passive stream, but how many passive streams can I create, through my investments through my retirement savings through a business, because we’re finding folks today, we don’t have the quote unquote, hard retirements that we had, you know, in previous generations, where folks at the age of 65, they left their career, they hung up their hat, and they never, they never did anything again, for us. You know, especially as folks are aging out, they’re starting second careers, they’re just getting started, I have a good friend of mine who’s 78 years old, and he could probably run circles around all of us, because he’s excited about what he does. And he’s, he’s, he’s, he’s living life. So just don’t look at retirement as an ending, look at it as a beginning. So again, protecting what we’ve got growing it, but also creating new streams of income, but also creating new streams of activity for yourself and growing personally, as well as financially.

Jamaal Stafford: 

That’s awesome. I like what you said about it’s not it’s about having multiple streams of passive income. That’s, I think that’s powerful. Because, like I mentioned earlier, you know, so many employees are sort of have that, you know, I think it’s oftentimes where they feel sort of, you know, like, they can’t reach that ultimate goal. And like you said, just a moment ago, if you think of retirement as just the beginning, the beginning of a potential opportunity to do something more. I think that can really be be powerful. Dave, another question I want to ask is, what does it cost to work with a financial advisor such as you and Jackie?

Dave Hedrick: 

Yeah, Jay, great question. And there’s so there’s so much variance out there in the industry, Jackie, and I, when we decided this was going to be our career path, and really, this is going to be our mission for life, is we set up ours differently than pretty much any advisory firm out there. Because most advisory firms, if you walk in the door, first off, you know, it’s an advisory fee of about 12 to 1500 dollars to sit down and to develop a plan. And then if you have to have a minimum of 250, most times $500,000 of investable assets, you know, to be able to work with them. But that eliminates a good percentage of the population because most folks, they’re looking for help, but they don’t know where to go. So the way we set up our practice was is we don’t have the advisory fees. We don’t have the minimums. I mean, you know, we have clients that are multimillionaires, but we have clients are just starting for the littlest $50 a month. So really, the middle class has been abandoned throughout this. So our goal was to teach the 98% what the 2% have known for generations. So let’s level that playing field. Let’s give folks the same opportunities and have folks to get the same information that the wealthy have had for years. So again, that’s why we want to take women into a different place. We want to take folks that maybe don’t you know, they’ve got a little bit of money from a rollover in a retirement account. What do I do with it? So

Jackie Hopkins: 

we’re sorry, we’ve got an entire generation of people that are receiving inheritances and don’t know what to do. And just reaching out, you know, you’ve got companies that are merging and 401 K’s that are changing, and people just have one or two questions, and we’re encouraging people to reach out, reach out and ask those questions. We don’t have fees associated with that. Just get the education so you know what to do and what’s best for your situation.

Jamaal Stafford: 

That’s awesome. And one of the other thing you know, you guys have a great newsletter that I get, is there a way they can sign up to get your newsletter?

Dave Hedrick: 

Yeah, just on LinkedIn would be a great place to sign up Jacqueline Hopkins on LinkedIn, or give us an email at finance stages@gmail.com

Jackie Hopkins: 

just let us know you’re interested into the in being signed up for the newsletter. All we need is an email address and a name to do that.

Jamaal Stafford: 

That’s great. Great. Talk to me, before we let you go. I always like to ask the financial advisors give us give me again, I know, no one has a crystal ball. But tell me, what do you think the next year two to five year to two years looks like? And again, I realized that who knows what can happen? Because I’ll tell you in January of 2020, I had no idea that COVID would happen, but just to the best you can give us your thoughts on what maybe the next year might look like for us.