What Dentists Want to Know — Listener Q&A #26 – Episode #339

On this listener Q&A episode of the Dentist Money™ Show, Ryan and Matt talk about “I” bonds, life policies for kids, and buying a home in today’s market. With inflation soaring, people want to know more about Series I savings bonds. What are the options for life policies for kids? And, if you’re in the market for a home, should you still buy, or wait for the market to cool down?

 

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Podcast Transcript

Ryan Isaac:
Hey everybody. Welcome back to another episode of the dentist money show brought to you by dentist advisors, a no commission, fiduciary comprehensive financial advisor, just for dentists all over the country. Check us out. At Dentistadvisors.com today on the show. Matt and I are coming to you Live from the CDA conference in Southern California. We are just joyously hanging out in the hotel room today talking about I-bonds, kids life insurance. And the question of, “should I wait to buy a house?” lots of good questions around these topics coming in lately. Thanks to those who asked them and submitted them. If you have any questions you’d like us to cover, shoot us an email a DM, go to the website and submit a question or a topic for the show. We’d love to chat about it. And if you want to talk to us directly, go to dentistadvisors.com, click the book free consultation link. We’d love to talk to you sometimes soon. And thanks for being here. Everybody enjoy the show.

Announcer:
Consult an advisor or conduct your own due diligence. When making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist advisors or registered investment advisor.

Ryan Isaac:
Hello, Dentist money show listeners and friends. I would like to invite you to join us for something new and exciting. It’s something we’ve never done before, but we’re all very excited about this on June 22nd, June 22nd, we are going to do an episode of the podcast, the dentist money show, but we’re gonna do it live, which we’ve never done before. And again, that’s June 22nd, 2022. Which is a Wednesday, by the way, you will be able to tune in to the episode as it happens. As we record in the studio at 5:00 PM mountain standard time, June 22nd. And we’ll be taking questions on air. You can join the conversation, submit questions live, up-vote the questions from others, that you’d like to hear answered. We will also be announcing the release of a brand new dentist money service that we have had in the works for years and have, been excited about and have feedback from, many, many listeners and clients and dentists around the country for years about this. And we’ve been waiting for it for a long time. So we’ll have more info about that on our live podcast episode, which again is Wednesday, June 22nd, 5:00 PM mountain time, and to register for the live show and to get the Zoom login instructions, go to dentistadvisors.com/live that’s dentistadvisor.com/live. It’s gonna be awesome. We’re super excited. We would love to see you there. Thanks again for joining us. Enjoy the rest of the show.

Announcer:
This is Dentist money. Now here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to the dentist money show where we help Dentist make smart financial decisions. I am Ryan and I’m here sitting side by side. Thank goodness with the Hollywood mountain, Matt Mulcock. What is that? What’s up?

Matt Mulcock:
Yo, Ryan, are we sitting side by side? Do we tell, do we tell the good people where we are right now?

Ryan Isaac:
Let’s describe the scene. Matt is visiting his his soul town. You know, like a soulmate in life.

Matt Mulcock:
Yeah. Yeah.

Ryan Isaac:
This is your soul City.

Matt Mulcock:
There is soul city, there is soulmate, there is spirit animal.

Ryan Isaac:
Spirit animals.

Matt Mulcock:
Yep.

Ryan Isaac:
Umm, not exactly the exact city, but county. This is your soul County.

Matt Mulcock:
Yeah. I’m in the county…

Ryan Isaac:
Matt is here in with me in Orange county, California. We are… We can feel the palpable energy from Disneyland around the corner.

Matt Mulcock:
Yeah.

Ryan Isaac:
We are. We are here at the…

Matt Mulcock:
It is so close.

Ryan Isaac:
Yeah, it is so close. You can just feel… I can feel the power of Churros pulping.

Matt Mulcock:
The power of Churros the happiness. I actually, I have to tell you, so I’m taking my family there and as you know…

Ryan Isaac:
Yeah.

Matt Mulcock:
And In a couple of days and I was [laughter] I was walking last night, because they’re not here yet. I’m here for work and then they’re gonna come meet me. We’re gonna go to Disneyland.

Ryan Isaac:
Yeah.

Matt Mulcock:
So last night I was walking around by myself, near Disneyland. It’s the end of the day. And I see a family coming towards me, a couple of young kids, parents just so exhausted.

[laughter]

Matt Mulcock:
The child, the little girl there with was…

Ryan Isaac:
Screaming.

Matt Mulcock:
Their, their child, screaming about my daughter’s age.

Ryan Isaac:
Yeah.

Matt Mulcock:
I got a little bit of A [laughter]..

Ryan Isaac:
You’re in for it.

Matt Mulcock:
A little bit of a shot of what my future’s gonna look like here in a few days, I was just like, oh my gosh, do we know what we’re doing here?

Ryan Isaac:
Well.

Matt Mulcock:
I’m taking a three year old and a one year old to Disneyland.

Ryan Isaac:
How many days are you going?

Matt Mulcock:
Just one.

Ryan Isaac:
Okay.

Matt Mulcock:
Yeah. We’re gonna go all out one day.

Ryan Isaac:
Okay.

Matt Mulcock:
 Sprint.

Ryan Isaac:
So I’m trying to think how I would strategize this. If your kids are nappers.

Matt Mulcock:
That’s the problem. They are.

Ryan Isaac:
Okay. I would nap them and try to go towards the middle to later part of the afternoon and see if I can keep them up a little later.

Matt Mulcock:
Yeah.

Ryan Isaac:
As it cools off, instead of like dead heat, middle of the day.

Matt Mulcock:
I’m glad you said that. ’cause that’s our, that’s our strategy.

Ryan Isaac:
That’s what I would do. Yeah. Plan for low amounts of rides. I mean…

Matt Mulcock:
Yeah.

Ryan Isaac:
You know, compared to like ride per… Dollar per ride is high.

[laughter]

Matt Mulcock:
Yeah. For, for sure.

Ryan Isaac:
Dollar per ride is high.

Matt Mulcock:
Disney is She’s some expensive rides.

Ryan Isaac:
We’re hoping Matt becomes a converted Disney fan. Stay tuned for another episode and we’ll, we’ll check in with Matt.

Matt Mulcock:
I will. My daughter’s already making she’s already. She has already started, she is so excited…

Ryan Isaac:
You’ll feel the magic. We are here though at the, I guess this is called officially CDA. It’s the California dental association convention. I think they have two Northern and Southern. So we’re in Southern California. It’s huge.

Matt Mulcock:
I think the Northern is in September.

Ryan Isaac:
Yeah.

Matt Mulcock:
In San Francisco. Yeah.

Ryan Isaac:
It is huge. And we’re stoked to be here. We’re gonna go wander around today and make some friends hopefully, and maybe eat some foods.

Matt Mulcock:
Yeah.

Ryan Isaac:
Some delectable meats.

Matt Mulcock:
You Said foods.

Ryan Isaac:
Foods.

Matt Mulcock:
Okay. Foods.

Ryan Isaac:
Multiple foods.

Matt Mulcock:
Okay.

Ryan Isaac:
Well let’s jump into it. Today on the show we are going to address some questions. We love these questions. And so a little plug here. If you listen to the show and you’re like, I would love for you to discuss my question. Just reach out to us. The Facebook page is great. Emails are fine. There’s a, there is a question submission form on the website, dentistadvisor.com So you can just go there, submit a question. DM us.

Matt Mulcock:
You can Slide into Ryan’s DMS.

Ryan Isaac:
Yeah.

Matt Mulcock:
It’s Not mine.

Ryan Isaac:
I log in once or twice a week. Matt literally doesn’t go there because he’s smarter than me and doesn’t log in to social media. But reach out if you have any questions, we love this and we’re gonna hit some questions today. Today. The questions are, hot topics about something called I-bonds.

Matt Mulcock:
Hot topics.

Ryan Isaac:
I keep getting, do you get a lot of questions about these? Like.

Matt Mulcock:
I haven’t really…

Ryan Isaac:
Really. Oh wow.

Matt Mulcock:
Surprisingly. Yeah.

Ryan Isaac:
I-bonds we’re gonna talk about them. We’re gonna talk about life insurance for kids and then this other, question’s also very hot, which is, should I wait to buy a house? Should I wait for the market to cool before I buy a house? Well, let’s go I-bonds first. So no one’s reaching out to you about I-bonds. Right now.

Matt Mulcock:
I, so I know people are in general, like…

Ryan Isaac:
They will now.

Matt Mulcock:
A lot of our advisors. Yeah. Now they will.

Ryan Isaac:
Yeah.

Matt Mulcock:
A lot of our advisors have had some inquiries. Got, you knows. Things it has Gotten a little attention lately from people. So, but I personally have not had, maybe my clients are just too busy going to Disneyland or something. I don’t know.

Ryan Isaac:
Hopefully.

Matt Mulcock:
Yeah.

Ryan Isaac:
They, okay. So, you. Dentist advisor’s been around for about 15 years. I’ve been here for most of that and I’ve, we, I’ve not really had I-Bonds discussions with people because inflation has never been high until right now. Yep. Which is the appeal of I-bonds and this is why people are reaching out and here’s what I’m noticing though. People are hearing about these in the typical ways, Facebook forums, friends, you know, podcast, internet, and the features are being explained, but not some of the Un-features.

Matt Mulcock:
I like that the Un-features.

Ryan Isaac:
The non features.

Matt Mulcock:
Yes.

Ryan Isaac:
Some of the drawbacks I mean not that it’s not like some severe thing, but we’re gonna talk about what they are. So an I-bond is a government issued, government backed bond that you can purchase that fixes its interest rate payments to inflation. So going back to the last 15 years that we’ve been around inflation has been basically nothing. So and a bond fixed to inflation is like, no, one’s cared about that but now do you know what the infl… Inflation numbers just came out for April what?

Matt Mulcock:
Inflation inflation numbers came out.

Ryan Isaac:
Do you know what they were?

Matt Mulcock:
Last week or was it earlier this week? 8.3, I believe. This is a whole other topic, but consensus is starting to come around to the fact that it has maybe peaked.

Ryan Isaac:
Sure.

Matt Mulcock:
And may be coming back down, but yeah, that was the last number.

Ryan Isaac:
Okay. I was on an island when they got released and all I saw were the red numbers on the markets.

[laughter]

Matt Mulcock:
Yeah. And you didn’t care ’cause you were in Fiji.

Ryan Isaac:
Well, I cared because I knew the texts and the emails would come in, but I didn’t have good service. So I was a little, like, I hope people just wait a few days to email me and then they did.

Matt Mulcock:
And then you went, then you went out to sea and you surfed it up and you didn’t care.

Ryan Isaac:
We took a boat out to a reef and surf for six hours a day and then I return emails if I could. But yeah, so they just came out eight point something, which means I-bonds, the way they work is they take inflation plus they tack on a little bit, I-bonds right now are paying nine and change, 9%. So like if…

Matt Mulcock:
What?

Ryan Isaac:
Yeah.

Matt Mulcock:
What? Everyone is saying right now.

Ryan Isaac:
Like Wait, wait, how do I get this? I mean, you know, if you, if someone comes to you and offers you, Hey, would you take a 9% rate of return in your stock portfolio? I’d be like, yes.

Matt Mulcock:
Yes Please.

Ryan Isaac:
That’d be, that’d be fantastic. You know, that would, that would be like almost 90% of what a long term S&P average is over the a long periods of time.

Matt Mulcock:
And It’s guaranteed. Yes thank you and have a nice day.

Ryan Isaac:
Yes guaranteed. Yeah. So people are hearing about these things called I-bonds and are like, oh, they’re guaranteed by the government. You just put some money in they’re paying nine and change like, duh, let’s do it. I have 500 grand. Let’s go.

Matt Mulcock:
Yeah, of course I got… I have a million.

Ryan Isaac:
I’ve got a million dollars. Let’s get ourselves some I-bonds.

Matt Mulcock:
What’s the catch Ryan.

Ryan Isaac:
Well how do they work? How do I-bonds work? I-bonds like I said, they’re pegged to inflation index to inflation and they change that number every six months. I think it’s like in the middle of the year and towards the end of the year. So it’s inflation plus a little bit, but like everything the government gives you, they’re gonna, they’re gonna request something in return. [laughter]

Matt Mulcock:
There’s some strings attached.

Ryan Isaac:
Yeah. There’s some strings, the strings to this are, are just that. There’s a maximum amount of money you can put in there. So, you know, it’s like a, you know.

Matt Mulcock:
The government likes doing that.

Ryan Isaac:
Yeah, they put limits on it.

Matt Mulcock:
IRAs, 401ks.

Ryan Isaac:
Yeah. I was just gonna say it, yeah, like, oh cool. I can deduct income out of a, you know, by putting money in an IRA or 401k, or I get this like tax benefit in Roth, but they cap the limit on how much you can put in there. And the same thing with I-bonds they cap the limits. So I’ve been getting emails where people, all people are hearing is guaranteed nine and change percent return backed by the government. And they’re just like, literally I wanna put six figures in this thing.

Matt Mulcock:
Yep.

Ryan Isaac:
It’s like, okay, well, they’ll allow you to put $10,000 per year per person. So you and a spouse partner could put in 10 grand each per year. And I do, I think there is a rule that you can also use five additional thousand dollars from a tax refund. So you can put in 10 Grand and if you got a tax refund, you can push another five to it, each. So if you’re just doing taxes and you haven’t done that yet, then you could push 15 Grand each for you and your spouse now. Okay. So when I get these emails and then we talk about these limits. Now we’re talking about maybe 20 Grand per household. So the 9% on 20 grand becomes I mean, it’s great. That’s a great percentage return, but a dollar for dollar return doesn’t feel that impactful. It doesn’t feel that meaningful on what, you know, for most dentists, 20 grand amounts to be like a little bit of an emergency fund money.

Matt Mulcock:
Yep.

Ryan Isaac:
You know, this isn’t significant strategy money. This isn’t like long term money. And as inflation decreases, when it eventually does these things will be indexed every six months and slowly start to decline and lose their appeal like they have for the, you know, past, however long before inflation became a big thing. So here’s a few I’ll, I’ll just tell you, Matt, how I’ve responded to some clients, first of, you know, done a little education. Here’s some limits, you know, 10 grand a piece they’ll reset these rates every six months. So it it’ll start declining at some point, you do have to keep your money in there for at least one year. And anything from year two to five, like if you, if you sell it before one year, you don’t get any of your interest. If you sell it from years two to five, you can have your money plus interest with a penalty of three months worth of interest. And it’s funny government makes things so complex, dude. So.

Matt Mulcock:
Of course, yeah.

Ryan Isaac:
These things pay interest monthly, but they only accumulate to your value every, oh, is it quarterly or six months? It might be six months when they re-index the interest rate. So in years, two through five, if you cash out, you’ll get your money minus three months of interest. That’s your penalty. Anything over year five, you can keep all the interest and that’s kind, and then you just do it directly with like you don’t your financial advisor won’t do it. You just do it directly with the US government.

Matt Mulcock:
Yeah. There’s a website you can go to and…

Ryan Isaac:
Buy your I-bonds.

Matt Mulcock:
Yep.

Ryan Isaac:
So here’s what I’ve said, Matt I’ve said, okay. If I had 20 grand here is a few places I would think about putting 20 grand right now, if I’m okay. I, and here’s some assumptions. I’m a, like a working dentist and I’ve got an income and I’m already saving money somewhere else. And I’m just thinking like, can I put 20 grand in I-bonds ’cause the rate’s killer right now, some questions I would ask myself would be, “Do I want to just take 20 grand and spend it on a vacation?” [chuckle]

[chuckle]

Matt Mulcock:
Right. I just wanna go to Fiji, or Disneyland.

Ryan Isaac:
Do I wanna go back to Fiji right now? [chuckle] the water was 85 degrees and it felt like sitting on a surfboard above an aquarium that you could see all the way to the bottom. It was like being in the Finding Nemo movie in the opening scenes, just on top of the water. And I would rather spend the money just go back there than try to get like a thousand bucks of interest on my 20, you know what I mean?

Matt Mulcock:
Yeah, of course.

Ryan Isaac:
But, okay. So that would be the indulgent me. I would be like, if everything else is healthy in my life and I’ve really got extra 20 grand, that’s not practice money. It’s not emergency fund money. It’s not long term savings money, it’s not down payment money, I just wanna take a trip.

Matt Mulcock:
You’re just saying it’s not, maybe the juice may be not be worth the squeeze.

Ryan Isaac:
It might not be worth it. Just take a couple trips with the family over the next 12 months. And a lot of case times, I think they would pay higher dividends than nine point something percent on 20 grand.

Matt Mulcock:
You’re saying think about the return on life. Not the return just on your money.

Ryan Isaac:
ROL.

Matt Mulcock:
ROL.

Ryan Isaac:
Return on life. Have you coined that?

Matt Mulcock:
No, but I’m going to right now.

Ryan Isaac:
Let’s coin, I wish we had sound effect it’d be like the, you know, the sound Mario makes when it hits the little, little ding.

Matt Mulcock:
Little ding. Yeah. Coined.

Ryan Isaac:
Coined ROL. What’s your ROL on this thing? So I would ask that question. I would also ask myself, does the practice need anything really? Do I need more liquidity in my business checking? Do I need any liquidity in my personal emergency fund? Does my long term investments, are they hurting for any cash? Am I gonna buy something coming up that I really should just hold the cash for and prepare for? Those are some like other questions. And then I might ask myself, okay, if all those categories are fine, what if you took 20 grand this year and put it into just a nice little marketing project? You went and hired a company to maybe revamp the website or do a little brand strategy or take 20 grand and create a couple videos on the website. We know some people who create insanely good media for dentist websites. So how far could 20 grand get you in terms of a return actually on your investment versus what the government’s gonna guarantee you index to inflation?

Matt Mulcock:
Yeah, I think that’s the key point, right? Because I think anyone that’s asking about this is seeing dollar signs with, yeah. They’re seeing 9%.

Ryan Isaac:
Well they’re seeing the percentage signs. There is no even dollar sign.

Matt Mulcock:
Well, yeah. That’s what it is… But they’re seeing this percentage. So they’re thinking I would imagine in their mind, they’re thinking return. Return return, I’m gonna go get this return on my investment.

Ryan Isaac:
Yeah.

Matt Mulcock:
To your point. I like what you’re saying is like, if this truly is about returns, why don’t you think about your practice which I’ll tell you right now, we’ve seen this time and time and time again, your return. I wish we could imprint this on our client’s brains, your return on investment it, number one is always going to be your business. Your practice, always. So $20,000 and you’re thinking return, go put it in your business.

Ryan Isaac:
Put it in your business.

Matt Mulcock:
If it’s $20,000, you don’t have anything to do with it. And your savings rate is solid and everything else is all of your boxes are checked. Go to Fiji.

Ryan Isaac:
Yeah. I mean…

Matt Mulcock:
Like, that’s really what it… Right? That’s it.

Ryan Isaac:
So 20 grand, if you got 9.25%, I don’t know what the actual rate is, but it’s close to that, we were talking about like 1800 bucks over 12 months. If you held it for at least that minus…

Matt Mulcock:
And by the way, that’s an annualized, like you said, it’s pegged every six months.

Ryan Isaac:
It will drop.

Matt Mulcock:
So by the end of the year, it’s not gonna be most likely that full 9%.

Ryan Isaac:
If inflation really has hit or near its peak, then we’ll see it drop sooner than later. So we’re talking about, you’re gonna put 20 grand somewhere and you’re gonna get about less than $2,000 of return back to you. So does a… Tropical island give you more than 1800 bucks in life satisfaction or does 20 grand worth of a couple new videos on the website? I’m just guessing it would cost that much. [chuckle]

Matt Mulcock:
Sure.

Ryan Isaac:
Can you get a couple videos done for 20 grand? I feel like you could.

Matt Mulcock:
I mean, call me.

[chuckle]

Ryan Isaac:
Matt will make you a couple videos for 20 grand.

Matt Mulcock:
I’ll make you some videos.

Ryan Isaac:
Quality is not being…

Matt Mulcock:
No, we’re not talking quality.

Ryan Isaac:
Just video.

Matt Mulcock:
I’ll make a video.

Ryan Isaac:
On his phone.

Matt Mulcock:
Yes.

Ryan Isaac:
But if you put 20 grand into some marketing in the practice right now, or what if you paid 20, what if you paid some of that money to a consultant who analyzed your insurance, the insurances that you’re taking and your fees that you’re charging and maybe dropped a few and went fee for service on some things maybe that fee for that consultant, could that bring you more than 1800 bucks in return over 12 months? It’s like.

Matt Mulcock:
Yes. Yeah.

Ryan Isaac:
Yeah. Yeah. Like, like you said, Matt, that practice will return so much more than I-bonds probably will over, especially over a long period of time. So that’s kind of what I’ve just said to my clients. It sounds, it’s a fun little place to put money. You’re just gonna lock it up for a year, is gonna be an anomaly year that you’ll get a couple grand back in interest, but where else could that money actually have a higher impact to you?

Matt Mulcock:
I think that’s the biggest catch is the locking it up. For that period of time.

Ryan Isaac:
Yeah, man.

Matt Mulcock:
That’s a huge catch. And it’s like you said, with everything. Everything has a trade off, just, you’re seeing a lot of stuff out there online about this on Twitter, wherever it’s not what it’s all cracked up to be. We’re not saying don’t do it, just be thoughtful about it.

Ryan Isaac:
As of yesterday, I don’t, I could pull it up on my phone. But as of yesterday measured by the S&P 500, we were almost to a 20% decline for this since the recent highs from late last year, which would be considered a bear market, which happens about every four to five years for the last hundred plus years.

Matt Mulcock:
Till it bounced back today.

Ryan Isaac:
Yeah. But it bounced back today. So we’re shy of that 20%, but here’s what I’m getting. If you… The market will get back to at least to where it was at some point. Right? And I have no predictions of when that be, that could be very quickly…

Matt Mulcock:
Give us a date.

Ryan Isaac:
Could be a slow roll. But if you put money in right now into the S&P 500, this is not investment advice. You wouldn’t build the portfolio of just the S&P 500. But as an example, the S&P right now is discounted 20% from where it just barely was. Inevitably, it’ll go back to where it was and it’ll keep on going like it always does. So right now we’re also staring at an opportunity to go, well, my long term stock fund, if I’ve got one and it’s properly built and diversified, is deeply discounted from where it was only four months ago.

Matt Mulcock:
Yeah.

Ryan Isaac:
And it’s more than 9% discounted right now. So even just getting back to where it was will have a higher return than the I bonds will. Especially as inflation drops over time in those I bonds. Anything else left to say about I bonds?

Matt Mulcock:
No, I think we hit it.

Ryan Isaac:
All right. Okay. Kids life insurance, Matt… Run through the question that we received. It was in our advisor. Weekly mastermind, a client asked this question to one of our clients or our advisors and what was the situation? What was the question?

Matt Mulcock:
So we have a weekly advisor meeting. We get together, share ideas, share questions.

Ryan Isaac:
Talk sports.

Matt Mulcock:
Talk sports.

Ryan Isaac:
Go sports.

Matt Mulcock:
Yeah. And so this came from one of our advisors, shout out Jake. He had a question around a client who has some permanent life insurance policies on young children. And I actually have this as well.

Ryan Isaac:
Yeah, I’ve got a lot of clients, basically.

Matt Mulcock:
Yeah. I’ve had a few clients who have come to us that have that in place. And so we were just chatting about…

Ryan Isaac:
From other advisors, we should probably point that out. We didn’t [0:20:35.8] ____.

[overlapping conversation]

Matt Mulcock:
100% some other advisors, they came to us with those policies already in place. So the question was, and just the discussion was around like, okay, truly. What are the reasons why… How are these sold to people? And why would you do this? And so we actually have some former Northwestern Mutual advisors on our team.

Ryan Isaac:
We do.

Matt Mulcock:
Shout out the horse Reese Harbor.

Ryan Isaac:
Yeah. Reese was the original…

Matt Mulcock:
He was the OG of the Northwestern advisor that came over.

Ryan Isaac:
Left the mothership and…

Matt Mulcock:
Yeah. So…

Ryan Isaac:
Took a gamble.

Matt Mulcock:
Took a gamble and it’s worked out. I think.

Ryan Isaac:
Yeah. It’s good.

Matt Mulcock:
So we anyway, we’re just chatting about this and really comes down to a couple of things as to why… Do you want me to hit these?

Ryan Isaac:
Yeah. I was gonna say what, yeah. Let’s first go through. What would a life insurance person say is the benefit to having life insurance on kids? There is…

Matt Mulcock:
Like what’s the pitch?

Ryan Isaac:
What’s the pitch?

Matt Mulcock:
Right. So.

Ryan Isaac:
Yeah. Which might be different than the actual benefit.

Matt Mulcock:
Exactly. That’s the thing it’s so here’s the pitch. The pitch is, I think two fold. And I’m not saying this is completely invalid, but again, not we’ll come back to it.

Ryan Isaac:
Okay. [laughter]

Matt Mulcock:
Here’s the pitch.

Ryan Isaac:
You’re trying to be…

Matt Mulcock:
I’m trying to be nice.

Ryan Isaac:
I can see the wheels turning in you like…

Matt Mulcock:
I’m trying to be nice.

Ryan Isaac:
How do I say this?

Matt Mulcock:
How do I say this to people? So, cause I truly don’t want anyone to feel stupid. I really, that’s not our job or it’s not what we’re trying to do.

Ryan Isaac:
And on the list of, I guess, on the list of like egregious insurance purchases, this is not at the top.

Matt Mulcock:
No, that’s the thing. So I think it’s well I’ll say it’s threefold, number one. They’re cheap policies when they’re young.

Ryan Isaac:
Yeah. They’re not expensive.

Matt Mulcock:
Not expensive.

Ryan Isaac:
They’re not…

Matt Mulcock:
For the most part.

Ryan Isaac:
Compared to like an adult whole life policy.

Matt Mulcock:
Exactly.

Ryan Isaac:
Yeah. They’re cheap. Yes. Totally.

Matt Mulcock:
Number two would be the insurability of the child throughout their life is kind of like locked in. Or like that policy is now locked in So if they have a health issue down the road, they it’s a permanent policy. As long as you’re paying the premiums you gonna have that child.

Ryan Isaac:
You can have the policy or speeding tickets. You ever seen that?

Matt Mulcock:
What?

Ryan Isaac:
Like super healthy people apply for insurance and they’re just shocked when they get terrible rates that come back because they have a lot of speeding tickets.

Matt Mulcock:
Oh. I’ve never seen that. But it makes sense.

Ryan Isaac:
Yeah, that always surprises me.

Matt Mulcock:
You’re gonna kill someone dude.

Ryan Isaac:
Go check your driving record and be like, yeah, you’re a speeder. So bad insurance.

Matt Mulcock:
So same thing is like…

Ryan Isaac:
Insurability.

Matt Mulcock:
Insurability as they get older. Health issues. Maybe they’re a bad driver.

Ryan Isaac:
Yeah.

Matt Mulcock:
Who knows, but they have that in place, right? So I think the pitch is like, “Hey, lock this in now for your kid.”

Ryan Isaac:
Totally.

Matt Mulcock:
You can, and then kind of part of that is what again, the whole be your own bank crap we hear all the time. Then they can take a loan of course. Everyone wants to be their own bank.

Ryan Isaac:
‘Cause that’s the American dream. Right? Every kid grows up like Just wanna grow up I wanna be my own bank.

Matt Mulcock:
Yeah, exactly.

Ryan Isaac:
I love that pitch because it somehow is supposed to tag at the heartstrings of everyone deep down and I’m like, who really cares about that? [laughter]

Matt Mulcock:
That’s my thing is…

Ryan Isaac:
When did that become the big appeal to be your own bank? You know.

Matt Mulcock:
We’ll come back to that at some point. Like that’s a whole other episode, but truly, if you really think about that, like why is that such an appeal?

Ryan Isaac:
Why is that a pitch?

Matt Mulcock:
I don’t wanna be a bank.

Ryan Isaac:
Yeah.

Matt Mulcock:
I do. You just said like child.

Ryan Isaac:
It’s funny.

Matt Mulcock:
Like a child, like a young kid. I just imagine a kid, like in, you know, like when you were a kid in elementary school and you like color a picture of like what you wanted to be?

Ryan Isaac:
I wanted to be a rockstar. I used to stand with a broom in front of MTV when I was like eight. And I wanted to be a rockstar.

Matt Mulcock:
I think mine was a football player or something like that. Yeah. But can you imagine the teacher going up to like little Sally…

Ryan Isaac:
What do you wanna do?

Matt Mulcock:
What do you wanna be Sally? And she just draws a bank. I wanna be my own bank.

Ryan Isaac:
I wanna lend myself money. My own money.

Matt Mulcock:
I wanna be able to lend myself money.

Ryan Isaac:
Anyway.

Matt Mulcock:
Anyways.

Ryan Isaac:
Sorry derailing you here.

[laughter]

Matt Mulcock:
What I’m at. Number three. The number three reason is and this is a total scare tactic again, not saying it’s invalid, but just saying it’s kind of sheisty this pitch.

Ryan Isaac:
Yeah. Dodgy.

Matt Mulcock:
A bit dodgy.

Ryan Isaac:
From all the Australian surfers I was hanging out with last week. Dodgy.

0:24:28.3 MM: If you look at data divorce rates, I guess, double when there’s the death, when there’s the death of a child.

Ryan Isaac:
Yeah.

Matt Mulcock:
For various reasons, I’m sure when you have emotional stress and pain so they use that as a pitch to say, “Hey, if you were to lose a child divorce rate numbers, go up. Like by double or more and so you’d want to have possibly some insurance on that child to cover… ”

Ryan Isaac:
Yeah. When you and the spouse split.

Matt Mulcock:
Yeah. And like, you’re gonna maybe need time. Obviously you would want a lot of time to grieve and go through that process. So if this happens, I’m gonna scare you. You’re probably gonna get a divorce and then you’re gonna need this money to like, take some time off. That’s the main pitch.

Ryan Isaac:
Emotional scares. Sometimes I mean, the idea to have like some money on your child if something ever happened to have some money to like, not work for a while. I mean, that’s very logical and that makes sense and I think that’s prudent. Although someone in our group yesterday brought up the fact that that’s highly dependent on your job. I mean, it doesn’t matter if you tell your job, like I’ve got a million dollars right now, and I just don’t need to work right now because I just lost a spouse or a child, and I had insurance on them. Your job might be like, well, that’s good for you, but like, you’ve only got two weeks to take.

Matt Mulcock:
Yeah.

Ryan Isaac:
It’s highly dependent on your job. Or if you’re a dentist, I mean, and you’re the solo doc in the practice. I mean, what are you gonna do?

Matt Mulcock:
Right.

Ryan Isaac:
So I think that makes sense, but there also a practical side. I think one more thing that was brought up to the math of the way these policies work, because the whole life policy’s permanent life insurance, which means it’s insurance mix with investments, the way that the math in these things, they’re terrible investments folks.

Matt Mulcock:
Yeah. Don’t use them as investments. Like they’re just not.

Ryan Isaac:
Yeah, they’re terrible investments.

Matt Mulcock:
It’s not an investment.

Ryan Isaac:
It takes usually 12 to 15 years for them to break even meaning the money that goes into the investment piece of the insurance policies are so heavy, like weighed down by the fees and the commissions and in the costs in the early years that it takes 10 to 15 years, usually closer to that 15 year mark to break even. So some of the [laughter].. This is a funny pitch, but sometimes the pitch that our advisor who came from that world told us about is that they’ll say, hey, look if you buy this policy on your child, when they’re young, by the time they’re at least 18 college age, the money you’ve put in there will at least break even.

[laughter]

Ryan Isaac:Okay.

Matt Mulcock:
Awesome.

Ryan Isaac:
Yeah. Thank you.

Matt Mulcock:
Can I just put that under my mattress?

Ryan Isaac:
Go buy an I bond, dude. It won’t break even it’ll least break even so at college age, if you haven’t used the policy and you can at least pull all your money back out that you put in there after two decades and use it for some college expenses and which begs the question, you should just save money for your kids somewhere else that will actually grow and not just break even.

Matt Mulcock:
Exactly yeah.

Ryan Isaac:
Another topic, but, okay. So those are the list of reasons that was part of the pitch. They’re probably pitched a lot sexier than me and Matt.

Matt Mulcock:
I’m sure. I’m sure they have it dialed in.

Ryan Isaac:
But we did do a good job of convincing.

Matt Mulcock:
I’m sure they have it dialed in there, that pitch that’s really what it is. The kind of overarching theme here is, you cannot buy a term policy on someone that’s under 18.

Ryan Isaac:
I was just gonna say, you can’t buy a term policy. Now what you can do, is you can get what’s called a rider on an adult policy where they give a rider on spouses and children. It’s really common. A lot of you might belong to some dental association, ADA or all other of the specialty associations that have their own insurance contracts with big carriers and you can add child riders. I think the ADA, you can add like a few 100,000 dollars of a child policy as a rider to your own policy.

Matt Mulcock:
And by the way, so we’re saying if you.

Ryan Isaac:
Do that.

Matt Mulcock:
Like do it.

Ryan Isaac:
100% do it.

Matt Mulcock:
’cause again, I don’t think we kind of as Ryan and I do joke a lot but we truly mean like there is a true risk there, like, if you lost a child, first of all, it goes without saying.

Ryan Isaac:
Unimaginable, I have no idea.

Matt Mulcock:
Unimaginable pain. But from a financial, from a risk management standpoint, it does, you could make an argument, very valid argument that you would want some money to help…

Ryan Isaac:
Totally.

Matt Mulcock:
Kind of with a period of time where you’re probably not gonna be yourself for who knows how long.

Ryan Isaac:
Yeah. Like who knows how it that will affects your life.

Matt Mulcock:
So that’s real.

Ryan Isaac:
Yes.

Matt Mulcock:
You just don’t need a permanent policy to do it.

Ryan Isaac:
So if you’ve got ’em, it’s not egregious, you can keep ’em around. If you don’t have life insurance on your kids, it’s not a bad idea, really, honestly, to add a rider it’s very inexpensive or to just at least set aside some money, just for the effects that losing someone in your family will have just being stone cold about it on the your finances and your money.

Matt Mulcock:
Yep.

Ryan Isaac:
We have no idea how that it would impact your work and your life and other parts of your money. So that’s a good way to prepare and have just take a precaution. Okay. Last one here, Matt, this one’s popular. We are in a bit of a hot housing market.

Matt Mulcock:
Hot hot hot.

Ryan Isaac:
As I survey the a land out of our window over, Anaheim and Orange county.

Matt Mulcock:
Yeah. [laughter]

Ryan Isaac:
All right. This is not a cheap place.

Matt Mulcock:
Mildly expensive. Yeah.

Ryan Isaac:
Nowhere’s cheap anymore. Even like historically inexpensive places are like nowhere near inexpensive anymore.

Matt Mulcock:
I think I know the hottest market though.

Ryan Isaac:
What?

Matt Mulcock:
I don’t know. I don’t have date on this.

Ryan Isaac:
Okay. What would do you say do you say?

Matt Mulcock:
But anecdotally, Austin, Texas.

Ryan Isaac:
Oh, geez.

Matt Mulcock:
It is.

Ryan Isaac:
You got clients there.

Matt Mulcock:
I had a meeting this morning with a client in Austin. It is wild.

Ryan Isaac:
Just outta control.

Matt Mulcock:
Outta control.

Ryan Isaac:
I mean, it’s just still the same. It’s just still the same stuff. I think everywhere you go, it’s still, overbidding like crazy. It’s people waving inspections and cash buys, it’s nuts. Inventory is still ridiculously low. I’m not even sure if the episode came out, I interviewed a guy named Drake blabomb.

Matt Mulcock:
I think it did. Yeah.

Ryan Isaac:
Did it come out?

Matt Mulcock:
I think so.

Ryan Isaac:
If I was smarter, I would have an episode number four, but it’s recent 2022. And anyway, he’s a national, a lender nationally for doctors and dentists and has been his whole career and he was talking about just the insane shortage of inventory out there, despite the fact that we’re heading into higher interest rates than they’ve been for, although historically they’re still great rates.

Matt Mulcock:
Yeah.

Ryan Isaac:
It’s insane. I mean, it’s crazy to buy a house when I mean people are getting outbid. People don’t even have to like put houses on markets anymore, you live in a neighborhood in Salt Lake city.

Matt Mulcock:
Yeah.

Ryan Isaac:
Where if you wanna sell your house tomorrow, you probably wouldn’t even have to list it.

Matt Mulcock:
It is.

Ryan Isaac:
Right?

Matt Mulcock:
No, it is. I wouldn’t. It is very rare in, I mean, I know it’s all regional, but where, I live, like you said, in the neighborhood I’m in, it is very rare that you see a house going for sale. Like it’s usually…

Ryan Isaac:
You would just tell someone in your neighborhood.

Matt Mulcock:
I would say for every 10 houses that are sold right now, I’d say seven or eight of them are sold privately.

Ryan Isaac:
Gosh That’s crazy.

Matt Mulcock:
I mean, I’m just, that’s a guess.

Ryan Isaac:
No, it’s gotta be.

Matt Mulcock:
We like throwing out just fake stuff.

Ryan Isaac:
Anyway. So the question becomes, and this is a similar question. When any market gets hot, if practices are expensive, because DSOs are buying ’em up, if real estate’s expensive, when stocks were expensive four months ago, and everyone’s like, this is too expensive I don’t wanna buy anymore, now it’s cheap and no one wants to buy it.

[laughter]

Matt Mulcock:
Exactly.

Ryan Isaac:
Now, the smart people still buy it.

Matt Mulcock:
I don’t wanna buy, I still don’t wanna buy it. It’s never a good time to buy.

Ryan Isaac:
Smart People are still buying, but the question comes up. So the question is, should I wait to buy a house? Until what? I mean, what’s the thought process? Or what are people thinking they’re gonna wait for?

Matt Mulcock:
Yeah. So I think if you just say ask the question, like, should I wait to buy a house?

Ryan Isaac:
Yeah.

Matt Mulcock:
My answer would be maybe, yeah. But It wouldn’t be for the reasons like the no, Would not be for the reasons you think, meaning, I think when people ask this question, I think what they’re thinking about is they’re thinking about it as an investment just like they’d say, is it the right time to invest in the markets.

Ryan Isaac:
Right. Yeah. Am I gonna get a good return on this thing? I wanna make some money.

Matt Mulcock:
Exactly. Exactly.

Ryan Isaac:
Or lose some money.

Matt Mulcock:
And, and by the way, I think the this context we gotta point out is we’re talking primary residents like buy a house, not a rental, buy a house you are going to live in.

Ryan Isaac:
Not an investment strategy I’m gonna live in it.

Matt Mulcock:
I’m gonna live in this house. Should I… Is it time to buy or should I wait?

Ryan Isaac:
Yeah.

Matt Mulcock:
And so I think what they’re thinking is, again, same thing as the markets, is it too expensive right now? Are prices going to come back down? I think that’s the mindset.

Ryan Isaac:
Well and what’s fresh in people’s… A lot of people’s minds still is ’08.

Matt Mulcock:
Of course.

Ryan Isaac:
Anyone who bought a house previous to that saw their equity tank by half in some cases.

Matt Mulcock:
Yep.

Ryan Isaac:
And then there’s just still this fresh kind of thing we’re anchored to that housing markets that get expensive, have to crash suddenly.

Matt Mulcock:
Exactly.

Ryan Isaac:
And people think that the same thing about stocks all the time, too, that they have to dramatically come down and that’s not at all how assets have to behave in the least. They don’t have to do anything.

Matt Mulcock:
Yeah, no, not at all. And it’s funny. I just had this conversation this morning with a friend who’s in more in real estate and we were chatting about this very topic. And I was telling him about my meeting with my client in Austin and just how wild the Austin market is.

Ryan Isaac:
Yeah.

Matt Mulcock:
And you know what, the first thing he said to me, “man this gotta come crashing down.”

Ryan Isaac:
Yeah.

Matt Mulcock:
That’s our mindset. Understandably so. But we just think like, this is too crazy. I don’t understand this. It’s gotta come crashing down.

Ryan Isaac:
And I mean, look, ’08 didn’t crash Real estate prices because real estate was expensive. 08 crashed real estate prices because half the homeowners shouldn’t have had loans.

Matt Mulcock:
Exactly. Fundamentally it was broken.

Ryan Isaac:
They shouldn’t have even had the house in the first place. High prices and again, markets don’t care what we think or feel at all real estate, business, stocks, they don’t care, we’re not significant to them. We’re just participants in their thing. We just jump on the ride. So an asset can climb in price even dramatically. And then all it has to do to get back to normal is just grow slower for a long period of time. So houses can just scream up and then they don’t have to crash, but they can just grow a little slower for the next 10 years than they did in the last two.

Matt Mulcock:
That’s a great point. And I think that’s…

Ryan Isaac:
And then they’re back to normal averages, like normal growth averages.

Matt Mulcock:
Yeah, exactly. Which I think nationally, the real estate average historically over the last 200 years is like 3%.

Ryan Isaac:
Yeah. And they’ve grown like double digits.

Matt Mulcock:
Yeah. It’s like very regional, right? So certain areas are different than others, but just national average. But I think that’s the nuance here that people… Again when you think, oh my gosh it’s been crazy last few years. It has to stop at some point. Yes it will. But that doesn’t mean that prices are gonna come… Are gonna crater. Activity will absolutely slow at some point. It it will eventually flip to become a buyer’s market again, at some point that’s just the natural cycle of assets.

Ryan Isaac:
It will, it’ll cycle.

Matt Mulcock:
But that does not mean that all of a sudden…

Ryan Isaac:
There’s a crash.

Matt Mulcock:
There’s a crash. And all of a sudden you’re gonna find that that house that’s a million dollars is all of a sudden gonna be $500,000 or whatever.

Ryan Isaac:
Yeah. You’re like, that’s not.

Matt Mulcock:
That’s not normal.

Ryan Isaac:
I’d be shocked if that happened.

Matt Mulcock:
Well, historically, really historically, if you look at the numbers outside of an ’08, ’09 type scenario.

Ryan Isaac:
Right.

Matt Mulcock:
It just doesn’t happen with real estate.

Ryan Isaac:
Yeah.

Matt Mulcock:
Floors are usually set with price increases.

Ryan Isaac:
Yeah.

Matt Mulcock:
And it usually does not come back down.

Ryan Isaac:
Yeah.

Matt Mulcock:
Again, activity will slow at some point. But it doesn’t mean… I don’t see a scenario in most of these areas…

Ryan Isaac:
No.

Matt Mulcock:
That all of a sudden you’re gonna wait and get into a house that you were trying to buy in six moths ago…

Ryan Isaac:
And it’s 50% off.

Matt Mulcock:
Yeah 50% discount that is not gonna happen.

Ryan Isaac:
Yeah. We saw that in ’09, 2010. The fundamentals of the real estate economy are just, they’re not what they were at that period of time.

Matt Mulcock:
Yep.

Ryan Isaac:
People’s loans are really high quality loans these days.

Matt Mulcock:
Or like record it’s the highest quality buyers.

Ryan Isaac:
Than it’s ever been.

Matt Mulcock:
Yeah. There are so many… There’s so many differences here.

Ryan Isaac:
Yeah.

Matt Mulcock:
Outside price increases that people just cannot fathom.

Ryan Isaac:
Yeah.

Matt Mulcock:
It is completely different than ’08, ’09 right know.

Ryan Isaac:
And it’s demand driven and supply driven. So here’s the question is like, what would you tell someone who is asking when like, should I wait? My opinion is you buy a house to live in when you are ready to make that move.

Matt Mulcock:
Boom.

Ryan Isaac:
And readiness is like, I’ve got the money, I’ve got the income to support it.

Matt Mulcock:
: I’m in the area I wanna be in.

Ryan Isaac:
I’m in the area I want to be in it’s the location. I’ve done my homework. I’ve rented there for a while. When it fits the bill, it doesn’t matter if prices are expensive or they’re super low. It’s kind of like, when do you jump in as a first time investor into your first stock market portfolio?

Matt Mulcock:
20 years ago.

Ryan Isaac:
When it’s time. Yeah.

Matt Mulcock:
Next best time is today.

Ryan Isaac:
Yeah. It’s like, when it’s time, it’s time, then you do it. So if you’ve saved your down payment and your income steady and the math works and it’s the place you want to be in and you found the spot, you get the spot, you move, you move on in life. You get your house, you move on. And, that’s it. I don’t think that you should wait around for some crash to happen before you put, because the house you live in is saying, I’m gonna put my family moving on in life, my kids going to school or us being in the community or whatever, I’m gonna put that on hold to wait for a price crash.

Matt Mulcock:
No, I’m totally with you. And that’s what I’m saying. When I say it’s maybe the yes. Would be, so we already hit the no. If you know, but if it’s yes. All comes down to, if the answer is, yes, it all comes down to what you just said.

Ryan Isaac:
Yeah.

Matt Mulcock:
This is a lifestyle decision. This is not a financial investment decision.

Ryan Isaac:
Right.

Matt Mulcock:
It’s a lifestyle investment.

Ryan Isaac:
Okay. I think that’s good advice for way to, now if this is like you said, man, if this is an investing question, you’re looking for rehabs or rentals or multifamily or commercial, then you do have to approach this thing mathematically. And there might be cities that are just off limits to you right now. You might have to look at another spot as an investor, purely mathematical. But most of you are not asking that question from an investment standpoint. It’s just, should I buy my house where my family’s gonna live?

Matt Mulcock:
Yep, exactly.

Ryan Isaac:
When you’re ready for, and being ready to buy a house is a list of things. Another episode we should do that.

Matt Mulcock:
Yeah we should.

Ryan Isaac:
What’s the house readiness episode. Yeah. We should do that. But alright man, I feel like we should go wander the, the hollow halls of the CDA.

Matt Mulcock:
We should go wander around. Yes.

Ryan Isaac:
We should see all the wonderful people in the dental industry. It’s been a long time since we’ve had a chance to wander around and smile at people and…

Matt Mulcock:
It feels good.

Ryan Isaac:
It does feel good. It feels nice. Although I’m gonna… I’m just stating this for a record. I’ve always said this publicly. I am a pre COVID fist bumper.

Matt Mulcock:
Oh yeah.

Ryan Isaac:
I don’t… I’m gonna go in there and I’m gonna bump some fists. It gets awkward when people go for the shake and I’m in the, for the fist, and it’s just like.

Matt Mulcock:
 I’ve had some of those awkward moments. Yeah.

Ryan Isaac:
Sometimes people just grab the fist.

Matt Mulcock:
That’s yeah, they do like the full.

Ryan Isaac:
It’s just weird, but I’m a fist bumper. People accuse me of just being a post COVID fist bumper. But I just wanna say I’m OG fist bumper.

Matt Mulcock:
They do the octopus over top of your…

Ryan Isaac:
Just softly.

Matt Mulcock:
Your fist bump.

Ryan Isaac:
A little clammy hand on top of your face.

Matt Mulcock:
The worst is when you go to do it, you go for the fist bump, they go for a handshake or a high five, and then you go back to the hand shake.

Ryan Isaac:
Back to the open hand and then they go fist.

Matt Mulcock:
And then they go fist and then it’s like, man we just need to move on with our lives.

Ryan Isaac:
Yeah. I’m just not great at handshakes, but I’m gonna go fist bump some folks and probably take some selfies.

Matt Mulcock:
Are you gonna selfie?

Ryan Isaac:
I don’t know. I think we should. I think it’s like you selfie and say we’re here and this is cool. And we like the industry and we love you. So we’ll go do that maybe.

Matt Mulcock:
Love it.

Ryan Isaac:
Thanks for being here, everybody. And thanks for tuning. If you have any questions, go to dentistadvisors.com and click on the book free consultation link and you can schedule a chat with one of our many friendly dental, specific financial advisors. Thanks for tuning in Matt. Thanks for sitting across…

Matt Mulcock:
Yeah, thanks Ryan.

Ryan Isaac:
The hotel room from me. And, we’ll catch you next time. On another episode of the Dentist Money Show, take care. Bye-bye.

Insurance, Real Estate