What are the risks to your assets and how do you protect them?

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John and Lisa discuss hard asset protection with intrinsic value. These are assets such as precious metals and cash money. What are the real threats to personal wealth?

John

Hi, everybody. We're about to head out Live on our Aging Insight Radio Show, hope you enjoy the program today.

Caller

And the resource for learning about how to manage your health, policy, financial and legal needs. This is a Live-calling program featuring John Ross and Lisa Shoalmire.

John

Just enjoy the show, feel free to give us a like, a share, hit one of those heart buttons, whatever you feel comfortable with.

John

Welcome to Aging Insight, everybody, this is your host John Ross, here Live in the studio, with my faithful co-host Lisa Shoalmire.

Lisa

Except for neither one of us were faithful last week, on our Live radio.

John

Except for neither one of us were able to make it last week. You know, life just catches up with you occasionally. You know, we've been doing the program for what, about four years now?

Lisa

Almost five.

John

Almost… is it really?

Lisa

Yes.

John

Wow. You know, I bet we've only missed a handful.

Lisa

Yeah. Well, you know, maybe a couple dozen over five years which is not bad?

John

I didn't know it was that many.

Lisa

I don't know.

John

I don't know, we've been...

Lisa

Some of our faithful listeners could probably tell us.

John

That's probably true. But, nonetheless, we are here Live on a rainy Texarkana day.

Lisa

Yeah, there's nothing better than being in a cozy radio studio today, if you are in our little nook of our woods, yeah.

John

And I think that means that we've probably got people that are sitting at home listening to the show.

Lisa

Or maybe they're sitting at the parking lot, get their shopping done and they're just not ready to get out of the car because, you know, it's rainy and cool.

John

That's exactly right, and of course, if you...

Lisa

Just stay in the car listen to the show.

John

And if you are at home and you're listening on the actual radio radio, you can give us a call, the phone numbers 903-793-1071. You can call in and ask your questions. Of course, if you're at home, you may have Internet access, and if you've got some Internet access you can always go and check out the Ross and Shoalmire Facebook page, where we are broadcasting this live. So you can watch us do radio, you can see Lisa Shoalmire in her Saints jacket, even though football season is over, still supporting her team.

Lisa

Hey the new football season started the day after the Super Bowl.

John

Well, and for you, the new football season started after the Saints lost to the Vikings.

Lisa

Well, that's true.

John

Because after that it really didn't matter.

Lisa

Hope springs eternal if you are a Saint's fan.

John

That's exactly right.

Lisa

Hopefully, we don't get any thumbs down on the Facebook page over that.

John

I don't think they do that, yeah, do they?

Lisa

I hope not. So anyway, if you jump on your Facebook page, if you've got Internet service, you can see us on Ross and Shoalmire Facebook page, we've got a little Live thing going. And I was over in Tyler, Texas, on Thursday John, so I was telling some folks about our Facebook Live, and so if I've got any Tyler, Texas folks watching today on Facebook, welcome.

John

That's right, welcome.

Lisa

Well, of course, getting on the radio and getting this airtime is not a free proposition. I mean, John and I, we give of our time to come up here on Saturdays to make this happen. So we're in the studio Live to answer your questions and take your comments, but the air time itself is not free, and so we have some sponsors that help us out with that cost.

Lisa

So it's top of the hour John, so I need to give a little shout out to our sponsors and those include Edgenet SP Manner, SP The Barnett Agency, Dierksen Memorial Hospice, Cowhorn Creek Estates, Christus St. Michael's Hospital and Health Care Center, Texarkana Funeral Home, Red River Federal Credit Union, Heritage Plaza and Reunion Plaza and their Twin City Rehab.

John

Yeah, so thanks to all of them and then, of course, thanks, to all our listeners out there. You know, we get to talk to you occasionally as, you know, when we have folks come in the office and mention that they listen to the program even, you know, it was Thursday evening, I emceed the Alzheimer's Alliance Annual Chili Supper.

Lisa

Oh, yeah, that's right because I missed it because I was in Tyler.

John

That's right.

Lisa

So you were here.

John

Yeah, that's right I was over emceeing the Chili Supper over there and got to... actually saw a couple there that I knew from outside of the Alzheimer's Alliance. A couple that actually are crazy enough to show up at the gym at 5:00 o'clock, every morning along with me and the teenagers.

Lisa

Yes, so gym friends.

John

So, gym friends that's right and visited with them at the Wiseman Gym having a listen to the program.

Lisa

All right, we like it.

John

Yeah, so it's all good stuff out there. Now speaking of the Alzheimer's Alliance, of course, we had a great chili supper. That's a great institution. Of course, I'm biased. I'm the President of...

Lisa

Yeah, you're the president.

John

President of the organization but, you know, that's something that I've volunteered with for many years now, and I'm a super supporter of the Alzheimer's Alliance. We've got the Wine Festival coming up.

Lisa

First Saturday in May?

John

First Saturday in May, that's right, so that's gonna be a big event, hope everybody will come out. And we will be announcing a new event where the Alzheimer's Alliance has teamed up with Texarkana College for a big event that I'm not gonna tell you about yet.

Lisa

Oh, so that's the teaser.

John

That's the teaser because there's going to be a big reveal at some point, but you have to stick with it. Now, the reason I mentioned all of this, so I show up at, of course, the Chill Supper, we make our own chili, you know we're not dumping cans of Wolf Brand.

Lisa

Wolf Brand, okay. Well that's good, that's right. It is big homemade. In fact, I've been to the Chili Supper in years past, John, and I see the guys and ladies out there, they spend all day fixing up some big pots of chili.

John

Right. And, you know, there's a group of gentlemen that, every year, they'd get out there and they'd cook that chili, they cook some fantastic chili.

Lisa

They do, they really... I don't even like chili and I like the Alzheimer's light chili.

John

And I will say that I do not believe that these gentlemen are really all that interested in being out there cooking chili as much as they are out there sitting around chill pots for some number of hours telling each other...

Lisa

Telling tales.

John

Telling tales, that's right.

Lisa

Perhaps indulging in a beverage or two.

John

It's possible, it's possible. And so anyway, I get out there a couple hours before the whole to-do starts, and I'm visiting with a couple of the gentlemen out there, and one in particular, I won't name names, but one in particular he does like to spin a whim, he likes to tell a tale, and he's talking about a friend of his, and he's talking about this friend of his who he had, in his retirement, he was kind of a motorcycle guy. And, you know, as he's interacting with other people in the motorcycle business and things like that, he ends up visiting with this other older gentleman who had basically a truckload of leathers.

Lisa

Okay, a truckload of leathers.

John

You know...

Lisa

Now are you talking about the kinda stuff that you wear when you're riding a motorcycle?

John

Right, leather jackets, leather chaps, you know, leathers, Harley leathers, you know, the tough stuff.

Lisa

I gotta catch up. Okay.

John

Yeah, yeah, so we got leathers, right? And this guy says, "Hey, I'm get out of this, you know. Are you interested in getting…?" He said, "Look this is a business, actually a pretty good little business of selling these leathers to the motorcyclists out there."

Lisa

The enthusiasts, the motorcyclists.

John

So this guy says, "Hey, you know, what, it was good deal, this guy wanted to get out of it." So he essentially bought his inventory, and as he's interacting with other motorcycle enthusiasts. he ends up starting to sell these. And in the process of this, he generated quite a bit if cash money.

Lisa

Okay. Well, I hadn't thought about that but cash from the sale of motorcycle leathers.

John

Right, and so he's got some cash and since we're... you know, we're not naming names or anything, we can say that not all of this cash made it into a...

Lisa

Tax return?

Lisa

Or a tax return.

John

A financial institution.

John

Well, I can't say whether or not...

Lisa

You didn't ask that question?

John

I did not ask that question. Don't ask questions you don't want the answer to.

Lisa

That's right. Yeah, when you're a lawyer you don't ask questions you don't want the answers to.

John

That's exactly right. So, in any case, this guy has got some cash. And so this gentleman at the Chili Supper, he's cooking chili, he's telling that story, and he says, "This guy's got about $25,000 $30,000 in cash, and he was telling this gentleman that he had buried it in the backyard."

Lisa

Okay, so he had buried his cash money in the backyard.

John

Right and so... yeah, 25,000 bucks he's buried in the backyard. And, of course, you know, the guy that's telling the story, he said, "Oh, yeah, I was just incredulous. I'm like, yes, it's gonna warp, it's gonna rot out there." He's like, "No, I have got vacuum sealed plastic bags."

Lisa

He's got Escobar.

John

Yeah, so he had vacuum-sealed it in plastic bags, then he had stuffed those into PVC pipes which he had then turned and sealed with, you know, like a plumber's...

Lisa

Plumber's glue or whatever they put on there.

John

That's right, and then buried the whole mess. And, of course, this guy said, "And he did it with his son that way the both of them would know where it was." And, of course, this guy said, "What happens if, you know, both you and your son die?" And he's like, "Well, if both of us dies who cares? We're not gonna spend it at that home."

Lisa

Right, "We don't need the cash."

John

But, you know, I guess it just kind of brings up the idea that, you know, people are... I talk to people every day almost, and inevitably they will ask questions about maybe they've got a little cash aside, or maybe they actually have a lot of stuff in banks, but for whatever reason they're thinking that maybe they should start pulling that out into cash.

Lisa

Yeah, pull it out in cash. I've had people say, "Well, I'll put it in a safety deposit box at the bank, I'll have them do that."

John

Yes. In fact, I had a gentleman the other day and he was talking about the fact that, you know, if you buy like the silver coins, you know, the investment, one of the…

Lisa

Yeah, the one-ounce silver coins.

John

Yeah, the one-ounce silver coins. He was saying that those fit exactly into like a one and a quarter inch PVC pipe, and so you can get you a foot of PVC pipe, and you can put, you know, a pound in each foot of PVC pipe and that's one of the things he has done.

Lisa

Well, and I guess that just goes to show you, John, that assets are... you know, we always talk about things like land and houses, real estate, IRAs, but assets we can dial it back to a bit more simple straightforward form talking about things like precious metals, cash money, that kind of thing.

John

Yeah, and I think a lot of this, in large part, it comes from, you know, people have a fear or multiple fears out there of external threats to their assets.

Lisa

Okay. So, yeah, external threats to assets, I think distrust of the banking system.

John

Yeah, I think...

Lisa

The financial system.

John

Especially depending on the...

Lisa

The age.

John

Depending on the age. I know, you know, Lisa when you and I first got into this business, our older clients were ones typically that had actual memory of the Depression.

Lisa

Right, these folks had actual memory about how their parents, they had a little money in the bank one day and the next day the bank was closed and the money was gone forever.

John

Yeah. And so, you know, with that and so they historically were very distrustful.

Lisa

Yes, absolutely.

John

… of financial institutions. And, you know, I had one situation where as a family was cleaning out the household of their mother-grandmother who was of the Depression era. They were putting books into boxes, and they dropped one, and when they dropped it, a $100 bill fell out.

Lisa

Okay, now we gotta unload all those boxes.

John

And so, yeah, that was exactly… so, now we gotta unload all the boxes. And by the time it was done, they had pulled almost $70,000 in cash from various stashed spots throughout the house.

Lisa

Well, John, I'll throw a couple stories on the table and then I know it'll be time for a break. But that does remind me of my great grandmother who was, of course, she grew up in Center, Texas in the Depression, and not a well-off family, a farm family. And I remember growing up with her and she always seemed to have a roll of 20s, and oftentimes she would peel one off and frankly stick it in her bra and take it with her wherever she went. You know, a $20 bill and a tube of red lipstick, very important.

John

Prior to his death.

Lisa

Prior to his death and, of course, when... he had two kids, two kids only. And when the kids, you know, got access to the gun safe, gosh, there wasn't a darn thing in there, and the...

John

Shown up.

Lisa

And the wife, the bereaved widows said, "Cash?"

John

"What cash?"

Lisa

"What cash?"

John

"What cash?" that's exactly right. So we're gonna take a quick break, you know, for our Live Radio folks, we've gotta take breaks, so our commercial sponsors can say their little piece. And in the meantime, of course, we will still be Live on Facebook, so during the break, feel free to get on your Internet service and check us out Live on Facebook, on the Ross and Shoalmire page. So, otherwise, stick around and we will be right.

Lisa

Unbanked, and I've got another case going on in another county where there was almost 100,000 in cash, and now it's gone. So that is… one thing to think about keeping cash closed at hand, if the wrong people or the people you don't want to, you know, get a hold of it you know, that truly is the old... was the old nursery rhyme, or finders keepers.

John

Right, yeah. And, you know, and particularly when you're talking about... you know, we're going to be talking about this on the radio part, but being unbanked, that seems very odd to the average U.S. citizen. You know, I'll have folks... I'll mention that there are folks that do not have bank accounts, they never have in any way, shape, or form, and many people are like, "Well, how do you...?"

Lisa

How do you live?

John

How do you live you know...?

Lisa

Gas, groceries you know.

John

And they just deal entirely in cash, and that seems odd in the United States, but in countries like India where there's actually a majority of the population is unbanked. And you'll see that in a lot of third-world countries and it's actually a problem for those governments.

Lisa

Well, that's because they don't trust the governments because, you know...

John

For whatever reason.

Lisa

For whatever reason, yes.

John

Or again, because of the social structures in the third world, they can't afford taxes or things like that, that are associated with reporting money.

Lisa

Right. But, yeah, I remember back in the day, I would go visit my great grandmother in Freeport in summertime, and if the car needed new tires or something was going on, I mean, she would go to her room and come back literally with a roll of 20s with a rubber band around it. And I guarantee... you know, my great grandfather was working at the glass factory, I mean, they weren't selling drugs or anything like that, but they just cashed the check and they kept their cash.

Lisa

Well, welcome back, everyone, to Aging Insights. I'm Lisa Shoalmire here with John Ross. And today, we're talking about asset protection but probably not as in the more typical way you make think about it. Today we're talking about if you have what I call hard assets, you know, we're talking precious metals, cash money, you know, things that have intrinsic value. Although I guess we can argue whether cash money really has intrinsic value.

John

Yeah, yeah, yeah, that's a whole another discussion.

Lisa

That's a theoretical discussion. But the bottom line is we deal with a lot clients that do in fact have physical possession of a substantial amount of cash, substantial amount precious metal, silver, gold, you know, things like that, and they are just as interested in asset protection for those type assets as they are for their house or their retirement account.

John

Yeah, and again, I think a lot of this goes back to fears from external threats, and so in my detailed research in leading up to today's program, and by that, I mean my Google search while I was sitting here in the studio before we went Live. But just out of curiosity I just did a Google search for biggest threats to personal wealth. Well, I was trying to wonder. My question in my mind was, "What are the real threats? "

Lisa

Okay, is this like Family Feud? Can I guess?

John

Yeah, go for it.

Lisa

Divorce.

John

There, actually, yes, one of them was your spouse.

Lisa

Okay. A health crisis?

John

No, that actually, in the first two or three pages of Google results, nothing came up with health crisis.

Lisa

Okay. Job loss?

John

No, job loss wasn't on either.

Lisa

All right. Wait, I'll see if I've got one more, I think, before I go for three strikes. So, threat to personal wealth?

John

Yeah, and that's was how…

Lisa

Overspending?

John

Well...

Lisa

Debt, that kind of thing.

John

Well, I guess sort of. One of them was essentially negligence.

Lisa

Negligence, yeah, not paying attention.

John

And not paying attention. And they were talking about, you know, you're busy so you don't refinance your home mortgage for a lower rate because it just takes too much time.

Lisa

Or, you know, every day you're at expensive coffee shop that shall remain nameless where you drop 10 bucks on a coffee.

John

Right.

Lisa

That's negligence, it might be.

John

And, of course, a couple of the others were... one of them in fact, one of the first two or three hits was, one of the biggest risks to your personal wealth is your financial adviser. And that's actually an interesting one. Some of you all may know that I do a podcast, and so that's just Internet radio essentially. I do a podcast called Big Picture Retirement, and if you've got iTunes or any of that sort of thing, you can go onto iTunes or whatever your favorite podcast app is. And if you don't have one, get on your phone and go to the Google store or the Apple store, and get you a podcast app, and then search for Big Picture Retirement.

Lisa

The fee structure of the investments.

John

The fee structures between most... and it's not just financial advisors but the financial services industry and the way they siphon off dollars from investments, that often your rate of return is much, much smaller than what it could be in any given scenario. But that's... so those were there. Now one of them that I did think... and this was making me think in terms of the 1920s era when, you know, all the banks collapsed right?

Lisa

Right.

John

And everybody lost their money, and they created this huge distrust of banks, but one of them, and this was the second hit on my Google search.

Lisa

Okay, for threats to personal wealth.

John

For threats to personal wealth, was cyberattack to the financial industry.

Lisa

Well, you know, that's one thing, John, if your account balance is nothing but numbers on an account statement piece of paper, and the cyberattack comes in and zeroes out your account and your money is gone.

John

And they weren't talking about just the account, but they were talking about say a cyberattack against a Bank of America or a Wells Fargo, where they essentially deleted all of the accounts, and the kind of catastrophe... I mean, again, you've just got a bunch of ones and zeroes at that bank.

Lisa

Right. Yes.

John

There's not actual paper money there.

Lisa

Yeah, so kind of print out your account statements.

John

That's what everybody found out with the rush on the banks during the Depression, was when they showed up to pull the money out, they didn't have actual money, they just had ledgers. So that may be actually a legitimate concern, where maybe some of this...

Lisa

Some hard assets would be a good thing.

John

Home hoarding would be better. So, anyways, stick around, we'll be right back. Yeah, So the top ones on my cell phone, the first from The Motley Fool website was the one about essentially negligence, just not doing anything.

Lisa

Not paying attention, yeah.

John

But the second one was from some website called Casey Research, and it said, by far the biggest threat to wealth, in 2016, was cyberattack. Number three in our Family Feud edition...

Lisa

Is your spouse.

John

Is the spouse.

Lisa

Now I had a client just this week tell me their dad had been divorced four times, and that he used to have a lot more money, and I said, "Yeah, divided by half four times, didn't it?"

Lisa

Yeah, I get that.

John

Yeah, that's exactly right. Now some of the others which we may actually end up kind of visiting on some of these topics, but you know, some of the others you start getting into things like inflation.

Lisa

But, you know, even if you have inflation, and I'm sure there's an economist who can figure all this out. I remember this from Econ 101, but you know, if you have inflation and you're a hoarder of precious metals, it doesn't automatically follow that the value of those precious metals also inflate, because I know at one time the silver was, you know, in the basement even though inflation was rising. So, you know, a lot of people think that precious metals and things are sort of a hedge, and I have to go back and look at the data, historical data, but not necessarily the case.

John

And so some of those sort of things are out there.

John

No, not necessarily the case, I don't know...

Lisa

Of course, you know, what is wealth I guess? I've always thought, you know, "If the world truly ends tomorrow as we know it, civilization as we know it, well then so what else? Gold bars?" I mean, what is that really gonna do for me? I might want bricks of ammunition that I could trade or, you know, I mean, what is wealth? I mean, the Romans thought it was a bag of salt, right?

John

Yeah. No, that's exactly right. In fact, let's see, I think here on…if I can…

Lisa

If you can get it all working.

John

If I can figure out how to do it. Let's see, a Chrome tab, there we go, silver prices, share. Let me go back over here. And I can put that up on the screen, there's your historical silver prices over a 100-year period. So, yeah, I mean, it's skyrocketed at one point, there that was...

Lisa

Well, and in 1980 that was a time of big inflation, as I recall.

John

Yeah, that's right.

Lisa

I know you were barely born then but.

John

But, yeah...

Lisa

But we haven't really had any inflation in a long time here, and then we've got, you know...

John

We've got some...

Lisa

…2012, you know, we got some peaks.

John

Yeah, I got some drops in there so, you know, it's... I don't know if it's really inflation, hedging or not.

Lisa

But, yeah, it brings some comfort to people to know that they have assets that they can put their hands on, it's not just at an account statement with numbers.

John

Yeah, but you know, of course, as you and I we're talking about earlier today, that's an emotional response, right?

Lisa

Right.

John

And people make decisions based on emotional responses and not necessarily rational logical decisions. And so, I'm not sure... we'll see if there's any rationale to it.

Lisa

Well, and I know were headed back to the show pretty quickly but, you know, another big thing we've had the last two years is people who've invested in other currencies besides American dollars.

John

Oh, yes, the...

Lisa

Such as the Iraqi dinar.

John

Yes, which is a scam, by the way. You can do currency investments. It's very, very dangerous, but Iraqi dinar is just a scam.

Lisa

It's not a good.

John

All right, we're going back in three, two, one.

John

Welcome back to Aging Insights, everybody. This is your host John Ross here Live in the studio with my co-host Lisa Shoalmire. You're listening to us Live on the radio where we are, today, talking about you know, a little bit of asset protection but kind of in the guise of, you know, "Is maybe hoarding some cash, or hoarding some silver, is that really asset protection?"

Lisa

Right. And, of course, I hear the commercials, when I'm listening to other radio programs or watching TV and, you know, frankly, if someone is... I'm just one of the those jaded people, John, that if I hear a radio commercial, if someone is really trying to sell me some silver or some gold, I kind of figure that I'm always the one late to the party. I'm never the one that's on time or ahead. So I figure, if they're trying to sell it to me, that I'm the rube they are trying to sell it to.

Lisa

Pick some stocks.

John

Pick some stocks and read some articles out of The Wall Street Journal or whatever. Of course, as a college professor they had subscriptions to Wall Street Journal.

Lisa

Of course, they did.

John

So I was pointing out, "Well, look at this article. This article says that, you know, XYZ stock is gonna the next biggest thing, and so it seems to me like, you know, wouldn't it be a good idea to go and buy a bunch of this XYZ stock? I mean, they're saying right here on the Wall Street Journal that it's a good buy." And, you know, my dad immediately responded back with, "If they're already saying it, it's too late."

John

And I will say, you know, being the child of a couple of college business professors as I was, you know, when I got into maybe the high school range and, you know, maybe you have a class and this is the first time you're really being exposed to the idea of stocks and things like that. And I kinda got into it for a little while there, and you know, I can remember going home and saying, "Yeah, dad, we were required to..."

Lisa

Yeah, it's not a good buy anymore.

John

It was a good buy before this article ever came out, but once it's been out there... and so that's the same thing you're saying there. If somebody is paying for commercial advertisement to tell you this is the best thing, then it's probably just not the best thing.

Lisa

Okay. So ,yes, but we have people that have made those investments or are hoarding that cash and so, John, I think we kind of touched a little bit on the very first problem, which is kind of the physical security of those assets. You know, you had your client that buried things in PVC pipes, I had clients that put substantial cash into a home safes and...

Lisa

Yeah, "and I need to get them out of the safe."

John

"And I need to get them out of the safe." And I don't care how secure your safe is, a safe cracker can bust it.

Lisa

Well, and what stunned me about that particular case, because we were brought in after the lady did recover, was that this other person who knew her, you know, what locksmith walks into somebody's house and cracks a safe? I mean, if I could just call him up on a speed dial and just...

John

And you may be thinking, "You know what, I've got a great home safe, it's a secure, it's not a big deal." We had a situation a while back where a lady had been hospitalized and pretty severely hospitalized.

John

But, you know, when...

Lisa

Anyway...

John

…in our office…

Lisa

But it happened.

Lisa

Yes, didn't know she was gonna make it out of the hospital.

John

…we have a safe in our office, right?

Lisa

Yes.

John

And somebody who was aware of a safe in that home calls a locksmith, meets the locksmith at the house, and gives them the sad sob story of, you know, "My dear mom," or, "My dear aunt," or whoever it is, "is at the hospital. They won't let me do anything. She has some powers of attorney..."

John

It actually was not our safe. It was a previous tenant that had left and moved, and we knew him. But they had moved, they had left, and when they left, they had left a safe. And in the space that now is our safe, I guess.

Lisa

I guess it is, finders keepers.

John

But I remember calling a locksmith and they just came over and opened it.

Lisa

And reprogrammed it, opened it right up.

John

Reprogrammed it. They didn't ask any questions.

Lisa

So the physical safety, if you are holding onto actual physical asset, that's a bit tricky. I do have people that I know that they have safety deposit boxes at banks and, you know, I don't know what's in your safety deposit box. Couple issues there, John, arguably that's a physically safe place to keep, you know, those assets. I have one couple that had 12 safety deposit boxes.

John

Wow, that's seems like getting pricey.

Lisa

Yeah, really seriously. But they had a bunch of precious metals and cash and everything in those safe deposit boxes. But, John, so even if you can overcome the physical safety of those assets, if they are your assets and you have a crisis of some kind which requires some money, it can be difficult at times to, I don't know, reduce your precious metals or, you know, go in and take out that wad of cash, and make it useful to you because, I'm sure many of our listeners know that, if you go to the bank and you make a deposit or withdrawal of... I think the federal rule says $10,000.

John

Yes.

Lisa

However, I've spoken to people in banking, and they say basically it's really up to their discretion, and they may report if you come in and bring $8,000 to…

John

Right, just because, yeah….

Lisa

…to deposit. They might fill out a report, and you didn't even know about it. They'd fill out the report, they send it through Treasury, and you think, "Well, this is no big deal because I just deposit 8,000 bucks. It's not even the $10,000 limit." But you know what, if you deposit 8,000 this month and you came back in and deposited 5,000 next month, well, those reports start stacking up.

John

Right, and that's actually how that one senator got busted.

Lisa

Yeah, he was... what do they call that structuring?

John

Right, they call it structuring.

Lisa

Structuring deposits.

John

Yeah. Now I will say I did have a client here recently and we were actually making a recommendation. They had a little bit of money, they were going to a nursing home, we were trying to figure out how to not have to spend the money at the nursing home, and in their case, they had a disabled child. And so essentially what we were gonna do is they were gonna transfer the assets to the disabled child which is permissible under Medicaid.

Lisa

Right, we follow the rules.

John

And this was not cash money. We're talking about they had some money in the bank, and they were asking me how to do it. And I said, "Well, look just write him a check for you know, the $20,000 or whatever it is." And then we were very concerned about the reporting here.

Lisa

Yes, and it's like it's fine.

John

And that was like it's fine. So the banks are reporting cash transactions not just the fact that you wrote a check, you know. If you've got 20 grand in the bank they already know about that. If you're taking that 20 grand out and putting it in...

Lisa

And doing something else with it.

John

…another bank account then that's not anything that they... the whole point of the IRS reporting requirement is they wanna try to find untaxed transaction.

Lisa

Well, untaxed transactions, they also kind of take the position that perhaps people who have acquired that cash through some illegal activities or perhaps, you know, just like you say, haven't paid tax on it, or maybe they're involved in terrorist financing. That's the purpose of the government rules is to catch the taxes and catch the bad guys. Unfortunately, if you're my great grandma and you've just been rolling out 20s for 40 years...

John

And they've stacked up.

Lisa

And they've stacked up, it's not that you're a bad guy, it's just you're a 90-year old lady who grew up in the Depression and didn't trust the banks. But that still can be problematic if that cash money is needed. You know, a lot of places, John, will not take substantial amounts of cash. So I know investment firms, you know, they will not let you bring 5,000 in cash.

John

Right, to buy some Amazon stock. That's just not how they do.

Lisa

And a lot of facilities also won't accept that amount cash. They're glad to take your money order, your check, your credit card. So a lot of times it might even be a banking issue, it may be who you're wanting to do business with that you've gotta get that cash into the banking system, and even if it was earned completely legitimately, if you've just been saving it in that cash form, it can be real difficult.

John

Right. And, of course, you know, the other thing I mentioned earlier, you know, I've done a little Google search on threats, and one of the biggest threats to personal wealth is inflation and...

Lisa

And if your cash is sitting in a safe deposit box or the home safe it's not...

John

It is devaluing.

Lisa

It's devaluing, it's worthless every day.

John

Every day. And so you may think of that in the... emotionally, it feels safe because it's tangible.

Lisa

Because it's right there and you can touch it.

John

Right. What you don't realize is that the buying power of that is diminishing by the day, but it's a frog in the boiling water sort of deal. It's diminishing every day but the increments are small enough that you don't notice.

Lisa

Right, so.

John

You don't notice until a couple years or...

Lisa

Ten years.

John

Ten years have gone by or 20 years have gone by, and then all of a sudden you look back, and you're like, "Wow, I remember when I put that $20,000 in a safety deposit box, and I was like, 'Man, what am I gonna do with that cash?' And now here we are 20 years later, and you're thinking what a measly $20,000 I have over there. You know, that was my rainy day and I couldn't do anything with that now, because of that inflation." So you are losing in that deal with the inflation no matter what. And real quick, before we take a break, the one other one is the recall of currency.

Lisa

Right. So another threat is if you're keeping, if you're hording so much cash, you know, we do take currency occasionally out of circulation. And, of course, other countries have done it to where, you know, where they've taken, you know, all of a certain denomination out of circulation. And so now if you're still holding… you have the choice to either go turn that into the bank to get it credited to your account. But if you just hold on to it, you know, next year they just won't honor it.

John

Right. And so that's a... I've got a client that has some of the older $100 bills and that's his concern is that they would become essentially...

Lisa

Worthless paper.

John

Worthless paper, if they took their old hundreds out of circulation.

Lisa

Well, before we go to break, there was a big talk about that. Larry Summers, former president of Harvard, they've been talking about taking down our cash denominations down... getting rid of the $100 bill. It hasn't flown anywhere, nobody's really willing to do that. But there is talk.

John

There is talk, and then they would have to make new rap songs the Benjamins.

Lisa

There wouldn't be any Benjamins, they'll be Jackson's.

John

There will be Jackson's, yeah. All right, we're gonna take a break, we'll be right back. Just not as cool.

Lisa

It's not all about the Benjamins' worths, you know, the Jacksons, I don't know. And, of course, they were talking about putting Harriet Tubman on the bill instead of Andrew Jackson. I mean, just random stuff. But, yeah, the idea was $100 bills are sort of the currency of drug dealers and, you know, because, frankly, $100 bills, you know, when I was a kid I hardly ever saw one. You know, $20 bill was pretty fabulous. Like you were talking about inflation, gosh, a $20 bill won't even fill up my gas tank or buy lunch for two.

John

Yup. So when we come back from the break here, we will... I think we'll, at least, give a few pointers of what maybe you should be doing or think about doing.

Lisa

We just like to talk about this stuff.

John

Yeah, we just like to talk about it, and you might as well... and with some strategies, maybe some things that you should worry about, maybe some things that you shouldn't worry about. So we've got about 30 seconds, it looks like, until we're back Live. And appreciate everybody that watches the program, and we do appreciate your comments your likes, your shares, all of that sort of stuff. It helps us spread the message out there. Get more people listening to the program, that's more information in the public, that means less people are making mistakes with their stuff. And understand, people make mistakes out there based on lack of knowledge, it's going to affect all of us, so we've got to share this information. All right, here we go.

Lisa

Well, welcome back, everyone, to our final segment today on Aging Insight. Y you know, John and I have just been you know, talking.

John

We've just been rambling a bit.

Lisa

Kind of theoretically talking about stuff, but it's been pretty interesting in our practice over the last 20 years that we have run across so many people that do in fact have a collection of currency or precious metals, and hard assets. And so we've been talking today about, you know, some of the risk in doing that. But, John, now that we're in our final segment, let's talk about some to-dos, and some not to-dos if you're one of those people.

John

Well, and the first thing is we've gotta take, as best we can, we've gotta take the emotion out of it, right, and get back to some of the logic. And I think the first way you do that is you look at... and you ask yourself, "What is it that I'm afraid of?"

Lisa

Yeah. Well, I'm afraid of being broke.

John

Okay. But where is that gonna come from, right? What external threat is it that you in your personal situation fear? You know, when we did our little Family Feud episode earlier, several that you mentioned weren't on the list, right? But I think things that you did mention like healthcare crisis, nursing home stay, something like that, that maybe that's a fear that people have, and they may be thinking, "Well, if I ever go to the nursing home, they're gonna take all of my stuff."

Lisa

"Yeah, they're gonna take what's in the bank, so if I have a safe full of cash they won't see that."

John

Right. And so, in that standpoint, that's the wrong choice. I mean, pulling everything out in cash, because you're worried about nursing home care, that's the wrong strategy. You know, from our standpoint, first of all, you can do long-term care insurance, although that's unaffordable for many people, but if you're looking at... first of all, and nursing homes don't take... they don't take stuff, it's just rent. It's expensive rent but it's just rent. They're not taking anything.

Lisa

Right, yeah. You can use these Trusts and you can continue to invest your assets in appropriate investments that return something to you, whether that's, you know, some safe or index funds or CDs or whatever. But at least, you're trying to at least keep up with inflation. So, yeah, these Trust you can still stay in the financial market and pick wise investments and choices. But you, at least, can hopefully keep up with the game there.

John

And I think another one that I get on a pretty regular basis is the fear a lawsuit.

Lisa

Yeah, but...

John

And actually your risk of a lawsuit is very, very small, and for most places where you're gonna create liability, you got insurance.

Lisa

Yeah. And, frankly, most of the lawsuits that we really see all have to do with divorce lawsuits which, you know…but as far as like a lawsuit because of a car accident or something like that, those are fairly minimal, you have insurance for that. And on top of that, John, you know, we have a lot of laws that protect your assets from being taken in a lawsuit, because basically the government doesn't want a plaintiff to come along and take everything you have, including the roof over your head, and now the government has to pay for you.

John

That's right. In fact, there was a...

Lisa

Lots of ways to protect assets.

John

Yeah, there's a case that came out of the Seventh Circuit Court of Appeals, just in the last week or so, that was talking about a person who had a judgment against them. After the judgment was against them, they took their assets and they put them in a IRAs, 401(k), 529 college savings accounts, and of course the...

Lisa

The plaintiff…

John

The judgment creditor out there said, "Wait a second, those are fraudulent transfers. You have to give us those back." And the Seventh Circuit Court of Appeals has come back and said, "No, those are legitimate transfers. You are free to invest your assets, however you want to invest those assets. If you happen to invest them in things that are exempt from a judgment creditor, well then that's just too bad for the judgement creditor."

Lisa

Yeah, you got your assets into the exempt asset before the judgment creditor can get them.

John

That's right, and there are lots of different ways between changing the investment structure of your assets. Some vehicles, some investments are subject to liabilities, many of them are not. In addition to that, if they are assets that are not subject to liabilities out, there are business entities like LLCs that you can use to shield assets, there are Trusts that are designed to shield those assets. And typically, you know, just for reference, you're gonna use a Trust for personal assets that you're shielding from liability, and you're gonna use a business entity for business assets, right?

Lisa

Right, yeah.

John

Now if maybe you're thinking, "But wait a second, John, you mentioned that the number two hit on there was a financial cyberattack that collapses the U.S. economy."

Lisa

Right. It turns all of your numbers on the statement page to blanks.

John

Well, the reality of that is that cash that you have is probably also going to be valueless.

Lisa

Yeah, that happens.

John

You know, because, may be for a short period of time, but the thing is is that if you have that sort of major financial collapse, it's likely going to be chaos.

Lisa

Yeah, I think that's that time to praise the Lord and pass the ammunition at that point.

John

And so from that standpoint, instead of hoarding that cash, if you really are, you know, kind of a prepper mind, instead of cash, even the precious metals, they only have value to the extent that there's a market for that, and much of that is just created through this same digital financial economy that we have. And so if the digital financial economy collapses, so does the value of the precious metals, as just like it does paper cash.

Lisa

Right. So bottom line is if you're of that mentality, and you're really scared and anxious about the collapse of the civilization as we know it, then if you're gonna lay out some assets...

John

Brass and lead.

Lisa

Yeah, brass and lead, MREs, you know, that kind of thing, you know, the stuff that's really gonna be useful when civilization collapses. But, you know, money, precious metals, things that we value based on their acceptability and trade in the market that we know right now, that will be nothing.

John

Now, all of that being said, I certainly have told lots of clients, I actually do think it's a good idea to have a little bit of available cash money. If for no other reason, you take the context of maybe a natural disaster, right, a major tornado, or flood, or ice storm, or things like that, where many of the ordinary services are down temporarily.

Lisa

Because there's no electricity and the ATM machine doesn't work.

John

Right, and everything's just down. So having access to some cash that's perfectly reasonable. I do it myself, you know, having a little available cash not a big deal, I don't think those should be excessive necessarily. What's excessive to you and to your mind, that's gonna vary from person to person, so I think having a little cash around is fine, that's not a big deal.

Lisa

Yeah, and if you're the precious metal type, you know, I've got folks that fall on the couple different categories there, they purchased and possessed the actual precious metals, and then I've got another subset that they purchase shares of precious metals. So we're right back to account statements about what you supposedly own as far as the gold or silver.

John

Yeah, that's usually the case.

Lisa

Yeah, so I'm not a big fan of the precious metals situation but...

John

So all of that to say is, if you're the kind of person that's worried about some external threat out there, well, first of all, identify the threat.

Lisa

Yeah, what are you scared of?

John

What is it that you're scared of? Then find the appropriate solution to that, which is probably not going to be hoarding tons and tons of cash. There's really probably more... you're actually probably creating more risks by doing that from other real threats.

Lisa

Yeah, the second wife who says, "What cash?"

John

The second wife that says, "What cash?"

Lisa

"What cash?"

John

So take care of yourselves out there and, of course, we appreciate you listening to the show. We have appreciate all of our sponsors who keep us on the radio. If you see them out there, be sure and let them know that you enjoy the show. Otherwise, we'll see you next week.

Lisa

Yeah, we'll be back next Saturday. Thanks.

John

And we'll see all of you all next week maybe.