And good evening, you've got more than money, you've got Jeanne Dickerson, your host, your personal financial adviser at your service for the next half an hour, all at your service.

You get all of me and all of my seven hundred and eighty years of experience.

Don't try to figure that out.

It's one of life's great mysteries.

Pleasure to be with you.

Back with you again.

And hopefully you're a loyal viewer.

If so, you know exactly how this works.

If not, we answer emails.

We answer your questions on air and give you as much information, as much background, as much insight as we possibly can to the topics that are of interest to you.

The way we do that is that you send us emails Jeanne and ask MTM Jeannie and ask MTV.com.

We can't assure you that your question will be used on a future show.

What we can assure you is that every single question is asked and answered.

Hopefully, you've already gotten your answers long before you see your question on air, but we assure you that we're going to serve you in any way that we are able.

It's a crazy world out there.

Some have far more challenging words for what's going on in our world today.

Chaotic is a word that I have heard unsettled, confrontational.

These are all words that are being used to describe our current economic, political, social environment.

And some have said, I think, rather ill informed Lee.

If that's a word some have said, it's never been this bad before.

Of course it has.

It always has.

And for those of us who are more than just a couple of decades on this spinning green planet, we have seen far worse.

We've seen far better.

There's no question, but we've seen far worse.

So if the issue of raising debt ceiling for the federal government or infrastructure bills that really aren't infrastructure bills or the budgetary confrontations that are going on in D.C., if these concern you, that makes perfect sense.

If these are causing you agenda, causing you significant amounts of heartburn, that probably doesn't make sense.

Or at the very least, it needs to be addressed.

Yes, things are very, very challenging.

But don't lead yourself astray.

Don't assume that things have never been this bad because for better or for worse, things are about normal.

You can take that any way you wish.

Normal for us is that we answer your email questions, we have Megan in the control room.

Megan, what's our first question for the evening?

Happy to get right to it and take a look.

This first viewer says I could use your insight insight into my dilemma.

I am seventy five and seriously, considering moving into a CCRC, there seem to be two options a steep initial buying and a reasonable monthly charge for service rendered or a lesser buying and a steeper monthly charge for service.

I have a monthly income of about six thousand composed of Social Security, a pension and a lifetime annuity.

I have about three hundred and fifty thousand in a money market.

Should I consider the lower buying with a higher monthly charge?

Or should I consider cashing in my annuity about one hundred and fifty thousand dollars and choosing the higher buying?

I have three children and one grandchild to whom I would like to leave some inheritance.

I am very confused, although because I live independently now, I cannot foresee the future and want to be prepared.

Thank you in advance for your advice.

There's a lot of moving parts in this question, and there are a lot of parts that are common to many of you watching this evening.

You have similar questions.

Let's parse the question just a little bit.

Ccrc continuing care retirement community If you haven't heard the phrase before, it's likely because you're not yet in that glide path to retirement for folks who are in their late fifties or early sixties.

It is a phrase that they have bumped into likely and maybe even explored if you're looking throughout our viewership area.

There are a wonderful selection of CCRC that offer tremendous care to their inhabitants.

Their residents, I guess, is the best word.

So examining the opportunity to live in a community where you can start independent and if you need assistance, modest assistance while you're still in that independently living scenario, your own home, your own apartment or more significant assistance right on right on up to twenty four seven care a CCRC could be a very interesting option for you to look at.

Keep in mind, it is not the only option.

There are a fair number of systems out there.

A fair number of services that will care for seniors in their own homes.

The overall phrase aging in place is one.

It's very, very common these days, and it's one that, to be blunt, most people would prefer.

Most people don't want to give up their home, they don't want to give up their neighborhood, their friends, etc.

and move anywhere, let alone away from everything that they've they've known to love.

Bottom line is, if you are one of those people, don't assume that a CCRC is the only option that you have.

It simply isn't.

But explore it.

Indeed, there are lots of good ones out there, and you're absolutely right.

This issue of I can put a little lower amount down and pay a little higher amount per month or vice versa.

I can put more money as my investment, my upfront investment and pay less per month.

How do you decide?

Well, one of the ways you decide is whether or not you even have the additional money to put down in your case you have an annuity.

You must be clear that when you surrender this annuity, there will be taxes due.

We, from your email, can't begin to assess what that number might be.

You're going to need to work with a tax advisor, a financial adviser, someone that is familiar with those calculations to let you know a one hundred and fifty thousand annuity is very likely, not a one hundred and fifty thousand dollars check that you can write to a CCRC.

Could it be just a few thousand dollars of tax?

Sure.

Could it be tens of thousands answers?

Of course, there's simply no way to know, but it's important that, you know before you get too far down this path and make decisions that are, in many cases, irreversible.

So having the money is the number one.

One of the factors that you should consider your health is another factor.

Seventy five is very young with any luck at all, we'll have you for another twenty five or thirty years, that would be fantastic.

But we don't know that you may have more insight into that.

You may have an insight that says, Well, to be fair, my health isn't very good.

In which case you would want to put down lower amount of money, pay a slightly higher monthly rate with the assumption that if your health isn't wonderful and your life expectancy isn't long term, that you would actually end up paying far less or vice versa.

We have lots of clients who parents have celebrated their one hundredth plus anniversary anniversary birthdays, and they have that to look forward to as well.

If you think you expect to be there for decades than making a higher down payment, lower monthly payments will likely end up benefiting you and your family.

And finally, your question about making sure you can leave a little something to your family.

It's understandable.

Perhaps you could consider a life insurance policy.

Life insurance policy would go to your beneficiaries income tax free.

It would be an absolute locked in guaranteed amount.

You wouldn't have to worry about spending down your other assets and potentially ending up with zero for your family.

You would have that set aside locked up nice and neat, and maybe that gives you just a little bit more peace of mind.

I know we talked about a lot of different pieces of that puzzle.

It's a very interesting question.

It's a very challenging question, and I would suggest that this young lady is likely to be benefited from sitting down with a financial adviser and or a tax adviser, perhaps even an estate planning attorney, so that she can outline all of her challenges and see what the professional guidance would be to make sure she has the best possible plan for her.

I hope we helped a bit.

If you have a question.

Similarly, Gene and ask MTM is the email address that you send those directly to me and we'll respond directly back.

Megan, do we have another email?

Of course we do.

This person says I went to a financial adviser to have my investments reviewed when I got her recommendations.

I saw two things that surprised me.

The first was she gave me all the information I need to do it myself and not have to pay her.

The second was that a lot of the mutual funds that she recommended are not rated five stars by Morningstar.

I thought she would want to put the very best into her investments, but she didn't.

Can you explain why she did this?

I believe I can.

There's a couple of parts to this again, parsing out the question that for viewers who might not be familiar with Morningstar.

It's a weather.

A rather well-known, rather well-regarded investment and research tool, database of mutual funds, exchange traded funds, stocks, bonds and many other types of investments.

And again, it is been around for decades.

It's very well respected, so its opinions are often referenced by financial advisers and obviously by the consumers as well who have access to that database.

So that's the Morningstar piece that he's referencing, that she has selected funds that on their rating scale, which by the way, goes from zero stars to a five star fund.

And everything in between, of course, is often used by folks to give some sense of whether a fund is useful, worthy of investment, quality, fund that type of thing.

Often, financial advisers are questioned just as this gentleman has about whether all of their funds.

Shouldn't they all be five star or five stars the best?

Why are we not using the best?

Well, there's a couple of answers to that number one.

There are more than 20000 mutual funds.

So how would you define the best?

Are you talking about the ones that are in the top one percent if you're in the top one percent, those are still two hundred mutual funds and top one percent for what time period?

For a year, for three months, for 10 years.

There are lots of different time frames that you could evaluate lots of different ways.

You can rank mutual funds.

So calling a fund a five star fund and Morningstar has its own criterion.

It has its own system and process for how they determine what a fund, how a fund is ranked from zero right on up to five stars.

It has become.

A rather poorly guarded secret among the users of Morningstar that their fund rating system isn't very good.

It isn't very useful.

If you were to say I rated this fund five stars because I expect in the future it will do very, very well.

That might have some value, but academically, the research has shown that isn't the case.

Many five star funds have been ranked that way because of their past performance, and then they tend to fall off.

Many financial advisers have found higher quality, greater potential in funds that are ranked three and four stars, and many academic studies have proven that out as well.

That three and four star funds often often outperform five star funds.

So this gentleman is making a an assumption in this case.

Not a very useful assumption, not a very well informed assumption.

If he had Googled Morningstar rating system, he would have had access to lots of that information, and he would likely not have asked that question.

But the first part of his question is a bit more troubling.

She gave him the entire roster of funds that she expects that she would employ in investing his funds, and his response was why.

Thank you very much.

I don't need you now.

I don't need to pay you now.

I can do this myself.

You've given me the recipe.

See?

Well, that's an interesting response.

I would suggest you're not going to like this.

It's an ignorant response, and I'm using the phrase ignorant, correctly stupid is I've told you a thousand times, you still don't get it.

That's stupid.

Ignorant is you just don't know.

And apparently, this gentleman just doesn't know what the real function of working with a financial adviser, particularly an investment adviser, brings to the table and the starting point the initial roster of funds is.

I don't know five percent of the success formula, three percent of the success formula may be less.

I know financial advisors who use radically different inventories of of investments than I do.

And they still do wonderfully well, wonderfully well.

So is it really the inventory or is it the allocation system?

Is it the monitoring system?

Is it the rebalancing system?

Is it answering questions that have nothing to do with investments whatsoever, like income tax impacts or perhaps environmental sensitivity issues or social responsibility issues or governance issues?

Those are all very high on the list of concerns for lots of folks these days.

But whether it's an income tax issue, an estate planning issue, a Social Security question, financial advisors value is often in addition to the investment process, rather than a what a tag along.

So for this gentleman, in a very misguided way to think that he has gotten something over on this young lady financial advisor, it's sad for him.

It is not terribly sad for her.

You would say, wait, gene goodness.

It sounds like she's going to lose a client.

This is not a client that most financial advisers would wish.

This is not the kind of team.

This is not the kind of relationship with the financial advisers are looking for in our more than money world headquarters in the holy lands between Bethlehem and Nazareth.

Our guidance, our litmus test of meeting a new prospective client and then deciding whether or not they fit us.

And it's only about half the folks that we talked to initially that do fit us.

If it's our litmus test is, will they be with us?

Would we want to serve them for at least 20 years?

And would you voluntarily want to hang out with someone who in the very first meeting is trying to figure out how to give you an elbow, push you to the side, undervalue your work and do it himself?

The answer is, of course not.

Why put up with that for 20 years when you could be serving a client who is appreciative, engaged and willing to form a team?

And that's the best possible result of any financial advisory relationship, the coming together of very smart people, all with the same goal in mind, making sure your financial future is the best it can possibly be.

A little harsh.

My apologies or not, you'll accept it or not, but for the rest of you listening, I think that gives you a very real kind of framework that you can either see yourself working with a financial adviser or perhaps not, maybe do it yourself is right up your alley.

For some folks, it works very well.

Meg's next question, please.

Sure thing this person says My fiance started his first real job in May.

He was given a really good starting salary and really good benefits.

One of his benefits is a four one K plan.

It gives him the choice of the standard and a Roth.

Which one should he pick?

Where can young couples like us go other than our parents, none of which have made very good financial choices to get answers to our financial questions.

We talked to two advisors and they both had investment account minimums way higher than we can even imagine.

Oh, goodness.

Our industry, the financial advisory industry, does have its faults.

And one of those faults is that in many cases, the financial advisers are either so far along in their career that they've lost touch or they've been, in my opinion, led astray by perhaps the the industry journals, encouraging them that the very best financial advisers are the ones that work with the highest net worth individuals.

If your clients aren't averaging a $5 million net worth or a $10 million net worth, then you're probably not a very good financial adviser.

There are even firms in major metropolitan areas that have a minimum of twenty five million dollars before they will accept you as a client.

That's fascinating.

And this young couple is exactly at this young lady is exactly right, where then does that assist young couples?

And the answer is for those firms, they don't and they won't, and they're not concerned about it.

But there are tons of high quality financial advisers who use the same litmus test we do, but in this case instead of, would they be good clients for the next 20 years?

Gosh, he just got his first real job.

They might be great clients for 30 years, 40 years, 50 years.

I'm not sure I'm going to see 50 years, but they will.

And nurturing those types of clients is not only the responsibility of it's the pleasure of serving those young folks is the pleasure of many, many firms more than money.

Mtm Financial Group.

The list would be longer than you can possibly imagine.

The fact that she's talked to two firms and they require one hundred thousand to invest a quarter of a million or a million, that sadly is unfortunate luck of the draw.

She could just as easily have talked to two other firms that would welcome them as young clients and be embracing them because they are wise enough to say these are planting seeds for the future.

And every business, financial advisory or otherwise should be serving their current clients at an extremely high level and planting seeds and nurturing the next generation of clients as well.

In this case, sadly, that did not happen.

Now, let's goodness get to the real question, which is he's in a four one K plan.

He gets the choice between a standard standard is I put money in.

I get a tax deduction and when I retire in 50 years, wow, it's taxable.

The Roth option says I put money in just the same way, but I get no tax deduction today.

But it will compound tax free for decades and at my retirement, it comes out income tax free for a young person just starting out, put as much into the Roth option as you possibly can.

It will be slightly uncomfortable at tax time.

You'll learn to forget that rather quickly, and you can look forward to a time where you will likely.

No guarantees, but likely have millions of dollars in your Roth 401k that will all support you in your joint retirement.

Tax free.

If you have questions, don't hesitate.

Our doors are open to all the young couples out there that are watching, and if you're not necessarily a young couple yourself, maybe it's mom or dad, grandma and grandpa.

Make sure you refer them because we'll make sure they get good, good guidance.

Make sure we have a short one.

I believe we do.

This one says I have a farm that was given to me not inherited.

Do I have to pay capital gains, capital gains if I sell it?

If so, is there a way to reduce capital gains?

It has always been taxed as a farm.

That is a short question.

Thank you.

It's not a short answer.

My apologies.

We don't know enough from this question to be able to tell this gentleman.

He will pay tax or he won't.

We don't know enough.

Let's paint the scenario where he doesn't.

It's a farm, but you and I would call it a farm.

Yet it's four or five acres.

It's a big garden.

Maybe it has some animals that they raise, but in reality, it's his home.

And it was given to him many, many years ago, perhaps by a parent many, many years ago, and it's currently worth five hundred thousand.

If he sells it, I'm assuming he's married if he and his wife sell it.

What were their capital gains?

B the answer is zero.

The capital gains will be literally no money whatsoever, because Uncle Sam says if a married couple has a primary residence, this is their home and they sell it and profit less than five hundred thousand.

There's no income tax, there's no capital gains, there's no tax due.

So I know you're already saying, Wait, whoa, what if he's single?

Well, then the number is two hundred and fifty thousand.

If, on the other hand, it is a full blown farm and it was given to him when it was given to him, he was also given the cost basis of the donor.

Whoever granted this to him gave him their cost basis, so let's use five hundred thousand as an example.

Let's assume that the grantor had a cost basis of one hundred thousand if indeed this is a full blown farm, it's a commercial venture.

He has a four hundred thousand dollars capital gain, long term capital gain.

The top bracket says he would pay about 20 percent in tax on that, plus a little extra for excise tax, yada yadda.

So it ends up being twenty three twenty four.

But let's use 20 as a good, simple example, he's going to owe about eighty thousand dollars in capital gains.

Are there ways to avoid the capital gains?

The answer is maybe it requires the advice of a very, very competent, experienced real estate attorney.

Financial advisers can guide you to a point.

Tax advisers can guide you to a point.

But in order to avoid, not evade, evade is a bad thing with taxes.

Avoidance is a wise thing with taxes in order to avoid paying significant capital gains on a property value of this size.

It is, in my opinion, mandatory that you talk to a, a very experienced attorney that specializes in real estate.

Let me give you one example of how that might turn out very, very nicely.

Let's assume I'm picking the number.

This gentleman is eighty five years old.

He's thinking, maybe I should sell it now and disperse it before I pass away.

If that is not his requirement, it was just an idea.

He's thinking he might be able to sell it or thinking he should be able to sell it.

He might be convinced by an estate planning attorney that the wiser thing would be allow it to stay in his estate.

So that at his passing, the beneficiaries of his estate, his heirs receive a stepped up basis, so the basis he had originally one hundred thousand on a property where it's five hundred thousand, the basis rises to the full market value on the day that he passes from this existence to a far, far better place.

Translation right now, if he sells it, he pays capital gains on four hundred thousand.

He might owe eighty thousand or more.

If he leaves it in his estate to his heirs, they will have a capital gains of zero.

They may actually have a slight loss because the transaction costs are tax deductible.

And not only do they not pay eighty thousand or more, they might end up with a slight tax deduction for the exact same result.

The farm has been sold.

Make sure you consult with an experienced state estate and real estate attorney.

Folks, we just have a moment or so left in this edition of more than money.

If you have a question that you would like to explore either on air or off, send them directly to me, Jean and ask TMZ.com.

We've had a number of questions coming into PBS.

Thirty nine.

Eventually they make their way to me.

But if you want to go direct and get the quickest response, Jean and ask MTM CNN.com works very, very well and your questions can be about anything that has a financial dollar sign connected to it.

That's of importance to you.

And keep in mind that our title is more than money.

So it's not just your dollars that we're interested in, we're making sure that we're paying attention to your specific personal needs.

Folks, again, thank you for spending part of your evening with us.

We hope you learned a lot and we hope you'll join us again next week right here on more than money.