Afford Anything Podcast

Host: Paula Pant | Guest Co-Host: Joe Saul-Sehy

Episode: Q&A: Can You Really Beat the Market by Copying Members of Congress?

Date: November 4, 2025

Episode Overview

This episode tackles four listener questions, ranging from whether you can beat the market by following congressional stock trades, to strategies for reducing home maintenance costs, tax implications of starting a business as a high earner, and optimizing retirement payouts. True to the show’s mission, Paula and Joe probe beneath surface-level answers, discussing behavioral economics, practical financial planning, and investor psychology — all with their signature wit and candor.

Key Discussion Points & Insights

1. Should You Invest in Funds that Track Congress Members' Trades?

Listener Nancy’s Question – Are ETFs that copy politicians’ trades a good investment strategy, especially for young, risk-seeking investors?

Main Takeaways:

• Reporting Lag: Congress is required to disclose trades, but there’s often a significant lag between trade execution and public reporting. This erodes any “insider” advantage.
• Insider Biases: Even those privy to more information than the average investor suffer from human biases, overestimating their knowledge and making mistakes.

  “Familiarity with a given domain can sometimes result in horse blinders.” – Paula [03:55]

• Recent Performance & Costs: Some of these ETFs (e.g., the Democratic tracking version) have recently outperformed their benchmarks, but have high fees (around 0.74% vs. typical 0.1% for index funds) and limited track records.
• Fun Money, Not Core Allocation: Such funds are best reserved for a playful “fun money” bucket — a small portion of your portfolio (ideally <5%-10%).

  “I’m not going to build my investment policy statement around what politicians invest in.” – Joe [06:49]

• Illusion of Insider Advantage: Congresspeople lack the strict trading prohibitions of corporate insiders, which adds intrigue, but it’s not a reliable strategy.
• Portfolio Segregation: Use separate accounts for speculative or entertainment investing to avoid muddling core long-term strategies.

Notable Quotes

• “Timing is everything. … There is a lag time, a substantial lag time between when a trade is made and when that information becomes publicly available.” – Paula [02:28]
• “I like it with Fun Money. … But when I’m building an investment policy statement … you know, that doesn’t make sense to me.” – Joe [06:49]

Timestamps

• [00:00-04:08] Introduction and context for political trading ETFs
• [04:08-11:47] In-depth analysis and discussion on using these funds

2. How to Control Home Repairs and Maintenance Costs

Listener Leslie’s Question – As a homeowner, what are the best ways to reduce the costs and surprises of home repairs and maintenance?

Main Takeaways:

• Contractor Selection:
  • Contractors serving retail (owner-occupant) clients typically charge more and offer more “polish”; investor-focused contractors, often accessible via word-of-mouth and real estate networks, are usually better value.
  • Word of Mouth is Key: Connect via local meetups, forums, property managers, and ask for detailed, reputational recommendations.
  • Wealthy individuals often use referrals over price shopping.

    “Real estate is about people, not properties.” – Paula [15:11] “The best way to find the best people … is word of mouth.” – Joe [15:58]

• Planned Maintenance:
  • Create a “life expectancy” spreadsheet of major components (roof, HVAC, siding, appliances) and budget accordingly; surprises often aren’t real surprises for well-prepared homeowners.

    “Some of these surprises truly are not surprises if we do some critical thinking…” – Joe [21:09]

• DIY Limitations & Opportunity Cost:
  • DIY repairs only save money if you already own the necessary tools and your time isn’t better spent elsewhere.
• Follow Home Inspectors & Contractors:
  • When buying, walk through homes with inspectors/contractors; you’ll get extra insights (often not included in reports) that help gauge maintenance needs and future costs.
• Renter’s Perspective:
  • A healthy case for renting in high cost areas, given the unpredictability and burden of repairs.

    “For all the people who are like, renting is throwing money away, like, let’s highlight everything that we just talked about…” – Paula [26:07]

Notable Quotes

• “If you can show up during the inspection and actually talk to the person … hugely rewarding.” – Joe [27:41]
• “Economically speaking, that time [doing home repairs] would be much better spent doing something else…” – Paula [29:03]

Timestamps

• [11:47-30:18] Strategies for reducing repair costs, finding contractors, planning, and DIY considerations

3. Should High Earners Start a Business Solely for Tax Benefits?

Listener “Anonymous/Nancy” – Is it worth starting a small business mainly to gain tax flexibility (e.g., hiring your kids, opening retirement accounts) even if most income is W2 and time is limited?

Main Takeaways:

• IRS 3-of-5 Rule: The business must show a profit for at least 3 out of 5 consecutive years, or it’s considered a hobby. Losses can trigger audits and back taxes.
• Tax Deductions ≠ Free Money: It’s not enough to run losses; you really need to treat it as a real business or risk IRS trouble.
• Energy Drainers: Turning a hobby into a business can suck the joy out of that activity and add stress, paperwork, and expense.

  “All those hobbies that you love … turn them into energy drainers.” – Joe [37:16]

• Hidden Complexity & Costs: Even simple “side hustles” require software, legal compliance, payroll, inventory, bookkeeping, state filings, etc.

  “The costs, even for a purely online business, the operational costs are enormous.” – Paula [39:41]

• ‘Silver Bullet’ Internet Myths: Avoid schemes promising you can turn vacations into tax write-offs by putting your family on your “board” – not IRS-proof and invites audit scrutiny.
• Season of Life Matters: Only pursue if you are genuinely interested in entrepreneurship, not just as a tax loophole.

Notable Quotes

• “To do it for a tax break is 100%, I think, the wrong reason.” – Joe [38:46]
• “The moment you open a business, it’s inventory, it’s procurement, … SOPS, KPIs, … project management software.” – Paula [38:46]

Timestamps

• [34:57-46:33] Listener’s scenario, pitfalls of ‘tax hack’ businesses, internet myths, and nuanced advice

4. Optimizing a Retirement Leave Payout (Roth, Pre-Tax, or Other?)

Listener Nancy #2’s Question – Approaching retirement with a $53k leave payout: Should she contribute to a Roth 457/403(b), use it for Roth conversions, or something else, considering her financial landscape?

Main Takeaways:

• Roth Conversion Timing:
  • Since Nancy is retiring partway through 2026 (lower income year), taking the payout in cash and spreading Roth conversions over 2026–2027 (and beyond) may optimize tax efficiency, especially given the anticipation of multiple “valley years” with lower taxable income.

    “With the money coming as a cash payout … optionality is greater.” – Paula [56:05]

• Tax Diversification:
  • Nancy already has significant Roth balances (“good job of building that portion of your tax triangle,” per Joe [53:39]), so she has flexibility.
• Other Uses for Payout:
  • Think about pending large expenses (“big rocks”), especially in early retirement. Strategically using this windfall as a sinking fund or even for mortgage payoff (if small and would free significant monthly cash flow) are valid considerations.

    “Happiest retirees … still pay off the debt anyway. … The freedom from worry … is something that pretty smart people do.” – Joe [58:56]

• No Wrong Choice:
  • All options have merit: maximize retirement contributions, cash for flexibility/conversions, or mortgage payoff depending on context.

Notable Quotes

• “I don’t think there’s a wrong answer here.” – Joe [54:58]
• “If the $53,000 is a big enough lump sum that it could pay it off in one fell swoop, I’d be far more inclined to do that…” – Paula [59:40]

Timestamps

• [50:17-61:08] Retirement payout strategy, Roth conversion mechanics, and deeper planning

Notable & Memorable Moments

• Naming Theme: Every questioner gets dubbed “Nancy” — an ongoing inside joke throughout the episode, escalating into confusion and laughter as more “Nancys” call in.

  “All the Nancy’s of the world, unite.” – Paula [63:07]

• “Affluent” vs. “Affluent” Banter: Lively debate over word pronunciation brings humor to the home repairs section.

  “[Affluent/affluent] … this is tomato, tomato.” – Paula [18:17]

• Playful, Candid Tone: Both Paula and Joe use personal anecdotes, gentle sarcasm, and transparent “here’s what I wish I’d known” advice that demystifies complex topics.

Additional Tips & Frameworks

• Segregate Portfolios: Use one brokerage for “serious” investing, another for speculative “fun money” [10:52]
• Who Not How: Strategic Coach lesson: ask “who” (for referrals/outcomes), not “how” (methodology) to find the right help [20:12]
• Home Inspectors as Teachers: Don’t just see inspection as a checkbox — use it as a learning opportunity by shadowing the inspector [26:19]
• Opportunity Cost: Weigh time spent on DIY or side hustles vs. what you’d earn/enjoy doing something else [29:03]
• Retirement Timeline: Map out all expected “big rock” expenses on a multi-decade timeline, then plan funding accordingly [21:09, 22:05]

Important Timestamps for Reference

• [00:00] Politicians’ trading funds – introduction and context
• [02:26] Why regulation and lag makes these less attractive
• [04:09] Outperformance, expenses, and fun factor
• [11:47] Home repair cost minimization Q&A begins
• [15:58] Word-of-mouth and “affluent” networks
• [20:12] “Who not how” principle
• [26:19] Value of home inspection “ride-alongs”
• [29:03] DIY, opportunity cost, and renting vs. owning
• [34:57] Starting (or not) a business for tax benefits
• [37:16] Hobby loss rule and danger of tax-motivated businesses
• [39:41] Operational headaches and cost for businesses
• [42:27] Travel “board meeting” myth
• [44:29] Episode anecdotes about side hustles consuming life
• [50:17] Roth conversion vs. Roth contributions with retirement payout
• [56:05] Optionality in payout planning
• [58:56] Emotional benefits of debt payoff before retirement
• [63:07] “Nancy’s of the world, unite.”

For Listeners Who Missed the Episode

• Should I follow Congress trades in my investment? Do it for fun, not as a core strategy. These funds are expensive, rely on old data, and politicians have built-in biases and no secret investing sauce.
• How to reduce home repair costs? Focus on referrals from experienced investors or “affluent” neighbors, plan major repairs proactively, use word-of-mouth to find trustworthy contractors, and only DIY if it truly saves money/time without sacrificing your core pursuits.
• High earner and considering a side business for tax breaks? Don’t do it unless you actually want a business. The hassle, risk, and IRS requirements outweigh tiny tax wins.
• Retirement payout: what’s best? Consider tax bracket timing. Taking the cash and gradually doing Roth conversions during low-earning years often maximizes flexibility and keeps future tax bills low, but direct contributions or using it for mortgage payoff can be great too depending on your needs.

Hosts:
Paula Pant (Afford Anything)
Joe Saul-Sehy (Stacking Benjamins)

Best Quote to Summarize the Episode:

“You can afford anything, not everything.” – Paula Pant [00:47]

Use this as a reference for the wisdom-packed and candid advice offered on this episode!