Podcast Summary: Jill on Money with Jill Schlesinger Episode: Should I Put Extra Money in a Brokerage? Release Date: May 23, 2025

Introduction

In this episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger delves into the topic, "Should I Put Extra Money in a Brokerage?" Focusing primarily on a listener named Heidi from Wisconsin, Jill and co-host Mark Telecio provide personalized financial advice tailored to Heidi's comprehensive financial profile. The discussion encompasses retirement planning, investment strategies, education funding, and effective asset allocation.

Listener Spotlight: Heidi's Financial Profile [04:40 - 08:58]

Heidi, a 40-year-old professional earning $205,000 annually, reaches out to seek guidance on managing her substantial savings. Having recently paid off her student loans and settled into her current job, Heidi presents a robust financial situation:

• Retirement Accounts:

  • Current Contributions: 7% to retirement with a 5% employer match.
  • Account Balances: $65,000 total ($35,000 Roth, $30,000 Traditional).
  • Additional Retirement Assets:
    • ESOP rollover option: ~$100,000.
    • Previous 401(k): $130,000 ($100,000 Traditional, $30,000 Roth).

• Other Investments:

  • HSA: ~$50,000.
  • IRAs: Traditional IRA with $75,000 and Roth IRA with $90,000 at Vanguard.
  • Cryptocurrency: $2,000 in Bitcoin.
  • Brokerage Account: $1,500.
  • Employee Stock: $40,000 (not yet vested).

• Real Estate:

  • Home Value: Approximately $415,000.
  • Mortgage: $255,000 at 3.75%.
  • Upcoming Repairs: $40,000 for foundation and roofing.

• Savings:

  • High-Yield Savings Account: $130,000 earmarked for safety and upcoming home repairs.

Evaluating Heidi's Current Strategy [05:25 - 11:20]

Jill begins by reviewing Heidi's comprehensive financial landscape, commending her disciplined approach to savings and debt management. The primary concern centers around her $130,000 in a high-yield savings account and whether to allocate additional funds into a brokerage account amidst market uncertainties.

Notable Quote:

"You're doing a fantastic job managing your finances, and it's clear you've built a solid foundation." – Jill Schlesinger [06:00]

Recommendations for Asset Allocation [11:20 - 16:15]

Jill and Mark analyze the benefits and drawbacks of Heidi's current investment strategy, particularly focusing on her Traditional IRA contributions and the complexities introduced by the pro-rata rule when attempting a backdoor Roth IRA conversion.

Key Recommendations:

1. Consolidate Traditional IRAs:

   • Roll over ESOP and old 401(k) into the Traditional IRA at Vanguard to simplify management and eliminate complications with backdoor Roth conversions.

2. Adjust Retirement Contributions:

   • Increase retirement contributions from 7% to 10% to maximize employer matching and enhance long-term savings growth.

3. Optimize the 529 Plan:

   • Prioritize funding the 529 plan for Heidi's nine-year-old to secure her child's educational future, recommending an initial lump sum contribution of $10,000 if feasible.

4. Utilize Brokerage Accounts Strategically:

   • Instead of funneling extra money into existing Vanguard brokerage accounts, divert funds towards public education savings and potential brokerage investments once foundational goals are met.

5. Maintain a Safety Net:

   • Retain $80,000 in the high-yield savings account to cover six to nine months of living expenses, ensuring financial security against unforeseen circumstances.

6. Leverage Employee Stock Options:

   • As employee stock vests, consider selling portions to further fund the 529 plan, effectively aligning investment growth with educational funding needs.

Notable Quotes:

"Don't freak out about the pro-rata rule, but ideally, you should eliminate Traditional IRA balances to properly execute backdoor Roth conversions." – Jill Schlesinger [11:06]

"If you can get $10,000 a year into a 529 plan, that's a very good number." – Mark Telecio [16:03]

Maximizing the 529 Plan [15:03 - 16:15]

The discussion emphasizes the strategic importance of the 529 plan in Heidi's financial plan. By allocating $1,000 monthly into the 529 plan, Heidi can significantly bolster her child's educational savings, providing flexibility and financial support for future educational endeavors.

Notable Quote:

"A 529 plan is a powerful tool for funding your child's education, and contributing consistently will yield substantial benefits over time." – Jill Schlesinger [16:00]

Conclusion and Key Takeaways [16:15 - 18:29]

Jill wraps up the conversation by applauding Heidi's proactive financial planning and encouraging her to implement the discussed strategies. The episode underscores the importance of personalized financial advice and the benefits of consolidating accounts, optimizing retirement contributions, and strategically funding education through 529 plans.

Listeners are invited to engage with the show by sharing their financial challenges and receiving tailored advice. Upcoming webinars and additional resources are also highlighted, offering further opportunities for financial education and planning.

Final Notable Quotes:

"You're in excellent shape, and these adjustments will only enhance your financial stability and growth." – Mark Telecio [15:43]

"Change your work, change your wealth, change your life." – Jill Schlesinger [18:09]

Conclusion

This episode of Jill on Money provides a comprehensive look into effective financial planning through a real-life example. Jill Schlesinger and Mark Telecio offer actionable insights that can help listeners make informed decisions about their investments, retirement planning, and educational funding. By focusing on personalized advice and strategic asset allocation, the podcast empowers individuals to optimize their financial futures.