Money Guy Show: This Will Change How You See MONEY…

Hosts: Brian Preston and Bo Hanson
Release Date: July 9, 2025

1. Introduction to the Episode

In this episode of the Money Guy Show, hosts Brian Preston and Bo Hanson unveil a groundbreaking financial tool designed to transform listeners' approach to money management. The episode emphasizes the importance of compound interest and effective financial planning in achieving long-term wealth goals.

2. Unveiling the New Compound Interest Calculator

At [00:44], Bo Hanson shares their excitement about introducing a free Compound Interest Calculator available on moneyguy.com/resources. This tool is crafted to help users visualize how their investments grow over time and to guide them in making informed financial decisions.

Bo Hanson: "We're allowing compound interest to take place. We're allowing our dollars to begin working even harder than we do with our back, with our brains and in our hands." [00:44]

3. Demonstrating the Calculator with Practical Examples

Brian and Bo walk listeners through practical scenarios demonstrating the calculator's functionality:

• Early Starter Scenario:
  A 28-year-old with $50,000 saved, contributing $1,000 monthly at a 9% annual return for 37 years, aiming for a retirement age of 65. The calculator projects reaching $5 million by retirement, highlighting the power of consistent saving and compound growth.

  Bo Hanson: "This individual would hit that in year three." [04:42]

• Adjusting Savings for Enhanced Goals:
  If the same individual aims for a $7 million retirement, increasing monthly savings by $564 could bridge a $2 million shortfall.

  Brian Preston: "If you're just looking for a roadmap to see how you can get to where you want to go, this is a great way to do that." [06:23]

4. Diversification in Investment Portfolios

Addressing a listener's question at [11:02], Bo Hanson discusses the nuances of portfolio diversification. Using a grocery store analogy, Bo explains that merely increasing the number of investments doesn't equate to true diversification. Instead, strategic allocation across different asset classes is crucial.

Bo Hanson: "You bought a whole bunch of one thing. You bought a whole bunch of the same thing. You did not venture out and actually add any true diversification benefits to your diet." [16:34]

He advocates for using low-cost index funds and target retirement index funds as effective tools for broad diversification without the complexity of managing numerous individual holdings.

5. Retirement Savings Strategies and Financial Order of Operations

The hosts delve into the Financial Order of Operations (FOO), outlining prioritized steps for wealth building:

1. Employer-Sponsored Plans:
   Maximize contributions, especially if there's an employer match.

2. High-Interest Debt Repayment:
   Eliminate debts like credit cards and high-interest loans to free up future savings.

3. Emergency Fund:
   Establish a reserve covering three to six months of living expenses.

4. Health Savings Account (HSA):
   If eligible, max out HSA contributions for tax-advantaged savings.

5. Roth IRA:
   Contribute to a Roth IRA for tax-free growth and withdrawals in retirement.

6. Additional Retirement Accounts:
   Consider maximizing after-tax 401(k) contributions or taxable brokerage accounts based on personal goals.

Bo emphasizes the importance of adhering to this order to ensure a solid financial foundation before pursuing additional investment opportunities.

6. Audience Questions and Expert Answers

a. Diversification in Roth IRAs:
A listener, Chris K., inquires about holding multiple index funds within a Roth IRA. Bo clarifies that true diversification isn't about the number of funds but the variety of asset classes they cover. He recommends minimizing overlap to avoid redundant holdings.

Bo Hanson: "Buying a whole bunch of holdings does not necessarily mean you're diversified." [16:34]

b. Saving for a Spouse Returning to the Workforce:
Vidax asks whether to prioritize a Roth IRA over contributing to a matchless 401(k) as his wife re-enters the workforce. Bo advises following the Financial Order of Operations, suggesting that after addressing debt and emergency funds, a Roth IRA is an excellent next step.

Bo Hanson: "If your plan doesn't offer a 401(k) match, then go to the next steps in the financial order of operations, such as a Roth IRA." [18:21]

c. Impact of Raises on Savings Goals:
Renata wonders how job raises affect her savings benchmarks. Bo reassures her that increased income provides an opportunity to enhance savings without necessarily being "behind," especially if lifestyle adjustments are managed.

Bo Hanson: "If you're someone who has variable income, there's nothing wrong with averaging your income over the past couple of years." [37:37]

He also introduces a modified formula inspired by Dr. Stanley's "Millionaire Next Door" to help individuals recalibrate their savings targets based on age and income.

d. Refinancing vs. Maximizing Roth IRA Contributions:
Isaac G. seeks advice on whether to refinance a high-interest mortgage or prioritize maxing out a Roth IRA. Bo analyzes the costs and benefits, ultimately leaning towards maximizing Roth IRA contributions due to the substantial benefits of compound interest over time.

Bo Hanson: "Every dollar you invest that you put to work inside that Roth IRA has a potential to turn into $58." [46:04]

e. Cashing Out Retirement Accounts to Avoid RMDs:
Tracy M. asks if cashing out all retirement accounts to avoid Required Minimum Distributions (RMDs) is wise. Bo strongly advises against it, highlighting the tax implications and the importance of strategic planning to manage RMDs without drastic measures.

Bo Hanson: "RMDs are not something you have to be terrified of. They're not really." [54:02]

7. Final Thoughts and Call to Action

In conclusion, Brian and Bo reiterate the value of their new Compound Interest Calculator and encourage listeners to utilize it along with other resources available on moneyguy.com/resources. They invite feedback and stories from users, emphasizing their commitment to providing accessible financial tools to empower personal wealth building.

Bo Hanson: "If we can be part of your financial journey helping you do money better, then we are all for that." [60:23]

Listeners are urged to engage with the show’s tools, share their experiences, and continue the conversation on social platforms to foster a community focused on financial confidence and fulfillment.

Note: This summary excludes all advertisement, introductory, and concluding remarks unrelated to the core content, focusing solely on the valuable financial discussions and insights shared by the hosts.