Podcast Summary: The Personal Finance Podcast – "Should I Invest in REITs? (Money Q&A)"

Release Date: July 28, 2025
Host: Andrew Giancola

Introduction

In this episode of The Personal Finance Podcast, hosted by Andrew Giancola of Master Money, listeners engage in a comprehensive Money Q&A session. The focus centers on whether investing in Real Estate Investment Trusts (REITs) is a prudent choice, alongside five other pertinent financial questions from the audience. Andrew provides in-depth analyses, practical advice, and actionable strategies to empower listeners in their personal finance and investment journeys.

1. Investing in Vanguard’s VNQ REIT vs. Fundrise

Question:
A long-time listener inquires whether they should purchase Vanguard's VNQ REIT for straightforward real estate investing instead of using Fundrise.

Andrew’s Analysis:

Andrew begins by acknowledging the importance of simplifying finances as a cornerstone of wealth building. He explains that Vanguard’s VNQ offers a public REIT option with an impressive low expense ratio of 0.13% (09:15), making it an attractive choice for investors seeking real estate exposure without the complexities of private investments like those offered by Fundrise.

• Expense Ratio & Holdings:
  VNQ maintains an expense ratio of 0.13% and holds 158 different REIT stocks, providing diversified exposure to sectors such as healthcare (13%), retail (13%), telecom towers (11.5%), and data centers (6.4%). Andrew highlights the stability of sectors like healthcare and data centers, which are less susceptible to economic downturns.

• Performance Comparison:
  He contrasts VNQ’s performance with Vanguard’s S&P 500 ETF, VOO. While VNQ has a year-to-date return of 2.81% (15:30), VOO stands at 7.08%. Over longer periods, VOO outperforms VNQ with a 10-year return of 13.6% compared to VNQ’s 5.93% since inception.

• Dividends & Tax Considerations:
  REITs like VNQ pay out most profits as dividends, offering both income and growth. However, Andrew cautions that dividends are taxed as ordinary income unless held within tax-advantaged accounts like Roth IRAs.

Notable Quote:
"REITs provide real estate exposure with liquidity and without the headaches of being a landlord." – Andrew Giancola (12:45)

Conclusion:
Andrew concludes that VNQ is a solid choice for those who prefer staying within Vanguard's ecosystem and seek simple, diversified real estate exposure. However, investors should be aware of the different performance metrics compared to broader market indices like the S&P 500.

2. Prioritizing Debt Repayment vs. Investing

Question:
A 36-year-old listener with multiple debts and rental properties seeks advice on whether to invest extra cash, pay off a boat and car loan, or aggressively pay down high-interest rental mortgages.

Andrew’s Strategy:

Andrew commends the listener for having a paid-off home and owning rental properties, emphasizing the importance of these achievements (28:10).

• Debt Hierarchy:

  1. Boat Loan: $2,500 remaining at a 9.5% interest rate – Highest priority.
  2. Rental Mortgages: Reset to 8% – Secondary priority.
  3. Car Loan: $30,000 at 4.74% interest rate – Lowest priority.

• Action Plan:

  • First: Pay off the boat loan immediately to eliminate the highest interest burden.
  • Second: Explore refinancing options for rental mortgages to potentially lower the 8% rate. If refinancing isn’t feasible, make extra principal payments to reduce the debt faster.
  • Third: Maintain regular payments on the car loan, as its interest rate is relatively manageable.
  • Finally: Redirect any surplus cash into index fund investments, ensuring an emergency fund (3-6 months of expenses) is in place.

Notable Quote:
"Prioritizing high-interest debt repayment frees up your cash flow faster, allowing you to invest more effectively in the long run." – Andrew Giancola (35:50)

Conclusion:
By systematically addressing debts from highest to lowest interest rates, the listener can efficiently reduce financial liabilities, thereby enhancing their capacity to invest and build wealth.

3. Saving for Children Without a 529 Plan

Question:
A parent seeks alternative methods to save for their three children’s future goals without restricting funds to college education.

Andrew’s Recommendations:

Andrew explores several alternatives to the traditional 529 plan, each offering flexibility for various financial goals beyond college.

• Roll Over 529 Plans:
  Up to $35,000 per child can be moved from a 529 plan to a custodial Roth IRA if the funds aren't used for college, providing tax-free growth and broader usage.

• Custodial Roth IRA:
  Allows contributions up to the child's earned income, fostering tax-free growth. However, this requires the child to have earned income.

• Taxable Brokerage Accounts:
  Andrew prefers this option for its flexibility. Funds can be used for any purpose without age restrictions or forced usage, though earnings are subject to taxes.

• UGMA/UTMA Accounts:
  These custodial accounts transfer ownership to the child at a designated age (18-21, depending on the state). While flexible, they obligate the funds to the child once they reach maturity.

Notable Quote:
"A taxable brokerage account offers the most flexibility, allowing funds to be used for college, a car, a house, or any other significant life goal." – Andrew Giancola (45:20)

Conclusion:
For parents desiring versatile savings options for their children, taxable brokerage accounts and custodial Roth IRAs present compelling alternatives to 529 plans, balancing growth potential with usage flexibility.

4. Tax Loss Harvesting vs. Dollar Cost Averaging

Question:
A regular investor inquires whether tax loss harvesting is worth the effort compared to simply continuing with dollar cost averaging into index funds.

Andrew’s Insight:

Andrew demystifies tax loss harvesting (TLH), explaining it as a strategy to offset capital gains and reduce taxable income by selling investments at a loss.

• Who Benefits:

  • High Earners: Those in higher tax brackets can significantly reduce their tax liabilities.
  • Large Taxable Accounts: Investors with substantial portfolios see more pronounced benefits from TLH.

• Who May Not Need It:

  • Investors with Tax-Advantaged Accounts: Minimal impact as gains within accounts like Roth IRAs are already tax-advantaged.
  • Buy-and-Hold Investors: Those who rarely sell won't benefit much from TLH.

• Practical Advice:

  • For most everyday investors using broad-based index funds and adhering to a long-term investment strategy, TLH may introduce unnecessary complexity without substantial benefits.
  • Robo Advisors: Services like Betterment or Wealthfront can automate TLH, optimizing tax strategies without manual intervention.

Notable Quote:
"For the average investor focused on long-term growth and simplicity, sticking to a regular investment strategy often outweighs the complex benefits of tax loss harvesting." – Andrew Giancola (20:50)

Conclusion:
While tax loss harvesting can offer tax advantages for specific investor profiles, most regular investors may find greater value in maintaining a consistent investment approach through dollar cost averaging and leveraging automated services if needed.

5. Should You Buy Finance Books Now?

Question:
Couple in their early 40s asks whether they should start purchasing finance books immediately or wait until they have established an emergency fund and begun investing.

Andrew’s Guidance:

Andrew strongly advocates for beginning financial education through reading, even before fully stabilizing other financial aspects.

• Recommended Books:

  1. "The Simple Path to Wealth" by J.L. Collins:
     A foundational guide to financial independence through straightforward investment strategies.
  2. "The Millionaire Next Door":
     Insights into wealth-building habits and financial discipline.
  3. "I Will Teach You to Be Rich" by Ramit Sethi:
     Modern strategies for managing personal finances and investments.
  4. "Get Good with Money" by Tiffany Alice:
     A practical approach to achieving financial wholeness through actionable steps.
  5. "Rich Dad Poor Dad" by Robert Kiyosaki:
     Mindset shifts essential for understanding and building wealth.

• Actionable Steps:

  • Start reading these books to build a solid financial foundation.
  • Parallelly, focus on establishing an emergency fund and tackling debt.
  • Begin automating investments once the foundational elements are in place.

Notable Quote:
"Educating yourself financially empowers you to make informed decisions, accelerating your path to financial independence." – Andrew Giancola (30:15)

Conclusion:
Andrew emphasizes the importance of proactive financial education. By immersing themselves in recommended literature, listeners can equip themselves with the knowledge necessary to navigate their financial journeys effectively.

6. Transferring Brokerage Accounts Set Up for Kids

Question:
A listener has opened brokerage accounts in their name for their daughters and seeks advice on transferring these accounts without selling investments.

Andrew’s Solutions:

Andrew outlines clear methods to transition ownership of brokerage accounts meant for minors to the children themselves.

• Setting Beneficiaries:
  Ensure that the daughters are named as beneficiaries in the accounts. This is a critical step in estate planning to ensure smooth transfer in case of unforeseen events.

• Transfer Options:

  1. Gifting Shares Directly:
     Andrew suggests that parents can gift the shares directly to their children. This can be facilitated through the brokerage’s transfer services, allowing for ownership transfer without liquidation.
  2. Selling Investments:
     An alternative is to sell the investments and provide the cash to the children. However, this approach may incur capital gains taxes.
  3. Opening Own Accounts for Children:
     Parents can maintain the accounts in their own names until the children reach adulthood, then assist them in opening individual brokerage accounts and transferring assets.

• Additional Advice:

  • Tax Implications:
    Discuss with a CPA to understand potential tax consequences of transferring assets.
  • Financial Education:
    Andrew recommends involving children in the investment process to foster financial literacy from an early age.

Notable Quote:
"Transferring brokerage accounts to your children can be seamless if you proactively set beneficiaries and choose the right transfer method." – Andrew Giancola (50:40)

Conclusion:
By carefully setting beneficiaries and selecting appropriate transfer methods, parents can effectively transfer brokerage accounts to their children without the need to liquidate investments, ensuring a smooth and tax-efficient transition of assets.

Conclusion of the Episode

Andrew wraps up the episode by encouraging listeners to subscribe, leave reviews, and join the Master Money newsletter for ongoing financial insights. He also teasers upcoming content, including the Master Money Academy, which will offer live workshops and in-depth courses on wealth building and financial management.

Final Thoughts:
This episode serves as a valuable resource for individuals seeking clarity on real estate investments through REITs, debt management, saving for children’s futures, tax strategies, financial education, and transferring investment accounts. Andrew's comprehensive and practical approach empowers listeners to make informed financial decisions tailored to their unique circumstances.

For more detailed discussions and personalized advice, be sure to listen to the full episode of "Should I Invest in REITs? (Money Q&A)" with Andrew Giancola on The Personal Finance Podcast.