Motley Fool Hidden Gems Investing
Mailbag! Maximizing Dividends, Spending in Retirement, Managing a 529
20 Jun 2026
Transcript generated automatically by AI and may contain errors.
Chapter 1: How do ETFs affect the recommendation to own 25 to 50 stocks?
Merry weekend, Fools, and welcome to the first Mailbag episode of the Personal Finance Edition of the Motley Fool Hidden Gems Investing Podcast. I'm Robert Brokamp, though my nickname around the fool is Bro, which you'll hear about today. And my colleagues who host the weekday shows have been soliciting questions from our audience for the past few months.
And it turns out y'all have plenty of financial planning questions. So I thought I'd devote an entire episode to answering some of them and to help me as my longtime partner in crime, Dan Kaplinger. Dan is a former financial planner and trust attorney. And for more than six years, Dan and I have been answering questions for Motley Fool premium members during two live shows each and every week.
So I asked Dan to join me for this inaugural mailbag episode. Welcome to the show, Dan.
Glad to be here, bro. It's always fun to talk financial planning with you.
Outstanding. So this is how this is going to work. So we chose six questions from those that we received, which touch on personal finance as well as a little bit of investing. I will read each question and Dan and I will take turns taking a first crack at it. And then the other will add his thoughts if he has any. With all that said, here's the first question.
It comes from Brother Zach, who wrote in that the Fool recommends holding at least 25 individual stocks. How do ETFs play into that? Do they count as one stock, one and a half stocks, or do you count them as completely outside of the 25 individual holdings? Dan, what do you think?
So, Zach, I need to update you quickly on the Fool philosophy because Fool CEO co-founder Tom Gardner recently updated that 25 individual stock number to 50. That really reflects the importance of you have so many individual stocks that kind of overlap in terms of industry, in terms of business model. You don't want to...
assume that just having 25 stocks is going to give you perfect diversification. That's part of the justification for Tom pushing that number up to 50. So I wanted to get that out of the way first. But to answer the question you ask, how do you deal with exchange traded funds? For me, an ETF counts as however many stocks that fund has a significant position in. So let's take a couple of examples.
A lot of people invest in ETFs that track the S&P 500 index. And to me, if you have that one ETF as a position, then you have satisfied the 50 stock requirement. You have a diversified portfolio. I am comfortable with people. If you don't like investing in individual stocks, just picking a broad market ETF like that can get the job done. But not all ETFs are like that.
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Chapter 2: What tools can help evaluate portfolio diversification and risk?
It's because it makes my tax accounting harder whenever I close out that position. If you reinvest your dividends, you have all these little bitty tax lots every quarter or several times a year that you have to account for when you're calculating your capital gains. Now, admittedly, brokers are supposed to do this for you. Tax software is supposed to make this easier. But nevertheless,
I like it when those purchases in taxable accounts are cleaner. In retirement accounts, not nearly as big of a deal. There's no tax impact. There I'm more likely to allow things to accumulate, to reinvest those dividends. Also in part because I'm not touching that money. That money is for retirement way down the road.
I'll just point out that how you manage your dividends could be a good way to rebalance your portfolio. So if you've become overweight in a certain stock or maybe a certain group of stocks, you might want to stop reinvesting those dividends and then use that cash to buy underweighted assets. And once you're getting closer to retirement, it can be a good way to gradually de-risk your portfolio.
I know once I'm within five years of retirement, I'll probably stop reinvesting all my dividends, let them accumulate as cash, maybe invest them in bonds so I can gradually get more conservative as I get closer to my retirement date. All right, it's time to move on to our sixth and final question, and it comes from Bill, who writes, I'm 44 and finally started learning about the market.
I made lots of mistakes in life, but finally got to a place where I can start saving for retirement and investing. My job now doesn't offer a retirement plan. I have about $50,000 in a money market savings account and about $20,000 as my emergency fund in the same money market account. My question is, how will you guys start a retirement plan and investing in the market?
I feel like I'm way behind and might need to take some risks. I believe my risk tolerance is strong. The goal is to retire with enough money to live comfortably. I only make $50,000 gross a year. I know the most important step is to try to find a higher paying job. Any help or advice would be very much appreciated. Well, Bill, so the good news is you do have an emergency fund and some savings.
So that is a great start. You are likely a bit behind. Various financial services firms provide guidelines based on your age and as a multiple of your household income. I'll just take a look at T. Rowe Prices guidelines. They suggest that someone at age 45, so a year from now, should have about three times their household income saved for retirement at that point.
So you're not quite there, but you're also not horribly behind either. I'll point out, if you're a W-2 employee, you say you have a job. And so if you're actually being employed by that job, your only choice for a retirement plan in terms of like a tax advantage account is an IRA. So you could sock away $7,500 this year in that.
If you're actually not an employee of that company, if you're a self-employed contractor or a 1099, as they often say, you actually could open up a solo 401k and save more. Of course, you do have that $50,000 in that money market account, and that's pretty safe, but also low returning. So If you don't need that money in the next five years, it could be invested in the stock market.
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Chapter 3: What advice do you have for new retirees switching from saving to spending mode?
I know it's easier said than done. But if you find a new career, a higher paying career that you really enjoy, you may be perfectly happy working well into your 60s. You know, we had the question earlier from someone earned about $50,000 a year and is doing very well, but he retired at age 70. And that can be very, very powerful. Dan, you have any thoughts?
Only thing I'll add quickly is don't be afraid to invest for retirement in a regular taxable brokerage account. You indicate that you have a high risk tolerance. Investing in growth stocks that don't pay dividends, for the most part, you can do even in a taxable account. without paying a whole bunch of tax until you decide to sell.
And if you're a long-term investor like we espouse at The Motley Fool, then that can be a tax-efficient way to get your money working. Don't be afraid to invest for retirement in that regular taxable brokerage account. You don't have to get it all into an IRA.
And that's the show. Thank you, Dan, for joining us. And thanks to Bart Shannon, the engineer for this episode. Thank you all for listening. As always, people on the program may have interest in the investments they talk about, and The Motley Fool may have formal recommendations for or against. So don't buy or sell investments based solely on what you hear.
All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. I'm Robert Prokamp. Fool on, everybody.
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