In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss how today’s market update ties directly into smarter portfolio management and building a Tax Efficient Portfolio for your non-IRA accounts. From headlines about new highs to rate cuts and tariffs, they translate noise into strategy—focusing on tax planning, tax strategy, and tax efficiency so you can secure your retirement with confidence.

Listen in to learn about using Direct indexing with Tax loss harvesting to mirror an index while managing investment taxes, handling concentrated stock positions, and customizing holdings (think: Index replication without the positions you don’t want). You’ll also hear practical retirement planning strategies to stay diversified, manage risk, and plan for retirement so you’re retiring comfortably with a clear retirement checklist and a resilient approach to Retirement Investing and Investment risk management.

In this episode, find out:

·     How recent Fed moves and headlines factor into a pragmatic market update and what that means for Retirement Planning and risk management.

·     The core–tactical–bonds/alternatives blend that creates a Diversified portfolio beyond just stocks to smooth volatility.

·     What Direct indexing is, how Index replication works with 50–75 stocks, and why Tax loss harvesting can add meaningful tax alpha.

·     Ways to unwind a concentrated position (e.g., long-held company stock) using harvested losses and a phased Capital gains strategy.

·     How to tailor portfolios (even in IRAs) to exclude specific stocks while still tracking an index—supporting your personalized planning retirement goals.

Tweetable Quotes:

·     “We’re not stock-picking heroes—we’re replicating the index and using tax efficiency to your advantage.” — Radon Stancil

·     “With Direct indexing, you can make money and harvest losses at the same time—powerful for investment taxes in non-IRA accounts.” — Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!”

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Welcome to Secure Your Retirement Podcast. This being the first Monday of the month, 

we’re going to really kind of break down what’s going on in the markets a little 

bit as well as we have a guest that we’re actually having on Brooke Garcia that 

we’re going to segue over into an interview with her after Murts and I kind of 

talk a little bit about what’s going on in the market. We feel this is important 

because many of our listeners, you know, they come to the show and really, they’re 

trying to, you know, get different ideas. And we thought, why don’t we take the 

first Monday of the month and really kind of talk about what we see going on in 

the markets, what’s driving things, maybe some things that we’re doing to shift and 

then maybe share an insight with you about some of the different levels of 

management we have. So, let’s start this off, Murs. As we think about what’s going 

on in the markets right now, it’s, I think, surprising a lot of people because, you 

know, I think at any point people have been thinking the markets are going to pull 

back. And no matter what we have going on in the world, it seems like the markets 

are just going up. So, what’s kind of some things that you see happening? Yeah, I 

know. It seems like every other day you’re logging in or however you look at the 

markets and you see a headline for hitting new highs and hitting new highs. And 

that’s exciting. And I don’t think anyone thought we’re going to be where we are, 

given everything, walking into the year with the administration change and inflation 

issues that we’ve been seeing. So, there’s a lot of positives that I think we’ve 

seen here over the last few months. But I think there’s also some things of caution 

that we can talk about as well. I’ll talk a little bit about the Fed because 

that’s been a big driver of what’s been going on in the last few months. You know, 

we walked into the year with issues around interest rates, issues around inflation, 

and then finally, as we sit here about a month ago, we got some rate cuts coming 

down in the line and projected a couple more by the end of the year. So the 

markets have benefited from that. interest rates going down helps the smaller 

companies and the middle -sized companies. And so, we’ve seen some recovery in those 

small cap and mid -cap types of areas because lending is a little bit easier for 

them now with rates going down. So that, I would say, is a positive in that 

direction. That has been one to get rates down. It’s been a tricky area, sticky 

inflation, all these buzzwords that we’ve been hearing, but rates are coming down. So 

that’s a nice one. Yeah, and I’ll speak a little bit on, you know, a lot of what 

we’re hearing right now, where there’s two major issues and we can kind of hit on 

both of them. One is the government shutdown, and I think the other one is what we 

see going on with the trade talks. As we’re recording this, 

the President Trump has just met with the president of China, 

and they have been trying to negotiate tariffs, and the feedback is things seem to 

be in a good positive way. But we know how that is. It could be positive today 

and by the time you’re listening to this, it’s all negative again. So, the reality 

is I think that some of this stuff, whether it’s the government shutdown or tariffs, 

I really believe that the investors have really kind of become numb to this, 

what used to be very alarming news. I mean, 10 years ago, these things would have 

been just sitting the markets into a spiral. And today it seems to be, you know, 

not that big of an issue. And I say all that to say that as the markets move up, 

obviously, you’ve got a risk of a pullback. Do we see things right now on the 

horizon that says we’re going to have some humongous sell -off? It doesn’t appear 

that way. Are we going to, are we set up right now to have some type of a 

pullback and that could be a 5 five to 10 % pullback. Yes, I think that’s possible. 

But I think that just drives us maybe to talk just a minute, MERS, about just to 

remind our listeners, you know, you talked about your topic. We can talk about 

government shutdown, but just to remind with our portfolio design, because I think 

especially for the podcast, we’ve not shared this on a regular basis, but just to 

kind of maybe give just a brief overview of how we set the portfolio up to be 

able to navigate or be able to withstand some of these market condition changes as 

they might come. Yeah, and I think I was listening to something on my way in to 

work here in the car. I was talking about Nvidia, and Nvidia’s being the craze, and 

there’s been this talk about the AI bubble that we’re potentially in. Nvidia just 

hit a of five trillion dollars as a company. That’s the setting records by itself. 

So sometimes we get the question of, well, are we in a bubble and what’s my 

investment strategy for it? So, here’s our stance on how to invest, especially when 

it comes into retirement, is we want to have balance, and we want to have not just 

diversification, but also de -risking through different types of asset classes. 

So not just having all the pieces of the stock market, we also look at different 

alternatives within the stock market and outside of the stock market. So, when it 

comes to strategy, we have our core strategy, which is really designed to just kind 

of move along with the benchmark or the indexes itself. So, if the markets are up, 

this is going to do well. If the markets are down, this is going to kind of 

follow. So, but it’s the core because we know long term the stock market does well. 

We’ll have some changes to that over time, but the idea is to be tracking the 

market to a degree. And then 

can be debated all day long, but there are ways to reduce risk without going to 

cash these days. And then outside of the equity side, then we’ve got, you know, 

traditional bonds. You’ve got to have bonds if you need to de -risk, and they’ve 

proven to be a little bit not as productive as they used to be 10 years ago. So 

for that reason, we like alternatives as well, liquid alternatives within the 

portfolio that are there to generate return, whether through income or growth, growth 

types of oriented funds. But the key here is that they’re not related to the 

general stock market. So, they’re zigging and zagging in different ways than the stock 

market is, which is especially important in times of volatility or an AI bubble or, 

you know, the tariff things that we’ve been going through. So having different asset 

classes working for us at different times is going to help smooth out when we do 

have issues and then if we’re in a place where we qualify, we can go into private 

investments completely outside of the stock market and get exposure to things that 

are not as subject to just daily trading and headlines that can rock the stock 

market and then and then we talk about a whole different area of safety which is 

in the fixed index annuity space to truly offset risk and serve as a bond 

alternative. The nice part here is that we get a promise of that our asset cannot 

go down if the markets have issues, and we’re still going to make a decent rate of 

return. So, you blend all those big strategies together, and now we’ve got true risk 

management, not just buying a handful of stocks and a handful of bonds, different 

strategies working together in different ways. Yeah. All right, so let’s do this. 

First Monday of the month, we’ve kind of give you a nice overview, but we’re 

excited right now because we conducted an interview with Brooke Garcia. She is a 

CFA, which is a chartered financial analyst, and she is super smart. 

And we ask her to explain to you how we do what’s called direct indexing with a 

tax overlay. How can we actually do this and manage money outside of an IRA in the 

most tax -efficient way? You’re going to want to listen to this you all the way 

through. Go ahead now. Let’s give your attention to Brooke Garcia. Thank you so 

much, Brooke, for coming on and talking with us today on a topic that we wanted to 

make sure that we could share with our clients. And in fact, if you’ve not met 

Brooke, Brooke is a part of our team when it comes to helping us build out our 

portfolios, help us make sure that we do all the due diligence. And she has all of 

the credentials to make sure that this all gets done correctly. So, Brooke, we 

appreciate you coming on. And we wanted to talk about a topic that we have been 

explaining to our clients, those that are coming on board. And it’s really this idea 

of how we can make a non -IRA account more tax efficient. 

And I’m just going to, before we go into the nitty -gritty, like you know, what people 

know is if I buy a stock and I hold that stock for more than a year, I get long 

-term capital gains, which means I’m only going to pay a much lower rate, usually around 

15 % on that tax, which is better than if I pay it, if I sell it within the 

year. Problem is, if I get a really good stock, I could get myself into a position 

where now, I’ve got a huge gain and I start saying, I don’t want to sell that stock 

because I got this big gain, and then I go, well now I’m not diversified, right? 

And so, there’s some problems here, so we have been helping our clients through the 

technical term is direct indexing but really, I say it is a tax -efficient portfolio 

so did you talk a little bit about what this is and how it works a little bit 

and why people might want to think yeah absolutely so to try and explain it as 

simply as possible with you could go out today and you could buy SPY you could buy 

the S &P 500 index right you’re going to pay like three basis points for it. And if 

you, if you invest in that, you are simply tracking the performance of the S &P 

500. I think it’s important to know, I mean, you said you buy Apple or whatever, 

40 % of the S &P 500 today is made up of 10 stops. So, 10 out of those 500, 

make up 40 % of the index. That’s a… When you say make up, you mean make up the 

return of the advance? Yes, yes, yes. So, a lot of people have gotten themselves 

into this exact situation where they’ve got huge gains, and if they sell it, they’re 

going to have a pretty hefty tax burden. So direct indexing essentially is a way to 

buy those individual stocks. Instead of buying an ETF like SPY, you go out and you 

buy the individual stocks. So, there’s actually no cost associated in buying the 

buying the stocks. But you may not buy all 500. You might buy, for example, 50 

stocks. But there’s a way that we can use technology to optimize which 50 of those 

stocks you buy so that you track very, very closely with what the index does. So 

if the S &P 500 goes up 7%, you’re up 7 .1 or 6 .9. 

And so over time, you’re holding these individual stocks and there’s a benefit to 

that which is that not every stock that you’re holding is going to go up a lot of 

them will go down and that’s okay because what happens when they go down we can 

sell those stocks that have gone down and that gives you sort of a buffer on your 

tax firm and so 

the purpose is that you’re just trying to track an index and it doesn’t have to be 

this 

but the purpose is you are just trying to track the same performance as that index 

but you’re able to do so and then take advantage of opportunities to harvest loss 

this is how we say it to offset your tax burden so the funny story or this client 

experience story I guess was she into this type of investor strategy, 

right? 

And the way I explained to it was basically that, right? We can replicate the 

index, the S &P 500, for example, by only using 50, the 75 stocks, 

not having to buy all 500 stocks, still get the return of the index because we’re 

replicating it, but also now there’s this tax that when there is a loss of the 

stock that’s not performing which happens all the time but somehow the markets still 

go up and you still losers so now it’s kind of like 

six months later and kind of talk 

and so, I explained to I said here and i drew the numbers on the board of here’s 

here’s what the dollar amount we started in this account and what it’s worth now 

and the funny part was I also showed her the loss, and she said how is it possible 

that i made money and I lost money at the same time i said that’s 

the same amount as the index itself but now on your tax return we just harvested a 

loss for you know make up a number but six thousand dollars that’s going to benefit 

so that was I actually don’t know. 

I 

actually, don’t know if I have a great answer for that question. there has been a 

couple of companies 

have certainly made it a lot easier to 

probably be 

listening, it’s like, it was kind of complicated, we’re replicator, we’re doing the 

stock, we’re selling the stocks, we did the loss. 

I think that replication part is the, is the, 

say, okay, I’m going to look at my fork 

on loss, I’m going to sell it what do you buy to be 

harvest losses but can 

and so, that’s what I think it is, is that 

there’s going to make mistakes. So, it didn’t work. Yeah, you couldn’t scale. It 

works really well now. So, I thought it was just a cool story. How did I make 

money and lose money at the same time? Well, that’s the beauty of this. So that’s 

one example. But kind of tell it. 

I just can’t, I can’t. 

I mean, assuming that you have stock other than IBM, we’re going to go to the 

idea. Assuming that you’ve got other things in the portfolio, 

you can start to, over time, sell that IBM slowly to get it closer. 

to make up the difference that position is sort of whittled down and sold down 

slowly yeah 

So, I’ve been doing this for some time now and I see you 

know those because again this is this is a whole team here that’s doing this 

and so, I’ve been able to see those trades come through where we’ve been harvesting 

it but could you give us maybe a little bit of an idea of what you’ve been seeing 

and I’m not trying to quote an actual rate here but just give me a little bit of 

a band range of what we’ve been seeing what we call it this this tax alpha and 

what that means yeah so, we’ve done some math we’ve looked at some we’ve looked at 

one percent um is basically the added value that tax alpha that you can get 

Obviously, it’s very fine specific, but in general, 

that’s what I’ve been seeing on my account as well, and I, you know, I think it’s 

just something that is a strong advantage. I do want to just talk about, because a 

lot of this is about the tax advantage, but I want to talk about one other area 

that the idea of us mimic an index like you’re in here without having to go buy 

500 stocks where we could even utilize this in a in a qualified account now and 

I’ll give the story I we had a lady come a now client come in and she just was 

like for her reasons did not want Tesla right she said I don’t want Tesla in my 

portfolio well if I bought buy a mutual fund or an exchange traded 

I’m going to hold Tesla, right? And there’s no way for me to carve it out of that 

exchange traded fund. And then, well, if I say, well, I still need to have 

diversification and I still want to, you know, track some type of index, how do I 

do that, right? So could you kind of explain how we could be able to do that if 

you had a person for whatever reason they have a stock they don’t want, but we 

still kind of want to track the end. Yeah, so I’ll start by just differentiating 

that there’s sort of two layers to this. There’s the direct indexing piece, and then 

there’s the 

tax laws harvesting makes no sense, right? So, you don’t need that extra overlay, but 

you can still direct index within that qualified account, within that IRA. So that’s 

a perfect example of where you would come to us and you say, hey, I want to track 

the S &P 500, but I don’t want to own Tesla. We do have the ability to customize 

that. It just goes off the buy list. Show nurse. Now, 

point two or eight point six something like that but it is we are able to 

customize for whatever reason that a client says I don’t I do not 

well, I think that the idea here is if you have money and I’ll say first and 

foremost outside of an IRA and it’s not a part of that IRA and I’m trying to get 

it to be efficient directly index it could be a little good source you have 

anything else first on that topic. No, I mean, 

it’s possible to do that to be better. But 

we still get good growth. Well, we get the growth of what the market or the index 

is attracting, Yeah, 

one thing I might mention, too, that this is a common misconception or a common 

point. 

We say we’re tracking an index. We still very regularly 

why do you own you now 

we’re not going in and saying are 

the stocks that are going to win we’re not doing so 

it’s super important to know that if you look at your account and first of all 

you’re like i have all of these stocks that have gone down. I have losses on all 

of these. First of all, in this case, that’s a great thing because we can harvest 

those losses to provide a tax alpha, but also, we’re not making fundamental calls on 

the underlying, 

we’re just trying to passively replicate something. So that’s a very common 

misconception. 

this is good or this is bad we as you mentioned are 

not to stop thinking yeah i don’t this is this is because i look at my company go 

ha i got some losses that means I’m going to do some harvesting you know so it’s 

actually, you get to view the losses a little bit different you know because you’re 

like okay this is going to be good for me uh to get off some of those bigger 

things uh that have had had such a big run up and with big, huge gains on them so 

well thank you very much Brooke this is always insightful we appreciate you coming 

on and giving us uh your thoughts on all this of course, thank you!