PODCAST: ETFs and Mutual Funds with Todd Rosenbluth

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Links and resources mentioned in this episode:

• iSeeCars: Best Leased Cars to Buy Back and Sell for Profit
• ETFs vs. Mutual Funds: Why Investors Who Hate Fees Should Love ETFs 
• The 21 Best ETFs to Buy for a Prosperous 2021
• PODCAST: Investing in Space, with Andrew Chanin

Transcript:

David Muhlbaum: Mutual funds or exchange traded funds? Which one's better for you as an investor? It's probably no surprise that there's no easy answer, but it's a decision you'll want or need to make. Fund expert Todd Rosenbluth joins us to talk about these two investment vehicles. Also, got a leased car? You might have yourself a little gold mine there. We'll tell you how to cash in. 

Welcome to Your Money's Worth. I'm Kiplinger senior online editor David Muhlbaum, and I am not joined this week by my regular co-host Sandy Block. At least not for our opening discussion, as she is off on vacation swimming with sharks or something. I asked the editor of Kiplinger's Personal Finance magazine, Mark Solheim, to take her place, in part because I want to talk about cars and car leasing, and that's something that he and I do. Thanks for joining us, Mark.

Mark Solheim: You're welcome, David. It's great to be back, even though we're talking about leasing.

David Muhlbaum: Yes. Leasing. We last had you on when we had Karl Brauer of iSeeCars as a guest to help us sort out the craziness that is today's car market, and that craziness, I guess, we can sum it up in two words, high prices. In fact, it was a study from Karl Brauer's outfit that got me wanting to drag you back here. It was a list basically of, okay, here's the title, “The Best Leased Cars to Buy Back and Sell for Profit.” It seems like some consumers are in a position to take advantage of high car prices, and that's like a man bites dog story because usually, it's not good out there.

Mark Solheim: Yeah, that's true. Yeah, this might be a bit of a niche story. I may be jumping ahead a bit here, but it sounds like it's a story about the residual value. Usually at Kiplinger, our advice has been whether to lease or buy and that's not what we're talking about now. The problem with leasing of course is it's this argot, this jargon that a lot of people don't understand. Capitalized cost for the vehicle price-

David Muhlbaum: Residual value. Terminology.

Mark Solheim: Yeah, residual value. Money factor for the interest rate. But this one sounds like a pretty good story. Let us explore it.

David Muhlbaum: Okay. That lease versus buy thing. I always felt like we talk about almost two camps. It's like a partisan divide. There are the leasers and there are the buyers, and nary the two shall meet, even though there really are valid reasons to consider one or the other. What this is about is kind of telling people who are leasing a car to buy one. The car they have right now, not their next one, the car they have right now, because basically it's worth more than expected. There are several things you need to make this work. You got to be in a lease, you've got to be willing and able to purchase the car that you already have, and you have to be sort of conceptually willing to switch teams, maybe this once. But there could be a lot of money on the line.

Mark Solheim: Okay. How much money? What's a lot? Thousands?

David Muhlbaum: Yeah. How much? Well, it turns on the question of what the car's buyout value was when you leased it. It's sort of the residual value. That price was set three years ago. Before this COVID microchip-driven car shortage that we and everyone has talked so much about. The equation is what is the car worth now versus what did the leasing company three years ago think it would be worth? What's the difference? What's the delta? Okay. From the iSeeCars study, for a Dodge Charger, that is almost $12,000.

Mark Solheim: Holy mackerel.

David Muhlbaum: On average, per the iSeeCars study, the difference across all three-year-old cars is about $7,000.

Right. This assumes, of course, that you're in a three-year lease, which is the most typical term and $7,000 on average. Wow. That's a lot, and certainly worth exploring. But how do you get it? You and I both know that leasing is full