April 14, 2025 • 20 mins
In this episode of Demystifying Money, Misty Lynch dives into the implications of global tariffs and market shifts. She covers essential financial strategies to help small business owners and individuals navigate these turbulent times.
Websites:
Instagram: @mistylynchcfp
- Impact of tariffs on small businesses and family budgets.
- Understanding market corrections and their historical context.
- Strategies to adjust your investment approach in volatile markets.
- The importance of diversification in asset classes and income sources.
- Tips on maintaining your financial health and mindset during economic uncertainty.
Websites:
Instagram: @mistylynchcfp
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Hey there, welcome back to Demystifying Money. I'm miss dy Lynch,
certified Financial Planner, and I'm here to guide you through
the financial rollercoaster that is going on globally right now.
So I know it's been all over the news, but
I wanted to talk today about the latest updates on
you know, the tariffs and the market and what this
can mean for small business owners, what this could mean
(00:24):
for everybody regarding their expenses and their budget, and some
things you could do if taking no action feels bad
right now, So we're going to talk about the tariffs.
I think that it's important to understand that it does
feel like this guy is falling sometimes, especially when we
see these headlines. We look at our cour one K
balances or our investments and we see these sharp declines,
(00:45):
and I think this is going to you know, this
is going to impact everybody, no matter if you have
money invested in the stock market, if you're not there
yet and you're still you know, budgeting, and you're still
making income and you're supporting your family and you're in
your lifestyle, we're all going to feel this. So this
is going to trickle down from big businesses small business
pretty much everywhere. So and when I talk about small businesses,
(01:07):
I you know, I think that this is important to
know that ninety nine percent of all US businesses employ
less than five hundred people. And you know, we're forty
seven percent of the private workforce, So almost half of
the working population depends on companies that are far more
vulnerable to rise and costs of supplies and goods and
economic shifts than other, you know, larger companies. So when
(01:29):
tariffs go up, inflation sticks around, market gets shaky. It's
not just a big business story. It's a small business.
It's a family budget and it's a real life story too.
So to backpad a little bit, what's going on as
of today and I'm recording this right now. On April tenth, so,
the US announced sheriffs some as high as a twenty
one hundred and twenty five percent on key imports including
(01:51):
electronic vehicles, semiconductors, and medical supplies from China. This move
is done to protect American industries and reduce reallyning and
song manufacturing, according to you know, the White House's press
conferences what they're saying. And China has retaliated with their
own tariffs and trade restrictions, including eighty four percent on
(02:12):
US goods and the blacklisting of eighteen US companies. So
to understand the ripple effect of this, in twenty twenty four,
the US imported four hundred and twenty seven billion in
goods from China and exported around one hundred and forty
eight billion back. So China remains one of our largest
trading partners, so any disruption in that flow is going
(02:33):
to create waves, and so large corporations may be able
to absorb these shocks with international teams in alternate supply chains,
but small businesses might not be able to be so lucky.
They often deal with one supplier, they have tight margins,
and they can't easily pass down costs. So this is
why it's crucial to understand why policies like tariffs are
going to show up in everyday ways at the store,
(02:54):
in your budget, and in your investment accounts. So one
of the things that's important to think about when it
comes to the investment accounts, though, is market corrections. And
with this type of global tension, it's very easy to
get nervous, and that's going to show up. Those nerves
show up in volatility. Really for investors. For corporations, we're
(03:15):
going to see things as far as what comes out
with earnings reports. So I want to break down what
a market correction is. It's a drop of more than
ten percent from a recent market high. So since nineteen
seventy four, there's been over twenty corrections. On average, they
happen every one year, every one and a half to
two years, and the good news is they typically recover
(03:35):
within three to four months. We saw a very sharp
recovery yesterday, but granted, when we are going from a
high and we go down twenty percent and back up
ten percent, we are still coming down from that low number,
so we still have some room to go up before
we hit where we started. So it's easy to feel
anxious when you're seeing that, but it's important to remember
(03:59):
that even though there's always different circumstances, there's always different
elected officials, there's always different, you know, different reasons, the
actual correction itself is not unusual and it's nothing that
we haven't seen before, and the market never goes up
in a straight line. So it's important to stay invested
(04:20):
if you don't need to take out investments right now.
If you are panicking and trying to sell. I mean
it is usually more important to stay invested and wait
for the recovery. Now, I will say, I know that
feels horrible, and if you're hearing from your financial advisor,
just stay in there. It's fine and they're dismissing your fears.
(04:40):
I do think there are some real important things that
you should be talking about with them. One of them
could be your actual risk tolerance. Everybody can be aggressive
when we feel like this guy's the limit. We have
twenty percent, twenty percent returns, twenty percent growth two years
in a row. It's very easy. But if you can't,
if you feel like seeing these decline makes you feel terrified, nauseous,
(05:04):
if you don't believe that this is a part of it,
or this is a buying opportunity, or this is a
normal part of business. Or if you're closer to retirement
than when you first started investing, when you were more aggressive,
but now you're looking at this and time to recover
doesn't feel the same, then it is important to think
about maybe adjusting you know your your risk level and
(05:25):
potentially rebalancing your investments so that you do perhaps have
more some more diversification in your account. So it's just
important to think about that as you know, as an investor,
but also if you can stay invested, a few other
things that you can do to take action in times
(05:45):
like this include looking at your cash flow. Your emergency
fund will You typically recommend three to six months in
a high yield savings to kind of keep you from
having to sell investments during a dip. You might feel
like that's not enough. Maybe six to twelve months feels
more comfortable for you. You might wonder if that's a
wasted opportunity, if that's too much cash on the sidelines,
(06:08):
But everybody feels differently. I don't think there's a perfect
right number for people. I talked to couples all the
time where one wants to higher amount in cash and
one wants it all invested, And usually we could come
to kind of a common ground and figure out maybe
we have some of those money invested more conservatively than others.
But it doesn't all have to be treated the exact
same way. But having that bucket of hiled savings for
(06:29):
emergency funds can be very helpful. And now is the
time to look at your budget. Tariffs and inflation can
make everyday living expenses more expensive for everyone, so it
could be a good time to actually trim, reprioritize. And
I will say this, I actually added to my budget
because I was looking at it and right now, you know,
this is a stressful time for all of us and
(06:50):
myself included, and so I wasn't spending any budget on
a gym. I'd given those all up, I hadn't rejoined
since COVID, and I was really thinking about mental health wise,
like what what am I missing right now? What do
I need more of? Now? That doesn't mean that like
everything has to get cut. Sometimes we need to cut
some things and sometimes we might need to bring some
(07:11):
things in. Sometimes we might need to just reevaluate our
personal priorities and this is something that we should do
all the time and find some space for the things
that are going to keep us healthy, keep us safe,
keep us protected. So that might mean increasing things like
your insurance or reviewing things that might not you know,
it might feel like you have to cut, cut, cut,
but maybe there's some things that you need to bring in.
(07:32):
Maybe there's some things you need to reprioritize and pay
more attention to in order to make sure that you
could still show up as you know fully, as yourself,
as a parent, as a as you know, a boss, employee, mother,
bother friend, just for you personally. I think it's so important.
(07:53):
And then sticking to your investment strategy. So I talk
to my blinds about this all the time. There's a
lot of solo investors out there. Emotional investing is expensive.
It is expensive to be a panic investor because a
lot of times yesterday there was not a lot of
warning between when the market was down and when it
shot up, so you couldn't say, Okay, I'm going to
(08:14):
invest at the end of the day tomorrow because you
would have missed that spike. So honestly, staying invested, if
that is your if that is your strategy right now,
sticking to it is super important. And staying diversified. This
is just another example of why it is important to
be diversified when it comes to asset classes, when it
comes to geographic locations, when it comes to you know,
(08:35):
even the different investments you have, how they're treated. Because
your retirement account savings if you are in retirement, might
be different. Maybe you treat your wrath differently. That might
be the longer term money, your savings could be invested differently,
like a high heeled savings versus your taxable brokerag account
or your five twenty nine for your kids. The timeframe matters.
It doesn't all have to be the same, but being
(08:57):
diversified is super important. And that doesn't just mean having
money in different spots, because if you have money in
different custodians and different locations, and your four one K
is all in the s and P five hundred index
and your burgage account is all on the S and
P five hundred index, everything is going to be impacted
the exact same way, no matter where it is. Another
thing you can think about is paying down high interest debt.
(09:19):
Interest rates are sticky, and I think that there you know,
as things get more expensive, if you are still relying
on credit cards, you're not paying down debt and you
don't have a plan to free up some cash flow,
it's going to be stressful and it's going to be
a difficult time to you know, to have that. So
it's really important if you can come up with a
plan start to reduce that high interest debt. Be mindful
(09:40):
of your spending as you consider taking on more, and
you know, if you are thinking about a major purchase
right now, you know, I think you need to not
panic again and do it because you're afraid. You don't
need to rush out and get a new computer or
a new car or anything like because you're afraid. But
if it is part of your plan, now could be
a good time to take a look at that. Because
anything that is already here, anything that's already been manufactured,
(10:02):
is not going to be impacted. But things that are
being manufactured right now, and this is going to include
everything really globally, most of the things that we have
are not one hundred percent US made, especially electronics and technology.
It could be a good time to actually move forward
with that plan instead of instead of overthinking it and
waiting too long and potentially spending more down the road
(10:24):
for something you actually need today. And also, you know,
working with a financial planner or professional, I think it
can be helpful. And now I'm biased because I am one,
and I see the help and I see the impact
that it has on my clients when we're able to
talk and we're able to discuss these things that are
stressing them out and that are coming up when it
comes to work and it comes to their budget, when
it comes to expenses, it could get rid of some
(10:45):
of that overwhelm and really help them start to take
positive action in the right direction. I do want to
say those for those tips, there is a little bit
of a difference for people who are close to retirement
or approaching retirement. If you're about five years out, maybe
even ten years out from retirement, retirements of volatility can
hit different. You don't have as much time to wait
(11:07):
for this rebound as you're drawing down your assets. So
this is where something called sequence of return risk comes in.
So if say this this year, your portfolio took a
really big hit in your early in retirement while you're
drawing from it, it can reduce how long your money lasts,
even if the market recovers later. So one of the
things you might think about if you are close to
(11:27):
retirement is maybe increasing that emergency fund or that liquid
that stable short term bond amount that bucket and instead
of like three to six months, it might be one
to two years. So maybe that is the that is
where you kind of have that more protected early retirement
bucket where you can withstand or even if you keep
that amount all the time for those next two years
(11:49):
and then you can kind of look further out and
keep that money invested. That is more for future you.
We're planning for like twenty five thirty year retirements. Now
for people, this is the money has to be working hard.
It just does matter when you start pulling it from
and what it's invested in. And then keep your withdrawal
strategy flexible, so you know if you are you know,
(12:11):
if you are at the required minimum distribution in age,
you have to take that amount. But if you are
under that, you do have flexibility where you take the
you know, the money from how much you take out,
if you take it out in a lump sum or
over you know, a monthly like what you know, if
you can withdraw your money in you know a certain
you know a certain strategy. I think that that can
(12:32):
help you. You'll really be prepared for them the market's
recover and then just you know, diversifying your income sources.
I know that part time work is not possible for everybody,
but for some people, especially if they retire early, they
could potentially add income streams in they could You know,
you can look at your social security strategy if you
have not turned that on yet. Sometimes it makes sense
(12:54):
for people to delay. Sometimes it makes sense for people
to take it. It's really a personal thing. But you know,
anytime you can add income sources in, it's going to
make the financial plan better. Another thing to think about
is concentration risk. So this is what happens when you
have too much of your money in one stock, one sector,
or one strategy. A lot of people will end up
with a lot of their employer stock if they went heavy,
(13:17):
you know, if they were offered a discounted they worked
somewhere for a number of years, and so sometimes if
one area or one sector, that particular company struggles, your
entire portfolio can suffer. So diversification is really important here,
mixing up your investments across industries, asset classes, geographic locations.
(13:37):
If you just have a strategy to sell a certain
amount of your company's shares and reinvest them in something
more diversified, you're always, as you're working, going to have
a lot of a lot writing on your company's performance.
You know, they pay your paycheck, your benefits, everything, plus
your equity compensation. So you might want to come up
with a strategy if you wouldn't always dump all that
(13:59):
money right back into your company. Maybe it's a great
company and you want to do you know, you want
to hold on to some Sometimes it's a great strategy,
but depending on the volume, it might not make sense
for everything. So definitely something to work with an advisor
on if you have that compensation or you are starting
to have that large concentration, because there's tax issues as well,
depending on where the account is held. So really really
(14:19):
important thing to think about. Another thing I want to
talk about is really just staying calm during the chaos.
So this is something that easier said than done. You know,
I think about you know a lot of times when
you know, when I was growing up and things got
more expensive, you know, it wasn't like we just had
this magical you know, supply of money that we could
tap into. We didn't have an emergency fund. When medication
(14:43):
got more expensive, it wasn't just like stop finding it
was like spreading it out or skipping it as something
I saw, you know that that had to have. And
you know, I was a child at the time, but
like I understand that. So there might be a lot
of people who are thinking that like this is this
is you know, emotional and it is normal to panic.
So I think one of the things that can be
(15:05):
really really helpful if you are stressed is, you know,
having a financial plan. It will give you the confidence
to whether things like volatility. It will give you that
outside of the bottle reading a label perspective, because I'm
looking at things from a different perspective thirty years out,
twenty years out, and you're looking at your bank account today,
(15:25):
and it can be really hard to picture that if
you just keep doing what you're doing, it's going to
pay off because our brain believes what we've seen. We
like proof, we like evidence, so we don't have a
ton of evidence that things are going to work out
in the future. So using those tools and those strategies
and kind of you know, looking at a plan and
really trying to figure out ways to keep things on track,
(15:48):
even if it means doing exactly what you're doing today
and staying the course a plan and can be really helpful.
Another thing is limiting the noise. You know, I think
it's important to stay informed, but don't let the twenty
four hour news cycle control your mood. And I'm guilty
of this too, you know, watching the futures market before
I go to bed and looking at things as soon
(16:09):
as I wake up, and so you know, we're going
to see breaking news, breaking news all the time, redline
on the bottom of the screen, twenty four to seven.
And it's not always breaking news, it's not. Some of
it is just you know, entertainment getting eyes on the screen.
We are attracted to things that are standing out, things
that scare us. We are more likely to look for
(16:30):
fear than the positive stories, and I think that the
media knows that. So it's really important to try to
stay informed, but not to necessarily let it control our mood,
our actions, but just to you know, to try to
notice if you maybe need to shut off the notifications
for a little while and talk it out. I mean,
(16:52):
you don't have to do this alone. I think you can.
You know, there's a lot of there's a lot of
people you know that you could talk to. You could
talk to and advice. You talk to your family, you
talk to your friends. You know, you could talk to
friends on the internet who have similar common goals. You
could talk to your coworkers. It's really important for people to,
you know, to be able to express, you know, what's
going on in their minds, especially if you're somebody who's
(17:13):
you know, who's learning, you know, who's maybe first starting out,
or maybe this is a new experience for you to
you know, maybe you're a new parent, maybe you're new
to you know, thinking about retirement. Maybe it hasn't been
on your mind. There's people who've gone through these things before,
and it can be helpful to kind of have someone
to talk to and also reflect on your goals. And
this is something that make people do a lot because
(17:35):
they might say, I want to I want to buy home,
I want to retire at sixty five, But like, what
do you really want to do? What what motivates you?
What are the goals that we could put on the calendar,
short term, long term, medium term things that you want
to make sure you do so you don't look back
and say, oh, I wish I did that, or I
(17:56):
never got to travel. I never did any of those things.
I was so busy. I think it's really important to
reflect on these goals because we have to continue living,
you know, like we can't be stuck in like fear
or panic. However, if we plan ahead, there's no real
reason why we have to put off everything now for
the future, or you know, reasons why we shouldn't make
(18:16):
some sacrifices today for the future if it is really
important to us to be financially secure, to not have
to depend on somebody, So kind of uncovering what those
real things are that matter to you and making sure
that you're putting your dollars, putting your energy and attention
and effort there, it can be really helpful. So, you know,
(18:37):
just to wrap it up, I want I want everyone
to understand that there are major global economic you know,
issues going on. These tariffs are series. They're going to
impact everybody. It is not just people who have money
invested in the market. It is not just big businesses.
It's really going to come down to every consumer. And
we're going to continue to see how these could raise
(18:57):
prices and impact everyone significantly as we get more news
and now as more things kind of come out of
this situation. But also market corrections are normal. We've seen
twenty since nineteen seventy and they usually recover within a
couple of months. So this isn't new. This isn't new,
it's different. It might be new for you. This might
(19:17):
be the first time, or if your mind must be
the third time you're going through something like this in
a very short amount of time. But it is important
to understand that these are normal and you know, if
you're still working or you're nearing retirement, having that financial
strategy is really key. It can help you stay resilient,
It can help you understand that you planned for this,
that you're ready for this, and that could be really
(19:37):
really critical. And then also, you know, if retirement is
around the corner, now might be the time. That might
be that that red zone where you really focus in
and do you need to change anything, what needs to happen.
How can you make sure that you're you know, you're
doing everything you need to do to kind of lock
down that that ultimate goal of being able to be
(19:57):
either you know, financially into past work optional. Really important
to kind of tweak things because it might be a
different plan than when you were just adding money in
and working and saving. And then most importantly, mindset matters,
stay healthy, stay informed, and try to remember that your
financial health is a long game. If you you know,
(20:20):
if you found this episode helpful or if you need
help creating a financial plan, I'd love to talk to you.
You can definitely take a head over to the misfew
Lynch dot com and you know set up a time
to chat and I just want to thank you for
tuning in to denestifying money. We'll talk to you next week.
Hey there, welcome back to Demystifying Money. I'm miss dy Lynch,
certified Financial Planner, and I'm here to guide you through
the financial rollercoaster that is going on globally right now.
So I know it's been all over the news, but
I wanted to talk today about the latest updates on
you know, the tariffs and the market and what this
can mean for small business owners, what this could mean
(00:24):
for everybody regarding their expenses and their budget, and some
things you could do if taking no action feels bad
right now, So we're going to talk about the tariffs.
I think that it's important to understand that it does
feel like this guy is falling sometimes, especially when we
see these headlines. We look at our cour one K
balances or our investments and we see these sharp declines,
(00:45):
and I think this is going to you know, this
is going to impact everybody, no matter if you have
money invested in the stock market, if you're not there
yet and you're still you know, budgeting, and you're still
making income and you're supporting your family and you're in
your lifestyle, we're all going to feel this. So this
is going to trickle down from big businesses small business
pretty much everywhere. So and when I talk about small businesses,
(01:07):
I you know, I think that this is important to
know that ninety nine percent of all US businesses employ
less than five hundred people. And you know, we're forty
seven percent of the private workforce, So almost half of
the working population depends on companies that are far more
vulnerable to rise and costs of supplies and goods and
economic shifts than other, you know, larger companies. So when
(01:29):
tariffs go up, inflation sticks around, market gets shaky. It's
not just a big business story. It's a small business.
It's a family budget and it's a real life story too.
So to backpad a little bit, what's going on as
of today and I'm recording this right now. On April tenth, so,
the US announced sheriffs some as high as a twenty
one hundred and twenty five percent on key imports including
(01:51):
electronic vehicles, semiconductors, and medical supplies from China. This move
is done to protect American industries and reduce reallyning and
song manufacturing, according to you know, the White House's press
conferences what they're saying. And China has retaliated with their
own tariffs and trade restrictions, including eighty four percent on
(02:12):
US goods and the blacklisting of eighteen US companies. So
to understand the ripple effect of this, in twenty twenty four,
the US imported four hundred and twenty seven billion in
goods from China and exported around one hundred and forty
eight billion back. So China remains one of our largest
trading partners, so any disruption in that flow is going
(02:33):
to create waves, and so large corporations may be able
to absorb these shocks with international teams in alternate supply chains,
but small businesses might not be able to be so lucky.
They often deal with one supplier, they have tight margins,
and they can't easily pass down costs. So this is
why it's crucial to understand why policies like tariffs are
going to show up in everyday ways at the store,
(02:54):
in your budget, and in your investment accounts. So one
of the things that's important to think about when it
comes to the investment accounts, though, is market corrections. And
with this type of global tension, it's very easy to
get nervous, and that's going to show up. Those nerves
show up in volatility. Really for investors. For corporations, we're
(03:15):
going to see things as far as what comes out
with earnings reports. So I want to break down what
a market correction is. It's a drop of more than
ten percent from a recent market high. So since nineteen
seventy four, there's been over twenty corrections. On average, they
happen every one year, every one and a half to
two years, and the good news is they typically recover
(03:35):
within three to four months. We saw a very sharp
recovery yesterday, but granted, when we are going from a
high and we go down twenty percent and back up
ten percent, we are still coming down from that low number,
so we still have some room to go up before
we hit where we started. So it's easy to feel
anxious when you're seeing that, but it's important to remember
(03:59):
that even though there's always different circumstances, there's always different
elected officials, there's always different, you know, different reasons, the
actual correction itself is not unusual and it's nothing that
we haven't seen before, and the market never goes up
in a straight line. So it's important to stay invested
(04:20):
if you don't need to take out investments right now.
If you are panicking and trying to sell. I mean
it is usually more important to stay invested and wait
for the recovery. Now, I will say, I know that
feels horrible, and if you're hearing from your financial advisor,
just stay in there. It's fine and they're dismissing your fears.
(04:40):
I do think there are some real important things that
you should be talking about with them. One of them
could be your actual risk tolerance. Everybody can be aggressive
when we feel like this guy's the limit. We have
twenty percent, twenty percent returns, twenty percent growth two years
in a row. It's very easy. But if you can't,
if you feel like seeing these decline makes you feel terrified, nauseous,
(05:04):
if you don't believe that this is a part of it,
or this is a buying opportunity, or this is a
normal part of business. Or if you're closer to retirement
than when you first started investing, when you were more aggressive,
but now you're looking at this and time to recover
doesn't feel the same, then it is important to think
about maybe adjusting you know your your risk level and
(05:25):
potentially rebalancing your investments so that you do perhaps have
more some more diversification in your account. So it's just
important to think about that as you know, as an investor,
but also if you can stay invested, a few other
things that you can do to take action in times
(05:45):
like this include looking at your cash flow. Your emergency
fund will You typically recommend three to six months in
a high yield savings to kind of keep you from
having to sell investments during a dip. You might feel
like that's not enough. Maybe six to twelve months feels
more comfortable for you. You might wonder if that's a
wasted opportunity, if that's too much cash on the sidelines,
(06:08):
But everybody feels differently. I don't think there's a perfect
right number for people. I talked to couples all the
time where one wants to higher amount in cash and
one wants it all invested, And usually we could come
to kind of a common ground and figure out maybe
we have some of those money invested more conservatively than others.
But it doesn't all have to be treated the exact
same way. But having that bucket of hiled savings for
(06:29):
emergency funds can be very helpful. And now is the
time to look at your budget. Tariffs and inflation can
make everyday living expenses more expensive for everyone, so it
could be a good time to actually trim, reprioritize. And
I will say this, I actually added to my budget
because I was looking at it and right now, you know,
this is a stressful time for all of us and
(06:50):
myself included, and so I wasn't spending any budget on
a gym. I'd given those all up, I hadn't rejoined
since COVID, and I was really thinking about mental health wise,
like what what am I missing right now? What do
I need more of? Now? That doesn't mean that like
everything has to get cut. Sometimes we need to cut
some things and sometimes we might need to bring some
(07:11):
things in. Sometimes we might need to just reevaluate our
personal priorities and this is something that we should do
all the time and find some space for the things
that are going to keep us healthy, keep us safe,
keep us protected. So that might mean increasing things like
your insurance or reviewing things that might not you know,
it might feel like you have to cut, cut, cut,
but maybe there's some things that you need to bring in.
(07:32):
Maybe there's some things you need to reprioritize and pay
more attention to in order to make sure that you
could still show up as you know fully, as yourself,
as a parent, as a as you know, a boss, employee, mother,
bother friend, just for you personally. I think it's so important.
(07:53):
And then sticking to your investment strategy. So I talk
to my blinds about this all the time. There's a
lot of solo investors out there. Emotional investing is expensive.
It is expensive to be a panic investor because a
lot of times yesterday there was not a lot of
warning between when the market was down and when it
shot up, so you couldn't say, Okay, I'm going to
(08:14):
invest at the end of the day tomorrow because you
would have missed that spike. So honestly, staying invested, if
that is your if that is your strategy right now,
sticking to it is super important. And staying diversified. This
is just another example of why it is important to
be diversified when it comes to asset classes, when it
comes to geographic locations, when it comes to you know,
(08:35):
even the different investments you have, how they're treated. Because
your retirement account savings if you are in retirement, might
be different. Maybe you treat your wrath differently. That might
be the longer term money, your savings could be invested differently,
like a high heeled savings versus your taxable brokerag account
or your five twenty nine for your kids. The timeframe matters.
It doesn't all have to be the same, but being
(08:57):
diversified is super important. And that doesn't just mean having
money in different spots, because if you have money in
different custodians and different locations, and your four one K
is all in the s and P five hundred index
and your burgage account is all on the S and
P five hundred index, everything is going to be impacted
the exact same way, no matter where it is. Another
thing you can think about is paying down high interest debt.
(09:19):
Interest rates are sticky, and I think that there you know,
as things get more expensive, if you are still relying
on credit cards, you're not paying down debt and you
don't have a plan to free up some cash flow,
it's going to be stressful and it's going to be
a difficult time to you know, to have that. So
it's really important if you can come up with a
plan start to reduce that high interest debt. Be mindful
(09:40):
of your spending as you consider taking on more, and
you know, if you are thinking about a major purchase
right now, you know, I think you need to not
panic again and do it because you're afraid. You don't
need to rush out and get a new computer or
a new car or anything like because you're afraid. But
if it is part of your plan, now could be
a good time to take a look at that. Because
anything that is already here, anything that's already been manufactured,
(10:02):
is not going to be impacted. But things that are
being manufactured right now, and this is going to include
everything really globally, most of the things that we have
are not one hundred percent US made, especially electronics and technology.
It could be a good time to actually move forward
with that plan instead of instead of overthinking it and
waiting too long and potentially spending more down the road
(10:24):
for something you actually need today. And also, you know,
working with a financial planner or professional, I think it
can be helpful. And now I'm biased because I am one,
and I see the help and I see the impact
that it has on my clients when we're able to
talk and we're able to discuss these things that are
stressing them out and that are coming up when it
comes to work and it comes to their budget, when
it comes to expenses, it could get rid of some
(10:45):
of that overwhelm and really help them start to take
positive action in the right direction. I do want to
say those for those tips, there is a little bit
of a difference for people who are close to retirement
or approaching retirement. If you're about five years out, maybe
even ten years out from retirement, retirements of volatility can
hit different. You don't have as much time to wait
(11:07):
for this rebound as you're drawing down your assets. So
this is where something called sequence of return risk comes in.
So if say this this year, your portfolio took a
really big hit in your early in retirement while you're
drawing from it, it can reduce how long your money lasts,
even if the market recovers later. So one of the
things you might think about if you are close to
(11:27):
retirement is maybe increasing that emergency fund or that liquid
that stable short term bond amount that bucket and instead
of like three to six months, it might be one
to two years. So maybe that is the that is
where you kind of have that more protected early retirement
bucket where you can withstand or even if you keep
that amount all the time for those next two years
(11:49):
and then you can kind of look further out and
keep that money invested. That is more for future you.
We're planning for like twenty five thirty year retirements. Now
for people, this is the money has to be working hard.
It just does matter when you start pulling it from
and what it's invested in. And then keep your withdrawal
strategy flexible, so you know if you are you know,
(12:11):
if you are at the required minimum distribution in age,
you have to take that amount. But if you are
under that, you do have flexibility where you take the
you know, the money from how much you take out,
if you take it out in a lump sum or
over you know, a monthly like what you know, if
you can withdraw your money in you know a certain
you know a certain strategy. I think that that can
(12:32):
help you. You'll really be prepared for them the market's
recover and then just you know, diversifying your income sources.
I know that part time work is not possible for everybody,
but for some people, especially if they retire early, they
could potentially add income streams in they could You know,
you can look at your social security strategy if you
have not turned that on yet. Sometimes it makes sense
(12:54):
for people to delay. Sometimes it makes sense for people
to take it. It's really a personal thing. But you know,
anytime you can add income sources in, it's going to
make the financial plan better. Another thing to think about
is concentration risk. So this is what happens when you
have too much of your money in one stock, one sector,
or one strategy. A lot of people will end up
with a lot of their employer stock if they went heavy,
(13:17):
you know, if they were offered a discounted they worked
somewhere for a number of years, and so sometimes if
one area or one sector, that particular company struggles, your
entire portfolio can suffer. So diversification is really important here,
mixing up your investments across industries, asset classes, geographic locations.
(13:37):
If you just have a strategy to sell a certain
amount of your company's shares and reinvest them in something
more diversified, you're always, as you're working, going to have
a lot of a lot writing on your company's performance.
You know, they pay your paycheck, your benefits, everything, plus
your equity compensation. So you might want to come up
with a strategy if you wouldn't always dump all that
(13:59):
money right back into your company. Maybe it's a great
company and you want to do you know, you want
to hold on to some Sometimes it's a great strategy,
but depending on the volume, it might not make sense
for everything. So definitely something to work with an advisor
on if you have that compensation or you are starting
to have that large concentration, because there's tax issues as well,
depending on where the account is held. So really really
(14:19):
important thing to think about. Another thing I want to
talk about is really just staying calm during the chaos.
So this is something that easier said than done. You know,
I think about you know a lot of times when
you know, when I was growing up and things got
more expensive, you know, it wasn't like we just had
this magical you know, supply of money that we could
tap into. We didn't have an emergency fund. When medication
(14:43):
got more expensive, it wasn't just like stop finding it
was like spreading it out or skipping it as something
I saw, you know that that had to have. And
you know, I was a child at the time, but
like I understand that. So there might be a lot
of people who are thinking that like this is this
is you know, emotional and it is normal to panic.
So I think one of the things that can be
(15:05):
really really helpful if you are stressed is, you know,
having a financial plan. It will give you the confidence
to whether things like volatility. It will give you that
outside of the bottle reading a label perspective, because I'm
looking at things from a different perspective thirty years out,
twenty years out, and you're looking at your bank account today,
(15:25):
and it can be really hard to picture that if
you just keep doing what you're doing, it's going to
pay off because our brain believes what we've seen. We
like proof, we like evidence, so we don't have a
ton of evidence that things are going to work out
in the future. So using those tools and those strategies
and kind of you know, looking at a plan and
really trying to figure out ways to keep things on track,
(15:48):
even if it means doing exactly what you're doing today
and staying the course a plan and can be really helpful.
Another thing is limiting the noise. You know, I think
it's important to stay informed, but don't let the twenty
four hour news cycle control your mood. And I'm guilty
of this too, you know, watching the futures market before
I go to bed and looking at things as soon
(16:09):
as I wake up, and so you know, we're going
to see breaking news, breaking news all the time, redline
on the bottom of the screen, twenty four to seven.
And it's not always breaking news, it's not. Some of
it is just you know, entertainment getting eyes on the screen.
We are attracted to things that are standing out, things
that scare us. We are more likely to look for
(16:30):
fear than the positive stories, and I think that the
media knows that. So it's really important to try to
stay informed, but not to necessarily let it control our mood,
our actions, but just to you know, to try to
notice if you maybe need to shut off the notifications
for a little while and talk it out. I mean,
(16:52):
you don't have to do this alone. I think you can.
You know, there's a lot of there's a lot of
people you know that you could talk to. You could
talk to and advice. You talk to your family, you
talk to your friends. You know, you could talk to
friends on the internet who have similar common goals. You
could talk to your coworkers. It's really important for people to,
you know, to be able to express, you know, what's
going on in their minds, especially if you're somebody who's
(17:13):
you know, who's learning, you know, who's maybe first starting out,
or maybe this is a new experience for you to
you know, maybe you're a new parent, maybe you're new
to you know, thinking about retirement. Maybe it hasn't been
on your mind. There's people who've gone through these things before,
and it can be helpful to kind of have someone
to talk to and also reflect on your goals. And
this is something that make people do a lot because
(17:35):
they might say, I want to I want to buy home,
I want to retire at sixty five, But like, what
do you really want to do? What what motivates you?
What are the goals that we could put on the calendar,
short term, long term, medium term things that you want
to make sure you do so you don't look back
and say, oh, I wish I did that, or I
(17:56):
never got to travel. I never did any of those things.
I was so busy. I think it's really important to
reflect on these goals because we have to continue living,
you know, like we can't be stuck in like fear
or panic. However, if we plan ahead, there's no real
reason why we have to put off everything now for
the future, or you know, reasons why we shouldn't make
(18:16):
some sacrifices today for the future if it is really
important to us to be financially secure, to not have
to depend on somebody, So kind of uncovering what those
real things are that matter to you and making sure
that you're putting your dollars, putting your energy and attention
and effort there, it can be really helpful. So, you know,
(18:37):
just to wrap it up, I want I want everyone
to understand that there are major global economic you know,
issues going on. These tariffs are series. They're going to
impact everybody. It is not just people who have money
invested in the market. It is not just big businesses.
It's really going to come down to every consumer. And
we're going to continue to see how these could raise
(18:57):
prices and impact everyone significantly as we get more news
and now as more things kind of come out of
this situation. But also market corrections are normal. We've seen
twenty since nineteen seventy and they usually recover within a
couple of months. So this isn't new. This isn't new,
it's different. It might be new for you. This might
(19:17):
be the first time, or if your mind must be
the third time you're going through something like this in
a very short amount of time. But it is important
to understand that these are normal and you know, if
you're still working or you're nearing retirement, having that financial
strategy is really key. It can help you stay resilient,
It can help you understand that you planned for this,
that you're ready for this, and that could be really
(19:37):
really critical. And then also, you know, if retirement is
around the corner, now might be the time. That might
be that that red zone where you really focus in
and do you need to change anything, what needs to happen.
How can you make sure that you're you know, you're
doing everything you need to do to kind of lock
down that that ultimate goal of being able to be
(19:57):
either you know, financially into past work optional. Really important
to kind of tweak things because it might be a
different plan than when you were just adding money in
and working and saving. And then most importantly, mindset matters,
stay healthy, stay informed, and try to remember that your
financial health is a long game. If you you know,
(20:20):
if you found this episode helpful or if you need
help creating a financial plan, I'd love to talk to you.
You can definitely take a head over to the misfew
Lynch dot com and you know set up a time
to chat and I just want to thank you for
tuning in to denestifying money. We'll talk to you next week.
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