February 18, 2025 • 30 mins
In this episode, we explore the significant influence of emotions on investment decisions and how they can ultimately impact our retirement. We discuss common emotional biases such as fear, greed, regret, and excitement, and provide practical tips on managing these emotions to make more rational investment choices.
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Episode Transcript
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Welcome (00:03):
Welcome to the Real Talk Retirement Show, where we
explore the financial side ofretirement and beyond.
Whether you're currentlyretired or planning for the
future, we offer real, relatableconversations about money and
personal finances.
Most importantly, we dive intoall these topics using Real Talk
.
Now, let's get real about yourmoney and your retirement.
(00:23):
Now, let's get real about yourmoney and your retirement.
Brian Graff (00:28):
Welcome everyone to another episode of the Real
Talk Retirement Show.
My name is Brian Graff.
With me again today is mycolleague and co-host, tracy
Burke.
Tracy, thanks for joining forepisode number two.
Great to be here, brian.
Yeah, I think we have a goodone today, tracy, and I guess
inevitably I'll let our viewersand listeners decide if it's a
good one, but it's definitelyone that I'm excited about,
(00:50):
because today we're going to betalking about how emotions and
behaviors impact investing.
And, tracy, make no mistake, youand I are in the business of
numbers, right?
Numbers are such a big part ofour work, lives, work lives we
can't avoid them.
Here at Conrad Siegel, we'vealways said numbers matter,
right, we're surrounded by abunch of actuaries in here, and
they and they definitely do.
But more than the numbers, thepeople is what really matters
(01:14):
the most.
Without the people, the numbersmean nothing.
So we are, we are definitely inthe people business.
We want to help people, andpeople are fascinating, right?
We are all driven by ouremotions, aren't we?
We're emotional about how muchsleep we get at night, what
we're going to have forbreakfast, lunch and dinner the
next day, what our workday lookslike, how our friends and
family are doing.
(01:34):
We're just emotional people.
So I think, tracy, it's onlynatural that we get emotional
when it comes to our money andour finances, right?
Tracy Burke (01:42):
Yeah, that's for sure, and this is a super
important topic.
Sometimes we don't, as you said, we don't like to focus or talk
about that emotional side orour behavior, especially guys
right, that's something we don'twear on our shirt sleeve there,
but I think we're gonna have alot of fun today talking about
that.
But it's also human nature, youknow, this is just.
(02:04):
This is how things go right,among other things.
So, as we were thinking throughthis topic today, one quote to
come to mind was from TonyRobbins, and his quote is the
single biggest threat to yourfinancial well-being is your own
brain.
And, as you know, every time Isee that or read it, I think,
wow, that's so true.
It's almost like that littleguy that's sitting on your
shoulder.
You know, every time I see thator read, I think, wow, that's
(02:25):
so true.
Uh, it's almost like that, thatlittle guy that's sitting on
your shoulder, you know,constantly telling you what to
do.
I don't know if you had that.
Oh yeah, I got a couple of thoseguys, yep, yeah, and they keep
popping up and and some, a lotof times it's the negativity
side of it, right, but sometimes, again, that brain and and our
emotions can certainly get intoit.
So, as as human beings, you know, we're just prone to making,
(02:46):
you know, bad or dumb decisionswhen dealing with money.
That's just how we're set up,right For sure, and sometimes
it's those.
You know, maybe we have mentalbiases, or I like to refer to as
blind spots, things that maybewe're not quite aware of, that
are out there, but you knowthose things are very prevalent
with coming, you know, when itcomes to money.
So you know, as we thinkthrough this, you know
(03:08):
everything we do from investingstandpoint, we could, we can
nail it all we could do.
You know everything that we'resupposed to do from a textbook
standpoint, but then we all of asudden can just mess it up with
the emotion with one emotionalmistake.
Right that those type of thingshappen.
And I think back to a mentor Ihad many years ago now.
(03:29):
He said, tracy, it can take 20years to build a reputation, but
you can destroy it in fiveminutes.
Brian Graff (03:37):
Absolutely yeah, we see it all the time.
Tracy Burke (03:39):
Yeah, by doing something emotional or something
dumb, and that happens a lot oftime, and money as well.
And then another quote thatTony Robbins saw before.
It was something like 80% ofyour success is due to the
psychology of things and theother 20% is the mechanics.
So, again important topic it'ssurprisingly difficult to invest
(04:03):
rationally.
So, you know, brian, somethingthat comes to my mind, you know,
and this is something we hearfrom client or see from clients
interaction all the time, youknow.
So when markets go down, what'sthat first reaction that a lot
of investors have?
Brian Graff (04:18):
Oh, people want to sell Tracy.
They've got a statement in themail or they logged on to their
you know different financialaccounts.
They see a drop in value andthey want to run from that bad
situation.
Again, that's human nature.
We see something go bad, wewant to get out of it, but
rationally I mean, that'sprobably the worst thing you can
do at that time.
Once the market really drops,you want to stay true to your
(04:39):
retirement planning goals, theplan you set forth for yourself,
and kind of selling low is theworst thing you can do.
In reality, if you're going todo anything and not saying you
have to, sometimes staying thecourse is the best thing you do.
But those really becomeopportune times to actually buy
more of those riskierinvestments that are a little
bit down in value.
But again, the human natureelement always creeps in and we
(04:59):
want to get out of a situationthat's currently bad.
Tracy Burke (05:03):
Yeah.
Brian Graff (05:04):
So, yeah, I think that whole idea of just kind of
setting a plan, sticking to it,not checking in to your account
too often, is probably the bestthing you can do during those
market downturns.
Tracy, let's talk about someother common feelings when it
comes to investing.
What are some other things thatcomes into play?
Tracy Burke (05:21):
Yeah, so fear something that and in all
aspects of life.
You know, sometimes there'sfear and sometimes it's real.
But in terms of investing, youknow, having that fear can
really lead to selling at thewrong time or even buying at the
wrong time.
If we have that fear that, mygoodness, the stock market's
(05:42):
going to go down and sometimeswe hit that sell button again,
panicking, or even markets at anall-time high.
This isn't the right time tobuy.
You just mentioned buying lowand selling high, which is what
we want to do.
But there are times when stockmarkets are at a high and people
(06:08):
say, well, nope, I'm fearfulthat this was the wrong time,
right, because if I buy now andthe market goes down, that's the
wrong.
So it seems like we can neverwin, sometimes in the fear
category.
Brian Graff (06:13):
Yeah, I agree, Tracy, and that's why I think
that the concept of dollar costaveraging is so important, which
is where you kind of continueto invest the same amount of
money periodically throughoutthe year.
Which where you think about,like retirement plan, investing
401Ks, 403Bs.
I mean, that's the beauty ofthose types of plans You're just
having a certain dollar amountcoming out of your paycheck
(06:34):
being invested every pay period,so every two weeks or once a
month, and you're buying at allkinds of different prices
throughout the year.
That's dollar cost averaging,Tracy, and is that?
Do you agree that that'sprobably an important thing for
investors to do?
Tracy Burke (06:46):
Yeah for sure.
And even on the back end too,right, even when people are
taking money out of theirinvestments later in life.
You know, just doing it sort ofthat, you know, dollar cost
averaging, almost reverseapproach, and taking money out,
so yeah, that's almost that fearof missing out type of thing
and we'll probably circle backto that in a little bit.
(07:14):
But a lot of times when greedyou're sort of ignoring some of
those risks out there and you'rechasing performance, hey well,
that stock or that sector orwhatever that asset just really
is taken off and it's done welland I want more.
So sometimes, instead ofcashing in your chips or just
being smart about it beingoverly concentrated, those types
(07:34):
of things Regret.
Something else that comes tomind.
You know, a lot of people willat some point have regret of not
doing something, maybe in thepast, and maybe there was a
missed opportunity and we thinkwell oh, Tracy, how many people
have you talked to?
Brian Graff (07:46):
that said, I knew Apple was going to be the next
stock and I just couldn'tconvince myself to buy it.
You know, years and years ago.
I mean, you hear it all thetime.
Tracy Burke (07:53):
All this regret from investors, yeah, yeah for
sure, and fear, you know, ofmaking that mistake.
You know I didn't do it.
And then the last sort ofemotion that sometime, you know,
maybe on the opposite side ofit, sometimes is that excitement
, and all these are intertwined,of course, but excitement.
Sometimes it's that excitement,and all these are intertwined,
(08:14):
of course, but excitement of,hey, I'm in something that's
doing really well, and sometimesmaybe people put more into
what's really doing well,chasing performance or whatnot
and sometimes then we look backand we're over-concentrated in a
certain stock or a certainasset class and sometimes we
just have that overestimation ofwhat's going to happen and that
excitement can lead to some ofthose components.
Brian Graff (08:34):
Yeah, but again, all human nature feelings and
decisions that drive that.
So one thing I think is prettycool, tracy we use a study done
by Dalbar in a lot of ourpresentations and some of our
reporting where this companybasically looks at the average
mutual fund investor right,someone that is more active in
managing their own accountthey're buying and selling
(08:55):
stocks, moving money around.
It kind of compares thatinvestor's performance to the
overall stock market, like usingbenchmarks and something I
think is really interesting.
A recent study showed that overa 30-year time period the
average equity investor so thatperson that was going in buying
stocks, trading, maybe trying totime the market in a lot of
situations had an average annualrate of return of roughly 6.8%
(09:19):
right, not awful.
That doesn't sound too shabby.
Whereas an investor though thatsimply invested in the S&P 500
index right that index that iscomprised of the largest 500 US
company they would have seen areturn of nearly 9.7% over that,
you know, a year in that same30 year span.
So that's a gap of nearly 3%.
(09:39):
That's pretty telling, isn't it.
Tracy Burke (09:41):
That's really incredible and I mean that 3%
gap's huge.
So to put some numbers to, orsome you know performance
numbers to that, if you had$100,000 30 years ago, as you
just said, brian, and put thatin the S&P 500 index, you'd have
roughly $1.6 million now, justto give our listeners some
perspective.
So that's great, right.
(10:02):
100,000, 30 years later turnsinto 1.6.
But if my return was 3% lessthat lower number, that average
equity investor that you justquoted in that study, I would
have less than half of that 1.6.
I would have just a little over$700,000.
Brian Graff (10:19):
You wouldn't think that you would never think that
on the surface, until you crunchthose numbers, it's powerful,
it is.
Yeah.
So let's talk a little bit morethen, Tracy, about the why
behind all this.
Why do our emotions often getthe best of us when we're
investing?
Tracy Burke (10:39):
Yeah, and a lot of studies have been done on this
sort of the why behind it.
And so much of these studiescome back to that decisions we
make are anchored to our past.
Our past experiences,especially those in childhood or
early, that form sort of who weare right.
So as I think back to my ownsituation during childhood and
thinking about, like, what moneymeant in the family or how that
was, it was tough to comparehow our family stacked up from a
(11:04):
financial standpoint to othersand not something that as a
child I was thinking about aheck of a lot of other stuff and
worried about that.
But now as I'm thinking back,you know certainly you know we
were somewhat thrifty, thefamily was somewhat thrifty, we
weren't living lavishly at all.
I mean, we were doing vacationsand, you know, doing some of
(11:24):
the what felt normal at the timeand certainly met needs, but
there was nothing overboard andwe were pretty cautious, or the
family was pretty cautious inhow we spent money, and so that
was my upbringing and sort of myintroduction to money and
finances, of course.
So I didn't know anydifferently.
So as I got into earlyadulthood, that's just how I
(11:46):
operated, right, and so it was alittle bit more thrifty.
So I think one thing I've knowit's.
I think one thing I I've seenit's very tough for people to
change their stripes.
Uh, and what I mean by that youknow sometimes.
You know when, when, when folksuh have, you know whatever
their money habits are andsometimes then people will be
very successfully financiallyand become very wealthy.
(12:09):
But you know a lot.
Most of the time I think a lotof folks in that situation
they're not changing theirstripes If they were somewhat
thrifty or, from that standpoint, just not big spenders.
It's not just a flip of theswitch.
I don't know how do you seethings, any of your past
experiences on this?
Brian Graff (12:27):
Yeah, that's interesting, tracy, because I
would say my childhood was kindof the opposite of yours in a
sense.
We were certainly by no meansrich, but we were definitely
upper middle class.
I'd say my dad had a reallygood corporate job and he was
very frivolous when it came tospending money, which maybe was
to my advantage.
As a kid growing up I canpicture Christmases going,
waking up and there was a bignew pinball machine by the tree,
(12:49):
right Like right out of thearcade, or a jukebox, you know
the time played 45 records.
It again dates me a little bit.
You know we always had the newgadgets, like you know, whenever
a new type of TV or a videogame console came out for you
kind of tech heads or video gamenerds I'm probably talking
about Pong and Atari andColecoVision, so again going way
back to the 80s and things likethat.
(13:10):
But we always kind of had thenew shiny things.
And I remember him saying asplain as day, tracy, he used to
have this quote where he wouldsay, brian, it was paper
yesterday, it's paper today,it'll be paper tomorrow when
talking about money.
Of course that's when cash wasking, and back in the 80s
Nowadays I guess he wouldprobably say, brian, it was
plastic today, and or maybedigital or crypto, you know,
(13:33):
whatever he might say, but theidea was just, it's just money,
let's spend it.
So we had a lot of you know, alot of nice things like that
growing up.
But then I would say, later inlife, when I got into high
school and college, you kind ofthe opposite happened.
I saw, I saw my family, my dadin particular, start to struggle
a little bit.
You know he got burned out bythe corporate job, tried a
couple of small businesses,passion projects that he had the
(13:54):
best intentions with but didnot work out.
And I saw him dipping into hisretirement plan, doing anything
he could, you know, to save thehouse and to keep the family
afloat.
So it was like two incrediblydifferent experiences.
And you know you talked abouthaving that person on your
shoulder earlier on there.
So I definitely still have thatone, you know, that devil on my
one shoulder that just buy it,brian, you know your kids will
love it.
You know, just bring it home.
(14:15):
But then the other one issaying don't make a mistake.
You know, use that money andsave it.
You don't want to end up in asituation you know where you're
using all your retirement moneynow.
So I am, and we do our best toyou know, make good decisions
based on his experience.
But that's just kind of youknow who we are and innate to
(14:35):
what we do.
Tracy Burke (14:36):
Absolutely yeah.
Brian Graff (14:38):
So yeah.
So something else, trace.
We'll move into the idea ofthis, something we call
overconfidence bias as well.
When we talk about the whys andhow our emotions get the best
of us as their portfolio andthey go through the roof and did
really well and he feels reallyconfident.
(15:05):
He pounds the chest a little bitand thinks that, wow, this must
have more to do with mysuperior skill as a stock picker
than maybe just luck itself,and it probably had more to do
with the market.
And then say Jim goes down, hebuys another stock, puts a lot
of money into it because he's sosuccessful at this and he
always knows what's going tohappen.
Shortly after he makes thatpurchase, that stock goes down
(15:26):
and Jim loses a lot of money.
That's what we call a baddecision based on overconfidence
.
Tracy Burke (15:33):
Yeah, for sure, and I don't want to call it certain
professions either, but thereare certain professions that we
see people have thatoverconfidence bias.
But I think the takeaway inthose situations is really
diversification, right, andthese are some of the
fundamentals that we talk overand over about with investors.
(15:53):
They really pay off.
But diversify, think over thelong term.
Don't make short-term decisionswith long-term money.
Work with a professional totake some of that emotional side
out of it, those type of things, and with all that you know
falling into line you know wetalked about this earlier a
little bit FOMO, the fear ofmissing out.
(16:15):
You know that's something thatis super common and something
that we've all been there insome way, shape or form, right
In all aspects of life.
You know we don't like missingout and maybe some of it's
keeping up with the Joneses orothers, but I've probably all
seen that often media caninfluence that.
(16:35):
You know what you read or whatyou listen to it can really
create some of those emotionsthat we talked about.
The excitement in particularthat we talked about earlier,
and maybe that's with a specificstock and we've referenced that
a couple of times, and as wesit here recording this, we're
in the 21st century, right, andwe'll just timestamp it in 21st
(16:59):
century, in case you know, brian, they're listening to us in a
couple hundred years from nowand listening to this podcast.
So here in the 21st century.
You know, nvidia is a very hotstock and has been here for a
little period of time.
Bitcoin, that's another one,and you know we've been hearing
a lot about it and it's creatingsome of that FOMO with people,
(17:20):
right, and when you hear aboutit, often it's too late, or
maybe it's not too late, butyou're further along in the game
, right.
There's lots of data out therethat really reflects that after
you start hearing aboutsomething and it's really risen
quite high that the next stage,it often is below average,
(17:42):
meaning it doesn't do as well asa lot of the other investors.
So it's just something as wekeep thinking through there,
something to think through.
Brian Graff (17:51):
Yeah, and when I talk to retirement savers every
day again, that's my job Ieducate people on retirement and
their investments and theirretirement plans.
Often I hear people call in andsay, hey, can I invest in, for
example, nvidia stock in my 401kplan, or can I buy Bitcoin?
They're very passionate aboutit because they've heard about,
they want to make money, theydon't want to miss out.
They have that fear of missingout and usually my answer for
(18:11):
the plans we administer is no.
I mean, those are too volatile.
For example, of investments,there's not a lot of, especially
with Bitcoin, right, it's just.
I try not to talk people out ofinvesting in those types of
investments if they'repassionate about it.
But my answer is usually youknow, do it outside of your
retirement plan, your futuresavings, use what we call play
money money that's on thesidelines that you know what if
(18:33):
you lost half of it, you're notgoing to lose any sleep over it,
right?
So, definitely, if you feelpassionate about a stock and you
want to play the game a littlebit, if you will, you can do it.
But remember, try to use moneyother than especially your
retirement savings in doing so.
Tracy Burke (18:46):
Yeah, and I don't think we're saying don't
necessarily invest in that stockbecause it might be a really
good one.
Sometimes it's hard to argue,but where the emotions get
involved is often we get in orout at the wrong time.
So again, if you buy it,successful investors buy low,
sell high.
(19:06):
So there's nothing wrongputting some money in there, but
let it sort of run its courseright.
We don't have to jump outbefore it's given us that
investment return that we'relooking for.
Brian Graff (19:19):
Yeah.
So when you say letting it runits course, so for example,
tracy, let's say somebody buys astock, they get a tip.
They buy a stock, they holdonto it, like you said, let it
run its course and five yearslater really doesn't go anywhere
.
It hasn't really lost a lot,but it hasn't gained a lot
either.
Then what do you do?
Do you hang in there with it?
Do you sell it?
Do you buy more of it?
Like what do you do after fiveyears of pretty much just a flat
(19:40):
growth?
Tracy Burke (19:41):
Yeah, and that's a tough one.
And if you hung in there forfirst of all for five years,
kudos to sort of you know, sortof trying to wait it out or see
it.
And it all depends on on thatparticular company.
If it's a good company, youknow, it probably still makes
sense to hold onto it as youmove forward.
But again, thinking thatlong-term approach, so
(20:02):
speculating versus, you know,don't speculate, don't try to
speculate and invest.
So focus on that long-term.
And we've said this multipletimes buying low, selling high,
so try not to sell it as a loss.
But again, it really sort ofdepends on what that situation
is.
You can just sort of ride itfor the long term.
(20:23):
I think our message is we wantto invest for the long term, not
speculate over the shorter term.
So the feelings we've beentalking about these emotions
when investing they certainlycan be expensive, especially
from a mistake standpoint.
Certainly can be expensive,especially from a mistake
(20:46):
standpoint.
Right, as we said, we sometimesget our emotions involved and
we'll make mistakes and that canreally cost us at certain
points.
And then something else we'veseen is some people will hold on
to investments for emotionalreasons as well.
And so what do I mean by youknow, maybe it's the company
they're working for and and youknow they they love the company
they're working for and thatthat's great and they want to
(21:08):
invest in that company.
If it's a publicly tradedcompany, nothing wrong with that
.
But just be smart about it,don't let those emotions get
involved.
Uh, maybe it's the stock of thecompany that they or the town
that they live in.
Maybe they're, you know there's, there's a big company in the
town that they live in.
They want to do the same thing.
Uh, other things.
You know, something else we'veseen pretty commonly is okay,
(21:28):
you know, I inherited this stockfrom my parent, or maybe it was
my grandparent, so I can't sellit Right.
Brian Graff (21:34):
That's a big one that comes up a lot, yeah, yeah.
Tracy Burke (21:37):
You know I have that emotional attachment and
and that that's fine as long asit's reasonable.
You know that there's nothingwrong with that and it's not bad
necessarily, you know,especially if you you know if
it's something moderate there.
But then where it can getdetrimental is really that
over-concentration.
So we talk aboutdiversification a lot, but that
(21:58):
over-concentration where you endup with one or two or a small
handful of stocks that blossomsinto a large chunk of your
portfolio, that's where it canbe a massive risk.
Over the years I've had multipleclients who have that one or
two stocks that whether theybought it on their own when it
was much lower, or they'veinherited and it's done really
(22:22):
well and it's, it's becomemassive and it become a massive.
You know, 20, 30, 40 percent oftheir net worth.
Sure, you just don't want tosell it and, um again, that can
be super dangerous because whathappens if that crashes?
And that's real money.
You talked about sort of playmoney, right?
You know, in that case when itgets to be such a big chunk of
(22:43):
your net worth, it can really dothat.
You know I've had a clientbefore who said, OK, well, once
it gets to this threshold we'regoing to sell and that's a great
plan.
Yeah, Got to the threshold.
Guess what?
They didn't sell it and it's away to gets now up here and the
same type of thing.
You can keep playing that game,but try to set your plan and
stick with it and come back.
Brian Graff (23:05):
Great stuff, Tracy, and you know, as we wrap up, we
always want to give ourlisteners and viewers some
action items, right?
We think this podcast will onlybe successful if there are some
takeaways in there foreverybody listening at home.
So we talked all day todayabout emotions and keeping
emotions kind of out ofinvesting in your financial life
the best we can.
But how, Tracy, how do we do it?
Tracy Burke (23:26):
Yeah.
So there's multiple ways, butthe first one comes to my mind
is sort of sleeping on it.
You know I call that theovernight test.
Sure, you know, any majordecisions in life, it's best not
just to be quick and reactive,right, think about it, resist
that urge, sleep about you know,sleep on it, think about what
you know, think through it alittle bit and not spur the
(23:48):
moment.
So that's something that'sprobably first and foremost in
my mind as an important actionitem for us today.
Brian Graff (23:54):
Yeah, great point, tracy.
And that's with any majordecision in your life, but
especially financial decisionsit's always good to sleep on it
and just give it that overnighttest.
Something else I think thatinvestors should do is
definitely align their goalswith their investment decisions.
So, when you think about youroverall financial goals, is it
really your ultimate goal topick the next Apple or Nvidia
stock, or is it really justhaving enough money to live a
(24:17):
fulfilling retirement, right?
Isn't that the goal foreverybody?
So focus on the actual goalitself.
In this case, you know asuccessful retirement and ask
yourself does this investmentthat I'm holding, will that
inevitably help me reach thatgoal with a reasonable amount of
risk, right?
So you have to ask yourselfthat questions.
And then super important writeit all down.
(24:37):
You know, as I get on with age,tracy, you know I forget what I
had for dinner last night,right?
So how am I going to rememberthis major, the goal that I have
when it comes to investing?
So write it down, put it on apiece of paper or in a
spreadsheet or something.
Word document.
Keep yourself accountable andstick to that long-term plan.
Something else I want to say too, before I turn it back over to
you and this, I think, is areally important one, especially
(24:58):
what I do every day and talk toretirement investors is don't
check your retirement accountbalances every single day.
Most investors out there are inthese daily valued 401k plans
where your balance is rightthere at your fingertips, and
when you log into your accountthe next day, you'll see it
either went up or down,depending on how the stock
market performed.
(25:18):
Right, but again, don't do that.
Right Like what's the point?
We wouldn't want you tocelebrate too much if the market
went up, just like we don'twant you to become dejected if
the market went down.
It's just one day over thislong term retirement, you know
investing horizon, so try not tocheck your account balances too
often, which can lead to thoseemotional decisions and we want
to, like we said, keep them outof it.
What else can we do, tracy?
Tracy Burke (25:39):
Yeah, I was going to say that last one, man, it
can also drive you crazy, right?
Oh for sure it's the ups anddowns as your account balance
grows and you see it's up by Xthousand or even more on a daily
basis, or down it can be like,wow, I lost X thousands of
dollars yesterday and it canreally send you off into some
(26:01):
emotional distress.
So yeah, and then the last onehere that I would say last
action item I mentioned this alittle bit earlier work with a
professional advisor, becauseit's super critical to work with
somebody else on this, becauseas a professional advisor, we're
in the day-to-day of this, thefolks we work with.
(26:22):
Their money is real to them and, believe us, it's real to us
too.
We take a lot of pride thatthey're giving us this
confidence and trust in us.
But we're taking the emotionalside out of it, and it's even
good practice for those of us inthe business to work with a
(26:42):
professional on our finances aswell, because we get emotional
on our own finances and that'sthe funny thing.
I get emotional on our ownfinances and that's the funny
thing.
I get emotional on my ownfinances and obviously don't, or
try not to, you know to thelargest extent with the folks
that we work with.
So, again, that's theprofessional's job to take that
(27:03):
emotions out, stay rational.
So, again, you know investors.
You know advocate for yourself,ask questions to the advisors
you're working with andultimately, to feel emotionally,
whether it's connected orsatisfied, you just want to know
what, feel comfortable with howyou're being invested and
(27:24):
comfortable with the advisoryou're working with 100%.
Brian Graff (27:27):
Tracy and good advisors are certainly worth
their weight in gold, especiallyonce you get to retirement age.
You're approaching retirementhelping you with like spending
strategies and tax strategies ohmy gosh.
There's so much a good advisorwill help you with.
But even before you get to thatpoint maybe you're in the
earlier stages of your careerthere are still professionals
you can talk to and takeadvantage of your retirement
(27:48):
plans.
Easy options I think that's abig one too.
You know most plans that weadminister here at Conrad Siegel
.
Investors have the opportunityto go into target retirement
date funds or investmentportfolios at a risk base, and
the great thing about those easyoptions or those professionally
managed options are that theytake the emotions out of it.
You kind of pick that plan andyou know if you look at a
(28:09):
statement, if you get astatement in the mail after you
know out of it.
You kind of pick that plan andif you look at a statement, if
you get a statement in the mailafter a quarter, that wasn't so
great in the market, you cankind of live with it because,
okay, well, I didn't make thosedecisions.
I know that's just part of this.
Whereas if you pick your ownportfolio and you have a bad
quarter.
Immediately you're like, okay,what did I do wrong?
And you probably didn't doanything wrong.
It's probably just indicativeof how the stock market before,
but we automatically think weshould have done something
(28:29):
different.
I'm going to go in, I'm goingto change it.
So those easy options or thoseprofessionally managed solutions
are wonderful ways where youcan experience good long-term
returns and keep your emotionsout of the picture.
So I just wanted to point thatout as well.
All right, tracy, this was a lotof fun.
I really enjoyed this topic.
I hope everybody out there didtoo, and I just want to remind
(28:50):
all of our listeners to pleasereach out to us If you have any
questions.
I told you early on that we arein the business of helping
people.
We'd love to hear from you.
So please email us at podcastat conradsegalcom If you like
what you heard today.
Share this podcast with yourfriends, your family members,
and please bookmark the page orwhatever kids do out there with
(29:11):
the podcast these days and tunein for episode number three.
So again, tracy, thanks.
This is a good time.
Have a great rest of your dayand look forward to talking to
you on the next podcast.
Tracy Burke (29:21):
Thanks.
Welcome (29:24):
Thank you for tuning into today's show.
The Real Talk Retirement Showis created and produced by
Conrad Siegel, an advisory firmthat specializes in helping
people prepare for retirementand beyond.
If you want to learn more aboutour work or meet the team, you
can visit conradsegelcom.
Information on this show is foreducational purposes only and
(29:46):
should not be consideredpersonalized investment tax or
legal advice.
Before making decisions, youshould consult with the
appropriate professionals foradvice that is specific to your
situation.
Welcome to the Real Talk Retirement Show, where we
explore the financial side ofretirement and beyond.
Whether you're currentlyretired or planning for the
future, we offer real, relatableconversations about money and
personal finances.
Most importantly, we dive intoall these topics using Real Talk
.
Now, let's get real about yourmoney and your retirement.
(00:23):
Now, let's get real about yourmoney and your retirement.
Brian Graff (00:28):
Welcome everyone to another episode of the Real
Talk Retirement Show.
My name is Brian Graff.
With me again today is mycolleague and co-host, tracy
Burke.
Tracy, thanks for joining forepisode number two.
Great to be here, brian.
Yeah, I think we have a goodone today, tracy, and I guess
inevitably I'll let our viewersand listeners decide if it's a
good one, but it's definitelyone that I'm excited about,
(00:50):
because today we're going to betalking about how emotions and
behaviors impact investing.
And, tracy, make no mistake, youand I are in the business of
numbers, right?
Numbers are such a big part ofour work, lives, work lives we
can't avoid them.
Here at Conrad Siegel, we'vealways said numbers matter,
right, we're surrounded by abunch of actuaries in here, and
they and they definitely do.
But more than the numbers, thepeople is what really matters
(01:14):
the most.
Without the people, the numbersmean nothing.
So we are, we are definitely inthe people business.
We want to help people, andpeople are fascinating, right?
We are all driven by ouremotions, aren't we?
We're emotional about how muchsleep we get at night, what
we're going to have forbreakfast, lunch and dinner the
next day, what our workday lookslike, how our friends and
family are doing.
(01:34):
We're just emotional people.
So I think, tracy, it's onlynatural that we get emotional
when it comes to our money andour finances, right?
Tracy Burke (01:42):
Yeah, that's for sure, and this is a super
important topic.
Sometimes we don't, as you said, we don't like to focus or talk
about that emotional side orour behavior, especially guys
right, that's something we don'twear on our shirt sleeve there,
but I think we're gonna have alot of fun today talking about
that.
But it's also human nature, youknow, this is just.
(02:04):
This is how things go right,among other things.
So, as we were thinking throughthis topic today, one quote to
come to mind was from TonyRobbins, and his quote is the
single biggest threat to yourfinancial well-being is your own
brain.
And, as you know, every time Isee that or read it, I think,
wow, that's so true.
It's almost like that littleguy that's sitting on your
shoulder.
You know, every time I see thator read, I think, wow, that's
(02:25):
so true.
Uh, it's almost like that, thatlittle guy that's sitting on
your shoulder, you know,constantly telling you what to
do.
I don't know if you had that.
Oh yeah, I got a couple of thoseguys, yep, yeah, and they keep
popping up and and some, a lotof times it's the negativity
side of it, right, but sometimes, again, that brain and and our
emotions can certainly get intoit.
So, as as human beings, you know, we're just prone to making,
(02:46):
you know, bad or dumb decisionswhen dealing with money.
That's just how we're set up,right For sure, and sometimes
it's those.
You know, maybe we have mentalbiases, or I like to refer to as
blind spots, things that maybewe're not quite aware of, that
are out there, but you knowthose things are very prevalent
with coming, you know, when itcomes to money.
So you know, as we thinkthrough this, you know
(03:08):
everything we do from investingstandpoint, we could, we can
nail it all we could do.
You know everything that we'resupposed to do from a textbook
standpoint, but then we all of asudden can just mess it up with
the emotion with one emotionalmistake.
Right that those type of thingshappen.
And I think back to a mentor Ihad many years ago now.
(03:29):
He said, tracy, it can take 20years to build a reputation, but
you can destroy it in fiveminutes.
Brian Graff (03:37):
Absolutely yeah, we see it all the time.
Tracy Burke (03:39):
Yeah, by doing something emotional or something
dumb, and that happens a lot oftime, and money as well.
And then another quote thatTony Robbins saw before.
It was something like 80% ofyour success is due to the
psychology of things and theother 20% is the mechanics.
So, again important topic it'ssurprisingly difficult to invest
(04:03):
rationally.
So, you know, brian, somethingthat comes to my mind, you know,
and this is something we hearfrom client or see from clients
interaction all the time, youknow.
So when markets go down, what'sthat first reaction that a lot
of investors have?
Brian Graff (04:18):
Oh, people want to sell Tracy.
They've got a statement in themail or they logged on to their
you know different financialaccounts.
They see a drop in value andthey want to run from that bad
situation.
Again, that's human nature.
We see something go bad, wewant to get out of it, but
rationally I mean, that'sprobably the worst thing you can
do at that time.
Once the market really drops,you want to stay true to your
(04:39):
retirement planning goals, theplan you set forth for yourself,
and kind of selling low is theworst thing you can do.
In reality, if you're going todo anything and not saying you
have to, sometimes staying thecourse is the best thing you do.
But those really becomeopportune times to actually buy
more of those riskierinvestments that are a little
bit down in value.
But again, the human natureelement always creeps in and we
(04:59):
want to get out of a situationthat's currently bad.
Tracy Burke (05:03):
Yeah.
Brian Graff (05:04):
So, yeah, I think that whole idea of just kind of
setting a plan, sticking to it,not checking in to your account
too often, is probably the bestthing you can do during those
market downturns.
Tracy, let's talk about someother common feelings when it
comes to investing.
What are some other things thatcomes into play?
Tracy Burke (05:21):
Yeah, so fear something that and in all
aspects of life.
You know, sometimes there'sfear and sometimes it's real.
But in terms of investing, youknow, having that fear can
really lead to selling at thewrong time or even buying at the
wrong time.
If we have that fear that, mygoodness, the stock market's
(05:42):
going to go down and sometimeswe hit that sell button again,
panicking, or even markets at anall-time high.
This isn't the right time tobuy.
You just mentioned buying lowand selling high, which is what
we want to do.
But there are times when stockmarkets are at a high and people
(06:08):
say, well, nope, I'm fearfulthat this was the wrong time,
right, because if I buy now andthe market goes down, that's the
wrong.
So it seems like we can neverwin, sometimes in the fear
category.
Brian Graff (06:13):
Yeah, I agree, Tracy, and that's why I think
that the concept of dollar costaveraging is so important, which
is where you kind of continueto invest the same amount of
money periodically throughoutthe year.
Which where you think about,like retirement plan, investing
401Ks, 403Bs.
I mean, that's the beauty ofthose types of plans You're just
having a certain dollar amountcoming out of your paycheck
(06:34):
being invested every pay period,so every two weeks or once a
month, and you're buying at allkinds of different prices
throughout the year.
That's dollar cost averaging,Tracy, and is that?
Do you agree that that'sprobably an important thing for
investors to do?
Tracy Burke (06:46):
Yeah for sure.
And even on the back end too,right, even when people are
taking money out of theirinvestments later in life.
You know, just doing it sort ofthat, you know, dollar cost
averaging, almost reverseapproach, and taking money out,
so yeah, that's almost that fearof missing out type of thing
and we'll probably circle backto that in a little bit.
(07:14):
But a lot of times when greedyou're sort of ignoring some of
those risks out there and you'rechasing performance, hey well,
that stock or that sector orwhatever that asset just really
is taken off and it's done welland I want more.
So sometimes, instead ofcashing in your chips or just
being smart about it beingoverly concentrated, those types
(07:34):
of things Regret.
Something else that comes tomind.
You know, a lot of people willat some point have regret of not
doing something, maybe in thepast, and maybe there was a
missed opportunity and we thinkwell oh, Tracy, how many people
have you talked to?
Brian Graff (07:46):
that said, I knew Apple was going to be the next
stock and I just couldn'tconvince myself to buy it.
You know, years and years ago.
I mean, you hear it all thetime.
Tracy Burke (07:53):
All this regret from investors, yeah, yeah for
sure, and fear, you know, ofmaking that mistake.
You know I didn't do it.
And then the last sort ofemotion that sometime, you know,
maybe on the opposite side ofit, sometimes is that excitement
, and all these are intertwined,of course, but excitement.
Sometimes it's that excitement,and all these are intertwined,
(08:14):
of course, but excitement of,hey, I'm in something that's
doing really well, and sometimesmaybe people put more into
what's really doing well,chasing performance or whatnot
and sometimes then we look backand we're over-concentrated in a
certain stock or a certainasset class and sometimes we
just have that overestimation ofwhat's going to happen and that
excitement can lead to some ofthose components.
Brian Graff (08:34):
Yeah, but again, all human nature feelings and
decisions that drive that.
So one thing I think is prettycool, tracy we use a study done
by Dalbar in a lot of ourpresentations and some of our
reporting where this companybasically looks at the average
mutual fund investor right,someone that is more active in
managing their own accountthey're buying and selling
(08:55):
stocks, moving money around.
It kind of compares thatinvestor's performance to the
overall stock market, like usingbenchmarks and something I
think is really interesting.
A recent study showed that overa 30-year time period the
average equity investor so thatperson that was going in buying
stocks, trading, maybe trying totime the market in a lot of
situations had an average annualrate of return of roughly 6.8%
(09:19):
right, not awful.
That doesn't sound too shabby.
Whereas an investor though thatsimply invested in the S&P 500
index right that index that iscomprised of the largest 500 US
company they would have seen areturn of nearly 9.7% over that,
you know, a year in that same30 year span.
So that's a gap of nearly 3%.
(09:39):
That's pretty telling, isn't it.
Tracy Burke (09:41):
That's really incredible and I mean that 3%
gap's huge.
So to put some numbers to, orsome you know performance
numbers to that, if you had$100,000 30 years ago, as you
just said, brian, and put thatin the S&P 500 index, you'd have
roughly $1.6 million now, justto give our listeners some
perspective.
So that's great, right.
(10:02):
100,000, 30 years later turnsinto 1.6.
But if my return was 3% lessthat lower number, that average
equity investor that you justquoted in that study, I would
have less than half of that 1.6.
I would have just a little over$700,000.
Brian Graff (10:19):
You wouldn't think that you would never think that
on the surface, until you crunchthose numbers, it's powerful,
it is.
Yeah.
So let's talk a little bit morethen, Tracy, about the why
behind all this.
Why do our emotions often getthe best of us when we're
investing?
Tracy Burke (10:39):
Yeah, and a lot of studies have been done on this
sort of the why behind it.
And so much of these studiescome back to that decisions we
make are anchored to our past.
Our past experiences,especially those in childhood or
early, that form sort of who weare right.
So as I think back to my ownsituation during childhood and
thinking about, like, what moneymeant in the family or how that
was, it was tough to comparehow our family stacked up from a
(11:04):
financial standpoint to othersand not something that as a
child I was thinking about aheck of a lot of other stuff and
worried about that.
But now as I'm thinking back,you know certainly you know we
were somewhat thrifty, thefamily was somewhat thrifty, we
weren't living lavishly at all.
I mean, we were doing vacationsand, you know, doing some of
(11:24):
the what felt normal at the timeand certainly met needs, but
there was nothing overboard andwe were pretty cautious, or the
family was pretty cautious inhow we spent money, and so that
was my upbringing and sort of myintroduction to money and
finances, of course.
So I didn't know anydifferently.
So as I got into earlyadulthood, that's just how I
(11:46):
operated, right, and so it was alittle bit more thrifty.
So I think one thing I've knowit's.
I think one thing I I've seenit's very tough for people to
change their stripes.
Uh, and what I mean by that youknow sometimes.
You know when, when, when folksuh have, you know whatever
their money habits are andsometimes then people will be
very successfully financiallyand become very wealthy.
(12:09):
But you know a lot.
Most of the time I think a lotof folks in that situation
they're not changing theirstripes If they were somewhat
thrifty or, from that standpoint, just not big spenders.
It's not just a flip of theswitch.
I don't know how do you seethings, any of your past
experiences on this?
Brian Graff (12:27):
Yeah, that's interesting, tracy, because I
would say my childhood was kindof the opposite of yours in a
sense.
We were certainly by no meansrich, but we were definitely
upper middle class.
I'd say my dad had a reallygood corporate job and he was
very frivolous when it came tospending money, which maybe was
to my advantage.
As a kid growing up I canpicture Christmases going,
waking up and there was a bignew pinball machine by the tree,
(12:49):
right Like right out of thearcade, or a jukebox, you know
the time played 45 records.
It again dates me a little bit.
You know we always had the newgadgets, like you know, whenever
a new type of TV or a videogame console came out for you
kind of tech heads or video gamenerds I'm probably talking
about Pong and Atari andColecoVision, so again going way
back to the 80s and things likethat.
(13:10):
But we always kind of had thenew shiny things.
And I remember him saying asplain as day, tracy, he used to
have this quote where he wouldsay, brian, it was paper
yesterday, it's paper today,it'll be paper tomorrow when
talking about money.
Of course that's when cash wasking, and back in the 80s
Nowadays I guess he wouldprobably say, brian, it was
plastic today, and or maybedigital or crypto, you know,
(13:33):
whatever he might say, but theidea was just, it's just money,
let's spend it.
So we had a lot of you know, alot of nice things like that
growing up.
But then I would say, later inlife, when I got into high
school and college, you kind ofthe opposite happened.
I saw, I saw my family, my dadin particular, start to struggle
a little bit.
You know he got burned out bythe corporate job, tried a
couple of small businesses,passion projects that he had the
(13:54):
best intentions with but didnot work out.
And I saw him dipping into hisretirement plan, doing anything
he could, you know, to save thehouse and to keep the family
afloat.
So it was like two incrediblydifferent experiences.
And you know you talked abouthaving that person on your
shoulder earlier on there.
So I definitely still have thatone, you know, that devil on my
one shoulder that just buy it,brian, you know your kids will
love it.
You know, just bring it home.
(14:15):
But then the other one issaying don't make a mistake.
You know, use that money andsave it.
You don't want to end up in asituation you know where you're
using all your retirement moneynow.
So I am, and we do our best toyou know, make good decisions
based on his experience.
But that's just kind of youknow who we are and innate to
(14:35):
what we do.
Tracy Burke (14:36):
Absolutely yeah.
Brian Graff (14:38):
So yeah.
So something else, trace.
We'll move into the idea ofthis, something we call
overconfidence bias as well.
When we talk about the whys andhow our emotions get the best
of us as their portfolio andthey go through the roof and did
really well and he feels reallyconfident.
(15:05):
He pounds the chest a little bitand thinks that, wow, this must
have more to do with mysuperior skill as a stock picker
than maybe just luck itself,and it probably had more to do
with the market.
And then say Jim goes down, hebuys another stock, puts a lot
of money into it because he's sosuccessful at this and he
always knows what's going tohappen.
Shortly after he makes thatpurchase, that stock goes down
(15:26):
and Jim loses a lot of money.
That's what we call a baddecision based on overconfidence
.
Tracy Burke (15:33):
Yeah, for sure, and I don't want to call it certain
professions either, but thereare certain professions that we
see people have thatoverconfidence bias.
But I think the takeaway inthose situations is really
diversification, right, andthese are some of the
fundamentals that we talk overand over about with investors.
(15:53):
They really pay off.
But diversify, think over thelong term.
Don't make short-term decisionswith long-term money.
Work with a professional totake some of that emotional side
out of it, those type of things, and with all that you know
falling into line you know wetalked about this earlier a
little bit FOMO, the fear ofmissing out.
(16:15):
You know that's something thatis super common and something
that we've all been there insome way, shape or form, right
In all aspects of life.
You know we don't like missingout and maybe some of it's
keeping up with the Joneses orothers, but I've probably all
seen that often media caninfluence that.
(16:35):
You know what you read or whatyou listen to it can really
create some of those emotionsthat we talked about.
The excitement in particularthat we talked about earlier,
and maybe that's with a specificstock and we've referenced that
a couple of times, and as wesit here recording this, we're
in the 21st century, right, andwe'll just timestamp it in 21st
(16:59):
century, in case you know, brian, they're listening to us in a
couple hundred years from nowand listening to this podcast.
So here in the 21st century.
You know, nvidia is a very hotstock and has been here for a
little period of time.
Bitcoin, that's another one,and you know we've been hearing
a lot about it and it's creatingsome of that FOMO with people,
(17:20):
right, and when you hear aboutit, often it's too late, or
maybe it's not too late, butyou're further along in the game
, right.
There's lots of data out therethat really reflects that after
you start hearing aboutsomething and it's really risen
quite high that the next stage,it often is below average,
(17:42):
meaning it doesn't do as well asa lot of the other investors.
So it's just something as wekeep thinking through there,
something to think through.
Brian Graff (17:51):
Yeah, and when I talk to retirement savers every
day again, that's my job Ieducate people on retirement and
their investments and theirretirement plans.
Often I hear people call in andsay, hey, can I invest in, for
example, nvidia stock in my 401kplan, or can I buy Bitcoin?
They're very passionate aboutit because they've heard about,
they want to make money, theydon't want to miss out.
They have that fear of missingout and usually my answer for
(18:11):
the plans we administer is no.
I mean, those are too volatile.
For example, of investments,there's not a lot of, especially
with Bitcoin, right, it's just.
I try not to talk people out ofinvesting in those types of
investments if they'repassionate about it.
But my answer is usually youknow, do it outside of your
retirement plan, your futuresavings, use what we call play
money money that's on thesidelines that you know what if
(18:33):
you lost half of it, you're notgoing to lose any sleep over it,
right?
So, definitely, if you feelpassionate about a stock and you
want to play the game a littlebit, if you will, you can do it.
But remember, try to use moneyother than especially your
retirement savings in doing so.
Tracy Burke (18:46):
Yeah, and I don't think we're saying don't
necessarily invest in that stockbecause it might be a really
good one.
Sometimes it's hard to argue,but where the emotions get
involved is often we get in orout at the wrong time.
So again, if you buy it,successful investors buy low,
sell high.
(19:06):
So there's nothing wrongputting some money in there, but
let it sort of run its courseright.
We don't have to jump outbefore it's given us that
investment return that we'relooking for.
Brian Graff (19:19):
Yeah.
So when you say letting it runits course, so for example,
tracy, let's say somebody buys astock, they get a tip.
They buy a stock, they holdonto it, like you said, let it
run its course and five yearslater really doesn't go anywhere
.
It hasn't really lost a lot,but it hasn't gained a lot
either.
Then what do you do?
Do you hang in there with it?
Do you sell it?
Do you buy more of it?
Like what do you do after fiveyears of pretty much just a flat
(19:40):
growth?
Tracy Burke (19:41):
Yeah, and that's a tough one.
And if you hung in there forfirst of all for five years,
kudos to sort of you know, sortof trying to wait it out or see
it.
And it all depends on on thatparticular company.
If it's a good company, youknow, it probably still makes
sense to hold onto it as youmove forward.
But again, thinking thatlong-term approach, so
(20:02):
speculating versus, you know,don't speculate, don't try to
speculate and invest.
So focus on that long-term.
And we've said this multipletimes buying low, selling high,
so try not to sell it as a loss.
But again, it really sort ofdepends on what that situation
is.
You can just sort of ride itfor the long term.
(20:23):
I think our message is we wantto invest for the long term, not
speculate over the shorter term.
So the feelings we've beentalking about these emotions
when investing they certainlycan be expensive, especially
from a mistake standpoint.
Certainly can be expensive,especially from a mistake
(20:46):
standpoint.
Right, as we said, we sometimesget our emotions involved and
we'll make mistakes and that canreally cost us at certain
points.
And then something else we'veseen is some people will hold on
to investments for emotionalreasons as well.
And so what do I mean by youknow, maybe it's the company
they're working for and and youknow they they love the company
they're working for and thatthat's great and they want to
(21:08):
invest in that company.
If it's a publicly tradedcompany, nothing wrong with that
.
But just be smart about it,don't let those emotions get
involved.
Uh, maybe it's the stock of thecompany that they or the town
that they live in.
Maybe they're, you know there's, there's a big company in the
town that they live in.
They want to do the same thing.
Uh, other things.
You know, something else we'veseen pretty commonly is okay,
(21:28):
you know, I inherited this stockfrom my parent, or maybe it was
my grandparent, so I can't sellit Right.
Brian Graff (21:34):
That's a big one that comes up a lot, yeah, yeah.
Tracy Burke (21:37):
You know I have that emotional attachment and
and that that's fine as long asit's reasonable.
You know that there's nothingwrong with that and it's not bad
necessarily, you know,especially if you you know if
it's something moderate there.
But then where it can getdetrimental is really that
over-concentration.
So we talk aboutdiversification a lot, but that
(21:58):
over-concentration where you endup with one or two or a small
handful of stocks that blossomsinto a large chunk of your
portfolio, that's where it canbe a massive risk.
Over the years I've had multipleclients who have that one or
two stocks that whether theybought it on their own when it
was much lower, or they'veinherited and it's done really
(22:22):
well and it's, it's becomemassive and it become a massive.
You know, 20, 30, 40 percent oftheir net worth.
Sure, you just don't want tosell it and, um again, that can
be super dangerous because whathappens if that crashes?
And that's real money.
You talked about sort of playmoney, right?
You know, in that case when itgets to be such a big chunk of
(22:43):
your net worth, it can really dothat.
You know I've had a clientbefore who said, OK, well, once
it gets to this threshold we'regoing to sell and that's a great
plan.
Yeah, Got to the threshold.
Guess what?
They didn't sell it and it's away to gets now up here and the
same type of thing.
You can keep playing that game,but try to set your plan and
stick with it and come back.
Brian Graff (23:05):
Great stuff, Tracy, and you know, as we wrap up, we
always want to give ourlisteners and viewers some
action items, right?
We think this podcast will onlybe successful if there are some
takeaways in there foreverybody listening at home.
So we talked all day todayabout emotions and keeping
emotions kind of out ofinvesting in your financial life
the best we can.
But how, Tracy, how do we do it?
Tracy Burke (23:26):
Yeah.
So there's multiple ways, butthe first one comes to my mind
is sort of sleeping on it.
You know I call that theovernight test.
Sure, you know, any majordecisions in life, it's best not
just to be quick and reactive,right, think about it, resist
that urge, sleep about you know,sleep on it, think about what
you know, think through it alittle bit and not spur the
(23:48):
moment.
So that's something that'sprobably first and foremost in
my mind as an important actionitem for us today.
Brian Graff (23:54):
Yeah, great point, tracy.
And that's with any majordecision in your life, but
especially financial decisionsit's always good to sleep on it
and just give it that overnighttest.
Something else I think thatinvestors should do is
definitely align their goalswith their investment decisions.
So, when you think about youroverall financial goals, is it
really your ultimate goal topick the next Apple or Nvidia
stock, or is it really justhaving enough money to live a
(24:17):
fulfilling retirement, right?
Isn't that the goal foreverybody?
So focus on the actual goalitself.
In this case, you know asuccessful retirement and ask
yourself does this investmentthat I'm holding, will that
inevitably help me reach thatgoal with a reasonable amount of
risk, right?
So you have to ask yourselfthat questions.
And then super important writeit all down.
(24:37):
You know, as I get on with age,tracy, you know I forget what I
had for dinner last night,right?
So how am I going to rememberthis major, the goal that I have
when it comes to investing?
So write it down, put it on apiece of paper or in a
spreadsheet or something.
Word document.
Keep yourself accountable andstick to that long-term plan.
Something else I want to say too, before I turn it back over to
you and this, I think, is areally important one, especially
(24:58):
what I do every day and talk toretirement investors is don't
check your retirement accountbalances every single day.
Most investors out there are inthese daily valued 401k plans
where your balance is rightthere at your fingertips, and
when you log into your accountthe next day, you'll see it
either went up or down,depending on how the stock
market performed.
(25:18):
Right, but again, don't do that.
Right Like what's the point?
We wouldn't want you tocelebrate too much if the market
went up, just like we don'twant you to become dejected if
the market went down.
It's just one day over thislong term retirement, you know
investing horizon, so try not tocheck your account balances too
often, which can lead to thoseemotional decisions and we want
to, like we said, keep them outof it.
What else can we do, tracy?
Tracy Burke (25:39):
Yeah, I was going to say that last one, man, it
can also drive you crazy, right?
Oh for sure it's the ups anddowns as your account balance
grows and you see it's up by Xthousand or even more on a daily
basis, or down it can be like,wow, I lost X thousands of
dollars yesterday and it canreally send you off into some
(26:01):
emotional distress.
So yeah, and then the last onehere that I would say last
action item I mentioned this alittle bit earlier work with a
professional advisor, becauseit's super critical to work with
somebody else on this, becauseas a professional advisor, we're
in the day-to-day of this, thefolks we work with.
(26:22):
Their money is real to them and, believe us, it's real to us
too.
We take a lot of pride thatthey're giving us this
confidence and trust in us.
But we're taking the emotionalside out of it, and it's even
good practice for those of us inthe business to work with a
(26:42):
professional on our finances aswell, because we get emotional
on our own finances and that'sthe funny thing.
I get emotional on our ownfinances and that's the funny
thing.
I get emotional on my ownfinances and obviously don't, or
try not to, you know to thelargest extent with the folks
that we work with.
So, again, that's theprofessional's job to take that
(27:03):
emotions out, stay rational.
So, again, you know investors.
You know advocate for yourself,ask questions to the advisors
you're working with andultimately, to feel emotionally,
whether it's connected orsatisfied, you just want to know
what, feel comfortable with howyou're being invested and
(27:24):
comfortable with the advisoryou're working with 100%.
Brian Graff (27:27):
Tracy and good advisors are certainly worth
their weight in gold, especiallyonce you get to retirement age.
You're approaching retirementhelping you with like spending
strategies and tax strategies ohmy gosh.
There's so much a good advisorwill help you with.
But even before you get to thatpoint maybe you're in the
earlier stages of your careerthere are still professionals
you can talk to and takeadvantage of your retirement
(27:48):
plans.
Easy options I think that's abig one too.
You know most plans that weadminister here at Conrad Siegel
.
Investors have the opportunityto go into target retirement
date funds or investmentportfolios at a risk base, and
the great thing about those easyoptions or those professionally
managed options are that theytake the emotions out of it.
You kind of pick that plan andyou know if you look at a
(28:09):
statement, if you get astatement in the mail after you
know out of it.
You kind of pick that plan andif you look at a statement, if
you get a statement in the mailafter a quarter, that wasn't so
great in the market, you cankind of live with it because,
okay, well, I didn't make thosedecisions.
I know that's just part of this.
Whereas if you pick your ownportfolio and you have a bad
quarter.
Immediately you're like, okay,what did I do wrong?
And you probably didn't doanything wrong.
It's probably just indicativeof how the stock market before,
but we automatically think weshould have done something
(28:29):
different.
I'm going to go in, I'm goingto change it.
So those easy options or thoseprofessionally managed solutions
are wonderful ways where youcan experience good long-term
returns and keep your emotionsout of the picture.
So I just wanted to point thatout as well.
All right, tracy, this was a lotof fun.
I really enjoyed this topic.
I hope everybody out there didtoo, and I just want to remind
(28:50):
all of our listeners to pleasereach out to us If you have any
questions.
I told you early on that we arein the business of helping
people.
We'd love to hear from you.
So please email us at podcastat conradsegalcom If you like
what you heard today.
Share this podcast with yourfriends, your family members,
and please bookmark the page orwhatever kids do out there with
(29:11):
the podcast these days and tunein for episode number three.
So again, tracy, thanks.
This is a good time.
Have a great rest of your dayand look forward to talking to
you on the next podcast.
Tracy Burke (29:21):
Thanks.
Welcome (29:24):
Thank you for tuning into today's show.
The Real Talk Retirement Showis created and produced by
Conrad Siegel, an advisory firmthat specializes in helping
people prepare for retirementand beyond.
If you want to learn more aboutour work or meet the team, you
can visit conradsegelcom.
Information on this show is foreducational purposes only and
(29:46):
should not be consideredpersonalized investment tax or
legal advice.
Before making decisions, youshould consult with the
appropriate professionals foradvice that is specific to your
situation.
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