July 14, 2025 • 15 mins
“Hey Mike, I am comfortable taking risks, even in retirement. For people like me, what type of portfolio would you recommend.” Discover why taking more risks may actually hurt you in the long-term and in the short-term when you retire.
Text your questions to 913-363-1234.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Mike (00:05):
Welcome to How to Retire On Time, a show that answers
your retirement questions. Myname is Mike Decker. I'm a
licensed financial advisor andfiduciary. And with me in the
studio today is my colleague,David Franson, who will be
reading your retirementquestions. As always, you can
submit those questions to (913)363-1234.
Again, that's (913) 363-1234.David, what do we have for
(00:26):
today?
David (00:28):
Hey, Mike. I am comfortable taking risks even in
retirement. For people like me,what type of portfolio would you
recommend?
Mike (00:35):
The first thing we need to address is the misnomer that
more risk equals more reward.It's potential reward. And if
you have a long time horizon,then, yeah, being more
aggressive can be helpful. RayDalio, a very famous fund
manager, once said that unlessyou're aggressive, you're not
gonna make any money, unlessyou're defensive, you're not
gonna keep any of your money.And the misnomer is in
(00:57):
retirement that you're going tomake money by taking more risk.
It's not necessarily true, andit's really based around, I
don't wanna say the sequence ofreturns risk. What I'm talking
about more is volatility. SoDavid, before you worked here
Uh-huh. Did you have a clue whatthe word volatility even meant?
Just think back before you wereeducated in finance.
David (01:19):
Right. Yeah. I mean, maybe not in the financial
context, and, you know, I thinkwe knew basically what
volatility meant. As it appliesdirectly to the markets and your
personal finance, maybe not. Andand sequence of returns risk is
another sort of,
Mike (01:32):
like, is that? Yeah. So let's define volatility is the
movement in the market. Okay. K?
We like volatility when it'sgood, as in when it goes up. We
don't like volatility when itgoes down, but you can't have
your cake and eat it too. Sowhen you've got a shorter time
horizon, then volatility or thebigger movements up or down can
(01:53):
be good, or they can be bad, butyou don't have time to kinda let
things average out. So forexample, if you had put money
into the S and P 500 inFebruary, there was a lot of
volatility, a lot of ups, butalso a lot of downs, and you
ended up with around zeroreturns over a ten year period
of time. Now from 2010 to 2020,you'd have averaged around 14%
(02:17):
year over year returns.
That's good volatility, but noone knows the future of
volatility. Yeah. It's theroller coaster, and roller
coasters go up and down. Yeah.Oh, it's
David (02:27):
gonna make some fun. Right? Yeah. Maybe not when it's
your life savings, though.
Mike (02:31):
Well, it could be, but No. Not really. It depends on Now
what you're looking the secondpart is, well, if I just hold on
to it long enough, it shouldrecover. You've gotta have, in
my opinion, a fifteen to twentyyear period of time for that
really to make sense. When youretire, it's not about shooting
the moon.
It's not about trying to really,really grow your assets. If you
(02:53):
need the money, you've got tolower the volatility and
increase the predictability.Notice the difference there. We
might be lowering thevolatility, the ups and downs of
the roller coaster, but we'reincreasing predictability. Okay?
So let me give an example. Youcould be invested in a bunch of
(03:13):
stocks. They go up, they godown, and you hope overall they
go up, but it's not certain. Andthey can go up as much as they
want. Look at Palantir and whatthat's done.
That's insane. But Palantir inthe beginning of twenty twenty
five also had a 40% top tobottom. Can you stomach that,
and what would that average outto be? So these are things to
look at. Super Micro companyalso had a very highly volatile
(03:35):
stock.
They've got huge swings going upand down. And then if you got
other stocks like Costco orWalmart or I would even throw
it's like Apple isn't asvolatile as it may be because
it's not incredibly high growth.It's just more it's slowed down
a little bit in its volatilityor its breath. That doesn't mean
(03:57):
it can't have big swings. Itjust means it's maybe not
swinging as big as it didoriginally.
Are you with me so far?
David (04:03):
Yeah. It sounds like the big established players,
Costco's, Walmart's, Apple's,their sort of peaks and valleys
are much smaller.
Mike (04:09):
They're just more predictable.
David (04:11):
Okay.
Mike (04:11):
Yes. They're more steady businesses. I mean, look at Coca
Cola.
David (04:14):
Oh, yeah.
Mike (04:15):
Do you think AI is going to revolutionize the enjoyment
of a bubbly beverage? I can'timagine that it does. So you can
still grow your wealth with morepredictable stocks as a part of
your portfolio, but maybe maybethat's not what you wanna do.
That's fine. But do you see thetrades here of just
predictability versus biggerswings?
Because when you need the money,it's gotta be there, and you
(04:37):
can't draw income from assetsthat have lost money. Now let's
continue down this path. Let'slook at bond funds. K. Bond
funds are less risky or lessvolatile, technically speaking,
than stocks.
What does that mean? They've gotless growth potential, but they
shouldn't lose as much moneyeither when things go sideways.
But bond funds can lose money.Well, what if we looked at
(04:58):
something a little bitdifferent? What if we looked at
something like a buffered ETF?
Yeah. Explain that. Yeah. So abuffered ETF is basically a very
fancy ETF that uses contracts togive the investor up to
typically, let's say, likearound 7% of the upside of the S
and P, for example, and rateswill always change. Let's say
(05:18):
you get the first 7%, that'scalled a cap, so you get up to
7%.
Anything above that was acontract that was sold, someone
else got those gains. But youcan't go backwards. So if you
hold it during the duration orthat one year period of time, if
the market's tanked, you don'tlose money. It resets, and now
you've got the next year forthat up to 7% growth. So do you
(05:40):
see how there's still upsidepotential?
You still could grow your funds.You could still grow your money,
but you can't go backwards. Youhave locked in your gains. As in
you've sold some of your assets,you can't go backwards, you're
still trying to make money, butyou're okay not trying to make
the most money. Now should allof your portfolio be in that?
(06:01):
No. One of the biggest red flagsis if all of your portfolio is
in all of kind of the same thingthat is oversimplification,
maybe an over generalized orrisky portfolio. That's just my
opinion. But what if you had apart of your portfolio that
couldn't go backwards? Do yousee how you're now maybe giving
up some of that upsidepotential, but you're
(06:23):
significantly decreasing thatdownside risk?
So you're kind of moving a wildroller coaster into a roller
coaster that you could handlethat still has reasonable
upside, that still is gonna fityour legacy goals, your
lifestyle goals, keeping up withinflation, outpacing inflation,
things like that. You see thedifference here?
David (06:42):
Yeah. Absolutely. I think I do. That it sounds like you're
saying that when you're going toneed those funds, like, early in
your retirement, right, to todraw income. And so we don't
want them losing too much toosoon, because as I think I've
heard you say before, if you'redrawing income from an account
that has had losses
Mike (07:01):
You accentuate those losses. It makes it more
difficult to recover. Right. Nowlet's talk about averages and
how they can be deceptive. Let'ssay your portfolio is a very
volatile portfolio.
Let's say you've you've reallypurchased some nice stocks, but
they're volatile. K? High beta.You could say if you if you're
familiar with the term orlooking at it on our Morningstar
reports.
David (07:21):
Okay. Industry terms there we get to learn about?
Mike (07:23):
Yeah. Look them up. They're interesting. But let's
say you're expecting you lookback, and this year it did, you
know, x percent, this year did xpercent, the next year did x
percent. And you put them alltogether, and you do a simple
average, and you say it's about10% is the average that you
would expect.
David (07:37):
Okay.
Mike (07:38):
Okay. Well, what does that really translate to? If it's,
like, nine percent one year,then 11% the other year, do you
notice how the returns are closeenough to each other? Then the
10% kinda makes sense. Thelarger that variation gets, the
less accurate that average isgoing to be.
So let's do an exaggeratoryexample. Let's say that you're
(08:00):
gonna get let's do 50% in oneyear, but a 30% crash in the the
next year, which can happen. Idon't remember a time where the
markets made 50% on their own,like at the S and P five
hundred, for example. So if themarkets go down, let's say 30%,
and let's say you have a$100,000 invested, you're now
down 70,000. And then themarket's increased by 50%.
(08:24):
You've averaged 10%, but yourcash value is at a 105%. The
cash value growth was reallyabout two and a half percent.
Mhmm. So do you see how theincreased volatility, the
increased exposure to the marketmight not always work out to
your favor when you're lookingat shorter time horizons when it
comes to income planning ordistributions or withdrawal
(08:45):
rates. It may not be aseffective if you're looking at
legacy planning, charitablegifting, or just moving funds
around for your lifestyle andlegacy purposes.
But if you had 9%, 11%, 10%, 6%,If the averages are kind of in
the same, there's a morepredictable range, then it may
make sense. Do you see thedifference there?
David (09:05):
Yeah. We wanna keep things within a a range, I
guess, that we're comfortablein. And if there's a track
record of it staying sort ofsimilar, then we can hope that
that continues.
Mike (09:14):
And the most important thing that you could really do
in this exercise is to not letgreed take the wheel. Let me
tell you a quick story.
David (09:24):
Does it involve Gordon Gekko?
Mike (09:25):
No. Oh, okay.
David (09:27):
Well, continue on anyway. Yeah.
Mike (09:29):
So when I was, I think, 11 years old, my family went we
were going to Lake Powell for anice kind of family boat trip.
Right? Lake Powell was inSouthern Utah, Northern Arizona,
but we flew into Las Vegas, andthen we we drove there. So we
flew in Las Vegas. We stayed onenight at the Circus Circus
Hotel, and we just kind of hadfun.
What do you do if you're a kidin Las Vegas? Well, you don't
gamble. You don't you you dobuffets, and you do roller
(09:51):
coasters kind of Right. That'skind of it. Maybe a magic show.
So we went to the stratosphere.If you know what the
stratosphere is, think of theSpace Needle, but in Las Vegas.
And on the very top, they havethis ride called the Big Shot. I
think it's still there. The BigShot is two, three hundred feet
vertical.
It goes straight up, k, on topof the stratosphere, on top of
(10:12):
the building. So it's like thehighest building, I think, in
Las Vegas or one of the highest.K? We get to the very top. We're
on the roof, and then we getinto this roller coaster that's
gonna pull three or four g'sgoing up.
And then you free fall goingdown, and you can't see anything
other than the city. And we dothis at night. So I am a very
scrawny, thin, light kid. I'm 11years old. Four g's is a lot for
(10:39):
a kid to handle.
I wish we bought the picturebecause here's what happened.
The ride goes off, and theytrick you. They go, alright.
We're gonna launch in ten, nine,and then it just launches. They
never actually do the rightcountdown.
Yeah. And so it catches you bysurprise. Well, it caught me by
surprise, and the force, thegravitational force was so
(11:02):
powerful, enough blood came outof my head that I passed out. I
could not handle the volatility.Oh, that's true.
To speak. And then when I gainedconsciousness at the top,
because I was kinda scrawny andnot really in my seat, I felt
like I was falling out of theride because I was lifted up in
(11:22):
my chair, leaning forwardthinking the ride broke, and I'm
about to fall to my death. Thatsounds terrifying. And then it
free falls 200 and some feetbefore it catches and then
throws you back up again. Ugh.
K? Why do I say this story? Thereason is the market is very
(11:43):
similar to this. Most people Ihave met have most of their
assets in the market, andthey're very happy about the
upside volatility. They love thegrowth, but they have forgotten
what it's like to lose yourmoney.
They have forgotten what it'slike to be in a 02/2002
situation, which is a verynormal situation for a market
crash, or a two thousand eightfinancial crisis where it goes
(12:06):
down very sharply, where youthink the banking industry is
going to collapse. The pandemicwasn't really that big of a
market crash. It was a quickcrash, but we printed a lot of
money so it recovered quickly.And all the money the Fed
printed basically made its wayinto the stock market, and all
was well. And then we had a slowinflationary crash, which was
(12:27):
difficult in 2022, 2023, butthat wasn't that big of a deal
because, again, we were printingmoney, and we still recovered.
It wasn't the end of the world.Those aren't normal crashes.
They can be much worse thanthat, and we have forgotten what
that's like. And if you look atthe last ten to fifteen years,
we are now used to a crash onlylasting a couple of months, and
(12:48):
that we're averaging 14% returnson our portfolio. That is not a
normal situation.
Last time I can think of thatbeing the standard was 1990 to
1999, then what happened inFebruary? The reason why I bring
this up is greed is a verypowerful emotion, and FOMO, fear
of missing out, is a verypowerful cognitive distortion
(13:11):
that prevents people from seeingreality as it is. All of that
upside potential you have has anappropriate amount of downside
risk. And so as people entertowards retirement, as they're
looking towards keeping theirmoney and staying rich,
typically five to two yearsbefore you retire or when you
(13:31):
retire is when you start lockingin your gains and start moving
some assets towards somethingthat's protected, but still has
growth potential. So notnecessarily CDs that are at a
fixed rate.
Like, if the markets boom, youwanna capture a lot of that
growth. But if the markets godown, you want at least a part
of your portfolio to not gobackwards so that in the next
(13:52):
year or in two years when themarkets start to recover, that
you're still participating inthat growth. You just didn't go
backwards.
David (13:59):
Yeah. That makes sense.
Mike (13:59):
It's not about getting rich. If you're gonna retire, it
means you've already becomerich. It's about staying rich.
It's about lowering the range orthreshold of the volatility, the
ups and downs, so you have amore predictable threshold and
that you can have a morepredictable plan, a more
predictable portfolio, and knowhow to more appropriately
navigate through thesetreacherous situations. That's
(14:22):
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Welcome to How to Retire On Time, a show that answers
your retirement questions. Myname is Mike Decker. I'm a
licensed financial advisor andfiduciary. And with me in the
studio today is my colleague,David Franson, who will be
reading your retirementquestions. As always, you can
submit those questions to (913)363-1234.
Again, that's (913) 363-1234.David, what do we have for
(00:26):
today?
David (00:28):
Hey, Mike. I am comfortable taking risks even in
retirement. For people like me,what type of portfolio would you
recommend?
Mike (00:35):
The first thing we need to address is the misnomer that
more risk equals more reward.It's potential reward. And if
you have a long time horizon,then, yeah, being more
aggressive can be helpful. RayDalio, a very famous fund
manager, once said that unlessyou're aggressive, you're not
gonna make any money, unlessyou're defensive, you're not
gonna keep any of your money.And the misnomer is in
(00:57):
retirement that you're going tomake money by taking more risk.
It's not necessarily true, andit's really based around, I
don't wanna say the sequence ofreturns risk. What I'm talking
about more is volatility. SoDavid, before you worked here
Uh-huh. Did you have a clue whatthe word volatility even meant?
Just think back before you wereeducated in finance.
David (01:19):
Right. Yeah. I mean, maybe not in the financial
context, and, you know, I thinkwe knew basically what
volatility meant. As it appliesdirectly to the markets and your
personal finance, maybe not. Andand sequence of returns risk is
another sort of,
Mike (01:32):
like, is that? Yeah. So let's define volatility is the
movement in the market. Okay. K?
We like volatility when it'sgood, as in when it goes up. We
don't like volatility when itgoes down, but you can't have
your cake and eat it too. Sowhen you've got a shorter time
horizon, then volatility or thebigger movements up or down can
(01:53):
be good, or they can be bad, butyou don't have time to kinda let
things average out. So forexample, if you had put money
into the S and P 500 inFebruary, there was a lot of
volatility, a lot of ups, butalso a lot of downs, and you
ended up with around zeroreturns over a ten year period
of time. Now from 2010 to 2020,you'd have averaged around 14%
(02:17):
year over year returns.
That's good volatility, but noone knows the future of
volatility. Yeah. It's theroller coaster, and roller
coasters go up and down. Yeah.Oh, it's
David (02:27):
gonna make some fun. Right? Yeah. Maybe not when it's
your life savings, though.
Mike (02:31):
Well, it could be, but No. Not really. It depends on Now
what you're looking the secondpart is, well, if I just hold on
to it long enough, it shouldrecover. You've gotta have, in
my opinion, a fifteen to twentyyear period of time for that
really to make sense. When youretire, it's not about shooting
the moon.
It's not about trying to really,really grow your assets. If you
(02:53):
need the money, you've got tolower the volatility and
increase the predictability.Notice the difference there. We
might be lowering thevolatility, the ups and downs of
the roller coaster, but we'reincreasing predictability. Okay?
So let me give an example. Youcould be invested in a bunch of
(03:13):
stocks. They go up, they godown, and you hope overall they
go up, but it's not certain. Andthey can go up as much as they
want. Look at Palantir and whatthat's done.
That's insane. But Palantir inthe beginning of twenty twenty
five also had a 40% top tobottom. Can you stomach that,
and what would that average outto be? So these are things to
look at. Super Micro companyalso had a very highly volatile
(03:35):
stock.
They've got huge swings going upand down. And then if you got
other stocks like Costco orWalmart or I would even throw
it's like Apple isn't asvolatile as it may be because
it's not incredibly high growth.It's just more it's slowed down
a little bit in its volatilityor its breath. That doesn't mean
(03:57):
it can't have big swings. Itjust means it's maybe not
swinging as big as it didoriginally.
Are you with me so far?
David (04:03):
Yeah. It sounds like the big established players,
Costco's, Walmart's, Apple's,their sort of peaks and valleys
are much smaller.
Mike (04:09):
They're just more predictable.
David (04:11):
Okay.
Mike (04:11):
Yes. They're more steady businesses. I mean, look at Coca
Cola.
David (04:14):
Oh, yeah.
Mike (04:15):
Do you think AI is going to revolutionize the enjoyment
of a bubbly beverage? I can'timagine that it does. So you can
still grow your wealth with morepredictable stocks as a part of
your portfolio, but maybe maybethat's not what you wanna do.
That's fine. But do you see thetrades here of just
predictability versus biggerswings?
Because when you need the money,it's gotta be there, and you
(04:37):
can't draw income from assetsthat have lost money. Now let's
continue down this path. Let'slook at bond funds. K. Bond
funds are less risky or lessvolatile, technically speaking,
than stocks.
What does that mean? They've gotless growth potential, but they
shouldn't lose as much moneyeither when things go sideways.
But bond funds can lose money.Well, what if we looked at
(04:58):
something a little bitdifferent? What if we looked at
something like a buffered ETF?
Yeah. Explain that. Yeah. So abuffered ETF is basically a very
fancy ETF that uses contracts togive the investor up to
typically, let's say, likearound 7% of the upside of the S
and P, for example, and rateswill always change. Let's say
(05:18):
you get the first 7%, that'scalled a cap, so you get up to
7%.
Anything above that was acontract that was sold, someone
else got those gains. But youcan't go backwards. So if you
hold it during the duration orthat one year period of time, if
the market's tanked, you don'tlose money. It resets, and now
you've got the next year forthat up to 7% growth. So do you
(05:40):
see how there's still upsidepotential?
You still could grow your funds.You could still grow your money,
but you can't go backwards. Youhave locked in your gains. As in
you've sold some of your assets,you can't go backwards, you're
still trying to make money, butyou're okay not trying to make
the most money. Now should allof your portfolio be in that?
(06:01):
No. One of the biggest red flagsis if all of your portfolio is
in all of kind of the same thingthat is oversimplification,
maybe an over generalized orrisky portfolio. That's just my
opinion. But what if you had apart of your portfolio that
couldn't go backwards? Do yousee how you're now maybe giving
up some of that upsidepotential, but you're
(06:23):
significantly decreasing thatdownside risk?
So you're kind of moving a wildroller coaster into a roller
coaster that you could handlethat still has reasonable
upside, that still is gonna fityour legacy goals, your
lifestyle goals, keeping up withinflation, outpacing inflation,
things like that. You see thedifference here?
David (06:42):
Yeah. Absolutely. I think I do. That it sounds like you're
saying that when you're going toneed those funds, like, early in
your retirement, right, to todraw income. And so we don't
want them losing too much toosoon, because as I think I've
heard you say before, if you'redrawing income from an account
that has had losses
Mike (07:01):
You accentuate those losses. It makes it more
difficult to recover. Right. Nowlet's talk about averages and
how they can be deceptive. Let'ssay your portfolio is a very
volatile portfolio.
Let's say you've you've reallypurchased some nice stocks, but
they're volatile. K? High beta.You could say if you if you're
familiar with the term orlooking at it on our Morningstar
reports.
David (07:21):
Okay. Industry terms there we get to learn about?
Mike (07:23):
Yeah. Look them up. They're interesting. But let's
say you're expecting you lookback, and this year it did, you
know, x percent, this year did xpercent, the next year did x
percent. And you put them alltogether, and you do a simple
average, and you say it's about10% is the average that you
would expect.
David (07:37):
Okay.
Mike (07:38):
Okay. Well, what does that really translate to? If it's,
like, nine percent one year,then 11% the other year, do you
notice how the returns are closeenough to each other? Then the
10% kinda makes sense. Thelarger that variation gets, the
less accurate that average isgoing to be.
So let's do an exaggeratoryexample. Let's say that you're
(08:00):
gonna get let's do 50% in oneyear, but a 30% crash in the the
next year, which can happen. Idon't remember a time where the
markets made 50% on their own,like at the S and P five
hundred, for example. So if themarkets go down, let's say 30%,
and let's say you have a$100,000 invested, you're now
down 70,000. And then themarket's increased by 50%.
(08:24):
You've averaged 10%, but yourcash value is at a 105%. The
cash value growth was reallyabout two and a half percent.
Mhmm. So do you see how theincreased volatility, the
increased exposure to the marketmight not always work out to
your favor when you're lookingat shorter time horizons when it
comes to income planning ordistributions or withdrawal
(08:45):
rates. It may not be aseffective if you're looking at
legacy planning, charitablegifting, or just moving funds
around for your lifestyle andlegacy purposes.
But if you had 9%, 11%, 10%, 6%,If the averages are kind of in
the same, there's a morepredictable range, then it may
make sense. Do you see thedifference there?
David (09:05):
Yeah. We wanna keep things within a a range, I
guess, that we're comfortablein. And if there's a track
record of it staying sort ofsimilar, then we can hope that
that continues.
Mike (09:14):
And the most important thing that you could really do
in this exercise is to not letgreed take the wheel. Let me
tell you a quick story.
David (09:24):
Does it involve Gordon Gekko?
Mike (09:25):
No. Oh, okay.
David (09:27):
Well, continue on anyway. Yeah.
Mike (09:29):
So when I was, I think, 11 years old, my family went we
were going to Lake Powell for anice kind of family boat trip.
Right? Lake Powell was inSouthern Utah, Northern Arizona,
but we flew into Las Vegas, andthen we we drove there. So we
flew in Las Vegas. We stayed onenight at the Circus Circus
Hotel, and we just kind of hadfun.
What do you do if you're a kidin Las Vegas? Well, you don't
gamble. You don't you you dobuffets, and you do roller
(09:51):
coasters kind of Right. That'skind of it. Maybe a magic show.
So we went to the stratosphere.If you know what the
stratosphere is, think of theSpace Needle, but in Las Vegas.
And on the very top, they havethis ride called the Big Shot. I
think it's still there. The BigShot is two, three hundred feet
vertical.
It goes straight up, k, on topof the stratosphere, on top of
(10:12):
the building. So it's like thehighest building, I think, in
Las Vegas or one of the highest.K? We get to the very top. We're
on the roof, and then we getinto this roller coaster that's
gonna pull three or four g'sgoing up.
And then you free fall goingdown, and you can't see anything
other than the city. And we dothis at night. So I am a very
scrawny, thin, light kid. I'm 11years old. Four g's is a lot for
(10:39):
a kid to handle.
I wish we bought the picturebecause here's what happened.
The ride goes off, and theytrick you. They go, alright.
We're gonna launch in ten, nine,and then it just launches. They
never actually do the rightcountdown.
Yeah. And so it catches you bysurprise. Well, it caught me by
surprise, and the force, thegravitational force was so
(11:02):
powerful, enough blood came outof my head that I passed out. I
could not handle the volatility.Oh, that's true.
To speak. And then when I gainedconsciousness at the top,
because I was kinda scrawny andnot really in my seat, I felt
like I was falling out of theride because I was lifted up in
(11:22):
my chair, leaning forwardthinking the ride broke, and I'm
about to fall to my death. Thatsounds terrifying. And then it
free falls 200 and some feetbefore it catches and then
throws you back up again. Ugh.
K? Why do I say this story? Thereason is the market is very
(11:43):
similar to this. Most people Ihave met have most of their
assets in the market, andthey're very happy about the
upside volatility. They love thegrowth, but they have forgotten
what it's like to lose yourmoney.
They have forgotten what it'slike to be in a 02/2002
situation, which is a verynormal situation for a market
crash, or a two thousand eightfinancial crisis where it goes
(12:06):
down very sharply, where youthink the banking industry is
going to collapse. The pandemicwasn't really that big of a
market crash. It was a quickcrash, but we printed a lot of
money so it recovered quickly.And all the money the Fed
printed basically made its wayinto the stock market, and all
was well. And then we had a slowinflationary crash, which was
(12:27):
difficult in 2022, 2023, butthat wasn't that big of a deal
because, again, we were printingmoney, and we still recovered.
It wasn't the end of the world.Those aren't normal crashes.
They can be much worse thanthat, and we have forgotten what
that's like. And if you look atthe last ten to fifteen years,
we are now used to a crash onlylasting a couple of months, and
(12:48):
that we're averaging 14% returnson our portfolio. That is not a
normal situation.
Last time I can think of thatbeing the standard was 1990 to
1999, then what happened inFebruary? The reason why I bring
this up is greed is a verypowerful emotion, and FOMO, fear
of missing out, is a verypowerful cognitive distortion
(13:11):
that prevents people from seeingreality as it is. All of that
upside potential you have has anappropriate amount of downside
risk. And so as people entertowards retirement, as they're
looking towards keeping theirmoney and staying rich,
typically five to two yearsbefore you retire or when you
(13:31):
retire is when you start lockingin your gains and start moving
some assets towards somethingthat's protected, but still has
growth potential. So notnecessarily CDs that are at a
fixed rate.
Like, if the markets boom, youwanna capture a lot of that
growth. But if the markets godown, you want at least a part
of your portfolio to not gobackwards so that in the next
(13:52):
year or in two years when themarkets start to recover, that
you're still participating inthat growth. You just didn't go
backwards.
David (13:59):
Yeah. That makes sense.
Mike (13:59):
It's not about getting rich. If you're gonna retire, it
means you've already becomerich. It's about staying rich.
It's about lowering the range orthreshold of the volatility, the
ups and downs, so you have amore predictable threshold and
that you can have a morepredictable plan, a more
predictable portfolio, and knowhow to more appropriately
navigate through thesetreacherous situations. That's
(14:22):
all the time we've got for theshow today.
If you enjoyed the show,consider subscribing to it
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you may not even know exist.Explore strategies that may be
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(14:43):
increasing your overall growthand lifestyle flexibility. This
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