April 8, 2025 • 24 mins
Market volatility can be unsettling—but long-term financial success is rarely built on short-term reactions.
In this episode of the Women’s Money Wisdom podcast, Melissa Joy, CFP® addresses the emotional and financial challenges that often arise during market downturns. As markets enter bear territory, many investors may feel inclined to make significant changes to their portfolios. Melissa encourages listeners to take a step back and revisit their overall strategy, focusing on long-term planning rather than short-term uncertainty.
She discusses general principles and planning considerations that can help investors stay grounded, including the potential benefits of maintaining diversified contributions, reviewing withdrawal strategies, and exploring financial planning opportunities that may arise in volatile environments.
This conversation is not a recommendation or a forecast, but a reminder that financial decisions are best made from a place of clarity, not fear.
Don't forget to check out the most recent Pearl Planning blog with more on tariffs and current market conditions. View here.
Topics Covered:
📉 Why emotional responses to market movements can lead to unintended consequences
📊 How continued contributions during down markets may support long-term goals
📋 Considerations for tax-loss harvesting, Roth conversions, and estate planning in down markets
🧠 Understanding the emotional side of investing and building financial resilience
⚖️ The value of small, intentional adjustments over reactive decision-making
The previous presentation by PEARL PLANNING was intended for general information purposes only. No portion of the presentation serves as the receipt of, or as a substitute for, personalized investment advice from PEARL PLANNING or any other investment professional of your choosing. Different types of investments involve varying degrees of risk, and it should not be assumed that future performance of any specific investment or investment strategy, or any non-investment related or planning services, discussion or content, will be profitable, be suitable for your portfolio or individual situation, or prove successful. Neither PEARL PLANNING’s investment adviser registration status, nor any amount of prior experience or success, should be construed that a certain level of results or satisfaction will be achieved if PEARL PLANNING is engaged, or continues to be engaged, to provide investment advisory services. PEARL PLANNING is neither a law firm nor accounting firm, and no portion of its services should be construed as legal or accounting advice. No portion of the video content should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if PEARL PLANNING is engaged, or continues to be engaged, to provide investment advisory services. A copy of PEARL PLANNING’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https:...
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Welcome to the Women's Money Wisdom Podcast.
I'm Melissa Joy, a certifiedfinancial planner and the
founder of Pearl Planning.
My goal is to help youstreamline and organize your
finances, navigate big moneydecisions with confidence and be
strategic in order to grow yourwealth.
As a woman, you work hard foryour money and I'm here to help
(00:21):
you make the most of it.
Now let's get into the show.
Just a quick note before wedive in.
The information that we shareis meant to educate and inspire,
not serve as personalizedfinancial advice.
Everyone's situation is unique,so be sure to consult with your
(00:41):
own financial professional forguidance that fits your life.
So be sure to consult with yourown financial professional for
guidance that fits your life.
And just so you know, theopinions shared in this podcast
are my own and those of myguests, and they don't
necessarily represent those ofany organizations that I'm
affiliated with.
For more important disclosures,please go to our webpage at
(01:02):
pearlplancom.
Now let's get started.
Welcome back to the Women'sMoney Wisdom Podcast.
Today's episode islate-breaking.
We usually don't try to tellyou exactly what's going on in
the news.
Right now we're more of anovertime kind of podcast, but we
(01:23):
are entering bear marketterritory in terms of stock
markets.
I'm recording this episode onMonday April 7th to be released
on Tuesday April 8th, and wejust got a lot going on and I
thought it would be great totalk to you in real time about
how a financial planner looks atchanging and difficult stock
markets and investing markets.
So to give you a lay of theland, on Wednesday previously
(01:47):
expected tariffs were announcedby President Trump and those
tariffs had been kind of toutedas coming with what's called
reciprocity, that you would lookat what tariffs were happening
from foreign governments andmake similar tariffs.
And yet when the tariffs wereactually announced, for much of
(02:08):
the market and that's not reallythe point of this podcast is to
get into exactly what'shappened but the taxes for
imports from foreign governmentwere much more broad and
amplified just big multipliers,three to four times higher than
anticipated, and amplified justbig multipliers three to four
times higher than anticipated.
And as a result of that, thatis, markets don't like change,
(02:29):
they don't like uncertainty andthere have been big moves in the
stock market.
I'm recording this before themarket opens.
On Monday morning and onThursday and Friday markets were
down big, entering correctionterritory and people.
It's difficult to define amarket crash, but for certain
(02:50):
segments of investing, includingthe NASDAQ, including small
company stocks in the US, thenwe have been entering, or have
entered, bear market territory,as measured by a 20% pullback
territory.
As measured by a 20% pullback,and other investments, including
international investments, aswell as the S&P 500, large
(03:16):
companies here in the US arealso experiencing nearly bear
market territory, with futurestoday opening lower.
Now, who knows, by the time youlisten to this episode, where
markets will be, and we're nottalking about the exact moment
or what to do on any given houror in any given day, but what I
wanted to do today was talk toyou about how you need to set
your mindset and frame yourfinancial decisions during times
(03:39):
of volatility, uncertainty anddownward returns, and I wanted
to give you some actionableitems to take with you and also
some don'ts.
So this is a do's and don'tsfor bear market investing, and
so, just to get started, I wantto talk about investments
themselves and one of the thingsthat you should know for people
(04:00):
who are invested with risk inmind, and asset allocation and
long-term investing plans, likethe way that Pearl Planning does
investments.
You should know and it'sdifficult to remember this as
you see negative returns on yourstatements or when you log into
your accounts, that manyinvestment strategies were built
to include very difficultmarkets.
(04:20):
So you can ask your financialadvisor or ask yourself if
you're self-managing.
Did you choose theseinvestments to own for a long
period of time through a varietyof circumstances, keeping in
mind that bear markets aren't,you know, kind of unicorn events
they happen frequently.
This event is a little differentbecause it seemed its source,
(04:41):
for many of us believe, iscoming directly from US
government policy and typicallywe are listening for the US
government officials, whetherit's the Federal Reserve or the
executive branch or members ofCongress.
We're looking for them toalleviate stress in the markets.
But communication and languagefrom Washington DC, from
(05:03):
President Trump, has said youknow, you just need to get used
to this.
This is the new normal, and sowe haven't seen that kind of
alleviating risk kind ofmessaging coming from the
Capitol.
Events like you can use thehousing market crisis of the
(05:23):
great financial crisis and sayyou know that came from lending
policy, not directly necessarilyfrom the US government.
It could have been deregulationyears prior, but not actions
that week.
That this time is a little bitdifferent.
But, that said, investingmarkets like this are not
necessarily different, and sothe first thing that you want to
(05:45):
think about is is my strategybuilt long-term, and many
strategies are, and what thatwould communicate to you is to
not deviate from your strategy.
I cannot tell you how muchhigher the probability is when
you kind of bail on yourstrategy.
You go to cash and then you'rescarred from the losses that you
had because you locked them in.
(06:06):
How much harder that is torecover from than investment
strategy that remains fluid,remains in touch with your
original intentions, how thatmakes it so much easier to
invest through and beyond.
And that can really bedifficult in the moment, because
our natural instinct is to saywe're in trouble, hunker down.
(06:26):
And that comes from ourancestors who, frankly, were
trying to protect themselvesfrom, you know, things lurking
in the night when it comes toour very ancient ancestors, and
our brains have been wired towant to do something when it
comes to market changes.
So from here I'm going to talkabout actionable things that you
can be doing when an investorlike me says focus on what you
(06:50):
can control.
And that is our mantra in a daylike this.
One, focus on what you cancontrol, another famous, you
know kind of piece of wisdomthat I always use in moments
like this is statisticallyspeaking, the world doesn't end
that often you just youinitially have a likelihood of
(07:12):
catastrophizing, saying what isthe worst case scenario.
I think that's appropriatereaction, but do not act to
protect yourself from with thiscatastrophizing emotion kind of
hat on and instead try to bereally constructive about what
you're going to choose to dofrom here on out.
So, talking about investingfirst, there's two instincts.
One is to just hunker down, goall the cash.
(07:34):
The second might be to put asmuch money as you have into the
market.
We really are fans, in a momentlike this, of incrementalism.
Incrementalism being likepicking moments where you want
to go into markets but notputting every dollar that you
have at risk assets.
And also, if you feel like Ijust can't take the risk my
portfolio has, if you'reconsidering making a change,
(07:57):
make that change one notch lessrisky and more.
Plan to keep that change intactin your portfolio.
Don't go all to cash and waitfor the perfect moment to go
back in.
When you are an investor also,you may be reconsidering the
type of investments that you own.
So, instead of selling all ofyour stocks or all of your bonds
(08:20):
.
You may want to change the typeof bonds that you own or change
your mix of stocks.
To change the type of bondsthat you own or change your mix
of stocks, that would be moreappropriate and perhaps more
forward thinking than just goinginto cash, but again, that
would also often mean that youneed to be a little more
sophisticated as you'reconsidering your options.
If you are a recent investor intaxable accounts, you may have
(08:42):
what's called a tax loss anunrealized loss in your
portfolio that can be used, ifsold right now and becoming a
realized loss, to offset gainsthat you take in the future or
you've already had this year interms of your investments.
And if you don't use them allup in a calendar year, you can
(09:02):
often carry those gains forward,and so one thing to consider
would be tax moves that can helpyou reduce your future tax
liability or your current taxliability, and that is a very
appropriate thing to do.
There's a couple things to keepin mind if you're doing this tax
loss selling First, we don'trecommend that you sell to cash,
like we just discussed.
(09:23):
Instead, if you sell somethingthat is perhaps a US large
company stock and then you buysomething similar but not the
same.
So let's say you sold the S&P500 index or ETF and you buy the
Russell 1000, both of thosehave a weighting to the largest
US companies then those would betwo different investments.
(09:46):
You would pick up the loss inthe S&P 500.
And, notably, you can't go backinto that S&P 500 investment
for a period of 31 days in orderto get what's called the tax
loss.
Otherwise it's what's called awash sale.
So tax loss selling or taxmanagement of your strategy is
certainly appropriate andsomething you can control at
(10:07):
this time.
Another thing that I think isreally important and you can
still contribute maintain theinvestment strategy that you're
(10:29):
doing, continue to contributeand if you have room to give
more and you wouldn't be hurt bythat, then consider boosting
the amount you give.
Then you can tell yourselfyou're doing something because
you are, and it is a wonderfulstrategy, as things are
turbulent and going down to adda little bit more in Now.
(10:50):
On the flip side, if you're aretiree and you're taking money
from your portfolio, I wouldstrongly encourage you to review
what is coming, see what haschanged and evaluate your budget
, evaluate your spending, andyou may choose to delay sending
money or just augment yourbudget.
(11:10):
You don't need to completelyoverhaul it, but a year when
markets are down are not thebest year to spend the most.
So and then third, on theinvesting side, is if you've
just kind of shut your portfolioand not looked at it for a long
time, and perhaps it's aninvestment in a way where stocks
crept up and bonds were a lowerpercentage over time because of
(11:33):
their past returns which wouldstill probably be evident in
portfolios given even with themarket pullbacks because the way
that investments have behavedover the last five and 10 years
then rebalancing not going tocash, but making sure that you
adjust your portfolio to the waythat it should be today would
be appropriate.
(11:53):
Okay, so I also think thatthere are some important
considerations beyond just yourinvestments.
One of the things that'shappening right now is there's a
recalculation and areassessment of the probability
of a recession.
We had a strong US economy thathad been resilient in the face
of inflation and growth, whilethe government sector is
(12:19):
anticipated to be shrinking.
The US corporate environmentwas perceived to be strong and
able to offset intended cuts onthe government side, or at least
considered to have a fightingchance.
But when you look at the costof tariffs and the implication
in terms of uncertainty,decision making and the ability
(12:41):
to forecast for US companies,that is much more murky today.
Let me give you one example.
The intention of the tariffs isto re-home factories back to
the US and increasemanufacturing in the US.
But in order to buy, to buildand construct manufacturing
(13:02):
facilities even if you have theexisting space built out then
you would likely have toretrofit for a newer, more
modern kind of manufacturingbase, and that requires
materials and parts, and thosematerials and parts are often
being created overseas.
(13:23):
So you would need to orderthings that would need to be
imported that would have ahigher cost because of tariffs.
So you would need to orderthings that would need to be
imported that would have ahigher cost because of tariffs.
So there's kind of a catch-22.
How do you build themanufacturing base at the higher
price when you're alreadypressured in terms of margins
and components?
And so there's so many differentcomplex factors going in,
(13:43):
including your decisions on howto spend money as the US
consumer, who is the broadestkind of supporter of the US
economy, that say that we may besitting in a different economic
environment.
And so when you think aboutthat making sure that your
emergency reserves are wellintact and thinking through if
you had a change incircumstances as an entrepreneur
(14:04):
, if you're in your own businessor a change in kind of the job
situation all of these areimportant.
Cash can be so valuable.
That's what helps investors,like I described in our first
section, really invest with.
Confidence is having enoughcash for your shorter term needs
, and if you need to reassessyour emergency reserves, you can
make decisions by eitherholding on to things within your
(14:27):
portfolio as emergency reservesperhaps pulling away a little
bit of your bond portion to becash, or reserves that you would
utilize if you needed to.
But also you may want toreassess and review your
financial goals to makeadjustments on what you would
spend and your budget.
To make adjustments on what youwould spend and your budget,
(14:48):
using apps like our clients useMonarch Money or YNAB is another
great app to focus on yourbudget and cash flow can be
really critical.
But also, keep in mind theseare the decisions that millions
of Americans are making rightnow is how certain can I be that
I can spend the amount that I'mspending today, and so that
goes into the factoring of theprobability of a US recession.
Your mindset is so important indown markets and I have a whole
(15:12):
separate section right now whereI want to talk about your
psychology in terms ofapproaching markets.
It's really important toacknowledge the pain and emotion
that you feel when you see yourstatements and they're going
down.
Some people choose to not lookat those statements for a while,
and it depends on the person.
I'm pro-looking, but more oftenthan not, the preponderance of
(15:48):
news is surprised on the upside,and good things happen over
time.
Keeping in mind that this is amoment in time, not a permanent
situation, and knowing that youhave an investing mindset that
acknowledge that we have gooddays and bad days, as we always
set up our clients to know andunderstand, can be really
(16:11):
critical as you navigate throughyour other decisions, because
it's easy to feel impulsive andmake short-term decisions that
will have long-term implicationsthat are quite difficult, and
so I just want you to keep yourmindset in mind.
In order to support thatmindset, I would encourage you
to do the regular things thatcan build resilience in your
mental well-being, whether it'staking a break from focusing on
(16:31):
the markets.
If you've got CNBC turned onall day, change the channel, get
outside, take deep breaths, getexercise and also talk with
financial professionals, orlisten to pragmatic, rational
financial professionals and notjust alarmists.
It's easy to get the headlineswhen you are chicken little and
say that the sky is falling, butit's much more practical to
(16:59):
assess things with a mindsetthat realizes that you're making
decisions that can be importantnot just for today but well
over time.
A few areas that I think it'simportant to think about as
you're trying to say, hey, wherecan I go and what can I do.
I already mentioned inretirement savings.
If you're able to boost whatyou put in, that can be super
valuable.
When it comes to collegesavings, if you've got a kid
that's approaching college andyou had chosen an age-based plan
(17:22):
, you're likely mostly in bonds,which has protected you from a
lot of the impact on markets sofar.
But you can assess and look andif you just know you're going
to have to write the tuitioncheck in the fall, you may get
even more conservative to aprincipal-protected portfolio.
If you are saving for youngerkids, then the same thing that I
(17:45):
mentioned before of boostingyour savings and not reducing it
can be really valuable.
When it comes to insuranceplanning.
I would encourage you toremember you're assessing risk
today.
That's why you're thinkingshould I do something different?
And if you haven't addressedthe risks that you have with
underexposure or underprotectionfor disability insurance or you
(18:08):
don't have you don't have lifeinsurance and you should why not
use this time to reduce therisk there?
And you may also choose to doless elective procedures when it
comes to health insurance.
And if you're one of thosepeople who has invested your
health savings account andchosen not to use it, but money
(18:29):
feels tighter right now and youdon't have access in other
places or you want to continueto boost your emergency reserve,
then I would say that a healthusing your HSA in a time like
this might be valuable For thoseof you.
When we think about taxes forthose we've already mentioned
tax loss selling I would alsomention that if you are someone
(18:49):
who does Roth conversions, thiscan be a terrific time to
convert because the accounts aresmaller, so you could move
money into Roth with a biggerkind of percent of your overall
assets if you were to move thatmoney right now.
And if you're doing charitablegiving, giving out of a
qualified charitable deductionor gifting appreciated stock
(19:10):
could go a long way, especiallyif you're looking to make a
difference in a time that hasbeen difficult for many
nonprofits and social servicesorganizations.
That can help you to feel good,feel like you're making a
difference and also be tax wisewhen it comes to your portfolios
.
Same goes in terms of riskmanagement.
If you have delayed and put offyour own estate planning, there
(19:33):
is no time like the present tosay, hey, I had a to-do list,
I'm worried about the markets,but I also have some other
things I can get done that won'timpact my long-term investment
results.
Why don't I go ahead and get mywill estate plan in order to
manage things?
A little piece.
A sliver, perhaps, of good newsis potentially, we have the
(19:53):
opportunity to have lowerinterest rates right now.
Markets are predicting thatrates will be lower over time,
and that's why bonds have goneup and their yields have gone
down, while stocks have beengoing down, and this may impact
the ability to borrow.
When it comes to car loans, youmay be able to refinance debt
(20:16):
at a lower rate, especially yourmortgage debt, if you purchased
a house in the last coupleyears, and so when you're
thinking about different options, know that you need to keep
kind of apprised of what's goingon with interest rates and this
may be a time to move moneyaround so that you're paying
less and you have more of thatmoney going to principal.
(20:36):
Now don't do this blindly.
You need to talk to a trainedprofessional and or really
assess the overall pictureBecause if you, for example, had
only 10 years left in amortgage and you refi to a
30-year mortgage, you'rechanging the whole trajectory of
what you're paying, of whatyou're paying, and that may be,
(21:00):
you know, kind of overall moreprinciple over time.
So be eyes wide open and assess.
It's not just a no-brainer andyou do want the interest rates
if you're refinancing to belower.
If you're thinking about, youknow, supply chain disruption
and you have a big ticket itemthat you want to purchase.
I've been talking to clientsabout purchasing vehicles, for
example, in advance of tariffskicking in, but I have to
mention that that vehicledecision should be.
(21:22):
It's a really big ticket item.
As we all know, it's a biggerpercent of our overall income
nowadays and you need to makesure that it's the right time to
do something.
If you are doing something.
The payments when it comes toauto loans, for example, are
really high nowadays, so youreally want to integrate that
into your financial plan and notjust consider it to be an
(21:45):
incidental cost.
I also encourage people ifyou're somebody that kind of
hoards frequent flyer miles,someone that puts aside all the
points when it comes to, perhaps, a hotel credit card, this
might be a great time where,instead of you paying for things
with cash, you use some of thebuilt-up funds that you have in
(22:07):
points to reduce your overallspend, while you're able to do
some of the things that you love.
When it comes right down to it,there are so many different
ways that you can adjust andmodify your financial plan to
fit today's environment and yourneeds without going to cash,
and so I hope that you rememberto be constructive, to see that
(22:28):
what I see, which is I've livedthrough multiple bear markets,
now with more than 25 years ofinvesting experience, and when I
look back on the past, thedecisions that are made in
moments like this can really setthe table.
They increase and boost yourconfidence.
When you make the rightdecisions, when you don't
capitulate and you don't forlack of a better word just freak
(22:50):
out.
It's very natural to be upset,angry, alarmed, nervous.
It's very natural to be upset,angry, alarmed, nervous and
(23:17):
uncertain.
In a moment like this can lookat your overall big picture,
assess where you're doing agreat job and also tell you
where you have the opportunityto improve can be so critical
and important.
My team at Pearl Planning isalways available and you can
feel free to go to our websiteat pearlplancom to learn more.
I also just recently wrote athink piece last week, two days
(23:38):
after the tariffs were announcedthat gave an overall assessment
of what's going on and what'snext.
You can find that underpearlplancom blogs and you'll be
able to see.
We'll have a link in the shownotes but you'll be able to see
more of a market commentary ofwhat's happening today.
We'll be talking to you moreabout what's going on in markets
(23:58):
, but also what you can do tohave more money wisdom
throughout your life in comingweeks, so stay tuned.
Thank you for listening to theWomen's Money Wisdom Podcast.
(24:19):
If you found value in thisepisode, the best way you can
support the podcast is toforward an episode to a friend
or leave a review.
Go to pearlplancom and thepodcast link to get all the
resources and links mentioned.
Welcome to the Women's Money Wisdom Podcast.
I'm Melissa Joy, a certifiedfinancial planner and the
founder of Pearl Planning.
My goal is to help youstreamline and organize your
finances, navigate big moneydecisions with confidence and be
strategic in order to grow yourwealth.
As a woman, you work hard foryour money and I'm here to help
(00:21):
you make the most of it.
Now let's get into the show.
Just a quick note before wedive in.
The information that we shareis meant to educate and inspire,
not serve as personalizedfinancial advice.
Everyone's situation is unique,so be sure to consult with your
(00:41):
own financial professional forguidance that fits your life.
So be sure to consult with yourown financial professional for
guidance that fits your life.
And just so you know, theopinions shared in this podcast
are my own and those of myguests, and they don't
necessarily represent those ofany organizations that I'm
affiliated with.
For more important disclosures,please go to our webpage at
(01:02):
pearlplancom.
Now let's get started.
Welcome back to the Women'sMoney Wisdom Podcast.
Today's episode islate-breaking.
We usually don't try to tellyou exactly what's going on in
the news.
Right now we're more of anovertime kind of podcast, but we
(01:23):
are entering bear marketterritory in terms of stock
markets.
I'm recording this episode onMonday April 7th to be released
on Tuesday April 8th, and wejust got a lot going on and I
thought it would be great totalk to you in real time about
how a financial planner looks atchanging and difficult stock
markets and investing markets.
So to give you a lay of theland, on Wednesday previously
(01:47):
expected tariffs were announcedby President Trump and those
tariffs had been kind of toutedas coming with what's called
reciprocity, that you would lookat what tariffs were happening
from foreign governments andmake similar tariffs.
And yet when the tariffs wereactually announced, for much of
(02:08):
the market and that's not reallythe point of this podcast is to
get into exactly what'shappened but the taxes for
imports from foreign governmentwere much more broad and
amplified just big multipliers,three to four times higher than
anticipated, and amplified justbig multipliers three to four
times higher than anticipated.
And as a result of that, thatis, markets don't like change,
(02:29):
they don't like uncertainty andthere have been big moves in the
stock market.
I'm recording this before themarket opens.
On Monday morning and onThursday and Friday markets were
down big, entering correctionterritory and people.
It's difficult to define amarket crash, but for certain
(02:50):
segments of investing, includingthe NASDAQ, including small
company stocks in the US, thenwe have been entering, or have
entered, bear market territory,as measured by a 20% pullback
territory.
As measured by a 20% pullback,and other investments, including
international investments, aswell as the S&P 500, large
(03:16):
companies here in the US arealso experiencing nearly bear
market territory, with futurestoday opening lower.
Now, who knows, by the time youlisten to this episode, where
markets will be, and we're nottalking about the exact moment
or what to do on any given houror in any given day, but what I
wanted to do today was talk toyou about how you need to set
your mindset and frame yourfinancial decisions during times
(03:39):
of volatility, uncertainty anddownward returns, and I wanted
to give you some actionableitems to take with you and also
some don'ts.
So this is a do's and don'tsfor bear market investing, and
so, just to get started, I wantto talk about investments
themselves and one of the thingsthat you should know for people
(04:00):
who are invested with risk inmind, and asset allocation and
long-term investing plans, likethe way that Pearl Planning does
investments.
You should know and it'sdifficult to remember this as
you see negative returns on yourstatements or when you log into
your accounts, that manyinvestment strategies were built
to include very difficultmarkets.
(04:20):
So you can ask your financialadvisor or ask yourself if
you're self-managing.
Did you choose theseinvestments to own for a long
period of time through a varietyof circumstances, keeping in
mind that bear markets aren't,you know, kind of unicorn events
they happen frequently.
This event is a little differentbecause it seemed its source,
(04:41):
for many of us believe, iscoming directly from US
government policy and typicallywe are listening for the US
government officials, whetherit's the Federal Reserve or the
executive branch or members ofCongress.
We're looking for them toalleviate stress in the markets.
But communication and languagefrom Washington DC, from
(05:03):
President Trump, has said youknow, you just need to get used
to this.
This is the new normal, and sowe haven't seen that kind of
alleviating risk kind ofmessaging coming from the
Capitol.
Events like you can use thehousing market crisis of the
(05:23):
great financial crisis and sayyou know that came from lending
policy, not directly necessarilyfrom the US government.
It could have been deregulationyears prior, but not actions
that week.
That this time is a little bitdifferent.
But, that said, investingmarkets like this are not
necessarily different, and sothe first thing that you want to
(05:45):
think about is is my strategybuilt long-term, and many
strategies are, and what thatwould communicate to you is to
not deviate from your strategy.
I cannot tell you how muchhigher the probability is when
you kind of bail on yourstrategy.
You go to cash and then you'rescarred from the losses that you
had because you locked them in.
(06:06):
How much harder that is torecover from than investment
strategy that remains fluid,remains in touch with your
original intentions, how thatmakes it so much easier to
invest through and beyond.
And that can really bedifficult in the moment, because
our natural instinct is to saywe're in trouble, hunker down.
(06:26):
And that comes from ourancestors who, frankly, were
trying to protect themselvesfrom, you know, things lurking
in the night when it comes toour very ancient ancestors, and
our brains have been wired towant to do something when it
comes to market changes.
So from here I'm going to talkabout actionable things that you
can be doing when an investorlike me says focus on what you
(06:50):
can control.
And that is our mantra in a daylike this.
One, focus on what you cancontrol, another famous, you
know kind of piece of wisdomthat I always use in moments
like this is statisticallyspeaking, the world doesn't end
that often you just youinitially have a likelihood of
(07:12):
catastrophizing, saying what isthe worst case scenario.
I think that's appropriatereaction, but do not act to
protect yourself from with thiscatastrophizing emotion kind of
hat on and instead try to bereally constructive about what
you're going to choose to dofrom here on out.
So, talking about investingfirst, there's two instincts.
One is to just hunker down, goall the cash.
(07:34):
The second might be to put asmuch money as you have into the
market.
We really are fans, in a momentlike this, of incrementalism.
Incrementalism being likepicking moments where you want
to go into markets but notputting every dollar that you
have at risk assets.
And also, if you feel like Ijust can't take the risk my
portfolio has, if you'reconsidering making a change,
(07:57):
make that change one notch lessrisky and more.
Plan to keep that change intactin your portfolio.
Don't go all to cash and waitfor the perfect moment to go
back in.
When you are an investor also,you may be reconsidering the
type of investments that you own.
So, instead of selling all ofyour stocks or all of your bonds
(08:20):
.
You may want to change the typeof bonds that you own or change
your mix of stocks.
To change the type of bondsthat you own or change your mix
of stocks, that would be moreappropriate and perhaps more
forward thinking than just goinginto cash, but again, that
would also often mean that youneed to be a little more
sophisticated as you'reconsidering your options.
If you are a recent investor intaxable accounts, you may have
(08:42):
what's called a tax loss anunrealized loss in your
portfolio that can be used, ifsold right now and becoming a
realized loss, to offset gainsthat you take in the future or
you've already had this year interms of your investments.
And if you don't use them allup in a calendar year, you can
(09:02):
often carry those gains forward,and so one thing to consider
would be tax moves that can helpyou reduce your future tax
liability or your current taxliability, and that is a very
appropriate thing to do.
There's a couple things to keepin mind if you're doing this tax
loss selling First, we don'trecommend that you sell to cash,
like we just discussed.
(09:23):
Instead, if you sell somethingthat is perhaps a US large
company stock and then you buysomething similar but not the
same.
So let's say you sold the S&P500 index or ETF and you buy the
Russell 1000, both of thosehave a weighting to the largest
US companies then those would betwo different investments.
(09:46):
You would pick up the loss inthe S&P 500.
And, notably, you can't go backinto that S&P 500 investment
for a period of 31 days in orderto get what's called the tax
loss.
Otherwise it's what's called awash sale.
So tax loss selling or taxmanagement of your strategy is
certainly appropriate andsomething you can control at
(10:07):
this time.
Another thing that I think isreally important and you can
still contribute maintain theinvestment strategy that you're
(10:29):
doing, continue to contributeand if you have room to give
more and you wouldn't be hurt bythat, then consider boosting
the amount you give.
Then you can tell yourselfyou're doing something because
you are, and it is a wonderfulstrategy, as things are
turbulent and going down to adda little bit more in Now.
(10:50):
On the flip side, if you're aretiree and you're taking money
from your portfolio, I wouldstrongly encourage you to review
what is coming, see what haschanged and evaluate your budget
, evaluate your spending, andyou may choose to delay sending
money or just augment yourbudget.
(11:10):
You don't need to completelyoverhaul it, but a year when
markets are down are not thebest year to spend the most.
So and then third, on theinvesting side, is if you've
just kind of shut your portfolioand not looked at it for a long
time, and perhaps it's aninvestment in a way where stocks
crept up and bonds were a lowerpercentage over time because of
(11:33):
their past returns which wouldstill probably be evident in
portfolios given even with themarket pullbacks because the way
that investments have behavedover the last five and 10 years
then rebalancing not going tocash, but making sure that you
adjust your portfolio to the waythat it should be today would
be appropriate.
(11:53):
Okay, so I also think thatthere are some important
considerations beyond just yourinvestments.
One of the things that'shappening right now is there's a
recalculation and areassessment of the probability
of a recession.
We had a strong US economy thathad been resilient in the face
of inflation and growth, whilethe government sector is
(12:19):
anticipated to be shrinking.
The US corporate environmentwas perceived to be strong and
able to offset intended cuts onthe government side, or at least
considered to have a fightingchance.
But when you look at the costof tariffs and the implication
in terms of uncertainty,decision making and the ability
(12:41):
to forecast for US companies,that is much more murky today.
Let me give you one example.
The intention of the tariffs isto re-home factories back to
the US and increasemanufacturing in the US.
But in order to buy, to buildand construct manufacturing
(13:02):
facilities even if you have theexisting space built out then
you would likely have toretrofit for a newer, more
modern kind of manufacturingbase, and that requires
materials and parts, and thosematerials and parts are often
being created overseas.
(13:23):
So you would need to orderthings that would need to be
imported that would have ahigher cost because of tariffs.
So you would need to orderthings that would need to be
imported that would have ahigher cost because of tariffs.
So there's kind of a catch-22.
How do you build themanufacturing base at the higher
price when you're alreadypressured in terms of margins
and components?
And so there's so many differentcomplex factors going in,
(13:43):
including your decisions on howto spend money as the US
consumer, who is the broadestkind of supporter of the US
economy, that say that we may besitting in a different economic
environment.
And so when you think aboutthat making sure that your
emergency reserves are wellintact and thinking through if
you had a change incircumstances as an entrepreneur
(14:04):
, if you're in your own businessor a change in kind of the job
situation all of these areimportant.
Cash can be so valuable.
That's what helps investors,like I described in our first
section, really invest with.
Confidence is having enoughcash for your shorter term needs
, and if you need to reassessyour emergency reserves, you can
make decisions by eitherholding on to things within your
(14:27):
portfolio as emergency reservesperhaps pulling away a little
bit of your bond portion to becash, or reserves that you would
utilize if you needed to.
But also you may want toreassess and review your
financial goals to makeadjustments on what you would
spend and your budget.
To make adjustments on what youwould spend and your budget,
(14:48):
using apps like our clients useMonarch Money or YNAB is another
great app to focus on yourbudget and cash flow can be
really critical.
But also, keep in mind theseare the decisions that millions
of Americans are making rightnow is how certain can I be that
I can spend the amount that I'mspending today, and so that
goes into the factoring of theprobability of a US recession.
Your mindset is so important indown markets and I have a whole
(15:12):
separate section right now whereI want to talk about your
psychology in terms ofapproaching markets.
It's really important toacknowledge the pain and emotion
that you feel when you see yourstatements and they're going
down.
Some people choose to not lookat those statements for a while,
and it depends on the person.
I'm pro-looking, but more oftenthan not, the preponderance of
(15:48):
news is surprised on the upside,and good things happen over
time.
Keeping in mind that this is amoment in time, not a permanent
situation, and knowing that youhave an investing mindset that
acknowledge that we have gooddays and bad days, as we always
set up our clients to know andunderstand, can be really
(16:11):
critical as you navigate throughyour other decisions, because
it's easy to feel impulsive andmake short-term decisions that
will have long-term implicationsthat are quite difficult, and
so I just want you to keep yourmindset in mind.
In order to support thatmindset, I would encourage you
to do the regular things thatcan build resilience in your
mental well-being, whether it'staking a break from focusing on
(16:31):
the markets.
If you've got CNBC turned onall day, change the channel, get
outside, take deep breaths, getexercise and also talk with
financial professionals, orlisten to pragmatic, rational
financial professionals and notjust alarmists.
It's easy to get the headlineswhen you are chicken little and
say that the sky is falling, butit's much more practical to
(16:59):
assess things with a mindsetthat realizes that you're making
decisions that can be importantnot just for today but well
over time.
A few areas that I think it'simportant to think about as
you're trying to say, hey, wherecan I go and what can I do.
I already mentioned inretirement savings.
If you're able to boost whatyou put in, that can be super
valuable.
When it comes to collegesavings, if you've got a kid
that's approaching college andyou had chosen an age-based plan
(17:22):
, you're likely mostly in bonds,which has protected you from a
lot of the impact on markets sofar.
But you can assess and look andif you just know you're going
to have to write the tuitioncheck in the fall, you may get
even more conservative to aprincipal-protected portfolio.
If you are saving for youngerkids, then the same thing that I
(17:45):
mentioned before of boostingyour savings and not reducing it
can be really valuable.
When it comes to insuranceplanning.
I would encourage you toremember you're assessing risk
today.
That's why you're thinkingshould I do something different?
And if you haven't addressedthe risks that you have with
underexposure or underprotectionfor disability insurance or you
(18:08):
don't have you don't have lifeinsurance and you should why not
use this time to reduce therisk there?
And you may also choose to doless elective procedures when it
comes to health insurance.
And if you're one of thosepeople who has invested your
health savings account andchosen not to use it, but money
(18:29):
feels tighter right now and youdon't have access in other
places or you want to continueto boost your emergency reserve,
then I would say that a healthusing your HSA in a time like
this might be valuable For thoseof you.
When we think about taxes forthose we've already mentioned
tax loss selling I would alsomention that if you are someone
(18:49):
who does Roth conversions, thiscan be a terrific time to
convert because the accounts aresmaller, so you could move
money into Roth with a biggerkind of percent of your overall
assets if you were to move thatmoney right now.
And if you're doing charitablegiving, giving out of a
qualified charitable deductionor gifting appreciated stock
(19:10):
could go a long way, especiallyif you're looking to make a
difference in a time that hasbeen difficult for many
nonprofits and social servicesorganizations.
That can help you to feel good,feel like you're making a
difference and also be tax wisewhen it comes to your portfolios
.
Same goes in terms of riskmanagement.
If you have delayed and put offyour own estate planning, there
(19:33):
is no time like the present tosay, hey, I had a to-do list,
I'm worried about the markets,but I also have some other
things I can get done that won'timpact my long-term investment
results.
Why don't I go ahead and get mywill estate plan in order to
manage things?
A little piece.
A sliver, perhaps, of good newsis potentially, we have the
(19:53):
opportunity to have lowerinterest rates right now.
Markets are predicting thatrates will be lower over time,
and that's why bonds have goneup and their yields have gone
down, while stocks have beengoing down, and this may impact
the ability to borrow.
When it comes to car loans, youmay be able to refinance debt
(20:16):
at a lower rate, especially yourmortgage debt, if you purchased
a house in the last coupleyears, and so when you're
thinking about different options, know that you need to keep
kind of apprised of what's goingon with interest rates and this
may be a time to move moneyaround so that you're paying
less and you have more of thatmoney going to principal.
(20:36):
Now don't do this blindly.
You need to talk to a trainedprofessional and or really
assess the overall pictureBecause if you, for example, had
only 10 years left in amortgage and you refi to a
30-year mortgage, you'rechanging the whole trajectory of
what you're paying, of whatyou're paying, and that may be,
(21:00):
you know, kind of overall moreprinciple over time.
So be eyes wide open and assess.
It's not just a no-brainer andyou do want the interest rates
if you're refinancing to belower.
If you're thinking about, youknow, supply chain disruption
and you have a big ticket itemthat you want to purchase.
I've been talking to clientsabout purchasing vehicles, for
example, in advance of tariffskicking in, but I have to
mention that that vehicledecision should be.
(21:22):
It's a really big ticket item.
As we all know, it's a biggerpercent of our overall income
nowadays and you need to makesure that it's the right time to
do something.
If you are doing something.
The payments when it comes toauto loans, for example, are
really high nowadays, so youreally want to integrate that
into your financial plan and notjust consider it to be an
(21:45):
incidental cost.
I also encourage people ifyou're somebody that kind of
hoards frequent flyer miles,someone that puts aside all the
points when it comes to, perhaps, a hotel credit card, this
might be a great time where,instead of you paying for things
with cash, you use some of thebuilt-up funds that you have in
(22:07):
points to reduce your overallspend, while you're able to do
some of the things that you love.
When it comes right down to it,there are so many different
ways that you can adjust andmodify your financial plan to
fit today's environment and yourneeds without going to cash,
and so I hope that you rememberto be constructive, to see that
(22:28):
what I see, which is I've livedthrough multiple bear markets,
now with more than 25 years ofinvesting experience, and when I
look back on the past, thedecisions that are made in
moments like this can really setthe table.
They increase and boost yourconfidence.
When you make the rightdecisions, when you don't
capitulate and you don't forlack of a better word just freak
(22:50):
out.
It's very natural to be upset,angry, alarmed, nervous.
It's very natural to be upset,angry, alarmed, nervous and
(23:17):
uncertain.
In a moment like this can lookat your overall big picture,
assess where you're doing agreat job and also tell you
where you have the opportunityto improve can be so critical
and important.
My team at Pearl Planning isalways available and you can
feel free to go to our websiteat pearlplancom to learn more.
I also just recently wrote athink piece last week, two days
(23:38):
after the tariffs were announcedthat gave an overall assessment
of what's going on and what'snext.
You can find that underpearlplancom blogs and you'll be
able to see.
We'll have a link in the shownotes but you'll be able to see
more of a market commentary ofwhat's happening today.
We'll be talking to you moreabout what's going on in markets
(23:58):
, but also what you can do tohave more money wisdom
throughout your life in comingweeks, so stay tuned.
Thank you for listening to theWomen's Money Wisdom Podcast.
(24:19):
If you found value in thisepisode, the best way you can
support the podcast is toforward an episode to a friend
or leave a review.
Go to pearlplancom and thepodcast link to get all the
resources and links mentioned.
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