Simply Money

Episode Transcript

(00:05):
Tonight we're talking social media and investing. I mean, it doesn't impact you,
does it? And when emergencies don'thave to break the bank. And
one of the most popular retirement fundsthat we would say you may not want
to have. You're listening to SimplyMoney presented my all Worth Financial Imami Wagner
along with Steve Ruby. You know, I think it's so easy for many

(00:27):
of us to be on Facebook,Instagram, LinkedIn Twitter X, whatever the
heck it is, whatever you wantto call it, and say, you
know, I just scroll and itdoesn't impact my decisions. It doesn't impact
my investing, doesn't impact the waythat I spend money. But I would
say if we do an actual deeperdive, many of us would actually realize

(00:49):
that it has a far greater impacton our decisions than we'd ever like to
admit. I mean, case inpoint. There are several examples when the
market's bottomed out in twenty twenty dueto COVID, including social media having an
impact on retail investors that were youknow, on Reddit for example, message
boards propping up some of these memestocks like AMC, like game Stop,

(01:12):
there was a craze for NFT's nonfungible tokens, which it kind of blows
my mind being the person that ownsthe actual original digital file for something that
everybody else can just have a copyof. How does that garnish value other
than speculation? Cryptocurrencies being another anda lot of the stuff was propped up

(01:37):
by stories on social media platforms.You know, it was just a few
years ago, but I think wecan easily forget what it really felt like
during that time. You weren't goinganywhere. It felt almost unsafe, and
you know, in some cases togo somewhere, you were stuck at home.
By the way, you couldn't spendmoney, so you were looking at
your bank account getting bigger and bigger. People got bored, They got these

(02:00):
Reddit forums went down these rabbit holes. People were making these huge predictions about
things in the power. I thinkthat was felt of being an individual investor
and being able to sway the marketagainst some companies that, on the face
of them, should never have stockprices going up, right. I mean,

(02:22):
the original meme stock was game Stop. As the mom of a teenager,
I can tell you I have neverbeen into a game Stop store where
my son has walked through and said, oh I went this and I love
this game. No no, no, no, the games that he's playing
he downloads online. He doesn't.We don't go into these stores. So
the future, right that the businessmodel for the store, which was great

(02:46):
and viable maybe ten years ago whenyou look into the future, wasn't bright,
rosy future. And yet all ofthese people were saying, Hey,
these these Wall Street muckety MUCKs arebetting again. They're shorting this stock,
this Game Stop stock. We're goingto take it to the man. We're
going to go all in. We'vegot all these cash reserves, we're bored.

(03:08):
We're going to band together and we'regoing to drive these stock prices up,
and hence the beginning of memestock.So it worked for a handful of
people that got in at the frontend of the room full of stocks for
a short amount of time. Yeah, the ones that kind of planned this
and saw the writing on the wallthat there was going to be what was
called a short squeeze, that thesebig hedge funds were betting against Game Stop,

(03:30):
which made sense because it's a pandemic, and even when it's not a
pandemic, you're still able to downloadthese games. You don't need to walk
into a store to buy a game, So it made sense that they were
shorting this company. Yeah, andthen the people that got in on the
front lines ahead of it, theymade a lot of money. But the
problem is when you're not one ofthose first people to get in, and

(03:51):
you're watching social media and you're lookingat all these stories of people turning ten
thousand dollars into five million, youthink that can be you now, even
though the price is already at thetop, and we don't want to buy
high, sell low. We wantto buy low, sell high. And
that was the opposite of what happenedto many people that took their advice in
quotations from social media. Another oneof the meme stocks that became incredibly popular

(04:17):
during this time amc okay movie theaters. How many people were signing up or
paying any money to go sit nextto a bunch of people in a small
movie theater and watch a movie.I mean, if they were even allowed,
exactly, it was the exact oppositeof what you would think. And
so I think it's like sometimes socialmedia, when you just see and read

(04:40):
about other people making decisions, cancan kind of push you in a direction
of making a decision that goes againsteverything that you know. Obviously, at
that time, buying stock in amovie theater didn't make a lot of sense,
and more and more people got ongot subscriptions for streaming services, so
the long term viability of movie theaterswould be you know, called into question

(05:03):
even after post pandemic. You know. So it's like you look at the
business model of these and you think, okay, this is probably not a
great long term company. Yet whatI'm going to go all in? You
know? And really there were peoplecalled making yolo bets. You only live
once, let me take all themoney out of my four ohe k and
go all in on AMC. Itworked for a small handful of people.

(05:26):
My concern though, is that thegreater masses that were just exposed to this
made it seem like day trading,getting in, getting out, getting in
and getting out, trying to figureout what the next big thing is the
best way to invest. And wehave histories on our history on our side
here to say, nah, thatis not the way to go. If
you're going to be a smart longterm investor. It's not the way to

(05:46):
go at all. And I hada lot of folks asking me during that
period of time, Hey, shouldI get into this now that it's at
the top. That wasn't the exactquestion, but it was should I get
into this? And the answer wasa resounding no. You're making decisions based
on greed and nothing else. Yes, you're listening to simply money presented by
all Worth Financial. I mean meWagner, along with Steve Ruby. If
you think this will never happen toyou, right, You'll never make a

(06:08):
bad decision when it comes to yourmoney and your investments based on social media.
But we would say not so fast. We've seen it happen far too
many times. You're making an excellentpoint. You're supposed to buy when something
is low, and you're supposed tosell it when it's high. There's nothing
that I buy that's a major collectible. But I think about my son,

(06:28):
who's a sneaker head. You don'thave any NFTs. I have no NFTs,
I have no fancy collectible anythings.But my son loves sneakers, you
know, he likes Jordan's. Andyou know when there's when something becomes really
popular with those shoes and suddenly everyone'stalking about it. That drives up the
price. That's when my son isalways like, I need these I need

(06:50):
these shoes, and I explain tothem, actually, you want to be
the person who decides these are theshoes to get. That starts the trend
because then they're not exp then youhelp drive up the price, and then
you sell it when it's high.And for so many people, it's just
because our biases make us say,oh no, no, no, everyone
else is getting into this, Iwant to get into this. I can't

(07:12):
tell you how many people I've comeacross in the past few years who bought
into crypto not because they understood it, but because other people were talking about
it, other people were talking aboutmaking money on not that they thought it
was a viable business, they justdidn't want to miss out. And there's
so much behavioral finance rolled up inthese decisions that we see people making.
And this is a herd bias,right, And when everyone else is going

(07:33):
in this direction, you may noteven know where you're heading, but you're
just going to jump in and gotoo. And you can see that in
the other direction too, in themarket so on a whole are going down.
Everything that you see those around youdoing is going to make more sense
to you. Oh my god,everybody's scared. It's time for me to
get out of the markets too.I'm sure you've heard the expression before.

(07:55):
Be greedy when others are fearful,and fearful when others are greedy. Or
in Buffett, I thought that wasSteve Sprovac. He is as smart as
Warren Buffett, as smart as Buffetthimself. Yeah he did retire well,
so I'll give him all the creditin the world for that. Yeah,
yeah, he sure did. Butyou know this is we need to be
cognizant and aware of some of thesebehavioral finance terminologies because what happens is is

(08:20):
you can make bad decisions based onthose around you behaving a certain way,
or those that we see on socialmedia, or for from the new sources
that we look at. I'll neverforget this show that I saw several years
ago, and it was kind ofthis just like giant human experience. And
what they did was they set upin the lobby of a big casino in

(08:41):
Las Vegas and they just made abig line all of these people. So
as new people are coming into thelobby, they have no idea what all
These people are waiting a line forbut they feel like they must be missing
out on something, so they startasking questions. And the people in the
line don't really know what they're standingbut they're like, we heard it something
big, don't know exactly what is. And the line keeps getting longer and

(09:03):
longer and longer. People are standingthere for hours. They're actually waiting for
nothing, but they're doing it becauseother people are doing it. I love
that. I'd love that experience.I think you wouldn't do it. You
walk into that lobby and you seeall those people, and you wonder,
would I fall into this or wouldI not. I think there's many out
here listening who who might stand inthat line not knowing what a great experiment

(09:28):
I know perfectly of herd mentality.Another one is availability bias. This is
the tendency among investors to judge thefrequency of events by the most available data.
In other words, market downturns.They're a normal part of investing,
but when the markets start to godown, everything you see around you is
going to be data about why thisis so bad, and that's going to

(09:50):
be what you're focused on, ratherthan the long term, which is the
markets go up and down. It'slike walking up the stairs while playing with
the Yo yo, and you justhappen to be on one of those downswings.
But if all the information around youis highlighting the fact that it's down
right now, that can make youmaybe make a fearful decision. There's also
recency bias, right like I rememberyou know the major downturn of seven oh

(10:13):
eight, and how you know howbadly that hurt? And loss of version
right that losses? Actually you rememberfar more, far greater than you do
any kinds of gain. So there'sall these things that play into our decision
making. Do you throw social mediaand on top of this, and you
can see how it's quite easy togo down a path where you're not making

(10:35):
the best decision. So the wayto avoid it, my opinion, then,
would be to build a financial planthat maps out your financial future.
What are your financial needs, whatare your goals, how you're going to
pay for things, how are youinvesting to achieve those goals? And if
we have a plan that understands andbakes in volatility, then you can focus
on the financial plan rather than anyof these biases that are around you that
might lead you to make some kindof an emotional knee jerk reaction that goes

(10:58):
against your own best interests. Well, and as we talk about the fact
that so much of this is behavioralfinance, right, that we're wired to
make these emotional decisions, I thinkone of the best ways that you can
also build a plan is to lookat what do you value you know,
as a couple, what is themost important thing. Is it to retire
well, is it to have thatstability, is it to help support your
family? And then you make goalsin that financial plan based on those values.

(11:22):
If your plan is built on yourvalues, nothing in social media,
nothing that you see when you holdit up against those values, is going
to hold any water. And soI think there's some smart ways to use
this behavioral finance to your advantage ratherthan going down these what we have seen
as incredibly destructive past. Here's theall Worth advice. You have a financial

(11:43):
plan for a reason. Please pleaseremember that the next time you're on social
media or you hear someone talking aboutsome kind of investment and you think,
oh, I don't want to missout, I have to jump in,
don't do it. Coming up next, we're going to take a look at
the latest retirement trend that may behere to stay. Doesn't make sense to
you. You're listening to Simply Money, presented by all Worth Financial. Here
in fifty five KRC the talk station. You're listening to Simply Money and presented

(12:11):
by all Worth Financial. I meanMe Wagner along with Steve Ruby. If
you miss our show one night,you don't have to miss a thing that
we talk about. We've got adaily podcast for you. Just search Simply
Money. It's right there on theiHeart app or wherever you get your podcasts.
And coming up at six forty three, we're we're looking at one of
the tools people use for retirement thatyou might actually want to avoid. We'll

(12:33):
take a deep dive on that one. You know, when you think about
retirements, times have changed, youknow. I think about my grandpa Hubert
Wagner, who retired from Cincinnati Milicronafter working there for decades and decades and
decades. He had a pension,his company was taking care of him,
and retirement today looks a lot differentthan that. Yeah, those of us

(12:56):
that get a pension are very fortunate. It's few between and this day and
age, you know, FIDELTI recentlydid a survey where two thirds of the
respondents actually said that they are planningsome kind of a gradual or phased in
retirement. A large portion of theserespondents for gen z ers and millennials that
actually say a traditional retirement doesn't reallyappeal to them. The idea here is

(13:20):
that maybe they work later, butin a less demanding, more enjoyable setting.
I think this sounds great. Ialso think that you've got people who
are far away from retirement making predictionsabout what they'll want decades down the road,
right. But I would also cautionthose of you who this is your

(13:41):
plan to say it may not bean option. We've done research on this
and we've been talking about it.It's less than ten percent of employers are
offering this as an option. Soif you are close to retirements and this
is your plan, please please pleasego to HR. Go to your boss,
make the case for why you thinkthis makes sense. But don't build

(14:05):
a financial plan around this before youknow whether your company is actually on the
same page as you are, becausetheir plan might be that when it's time
for you to retire, you gofrom working five days a week forty hours
to suddenly you've now trained your replacementand you're out the door. So that
gradual sort of phased in retirement maynot be an option. If it is,

(14:26):
great, but make sure everyone's onthe same page first. The thing
that worries me about this trend isthe fact that some may think that they
don't need to plan accordingly when itcomes to saving for retirement. If you
think that you are going to beable to work and continue to earn income,
and then your ability to work goesaway, maybe some kind of injury,

(14:50):
health situation, whatever work you dobecomes obsolete, there are issues that
could obviously arise without proper planning.But on the flip side of what you
said, I do see this inpractice from time to time, but we've
built it into financial plans in away that make sure that you have the

(15:11):
savings to support yourself in the eventthat you can't work. Yes, and
then the transition to part time workis more or less a quality of life
adjustment, and it doesn't necessarily haveto be with your same employer that you've
spent all these years with. Alot of the time people changed to I
don't know, working at a golfcourse, doing some kind of consulting work

(15:33):
ten nine y to nine income goingout on their own. I think the
key here, and this is whatreally really worries me, is whether you're
planning on a phased in retirement.I've talked to many people who say,
I'm just not ever going to retire. I'm going to retire when I'm seventy
five or eighty, and that becomesa crutch for not saving. And we
just know time after time, mostpeople on average retire at the age of

(15:54):
sixty two. Many of them notbecause they chose sixty two, because it
was chosen for them. So,you know, I think this is an
actual excellent option. But it's almostlike the gravy on top, like you've
planned to just go ahead and retire, and you've got the money to do
that, and if all of asudden it becomes an option for you to
do this phased and retirement, thengreat money isn't an issue. It just

(16:15):
maybe helps you kind of mentally getin that place of retiring. At the
same time, it helps your boss. My dad did this. My dad
did this several years ago. Bythe way, he retired from the same
company where he interned in college.So he had so much institutional knowledge built
up in his head and my dadis so amazing. But I also have

(16:37):
a feeling that just knowing him,he probably wasn't super intentional through the years
as he got closer and closer toretirement to say I'm going to share this
with you and I'm going to sharethis too. So probably got to the
point where it was like, oh, Gary's getting ready to go, and
when he walks out the door,we might be in trouble. He made
himself very valuable. We don't bevery valuable. So he Gary from five
days to four days he's a smartman, down to three days. So

(17:02):
he was able to ease into retirement. At the same time, they were
able to get more and more peoplein the room with him in order to
get that knowledge out and so thatthey could continue into the future with what
he knew. So it made alot of sense. I've seen this firsthand.
I've seen it go well, Ijust don't know if it as many
of us have that option as we'dlike to think we do. Yeah,
that's a great point. Not everybodyhas that option. And for those of

(17:23):
you that are thinking that this mightbe you, eventually one of the issues
that you might run into is ifyou retire before sixty five years old,
what are you going to do forhealthcare? Yes, that can be a
major expense. If you're able toswitch to Cobra from the position that you
do leave from, that's eighteen monthsof coverage, but that's like five times
the premium that you are used topaying for because your your employer pays a

(17:47):
significant chunk of what that healthcare costs. If you're not going to do Cobra,
then it's finding another job that offershealthcare. But then maybe you're not
even stepping down as far as responsibilitiesare concerned. And that's what the goal
here is for transitioning into retirement slowly, is to move away from something where
you have a lot of responsibilities anda large time commitment to something that's a
little bit less stressful. So oneof the issues here that I would also

(18:10):
shine light on for people that planfor this is how are you going to
pay for healthcare if indeed you pullthe trigger on transitioning into retirement before you
turn sixty five. That's a hugepart of this. And I also want
to go back to something that yousaid before, which is you don't necessarily
have to continue working for the sameplace where you were working before. If
you were in this high stress,you know, just completely burnt out on

(18:33):
a job, you have other options. And thinking of someone who I knew
who several years ago had a prettyfat paycheck coming in, made a great
salary, didn't see it coming,but they were let go and they were
a few years away from where theywould retire. Well, they ended up
going to work at Great American Ballparkas an usher. Now, was there
a huge discrepancy between what they're makingnow and what they're making before, Absolutely

(18:56):
a little bit. But the keyhere was they were not drawing on their
retirement accounts. They gave those retirementaccounts several more years to grow and compound.
They made enough to live off ofduring that time. And so the
key for them and for making theirfinancial plan work wasn't that they had to
make oodles and noodles of money.It was that they shouldn't touch that money
for a few more years and thenthey were going to be just fine.

(19:18):
So I think there's several ways tolook at this, several options to looking
at it. I think the keyis to going into this with eyes wide
open. Here's the all Worth advice. If you do want to gradually retire,
make sure you're working with a qualifiedfinancial advisor who can help build that
proper plan to help you get there. Coming up next, we've got the
emotional barriers to overcome if an emergencyhappens, and maybe you're thinking you need

(19:42):
to shell out big bunks when youdon't have to. You're listening to Simply
Money presented by all Worth Financial herein fifty five KRC the talk station.
You're listening to Simply Money presented byall Worth Financial. I mean you Wagner,
along with Steve be one of thepeople I think that there is just

(20:03):
so much to learn from and howhe can take just a regular, everyday
occurrence and turn it into something thatthis aha moment that we can all learn
from. Is our good friend Alreddickfrom Game Time Budgeting. Al I was
just saying earlier today, if Icould like embed you with my family for
like a month, I think theywould look at everything differently, they would

(20:25):
make financial decisions differently. But youhave yet again a great story for us,
something that would have been an emergencyto the rest of us that we
might have spent quite a bit ofmoney on not you though, my friend,
Yes, ma'am. So the mostrecent occurrence in my life, Amy,
I decided to surprise my dad becausehe was in Greenville, North Carolina,

(20:49):
having a medical procedure. So Ialready had my plane ticket, but
I didn't think about getting my rentalcar until the night before my flight.
So I get online and I startedsearching for rental cars and guess what,
Amy, all the rental cars hadbeen booked for just about way actually every

(21:10):
rental car agency at the Raleigh DurhamAirport. And then it hit me.
I was like, oh man,this is marsh madness, so no wonder
there aren't any cars. So obviouslyI'm like, what in the world am
I going to do? Because Ineeded to get from Raleigh, North Carolina
to Greenville, North Carolina, whichis about an hour and a half away,

(21:30):
so then it stop right there,because the average non Alriddic kind of
person would then go to, well, I'm gonna have to stuck it up
and uber or left and it's goingto be quite a bill. Or is
there some kind of limousine service orsomething like that they can get me there.
I'm already in on this plane ticket, you know, so it's probably

(21:53):
just gonna cost me even more toget there. But friends, as we
know already, we know that isnot that's not where you went. You
did not Ubert, your dad?Did you? No? I did not.
Amy. It occurred to me,now I did think about that.
I'm not gonna lie, but itoccurred to me that I had always wanted
to ride, wait for Amy,a Greyhound bus, right. So then

(22:19):
I get online and I discovered thatI could catch a Grayhound from Raleigh to
Greenville, North Carolina for thirty dollarsavy. So I felt like I had
hit the lottery and even the busride itself. When I got on the
bus, now, of course,picture this big, long bus. There
were only eight passengers for the entiretrip, so it was quiet. The

(22:44):
seats were actually very comfortable, andthen I came to discover that I enjoyed
the sound of the engine. Itwas very relaxing. So I was like,
man, this is pretty cool.But my wife she did say,
you know, riding greyhound with justeight people is a lot different than riding
it with a full bus loads,so we'll have to see about that.
It brings up a good point.I think next time around, if this

(23:04):
happens again and you have a packedbus, you might feel a little bit
different, But it sounds like it'sa good experience all things considered. You
know a lot of times people aregoing to choose that quick fix when it
comes to resolving some kind of aproblem. And you know, I love
how you turn this into a positiveexperience for yourself. Otherwise there could have
been some real downsides exactly. Sotypically when most people find themselves in an

(23:27):
uncomfortable position, obviously we want tofix it as quickly as possible. It's
almost like this. Everybody has hearda baby cry, right, and sometimes
they cry because they're wet, Sowhen you change the diaper, then everything
is good again. So as adults, we rarely cry out loud. We

(23:48):
cry with our emotions though, andthat could kind of create an emotional volcano
where we just want to do thefirst thing we think about, no matter
what it costs, because we wantto go from being uncomfortable to comfortable as
quickly as possible. So that wasbasically the reason that I decided to take

(24:08):
the bus because for me, obviouslyfinances always plays a part in the decisions
that I make. But when youmake decisions typically based on your gut instinct
or your quick response or first thought, typically you're going to spend a lot
more money than you could have ifyou just sit back and say, you
know what needs to happen for meto make this possible. Does that make

(24:32):
sense? Makes perfect sense? You'relistening to Simply Money, presented by all
Worth Financial Imami Wagner along with SteveRubiez. We're talking to our good friend
Alverredek tonight. He's getting ready tofly to meet his dad, has a
flight booked night before, realizes there'sno rental cars. Rather than spending hundreds
of dollars on an uber or someother solution, he takes a minute,

(24:53):
takes a deep breath, and looksat all of the options and comes up
with a Greyhound bus, which endsup being thirty dollars. Now what this
reminds me of? And I haveseen this so many times through the year.
Even people that we work with whoare smart long term investors, something
will come up. They look attheir four oh one K statement and say,

(25:14):
I don't have the money to payfor this medical bill or this unexpected
expense. I'm just gonna pull itout of my four one k. Right,
it is the quickest fix. Iknow the money is there, and
I'm done. And once we talkthrough it with them, there's actually many
times other options that they have thatthey haven't considered. They just didn't take
the time to think through it,exactly, Amy, and I almost created

(25:38):
when you gave that example, becausemost people, well not most, a
lot of people do look at theirfour one K retirement savings as their emergency
fund. And I'm like, waita minute. When you put that money
away, it is for a particularpurpose, and that is for your golden
ages or your golden years, andwhen you tap into it, obviously you're

(26:02):
taken away from the principle and youare also foregoing any capital gains or dividy
is or whatever you want to callit. Right, So I'm like,
why don't we just sit down inpause, take a deep breath. What
other options would you consider if tapit into that four oh one k?
We're not an option. So whenyou take that off the table, it

(26:22):
forces people to be what I callfinancially creative to come up with other ideas,
because let's be real about it,if people really looked at how they
use money, on a day inand day out basis. Most emergencies can
be paid for with regular cash flow, but you just have to plan so
that you can put money away forthat unexpected event that you know will happen

(26:47):
sooner or later, so you knowquickly. This is a great story about
how you turned not having rental vehicleinto an experience. But after your return
flight to Cincinnati, understand that youalso had another transportation challenge was that what
was the financial impact? So Ihad made arrangements. I thought with my
wife that she was just gonna pickme up from the Cincinnati airport, right,

(27:08):
but she got called. She gotcalled into a meeting at eight o'clock
and my flight landed at like eighttwenty and her meetings they always last at
least like an hour. So Iwas like, you know, what what
can I do to get my bodyfrom the Cincinnati airport back home? And
then I remembered that my wife parksin the garage downtown and I was like,

(27:30):
oh man, this is my opportunityto ride the tank bus. So
all right, so I hopped onthe tank bus dollar fifty cent went got
dropped off at like Government Square,walked one block north, got my wife's
car out of the garage and wenthome. So I did that entire trip

(27:52):
for like a dollar fifty cent,but had I taken like a ride share,
it would have been probably like sixtybucks. You know, well,
how quickly, how do you getpeople wired to think this way? Because
I don't know that the way thatyou come up with things is the natural
way that others would think. Ilike the way you say that, Amy,

(28:14):
So for what I've seen obviously,as you know, I do a
lot of workshops with corporate employees.One of the things that I think I'm
pretty good at is helping people understandwhat are some of the root causes that
makes them think the way they do. And for most of us, it
goes back to things that we learnedas children, because of course it's ingrained

(28:34):
in your mindset and you just replaythat video when you're presented with a particular
challenge. So it's really all abouthelping people get down to the core of
the way, understanding unhealthy patterns withtheir money, and then correcting them.
All we learn so much from you. Thank you for always being willing to
share your stories with us. AllRiddict from Game Time Budgeting you're listening to

(28:56):
Simply Money, presented by all WorthFinancial. Here on fifty five the talk
station. You're listening to Simply Money, percent of by all Worth Financial.
I Meemi Wagner along with Stevere.But if you've got a financial question you
just can't figure out on your own, will help. There's a red button
you can click on while you're listeningto the show. It's right there on

(29:18):
your iHeart app. Record your question. It's coming straight to us and straight
ahead. Have you ever thought abouta time share? We're going to dig
into those. We're looking at boththe pros and the cons. Okay,
so, if you've listened to theshow for a while, well, one
of the topics that we get intoquite often here, and it's because I
think it's something that many people lookat quite seriously, is a target date

(29:38):
fund. So tonight we're looking atthe fact that there's a lot of articles
out there. Right, if you'reanyone who consumes any kind of financial media,
and if you listen to the showyou probably do. I think there's
a lot of stuff out there thatmakes these target date funds sound like a
good option for you for your fourone K and so I think it's just
important to talk through that and makesure you fully understand what you're signing up

(30:02):
for. So that target date,it represents the time frame in which you
might be retiring to align with acertain level of risk and reward potential that
gets safer the older that you get. So this means that it's kind of
like a form of passive management.It's a little bit like taking a bus
to retirement because everybody in that fundgets the same treatment based on the destination

(30:26):
that they're going to, and thatdoesn't change to be to treat you in
any way special based on your needsand goals. It's just that time frame
alone. As for one, k'shave become more and more popular as there
are more options, more of usrelying on them to retire. This becomes
more and more a part of theconversation. And listen, I get it.

(30:48):
When you're starting a new job andyou're sitting in front of that HR
person and you've got that stack ofpapers that is like a mile long.
You know that you're trying to fillout and get through about insurance and in
all the things, you get tothe four oh one K and it's like,
oh, okay, well I thinkI'm going to retire around this year,
here's the fund set up to supportthat. Sign me up. One
last thing that I have to thinkabout and worry about. And this is

(31:11):
why I am so passionate about makingsure that you understand exactly what you're getting.
Because the major players, I meanthis is out there in Fidelity,
Vanguard, t row Price. Youknow, they collectively manage more than a
trillion dollars in these target date funds. They're accessible, they're easy to understand,
and the problem I think that manydon't understand is it's a very first

(31:33):
of all, one size fits allapproach to retirement. Oh, you're going
to retire in twenty thirty five,so everyone who is going to retire in
roughly ten years, well all ofthem need to start pulling back to you
know, fifty percent stocks and fiftypercent bonds. That might be right,
but it also may not be rightfor you. And also what you have
to understand is if you kind ofpull up the hood under these funds,

(31:57):
many of them are in credibly different. You can have one that says to
retirement and one that says through retirement, and they can be then built very
very differently and may not actually bein line with your your real risk tolerance.
That's a very good point, becausethe two retirement is going to represent
something that is way more conservative.When you're too conservative, you risk not

(32:22):
allowing your money to keep up withinflation. I have plenty of folks that
I've worked with over the years thathave a sixty percent stock forty percent bond
allocation when they're at ninety years old. Some of them even have roth iras
with one hundred percent stock because theyknow that this money is going to be
part of part of their legacy planand not anything that they're actually going to

(32:43):
spend themselves. It's going to bepassed on to loved ones in a tax
efficient manner. Some of these throughtarget date retirement funds that represents a through
retirement are going to give you alittle bit more risk on your dollars,
which many of us do need.A too retirement fund may be too conservative.
And I think when you're looking atif you were going to look at

(33:04):
all of the investment options available toyou, right, it can be overwhelming
to know exactly what's right. Butif you were going to pick, would
you individually then pick the same stocksthat are part of these target date funds,
probably not if you want to seehow the sausage is made. A
lot of these funds have some absolutedogs in them, like just wouldn't They're

(33:27):
not great performers, but they're tryingto get someone to invest in them.
How do they do it? Well, they stake it is exactly and you
have no idea. And you know, back to the point of this kind
of being overwhelming to pick and chooseexactly what you should put in your four
oh one k. We laugh aboutthis, but it's not laughable. Many
of us spend more time planning oursummer vacation than we ever do looking at

(33:49):
our four o one k. Youknow, there is an option for you
to work with fiduciary financial advisors thatcan actually manage your four oh one k
right and say this is what youshould choose right in ninety nine point nine
percent of the time, it's notgoing to be a target date fund.
That's not the best thing for you. Yeah, I mean a target date
retirement fund. You pull back,you lift up the hood, and you're

(34:09):
going to see oftentimes an expense ratiothat you can reduce by using some of
the other investments that exist inside ofthe menu that your employer gives you to
pick and choose from in your fourto one K, Especially if you have
low cost institutional index funds, ifyou'd pick the best out of those to
build that custom portfolio for you asan investor, then it's going to be
a lot more effective than taking abust to retirement. It's going to be

(34:31):
more like taking a taxi or anuber. And if you have a portfolio
other investments outside your four oh oneK, which many people do, it's
like there's this disconnect between everything elseyou're doing in your financial life and this
major investment that you have in atarget date fund in your four to one
K. All of those things arenot working together harmoniously to get you to

(34:54):
where you need to go. SoI think at some point, if you
listen, if you have kids orgrandkids who were in in their twenties and
they're just starting to invest, startingto put money in the pour one K,
this is not a terrible option forthem, But at some point someone
looks at that statement and that becomesreal money, and then I think at
that point it should not be aone size fits all approach to retirement.

(35:15):
Here's the all Worth advice. Ifyou're a younger investor, you've got little
financial knowledge, Okay, fine,a target date fund could make sense for
you, but as you get older, we would say you need to take
a more customized approach. Coming upnext, when a timeshare might make sense
and when it doesn't. You're listeningto Simply Money presented by all Worth Financial
Here on fifty five KRC the talkstation. You're listening to Simply Money presented

(35:43):
by all Worth Financial. I MemiWagner along with Steve Ruby. You know
is people think about summer vacations andvacationing. Something that often comes up time
shares, right, does this makesense? And I think what you also
have to understand is that time sharesare not once fits all. There's lots
of different flavors of these. Sobefore it's something you consider, we want

(36:05):
to make sure that you know whatyou're really looking at. Yeah, types
of time shares first, as afixed week. This is where the buyer
actually owns the rights to a specificunit in the same week, year in
and year out, for as longas the contract is written. Another one
is floating, right, so you'regiven like a different period of the year
a given period of the year andyou can you know, go any time

(36:27):
during that time. But listen,what you have to understand is there's other
people who own the timeshare, andif there's like spring break and everyone wants
spring break, the likelihood of yougetting that week at that place that you're
hoping becomes less and less. Yeah, So then you think about Wolf,
I wasn't tied to this timeshare,I could go anywhere that week, and
now all of a sudden, I'mfinancially tied to this place and I can't

(36:49):
even go when I want to.Well, there are other types right to
use. For example, in thisarrangement that the buyer leases the property for
a given amount of time each yearfor a set amount of years. So
that might give you a little bitmore flexibility than you know, fighting over
the times that that people are goingto want, like spring break, for
example. And there's another option.I think this is the one that I
hear about people using the most andit's you know points, right, and

(37:12):
you use your points, or youcan save your points maybe one year not
go and then you know, youaccrue those points and you get to go
to a bigger place. The problemI think with these and it's kind of
like, well, I know myself, it's like, oh, well,
yeah, I could go to Floridathis year, or I could buy even
more points or pay even some extramoney and go somewhere even nicer, when

(37:35):
actually, financially it may not bethe best thing for you. And I
guess when I come back to personallywhat works for me, it makes me
a little nervous to be so tiedto one place, one company that may
not be the best value or thebest option for your family. Yeah.
I mean there's certainly more more consI would say to timeshares than there are
pros annual fees that you have topay. You're at the mercy of any

(37:59):
increases in those timeshares. They arehard to sell. There are so many
of them on the market that there'sactually businesses out there that specialize in trying
to get you out of time sharesthat you have buyers remorse for. I've
gotten the postcards in the mail,right, I'm an expert at getting you
out of a timeshare. I'm thinking, well, this must be something that
a lot of people are interested ina couple of ways that these can make
sense. First of all, ifyou like to go to the same place

(38:20):
and stay exactly in the same placeevery year. I have a friend who's
had a timeshare in Myrtle Beach.They meet the same people there every year.
They absolutely love it. I haveanother friend who has points and they
say they've gone to places that theycould have not afforded and would have not
gone without it. You have todo your research and make sure you maximize
these things if you're going to buyinto them. Here's the all Worth advice.

(38:42):
A timeshare can help create some wonderfulmemories. You have to make sure
you're careful with these. Make sureit jives with the kind of lifestyle and
the kinds of vacations you like totake. Thanks for listening tonight. You've
been listening to Simply Money, presentedby all Worth Financial here in fifty five
KRC, the talk station