Simply Money

Episode Transcript

Speaker 1 (00:05):
Tonight we're talking social media and investing. I mean, it
doesn't impact you, does it? And when emergencies don't have
to break the bank. And one of the most popular
retirement funds that we would say you may not want
to have. You're listening to Simply Money presented my all
Worth Financial Imami Wagner along with Steve Ruby. You know,

(00:26):
I think it's so easy for many of us to
be on Facebook, Instagram, LinkedIn Twitter X, whatever the heck
it is, whatever you want to call it, and say,
you know, I just scroll and it doesn't impact my decisions.
It doesn't impact my investing, doesn't impact the way that
I spend money. But I would say if we do
an actual deeper dive, many of us would actually realize

(00:49):
that it has a far greater impact on our decisions
than we'd ever like to admit.

Speaker 2 (00:53):
I mean, case in point. There are several examples when
the market's bottomed out in twenty twenty due to COVID,
including social media having an impact on retail investors that
were you know, on Reddit for example, message boards propping
up some of these meme stocks like AMC, like game Stop,

(01:13):
there was a craze for NFT's non fungible tokens, which
it kind of blows my mind being the person that
owns the actual original digital file for something that everybody
else can just have a copy of.

Speaker 3 (01:30):
How does that garnish.

Speaker 2 (01:31):
Value other than speculation? Cryptocurrencies being another and a lot
of the stuff was propped up by stories on social
media platforms.

Speaker 1 (01:41):
You know, it was just a few years ago, but
I think we can easily forget what it really felt
like during that time. You weren't going anywhere. It felt
almost unsafe, and you know, in some cases to go somewhere,
you were stuck at home. By the way, you couldn't
spend money, so you were looking at your bank account
getting bigger and bigger. People got bored, They got these
Reddit forums went down these rabbit holes. People were making

(02:04):
these huge predictions about things in the power. I think
that was felt of being an individual investor and being
able to sway the market against some companies that, on
the face of them, should never have stock prices going up, right.
I mean, the original meme stock was game Stop. As

(02:26):
the mom of a teenager, I can tell you I
have never been 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
business model for the store, which was great and viable

(02:47):
maybe ten years ago when you look into the future,
wasn't bright, rosy future. And yet all of these people
were saying, Hey, these these Wall Street muckety MUCKs are
betting again. They're shorting this stock, this Game Stop stock.
We're going to take it to the man. We're going
to go all in. We've got all these cash reserves,

(03:08):
we're bored. We're going to band together and we're going
to drive these stock prices up, and hence the beginning
of memestock.

Speaker 2 (03:14):
So it worked for a handful of people that got
in at the front end of.

Speaker 1 (03:17):
The room full of stocks for a short amount of time.

Speaker 2 (03:20):
Yeah, the ones that kind of planned this and saw
the writing on the wall that there was going to
be what was called a short squeeze, that these big
hedge funds were betting against Game Stop, which made sense
because it's a pandemic, and even when it's not a pandemic,
you're still able to download these 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,

(03:42):
and then the people that got in on the front
lines ahead of it, they made a lot of money.
But the problem is when you're not one of those
first people to get in, and you're watching social media
and you're looking at all these stories of people turning
ten thousand dollars into five million, you think that can
be you now, even though the price is already at
the top, and we don't want to buy high, sell low.

(04:05):
We want to buy low, sell high. And that was
the opposite of what happened to many people that took
their advice in quotations from social media.

Speaker 1 (04:15):
Another one of the meme stocks that became incredibly popular
during this time amc.

Speaker 3 (04:20):
Okay movie theaters.

Speaker 1 (04:21):
How many people were signing up or paying any money
to go sit next to a bunch of people in
a small movie theater and watch a movie.

Speaker 3 (04:30):
I mean, if they were even allowed, exactly, it was.

Speaker 1 (04:33):
The exact opposite of what you would think. And so
I think it's like sometimes social media, when you just
see and read about other people making decisions, can can
kind of push you in a direction of making a
decision that goes against everything that you know. Obviously, at
that time, buying stock in a movie theater didn't make

(04:53):
a lot of sense, and more and more people got
on got subscriptions for streaming services, so the long term
viability of movie theaters would be you know, called into
question even after post pandemic.

Speaker 3 (05:06):
You know.

Speaker 1 (05:06):
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 what I'm going to go
all in?

Speaker 4 (05:14):
You know?

Speaker 1 (05:15):
And really there were people called making yolo bets. You
only live once, let me take all the money out
of my four ohe k and go all in on AMC.
It worked for a small handful of people. My concern though,
is that the greater masses that were just exposed to
this made it seem like day trading, getting in, getting out,
getting in and getting out, trying to figure out what

(05:36):
the next big thing is the best way to invest.
And we have histories on our history on our side
here to say, nah, that is not the way to go.
If you're going to be a smart long term investor.

Speaker 3 (05:46):
It's not the way to go at all.

Speaker 2 (05:47):
And I had a lot of folks asking me during
that period of time, Hey, should I get into this
now that it's at the top. That wasn't the exact question,
but it was should I get into this? And the
answer was a resounding no. You're making decisions based on
greed and nothing else.

Speaker 1 (06:00):
Yes, you're listening to simply money presented by all Worth Financial.
I mean me Wagner, along with Steve Ruby. If you
think this will never happen to you, right, You'll never
make a bad decision when it comes to your money
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 excellent point. You're supposed to
buy when something is low, and you're supposed to sell

(06:23):
it when it's high. There's nothing that I buy that's
a major collectible. But I think about my son, who's
a sneaker head.

Speaker 3 (06:29):
You don't have any NFTs.

Speaker 1 (06:31):
I have no NFTs, I have no fancy collectible anythings.
But my son loves sneakers, you know, he likes Jordan's.
And you know when there's when something becomes really popular
with those shoes and suddenly everyone's talking about it. That
drives up the price. That's when my son is always like,
I need these I need these shoes, and I explain

(06:53):
to them, actually, you want to be the person who
decides these are the shoes to get. That starts the
trend because then they're not exp then you help 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, I want to get into this. I can't
tell you how many people I've come across in the

(07:14):
past few years who bought into crypto not because they
understood it, but because other people were talking about it,
other people were talking about making money on not that
they thought it was a viable business, they just didn't
want to miss out. And there's so much behavioral finance
rolled up in these decisions that we see people making.
And this is a herd bias, right, And when everyone
else is going in this direction, you may not even

(07:36):
know where you're heading, but you're just going to jump
in and go too.

Speaker 2 (07:40):
And you can see that in the other direction too,
in the market so on a whole are going down.
Everything that you see those around you doing 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. Be greedy when
others are fearful, and fearful when others are greedy.

Speaker 1 (07:59):
Or in Buffett, I thought that was Steve Sprovac. He
is as smart as Warren Buffett.

Speaker 3 (08:06):
As smart as Buffett himself.

Speaker 1 (08:07):
Yeah he did retire well, so I'll give him all
the credit in the world for that.

Speaker 3 (08:11):
Yeah, yeah, he sure did.

Speaker 2 (08:12):
But you know this is we need to be cognizant
and aware of some of these behavioral finance terminologies because
what happens is is you can make bad decisions based
on those around you behaving a certain way, or those
that we see on social media, or for from the
new sources that we look at.

Speaker 1 (08:31):
I'll never forget this show that I saw several years ago,
and it was kind of this just like giant human experience.
And what they did was they set up in the
lobby of a big casino in Las Vegas and they
just made a big line all of these people. So
as new people are coming into the lobby, they have
no idea what all These people are waiting a line

(08:52):
for but they feel like they must be missing out
on something, so they start asking questions. And the people
in the line don't really know what they're standing but
they're like, we heard it something big, don't know exactly
what is. And the line keeps getting longer and longer
and longer. People are standing there for hours. They're actually
waiting for nothing, but they're doing it because other people
are doing it.

Speaker 3 (09:12):
I love that. I'd love that experience.

Speaker 1 (09:14):
I think you wouldn't do it. You walk into that
lobby and you see all those people, and you wonder,
would I fall into this or would I not. I
think there's many out here listening who who might stand
in that line not knowing what a great experiment I
know perfectly of herd mentality.

Speaker 2 (09:31):
Another one is availability bias. This is the tendency among
investors to judge the frequency 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 go down,
everything you see around you is going to be data
about why this is so bad, and that's going to
be what you're focused on, rather than the long term,

(09:52):
which is the markets go up and down. It's like
walking up the stairs while playing with the Yo yo,
and you just happen to be on one of those downswings.
But if all the information around you is highlighting the
fact that it's down right now, that can make you
maybe make a fearful decision.

Speaker 1 (10:07):
There's also recency bias, right like I remember you know
the major downturn of seven oh eight, and how you
know how badly that hurt? And loss of version right
that losses? Actually you remember far more, far greater than
you do any kinds of gain. So there's all these
things that play into our decision making. Do you throw

(10:28):
social media and on top of this, and you can
see how it's quite easy to go down a path
where you're not making the best decision.

Speaker 2 (10:36):
So the way to avoid it, my opinion, then, would
be to build a financial plan that maps out your
financial future. What are your financial needs, what are your goals,
how you're going to pay for things, how are you
investing to.

Speaker 3 (10:45):
Achieve those goals?

Speaker 2 (10:46):
And if we have a plan that understands and bakes
in volatility, then you can focus on the financial plan
rather than any of these biases that are around you
that might lead you to make some kind of an
emotional knee jerk reaction that goes against your own best interests.

Speaker 1 (11:00):
Well, and as we talk about the fact that so
much of this is behavioral finance, right, that we're wired
to make these emotional decisions, I think one of the
best ways that you can also build a plan is
to look at what do you value you know, as
a couple, what is the most important thing. Is it
to retire well, is it to have that stability, is
it to help support your family? And then you make
goals in that financial plan based on those values. If

(11:23):
your plan is built on your values, nothing in social media,
nothing that you see when you hold it up against
those values, is going to hold any water. And so
I think there's some smart ways to use this behavioral
finance to your advantage rather than going down these what
we have seen as incredibly destructive past. Here's the all
Worth advice. You have a financial plan for a reason.

(11:44):
Please please remember that the next time you're on social
media or you hear someone talking about some kind of
investment and you think, oh, I don't want to miss out,
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 be here 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.

(12:10):
You're listening to Simply Money and presented by all Worth Financial.
I mean Me 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 a daily
podcast for you. Just search Simply Money. It's right there
on the iHeart 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 that

(12:31):
you might actually want to avoid. We'll take a deep
dive on that one. You know, when you think about retirements,
times have changed, you know. I think about my grandpa
Hubert Wagner, who retired from Cincinnati Milicron after working there
for decades and decades and decades. He had a pension,
his company was taking care of him, and retirement today

(12:54):
looks a lot different than that.

Speaker 2 (12:56):
Yeah, those of us that get a pension are very fortunate.
It's few between and this day and age, you know,
FIDELTI recently did a survey where two thirds of the
respondents actually said that they are planning some kind of
a gradual or phased in retirement. A large portion of
these respondents for gen z ers and millennials that actually

(13:16):
say a traditional retirement doesn't really appeal to them. The
idea here is that maybe they work later, but in
a less demanding, more enjoyable setting.

Speaker 1 (13:28):
I think this sounds great. I also think that you've
got people who are far away from retirement making predictions
about what they'll want decades down the road, right. But
I would also caution those of you who this is
your plan to say it may not be an 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

(13:52):
as an option. So if you are close to retirements
and this is your plan, please please please go to HR.
Go to your boss, make the case for why you
think this makes sense. But don't build a financial plan
around this before you know whether your company is actually
on the same page as you are, because their plan
might be that when it's time for you to retire,

(14:14):
you go from working five days a week forty hours
to suddenly you've now trained your replacement and you're out
the door. So that gradual sort of phased in retirement
may not be an option. If it is, great, but
make sure everyone's on the same page first.

Speaker 2 (14:30):
The thing that worries me about this trend is the
fact that some may think that they don't need to
plan accordingly when it comes to saving for retirement. If
you think that you are going to be able to
work and continue to earn income, and then your ability
to work goes away, maybe some kind of injury, health situation,

(14:55):
whatever work you do becomes obsolete, there are issues that
could obviously arise without proper planning. But on the flip
side of what you said, I do see this in
practice from time to time, but we've built it into
financial plans in a way that make sure that you
have the savings to support yourself in the event that.

Speaker 3 (15:15):
You can't work.

Speaker 2 (15:16):
Yes, and then the transition to part time work is
more or less a quality of life adjustment, and it
doesn't necessarily have to be with your same employer that
you've spent all these years with. A lot of the
time people changed to I don't know, working at a
golf course, doing some kind of consulting work ten nine
y to nine income going out on their own.

Speaker 1 (15:36):
I think the key here, and this is what really
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 becomes a
crutch for not saving. And we just know time after time,
most people on average retire at the age of sixty two.
Many of them not because they chose sixty two, because

(15:58):
it was chosen for them. So, you know, I think
this is an actual excellent option. But it's almost like
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 a sudden it becomes an option
for you to do this phased and retirement, then great
money isn't an issue. It just maybe helps you kind
of mentally get in that place of retiring. At the

(16:19):
same time, it helps your boss. My dad did this.
My dad did this several years ago. By the 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 dad is so amazing. But I
also have a feeling that just knowing him, he probably
wasn't super intentional through the years as he got closer

(16:42):
and closer to retirement to say I'm going to share
this with you and I'm going to share this 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.

Speaker 3 (16:52):
He made himself very valuable.

Speaker 1 (16:53):
We don't be very valuable. So he Gary from five
days to four days he's a smart man, down to
three days. So he was able to ease into retirement.
At the same time, they were able to get more
and more people in the room with him in order
to get that knowledge out and so that they could
continue into the future with what he knew. So it
made a lot of sense. I've seen this firsthand. I've

(17:15):
seen it go well, I just don't know if it
as many of us have that option as we'd like
to think we do.

Speaker 2 (17:21):
Yeah, that's a great point. Not everybody has that option.
And for those of you that are thinking that this
might be you, eventually one of the issues that you
might run into is if you retire before sixty five
years old, what are you going to do for healthcare? Yes,
that can be a major expense. If you're able to
switch to Cobra from the position that you do leave from,
that's eighteen months of coverage, but that's like five times

(17:43):
the premium that you are used to paying for because
your your employer pays a significant chunk of what that
healthcare costs. If you're not going to do Cobra, then
it's finding another job that offers healthcare. But then maybe
you're not even stepping down as far as responsibilities are concerned.
And that's what the goal here is for transitioning into
retirement slowly, is to move away from something where you

(18:03):
have a lot of responsibilities and a large time commitment
to something that's a little bit less stressful. So one
of the issues here that I would also shine light
on for people that plan for this is how are
you going to pay for healthcare if indeed you pull
the trigger on transitioning into retirement before you turn sixty five.

Speaker 1 (18:20):
That's a huge part of this. And I also want
to go back to something that you said before, which
is you don't necessarily have to continue working for the
same place where you were working before. If you were
in this high stress, you know, just completely burnt out
on a job, you have other options. And thinking of
someone who I knew who several years ago had a
pretty fat paycheck coming in, made a great salary, didn't

(18:43):
see it coming, but they were let go and they
were a few years away from where they would retire. Well,
they ended up going to work at Great American Ballpark
as an usher. Now, was there a huge discrepancy between
what they're making now and what they're making before.

Speaker 3 (18:56):
Absolutely a little bit.

Speaker 1 (18:57):
But the key here was they were not drawing on
their retirement accounts. They gave those retirement accounts several more
years to grow and compound. They made enough to live
off of during that time. And so the key for
them and for making their financial 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 then they were going to be just fine.

(19:19):
So I think there's several ways to look at this,
several options to looking at it. I think the key
is 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 qualified financial advisor who
can help build that proper plan to help you get there.
Coming up next, we've got the emotional barriers to overcome

(19:40):
if an emergency happens, and maybe you're thinking you need
to shell out big bunks when you don't have to.
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 presented by all Worth Financial. I mean
you Wagner, along with Steve be one of the people

(20:02):
I think that there is just so much to learn
from and how he can take just a regular, everyday
occurrence and turn it into something that this aha moment
that we can all learn from. Is our good friend
Alreddick from Game Time Budgeting. Al I was just saying
earlier today, if I could like embed you with my
family for like a month, I think they would look

(20:23):
at everything differently, they would make financial decisions differently. But
you have yet again a great story for us, something
that would have been an emergency to the rest of
us that we might have spent quite a bit of
money on not you though, my friend.

Speaker 4 (20:41):
Yes, ma'am. So the most recent occurrence in my life, Amy,
I decided to surprise my dad because he was in Greenville,
North Carolina, having a medical procedure. So I already had
my plane ticket, but I didn't think about getting my
rental car until the night before my flight. So I
get online and I started searching for rental cars and

(21:03):
guess what, Amy, all the rental cars had been booked
for just about way actually every rental car agency at
the Raleigh Durham Airport. And then it hit me. I
was like, oh man, this is marsh madness, so no
wonder there aren't any cars. So obviously I'm like, what
in the world am I going to do? Because I

(21:24):
needed to get from Raleigh, North Carolina to Greenville, North Carolina,
which is about an hour and a half away, so
then it stop right there.

Speaker 1 (21:34):
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 going to be quite
a bill. Or is there some kind of limousine service
or something like that they can get me there. I'm
already in on this plane ticket, you know, so it's
probably just gonna cost me even more to get there.

(21:58):
But friends, as we know already, we know that is
not that's not where you went. You did not Ubert,
your dad? Did you?

Speaker 3 (22:05):
No?

Speaker 4 (22:05):
I did not. Amy. It occurred to me, now I
did think about that. I'm not gonna lie, but it
occurred to me that I had always wanted to ride,
wait for Amy, a Greyhound.

Speaker 3 (22:16):
Bus, right.

Speaker 4 (22:19):
So then I get online and I discovered that I
could catch a Grayhound from Raleigh to Greenville, North Carolina
for thirty dollars avy. So I felt like I had
hit the lottery and even the bus ride itself. When
I got on the bus, now, of course, picture this big,
long bus. There were only eight passengers for the entire trip,

(22:42):
so it was quiet. The seats were actually very comfortable,
and then I came to discover that I enjoyed the
sound of the engine. It was very relaxing. So I
was like, man, this is pretty cool. But my wife
she did say, you know, riding greyhound with just eight
people is a lot different than riding it with a
full bus loads, so we'll have to see about that.

Speaker 3 (23:03):
It brings up a good point.

Speaker 2 (23:04):
I think next time around, if this happens again and
you have a packed bus, you might feel a little
bit different, But it sounds like it's a good experience
all things considered. You know a lot of times people
are going to choose that quick fix when it comes
to resolving some kind of a problem. And you know,
I love how you turn this into a positive experience
for yourself. Otherwise there could have been some real downsides exactly.

Speaker 4 (23:25):
So typically when most people find themselves in an uncomfortable position,
obviously we want to fix it as quickly as possible.
It's almost like this. Everybody has heard a baby cry, right,
and sometimes they cry because they're wet, So when you
change the diaper, then everything is good again. So as adults,

(23:46):
we rarely cry out loud. We cry with our emotions though,
and that could kind of create an emotional volcano where
we just want to do the first thing we think about,
no matter what it costs, because we want to go
from being uncomfortable to comfortable as quickly as possible. So
that was basically the reason that I decided to take

(24:09):
the bus because for me, obviously finances always plays a
part in the decisions that I make. But when you
make 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 if you
just sit back and say, you know what needs to

(24:30):
happen for me to make this possible. Does that make sense?

Speaker 1 (24:33):
Makes perfect sense? You're listening to Simply Money, presented by
all Worth Financial Imami Wagner along with Steve Rubiez. We're
talking to our good friend Alverredek tonight. He's getting ready
to fly to meet his dad, has a flight booked
night before, realizes there's no rental cars. Rather than spending
hundreds of dollars on an uber or some other solution,
he takes a minute, takes a deep breath, and looks

(24:56):
at all of the options and comes up with a
Greyhound bus, which ends up being thirty dollars. Now what
this reminds me of? And I have seen this so
many times through the year. Even people that we work
with who are smart long term investors, something will come up.
They look at their four oh one K statement and say,
I don't have the money to pay for this medical

(25:17):
bill or this unexpected expense. I'm just gonna pull it
out of my four one k. Right, it is the
quickest fix. I know the money is there, and I'm done.
And once we talk through it with them, there's actually
many times other options that they have that they haven't considered.
They just didn't take the time to think through.

Speaker 4 (25:35):
It, exactly, Amy, and I almost created when you gave
that example, because most people, well not most, a lot
of people do look at their four one K retirement
savings as their emergency fund. And I'm like, wait a minute.
When you put that money away, it is for a

(25:55):
particular purpose, and that is for your golden ages or
your golden years, and when you tap into it, obviously
you're taken away from the principle and you are also
foregoing any capital gains or dividy is or whatever you
want to call it. Right, So I'm like, why don't
we just sit down in pause, take a deep breath.
What other options would you consider if tap it into

(26:18):
that four oh one k? We're not an option. So
when you take that off the table, it forces people
to be what I call financially 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 in and day out basis. Most emergencies can be
paid for with regular cash flow, but you just have

(26:40):
to plan so that you can put money away for
that unexpected event that you know will happen sooner or later,
so you know quickly.

Speaker 2 (26:50):
This is a great story about how you turned not
having rental vehicle into an experience. But after your return
flight to Cincinnati, understand that you also had another transportation
challenge was that what was the financial impact?

Speaker 4 (27:02):
So I had made arrangements. I thought with my wife
that she was just gonna pick me up from the
Cincinnati airport, right, but she got called. She got called
into a meeting at eight o'clock and my flight landed
at like eight twenty and her meetings they always last
at least like an hour. So I was like, you know,
what what can I do to get my body from

(27:24):
the Cincinnati airport back home? And then I remembered that
my wife parks in the garage downtown and I was like,
oh man, this is my opportunity to ride the tank bus.
So all right, so I hopped on the tank bus
dollar fifty cent went got dropped off at like Government Square,

(27:46):
walked one block north, got my wife's car out of
the garage and went home. So I did that entire
trip for like a dollar fifty cent, but had I
taken like a ride share, it would have been probably
like sixty bucks.

Speaker 1 (27:59):
You know, well, how quickly, how do you get people
wired to think this way? Because I don't know that
the way that you come up with things is the
natural way that others would think.

Speaker 4 (28:12):
I like the way you say that, Amy, 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
understand what 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 learned as children,

(28:33):
because of course it's ingrained in your mindset and you
just replay that video when you're presented with a particular challenge.
So it's really all about helping people get down to
the core of the way.

Speaker 1 (28:44):
Understanding unhealthy patterns with their money, and then correcting them.
All we learn so much from you. Thank you for
always being willing to share your stories with us. All
Riddict from Game Time Budgeting you're listening to Simply Money,
presented by all Worth Financial. Here on fifty five the
talk station. You're listening to Simply Money, percent of by

(29:08):
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 listening to the show.
It's right there on your iHeart app. Record your question.
It's coming straight to us and straight ahead. Have you
ever thought about a time share? We're going to dig
into those. We're looking at both the pros and the cons. Okay, so,

(29:30):
if you've listened to the show for a while, well,
one of the topics that we get into quite often here,
and it's because I think it's something that many people
look at quite seriously, is a target date fund. So
tonight we're looking at the fact that there's a lot
of articles out there. Right, if you're anyone who consumes
any kind of financial media, and if you listen to
the show you probably do. I think there's a lot

(29:51):
of stuff out there that makes these target date funds
sound like a good option for you for your four
one K and so I think it's just important to
talk through that and make sure you fully understand what
you're signing up for.

Speaker 2 (30:03):
So that target date, it represents the time frame in
which you might be retiring to align with a certain
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 fund gets the same treatment based on the destination

(30:26):
that they're going to, and that doesn't change to be
to treat you in any way special based on your
needs and goals. It's just that time frame alone.

Speaker 1 (30:37):
As for one, k's have become more and more popular
as there are more options, more of us relying on
them to retire. This becomes more and more a part
of the conversation. And listen, I get it. When you're
starting a new job and you're sitting in front of
that HR person and you've got that stack of papers
that is like a mile long. You know that you're
trying to fill out and get through about insurance and

(30:59):
in all the things, you get to the four oh
one K and it's like, oh, okay, well I think
I'm going to retire around this year, here's the fund
set up to support that. Sign me up. One last
thing that I have to think about and worry about.
And this is why I am so passionate about making
sure that you understand exactly what you're getting. Because the
major players, I mean this is out there in Fidelity, Vanguard,

(31:20):
t row Price. You know, 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
many don't understand is it's a very first of all,
one size fits all approach 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 of

(31:43):
them need to start pulling back to you know, fifty
percent stocks and fifty percent bonds. That might be right,
but it also may not be right for you. And
also what you have to understand is if you kind
of pull up the hood under these funds, many of
them are in credibly different. You can have one that
says to retirement and one that says through retirement, and

(32:07):
they can be then built very very differently and may
not actually be in line with your your real risk tolerance.

Speaker 2 (32:14):
That's a very good point, because the two retirement is
going to represent something that is way more conservative. When
you're too conservative, you risk not allowing your money to
keep up with inflation. I have plenty of folks that
I've worked with over the years that have a sixty
percent stock forty percent bond allocation when they're at ninety
years old. Some of them even have roth iras with

(32:36):
one hundred percent stock because they know that this money
is going to be part of part of their legacy
plan and not anything that they're actually going to spend themselves.
It's going to be passed on to loved ones in
a tax efficient manner. Some of these through target date
retirement funds that represents a through retirement are going to
give you a little bit more risk on your dollars,
which many of us do need. A too retirement fund

(32:59):
may be too conservative.

Speaker 1 (33:01):
And I think when you're looking at if you were
going to look at all of the investment options available
to you, right, it can be overwhelming to know exactly
what's right. But if you were going to pick, would
you individually then pick the same stocks that are part
of these target date funds, probably not if you want
to see how the sausage is made. A lot of
these funds have some absolute dogs in them, like just

(33:26):
wouldn't They're not great performers, but they're trying to 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 choose exactly what you
should put in your four oh one k. We laugh
about this, but it's not laughable. Many of us spend

(33:47):
more time planning our summer vacation than we ever do
looking at our four o one k. You know, there
is an option for you to work with fiduciary financial
advisors that can actually manage your four oh one k
right and say this is what you should choose right
in ninety nine point nine percent of the time, it's
not going to be a target date fund. That's not
the best thing for you.

Speaker 2 (34:07):
Yeah, I mean a target date retirement fund. You pull back,
you lift up the hood, and you're going to see
oftentimes an expense ratio that you can reduce by using
some of the other investments that exist inside of the
menu that your employer gives you to pick and choose
from in your four to one K, Especially if you
have low cost institutional index funds, if you'd pick the
best out of those to build that custom portfolio for

(34:28):
you as an investor, then it's going to be a
lot more effective than taking a bust to retirement. It's
going to be more like taking a taxi or an uber.

Speaker 1 (34:36):
And if you have a portfolio other investments outside your
four oh one K, which many people do, it's like
there's this disconnect between everything else you're doing in your
financial life and this major investment that you have in
a target date fund in your four to one K.
All of those things are not working together harmoniously to
get you to where you need to go. So I

(34:56):
think at some point, if you listen, if you have
kids or grandkids who were in in their twenties and
they're just starting to invest, starting to put money in
the pour one K, this is not a terrible option
for them, But at some point someone looks at that
statement and that becomes real money, and then I think
at that point it should not be a one size
fits all approach to retirement. Here's the all Worth advice.

(35:17):
If you'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 up next, when a
timeshare might make sense and when it doesn't. You're listening
to Simply Money presented by all Worth Financial Here on
fifty five KRC the talk station. You're listening to Simply

(35:42):
Money presented by all Worth Financial. I Memi Wagner along
with Steve Ruby. You know is people think about summer
vacations and vacationing. Something that often comes up time shares, right,
does this make sense? And I think what you also
have to understand is that time shares are not once
fits all. There's lots of different flavors of these. So

(36:03):
before it's something you consider, we want to make sure
that you know what you're really looking at.

Speaker 2 (36:07):
Yeah, types of time shares first, as a fixed week.
This is where the buyer actually owns the rights to
a specific unit in the same week, year in and
year out, for as long as the contract is written.

Speaker 1 (36:19):
Another one is floating, right, so you're given like a
different period of the year a given period of the
year and you can you know, go any time during
that time. But listen, what you have to understand is
there's other people who own the timeshare, and if there's
like spring break and everyone wants spring break, the likelihood
of you getting that week at that place that you're
hoping becomes less and less. Yeah, So then you think

(36:41):
about Wolf, I wasn't tied to this timeshare, I could
go anywhere that week, and now all of a sudden,
I'm financially tied to this place and I can't even
go when I want to.

Speaker 2 (36:51):
Well, there are other types right to use. For example,
in this arrangement that the buyer leases the property for
a given amount of time each year for a set
amount of years. So that might give you a little
bit more flexibility than you know, fighting over the times
that that people are going to want, like spring break,
for example.

Speaker 1 (37:08):
And there's another option. I think this is the one
that I hear about people using the most and it's
you know points, right, and you use your points, or
you can save your points maybe one year not go
and then you know, you accrue those points and you
get to go to a bigger place. The problem I
think with these and it's kind of like, well, I
know myself, it's like, oh, well, yeah, I could go
to Florida this year, or I could buy even more

(37:29):
points or pay even some extra money and go somewhere
even nicer, when actually, financially it may not be the
best thing for you. And I guess when I come
back to personally what works for me, it makes me
a little nervous to be so tied to one place,
one company that may not be the best value or

(37:49):
the best option for your family.

Speaker 3 (37:51):
Yeah.

Speaker 2 (37:51):
I mean there's certainly more more cons I would say
to timeshares than there are pros annual fees that you
have to pay. You're at the mercy of any increases
in those timeshares. They are hard to sell. There are
so many of them on the market that there's actually
businesses out there that specialize in trying to get you
out of time shares that you have buyer's remorse for.

Speaker 1 (38:10):
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 in a couple of ways that these can make sense.
First of all, if you like to go to the
same place and stay exactly in the same place every 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 have another friend who has points and

(38:31):
they say they've gone to places that they could have
not afforded and would have not gone without it. You
have to do your research and make sure you maximize
these things if you're going to buy into them. Here's
the all Worth advice. A timeshare can help create some
wonderful memories. You have to make sure you're careful with these.
Make sure it jives with the kind of lifestyle and
the kinds of vacations you like to take. Thanks for

(38:52):
listening tonight. You've been listening to Simply Money, presented by
all Worth Financial here in fifty five KRC, the talk
station