Episode Transcript
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Speaker 1 (00:06):
Today, reasons why some people pulling off planning solutions for
you if you've got.
Speaker 2 (00:13):
Cash lying around? But first, could it be calm in
the markets?
Speaker 1 (00:19):
You're listening disciplly money presented by all Worth Financial Immy
Wagner along with Bob Spondseller. Maybe this is a week
where you don't even have to think about checking your
four oh one K account? Dare I? I know it's
knock on. Would don't walk under any ladders, stay away
from black cats, whatever you gotta do. We've got our
(00:39):
all worst chief investment officer, Andy's down And so before
I say anything else, I'm just going to tee you up.
Speaker 2 (00:45):
Andy.
Speaker 1 (00:46):
I don't want to be the one responsible for saying this.
But do you think maybe we could be in for
a week of relative calm?
Speaker 3 (00:56):
No?
Speaker 4 (00:56):
Probably not.
Speaker 3 (00:58):
I mean, if history's in a guy, I mean, it's
it's unlikely to happen. I mean we did see last week.
I know, stocks pulled back just a bit, at least
on the large cast side. Small cap socks were actually up,
but it was because there was a reprieve in the
negative tariff related headlines. And you know, as an example,
(01:19):
President Trump win talking about China, he said you know,
they're already had one hundred and forty five percent tariff
right we have on them, And he basically acknowledged that
these high tariffs could cost spending to essentially come to
a halt. He said something to the effect of that
he doesn't want them to go any higher because at
a certain point people won't be buying products, and consumer
(01:41):
spending represents seventy percent of the US economy and that
has a big impact. Now, first part, China also said
something similarly where they don't want to respond to a
numbers game, so they want to keep tariffs where they are.
And Beijing previously up their own levee on the US
one hundred and twenty five percent, So we got this
one hundred and forty five percent on the US one
(02:01):
hundred and twenty five percent or from the US one
hundred twenty five percent from China. Now, despite those seemingly
close to one another, the impacts were really different. I mean,
for instance, we import almost three times as much as
what China imports from US. It's going to have a
much bigger impact on their overall economy. So when when
(02:23):
you think about that, you know, we might see a
little bit of quietness there just because both the governments
agreed to pause, and we're in this ninety day other
pause if you will, on those higher tariffs that President
Trump unveiled with this big board. I don't know if
you remember that a few weeks ago, but he said, yeah,
we're going to hold off on upping all of that
(02:44):
for now, at least on everybody except in China. But
getting back to the question of whether or not we'll
see some quietness, you know, last Friday after the market closed,
probably when the biggest news might have come out, where
there was a report suggesting that Trump was exploring ways
(03:07):
that he might be able to fire FED chair jer
own Pal and that would call into question the independence
of the Central Bank, and certainly, you know, raised just
overall level of uncertainty. So from that perspective, no, I
don't expect any sort of quietness because I think markets
(03:27):
will focus on that for a bit.
Speaker 4 (03:31):
Andy, We've got a bunch of corporate earnings coming out
here over the next week or two, right, And what
are you expecting in terms of earnings announcements with all
these tarifts being put on hold until you know, early July.
If it runs out to the whole ninety day completion.
Are you expecting a lot of companies to just not
give guidance for the next quarter or what have you
(03:53):
been seeing so far and what are you expecting on
an earnings front?
Speaker 3 (03:57):
Yeah, I mean that's a really good question. I think
there could be some that avoid giving guidance and some
that give some very disappointing guidance, like you Haded Health
last week, which they tanked twenty two percent and being
a big component of the doat That's why you saw
on Friday the Dell closed much lower than some of
the other major indexes just because of the impact from
(04:18):
United Health. But when you look at the big picture
of earnings and you know what we might expect for
this calendar. You know, right now we're sitting around a
seven percent growth rate if you look at the first
quarter of this year compared to the first quarter of
last year.
Speaker 4 (04:38):
And in MS in terms of year over year earnings
on the S and P five hundred.
Speaker 3 (04:44):
Yeah, just the first quarter by itself compared to the
first quarter of last year, and that that's good. It's
a little bit better than what Wall Street was expecting
at the start of earning season, which was around six
and a half percent. I would actually think this seven
percent growth will probably increase as earning season goes on.
That's what you typically see, Bob. I mean, you typically
(05:05):
see earnings kind of come in near forecast and then
as the season progresses, as we start to get these
big companies reporting like we have Alphabet, which is Google
parents later this week. When you start to get these
big companies Microsoft to you know, NA Video much much
later but this week, Alpha, that that's when you start
(05:25):
to see that growth rate increases. Because they have such
a large amount of sales that in revenue that it
really moves the needle a lot more than many of
the other companies, UH that are out there. So I
would expect that spread to widen, and that's going to
be ultimately, you know, a good thing because when you
think about just the ongoing tariff uncertainties that are out there,
(05:50):
what Wall Street is going to be really looking at
closely is how these companies, you know, address the pressures
related to the tariffs that are essentially on the horizon.
And they're going to be talking about, you know, how
they're going to manage costs, what they're going to do
on a supply chain, to try to navigate the situation.
(06:11):
And I mentioned Alphabet later this week, but we also
have a local company, Procter and Gamble, reporting as well,
and it's going to be really interesting to see, you know,
what they say, given their presence abroad in China, and
also you know the impact that supply chains has on
a consumer staple company like Procter and Gamble.
Speaker 4 (06:33):
Andy, we saw pretty positive retail sales numbers last last
week announced for March, you know, mostly due to surges
in motor vehicle sales, building materials and sporting goods sales.
Would you say that those numbers really have nothing to
do with any possible coming tariffs that may rear their
(06:53):
the effect of which may rear their ugly head here
in sixty to ninety days. Is that almost useless in
from at this point the March retail sales numbers.
Speaker 3 (07:03):
Why would it say they're useless? I mean it was
a pretty good number. If you look at the retail
sales they increased for the month one point four percent,
which was largely driven by people trying to get ahead
of tariff increases. Like motor vehicle and part sales they
soared five point three percent. I mean that's a really
big number. Building materials three point three percent another, you know,
(07:27):
just a significant increase for the month. So those are
where they're trying to get ahead of the game a
little bit. So wouldn't it be too shocking to see
a little bit of a give back in the months ahead.
And we'll see how it all plays out. But there
was some other indicators within that report that did show
a positive sign when you think about the consumer's health.
(07:48):
For instance, restaurants spending, which is a really good measure
of discretionary spending, increased one point eight percent. If you
go look at sporting good sales they were up about
two and a half percent, and just kind of across
the board, it wasn't a bad report, and it really
shows that the consumer is at least coming from a
(08:09):
position of strength before the bulk of these tariffs really
go into place, and that's a good thing. At least
we want to be coming from a position of strength
rather than a position of weakness. So we'll see how
this all shakes out. But what's going to be really
interesting is when you look at that economic data, you know,
what does it mean for the Federal Reserve? How are
(08:29):
they going to reply, especially especially given that the tariffs
have an impact going against what the FED wants to do.
I mean, the FED wants stable inflation, they want maximum employment,
that's their dual mandate. However, what tariffs do is they
actually put upward inflationary pressures on products and they can
(08:50):
slow the economy down, causing employment to weaken. So the
Federal Reserve, if they want to fight inflation and employment,
they can't do both at the same time because those
measures call for conflicting policy responses. Specifically, higher inflation calls
for higher rates to fight weaker job growth calls for
(09:11):
lower interest rates to fight So you can't both raise
interest rates and cut interest rates. So it puts a
FED in a really tough spot. And then to compound
all of that, well, we have the reports about President
Trump exploring ways to fire your own path.
Speaker 2 (09:29):
So a lot to digest, is what you're telling us
right now.
Speaker 1 (09:32):
Andy Stout, our chief investment officer from all Worth, helping
us digest the latest and maybe some expected market volatility ahead.
And I'm going to ask you a question I've asked
you many times on the show because I really like
to get your pulse on it, and it is what
if anything is keeping you awake right now? Is there
(09:52):
anything keeping Andy Stout up or in all of this
market volatility. Maybe there are some nervous, jittery long term investors,
but not one of them.
Speaker 3 (10:02):
I don't lose sleep over this. I mean, the big
thing is just understanding markets go in cycles. You're going
to have periods where you have volatility, and that's kind
of the cost of investing. I mean, it's not a
risk free return. If you want a risk freer return,
you know, go put your money in a bank and
you don't get whatever interest rate they're giving, or more
(10:22):
specific more safely more risk for you. I guess the
US treasuries Now that's a risk free return. Markets have risk,
and if you want to earn above that risk free return,
you have to take on some risk. And taking on
that risk, you know, historically you've seen about an eleven
percent going back to nineteen fifty return on large cap stocks,
well above the risk free rate of return, which is
(10:44):
just you know, I don't know, three to four percent,
so probably somewhere in that range going back over the
same time period. Now, it's nothing. Nothing is free. I mean,
there's an old saying there is no free lunch, so
you got to take on some risk. But here's the thing, Amy,
you know, the landscape obviously remains uncertain, but what history
has shown us is that markets have been resilient over time,
(11:08):
and we think that that's what will continue in the
months and years ahead. And now, of course there will
be bumps along the way, but we'll get past this
rough patch like we have every other rough patch.
Speaker 1 (11:21):
Great perspective, Andy Stout, our chief investment officer, Thank you
so much. Coming up next, a critical part of the
financial planning process. In seven out of ten of you
have not taken care of this. We're going to look
at what it is and why we're not doing it. Next,
you're listening to Simply Money, presented by all Worth Financial
here on fifty five KRC, the talk station. You're listening
(11:46):
to Simply Money persented by all Worth Financial. I mean
you Wagner along with Bob sponseller. If you can't listen
to our show every single night, you don't have to
miss anything we're talking about. Because you know what, there's
a luck going on in the markets right now. You
gotta catch up. We've got to deal podcasts for you.
Just search simply money. It's on the iHeart app or
wherever you get your podcasts coming up at six forty
three fact or fiction. We've got market volatility and we're
(12:10):
going to get into lots of great things there.
Speaker 2 (12:12):
We're going to educate you during this crazy time.
Speaker 1 (12:15):
But right now we are tackling a topic that maybe
on your to do list, and if it is, it's
probably been there for I don't know, six months, six years,
something like that. This is estate planning, Bob. I see
this pretty often. Someone's in my office and they say,
we know we've got to do it, we just.
Speaker 2 (12:35):
Haven't done it.
Speaker 4 (12:37):
Same amy. This comes up way too often for my
comfort level. So let's get into it because this is
critically important that people tackle this. A couple recent surveys
that came across our desk indicate that only three and
ten American adults have any kind of a state plan
in place, will trust, power, attorney, nothing, Only three and ten.
(12:57):
That is an alarmingly low number. And the really the
question we always ask ourselves is why why aren't people
doing this basic part of any good financial plan.
Speaker 1 (13:09):
If this is you, right, you know you haven't tackled
your estate planning yet. If we're going to get We're
going to cross a list of excuses off right now.
Speaker 2 (13:18):
So if any of these are you, I want you
to listen very closely.
Speaker 1 (13:20):
We're going to tell you what we often hear people
say they're not doing this and why we think it's
not an excuse. And the first one is it's not necessary.
I don't have assets. I do think the word estate
planning is a little uh, you know, It's like, well,
I don't have an estate. I'm picturing some massive you know,
you've got to punch in a code to get to
my home. And I actually, like, you know, have a
(13:43):
two hundred and fifty three hundred thousand dollars house whatever
it is. If you own a home, if you own
a car, if you have any assets in a FLOORA
one K you now having a state yes, exactly, you
have an estate.
Speaker 4 (13:58):
Yeah, And I I can only guess as to why
folks are hesitant and want to use that, you know,
rationalize I don't have enough assets. I guess it. I
guess it has to do with when people think of
a state planning, they immediately think of the word attorney.
And when they think of the word attorney, they think
of I've got to spend money. Yes, it's very expensive,
(14:18):
and what I have.
Speaker 1 (14:20):
Isn't enough to rise to the level where I need
to hire an attorney to get this figured out.
Speaker 4 (14:24):
Yeah, and I'm going through a situation right now, Amy
where I've got somebody who is inheriting assets from their
aunt down in Alabama. And to make a long story
real short, they thought they could get away with doing
some of this. And this guy is going to have
to you know, he's going to have to either go
physically go down to Alabama or correspond with a probate
(14:45):
court down in this tiny little county in Alabama just
to get named the executor for this estate. And it's
creating a lot of uncomfortable delays and hassles that could
have easily been avoided.
Speaker 2 (14:57):
Yeah.
Speaker 1 (14:57):
I think another excuse is I'm young, healthy, I've got years.
Speaker 3 (15:01):
Right.
Speaker 1 (15:02):
We all know that the horror stories of something coming
out of the blue often what drives people to get
that first estate plan is if you become parents for
the first time, and then it starts to be well,
what if something happens to both of us, who would
take our children? And I think that oftentimes can get
people to do estate planning. But then, Bob, what I
(15:23):
also see is you do it then when your kids
are little, And now someone's back in my office and
their kids are thirty and they have their own kids,
and they have not updated the estate plan since that time.
It doesn't matter if you are twenty five or fifty
five or ninety five. I would say, if you love
the people around you who would be left to take
(15:46):
care of your estates, then this is an act of love.
It doesn't matter how young you are, how healthy you are,
how much you have.
Speaker 2 (15:54):
This is important.
Speaker 4 (15:56):
Yeah. And some of the reasons it's important go way
beyond just to distributing assets. We're talking about management of
your healthcare directives, yes, and just overall management of your
financial affairs. If you're incapacitated, think car accident, think sudden illness,
medical emergency, something like that. You know, for any of
(16:16):
you that have checked into a hospital, you know, at
any time, even a doctor's office, one of the first
questions they ask is, do yeah have a healthcare directive?
Speaker 3 (16:25):
Yeah?
Speaker 4 (16:25):
And the reason they asked that is if you're not
able to make decisions on your own in the event
of a health emergency. And let's face it, most health
emergencies are unexpected, right, we don't plan for them. They
have them. You want to name the people that are
you want to designate to act on your behalf in
case you're not able to make these decisions for yourself.
(16:47):
And the good news is it's fairly simple, very inexpensive
to get these things done. I know in Ohio, Kentucky,
and Indiana there's basic form documents available, so there's not
a lot of expensive drafting needed. But you need to
have these directives in place to take care of things.
Speaker 1 (17:07):
I'm going to tell you one reason why I didn't
take care of it for a few years, and that's
just procrastination.
Speaker 2 (17:13):
I am someone who constantly in.
Speaker 1 (17:15):
My phone has a list of things to do, and
then I also have a paper list of things to do.
Speaker 2 (17:21):
I have lists about list of.
Speaker 1 (17:23):
Things to do, but as state planning in years past
had always you know, kind of fallen farther on the list.
It's not fun to think about it, it's not fun
to take care of but the sense of accomplishment of
like I have done this, and in the good conversations
often that come out of it, when you and your
spouse are sitting down talking through these things are invaluable.
(17:45):
So if this is the bottom of your to do list,
can we get it bumped up to the top a
little bit, you procrastinators?
Speaker 2 (17:50):
Please?
Speaker 4 (17:52):
Yeah. And I've seen the procrastination come into effect a
lot of times with young couples with young kids, and
they can't I can't even fathom the possibility of both
of them being passed away and having to name guardians
for their kids and they can't decide what they want
to do. Yeah, so they do nothing, and that obviously
is not a good solution.
Speaker 1 (18:13):
Yeah. Well, a lot of times when you've got young kids,
you're just trying to sleep through the night.
Speaker 4 (18:17):
That's right. He knows.
Speaker 2 (18:18):
It was like overwhelming to even think about this, but
it is.
Speaker 1 (18:21):
It's incredibly important regardless of what age you are in
your life. And I also think, you know, do not
use the expense of it as a barrier, because sometimes
some of this is if you need like a very
easy will options that can maybe get that done for you.
Speaker 4 (18:39):
Well, and we have some of those online options available
for our clients here at all Worth. We've been using
now for it and they're great and people love them
and it's little to no expense whatsoever. You know, it's
just getting people to sit down and go through this,
so expense is no longer a good excuse.
Speaker 1 (18:57):
Yeah, I think a lot to think through here, But
and I'm glad you also brought up it's not just
the will. You need a power of attorney, you need
an advanced healthcare directive. I come across people who have
been building assets for years and they've got accounts in
seventeen different places, and you know exactly where everything is,
(19:19):
and you have it all figured out. But what happens
if tomorrow you're not there to log into those seventeen
different accounts to check the balances. First of all, you
might want to consolidate as a matter of convenience for
your loved ones. But second, they need to know where
it is, and they need to have a financial power
of attorney so that they can be reaching out and
taking care of matters for you well.
Speaker 4 (19:40):
And I think this is a good time to bring
up and hopefully eliminate some confusion about what wills do
and do not do. And what we're talking about here
is retirement accounts. Amy. Even if you've got the best
will and trust known, demand your iras your four to
one k's your life insurance. All that stuff passes by
beneficiary designation, not your will. So in your example of
(20:02):
the seventeen different accounts and institutions, a lot of people
have no idea deer in the headlights look when you
ask them who their beneficiaries are. So that's something you
got to stay on top of. In addition to wills
and power of attorney, It's all part of a good
comprehensive estate plan.
Speaker 2 (20:20):
Important stuff. Here's the all Worth advice is state planning.
Speaker 1 (20:22):
It might seem daunting, it's actually a gift to your
loved ones, a way to make sure they are taken
care of and that your wishes are respected. Coming up next,
do you e haven't have cash on hand to weather
this market volatility? All wor Chief Investment Officer Andy's dealt
back with us to discuss some investment solutions. If you
are trying to manage cash, you're listening to Simply Money
presented by all Worth Financial here on fifty five KRC
(20:45):
the talk station.
Speaker 2 (20:52):
You're listening to simply Money presented by all Worth Financial.
Speaker 1 (20:55):
I mean you Wagner along with Bob's sponseller. For now,
gone are the days where if you had your money
in a long term savings account of seedy pretty much
anywhere outside of the markets, you're gonna get point zero
zero zero zero zero six percent right in interest on that.
And in over the past few years, we have seen
a slight change where investors can take advantage of having
(21:16):
money in relatively safe investments. Joining us tonight all worse.
Chief Investment Officer Andy Stout.
Speaker 2 (21:23):
Andy, let's talk.
Speaker 1 (21:24):
About what options are out there for long term investors
right now and kind of how you think they should
be thinking about money that they do have on the sidelines.
Speaker 3 (21:37):
There are definitely a lot of options out there because
you don't want to have all of your money at risk.
I mean, we talked earlier about you know, risk free
investments and if you're wanting to earn more than that
risk free investment, but if you have a situation where
you need that money, you know, that's where you know
cash can certainly, you know, make a lot of sense.
(21:57):
But I mean over time, you know stocks and both
bonds have outperformed cash. But when you think about your
own personal situation, you know, that's where different cash alternatives
can make some sense. And you know there are things
like CDs, UH Treasury bonds, just parking in it in
(22:18):
your savings or checking account, Treasury bills, position traded money
market funds. There's just there's a lot of options out there,
and determining what the best option is really just depends on,
you know, what is available to you at any given
point in time.
Speaker 4 (22:37):
Are you seeing any sweet spots right now on the
yield curve? Andy? When you look when you do compare CDs, treasuries,
money markets, and you look at three month money going
all the way out to maybe four to five year,
you know, maturities, is there anything that's catching your eye
right now that looks like a relative bargain or sweet
(22:57):
spot in which to invest?
Speaker 3 (23:00):
And they're always going not always, but very frequently they're
going to be about the same. I mean, you're going
to see rates on CDs be pretty similar to rates
on treasury bills when you're looking at that same maturity,
because essentially you're giving up a little bit of liquidity.
So if you go to look at you know, like
(23:20):
a three month CD or a three month treasury bill,
I mean you're probably looking about the same. The treasury
bills will probably generally be a little bit higher. Just
for a variety of reasons. Right now, as of you
know today, you're looking about a four point three percent
(23:40):
three month treasury bill and depending on you know, the
the CD rates that are out there, you know, at
any given point in time, you could be looking around
a four percent generally speaking, so it's not going to
be much difference, but treasury bills can offer a little
bit more yield. Now, the thing is with treasury bills,
you know you can buy and sell at any time,
(24:03):
but if you hold it into maturity, you're going to
get that interest right, you know, assuming the US government
does a default, which seems you know, almost impossible and
highly unlikely. So you get that four point three percent,
But if you sell between now and when it actually matures,
you might not get what you expect because a price
could move between now and then. Where's a CD you
(24:24):
pretty much know what you're going to get, and it's protected.
You know, up to the FDIC limit, you're you're going
to know what you're going to get. However, if you
want to get out of that CD early, you might
be taking a bit of a haircut. So when you're
looking at the sweet spots of different areas, I think
you got to think about not only what the rate is,
and you know treasuries might be a little higher interest rate,
(24:46):
but you also need to think about liquidity needs. And
then you also want to think how do you feel
about that FDIC insurance because some people really love that
FDIC insurance. Now that's you know, good if your money's
you know, outside a brokech account, if you're in a
brokerage account. You can also be looking at things like
position traded money market funds and some of those can
(25:07):
offer some you know, better yields or at least competitive
and with those you're going to get daily liquidity and
you also not going to see that change and value.
So with a money market fund, while it's not FDIC protected, uh,
they typically invest in very high uh you know, very
safe securities and you're getting a strong rate. And at
(25:30):
the same time, you get a dollar, and you know
your dollar is worth a dollar, it's not going to
change in value. You assuming you're not in a position, uh,
you know, in a type of money market fund that
sees it's what's called it's an av change or the
dollar can change, and you know we would uh, we
don't like to use those because then the dollar may
not be a dollar, and that can be pretty scary
(25:51):
for a lot of people think like, hey, why is
my cash change changing in value? You don't want that, uh,
at least in my opinion. What you want is we
want to see like a stay your dollars a dollar
and you're getting a good interest rate on it.
Speaker 4 (26:04):
Andy, you bring up a great point about FDIC insurance,
and we have clients, you know, more of more frequently
now than ever before, that have large amounts of cash
that need to be in cash for good reason.
Speaker 2 (26:17):
Maybe they just sold a business something along those lines.
They haven't paid taxes that yet.
Speaker 4 (26:22):
Yeah, absolutely, they're getting ready to buy a home, they're
making a large purchase, or you know what Amy and
I talk about all the time, just having one to
three to six years worth of cash flow, you know,
out of harm's way in the market. My point in
the question that's coming here and they is a lot
of times the amount of cash that we need to
be holding is above that which we can get FDIC
(26:44):
insurance from a single bank. Talk a little bit about
what options we have available for those type of folks
that do have large cash balances that we need to
manage for them. But they want every single penny FDIC insured.
Speaker 3 (27:00):
Yeah, I get it, Bobby. I mean, if you're paying taxes,
you just sold the business you're sitting on, you know,
tens of millions of dollars, and you want to make
sure you're able to pay those taxes and you're not
putting anything at risk because it's just you don't want
to mess with the I R. S. And but at
the same time, you don't want to just give money away, uh,
through a lost opportunity. So you want to have that
money earning something for you and you want it to
(27:23):
be protected. So it might seem you're at a bit
of a h you know, fork in the road. If
you will, you can like either get this liquidity or
it can get you know, or get this interest rate,
or I can get this protection. You can actually get
both through a you know a few different types of
programs that are out there. You know. One of the
ones that you know, we like to look at and
take advantage of is the ability to essentially spread out
(27:47):
large amounts of cash and get up to like about
one hundred million of FDIC insurance coverage. I know, many
people don't sell their business for one hundred million.
Speaker 4 (27:58):
Give it done for me, okay, covers Bob.
Speaker 3 (28:02):
Yeah, all right, so Bob's covered. Now for other people
who might not have one hundred million sitting on the
sideline from selling a business, maybe it's only twenty million,
or maybe it's all very very facetious there. Oh kay. Uh.
You know, if it's twenty million, ten million, five million,
one million, uh, those are all above the FDIC covers.
(28:25):
But what you can do is you can invest in
a or use a vehicle essentially to take that money
and spread it across many different banks where each bank
stays under that two hundred and fifty thousand. So for instance,
you know, we can get up to like one hundred
million of FDIC protected securities while still getting a pretty
(28:45):
attractive yield. I mean, if you're looking at something around
five million or one million, h one million probably gets
probably get somewhere around, you know, a four percent rate,
all protected by FDIC insurance. So you know it might
change as you add more and more money, might you know,
go down from that four percent ish rate, but it's
(29:07):
going to start in that general range, and so you
can get a strong yield and get all that money
protected by the FDIC insurance program.
Speaker 1 (29:16):
Annie, what do you say quickly to investors who want
to pull all of their money out of the markets
and just say, how can I take advantage of you know,
any of these cash management strategies, what's the response to them?
Speaker 3 (29:30):
Well, my response to them would be think about your
long term goals and if you need that money the
short term, probably makes sense not to have it at risk.
But if you're planning for your own you know, personal
time rise, and when we talk long term, Ambe, we're
not talking about, you know, a fifty year time rise,
and I'm talking about what your personal long term is.
(29:51):
And you got to line up that investment mix. And
if you put too much in cash, what you can
end up doing is putting yourself in a position where
you won't be able to meet those financial goals. So
just making sure everything's aligned with it with your financial
plan and what your goals are, making sure you're taking
the right amount of risk, because taking no risk is
often putting you more at risk than you know.
Speaker 2 (30:11):
It's still a risk, right. The risk then becomes inflation.
Speaker 1 (30:14):
You're listening to Simply Money presented by all Worth Financial
here in fifty.
Speaker 2 (30:17):
Five KRZ, the talk station.
Speaker 1 (30:24):
You're listening to simply money presented by all Worth Financial.
I mean, you Wagner, along with Bob spond Salary, have
a financial question you need a little help with. Right now,
there's a red button you can click them while you're
listening to the show right there on the iHeart app
record your question.
Speaker 2 (30:36):
It's coming straight to us. And now it is time
to play some market volatility version of factor fiction.
Speaker 1 (30:43):
I feel like we've been living here a little bit lately.
Let's get to the first one, Bob backed or fiction.
If I'm near retirement, I should just move all my
money to cash to just avoid all this risk fiction.
Speaker 4 (30:56):
And the key word here is all We rarely want
to do something with all of our money, no matter
what's going on in the markets. But you know, Amy
and you and I talk about this all the time.
As people approach retirement, you know one three five years
away from retirement, we are always proactively with our clients
positioning assets to be ready for that retirement date. And
(31:21):
I know you like to do this.
Speaker 3 (31:22):
I like to do this.
Speaker 4 (31:23):
You know, whether it's three months, six months, one year,
year and a half, it's worth of cash. We like
to have some money in short term bonds and cash
equivalents as people retire, so that they don't experience a
big hit right after they stop getting that paycheck, because
that can be very unsettling for people.
Speaker 3 (31:43):
Yeah.
Speaker 1 (31:43):
Yeah, there are strategies you can use here, but they
do not include moving all of your money to cash
to avoid.
Speaker 2 (31:50):
Volatility factor fiction. I need to check my investments every
day to stay on top of things. This is such fiction.
Speaker 1 (31:57):
I'm going to be honest here. I haven't checked MYKA
in the past several weeks.
Speaker 2 (32:02):
Here's why.
Speaker 1 (32:03):
First of all, I'm a long term investor. I know
that over time the markets will rebound and my balance
will come back up. Second of all, I don't like
to walk up to a door, stick my fingers where
it's going to close and slam it, slam my hand
in the door. I know it's going to hurt, right,
and it's the same thing. I know markets are down
(32:24):
right now, Why do I want to check that. It's
not that I've got my head in the sand.
Speaker 2 (32:28):
I have a long term plan.
Speaker 1 (32:29):
I know that my investments will but why am I
going to make myself experience pain when I don't need to? Now,
if you can check it and it's not going to
bother you, that's great. I know myself, I don't like
looking at it when it's down. I'm like, oh, that
really hurts. But I also know that I've got a
long term plan, and so this is a kind of
pull the mirror up to your face and say, if
(32:52):
I'm checking this three times a day, is it making
me crazy?
Speaker 2 (32:55):
Is it helping me? Is it making me feel like
I need to do something that might hurt my life
long term plan? And if that's the case, don't check
it for a little while.
Speaker 1 (33:04):
Right, If you're working with a fiduciary financial advisor, you've
already figured out what your plan is, and that plan
should one hundred percent include how you're gonna weather times
like this of market folatility.
Speaker 2 (33:16):
I don't know, Bob. Are you checking three times a day?
Speaker 3 (33:19):
Yeah?
Speaker 4 (33:19):
But I do that all the time. But I think
you make a great point.
Speaker 2 (33:24):
It's like hitting your head against.
Speaker 4 (33:25):
The wall here, yeah, or worse. I talked I talked
about throwing baseball ball buckets last week.
Speaker 2 (33:32):
That's a show.
Speaker 3 (33:33):
You know.
Speaker 4 (33:33):
I can tend to get all right, But you bring
up a great point. The more most people check this
and think about it and obsess over it, the emotional
need that crops up is thinking, well, I got to
do something yes, And that's when we can get ourselves,
you know, into trouble. If you spend time and energy
on it and look at it and stare at it,
(33:55):
and while you're doing that, you're listening to news headlines
and cable news shows. The natural reaction is well, I
better do something yes, and oftentimes that's the worst thing
you can do.
Speaker 3 (34:04):
Yeah.
Speaker 4 (34:05):
So yeah, I think we've covered that topic.
Speaker 3 (34:07):
Yep.
Speaker 1 (34:08):
Well, factor fiction stocks have historically provided higher long term
returns compared to bonds and cash despite periods of volatility.
Speaker 4 (34:18):
Well, this is a fact, and I think most people
understand this, but there's a difference between understanding and intellectually
and acting upon it emotionally, particularly during times of market
volatility like we're going through now. So yes, we all
know the long term returns are always higher in stocks
than any other asset class, but we've got to hang
(34:40):
in there to experience those returns. And it's counterintuitive when
when we stare at those statements three four times a
day and seeing them going down in value.
Speaker 1 (34:51):
And this is why I think it's really important that
you have built a long term plan because part of
that is how much of your entire portfolio should be
invested in the stock market, right, and so if there's
additional you know, if there's crazy volatility, well then if
you've got some money in bonds and fixed incomes, those
are your shock absorbers. And then you figured out what
(35:11):
your exact percentage is to help weather storms like this.
Coming up next, we've got a dose of Wagner wisdom.
I am coining some new money terms today. We're going
to talk about the vision caster and the strategist. You're
listening to Simply Money presented by all Worth Financial here
in fifty five KRC, the talk station.
Speaker 2 (35:37):
You're listening to Simply Money presented by all Worth Financial.
I mean me Wagner along with Bob's sponseller. I love
that music. It means I've got something to tell you,
and I do.
Speaker 4 (35:48):
It's empowering for me.
Speaker 2 (35:49):
I love It's my walk up music. Joe Stracker hooks.
I love it, love it so much. Okay.
Speaker 1 (35:54):
I also love a dynamic that I have been seeing
in my office more and more recently. I am a
huge proponent of there's a couple and you're both sitting
down with me. Not one of you coming, but I
think what often happens is one person takes on the
role of money strategist and the other person is like, well,
(36:16):
you're in this day in and day out. I'm not
interested in it, So you go meet with the advisor
I'm not going to And the voice it's missing at.
Speaker 2 (36:25):
The table is the vision caster.
Speaker 1 (36:28):
And I think this is a role that's often downplayed
in a relationship when it comes to money. One of
you is strategizing, but the other one has the vision
of long term what the goals really are, and those
two things married together make money magic.
Speaker 2 (36:44):
It's like, why are we doing all this stuff?
Speaker 1 (36:46):
Why are we spending so much time thinking about our
investments and our strategies and making sure that we're keeping
as much of it in our pocket as possible and
not paying Uncle Sam? And sometimes the missing pieces that
person wants to come in my office and all they
want to talk about the strategies, and they're missing why
are we doing this?
Speaker 2 (37:04):
And if both people in the relationship, or even if.
Speaker 1 (37:07):
It's one person and you usually only wear one hat,
my job then is to bring out a little bit
of the other hat and say, okay, if we're talking
about strategies, here what's our vision, what's our goal?
Speaker 2 (37:18):
Why does this even matter?
Speaker 1 (37:20):
Rate Steve Spovac, my former co host, used to always
say money is just a tool, and it's a fantastic tool,
but the tool is to help you reach your goals.
Speaker 4 (37:30):
All great points, Amy, I have nothing to add that
would add to any of the wisdom you just shared
other than I agree one hundred percent.
Speaker 3 (37:39):
Yeah.
Speaker 4 (37:41):
That's why there's the institution of marriage. Husband and wife
come together, they form one person, and there are different
perspectives that are equally valuable in that relationship. And as
the financial advisor trying to help the family as a whole,
we need to hear from both. So both and so
(38:01):
great job.
Speaker 1 (38:02):
Well, some one in my office last week was like, ah,
I bet you see this all the time, right, One's
the spender, one's the saver. And I'm like, yeah, I mean,
there's definitely different dynamics, but I don't think either role
is a negative, right, you know, And I think there's
positives to both of them. But what I do know
is that your long term financial plan and the outlook
(38:24):
is better when both voices are at the table. So
don't discount what the other one is bringing to the table,
and also make sure that your voice is part of
the conversation with the advisor and part of the annual
planning and conversations that are taking place. I guarantee and
the long term that's where the money magic is really made.
Than E've been listening to Simply Money, presented by all
(38:46):
Worth Financial here on fifty five krs the talk station
Today, reasons why some people pulling off planning solutions for
you if you've got.
Speaker 2 (00:13):
Cash lying around? But first, could it be calm in
the markets?
Speaker 1 (00:19):
You're listening disciplly money presented by all Worth Financial Immy
Wagner along with Bob Spondseller. Maybe this is a week
where you don't even have to think about checking your
four oh one K account? Dare I? I know it's
knock on. Would don't walk under any ladders, stay away
from black cats, whatever you gotta do. We've got our
(00:39):
all worst chief investment officer, Andy's down And so before
I say anything else, I'm just going to tee you up.
Speaker 2 (00:45):
Andy.
Speaker 1 (00:46):
I don't want to be the one responsible for saying this.
But do you think maybe we could be in for
a week of relative calm?
Speaker 3 (00:56):
No?
Speaker 4 (00:56):
Probably not.
Speaker 3 (00:58):
I mean, if history's in a guy, I mean, it's
it's unlikely to happen. I mean we did see last week.
I know, stocks pulled back just a bit, at least
on the large cast side. Small cap socks were actually up,
but it was because there was a reprieve in the
negative tariff related headlines. And you know, as an example,
(01:19):
President Trump win talking about China, he said you know,
they're already had one hundred and forty five percent tariff
right we have on them, And he basically acknowledged that
these high tariffs could cost spending to essentially come to
a halt. He said something to the effect of that
he doesn't want them to go any higher because at
a certain point people won't be buying products, and consumer
(01:41):
spending represents seventy percent of the US economy and that
has a big impact. Now, first part, China also said
something similarly where they don't want to respond to a
numbers game, so they want to keep tariffs where they are.
And Beijing previously up their own levee on the US
one hundred and twenty five percent, So we got this
one hundred and forty five percent on the US one
(02:01):
hundred and twenty five percent or from the US one
hundred twenty five percent from China. Now, despite those seemingly
close to one another, the impacts were really different. I mean,
for instance, we import almost three times as much as
what China imports from US. It's going to have a
much bigger impact on their overall economy. So when when
(02:23):
you think about that, you know, we might see a
little bit of quietness there just because both the governments
agreed to pause, and we're in this ninety day other
pause if you will, on those higher tariffs that President
Trump unveiled with this big board. I don't know if
you remember that a few weeks ago, but he said, yeah,
we're going to hold off on upping all of that
(02:44):
for now, at least on everybody except in China. But
getting back to the question of whether or not we'll
see some quietness, you know, last Friday after the market closed,
probably when the biggest news might have come out, where
there was a report suggesting that Trump was exploring ways
(03:07):
that he might be able to fire FED chair jer
own Pal and that would call into question the independence
of the Central Bank, and certainly, you know, raised just
overall level of uncertainty. So from that perspective, no, I
don't expect any sort of quietness because I think markets
(03:27):
will focus on that for a bit.
Speaker 4 (03:31):
Andy, We've got a bunch of corporate earnings coming out
here over the next week or two, right, And what
are you expecting in terms of earnings announcements with all
these tarifts being put on hold until you know, early July.
If it runs out to the whole ninety day completion.
Are you expecting a lot of companies to just not
give guidance for the next quarter or what have you
(03:53):
been seeing so far and what are you expecting on
an earnings front?
Speaker 3 (03:57):
Yeah, I mean that's a really good question. I think
there could be some that avoid giving guidance and some
that give some very disappointing guidance, like you Haded Health
last week, which they tanked twenty two percent and being
a big component of the doat That's why you saw
on Friday the Dell closed much lower than some of
the other major indexes just because of the impact from
(04:18):
United Health. But when you look at the big picture
of earnings and you know what we might expect for
this calendar. You know, right now we're sitting around a
seven percent growth rate if you look at the first
quarter of this year compared to the first quarter of
last year.
Speaker 4 (04:38):
And in MS in terms of year over year earnings
on the S and P five hundred.
Speaker 3 (04:44):
Yeah, just the first quarter by itself compared to the
first quarter of last year, and that that's good. It's
a little bit better than what Wall Street was expecting
at the start of earning season, which was around six
and a half percent. I would actually think this seven
percent growth will probably increase as earning season goes on.
That's what you typically see, Bob. I mean, you typically
(05:05):
see earnings kind of come in near forecast and then
as the season progresses, as we start to get these
big companies reporting like we have Alphabet, which is Google
parents later this week. When you start to get these
big companies Microsoft to you know, NA Video much much
later but this week, Alpha, that that's when you start
(05:25):
to see that growth rate increases. Because they have such
a large amount of sales that in revenue that it
really moves the needle a lot more than many of
the other companies, UH that are out there. So I
would expect that spread to widen, and that's going to
be ultimately, you know, a good thing because when you
think about just the ongoing tariff uncertainties that are out there,
(05:50):
what Wall Street is going to be really looking at
closely is how these companies, you know, address the pressures
related to the tariffs that are essentially on the horizon.
And they're going to be talking about, you know, how
they're going to manage costs, what they're going to do
on a supply chain, to try to navigate the situation.
(06:11):
And I mentioned Alphabet later this week, but we also
have a local company, Procter and Gamble, reporting as well,
and it's going to be really interesting to see, you know,
what they say, given their presence abroad in China, and
also you know the impact that supply chains has on
a consumer staple company like Procter and Gamble.
Speaker 4 (06:33):
Andy, we saw pretty positive retail sales numbers last last
week announced for March, you know, mostly due to surges
in motor vehicle sales, building materials and sporting goods sales.
Would you say that those numbers really have nothing to
do with any possible coming tariffs that may rear their
(06:53):
the effect of which may rear their ugly head here
in sixty to ninety days. Is that almost useless in
from at this point the March retail sales numbers.
Speaker 3 (07:03):
Why would it say they're useless? I mean it was
a pretty good number. If you look at the retail
sales they increased for the month one point four percent,
which was largely driven by people trying to get ahead
of tariff increases. Like motor vehicle and part sales they
soared five point three percent. I mean that's a really
big number. Building materials three point three percent another, you know,
(07:27):
just a significant increase for the month. So those are
where they're trying to get ahead of the game a
little bit. So wouldn't it be too shocking to see
a little bit of a give back in the months ahead.
And we'll see how it all plays out. But there
was some other indicators within that report that did show
a positive sign when you think about the consumer's health.
(07:48):
For instance, restaurants spending, which is a really good measure
of discretionary spending, increased one point eight percent. If you
go look at sporting good sales they were up about
two and a half percent, and just kind of across
the board, it wasn't a bad report, and it really
shows that the consumer is at least coming from a
(08:09):
position of strength before the bulk of these tariffs really
go into place, and that's a good thing. At least
we want to be coming from a position of strength
rather than a position of weakness. So we'll see how
this all shakes out. But what's going to be really
interesting is when you look at that economic data, you know,
what does it mean for the Federal Reserve? How are
(08:29):
they going to reply, especially especially given that the tariffs
have an impact going against what the FED wants to do.
I mean, the FED wants stable inflation, they want maximum employment,
that's their dual mandate. However, what tariffs do is they
actually put upward inflationary pressures on products and they can
(08:50):
slow the economy down, causing employment to weaken. So the
Federal Reserve, if they want to fight inflation and employment,
they can't do both at the same time because those
measures call for conflicting policy responses. Specifically, higher inflation calls
for higher rates to fight weaker job growth calls for
(09:11):
lower interest rates to fight So you can't both raise
interest rates and cut interest rates. So it puts a
FED in a really tough spot. And then to compound
all of that, well, we have the reports about President
Trump exploring ways to fire your own path.
Speaker 2 (09:29):
So a lot to digest, is what you're telling us
right now.
Speaker 1 (09:32):
Andy Stout, our chief investment officer from all Worth, helping
us digest the latest and maybe some expected market volatility ahead.
And I'm going to ask you a question I've asked
you many times on the show because I really like
to get your pulse on it, and it is what
if anything is keeping you awake right now? Is there
(09:52):
anything keeping Andy Stout up or in all of this
market volatility. Maybe there are some nervous, jittery long term investors,
but not one of them.
Speaker 3 (10:02):
I don't lose sleep over this. I mean, the big
thing is just understanding markets go in cycles. You're going
to have periods where you have volatility, and that's kind
of the cost of investing. I mean, it's not a
risk free return. If you want a risk freer return,
you know, go put your money in a bank and
you don't get whatever interest rate they're giving, or more
(10:22):
specific more safely more risk for you. I guess the
US treasuries Now that's a risk free return. Markets have risk,
and if you want to earn above that risk free return,
you have to take on some risk. And taking on
that risk, you know, historically you've seen about an eleven
percent going back to nineteen fifty return on large cap stocks,
well above the risk free rate of return, which is
(10:44):
just you know, I don't know, three to four percent,
so probably somewhere in that range going back over the
same time period. Now, it's nothing. Nothing is free. I mean,
there's an old saying there is no free lunch, so
you got to take on some risk. But here's the thing, Amy,
you know, the landscape obviously remains uncertain, but what history
has shown us is that markets have been resilient over time,
(11:08):
and we think that that's what will continue in the
months and years ahead. And now, of course there will
be bumps along the way, but we'll get past this
rough patch like we have every other rough patch.
Speaker 1 (11:21):
Great perspective, Andy Stout, our chief investment officer, Thank you
so much. Coming up next, a critical part of the
financial planning process. In seven out of ten of you
have not taken care of this. We're going to look
at what it is and why we're not doing it. Next,
you're listening to Simply Money, presented by all Worth Financial
here on fifty five KRC, the talk station. You're listening
(11:46):
to Simply Money persented by all Worth Financial. I mean
you Wagner along with Bob sponseller. If you can't listen
to our show every single night, you don't have to
miss anything we're talking about. Because you know what, there's
a luck going on in the markets right now. You
gotta catch up. We've got to deal podcasts for you.
Just search simply money. It's on the iHeart app or
wherever you get your podcasts coming up at six forty
three fact or fiction. We've got market volatility and we're
(12:10):
going to get into lots of great things there.
Speaker 2 (12:12):
We're going to educate you during this crazy time.
Speaker 1 (12:15):
But right now we are tackling a topic that maybe
on your to do list, and if it is, it's
probably been there for I don't know, six months, six years,
something like that. This is estate planning, Bob. I see
this pretty often. Someone's in my office and they say,
we know we've got to do it, we just.
Speaker 2 (12:35):
Haven't done it.
Speaker 4 (12:37):
Same amy. This comes up way too often for my
comfort level. So let's get into it because this is
critically important that people tackle this. A couple recent surveys
that came across our desk indicate that only three and
ten American adults have any kind of a state plan
in place, will trust, power, attorney, nothing, Only three and ten.
(12:57):
That is an alarmingly low number. And the really the
question we always ask ourselves is why why aren't people
doing this basic part of any good financial plan.
Speaker 1 (13:09):
If this is you, right, you know you haven't tackled
your estate planning yet. If we're going to get We're
going to cross a list of excuses off right now.
Speaker 2 (13:18):
So if any of these are you, I want you
to listen very closely.
Speaker 1 (13:20):
We're going to tell you what we often hear people
say they're not doing this and why we think it's
not an excuse. And the first one is it's not necessary.
I don't have assets. I do think the word estate
planning is a little uh, you know, It's like, well,
I don't have an estate. I'm picturing some massive you know,
you've got to punch in a code to get to
my home. And I actually, like, you know, have a
(13:43):
two hundred and fifty three hundred thousand dollars house whatever
it is. If you own a home, if you own
a car, if you have any assets in a FLOORA
one K you now having a state yes, exactly, you
have an estate.
Speaker 4 (13:58):
Yeah, And I I can only guess as to why
folks are hesitant and want to use that, you know,
rationalize I don't have enough assets. I guess it. I
guess it has to do with when people think of
a state planning, they immediately think of the word attorney.
And when they think of the word attorney, they think
of I've got to spend money. Yes, it's very expensive,
(14:18):
and what I have.
Speaker 1 (14:20):
Isn't enough to rise to the level where I need
to hire an attorney to get this figured out.
Speaker 4 (14:24):
Yeah, and I'm going through a situation right now, Amy
where I've got somebody who is inheriting assets from their
aunt down in Alabama. And to make a long story
real short, they thought they could get away with doing
some of this. And this guy is going to have
to you know, he's going to have to either go
physically go down to Alabama or correspond with a probate
(14:45):
court down in this tiny little county in Alabama just
to get named the executor for this estate. And it's
creating a lot of uncomfortable delays and hassles that could
have easily been avoided.
Speaker 2 (14:57):
Yeah.
Speaker 1 (14:57):
I think another excuse is I'm young, healthy, I've got years.
Speaker 3 (15:01):
Right.
Speaker 1 (15:02):
We all know that the horror stories of something coming
out of the blue often what drives people to get
that first estate plan is if you become parents for
the first time, and then it starts to be well,
what if something happens to both of us, who would
take our children? And I think that oftentimes can get
people to do estate planning. But then, Bob, what I
(15:23):
also see is you do it then when your kids
are little, And now someone's back in my office and
their kids are thirty and they have their own kids,
and they have not updated the estate plan since that time.
It doesn't matter if you are twenty five or fifty
five or ninety five. I would say, if you love
the people around you who would be left to take
(15:46):
care of your estates, then this is an act of love.
It doesn't matter how young you are, how healthy you are,
how much you have.
Speaker 2 (15:54):
This is important.
Speaker 4 (15:56):
Yeah. And some of the reasons it's important go way
beyond just to distributing assets. We're talking about management of
your healthcare directives, yes, and just overall management of your
financial affairs. If you're incapacitated, think car accident, think sudden illness,
medical emergency, something like that. You know, for any of
(16:16):
you that have checked into a hospital, you know, at
any time, even a doctor's office, one of the first
questions they ask is, do yeah have a healthcare directive?
Speaker 3 (16:25):
Yeah?
Speaker 4 (16:25):
And the reason they asked that is if you're not
able to make decisions on your own in the event
of a health emergency. And let's face it, most health
emergencies are unexpected, right, we don't plan for them. They
have them. You want to name the people that are
you want to designate to act on your behalf in
case you're not able to make these decisions for yourself.
(16:47):
And the good news is it's fairly simple, very inexpensive
to get these things done. I know in Ohio, Kentucky,
and Indiana there's basic form documents available, so there's not
a lot of expensive drafting needed. But you need to
have these directives in place to take care of things.
Speaker 1 (17:07):
I'm going to tell you one reason why I didn't
take care of it for a few years, and that's
just procrastination.
Speaker 2 (17:13):
I am someone who constantly in.
Speaker 1 (17:15):
My phone has a list of things to do, and
then I also have a paper list of things to do.
Speaker 2 (17:21):
I have lists about list of.
Speaker 1 (17:23):
Things to do, but as state planning in years past
had always you know, kind of fallen farther on the list.
It's not fun to think about it, it's not fun
to take care of but the sense of accomplishment of
like I have done this, and in the good conversations
often that come out of it, when you and your
spouse are sitting down talking through these things are invaluable.
(17:45):
So if this is the bottom of your to do list,
can we get it bumped up to the top a
little bit, you procrastinators?
Speaker 2 (17:50):
Please?
Speaker 4 (17:52):
Yeah. And I've seen the procrastination come into effect a
lot of times with young couples with young kids, and
they can't I can't even fathom the possibility of both
of them being passed away and having to name guardians
for their kids and they can't decide what they want
to do. Yeah, so they do nothing, and that obviously
is not a good solution.
Speaker 1 (18:13):
Yeah. Well, a lot of times when you've got young kids,
you're just trying to sleep through the night.
Speaker 4 (18:17):
That's right. He knows.
Speaker 2 (18:18):
It was like overwhelming to even think about this, but
it is.
Speaker 1 (18:21):
It's incredibly important regardless of what age you are in
your life. And I also think, you know, do not
use the expense of it as a barrier, because sometimes
some of this is if you need like a very
easy will options that can maybe get that done for you.
Speaker 4 (18:39):
Well, and we have some of those online options available
for our clients here at all Worth. We've been using
now for it and they're great and people love them
and it's little to no expense whatsoever. You know, it's
just getting people to sit down and go through this,
so expense is no longer a good excuse.
Speaker 1 (18:57):
Yeah, I think a lot to think through here, But
and I'm glad you also brought up it's not just
the will. You need a power of attorney, you need
an advanced healthcare directive. I come across people who have
been building assets for years and they've got accounts in
seventeen different places, and you know exactly where everything is,
(19:19):
and you have it all figured out. But what happens
if tomorrow you're not there to log into those seventeen
different accounts to check the balances. First of all, you
might want to consolidate as a matter of convenience for
your loved ones. But second, they need to know where
it is, and they need to have a financial power
of attorney so that they can be reaching out and
taking care of matters for you well.
Speaker 4 (19:40):
And I think this is a good time to bring
up and hopefully eliminate some confusion about what wills do
and do not do. And what we're talking about here
is retirement accounts. Amy. Even if you've got the best
will and trust known, demand your iras your four to
one k's your life insurance. All that stuff passes by
beneficiary designation, not your will. So in your example of
(20:02):
the seventeen different accounts and institutions, a lot of people
have no idea deer in the headlights look when you
ask them who their beneficiaries are. So that's something you
got to stay on top of. In addition to wills
and power of attorney, It's all part of a good
comprehensive estate plan.
Speaker 2 (20:20):
Important stuff. Here's the all Worth advice is state planning.
Speaker 1 (20:22):
It might seem daunting, it's actually a gift to your
loved ones, a way to make sure they are taken
care of and that your wishes are respected. Coming up next,
do you e haven't have cash on hand to weather
this market volatility? All wor Chief Investment Officer Andy's dealt
back with us to discuss some investment solutions. If you
are trying to manage cash, you're listening to Simply Money
presented by all Worth Financial here on fifty five KRC
(20:45):
the talk station.
Speaker 2 (20:52):
You're listening to simply Money presented by all Worth Financial.
Speaker 1 (20:55):
I mean you Wagner along with Bob's sponseller. For now,
gone are the days where if you had your money
in a long term savings account of seedy pretty much
anywhere outside of the markets, you're gonna get point zero
zero zero zero zero six percent right in interest on that.
And in over the past few years, we have seen
a slight change where investors can take advantage of having
(21:16):
money in relatively safe investments. Joining us tonight all worse.
Chief Investment Officer Andy Stout.
Speaker 2 (21:23):
Andy, let's talk.
Speaker 1 (21:24):
About what options are out there for long term investors
right now and kind of how you think they should
be thinking about money that they do have on the sidelines.
Speaker 3 (21:37):
There are definitely a lot of options out there because
you don't want to have all of your money at risk.
I mean, we talked earlier about you know, risk free
investments and if you're wanting to earn more than that
risk free investment, but if you have a situation where
you need that money, you know, that's where you know
cash can certainly, you know, make a lot of sense.
(21:57):
But I mean over time, you know stocks and both
bonds have outperformed cash. But when you think about your
own personal situation, you know, that's where different cash alternatives
can make some sense. And you know there are things
like CDs, UH Treasury bonds, just parking in it in
(22:18):
your savings or checking account, Treasury bills, position traded money
market funds. There's just there's a lot of options out there,
and determining what the best option is really just depends on,
you know, what is available to you at any given
point in time.
Speaker 4 (22:37):
Are you seeing any sweet spots right now on the
yield curve? Andy? When you look when you do compare CDs, treasuries,
money markets, and you look at three month money going
all the way out to maybe four to five year,
you know, maturities, is there anything that's catching your eye
right now that looks like a relative bargain or sweet
(22:57):
spot in which to invest?
Speaker 3 (23:00):
And they're always going not always, but very frequently they're
going to be about the same. I mean, you're going
to see rates on CDs be pretty similar to rates
on treasury bills when you're looking at that same maturity,
because essentially you're giving up a little bit of liquidity.
So if you go to look at you know, like
(23:20):
a three month CD or a three month treasury bill,
I mean you're probably looking about the same. The treasury
bills will probably generally be a little bit higher. Just
for a variety of reasons. Right now, as of you
know today, you're looking about a four point three percent
(23:40):
three month treasury bill and depending on you know, the
the CD rates that are out there, you know, at
any given point in time, you could be looking around
a four percent generally speaking, so it's not going to
be much difference, but treasury bills can offer a little
bit more yield. Now, the thing is with treasury bills,
you know you can buy and sell at any time,
(24:03):
but if you hold it into maturity, you're going to
get that interest right, you know, assuming the US government
does a default, which seems you know, almost impossible and
highly unlikely. So you get that four point three percent,
But if you sell between now and when it actually matures,
you might not get what you expect because a price
could move between now and then. Where's a CD you
(24:24):
pretty much know what you're going to get, and it's protected.
You know, up to the FDIC limit, you're you're going
to know what you're going to get. However, if you
want to get out of that CD early, you might
be taking a bit of a haircut. So when you're
looking at the sweet spots of different areas, I think
you got to think about not only what the rate is,
and you know treasuries might be a little higher interest rate,
(24:46):
but you also need to think about liquidity needs. And
then you also want to think how do you feel
about that FDIC insurance because some people really love that
FDIC insurance. Now that's you know, good if your money's
you know, outside a brokech account, if you're in a
brokerage account. You can also be looking at things like
position traded money market funds and some of those can
(25:07):
offer some you know, better yields or at least competitive
and with those you're going to get daily liquidity and
you also not going to see that change and value.
So with a money market fund, while it's not FDIC protected, uh,
they typically invest in very high uh you know, very
safe securities and you're getting a strong rate. And at
(25:30):
the same time, you get a dollar, and you know
your dollar is worth a dollar, it's not going to
change in value. You assuming you're not in a position, uh,
you know, in a type of money market fund that
sees it's what's called it's an av change or the
dollar can change, and you know we would uh, we
don't like to use those because then the dollar may
not be a dollar, and that can be pretty scary
(25:51):
for a lot of people think like, hey, why is
my cash change changing in value? You don't want that, uh,
at least in my opinion. What you want is we
want to see like a stay your dollars a dollar
and you're getting a good interest rate on it.
Speaker 4 (26:04):
Andy, you bring up a great point about FDIC insurance,
and we have clients, you know, more of more frequently
now than ever before, that have large amounts of cash
that need to be in cash for good reason.
Speaker 2 (26:17):
Maybe they just sold a business something along those lines.
They haven't paid taxes that yet.
Speaker 4 (26:22):
Yeah, absolutely, they're getting ready to buy a home, they're
making a large purchase, or you know what Amy and
I talk about all the time, just having one to
three to six years worth of cash flow, you know,
out of harm's way in the market. My point in
the question that's coming here and they is a lot
of times the amount of cash that we need to
be holding is above that which we can get FDIC
(26:44):
insurance from a single bank. Talk a little bit about
what options we have available for those type of folks
that do have large cash balances that we need to
manage for them. But they want every single penny FDIC insured.
Speaker 3 (27:00):
Yeah, I get it, Bobby. I mean, if you're paying taxes,
you just sold the business you're sitting on, you know,
tens of millions of dollars, and you want to make
sure you're able to pay those taxes and you're not
putting anything at risk because it's just you don't want
to mess with the I R. S. And but at
the same time, you don't want to just give money away, uh,
through a lost opportunity. So you want to have that
money earning something for you and you want it to
(27:23):
be protected. So it might seem you're at a bit
of a h you know, fork in the road. If
you will, you can like either get this liquidity or
it can get you know, or get this interest rate,
or I can get this protection. You can actually get
both through a you know a few different types of
programs that are out there. You know. One of the
ones that you know, we like to look at and
take advantage of is the ability to essentially spread out
(27:47):
large amounts of cash and get up to like about
one hundred million of FDIC insurance coverage. I know, many
people don't sell their business for one hundred million.
Speaker 4 (27:58):
Give it done for me, okay, covers Bob.
Speaker 3 (28:02):
Yeah, all right, so Bob's covered. Now for other people
who might not have one hundred million sitting on the
sideline from selling a business, maybe it's only twenty million,
or maybe it's all very very facetious there. Oh kay. Uh.
You know, if it's twenty million, ten million, five million,
one million, uh, those are all above the FDIC covers.
(28:25):
But what you can do is you can invest in
a or use a vehicle essentially to take that money
and spread it across many different banks where each bank
stays under that two hundred and fifty thousand. So for instance,
you know, we can get up to like one hundred
million of FDIC protected securities while still getting a pretty
(28:45):
attractive yield. I mean, if you're looking at something around
five million or one million, h one million probably gets
probably get somewhere around, you know, a four percent rate,
all protected by FDIC insurance. So you know it might
change as you add more and more money, might you know,
go down from that four percent ish rate, but it's
(29:07):
going to start in that general range, and so you
can get a strong yield and get all that money
protected by the FDIC insurance program.
Speaker 1 (29:16):
Annie, what do you say quickly to investors who want
to pull all of their money out of the markets
and just say, how can I take advantage of you know,
any of these cash management strategies, what's the response to them?
Speaker 3 (29:30):
Well, my response to them would be think about your
long term goals and if you need that money the
short term, probably makes sense not to have it at risk.
But if you're planning for your own you know, personal
time rise, and when we talk long term, Ambe, we're
not talking about, you know, a fifty year time rise,
and I'm talking about what your personal long term is.
(29:51):
And you got to line up that investment mix. And
if you put too much in cash, what you can
end up doing is putting yourself in a position where
you won't be able to meet those financial goals. So
just making sure everything's aligned with it with your financial
plan and what your goals are, making sure you're taking
the right amount of risk, because taking no risk is
often putting you more at risk than you know.
Speaker 2 (30:11):
It's still a risk, right. The risk then becomes inflation.
Speaker 1 (30:14):
You're listening to Simply Money presented by all Worth Financial
here in fifty.
Speaker 2 (30:17):
Five KRZ, the talk station.
Speaker 1 (30:24):
You're listening to simply money presented by all Worth Financial.
I mean, you Wagner, along with Bob spond Salary, have
a financial question you need a little help with. Right now,
there's a red button you can click them while you're
listening to the show right there on the iHeart app
record your question.
Speaker 2 (30:36):
It's coming straight to us. And now it is time
to play some market volatility version of factor fiction.
Speaker 1 (30:43):
I feel like we've been living here a little bit lately.
Let's get to the first one, Bob backed or fiction.
If I'm near retirement, I should just move all my
money to cash to just avoid all this risk fiction.
Speaker 4 (30:56):
And the key word here is all We rarely want
to do something with all of our money, no matter
what's going on in the markets. But you know, Amy
and you and I talk about this all the time.
As people approach retirement, you know one three five years
away from retirement, we are always proactively with our clients
positioning assets to be ready for that retirement date. And
(31:21):
I know you like to do this.
Speaker 3 (31:22):
I like to do this.
Speaker 4 (31:23):
You know, whether it's three months, six months, one year,
year and a half, it's worth of cash. We like
to have some money in short term bonds and cash
equivalents as people retire, so that they don't experience a
big hit right after they stop getting that paycheck, because
that can be very unsettling for people.
Speaker 3 (31:43):
Yeah.
Speaker 1 (31:43):
Yeah, there are strategies you can use here, but they
do not include moving all of your money to cash
to avoid.
Speaker 2 (31:50):
Volatility factor fiction. I need to check my investments every
day to stay on top of things. This is such fiction.
Speaker 1 (31:57):
I'm going to be honest here. I haven't checked MYKA
in the past several weeks.
Speaker 2 (32:02):
Here's why.
Speaker 1 (32:03):
First of all, I'm a long term investor. I know
that over time the markets will rebound and my balance
will come back up. Second of all, I don't like
to walk up to a door, stick my fingers where
it's going to close and slam it, slam my hand
in the door. I know it's going to hurt, right,
and it's the same thing. I know markets are down
(32:24):
right now, Why do I want to check that. It's
not that I've got my head in the sand.
Speaker 2 (32:28):
I have a long term plan.
Speaker 1 (32:29):
I know that my investments will but why am I
going to make myself experience pain when I don't need to? Now,
if you can check it and it's not going to
bother you, that's great. I know myself, I don't like
looking at it when it's down. I'm like, oh, that
really hurts. But I also know that I've got a
long term plan, and so this is a kind of
pull the mirror up to your face and say, if
(32:52):
I'm checking this three times a day, is it making
me crazy?
Speaker 2 (32:55):
Is it helping me? Is it making me feel like
I need to do something that might hurt my life
long term plan? And if that's the case, don't check
it for a little while.
Speaker 1 (33:04):
Right, If you're working with a fiduciary financial advisor, you've
already figured out what your plan is, and that plan
should one hundred percent include how you're gonna weather times
like this of market folatility.
Speaker 2 (33:16):
I don't know, Bob. Are you checking three times a day?
Speaker 3 (33:19):
Yeah?
Speaker 4 (33:19):
But I do that all the time. But I think
you make a great point.
Speaker 2 (33:24):
It's like hitting your head against.
Speaker 4 (33:25):
The wall here, yeah, or worse. I talked I talked
about throwing baseball ball buckets last week.
Speaker 2 (33:32):
That's a show.
Speaker 3 (33:33):
You know.
Speaker 4 (33:33):
I can tend to get all right, But you bring
up a great point. The more most people check this
and think about it and obsess over it, the emotional
need that crops up is thinking, well, I got to
do something yes, And that's when we can get ourselves,
you know, into trouble. If you spend time and energy
on it and look at it and stare at it,
(33:55):
and while you're doing that, you're listening to news headlines
and cable news shows. The natural reaction is well, I
better do something yes, and oftentimes that's the worst thing
you can do.
Speaker 3 (34:04):
Yeah.
Speaker 4 (34:05):
So yeah, I think we've covered that topic.
Speaker 3 (34:07):
Yep.
Speaker 1 (34:08):
Well, factor fiction stocks have historically provided higher long term
returns compared to bonds and cash despite periods of volatility.
Speaker 4 (34:18):
Well, this is a fact, and I think most people
understand this, but there's a difference between understanding and intellectually
and acting upon it emotionally, particularly during times of market
volatility like we're going through now. So yes, we all
know the long term returns are always higher in stocks
than any other asset class, but we've got to hang
(34:40):
in there to experience those returns. And it's counterintuitive when
when we stare at those statements three four times a
day and seeing them going down in value.
Speaker 1 (34:51):
And this is why I think it's really important that
you have built a long term plan because part of
that is how much of your entire portfolio should be
invested in the stock market, right, and so if there's
additional you know, if there's crazy volatility, well then if
you've got some money in bonds and fixed incomes, those
are your shock absorbers. And then you figured out what
(35:11):
your exact percentage is to help weather storms like this.
Coming up next, we've got a dose of Wagner wisdom.
I am coining some new money terms today. We're going
to talk about the vision caster and the strategist. You're
listening to Simply Money presented by all Worth Financial here
in fifty five KRC, the talk station.
Speaker 2 (35:37):
You're listening to Simply Money presented by all Worth Financial.
I mean me Wagner along with Bob's sponseller. I love
that music. It means I've got something to tell you,
and I do.
Speaker 4 (35:48):
It's empowering for me.
Speaker 2 (35:49):
I love It's my walk up music. Joe Stracker hooks.
I love it, love it so much. Okay.
Speaker 1 (35:54):
I also love a dynamic that I have been seeing
in my office more and more recently. I am a
huge proponent of there's a couple and you're both sitting
down with me. Not one of you coming, but I
think what often happens is one person takes on the
role of money strategist and the other person is like, well,
(36:16):
you're in this day in and day out. I'm not
interested in it, So you go meet with the advisor
I'm not going to And the voice it's missing at.
Speaker 2 (36:25):
The table is the vision caster.
Speaker 1 (36:28):
And I think this is a role that's often downplayed
in a relationship when it comes to money. One of
you is strategizing, but the other one has the vision
of long term what the goals really are, and those
two things married together make money magic.
Speaker 2 (36:44):
It's like, why are we doing all this stuff?
Speaker 1 (36:46):
Why are we spending so much time thinking about our
investments and our strategies and making sure that we're keeping
as much of it in our pocket as possible and
not paying Uncle Sam? And sometimes the missing pieces that
person wants to come in my office and all they
want to talk about the strategies, and they're missing why
are we doing this?
Speaker 2 (37:04):
And if both people in the relationship, or even if.
Speaker 1 (37:07):
It's one person and you usually only wear one hat,
my job then is to bring out a little bit
of the other hat and say, okay, if we're talking
about strategies, here what's our vision, what's our goal?
Speaker 2 (37:18):
Why does this even matter?
Speaker 1 (37:20):
Rate Steve Spovac, my former co host, used to always
say money is just a tool, and it's a fantastic tool,
but the tool is to help you reach your goals.
Speaker 4 (37:30):
All great points, Amy, I have nothing to add that
would add to any of the wisdom you just shared
other than I agree one hundred percent.
Speaker 3 (37:39):
Yeah.
Speaker 4 (37:41):
That's why there's the institution of marriage. Husband and wife
come together, they form one person, and there are different
perspectives that are equally valuable in that relationship. And as
the financial advisor trying to help the family as a whole,
we need to hear from both. So both and so
(38:01):
great job.
Speaker 1 (38:02):
Well, some one in my office last week was like, ah,
I bet you see this all the time, right, One's
the spender, one's the saver. And I'm like, yeah, I mean,
there's definitely different dynamics, but I don't think either role
is a negative, right, you know, And I think there's
positives to both of them. But what I do know
is that your long term financial plan and the outlook
(38:24):
is better when both voices are at the table. So
don't discount what the other one is bringing to the table,
and also make sure that your voice is part of
the conversation with the advisor and part of the annual
planning and conversations that are taking place. I guarantee and
the long term that's where the money magic is really made.
Than E've been listening to Simply Money, presented by all
(38:46):
Worth Financial here on fifty five krs the talk station
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