June 29, 2026 • 29 mins
Are you keeping too much money in cash because you’re waiting for the “right time” to invest? In this episode, Tom and Don explain why market timing has historically been one of the costliest investing mistakes—and why even the worstinvestment timing has dramatically outperformed sitting on the sidelines.
They also answer listener questions about immediate annuities, I Bonds, portfolio allocation, sequence-of-returns risk, and why using whole life insurance as an investing strategy is a bad idea.
00:05 – Why so much money is sitting in cash
03:21 – Americans hold over $20 trillion in cash-like accounts
05:08 – The enormous cost of waiting to invest
07:27 – Morningstar’s “Mind the Gap” study and investor behavior
10:41 – Cash is trash (except when it isn’t)
11:41 – How to earn more on your bank savings
15:55 – Should immediate annuities count as bonds in your portfolio?
17:23 – I Bonds vs. TIPS and inflation protection
19:50 – Is 20% cash too much in retirement?
20:43 – Whole life insurance for sequence-of-returns risk?
22:28 – Why the advisor’s recommendation raises red flags
23:39 – The real way to manage sequence risk in retirement
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_00 (00:05):
We're gonna do a really great financial future.
Tom and Don are talking realmoney.
SPEAKER_02 (00:12):
Boy, we're letting a lot of money just sit around
doing nothing.
We're really not making what wecould be making, and we're not
talking a little money, we'retalking a lot.
We're talking real money.
We really are talking real moneyon talking real money, and
that's why we call it talkingreal money, because what do we
do?
We talk real money.
I'm Don McDonald in the lovely,heat, wet, disgusting summer
(00:38):
Florida.
Tom is in cool, collectednortheast northwest Seattle is
area.
Santa Wild Waves.
Sorry about that.
Sad day.
SPEAKER_03 (00:50):
Sad day.
SPEAKER_02 (00:51):
You lost your one outdoor water park that no one
goes to because of the biggest.
SPEAKER_03 (00:54):
No, my one line, my one decent joke.
That one really that oh that wasone that always worked.
SPEAKER_02 (01:01):
Before we get in the topic, wait.
Yeah.
You have a decent joke?
You you've heard it.
You've heard it.
I've heard it.
I haven't laughed.
Well, okay.
The audience titters.
SPEAKER_04 (01:10):
Yeah, the the audience cut I still like the
one.
SPEAKER_03 (01:14):
The all-time favorite is when at last the
most recent retirement.
I told one there was a lengthypause, and you turned your mic
back on and went.
That was a joke, folks.
SPEAKER_02 (01:25):
He did laugh, though.
He's totally entertained byhimself.
SPEAKER_03 (01:30):
I know.
SPEAKER_02 (01:30):
Uh but okay, what's the joke?
The wild waves joke.
SPEAKER_03 (01:34):
The wild wave okay, it goes like I think it's in
Federal Way, Washington, southof Seattle.
It's closing.
It's over.
SPEAKER_04 (01:40):
And you made a very good point like a park in a
place where it's wintery allright.
Where the water comes from thesky.
You don't really need otherwater.
SPEAKER_02 (01:47):
Oh, and we have a lovely Antarctic water park
opening.
SPEAKER_03 (01:51):
You want to be cold?
Really cold?
Uh but the joke goes like thisit's about retirement and the
withdrawals.
If you have a flexiblewithdrawal strategy, right?
You take out a percentage of theportfolio.
So in a good year, you take thewhole gang up, right?
Like 2025, shuffle them off toHawaii, right?
Because it's a pretty nice year.
SPEAKER_02 (02:12):
What Tom's family does.
SPEAKER_03 (02:13):
Yeah.
And then in a bad year, I guessyou have to tell them, sorry, we
had to take out less money.
We're all going to wild waves.
Trevor Burrus, Jr.
SPEAKER_02 (02:20):
Well, now it's even more depressing.
And oh, by the way, let me turnmy mic on.
He thought that was a joke.
SPEAKER_03 (02:24):
I can't do it anymore.
I got to find a new punchlinefor that joke.
SPEAKER_02 (02:28):
I told you it's Great Wolf Lodge.
You used that one last year.
I did.
I know I did.
And it did fall a little flatterbecause I guess it's less
miserable than in the GreaterSeattle area.
SPEAKER_01 (02:41):
Trevor Burrus, Jr.
Not in the nation.
Trevor Burrus, Jr.
SPEAKER_03 (02:43):
Not no nationwide.
No, Great Wolf is one of thoseplaces I absolutely 100% refuse
to step foot in, but I'm notgoing to get close.
And I don't care how much mygrandson said, we're going to go
to Great Wolf Lodge.
No, I'm not going there.
SPEAKER_02 (02:55):
And that's exactly who it's for.
It's geared toward yourgrandson.
Yeah.
SPEAKER_03 (02:59):
They would live there, actually, if they had the
option.
SPEAKER_02 (03:01):
Aaron Powell And one of the reasons you have a lot of
money in cash, I guess, isbecause you want to take your
little ones on a trip to uhGreat Wolf Lodge or Hawaii,
because you know there's a lotof money sitting in savings.
A lot.
Give us the number.
Well, it depends on what kind ofsavings we're talking about.
There's the total savings, whichis checking accounts, savings
(03:24):
accounts, CDs, money markets,all of those.
The Federal Reserve estimatesthat in these cash style
investments, there's abouttwenty and a half trillion
dollars.
Trevor Burrus, Jr.
SPEAKER_03 (03:36):
We just talked to a guy yesterday that double-digit
millions in cash for the lastcouple of years.
Why?
SPEAKER_02 (03:42):
He's worried about the market.
Trevor Burrus, Jr.
SPEAKER_03 (03:44):
Yeah.
He's not taking his kids toGreat Wolf Lodge or his
grandkids.
No, he's been worried.
He's been waiting for themarkets to turn down.
Trevor Burrus, Jr.
Although.
SPEAKER_02 (03:50):
Trevor Burrus Now that I think about it, that$20
trillion isn't as impressivewhen you think of it as 20 Elon
Musk's.
SPEAKER_03 (03:59):
I wonder what his cash holding is.
If I was his advisor, it'd besubstantial, because I still
think anyway.
Trevor Burrus, Jr.
SPEAKER_02 (04:05):
Supposedly, though, the the amount in low-yielding
savings accounts, the kind wemake fun of at Bank of America.
SPEAKER_03 (04:12):
Which are still paying.
Is it three-tenths of onepercent?
No, it was one-tenth.
Remember we last time we looked.
Thank you, Bank of America.
SPEAKER_02 (04:19):
One tenth of one percent.
The amount of money in those isa couple of trillion.
SPEAKER_01 (04:26):
That was like five, but okay.
Trevor Burrus, Jr.
Is that right?
Let me look.
SPEAKER_03 (04:29):
And that's just I hate to be mean to you people,
but that's just laziness.
Did you just call them youpeople?
I hate to be mean to ourlisteners, who I deeply love and
respect, but that's just lazy.
SPEAKER_02 (04:42):
Where is it?
SPEAKER_03 (04:43):
I lost the number.
5.6 trillion.
Yeah.
5.6 trillion.
Trevor Burrus, Jr.
That's just you're just beinginefficient.
That's the word I'm looking for.
You're just not paying enoughattention to that.
You got money sitting aroundthat is just making nothing.
In fact, it's worse than that.
It's losing to the rising priceof fill in the blank.
SPEAKER_02 (05:00):
And you're right.
I don't think the bulk of it isthere because of uh Great Wolf
Lodge or Hawaii or wild waves inthe past.
I think the bulk of it is therebecause people are afraid to
invest it for fill-in-the-blankreason.
SPEAKER_03 (05:16):
Yeah.
And so let me give you a coupleof numbers.
These are his numbers.
These are his numbers.
They're not my numbers, they'rehis numbers.
But according to him,$5,000 ayear into U.S.
stocks between 1980 and 2023.
So I think that's like 43 years.
Mm-hmm.
Yeah.
And what he did because 44years.
(05:36):
Yeah.
What he did because you peoplethink.
You people, there it is again.
That's just pejorative.
I'm pointing as I say this.
Believe somehow that you knowenough about the future that you
know when to invest in stocksand when not to invest in
stocks.
All right?
So had you taken that$5,000 andput it in with perfect timing
each one of those years, that$5,000 a year would have grown
(05:59):
to$5.6 million in the S P$500.
SPEAKER_02 (06:02):
That's buying at the right time every year.
That's right.
Waiting until the absolute lowmoment, the lowest price of that
year every year for 44 years.
SPEAKER_03 (06:14):
Had you had the worst possible timing.
SPEAKER_02 (06:17):
You bought at the highest point every year.
So you you bought when themarket was up.
Wait up.
SPEAKER_03 (06:25):
Like, sound familiar?
Uh would your your money wouldhave grown to 4.3 million.
So there's a$1.3 milliondifference.
That's you know, not pocketchange, I grant you that.
But listen to this number.
Had you just left it in cash,$5,000,$5,000,$5,000, that money
(06:45):
would have turned into$350,000.
Remember, that's versus$5.6 or$4.3 million.
So had you invested it, anytime.
Not try to time the market, nottry to see the future, not try
to have any idea about what'snext, because we know you don't
(07:08):
know, you people, what's next.
Sorry, I'm just having fun now.
Uh I'm gonna get in trouble forthat probably.
SPEAKER_02 (07:15):
No, I'm just not gonna comment anymore.
Because I fa I decided if youfeed you if I feed you any any
attention, it reinforces the badbehavior.
SPEAKER_03 (07:25):
That's a good point.
Um So why?
Why are you doing this?
Why are you uh and by the way,there's more numbers if you
really Morningstar does theirmind the gap study.
SPEAKER_02 (07:36):
That's kind of like the Dalbar study, remember that
looked at the Yeah, like theDalbar study that measures
investors' behavior versus justbuying the market.
Yeah.
SPEAKER_03 (07:45):
Yeah.
Not not how much the market did,or not how much that fund did,
but how much the real investingpublic did.
Yes.
You people, how you did.
Sorry.
According to Morningstar, uh,mutual fund investors earned 1.2
percent less than mutual fundsover on average over the last
(08:07):
decade.
And before that, by the way, theDalbar study used to have a
greater differential.
Trevor Burrus, Jr.
SPEAKER_02 (08:11):
Oh, it was a much bigger differential.
But actually the funny thing isthat over time, the differential
gradually grew smaller.
It did.
Because our behavior has beenchanging over the past several
decades.
I've seen it in my ownexperience in this industry.
Uh I mean, I've been in thefinancial services industry now
since 1983, and I've seendramatic changes in the way
(08:36):
investors behave.
You are becoming moredisciplined in your approach,
and that's why that gap hasnarrowed.
But what it still shows is thatwe are our own worst enemies
when it comes to investing,still, because we think we know
things that can't be known.
We keep proving it over and overand over again, and yet many,
(08:59):
many of you continue to cling tothe mistaken belief that your
senses are so highly attuned tothe goings-on in the world that
you know when I should be.
It's obvious I know when to beout and I know when to be in.
And you're just deludingyourself.
SPEAKER_03 (09:16):
Or you think you know someone who does.
I just saw a very good friendover the weekend I had not seen
in some time, and he even said,What are your tea leaves show?
Which I had to explain.
SPEAKER_02 (09:26):
Everybody asks that when I get around people saying,
So what do you think themarket's gonna do?
Uh it's gonna go up and it'sgonna go down.
SPEAKER_03 (09:35):
That's about it.
SPEAKER_02 (09:36):
So let me give you those numbers.
It'll go up more than it goesdown.
SPEAKER_03 (09:40):
Just for those of you who are still thinking, you
know, I'm gonna wait for X orI'm gonna wait for Y again.
5,000 a year into U.S.
stocks, 1980 to 2023, perfecttiming 5.6 million using the SP.
Worse timing, 4.3 million,leaving it in cash,$350,000.
(10:02):
Now you can decide which one ofthose is the better option.
SPEAKER_02 (10:05):
I think the math in this case is pretty clear.
And always believe the math.
Math is one of those things thatis pretty rigid.
Usually right.
Don't like math because it's notone, it was not my favorite
subject in school.
I hated math.
I like geometry.
(10:26):
But algebra, I went, why do wehave letters?
What good are those lettersdoing?
I can't add up a darn letter.
Well, apparently I can, but Ijust couldn't figure it out
because it was like, this isbaffling.
Now I understand it.
But I'm almost dead.
Uh anyway, that that thatthere's a there's a message in
here.
And again, the message is keepyour emotions out of this thing.
SPEAKER_03 (10:50):
Well, timing doesn't matter.
Don't believe anybody.
Timing has never worked.
No, it's never worked.
But it make you feel better insome cases, right?
Because you're very smart.
SPEAKER_02 (10:59):
I shouldn't have said timing has never worked.
It has worked occasionally.
But the only reason we can findlogical, scientifically studied
reason for market timing workingis luck.
SPEAKER_03 (11:15):
Yeah.
And uh that can happen, and weget it, there can be people that
get lucky more than once.
Number two is cash is trash.
Unless it's for a short-termneed or an emergency.
That's really about the onlytime.
I mean and because the rest ofit suggests you even see mutual
funds manage this way.
(11:36):
We're holding on to that moneynow, waiting for blank.
There is no blank that thatmeans anything.
SPEAKER_02 (11:43):
It's by the way, if you have money in a savings
account at your bank right now,and many of you do, to the tune
of apparently trillions ofdollars, uh, you might want to
check with your bank and askthem what the interest rate is.
And then you might want to askthem, do you have a secret
account that pays more?
SPEAKER_03 (12:04):
You found that out that one time, remember?
SPEAKER_02 (12:07):
Yes.
SPEAKER_03 (12:07):
They do a secret one.
Oh, you want to be in theaccount that makes money.
SPEAKER_02 (12:12):
We're not gonna tell people that exists.
SPEAKER_04 (12:14):
That's crazy.
SPEAKER_02 (12:15):
But if you ask and you say, Well, here's the thing.
You know that$100,000 I have insavings, or that$50,000?
I'm thinking about moving it.
Can you pay me more?
Magically, they're gonna find away to pay you a little bit
more.
Now, if they don't get it tofour percent on savings, then
(12:36):
you still should probably leave.
SPEAKER_03 (12:37):
But if they get you to three and a half, and
somebody today just told me theygot a one-year CD at four.
SPEAKER_02 (12:43):
Yeah, no, I've got I've got a CD ladder where they
all average four, right aroundfour.
SPEAKER_03 (12:48):
Yeah.
SPEAKER_02 (12:48):
So, okay, but so see, four, four, though, is four
is actually keeping you at orahead of inflation.
Four is a is a stability portionof the portfolio number.
That's where you can have cashin your portfolio that's not
just for emergencies orimmediate needs.
(13:09):
That it's part of your fixedincome portfolio.
Yeah.
SPEAKER_03 (13:12):
Yeah.
Because that basically betweentaxes and inflation, four is
about covering the coveringbill.
Covering the bill.
Yeah.
But if you're going to insist onhaving cash, as you just said,
it should be in either highyield savings or CDs somewhere
where you're making something onit.
Don't be inefficient and letthat money sit around and not to
(13:35):
pick on Bank of America, but Ilike picking on Bank of America.
Well, we can't.
And we both bank with them.
I know.
I hate myself every day when Ilook at the stuff that's a good
thing.
Well, but the con it's theconvention.
I know.
It's easy.
Yeah.
It's fast food.
SPEAKER_02 (13:48):
It's their website is so easy to deal with.
I've dealt with other banks'websites and payment systems,
and they're just a nightmare.
My wife banks with uh oh used tobe Sun Trust.
What's it called now?
Truist.
Truest.
Oh, truest, yeah.
Their website is a mess.
It's just a mess.
(14:08):
So that's why I bank with them.
But anyway, uh we love takingyour questions.
We also realize that we'recoming into the summer months,
and that tends to be kind of adoldrum period for questions.
Uh we could use more of them forthe programs that we do, the
five of them, because ourfavorite part of every program
is the question and answerperiod.
(14:30):
And some of those writtenquestions that you type in, Tom
will actually get in touch withyou and set up a phone call, and
uh we'll do those on the show,though we don't have any right
now.
Um, and then here's the otherthing.
I was getting a huge influx ofspoken questions.
Yes.
To the point where I was able todo five a show every week on
(14:51):
Fridays.
They're dwindling.
Good thing we have a couple ofFriday holidays.
Good some Friday holidays comingup.
They're dwindling.
Come blowing in.
So when you go totalkingrealmoney.com, you'll see
a button that says ask aquestion.
You can use that for both.
Or if you want to speak yourquestion, just click the
(15:11):
microphone button in the corner.
Record you, and then send you alittle bit more.
SPEAKER_03 (15:14):
And we will answer them.
I don't think we'll vote.
There's a couple that there's acrypto thing that we didn't do
once because we had 14 cryptoquestions, but basically.
SPEAKER_02 (15:23):
Well, and it really wasn't a question, it was more
of a criticism.
SPEAKER_03 (15:26):
Yeah.
SPEAKER_02 (15:27):
And we know hey guys, hey, crypto guys.
Hey, yeah, you, you know you'rethere.
You people.
Um we know what we get yourpoint.
We just disagree with it.
Okay?
SPEAKER_03 (15:40):
Yeah.
SPEAKER_02 (15:41):
Can we just agree to disagree?
We don't buy the story.
We don't.
SPEAKER_03 (15:47):
We're not gonna air criticisms unless they're of
Don.
SPEAKER_02 (15:52):
Oh, we hear those all the time.
SPEAKER_03 (15:54):
Go for that's saying, anyway.
SPEAKER_02 (15:55):
Uh we do have a couple of type questions,
though, that Tom has collectedand uh and printed and then
reads.
Like now.
SPEAKER_03 (16:03):
Like this from Arlington, Texas, Kirk.
Hi guys.
My wife and I have$3.8 millionin liquid investment assets.
We also own five immediateannuities.
Cash?
In liquid immediate investment.
No, it didn't say cash.
Liquid cash investment.
What other liquid investment isthere?
You could say stocks or bonds ifthey're in funds or liquid.
SPEAKER_02 (16:28):
Go ahead.
SPEAKER_03 (16:29):
Also own five immediate annuities of 100K each
with five highly rated insurancecompanies.
The monthly income from them, itseems to me, has bond-like
qualities.
SPEAKER_02 (16:40):
No, while balancing and rebalancing, I know what
he's gonna add.
SPEAKER_03 (16:44):
I use bond equity ratios and ignore the IA income,
33k plus 2% colas in thecomputation.
Should I include the IA incomeon the bond side for balancing
purposes while ignoring themsince they have no recoverable
value in my net worthassessments?
SPEAKER_02 (17:01):
You ignore them in both, in my opinion, because
they have no net worth value.
And we don't want we don'tsuggest you have fixed income in
your portfolio for the income.
It's for the stability of theprincipal, and there is no
principle that can go back intoyour portfolio if needed.
It's gone.
The principle is gone.
It is it has been converted intoan income stream.
(17:22):
That that would be like saying,okay, your social security is a
bond.
It's not.
Yeah.
It's an income stream.
SPEAKER_03 (17:30):
Thank you.
Those are two very differentstuff.
SPEAKER_02 (17:32):
You can't cash it out, so it's not confused.
SPEAKER_03 (17:35):
Uh he also asks, we have 350K in I bonds.
These are 30-year bonds thathave seemingly no long-term bond
interest rate fluctuationexposure.
All of them have assorted fixedrate components as well as
biannual inflation rateadjustments.
They represent 26% of our bondholdings.
I'd like to know that if thatinflation fighting influence is
(17:58):
a desirable portion of ourassets, and is there any reason
to add tips?
Are these two reviews?
SPEAKER_02 (18:04):
You've got enough now.
Gee whiz.
Apparently you're a bit of aninflation uh uh fearer?
I was trying to think of whatthe word was.
Fearer.
It's not fearer.
You're a bit of an inflation.
Be careful the way you say it.
It's not an inflation hawk.
It's not an inflation dove, it'san inflation concerned person.
(18:26):
Yeah.
Why can't I?
I hate senior moments.
Uh wait till tomorrow you'llhave the word just like that,
too.
I know I will too.
Um but no, you've got plenty.
Stop.
SPEAKER_03 (18:37):
Yeah.
He went on.
He says we have 20% of ourinvestment assets in cash.
I think we just talked aboutthat.
39% in equities, 36% in fixedincome, and 4% in precious
metals.
By most standards, the cashholdings are too high, but they
earn 4% these days, and we likethe comfort associated with
hedging on the conservative sidesince our drawdown is quite low.
(18:59):
We aren't greedy.
Um, by the way, he says he's 69.
So this is a 69.
SPEAKER_02 (19:05):
This basically is a 40-60 portfolio.
SPEAKER_03 (19:06):
Yep.
My wife uh is uh 69, he's 73.
What do you think?
Thank you so much for what youguys do.
My dog walks me about four milesa day.
You occupy a large portion ofthat time.
I'm grateful.
I you know, I cannot tell youthe number of people I talk to
that that listen to this podcastwhile walking Rover.
I think it's touching in manyways.
(19:27):
So we're helping dogs.
No, Buddy, Tucker, uh whateveryou want to call them.
So uh but the question at handreally is and you answered the
crux of the matter.
Income is a different thing thanassets.
Should be viewed that way, too.
Trevor Burrus, Jr.
SPEAKER_02 (19:43):
Yeah, you've got a you've got a very conservative
portfolio.
SPEAKER_03 (19:46):
Yes, which is fine.
SPEAKER_02 (19:48):
Which is fine.
Um I do think there's oneconcern that I would have, and
that's the fact that so much ofyour fixed income is in very
short-term money.
And that exposes it to thepotential of interest rate
declines.
That's right.
Because the the rate of returncan fall very quickly, and then
(20:09):
the problem is the rate tends tofall across the board, so you
can't really move it intosomething longer term.
You want to have it betterspread out.
You want more of a ladderingeffect, I think, than just
having five large cash jumpchunk.
SPEAKER_03 (20:22):
Five year on your ladder?
Five.
SPEAKER_02 (20:24):
I do a five-year ladder on my C D ladder.
SPEAKER_03 (20:26):
Okay.
SPEAKER_02 (20:27):
I got my CD ladder and BND.
So I have both in my fixedincome portfolio.
SPEAKER_03 (20:32):
Well diversified, I should say.
Yeah.
We got time for one more.
Squeeze in another one?
SPEAKER_02 (20:37):
Well, it depends on how long the dog walk is.
The dog says This is gonna be alonger, the dog is gonna love
this walk.
SPEAKER_03 (20:43):
This dog says, keep going.
Hi guys, I have a questionregarding mitigating the risk of
sequence returns early inretirement.
My advisor is recommended awhole life insurance policy via
non-direct recognition contract.
Oh, yeah.
He thinks is a good strategy tomitigate sequence of return risk
in the first few years ofretirement.
(21:04):
Essentially, you can borrowmoney from this policy, then pay
yourself back without disruptingthe compounding of interest in
the policy.
Of course, I understand yourstance on the whole life policy,
uh whole life insurance ingeneral, but this is something,
but he says, is this somethingworth considering?
If not, what are some of thebest ways to try to deal with
(21:24):
sequence of returned risk?
SPEAKER_02 (21:27):
This is one of those gadgeting gizmos, it's bank on
yourself, it's infinite banking.
It is it is so close, so close,to being a little scammy.
I mean, I really dislike it.
And it's sold by people who aremaking big commissions on on
(21:50):
whole life sales.
Big.
It's not this is not a solutionto the problem.
You're borrowing back your ownmoney if the policy.
Ever lapses, then all the loansbecome taxable.
Uh it could be, it's just therethere's so much, there's there's
so many problems in this reallycomplex strategy.
(22:10):
I would fire this advisor, bythe way.
SPEAKER_04 (22:12):
Yeah, I would too.
SPEAKER_02 (22:13):
This advisor, this advisor has proven that they are
not working for you.
They have absolutely proven thatby selling you something with as
high a commission as thisproduct has.
This is a bad, bad, bad advisor.
I don't care if it's yourbrother, this is a bad advisor.
You he it it's your money.
You should never work with thisperson again.
As far as sequence of returnrisk goes, the key is having the
(22:36):
best allocation for your risk,need, and tolerance.
That solves the equation.
If you have enough fixed incomeand the stock market plunges for
a while, you can still live onthe fixed income and the income
provided from that fixed income.
Let me cut in there real quick.
SPEAKER_03 (22:57):
Let's just say, for example, that you have a
million-dollar portfolio andhalf of it is in fixed income.
Right?
And you're taking out fivepercent because you're being
aggressive.
You have ten years ofwithdrawals there, right?
50,000 times before the marketneeds to recover.
We've never had a market stayunderwater for 10 years, so you
should still be okay under thatcircumstance.
SPEAKER_02 (23:18):
And even if it did, then we are in a situation where
the economy of the world, by theway, the world, if it's not just
the U.S., the economy, the worldis in horrible shape if we have
a market that stays down for tenyears.
That means that along the way,you are likely going to be
cutting your spending.
(23:39):
Because the economic conditionsare terrible.
You're you're you're not whatyou're gonna look around and and
see that the economy iscollapsing before your very eyes
if the market stays down for tenyears.
That's worse than the GreatDepression.
And during the Great Depression,I'm pretty confident you saw the
economy collapsing.
(23:59):
And by the way, the other thingthat tends to happen in
depressions is deflation.
Which means, oh, all of a suddenyou don't need to spend as much.
So we we worry way too muchabout bad markets.
If you have the right portfolioto begin with, you really don't
(24:20):
have to worry.
Except in the most extremecases, and then the whole thing
you may not even exist anymore.
SPEAKER_03 (24:30):
Let's not go there.
But I will say this aboutsequence of return risk.
Yes, it's an issue because ifyou retired in the fall of 2008
and you started taking money outfor the next six, eight months
before the market recovered,that could have an impact on
your overall portfolio that maytake years to recover.
No doubt.
Not if you were in bonds.
(24:50):
But no, what I'm saying is thatit could have an impact.
It could make things look worse.
And it does.
That's the thing.
But things retirement's a 20,hopefully 20 to 25 year time
period.
So things look bad then, butthey look better later on.
So yes, I do think it'soverworrying, and people when
they start retirement, I get it,the stress level is higher
because instead of getting thisregular check, now you're living
(25:12):
off the money that you saved.
Your pile, as somebody soeloquently wants to do that.
SPEAKER_02 (25:17):
But that's what the pile is there for.
SPEAKER_03 (25:18):
Exactly.
SPEAKER_02 (25:19):
So that's what the mattress is there for, to draw
from in in downturns, indowntimes.
You of course you don't want totouch it, you want to see it
grow.
We all do.
That's the greed part of us.
But it's there for worst-casescenarios, and we have never
suggested ever, and we neverwill, that anybody going into
(25:41):
retirement have a hundredpercent of their money in the
stock market, and that's whensequence of return risk really
slaps you upside the head.
Is if you ha exp experience a2008 and 100% of your money's in
in stocks.
SPEAKER_03 (25:57):
You paid a big price then.
No question.
SPEAKER_01 (26:00):
Yeah.
And you're drawing on it?
SPEAKER_03 (26:02):
Bad.
Bad, bad, bad.
SPEAKER_01 (26:03):
We really have to go.
Long episode.
Okay.
I'm well, I don't know.
It's gonna be quiet now then.
Go ahead.
We're gonna stop.
SPEAKER_02 (26:09):
If you have any questions, send them in at
talkingrealmoney.com.
Just click on the button thatsays ask a question or speak
them by clicking on themicrophone in the corner.
If by some strange chance you'vegot a portfolio, you've done
pretty well, you've saved somemoney, but you're looking at it
and you're going, I don't thinkTom or Don would like this
necessarily.
Maybe I should get anotheropinion.
Well, that opinion is available.
(26:32):
And that opinion comes with nocost and no obligation.
And I swear to you, cross myheart, hope did I stick a needle
in my eye?
Oh, don't do that.
That sounds gross.
Uh that we will not that therewhoever you talk to is not gonna
pressure you to become a no buy,sell, or mutilate?
SPEAKER_03 (26:48):
Anything above?
SPEAKER_02 (26:48):
None of that stuff.
Okay.
Nope.
As a matter of fact, you couldeven put on the forum the ask uh
it says meet an advisor.
Click click on that and say, andput a note in that says, Can I
meet with Tom?
SPEAKER_03 (26:58):
Yeah if you want to.
You can meet me on Paros verysoon.
SPEAKER_02 (27:00):
So are you gonna actually be calling people from
Greece?
Probably.
You know me, I'll get a page.
You know, he goes on vacation,he goes, I'm bored.
SPEAKER_04 (27:09):
I'll call somebody.
Sure.
SPEAKER_02 (27:10):
How long can I sit in the sun?
Your wife says, all day.
Yeah.
Tom goes, no, like 30 minutes.
Uh unless I've got a great book.
SPEAKER_03 (27:18):
No, it depends how much oozo I had the night
before.
That will determine the point ofthe church.
Drink oozo?
No.
I was just telling everybody atdinner last time I'm gonna have
my one drink of it so I can sayI had one, and that's it.
That's stuck in the world.
It's like drinking black awfulburning black licorice.
I don't like it, but I'm gonnado one because you know I'm in
Greece and that's what you do.
(27:38):
So that's it.
SPEAKER_02 (27:39):
So you're greasing the skids.
As it were, it'll be skiddingall right.
All right, everybody, thanks forbeing there.
Please tell a friend or two orten.
And uh remember, if money'simportant to you and you really
want a better future, you needto go wherever somebody is
talking real money.
SPEAKER_00 (27:57):
The opinions and views expressed on this podcast
were current on the daterecorded.
Opinions, estimates, forecasts,and statements of financial
market trends that are based oncurrent market conditions
constitute our judgment and oursubjects change without notice,
including any forward-lookingestimates or statements which
are based on certainexpectations and assumptions.
Although information andopinions given have been
obtained from or based onsources believed to be reliable,
no warranty or representation ismade as to their correctness,
(28:18):
completeness, or accuracy.
Information presented on thepodcast is not personalized
investment advice from ApolloWell.
The views and strategiesdescribed may not be suitable
for everyone.
This podcast does not identifyall the risks, direct or
indirect, or otherconsiderations which might be
material to you when enteringany financial transaction.
Past performance does notguarantee feature results, and
profitable results cannot beguaranteed.
We hope you realize that theinformation provided on Talking
(28:40):
Real Money is for informational,educational, and hopefully
enjoyable purposes only.
The podcast is not trying to getyou to buy or sell any financial
products or securities.
Instead, the program is providedas a public service by Apello
Wealth, a fee-only registeredinvestment advisor.
Please see Apello Wealth's ADBPart 2A on our website for
information regarding Appello'sfees and services.
Apello Capital, L O C D B AApello Wealth, is an investment
(29:01):
advisory firm registered withthe Securities and Exchange
Commission.
The firm only transacts businessin the states where it is
properly registered or excludedor exempt from registration
requirements.
Registration with the SEC or anystate securities authority does
not imply a certain level ofskill or training.
Apello does not provide tax orlegal advice, and nothing either
stated or implied here should beinferred as providing such
advice.
Thanks for listening, and pleasevisit talkingrealmoney.com for
(29:23):
more information and importantdisclosure related to
performance of any specificindex or fund quoted in this
podcast.
We're gonna do a really great financial future.
Tom and Don are talking realmoney.
SPEAKER_02 (00:12):
Boy, we're letting a lot of money just sit around
doing nothing.
We're really not making what wecould be making, and we're not
talking a little money, we'retalking a lot.
We're talking real money.
We really are talking real moneyon talking real money, and
that's why we call it talkingreal money, because what do we
do?
We talk real money.
I'm Don McDonald in the lovely,heat, wet, disgusting summer
(00:38):
Florida.
Tom is in cool, collectednortheast northwest Seattle is
area.
Santa Wild Waves.
Sorry about that.
Sad day.
SPEAKER_03 (00:50):
Sad day.
SPEAKER_02 (00:51):
You lost your one outdoor water park that no one
goes to because of the biggest.
SPEAKER_03 (00:54):
No, my one line, my one decent joke.
That one really that oh that wasone that always worked.
SPEAKER_02 (01:01):
Before we get in the topic, wait.
Yeah.
You have a decent joke?
You you've heard it.
You've heard it.
I've heard it.
I haven't laughed.
Well, okay.
The audience titters.
SPEAKER_04 (01:10):
Yeah, the the audience cut I still like the
one.
SPEAKER_03 (01:14):
The all-time favorite is when at last the
most recent retirement.
I told one there was a lengthypause, and you turned your mic
back on and went.
That was a joke, folks.
SPEAKER_02 (01:25):
He did laugh, though.
He's totally entertained byhimself.
SPEAKER_03 (01:30):
I know.
SPEAKER_02 (01:30):
Uh but okay, what's the joke?
The wild waves joke.
SPEAKER_03 (01:34):
The wild wave okay, it goes like I think it's in
Federal Way, Washington, southof Seattle.
It's closing.
It's over.
SPEAKER_04 (01:40):
And you made a very good point like a park in a
place where it's wintery allright.
Where the water comes from thesky.
You don't really need otherwater.
SPEAKER_02 (01:47):
Oh, and we have a lovely Antarctic water park
opening.
SPEAKER_03 (01:51):
You want to be cold?
Really cold?
Uh but the joke goes like thisit's about retirement and the
withdrawals.
If you have a flexiblewithdrawal strategy, right?
You take out a percentage of theportfolio.
So in a good year, you take thewhole gang up, right?
Like 2025, shuffle them off toHawaii, right?
Because it's a pretty nice year.
SPEAKER_02 (02:12):
What Tom's family does.
SPEAKER_03 (02:13):
Yeah.
And then in a bad year, I guessyou have to tell them, sorry, we
had to take out less money.
We're all going to wild waves.
Trevor Burrus, Jr.
SPEAKER_02 (02:20):
Well, now it's even more depressing.
And oh, by the way, let me turnmy mic on.
He thought that was a joke.
SPEAKER_03 (02:24):
I can't do it anymore.
I got to find a new punchlinefor that joke.
SPEAKER_02 (02:28):
I told you it's Great Wolf Lodge.
You used that one last year.
I did.
I know I did.
And it did fall a little flatterbecause I guess it's less
miserable than in the GreaterSeattle area.
SPEAKER_01 (02:41):
Trevor Burrus, Jr.
Not in the nation.
Trevor Burrus, Jr.
SPEAKER_03 (02:43):
Not no nationwide.
No, Great Wolf is one of thoseplaces I absolutely 100% refuse
to step foot in, but I'm notgoing to get close.
And I don't care how much mygrandson said, we're going to go
to Great Wolf Lodge.
No, I'm not going there.
SPEAKER_02 (02:55):
And that's exactly who it's for.
It's geared toward yourgrandson.
Yeah.
SPEAKER_03 (02:59):
They would live there, actually, if they had the
option.
SPEAKER_02 (03:01):
Aaron Powell And one of the reasons you have a lot of
money in cash, I guess, isbecause you want to take your
little ones on a trip to uhGreat Wolf Lodge or Hawaii,
because you know there's a lotof money sitting in savings.
A lot.
Give us the number.
Well, it depends on what kind ofsavings we're talking about.
There's the total savings, whichis checking accounts, savings
(03:24):
accounts, CDs, money markets,all of those.
The Federal Reserve estimatesthat in these cash style
investments, there's abouttwenty and a half trillion
dollars.
Trevor Burrus, Jr.
SPEAKER_03 (03:36):
We just talked to a guy yesterday that double-digit
millions in cash for the lastcouple of years.
Why?
SPEAKER_02 (03:42):
He's worried about the market.
Trevor Burrus, Jr.
SPEAKER_03 (03:44):
Yeah.
He's not taking his kids toGreat Wolf Lodge or his
grandkids.
No, he's been worried.
He's been waiting for themarkets to turn down.
Trevor Burrus, Jr.
Although.
SPEAKER_02 (03:50):
Trevor Burrus Now that I think about it, that$20
trillion isn't as impressivewhen you think of it as 20 Elon
Musk's.
SPEAKER_03 (03:59):
I wonder what his cash holding is.
If I was his advisor, it'd besubstantial, because I still
think anyway.
Trevor Burrus, Jr.
SPEAKER_02 (04:05):
Supposedly, though, the the amount in low-yielding
savings accounts, the kind wemake fun of at Bank of America.
SPEAKER_03 (04:12):
Which are still paying.
Is it three-tenths of onepercent?
No, it was one-tenth.
Remember we last time we looked.
Thank you, Bank of America.
SPEAKER_02 (04:19):
One tenth of one percent.
The amount of money in those isa couple of trillion.
SPEAKER_01 (04:26):
That was like five, but okay.
Trevor Burrus, Jr.
Is that right?
Let me look.
SPEAKER_03 (04:29):
And that's just I hate to be mean to you people,
but that's just laziness.
Did you just call them youpeople?
I hate to be mean to ourlisteners, who I deeply love and
respect, but that's just lazy.
SPEAKER_02 (04:42):
Where is it?
SPEAKER_03 (04:43):
I lost the number.
5.6 trillion.
Yeah.
5.6 trillion.
Trevor Burrus, Jr.
That's just you're just beinginefficient.
That's the word I'm looking for.
You're just not paying enoughattention to that.
You got money sitting aroundthat is just making nothing.
In fact, it's worse than that.
It's losing to the rising priceof fill in the blank.
SPEAKER_02 (05:00):
And you're right.
I don't think the bulk of it isthere because of uh Great Wolf
Lodge or Hawaii or wild waves inthe past.
I think the bulk of it is therebecause people are afraid to
invest it for fill-in-the-blankreason.
SPEAKER_03 (05:16):
Yeah.
And so let me give you a coupleof numbers.
These are his numbers.
These are his numbers.
They're not my numbers, they'rehis numbers.
But according to him,$5,000 ayear into U.S.
stocks between 1980 and 2023.
So I think that's like 43 years.
Mm-hmm.
Yeah.
And what he did because 44years.
(05:36):
Yeah.
What he did because you peoplethink.
You people, there it is again.
That's just pejorative.
I'm pointing as I say this.
Believe somehow that you knowenough about the future that you
know when to invest in stocksand when not to invest in
stocks.
All right?
So had you taken that$5,000 andput it in with perfect timing
each one of those years, that$5,000 a year would have grown
(05:59):
to$5.6 million in the S P$500.
SPEAKER_02 (06:02):
That's buying at the right time every year.
That's right.
Waiting until the absolute lowmoment, the lowest price of that
year every year for 44 years.
SPEAKER_03 (06:14):
Had you had the worst possible timing.
SPEAKER_02 (06:17):
You bought at the highest point every year.
So you you bought when themarket was up.
Wait up.
SPEAKER_03 (06:25):
Like, sound familiar?
Uh would your your money wouldhave grown to 4.3 million.
So there's a$1.3 milliondifference.
That's you know, not pocketchange, I grant you that.
But listen to this number.
Had you just left it in cash,$5,000,$5,000,$5,000, that money
(06:45):
would have turned into$350,000.
Remember, that's versus$5.6 or$4.3 million.
So had you invested it, anytime.
Not try to time the market, nottry to see the future, not try
to have any idea about what'snext, because we know you don't
(07:08):
know, you people, what's next.
Sorry, I'm just having fun now.
Uh I'm gonna get in trouble forthat probably.
SPEAKER_02 (07:15):
No, I'm just not gonna comment anymore.
Because I fa I decided if youfeed you if I feed you any any
attention, it reinforces the badbehavior.
SPEAKER_03 (07:25):
That's a good point.
Um So why?
Why are you doing this?
Why are you uh and by the way,there's more numbers if you
really Morningstar does theirmind the gap study.
SPEAKER_02 (07:36):
That's kind of like the Dalbar study, remember that
looked at the Yeah, like theDalbar study that measures
investors' behavior versus justbuying the market.
Yeah.
SPEAKER_03 (07:45):
Yeah.
Not not how much the market did,or not how much that fund did,
but how much the real investingpublic did.
Yes.
You people, how you did.
Sorry.
According to Morningstar, uh,mutual fund investors earned 1.2
percent less than mutual fundsover on average over the last
(08:07):
decade.
And before that, by the way, theDalbar study used to have a
greater differential.
Trevor Burrus, Jr.
SPEAKER_02 (08:11):
Oh, it was a much bigger differential.
But actually the funny thing isthat over time, the differential
gradually grew smaller.
It did.
Because our behavior has beenchanging over the past several
decades.
I've seen it in my ownexperience in this industry.
Uh I mean, I've been in thefinancial services industry now
since 1983, and I've seendramatic changes in the way
(08:36):
investors behave.
You are becoming moredisciplined in your approach,
and that's why that gap hasnarrowed.
But what it still shows is thatwe are our own worst enemies
when it comes to investing,still, because we think we know
things that can't be known.
We keep proving it over and overand over again, and yet many,
(08:59):
many of you continue to cling tothe mistaken belief that your
senses are so highly attuned tothe goings-on in the world that
you know when I should be.
It's obvious I know when to beout and I know when to be in.
And you're just deludingyourself.
SPEAKER_03 (09:16):
Or you think you know someone who does.
I just saw a very good friendover the weekend I had not seen
in some time, and he even said,What are your tea leaves show?
Which I had to explain.
SPEAKER_02 (09:26):
Everybody asks that when I get around people saying,
So what do you think themarket's gonna do?
Uh it's gonna go up and it'sgonna go down.
SPEAKER_03 (09:35):
That's about it.
SPEAKER_02 (09:36):
So let me give you those numbers.
It'll go up more than it goesdown.
SPEAKER_03 (09:40):
Just for those of you who are still thinking, you
know, I'm gonna wait for X orI'm gonna wait for Y again.
5,000 a year into U.S.
stocks, 1980 to 2023, perfecttiming 5.6 million using the SP.
Worse timing, 4.3 million,leaving it in cash,$350,000.
(10:02):
Now you can decide which one ofthose is the better option.
SPEAKER_02 (10:05):
I think the math in this case is pretty clear.
And always believe the math.
Math is one of those things thatis pretty rigid.
Usually right.
Don't like math because it's notone, it was not my favorite
subject in school.
I hated math.
I like geometry.
(10:26):
But algebra, I went, why do wehave letters?
What good are those lettersdoing?
I can't add up a darn letter.
Well, apparently I can, but Ijust couldn't figure it out
because it was like, this isbaffling.
Now I understand it.
But I'm almost dead.
Uh anyway, that that thatthere's a there's a message in
here.
And again, the message is keepyour emotions out of this thing.
SPEAKER_03 (10:50):
Well, timing doesn't matter.
Don't believe anybody.
Timing has never worked.
No, it's never worked.
But it make you feel better insome cases, right?
Because you're very smart.
SPEAKER_02 (10:59):
I shouldn't have said timing has never worked.
It has worked occasionally.
But the only reason we can findlogical, scientifically studied
reason for market timing workingis luck.
SPEAKER_03 (11:15):
Yeah.
And uh that can happen, and weget it, there can be people that
get lucky more than once.
Number two is cash is trash.
Unless it's for a short-termneed or an emergency.
That's really about the onlytime.
I mean and because the rest ofit suggests you even see mutual
funds manage this way.
(11:36):
We're holding on to that moneynow, waiting for blank.
There is no blank that thatmeans anything.
SPEAKER_02 (11:43):
It's by the way, if you have money in a savings
account at your bank right now,and many of you do, to the tune
of apparently trillions ofdollars, uh, you might want to
check with your bank and askthem what the interest rate is.
And then you might want to askthem, do you have a secret
account that pays more?
SPEAKER_03 (12:04):
You found that out that one time, remember?
SPEAKER_02 (12:07):
Yes.
SPEAKER_03 (12:07):
They do a secret one.
Oh, you want to be in theaccount that makes money.
SPEAKER_02 (12:12):
We're not gonna tell people that exists.
SPEAKER_04 (12:14):
That's crazy.
SPEAKER_02 (12:15):
But if you ask and you say, Well, here's the thing.
You know that$100,000 I have insavings, or that$50,000?
I'm thinking about moving it.
Can you pay me more?
Magically, they're gonna find away to pay you a little bit
more.
Now, if they don't get it tofour percent on savings, then
(12:36):
you still should probably leave.
SPEAKER_03 (12:37):
But if they get you to three and a half, and
somebody today just told me theygot a one-year CD at four.
SPEAKER_02 (12:43):
Yeah, no, I've got I've got a CD ladder where they
all average four, right aroundfour.
SPEAKER_03 (12:48):
Yeah.
SPEAKER_02 (12:48):
So, okay, but so see, four, four, though, is four
is actually keeping you at orahead of inflation.
Four is a is a stability portionof the portfolio number.
That's where you can have cashin your portfolio that's not
just for emergencies orimmediate needs.
(13:09):
That it's part of your fixedincome portfolio.
Yeah.
SPEAKER_03 (13:12):
Yeah.
Because that basically betweentaxes and inflation, four is
about covering the coveringbill.
Covering the bill.
Yeah.
But if you're going to insist onhaving cash, as you just said,
it should be in either highyield savings or CDs somewhere
where you're making something onit.
Don't be inefficient and letthat money sit around and not to
(13:35):
pick on Bank of America, but Ilike picking on Bank of America.
Well, we can't.
And we both bank with them.
I know.
I hate myself every day when Ilook at the stuff that's a good
thing.
Well, but the con it's theconvention.
I know.
It's easy.
Yeah.
It's fast food.
SPEAKER_02 (13:48):
It's their website is so easy to deal with.
I've dealt with other banks'websites and payment systems,
and they're just a nightmare.
My wife banks with uh oh used tobe Sun Trust.
What's it called now?
Truist.
Truest.
Oh, truest, yeah.
Their website is a mess.
It's just a mess.
(14:08):
So that's why I bank with them.
But anyway, uh we love takingyour questions.
We also realize that we'recoming into the summer months,
and that tends to be kind of adoldrum period for questions.
Uh we could use more of them forthe programs that we do, the
five of them, because ourfavorite part of every program
is the question and answerperiod.
(14:30):
And some of those writtenquestions that you type in, Tom
will actually get in touch withyou and set up a phone call, and
uh we'll do those on the show,though we don't have any right
now.
Um, and then here's the otherthing.
I was getting a huge influx ofspoken questions.
Yes.
To the point where I was able todo five a show every week on
(14:51):
Fridays.
They're dwindling.
Good thing we have a couple ofFriday holidays.
Good some Friday holidays comingup.
They're dwindling.
Come blowing in.
So when you go totalkingrealmoney.com, you'll see
a button that says ask aquestion.
You can use that for both.
Or if you want to speak yourquestion, just click the
(15:11):
microphone button in the corner.
Record you, and then send you alittle bit more.
SPEAKER_03 (15:14):
And we will answer them.
I don't think we'll vote.
There's a couple that there's acrypto thing that we didn't do
once because we had 14 cryptoquestions, but basically.
SPEAKER_02 (15:23):
Well, and it really wasn't a question, it was more
of a criticism.
SPEAKER_03 (15:26):
Yeah.
SPEAKER_02 (15:27):
And we know hey guys, hey, crypto guys.
Hey, yeah, you, you know you'rethere.
You people.
Um we know what we get yourpoint.
We just disagree with it.
Okay?
SPEAKER_03 (15:40):
Yeah.
SPEAKER_02 (15:41):
Can we just agree to disagree?
We don't buy the story.
We don't.
SPEAKER_03 (15:47):
We're not gonna air criticisms unless they're of
Don.
SPEAKER_02 (15:52):
Oh, we hear those all the time.
SPEAKER_03 (15:54):
Go for that's saying, anyway.
SPEAKER_02 (15:55):
Uh we do have a couple of type questions,
though, that Tom has collectedand uh and printed and then
reads.
Like now.
SPEAKER_03 (16:03):
Like this from Arlington, Texas, Kirk.
Hi guys.
My wife and I have$3.8 millionin liquid investment assets.
We also own five immediateannuities.
Cash?
In liquid immediate investment.
No, it didn't say cash.
Liquid cash investment.
What other liquid investment isthere?
You could say stocks or bonds ifthey're in funds or liquid.
SPEAKER_02 (16:28):
Go ahead.
SPEAKER_03 (16:29):
Also own five immediate annuities of 100K each
with five highly rated insurancecompanies.
The monthly income from them, itseems to me, has bond-like
qualities.
SPEAKER_02 (16:40):
No, while balancing and rebalancing, I know what
he's gonna add.
SPEAKER_03 (16:44):
I use bond equity ratios and ignore the IA income,
33k plus 2% colas in thecomputation.
Should I include the IA incomeon the bond side for balancing
purposes while ignoring themsince they have no recoverable
value in my net worthassessments?
SPEAKER_02 (17:01):
You ignore them in both, in my opinion, because
they have no net worth value.
And we don't want we don'tsuggest you have fixed income in
your portfolio for the income.
It's for the stability of theprincipal, and there is no
principle that can go back intoyour portfolio if needed.
It's gone.
The principle is gone.
It is it has been converted intoan income stream.
(17:22):
That that would be like saying,okay, your social security is a
bond.
It's not.
Yeah.
It's an income stream.
SPEAKER_03 (17:30):
Thank you.
Those are two very differentstuff.
SPEAKER_02 (17:32):
You can't cash it out, so it's not confused.
SPEAKER_03 (17:35):
Uh he also asks, we have 350K in I bonds.
These are 30-year bonds thathave seemingly no long-term bond
interest rate fluctuationexposure.
All of them have assorted fixedrate components as well as
biannual inflation rateadjustments.
They represent 26% of our bondholdings.
I'd like to know that if thatinflation fighting influence is
(17:58):
a desirable portion of ourassets, and is there any reason
to add tips?
Are these two reviews?
SPEAKER_02 (18:04):
You've got enough now.
Gee whiz.
Apparently you're a bit of aninflation uh uh fearer?
I was trying to think of whatthe word was.
Fearer.
It's not fearer.
You're a bit of an inflation.
Be careful the way you say it.
It's not an inflation hawk.
It's not an inflation dove, it'san inflation concerned person.
(18:26):
Yeah.
Why can't I?
I hate senior moments.
Uh wait till tomorrow you'llhave the word just like that,
too.
I know I will too.
Um but no, you've got plenty.
Stop.
SPEAKER_03 (18:37):
Yeah.
He went on.
He says we have 20% of ourinvestment assets in cash.
I think we just talked aboutthat.
39% in equities, 36% in fixedincome, and 4% in precious
metals.
By most standards, the cashholdings are too high, but they
earn 4% these days, and we likethe comfort associated with
hedging on the conservative sidesince our drawdown is quite low.
(18:59):
We aren't greedy.
Um, by the way, he says he's 69.
So this is a 69.
SPEAKER_02 (19:05):
This basically is a 40-60 portfolio.
SPEAKER_03 (19:06):
Yep.
My wife uh is uh 69, he's 73.
What do you think?
Thank you so much for what youguys do.
My dog walks me about four milesa day.
You occupy a large portion ofthat time.
I'm grateful.
I you know, I cannot tell youthe number of people I talk to
that that listen to this podcastwhile walking Rover.
I think it's touching in manyways.
(19:27):
So we're helping dogs.
No, Buddy, Tucker, uh whateveryou want to call them.
So uh but the question at handreally is and you answered the
crux of the matter.
Income is a different thing thanassets.
Should be viewed that way, too.
Trevor Burrus, Jr.
SPEAKER_02 (19:43):
Yeah, you've got a you've got a very conservative
portfolio.
SPEAKER_03 (19:46):
Yes, which is fine.
SPEAKER_02 (19:48):
Which is fine.
Um I do think there's oneconcern that I would have, and
that's the fact that so much ofyour fixed income is in very
short-term money.
And that exposes it to thepotential of interest rate
declines.
That's right.
Because the the rate of returncan fall very quickly, and then
(20:09):
the problem is the rate tends tofall across the board, so you
can't really move it intosomething longer term.
You want to have it betterspread out.
You want more of a ladderingeffect, I think, than just
having five large cash jumpchunk.
SPEAKER_03 (20:22):
Five year on your ladder?
Five.
SPEAKER_02 (20:24):
I do a five-year ladder on my C D ladder.
SPEAKER_03 (20:26):
Okay.
SPEAKER_02 (20:27):
I got my CD ladder and BND.
So I have both in my fixedincome portfolio.
SPEAKER_03 (20:32):
Well diversified, I should say.
Yeah.
We got time for one more.
Squeeze in another one?
SPEAKER_02 (20:37):
Well, it depends on how long the dog walk is.
The dog says This is gonna be alonger, the dog is gonna love
this walk.
SPEAKER_03 (20:43):
This dog says, keep going.
Hi guys, I have a questionregarding mitigating the risk of
sequence returns early inretirement.
My advisor is recommended awhole life insurance policy via
non-direct recognition contract.
Oh, yeah.
He thinks is a good strategy tomitigate sequence of return risk
in the first few years ofretirement.
(21:04):
Essentially, you can borrowmoney from this policy, then pay
yourself back without disruptingthe compounding of interest in
the policy.
Of course, I understand yourstance on the whole life policy,
uh whole life insurance ingeneral, but this is something,
but he says, is this somethingworth considering?
If not, what are some of thebest ways to try to deal with
(21:24):
sequence of returned risk?
SPEAKER_02 (21:27):
This is one of those gadgeting gizmos, it's bank on
yourself, it's infinite banking.
It is it is so close, so close,to being a little scammy.
I mean, I really dislike it.
And it's sold by people who aremaking big commissions on on
(21:50):
whole life sales.
Big.
It's not this is not a solutionto the problem.
You're borrowing back your ownmoney if the policy.
Ever lapses, then all the loansbecome taxable.
Uh it could be, it's just therethere's so much, there's there's
so many problems in this reallycomplex strategy.
(22:10):
I would fire this advisor, bythe way.
SPEAKER_04 (22:12):
Yeah, I would too.
SPEAKER_02 (22:13):
This advisor, this advisor has proven that they are
not working for you.
They have absolutely proven thatby selling you something with as
high a commission as thisproduct has.
This is a bad, bad, bad advisor.
I don't care if it's yourbrother, this is a bad advisor.
You he it it's your money.
You should never work with thisperson again.
As far as sequence of returnrisk goes, the key is having the
(22:36):
best allocation for your risk,need, and tolerance.
That solves the equation.
If you have enough fixed incomeand the stock market plunges for
a while, you can still live onthe fixed income and the income
provided from that fixed income.
Let me cut in there real quick.
SPEAKER_03 (22:57):
Let's just say, for example, that you have a
million-dollar portfolio andhalf of it is in fixed income.
Right?
And you're taking out fivepercent because you're being
aggressive.
You have ten years ofwithdrawals there, right?
50,000 times before the marketneeds to recover.
We've never had a market stayunderwater for 10 years, so you
should still be okay under thatcircumstance.
SPEAKER_02 (23:18):
And even if it did, then we are in a situation where
the economy of the world, by theway, the world, if it's not just
the U.S., the economy, the worldis in horrible shape if we have
a market that stays down for tenyears.
That means that along the way,you are likely going to be
cutting your spending.
(23:39):
Because the economic conditionsare terrible.
You're you're you're not whatyou're gonna look around and and
see that the economy iscollapsing before your very eyes
if the market stays down for tenyears.
That's worse than the GreatDepression.
And during the Great Depression,I'm pretty confident you saw the
economy collapsing.
(23:59):
And by the way, the other thingthat tends to happen in
depressions is deflation.
Which means, oh, all of a suddenyou don't need to spend as much.
So we we worry way too muchabout bad markets.
If you have the right portfolioto begin with, you really don't
(24:20):
have to worry.
Except in the most extremecases, and then the whole thing
you may not even exist anymore.
SPEAKER_03 (24:30):
Let's not go there.
But I will say this aboutsequence of return risk.
Yes, it's an issue because ifyou retired in the fall of 2008
and you started taking money outfor the next six, eight months
before the market recovered,that could have an impact on
your overall portfolio that maytake years to recover.
No doubt.
Not if you were in bonds.
(24:50):
But no, what I'm saying is thatit could have an impact.
It could make things look worse.
And it does.
That's the thing.
But things retirement's a 20,hopefully 20 to 25 year time
period.
So things look bad then, butthey look better later on.
So yes, I do think it'soverworrying, and people when
they start retirement, I get it,the stress level is higher
because instead of getting thisregular check, now you're living
(25:12):
off the money that you saved.
Your pile, as somebody soeloquently wants to do that.
SPEAKER_02 (25:17):
But that's what the pile is there for.
SPEAKER_03 (25:18):
Exactly.
SPEAKER_02 (25:19):
So that's what the mattress is there for, to draw
from in in downturns, indowntimes.
You of course you don't want totouch it, you want to see it
grow.
We all do.
That's the greed part of us.
But it's there for worst-casescenarios, and we have never
suggested ever, and we neverwill, that anybody going into
(25:41):
retirement have a hundredpercent of their money in the
stock market, and that's whensequence of return risk really
slaps you upside the head.
Is if you ha exp experience a2008 and 100% of your money's in
in stocks.
SPEAKER_03 (25:57):
You paid a big price then.
No question.
SPEAKER_01 (26:00):
Yeah.
And you're drawing on it?
SPEAKER_03 (26:02):
Bad.
Bad, bad, bad.
SPEAKER_01 (26:03):
We really have to go.
Long episode.
Okay.
I'm well, I don't know.
It's gonna be quiet now then.
Go ahead.
We're gonna stop.
SPEAKER_02 (26:09):
If you have any questions, send them in at
talkingrealmoney.com.
Just click on the button thatsays ask a question or speak
them by clicking on themicrophone in the corner.
If by some strange chance you'vegot a portfolio, you've done
pretty well, you've saved somemoney, but you're looking at it
and you're going, I don't thinkTom or Don would like this
necessarily.
Maybe I should get anotheropinion.
Well, that opinion is available.
(26:32):
And that opinion comes with nocost and no obligation.
And I swear to you, cross myheart, hope did I stick a needle
in my eye?
Oh, don't do that.
That sounds gross.
Uh that we will not that therewhoever you talk to is not gonna
pressure you to become a no buy,sell, or mutilate?
SPEAKER_03 (26:48):
Anything above?
SPEAKER_02 (26:48):
None of that stuff.
Okay.
Nope.
As a matter of fact, you couldeven put on the forum the ask uh
it says meet an advisor.
Click click on that and say, andput a note in that says, Can I
meet with Tom?
SPEAKER_03 (26:58):
Yeah if you want to.
You can meet me on Paros verysoon.
SPEAKER_02 (27:00):
So are you gonna actually be calling people from
Greece?
Probably.
You know me, I'll get a page.
You know, he goes on vacation,he goes, I'm bored.
SPEAKER_04 (27:09):
I'll call somebody.
Sure.
SPEAKER_02 (27:10):
How long can I sit in the sun?
Your wife says, all day.
Yeah.
Tom goes, no, like 30 minutes.
Uh unless I've got a great book.
SPEAKER_03 (27:18):
No, it depends how much oozo I had the night
before.
That will determine the point ofthe church.
Drink oozo?
No.
I was just telling everybody atdinner last time I'm gonna have
my one drink of it so I can sayI had one, and that's it.
That's stuck in the world.
It's like drinking black awfulburning black licorice.
I don't like it, but I'm gonnado one because you know I'm in
Greece and that's what you do.
(27:38):
So that's it.
SPEAKER_02 (27:39):
So you're greasing the skids.
As it were, it'll be skiddingall right.
All right, everybody, thanks forbeing there.
Please tell a friend or two orten.
And uh remember, if money'simportant to you and you really
want a better future, you needto go wherever somebody is
talking real money.
SPEAKER_00 (27:57):
The opinions and views expressed on this podcast
were current on the daterecorded.
Opinions, estimates, forecasts,and statements of financial
market trends that are based oncurrent market conditions
constitute our judgment and oursubjects change without notice,
including any forward-lookingestimates or statements which
are based on certainexpectations and assumptions.
Although information andopinions given have been
obtained from or based onsources believed to be reliable,
no warranty or representation ismade as to their correctness,
(28:18):
completeness, or accuracy.
Information presented on thepodcast is not personalized
investment advice from ApolloWell.
The views and strategiesdescribed may not be suitable
for everyone.
This podcast does not identifyall the risks, direct or
indirect, or otherconsiderations which might be
material to you when enteringany financial transaction.
Past performance does notguarantee feature results, and
profitable results cannot beguaranteed.
We hope you realize that theinformation provided on Talking
(28:40):
Real Money is for informational,educational, and hopefully
enjoyable purposes only.
The podcast is not trying to getyou to buy or sell any financial
products or securities.
Instead, the program is providedas a public service by Apello
Wealth, a fee-only registeredinvestment advisor.
Please see Apello Wealth's ADBPart 2A on our website for
information regarding Appello'sfees and services.
Apello Capital, L O C D B AApello Wealth, is an investment
(29:01):
advisory firm registered withthe Securities and Exchange
Commission.
The firm only transacts businessin the states where it is
properly registered or excludedor exempt from registration
requirements.
Registration with the SEC or anystate securities authority does
not imply a certain level ofskill or training.
Apello does not provide tax orlegal advice, and nothing either
stated or implied here should beinferred as providing such
advice.
Thanks for listening, and pleasevisit talkingrealmoney.com for
(29:23):
more information and importantdisclosure related to
performance of any specificindex or fund quoted in this
podcast.
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