Simply Money

Episode Transcript

Speaker 1 (00:04):
Tonight, Are you focusing your energy and attention on the
wrong thing, maybe the wrong indexes you're listening to Simply
Money presented by all Worth Financially Mei Wagner along with
Bob Sponseller Bob Versut headline I saw this morning.

Speaker 2 (00:19):
I said markets poised to open with Dow down six
hundred points, and it just made me laugh because I thought,
every time we have any kind.

Speaker 1 (00:31):
Of coverage about the markets, two things happen. The Dow
is the only index that's mentioned, and it's not telling
you what percentage the Dow is down, but how many
hundreds of points? What does it even mean to people?

Speaker 3 (00:48):
Well, it means a lot to people, I think, depending
on what your age is. I mean, the Dow has
always been a long time measure of quote unquote the market.
But let's remember it should it be No, it's thirty companies.
It's made up of thirty of the most well known companies,
and those are companies that are selected for this index,

(01:09):
trying to give you a diversified picture of the economy
and the stock market. But it's really a very small
slice of the pie. And you made the main point
amy the higher this market goes over years and decades.
You know, when we have a down day, the point
total looks astronomical and you got to really look at

(01:31):
the percentage. So yeah, I agree, it's not a very
indicative of what's really going on in the economy, in
the market.

Speaker 1 (01:37):
So please, as a long term investor, just keep those
two points in mind if you are looking at the Dow,
you're seeing headlines or people talking about the Dow. First
of all, just keep in mind only thirty companies, as
diversified as they try to be. I mean, there's definitely
some big names in their Apple, Boeing, Coca Cola, that's
just at the top of the alphabetical list, but still

(01:58):
only thirty companies. I mean, how representative can you be
of the entire American economy in markets with thirty companies?
I would I would argue it's difficult. And then second
points are points percentages are going to give you a
better idea of exactly the movement of the market and

(02:19):
what it means to you.

Speaker 3 (02:20):
Yeah, and another big point to throw out there, and
this is, you know, it doesn't matter whether the Dow
is up or down. We're not talking about that. But
the thing to remember is the Dow Index is price weighted.
It's not cap weighted. It's price weighted, so meaning that
if a stock's dollar price is very high, that's going

(02:41):
to move the Dow Index irrespective of the value of
the actual company. So yeah, it's a pretty outdated index
if you really want to look at what's really going
on in the economy and the market.

Speaker 1 (02:53):
Yeah, well you mentioned market cap, right, That's how the
S and P five hundred is set up, and that
is the price of shares times the number of outstanding shares, right,
which gives you a larger picture of how that particular
company fits into the overall economy. Right, So very different
and I think you know, as many people kind of
throw these terms around, these indexes around the now, the NASAK,

(03:15):
the S and P five hundred, investors often don't know
exactly what we're talking about or the differences between them,
you know. So let's take a pause this week, in
the midst of all of this market volatility and give
you this background so that when you are reading these headlines,
when you are hearing these terms, you actually know exactly
what they're talking about, and more importantly, what does it

(03:37):
mean to you and your four O one k and
your investments and your retirement.

Speaker 3 (03:42):
Another major index that people look at is the Nasdaq,
and that's a bit more modern and newer, and it
is more tech heavy. Now this index makes up three
thousand companies that are listed just on the Nasdaq index.
But the real stars of that index are, as we
might have met, the big tech names Apple, Microsoft, Amazon, Navidio,

(04:03):
Meta and so on and so on. So it is
it can tend to be a more technology weighted index.
Therefore it could be a lot more volatile in the
short term on the upside and the downside.

Speaker 1 (04:15):
Okay, you just touched on this, but I think it's
worth making the point for an investor who's hearing you
and saying, Okay, so you're telling me three thousand companies
are in this index. It's tech weighted, tech focused, and
I think tech is the way of the future. It's
what's been driving all these major gains in the market.
Why would I not go all in on the NASDAC.

Speaker 3 (04:39):
Well, technology stocks as we have seen not just recently
with the tear of volatility, but amy the large cap
tech stocks have been trending down now, you know, for
three or four months so far this year, and that's
because they've had such a huge run the last couple
of years, and pricer earnings ratios can get a little

(05:01):
out of whack. Growth estimates can get a little ambitious here,
and that's why it can be more volatile on the
upside and downside, because these tend to be the growth companies,
and growth companies do well when earnings are continuing to
go up and earnings estimates continue to go up. But boy,

(05:22):
at the first sign of any turbulence, those things can
come down quickly. And we've seen that.

Speaker 1 (05:29):
You're listening to Simply Money presented by all Worth Financial
I Memi Wagnero along with Bob spawn Seller. What are
you paying attention to when you decide or determine how
good the day was, how healthy the markets are doing.
Is it because you're hearing the Dow is up a
few hundred points the Dow is down a few hundred points.
We've certainly heard both a lot over the course of
the past week. But we would say, hey, you need

(05:52):
to understand, first of all, what the Dow is only
thirty companies, and you need to understand all of these
indexes and what they mean. If you are a long
term investor looking to be truly diversified, I would argue
the best index index that you should be focused on
is the SP five hundred.

Speaker 3 (06:12):
Yeah, and when people talk about quote unquote the market,
you know most of the time in new shows or
on financial shows or with financial advisors, when people use
quote unquote the market, they're talking about the S and
P five hundred, the five hundred largest US based companies,

(06:32):
And it is cap weighted. And we've talked about this
in prior shows. So cap weighted means the higher valued
companies shares times the price is going to move that index.
And you know, thirty five percent of the S and
P five hundred on a cap weighted basis was just
in those magnificent seven companies very recently. So it can

(06:56):
get a little bit out of whack too, Yeah, but
it is more rep persentative of the overall stock market.
A couple other points I want to make here. We
talked about the Nasdaq being three thousand companies. People see
three thousand companies and think they're diversified. A way better
way to go if you really want to be diversified
in three thousand companies across all sectors of the stock

(07:19):
market something like the Vanguard Total Stock Market Index. That's
going to get you small cap, mid cap, large cap
growth value among three thousand companies, and there you truly
are diversified. The other point i'd make about the S
and P and Amy, I know you and I've talked
about this a couple times in recent months, is there

(07:40):
are ETFs out there right now that will put you
in the S and P five hundred, but they will
equally cap the companies, so it's not getting so skewed
to the Magnificent seven stocks and these other high growth stocks.
And think of five hundred companies evenly distributed independent of
the cap weighting, and that can reduce some volatility in

(08:02):
your portfolio, and quite frankly has reduced volatility in the
portfolio for those that have used an instrument like that
so far in twenty twenty five.

Speaker 1 (08:12):
And from a just a diversification point, right, if you're
looking at the S and P five hundred, you've got tech, yes, absolutely,
but you also have healthcare, energy, consumer goods, right, large banks,
all of those sectors represented in the S and P
five hundred. Bob to your point, obviously, market cap weighted
gives a little more power to those tech stocks, but

(08:33):
you also as an investor, have the power than to
control how much of those you owe. You know, and
you said, hey, when people are talking about the market,
this is actually likely what they're talking about. It's also
probably what your four O win k in your retirement
plan could be tied to, right either directly maybe through
index funds, indirectly through diversified mutual funds. And that's kind

(08:55):
of the benchmark with which you can look at your
four O wink and say, you know, how well am
I doing as opposed to the broader economy, you know,
in within your options for for one ks? And I'm
having these conversations all the time right now with investors.
You know, you've often got those target date funds, and
that's where people go. I love that you brought up

(09:17):
the Vanguard Total markets, right, because you really really want
exposure to all the different sectors. I looked at some
dimensional fund research several several months ago, and they looked
at if you invested a dollar in each sector, right, gold,
you know, large cab value, large cap growth, anything you pust,

(09:40):
bond market, whatever, anything you can think of a dollar
going back to the nineteen twenties, nineteen thirties through. Now,
where would you really come out ahead? I mean, I
think most people listening would be like, oh, definitely, there's
large cap growth docks. Nope, it's actually small cap value
is where you would have the just returned on that

(10:01):
original dollar investment. And that's why when we talk about diversification,
we're not just saying, you know, across companies, We're talking
about across sectors, you know, across different ways, different investment instruments,
because you do not know from year to year where
you're going to maybe get the value or the growth.

(10:22):
But if you're highly divers if you're going to be
able to take advantage of it in some way, shape
or form.

Speaker 3 (10:26):
Yeah, and I handed that small cap value for the
long term. And you know, you can't dispute the data.
The data is the data that just the only caveat
and reminder on that is the journey along the way
over that seventy year period of holding small cap value
is very volatile.

Speaker 1 (10:43):
Yeah.

Speaker 3 (10:44):
The point here is this is why Andy Stout and
our team here at all Worth and other good fiduciary
money managers, they are building diversified portfolios and rebalancing them
for our clients continuously, so you have exposure to all
of these sectors in any one time. But adjustments can

(11:06):
and are being made during markets like this, and that's
that's why you want a good fiduciary advisor and money
manager handling things for you in most cases, unless you're
really really good at this on your own.

Speaker 1 (11:17):
Yeah. My litmus test for how investors are feeling is
when I go to Kroger. Okay, I've just been doing
this for long enough that people know I am talking
about you know, know that I am talking about money
or whatever. They'll stop me within the aisles and say,
let's talk about social security, what's the deal with this
or whatever? And this week I went in, I thought

(11:38):
can I get through without talking about markets and tariffs?
And essentially I heard someone talking about how many points
the markets were out, and I almost wanted to stop
them and say, percentages. Just remember percentages are what's really important.

Speaker 3 (11:53):
Here's the also, amy you're you're talking about China trade
policy and the produce aisle at Kroger. Is that happen
to you right now?

Speaker 1 (12:01):
If you time your Kroger trips right and you are
shopping at the Fort Mitchell Kroger. You never know what
the conversation is going to be like, but usually yep,
it's something about money, and I think you know. I
will often try to keep to myself, but in that
particular situation, I was like, ugh, I do not talk
about points. It's really percentages that you should care about.
Here's the all Worth advice. The next time you see
Dow down five hundred points, take a breath, ask yourself,

(12:24):
how is the S and P doing. That's the index
that really reflects your money, your retirement, your future coming
up next to contributing factor to all of this market
volatility that you may not be thinking about. You're listening
to Simply Money, presented by all Worth Financial. Here and
fifty five KRC the talk station. You're listening to Simply
Money presented by all Worth Financial. I Me Me Wagner

(12:47):
along with Bob's spond seller these crazy markets. Lately, every
day as an investor feels like a year, so you
may not want to miss the show on any given day.
And if you do, we have a daily podcast for you.
Just Search some Money. It's right there on the iheartop
or wherever you get your podcasts. Coming up at six
forty three. You really do have a lot of questions
right now, and we understand that you've got some great ones.

(13:09):
We will get to those, many of them about this
market volatility in our Ask the Advisor's segment coming up
in just a few minutes. There's a stat that has
caught my attention recently about how many Americans are invested
in the stock market. You know, Bob we I think
back to the great recession that we saw right in

(13:30):
the you know, two thousand and seven, two thousand and eight,
two thousand and nine. What we saw was investors leaving
the markets in numbers we had never seen before. And
it took a long time for investors, I think, to
feel safe and calm there again. And now we're there,
and now we have all this market volatility. I was

(13:51):
listening to someone saying just this morning, Hey, if you've
been invested for thirty forty years, you're a long term investor,
you kind of understand this is part of it. Do
have a soft spot in my heart for someone who
maybe graduated a few years ago, they've only experienced up markets,
and now they're checking their four one K ballance and like,
what is happening here?

Speaker 3 (14:13):
Well, my own son did this days ago.

Speaker 1 (14:17):
He just got him into his four to one K.

Speaker 3 (14:19):
Right, I got him into his four to one K.
I don't know eighteen months ago. You know, everything's going great.
He funds his roth Ira, it goes up twenty two percent.
You know, life is good. Dad's a genius, you know,
all all the above.

Speaker 1 (14:31):
And how delicate this week.

Speaker 3 (14:33):
Well, I'm sitting there trying to watch a movie the
other night and I get a text from my son saying, Dad,
I pulled up my Fidelity app and my roth Ira
is down four thousand dollars? Is uh? Is something going on?

Speaker 4 (14:48):
Yeah?

Speaker 3 (14:49):
So he has no idea. I mean he's out working
every day coaching football whatever. He doesn't know what's going on.
All he cares about is the thing's up and the
things down, and he wants to know wahi. So you go.
You got people day training bitcoin on a coinbase app
on their phone. We've already talked about game Stop. Yeah.

(15:10):
Younger people they're they like the volatility because they like
the adrenaline rush, and they like the ability to make
money quickly and weeks and days like what we're experiencing
right now. It's a first time they've been through anything
like this.

Speaker 1 (15:25):
The parents and grandparents right like you probably have that perspective.
I mean, I can even tell from my clients like
the ones who were nervous are usually like the younger
ones right now. I always am an advocate for financial literacy,
call and check on your twenty something kids or grandkids
and say, how are you feeling this week? Maybe they're

(15:46):
not paying attention, but if they are, cand of share, Hey,
you know in two thousand, here's how much I lost
in two thousand and seven, two thousand and eight, you know,
bring up COVID if they weren't an investor until after
that time, talk about the fact that, yes, you have
experienced major dips like this in the circumstances around them

(16:07):
always different, but the market cycles are not. And remind
them not only you know, did you survive those things,
but because you're stat in is a smart long term investor,
You've reaped the reward so that they understand they can
kind of learn from your longer term perspective and your wisdom.

Speaker 3 (16:25):
I mean again, as recently as twenty twenty two, which
to most people with this twenty four hour news cycle
now seems like a century ago. Yeah, twenty twenty two,
the stock and the bond market both were down in
the mid to high teens, almost twenty percent. People forget that.
More importantly, the average annual decline in the broad SMP

(16:49):
stock market every single year, on average, the average decline
is around fourteen percent. So some level of market volatility
is normal. And I've heard you say this recently, Amy,
and I love this. You say, Hey, this is the
price of admission, ye to being involved in an asset
class that is going to grow and increase your purchasing

(17:12):
power for decades, you got to be able to handle
it to some extent. Does that mean that you've got
to be one hundred percent in stocks? No, but the
stock market will move and we're seeing that right now.

Speaker 4 (17:25):
Yeah.

Speaker 1 (17:25):
And I think it's important to make sure that your
kids or your grandkids understand that. You've got to understand
they're wired differently. I got all these teenagers in my
house right coming up on twenties, and you know, they
don't even know what commercials on TV are because they've
never had to sit and watch commercials. So long term
for them is how long it takes for them to

(17:46):
watch a thirty second reel on Instagram. That's long term
for them, right, They're constantly, you know, with devices and
things like that stimulated. And I think, you know, attention
span has grown so much short And I'm not going
to get on a tangent about technology here from a
parent's perspective, but I think it's important to understand you
have to help them define what long term is. Their

(18:09):
version of long term versus your version of long term
is probably vastly different, totally.

Speaker 3 (18:15):
Yeah, attention spans are small. The amount of information flowing
past all of us has grown exponentially, and when we're
not talking about just seventeen year olds, I mean seventy
seven year olds get caught up in this.

Speaker 1 (18:31):
Yeah.

Speaker 3 (18:31):
The more information you have going through your ears and
past your eyes and on your phone, you have a
tendency to have a need to want to do something
and information it can be dangerous at times because most
of it is completely useless. It's clickbait.

Speaker 1 (18:51):
Yeah, But for these kids who are used to watching influencersight,
I use the term in air quotes. Those influencers are
just influencers because they've gotten a certain number of people
to follow them, not necessarily because they have a strong
financial background. Yet they are out there giving your kids
advice on the social media platforms that they are on,

(19:12):
So I think it's really important during times like this
that they also have your voice in their head. Here's
the all Worth advice. Please don't get swept up and
it all. Make sure your kids' grandkids aren't either. Don't
feel like you have to act just because the market
is moving fast and you've got so much information coming up. Next,
what do you do if you've got too much money
invested in maybe a few stocks or one stock during

(19:34):
this market volatility? Some solutions for you. Next, you're listening
to Simply Money presented by all Worth Financial. Here in
fifty five KRC the talk station. You're listening to Simply
Money presented by all Worth Financial. I Meani Wagner along
with Bob spondseller in the Cincinnati area. We often come
across investors who have a concentrated position, so think a

(19:56):
lot of stock in particular companies. We've got some great, big, strong,
hometown companies that we believe in. I'm just gonna throw
Procter and Gamble out there, because man, do I see
it all the time, But you know, I think over
the past couple of years, we've seen people fall in
love with tech companies. I have a client who has

(20:20):
a large position in Amazon right now, and so this
is something we see all the time. And the problem
is when that company is doing great, so are you.
And when the company is not doing so great, you're
not sleeping at night. So if this is a situation
that you are in, right, we see investors in this
all the time. We are joined by Andy Stout, our

(20:40):
chief investment officer for kind of a news series that
we're starting here on the show Investor Solutions. Right.

Speaker 5 (20:46):
If this is something that's you're in this boat? How
do you handle it? So, Andy, this is not something
new to you whatsoever.

Speaker 1 (20:54):
You know, We've got lots of clients here at All
Worth that come to us in this situation. Let's talk
about the conversations that we're having with them. If someone
is coming to us with a lot of stock, right,
a lot of their portfolio exists in one particular company,
how can we help them diversify.

Speaker 4 (21:13):
That in many ways? I mean Procter and Gamble is
a classic example. I mean you mentioned them, you know,
at the top here, and if you look at where
Procter and Gamble, if you go back, you know, ten
years ago, it was around forty dollars a share, which is,
you know, pretty insignificant compared to you know where it's

(21:34):
trading at today. And so you have these gains build up, right,
and now many people want to know, Okay, how can
I protect my gains or how can I reduce my
exposure without having a large tax bill? And these are
real concerns, and Amy and Bobby you are seeing them
all the time because one thing that pretty much every

(21:54):
single person at least that I know, can rally around is,
you know, let's pay less and tax or how can
we you know, not pay so much to the I
R R S so that if.

Speaker 3 (22:05):
Well, people love that dividend too, Andy, Yeah, the dividends
a good thing.

Speaker 4 (22:09):
You don't want to give that up, but you probably
rather you know, not pay Uncle Sam more than uh
more than you have to. So how do we do that? Right?
So one thing, when when you think about that, it's
not just about paying less in taxes, because ultimately it's
not necessarily about reducing how many shares you have, but

(22:32):
it could also be about minimizing the risk you have there.
So when you think about it, yes, we can you know,
have a predetermined ways to exit a position in a
tax efficient manner. Another thing that we can do, or
you know, an advisor can do, is essentially make that
single risk more market wide risks. So instead of having

(22:57):
exposure to one stock and which could you know, be
very volatile, could go who knows where, maybe we can
transfer that risk from a single stock to the broad market.
So there are quite a few ways that we can
handle that as well. So what I'll first talk about is,
you know, how an advisor can actually reduce the number
of shares in a tax efficient manner. So when you

(23:20):
think about that, there's quite a few ways to the
One of the more you know, one of the easier
ones to do, Amy and Bob is if you have
someone who happens to be charitably inclined, the easiest thing
you can do is donate that So this could be
like a through a donor advice fund, or you know

(23:40):
some other you know mechanism that you can essentially donate
a portion of that stock. Because if you're going to
donate money anyway, why not just donate the appreciated stock. There,
you're essentially eliminating any sort of a tax exposure from
that donation and reducing or increasing your overall tax basis
and lowering your future taxes. So we got donations. That's

(24:02):
a really important one that I think it's overlooked a lot, right.
The second one is creating a plan to exit out
of the position over a period of time through aggressive
tax loss harvesting. And there are certain ways that companies
and advisors can help with this, certain types of programs

(24:24):
that essentially generate losses and take those losses to offset
gains in other areas. So you know, we can do
this through programs, you know by tax smart trading as
an example, where you look to look for losses in
other positions and then you know, sell those, but in
order to not reduce your overall exposure, maybe you go

(24:47):
into something similar but not identical for irs reasons obviously,
that allows you to maintain your overall exposure, bank those
losses and use those to offset gains on the individual stock.

Speaker 3 (24:59):
A big thing with the with the charitable giving that
I don't think you mentioned is just a reminder that
you get you get a tax deduction for the full
fair market value of the stock that you give away
to your donor advised fund or charity or chosen charity, right, Andy.

Speaker 4 (25:14):
It's just like it's just like donating cash in the
same amount, and you can definitely have that deduction on
top of that. So it's a really good way to
essentially help others while also helping yourself. Now, we talked
about ways to reduce your tax exposure by actually exiting
out of the shares. Now when we think about, well,

(25:36):
maybe you want to keep the stock, but you want
to reduce your overall exposure.

Speaker 1 (25:40):
I'm glad you're making that point.

Speaker 5 (25:42):
Andy, I'm glad we're talking about this because you know,
we can't make.

Speaker 1 (25:47):
Our investors right, even though we're saying like, hey, maybe
being diversified is better. Lots of people have very strong,
even sometimes emotional ties to companies. Maybe it's my grandfather.

Speaker 5 (26:00):
Bought this stock said you know, you know, they they
willed it to me and told me never to sell it.
Like I've heard, I've heard every story on the spectrum
about why someone needs to keep, you know, a position
in a certain company, and so how then can we
help kind of protect them against themselves at that point.

Speaker 4 (26:19):
Yeah, there's a couple of ways that we can do this.
One of the more common ways using stock options. Now,
stock options can be complicated, uh so you definitely want
to make sure that you fully understand, you know what
you're doing. But one way that you can essentially reduce
your risk while also you know, keeping that keeping the

(26:40):
underlying stock is you know, employing without going into the weeds.
I'll call an exchange fund replication strategy. So using stock options,
which are calls inputs, you can essentially mimic an underlying
index like S and P five hundred and at the
same time, you can offset all of the risk of

(27:03):
the stock going up or down doing what's called a caller.
And again you want to have a long conversation with
an advisor about this because stock callers and stock options
can be a pretty pretty complicated to fully understand without
going into the weeds. So that's one thing that you
can use as stock options do so maintain that Procter

(27:24):
and Gamble position but eliminate that company specific risk. And
you don't have to use just stock options for that.
You can also use some other strategies that are out there,
but stock options are probably one of the more well
known ones to in order to maintain your exposure.

Speaker 3 (27:44):
Andy.

Speaker 1 (27:44):
These are the conversations we're having in our offices day
in and day out. Right, someone coming to us with,
you know, a large part of their portfolio in one
individual company and one individual stock, you know. So we're
having these conversations, how do you mitigate this risk? What
are your options? Very much appreciate your insights on how
best to handle this. You're listening to Simply Money presented

(28:06):
by all Worth Financial here in fifty five KRC the
talk station. You're listening to Simply Money presented by all
Worth Financial. I mean me Wagner along with Bob's spawn Seller.
You probably have, I don't know, maybe a money question
or two right now? Is your money properly allocated diversified?
Are you nervous right now? Well, there's a red button

(28:28):
you can click. Come on, you're listening to the show
right there on the iHeart op record your question. It's
coming straight to us. And in this week we are
really focusing on the questions that we are getting from you.
They're good ones. I think many of your questions applied
to hundreds thousands of other people out there thinking and
wondering the same things. So let's get to John and Bridgetown. Here,

(28:49):
my hope was to retire in about six months. Well,
now I'm not so sure. How do I even know
if I can pull the trigger. And what do I
need to have in place?

Speaker 3 (29:00):
Well, John, what I'd say you need to have in
place is a comprehensive coordinated financial plan. And by that
I mean have somebody sit down with you and you
your current assets, your current present and future income sources,
social security, pension, things like that, and what your spending
needs and wants are going to be in retirement, and

(29:22):
then have somebody give you an objective look at whether
it's going to work. You know today. The other thing
to do is stress test your portfolio. Look at what's
in your portfolio and look at how those things would
tend to perform in a good market and in a
down market. And that's the time to say, Wow, maybe
my portfolio is a little more volatile in terms of

(29:45):
its construction than what's going to work for me in retirement.
So that'd be my answer. Sit down with somebody that
can help you do that evaluation.

Speaker 1 (29:53):
And John, what I'm seeing a lot is people retiring
or getting ready to retire, and they've got the memo,
they've gotten the message that retirement is on them and
they have just put so much money into those tax
deferred for oh one ks and iras. And you know,
if this is you, I would say, hey, one of

(30:15):
the focuses you need to have is on your emergency
cash reserves. So in the months that you've got leading
up to retirement, if those aren't fully funded, maybe don't
You'll rarely hear me say this, but maybe you quit
saving for retirement specifically in those kinds of accounts that
you maybe already have a ton of money and that
you're still going to owe regular income tax on, and

(30:37):
you fully fund your emergency cash reserves, because when you
get to retirement, if this volatility is still here. Right,
we've got a bit of a reprieve now, but we
do not know what's going to happen down the pike
when it comes to these tariffs or whatever the next
thing is down the road. If you have to lock
in losses as soon as you retire, you know it's

(30:58):
not the best outcome for you. If you've got a
fully funded cash reserve that you can live off of
for a year and a year and a half. That's
the conversation I'm having with my and my investors right now,
then you can weather kind of any storm, you know,
because you're probably gonna have several several market cycles over
the course of your retirement.

Speaker 3 (31:16):
All right, here's one for you, Amy, from Bob and Kenwood.
This question is probably near and dear to your heart,
with having all those college age kiddos running around. Here's
Bob's question. I was about to pull money out of
our five twenty nine plan for our son's college. Should
I wait for the market to bounce back? Eh?

Speaker 1 (31:34):
I don't hate this idea if you do have funding
from somewhere else, But then I also think would you
have to understand about five twenty nine plans the way
that most of them are set up. It's very similar
to a target date fund in your four oh one K,
and there's a glide path within it. Right when your
kids are babies or toddlers, there's a lot more market

(31:55):
exposure within that five twenty nine. As they get closer
to not retirement, as a closer to college age, it
often dials back the exposure to the markets.

Speaker 3 (32:05):
So if you're using an age based portfolio, right, not
everybody does.

Speaker 1 (32:09):
Not everyone does. I guess if I find that a
lot of my clients do have that within their five
twenty and so I guess it's important to know how
that money is invested, but it can tend to get
a little more conservative. Listen, if you need the money, though,
and you don't have the option in the five to
twenty nine is the plan, I don't hate taking it
out right now. I would prefer that you do that
then look for other sources to try to find that money.

Speaker 3 (32:34):
Yeah, I would just add that, you know, it's a
good time now, it's a good time to look at
for all of your five twenty nine plans, how are
they invested? How are they allocated? Because if you got
to write a tuition check in three months or six
months and you decided to put that whole five to
twenty nine plan in large cap growth stocks, that's not
probably a good way to go. Just like anything else

(32:56):
in life, and you just brought it up from a
retirement standpoint, Amy, it's good to have some cash available
for your short term needs, and college tuition and room
and board is one of those short term needs. So
the reminder is how that five to twenty nine plan
is allocated and invested so you don't get caught with
your proverbial pants down in a down market.

Speaker 1 (33:19):
Absolutely, Let's get to Andy's question. He's in Mount Washington. Hey,
is now a good time to rebalance my portfolio?

Speaker 3 (33:27):
It absolutely is, and I think the rebalancing should take
on a couple of dimensions here. Number one, you got
this is a great time when we've had things moving
up and then moving down. Rebalancing might be done as
a result of our true risk tolerance being a little
bit different than maybe we thought it was. Yeah, that'd

(33:50):
be one reason to rebalance. The other reason to rebalance is, Hey,
when the market goes down fifteen eighteen twenty percent, there's
an opportunity to buy things on sale. We've talked about
bonds being up so far this year. You slice a
little bit off of those profits and you buy stocks,
you know, when they're on sale. That's some basic things

(34:10):
that should be going on, you know, on a continual basis,
but in periods of what we'll call more severe volatility,
it's imperative to rebalance your portfolio. The good news is,
you know, again for our clients here at all Worth,
that's being done on a continual basis without our clients
having to call and ask that it be done. We're

(34:31):
just doing it for them and that tends out, tends
to work out beautifully, you know.

Speaker 1 (34:35):
I think during these times too, there's some questions about, Okay,
if I do have money sitting on the sidelines, what's
the best way to focus that money? So coming up
next some thoughts for you. If that is the case
for you, you're listening to Simply Money presented by all
Worth Financial here in fifty five krs the talk station.

(35:02):
You're looking too, Simply money for somebody all with Financial
Immi Wagner along with Bob Sponzeller, what I if you
are someone who is in the position right now, you
got a little money on the sidelines, what's the best
way for you to do it? We've been talking a
lot lately about having a fully funded emergency fund, and also, Bob,
we've been talking a lot lately about the opportunity to

(35:26):
buy parts of companies when they're on sale. So how
do you look at this?

Speaker 3 (35:34):
Well, if we're talking about either or boosting the emergency
fund or buying the dip in the stock market. And
I don't claim to know anyone's specific situation, but the
first answer that comes to my mind is it might
be time to do both. Yes, doing both might be
a great solution. And that's just part of responsible financial planning,

(35:54):
meaning that we know greed and fear, both emotions can
rear their ugly head during times like this, and we
forget to do the basic blocking and tackling of keeping
that emergency fund in a healthy place. So hopefully, if
you have enough ers to do both, now might be
a great time to do both.

Speaker 1 (36:14):
It's may. I often get someone coming into my office
and they've already they already think they figured out their problem.
You know, it's like I have money and here's what
I'm going to do with it. Or I need money
and I've decided the best place to take it from
is my four to one K And it's like we
just kind of get laser focused on whatever it is
that we're thinking about. And I think that's one of
the best benefits of working with a fiduciary financial advisor,

(36:37):
because the answer sometimes isn't all one thing or another,
it's a little bit of both. I think that emergency
fund is incredibly important, but also don't miss out the
opportunity to buy the dip and so both of those
things I think can exist at the same time. And
I often also think what you have to remember is

(36:57):
you're often making a money decision for your current self, right,
You're just thinking about it in the here and now.
If you could bring your future self into the room,
you might think about those decisions a little bit differently.

Speaker 3 (37:10):
Yeah, instead said saying the same thing, maybe a little
bit differently or And additionally, a lot of times our
clients have very good ideas. They're not invalid ideas. There
just might be a different way to go about executing
on the idea. And that's why it's good to have
an advisor walk with you side by side and say, hey,
I hear you. I agree with you. This sounds like

(37:32):
a great idea. But here's two or three other ways
we could get to the same endpoint. And there might
be some great tax benefits and other benefits associated with
looking at the same concept or idea through a slightly
different lens.

Speaker 1 (37:45):
Yeah. This is why I am a huge proponent of Hey,
do not you know, if I'm working with a couple,
I don't only want to see one of you you're
in and year out, because even if that person is
the person who is the technical money person, the other
voice at the table also provides such great perspective for
me as an advisor, and has someone in my office

(38:06):
recently same thing. She had kind of big picture, here's
our goals for our money. He was doing, to your point,
the basic blocking and tackling. And then if you can
add another voice to that conversation of someone who's walked
this path with many others and can give you some
great options, there's where I think you truly find your value,
even during this time of volatility. Thanks for listening tonight.

(38:27):
You've been listening to Simply Money, presented by all Worth
Financial here on fifty five KRC the TALX station