Portfolio Pitfalls: 5 Mistakes You Can’t Afford to Make

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Welcome to Something More with Chris Boyd.

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Chris Boyd is a certified financial planner, practitioner,

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and senior vice president and financial advisor at

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Wealth Enhancement Group, one of the nation's largest

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registered investment advisors.

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We call it Something More because we'd like

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to talk not only about those important dollar

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and cents issues, but also the quality of

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life issues that make the money matters matter.

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Here he is, your fulfillment facilitator, your partner

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in prosperity, advising clients on Cape Cod and

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across the country.

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Here's your host, Jay Christopher Boyd.

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Welcome to Something More with Chris Boyd.

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I'm Chris Boyd here with Jeff Perry and

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Russ Ball, all of us from the AMR

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team at Wealth Enhancement.

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Thanks for joining us.

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And today we're talking about the portfolio pitfalls,

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five mistakes you can't afford to make.

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When we think about financial planning and portfolio

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management, it's a big part of what we

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think about.

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There are a lot of things to consider

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when it comes to your investing.

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So we're going to talk about a few

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of them.

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And candidly, there's so many possible things to

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think about that you can really, there's a

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lot of opportunities to go wrong when it

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comes to investing.

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So we'll at least try to help you

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identify some of the things that you should

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pay attention to.

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You may know some, you may not.

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So.

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Chris, why don't you think one of the

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least talked about, but maybe most valuable things

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that a good financial advisor does is helps

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you not make those mistakes.

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Yeah, that's right.

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You know, just avoiding mistakes is a big

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way to get ahead.

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Right.

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Looking over the list, you know, if you're

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a, and we're going to go through these

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five and maybe a couple more, but these

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are things that, you know, the average Joe

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or Jane, when they're not a student of

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the market or they're reacting emotionally, or they're

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watching the news or to their neighbor that

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come up and, you know, they're, they seemingly

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make sense at the time in your mind,

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but, you know, history is proven that most

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of these don't.

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Well, and I think particularly the first one,

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when it comes to the, the notion of

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timing the market or doing an all in

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or all out kind of a mindset, this

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one is one that is such an easy

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one to make that, you know, we look

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at the world and the news is bad

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and there's an election looming, there's a war

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happening, there's.

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Tariffs.

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Tariffs these days, right?

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There's all kinds of variables that, you know,

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pop up and create anxiety.

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This time it's different.

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This time it's different.

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Yes.

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Well, I think it's, it's, it's not to

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say that there aren't times when we should

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reassess our tolerance for risk.

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And there's a difference in thinking about saying,

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I, maybe I just don't want to go

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through as much decline, which is inevitable when

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I have investments that have risk.

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And candidly, everyone who invests has investments that

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have risk.

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It's just a question of what risks you're

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deciding to endure.

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I'll give you an example.

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What I mean?

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Oh, I don't want to have risk.

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I'm going to have CDs.

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Well, guess what?

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You, you have risk.

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You have different risk.

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You have risks of inflation or you're exposed

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to the risk of asset depletion because you're

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not making as much that opportunity risk in

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a sense that you're, you're giving up performance

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ultimately by trying to be more safe.

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You may actually put yourself at more risk

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of running out of resources because you're not

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getting as an adequate rate of return to,

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to meet your needs over time.

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That's not to say that that can't be

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a way they say, I want that low

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risk.

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That's fine.

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But you might have to do more to

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protect yourself from these other kinds of risks

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that compared to someone who would invest in

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a more diversified manner.

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Let's say I don't want market risk.

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You know, that's an understandable concern.

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People worry about that.

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And they think about these, these variables you

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know, the news of the day that creates

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that anxiety and say, you know, they have

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the inclination to say, I'm, I'm just going

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to get out.

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I'll get back in when things settle down,

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you know, never happens.

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Things are never settled by No.

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And usually if they are, you've missed the,

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a meaningful part of your performance because markets

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anticipate, they don't wait for something to be

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resolved before they start to move.

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So you know, when you time the market,

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we've talked about this many times, I feel

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like I'm broken record here, but you have

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to be right twice, right?

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You have to get out when markets are

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high, but you have to get in when

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markets are low.

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And that's where most people falter when they

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try to time things because they're not ready

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to get in because they're of their anxieties

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that are still out there.

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So, you know, better to think about, look,

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if you, if you feel anxious, you know,

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if you want to make some adjustment on

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the edges, I think that's a way to

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scratch that itch without necessarily doing damage, you

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know, that you can, you can moderate your

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exposure to risk without saying I'm all in,

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or I'm all out.

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You know, as I started off, you know,

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sometimes your tolerance for risk changes as we

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age, we tend to want to have less.

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So, okay.

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Maybe you move yourself down a notch on

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the asset allocation mindset.

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Maybe that's an appropriate response to circumstances without

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going overboard and really trying to time the

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market of getting all in or all out.

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If you have the right time horizon and

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risk tolerance, your best bet typically is to

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stay the course, you know, be invested.

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But sometimes it's challenging to know if I've

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got cash and I have these worries, should

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I invest today?

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Should I wait?

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Have I missed the moment?

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I'll wait for it to decline and then

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I'll get in.

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These are not generally the, it's so easy

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to fall prey to these kinds of mindsets

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that you tend to miss a lot when

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you do that.

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So, Russ, what's some of the ways that

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people can try to respond to these kinds

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of concerns?

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Well, I just want to acknowledge what you're

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saying in the idea that, you know, even

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in my investing career, it's very easy to

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get caught up in the present moment and

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like, what's going on in the news?

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What's going on with the, you know, big

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investment bank prognosticators that say, like, this is

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a good time to invest.

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This is not a good time to invest.

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And it's like, okay, like in that moment,

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yeah, let me not put all my money

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into the market because like, there's these predictions

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that these things are going to happen and

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they know what's going on.

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And of course, the market just kind of

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does its thing.

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And then you turn around and you're like,

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well, if I had invested that money, it

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would have grown to X amount.

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You know, we're in a moment where it's

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easier to forget that sometimes it's difficult to

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be an investor.

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You know, when you look at the last

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15 years, yeah, there've been disruptions, but they've

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been short-lived.

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You know, if you were an investor in

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the 2000s, you had big declines that lasted

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multiple years, 2000, 2001, 2002.

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The recession took on, we had terror, we

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had a lot of reasons why markets were

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driven lower coming off the dot-com boom,

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you know, irrational exuberance.

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And so you got to a point where

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it was a three-year slog and it

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was tough to be an investor to see

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accounts go down 50%.

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Well, the good news is the market bottomed

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and they started to come back and then

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they came back.

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And then we had 2007, the mortgage crisis,

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the beginning of the financial crisis, another period

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of time where markets went down and cut

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in half, in that case, in short order

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because of worry of systemic crisis, right?

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Was the financial system really in jeopardy?

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Fortunately, cooler heads prevailed, some good policy decisions

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helped to mitigate those risks.

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And we've had, you know, we had a

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very prolonged low interest rate environment.

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I was talking with someone the other day

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and they're saying, gosh, I miss those low

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interest rate environment for the mortgages and stuff.

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And it's like, well, but that was the

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backdrop of a real problem, a struggling economy.

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We don't really want that.

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I understand nobody wants higher mortgage rates, but

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at the same time, we don't necessarily want

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the need for this zero interest rate environment

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because it was really implying the economy was

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struggling.

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So we've kind of gotten past a lot

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of that, but we've been through experiences where,

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you know, it takes many years for the

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market to recover to its prior highs.

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But over the last 15 years, maybe not

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so much, right?

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It goes down in the pandemic and it

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comes back within a year, within months.

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You know, we have these disruptions and they're

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not long lived.

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So, you know, I think we do have

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to recognize that that's not always the case

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that we have this rapid recovery.

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And so it's understandable when people want to

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be protective of principal because they may not

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want to endure, let's say, a three year

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decline and then maybe a three or four

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year or five year recovery, you know, whatever

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it might be.

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And that can happen.

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So that is reasonable to say, oh, maybe

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I'll scale back my risk if I'm really

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worried.

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Oftentimes we hear it, we all hear this,

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Jeff, right?

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With retirees who say, I don't know if

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I'm going to even be around that long,

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you know, like five years, long-term, what's

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long-term?

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I don't have long-term, you know, who

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knows, right?

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They may actually, but they often think in

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terms of, well, I don't know how long

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I have, so therefore.

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And sometimes that frees people up to say,

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oh, I can take risk.

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I've got enough.

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I don't need to worry about it.

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And other times I don't need to take

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risk.

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Why should I worry about having to have

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the stress of the market?

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You know, that kind of mindset.

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Big picture, we want to be measured, deliberate,

271
00:11:42,730 --> 00:11:49,070
not drastic in our makeup, in our movements,

272
00:11:49,070 --> 00:11:51,330
in our revisions of our portfolio.

273
00:11:52,450 --> 00:11:54,190
You want to comment on some of this,

274
00:11:54,290 --> 00:11:54,470
Jeff?

275
00:11:55,390 --> 00:11:57,510
You know, I think you had a good

276
00:11:57,510 --> 00:11:59,510
outline of the markets, ups and downs.

277
00:11:59,910 --> 00:12:01,650
And, you know, think about if you were

278
00:12:01,650 --> 00:12:05,990
dollar-cost averaging all those years, you know,

279
00:12:06,130 --> 00:12:07,190
when do you get in, right?

280
00:12:07,250 --> 00:12:08,630
We'll talk about that first, maybe.

281
00:12:09,110 --> 00:12:10,870
If you were dollar-cost averaging in those

282
00:12:10,870 --> 00:12:13,930
ups and downs, you were buying more shares

283
00:12:13,930 --> 00:12:17,370
of your investments, mutual funds or whatever, at

284
00:12:17,370 --> 00:12:18,150
lower prices.

285
00:12:18,150 --> 00:12:19,950
It would have been a good, great time.

286
00:12:20,110 --> 00:12:21,290
You know, when you're younger and you see

287
00:12:21,290 --> 00:12:24,510
these downturns, you should almost get excited, right?

288
00:12:24,550 --> 00:12:27,010
Because you're buying things on sale and you

289
00:12:27,010 --> 00:12:29,430
don't have to worry about, is this a

290
00:12:29,430 --> 00:12:30,310
good month to invest?

291
00:12:30,390 --> 00:12:31,550
Just invest every month.

292
00:12:31,730 --> 00:12:36,430
So slowly building your, accumulating your assets.

293
00:12:36,790 --> 00:12:39,090
And on the way out, similarly.

294
00:12:39,510 --> 00:12:39,950
Exactly.

295
00:12:40,090 --> 00:12:40,710
That's where I was going.

296
00:12:40,970 --> 00:12:41,070
Go ahead.

297
00:12:41,230 --> 00:12:41,570
Okay.

298
00:12:41,650 --> 00:12:41,970
Sorry.

299
00:12:42,450 --> 00:12:44,290
That notion that we do think markets are

300
00:12:44,290 --> 00:12:45,610
going to rise over time.

301
00:12:45,990 --> 00:12:49,630
You know, the broad direction trend of things

302
00:12:49,630 --> 00:12:51,690
is to, to increase in value.

303
00:12:52,070 --> 00:12:54,770
Companies will be more profitable ultimately.

304
00:12:55,730 --> 00:12:59,810
So you were talking about dollar-cost averaging

305
00:12:59,810 --> 00:13:02,530
and that, that works on the way out

306
00:13:02,530 --> 00:13:02,890
too.

307
00:13:02,970 --> 00:13:03,290
It does.

308
00:13:03,610 --> 00:13:04,070
On the way in.

309
00:13:04,310 --> 00:13:05,410
So sorry to interrupt.

310
00:13:05,790 --> 00:13:09,030
No, there's no need for much extra on

311
00:13:09,030 --> 00:13:09,310
that.

312
00:13:09,430 --> 00:13:12,070
Just other than just sticking to your plan

313
00:13:12,070 --> 00:13:14,710
and dollar-cost averaging in or out, you

314
00:13:14,710 --> 00:13:17,970
know, slow and steady, have a plan, rely

315
00:13:17,970 --> 00:13:21,170
on your financial plan and you will not

316
00:13:21,170 --> 00:13:22,470
have to worry about those things.

317
00:13:22,910 --> 00:13:25,470
I think the, you know, the concept or

318
00:13:25,470 --> 00:13:29,330
the mistake of not timing the market is

319
00:13:29,330 --> 00:13:32,370
maybe been, should be emphasized in the past,

320
00:13:32,530 --> 00:13:35,170
I don't know, 10 years or so when

321
00:13:35,170 --> 00:13:38,610
politics is driving so much of our conversations

322
00:13:38,610 --> 00:13:40,690
and, you know, our emotions.

323
00:13:40,690 --> 00:13:44,950
And so if you were worried about President

324
00:13:44,950 --> 00:13:46,790
Biden, when he was elected, that the stock

325
00:13:46,790 --> 00:13:48,390
market was going to be terrible, you were

326
00:13:48,390 --> 00:13:48,730
wrong.

327
00:13:49,350 --> 00:13:51,310
And if you were worried about when President

328
00:13:51,310 --> 00:13:53,070
Trump was elected, the stock market was going

329
00:13:53,070 --> 00:13:53,510
to crash.

330
00:13:53,610 --> 00:13:57,450
You're wrong because the market isn't really about,

331
00:13:57,570 --> 00:14:01,150
it's affected by policies that pass in Congress

332
00:14:01,150 --> 00:14:04,290
and that are of the president, but long

333
00:14:04,290 --> 00:14:06,870
term, the market's about corporate earnings and the

334
00:14:06,870 --> 00:14:08,350
trend of interest rates, right?

335
00:14:08,450 --> 00:14:09,890
I mean, how many times do we?

336
00:14:10,430 --> 00:14:10,730
Yeah.

337
00:14:11,990 --> 00:14:12,770
That's right.

338
00:14:12,950 --> 00:14:16,390
And so policy certainly helps or hurts, you

339
00:14:16,390 --> 00:14:20,350
know, tax policy or fiscal policy or stimuluses,

340
00:14:20,370 --> 00:14:21,730
they affect those things.

341
00:14:22,610 --> 00:14:26,110
But ultimately, you know, we talked about this

342
00:14:26,110 --> 00:14:27,310
coming up to every election.

343
00:14:27,530 --> 00:14:31,010
The data is clear that it really doesn't

344
00:14:31,010 --> 00:14:34,910
matter long-term what political party is in

345
00:14:34,910 --> 00:14:36,050
power, that it matters.

346
00:14:36,050 --> 00:14:38,110
We've had these conversations with clients.

347
00:14:38,430 --> 00:14:39,230
That's right.

348
00:14:39,230 --> 00:14:41,890
As you said, Obama's coming into power.

349
00:14:42,130 --> 00:14:44,490
People, I remember Republican clients were like, oh

350
00:14:44,490 --> 00:14:45,950
my gosh, everything's going to hell.

351
00:14:46,030 --> 00:14:46,610
Let's get out.

352
00:14:47,050 --> 00:14:49,630
You know, Trump comes, was it Trump after

353
00:14:49,630 --> 00:14:49,950
Obama?

354
00:14:50,110 --> 00:14:50,210
Yeah.

355
00:14:50,330 --> 00:14:53,090
Trump comes into power and, you know, the

356
00:14:53,090 --> 00:14:55,450
Democrat clients are like, oh my gosh, this

357
00:14:55,450 --> 00:14:56,390
is going to be terrible.

358
00:14:57,510 --> 00:14:59,290
And Biden and so on, right?

359
00:14:59,310 --> 00:15:01,070
You go back and forth and just this

360
00:15:01,070 --> 00:15:02,870
anxiety that you outlined.

361
00:15:03,270 --> 00:15:04,650
So if you get out at the beginning

362
00:15:04,650 --> 00:15:07,070
of any of those administrations, you lost an

363
00:15:07,070 --> 00:15:09,210
opportunity to have a good four years of

364
00:15:09,210 --> 00:15:09,710
returns.

365
00:15:10,670 --> 00:15:12,690
Whichever, whichever one it is, pick one.

366
00:15:13,310 --> 00:15:17,790
So, you know, Mr. Bolu of Vanguard coined

367
00:15:17,790 --> 00:15:21,950
the phrase, it's financial investing is successful based

368
00:15:21,950 --> 00:15:24,830
upon your time in the market, not your

369
00:15:24,830 --> 00:15:26,110
timing of the market.

370
00:15:26,870 --> 00:15:28,770
And to Russ's point earlier, you know, you

371
00:15:28,770 --> 00:15:31,310
see the talking heads on TV and you

372
00:15:31,310 --> 00:15:33,390
can be totally convinced because they're at their

373
00:15:33,390 --> 00:15:36,730
comments that you got to get out or

374
00:15:36,730 --> 00:15:38,430
you got to get in because this is

375
00:15:38,430 --> 00:15:38,610
it.

376
00:15:38,790 --> 00:15:40,050
This is, this time is different.

377
00:15:40,150 --> 00:15:41,950
And this guy, a woman knows what they're

378
00:15:41,950 --> 00:15:42,570
talking about.

379
00:15:42,750 --> 00:15:46,190
And it's just, it's just not proven through

380
00:15:46,190 --> 00:15:47,150
history that.

381
00:15:47,350 --> 00:15:48,630
We spent a lot of time on the

382
00:15:48,630 --> 00:15:51,150
first of these five mistakes.

383
00:15:51,490 --> 00:15:52,190
You know what?

384
00:15:52,250 --> 00:15:53,930
It is the biggest, it's the biggest one.

385
00:15:53,930 --> 00:15:54,130
Yeah.

386
00:15:54,210 --> 00:15:56,010
I think it's the biggest, it's worthy of

387
00:15:56,010 --> 00:15:56,890
that extra time.

388
00:15:57,390 --> 00:15:59,230
But let's go on to talk about some

389
00:15:59,230 --> 00:16:00,150
of the other mistakes.

390
00:16:00,230 --> 00:16:02,050
So what are some of the other ones

391
00:16:02,050 --> 00:16:02,950
that we want to talk about?

392
00:16:02,990 --> 00:16:04,610
Another one we want to talk about is,

393
00:16:06,730 --> 00:16:07,950
well, I don't know if I want to

394
00:16:07,950 --> 00:16:08,510
talk about it.

395
00:16:08,590 --> 00:16:10,530
I'm going to have a maybe contrary view

396
00:16:10,530 --> 00:16:13,970
to the materials that we have, but a

397
00:16:13,970 --> 00:16:17,130
mistake is not having enough international exposure.

398
00:16:18,070 --> 00:16:18,250
Yeah.

399
00:16:18,330 --> 00:16:19,650
So it is common.

400
00:16:19,950 --> 00:16:22,250
It is, no matter what country you live

401
00:16:22,250 --> 00:16:25,250
in, it is the norm to have a

402
00:16:25,250 --> 00:16:26,570
home country bias.

403
00:16:27,370 --> 00:16:30,630
Uh, you, you prefer the companies, you know,

404
00:16:30,690 --> 00:16:35,030
and, uh, are your national brand familiarity, right?

405
00:16:35,590 --> 00:16:37,950
Um, and the U S uh, the U

406
00:16:37,950 --> 00:16:40,550
S represents a very large percentage of the

407
00:16:40,550 --> 00:16:41,270
world economy.

408
00:16:41,390 --> 00:16:44,210
U S companies do have, in many cases,

409
00:16:44,210 --> 00:16:48,190
these mega cap companies that have international, uh,

410
00:16:48,190 --> 00:16:48,570
earnings.

411
00:16:48,750 --> 00:16:51,150
So they have an element of international exposure,

412
00:16:51,850 --> 00:16:55,550
but, um, there is an argument to have

413
00:16:55,550 --> 00:17:02,290
international investments, uh, differences in, um, multiples differences

414
00:17:02,290 --> 00:17:03,710
in types of industries.

415
00:17:04,250 --> 00:17:10,030
Um, the, uh, impact of, uh, currencies, uh,

416
00:17:10,069 --> 00:17:13,849
there's, there's, um, reasons to think it might

417
00:17:13,849 --> 00:17:14,589
be appropriate.

418
00:17:14,589 --> 00:17:16,470
Now, you know, the, if you were to

419
00:17:16,470 --> 00:17:21,109
compare, uh, an all stock portfolio that is,

420
00:17:21,109 --> 00:17:25,510
uh, comprised of, uh, of the all country

421
00:17:25,510 --> 00:17:29,030
world index, let's say an index that is,

422
00:17:29,030 --> 00:17:31,350
uh, developed economies around the world.

423
00:17:31,610 --> 00:17:35,070
Uh, you might expect to have somewhere around

424
00:17:35,070 --> 00:17:39,070
60, 65% United States and 35 or

425
00:17:39,070 --> 00:17:43,850
40% non-U S uh, most investors

426
00:17:43,850 --> 00:17:47,510
do not really have that, uh, reflected in

427
00:17:47,510 --> 00:17:50,330
that way that they've put their international exposure.

428
00:17:50,450 --> 00:17:53,770
If that's by cap weight exposure across the,

429
00:17:53,850 --> 00:17:54,570
across the globe.

430
00:17:55,150 --> 00:18:00,230
Um, so, um, well, I think it's common

431
00:18:00,230 --> 00:18:03,030
for people to have, um, a U S

432
00:18:03,030 --> 00:18:03,510
bias.

433
00:18:04,170 --> 00:18:06,410
Um, and we run into people who want

434
00:18:06,410 --> 00:18:09,150
only U S, but, uh, we do think

435
00:18:09,150 --> 00:18:11,910
it's, there's virtue in having some non-U

436
00:18:11,910 --> 00:18:13,350
S we're seeing that this year is one

437
00:18:13,350 --> 00:18:16,510
of the reasons, uh, you want some, uh,

438
00:18:16,510 --> 00:18:18,470
that being said, we've also seen over the

439
00:18:18,470 --> 00:18:22,430
last decade, um, U S has dominated performance

440
00:18:22,430 --> 00:18:26,730
over many of the international funds that you

441
00:18:26,730 --> 00:18:27,370
might utilize.

442
00:18:27,650 --> 00:18:31,390
So, but the reason we are diversified is

443
00:18:31,390 --> 00:18:33,210
because we don't know in a given year,

444
00:18:33,230 --> 00:18:36,130
whether there's going to be better returns from

445
00:18:36,130 --> 00:18:37,170
this way or that way.

446
00:18:37,210 --> 00:18:38,670
So we want to have a blend of

447
00:18:38,670 --> 00:18:39,070
things.

448
00:18:39,070 --> 00:18:43,070
It's, it's really hard or impossible if you're

449
00:18:43,070 --> 00:18:46,470
a diversified investor, not to have foreign exposure.

450
00:18:47,090 --> 00:18:50,350
Um, if you invest, you know, in the

451
00:18:50,350 --> 00:18:53,430
S and P 500, for example, which is,

452
00:18:53,570 --> 00:18:56,390
you know, a part of most people's investments,

453
00:18:56,490 --> 00:18:58,410
even if they don't know about it, um,

454
00:18:58,830 --> 00:19:01,530
41% of the revenue of those S

455
00:19:01,530 --> 00:19:04,170
and P 500 companies are from non-U

456
00:19:04,170 --> 00:19:07,550
S sources, 59 are from purely U S

457
00:19:07,550 --> 00:19:07,870
sources.

458
00:19:08,230 --> 00:19:11,770
So even if you choose not to like

459
00:19:11,770 --> 00:19:14,130
overtly choose not to want to have foreign

460
00:19:14,130 --> 00:19:17,250
exposure, you have foreign exposure by how the

461
00:19:17,250 --> 00:19:19,530
U S companies are impacted by their businesses

462
00:19:19,530 --> 00:19:20,090
overseas.

463
00:19:20,470 --> 00:19:20,970
Yeah.

464
00:19:20,990 --> 00:19:21,790
It's, it's funny.

465
00:19:21,850 --> 00:19:24,670
I, I, uh, remember going to a talk,

466
00:19:24,710 --> 00:19:27,610
this was probably 20 years ago and the

467
00:19:27,610 --> 00:19:31,690
portfolio manager was saying, well, you know, uh,

468
00:19:31,690 --> 00:19:33,330
on the one hand, we've got Procter and

469
00:19:33,330 --> 00:19:36,590
Gamble, it's a U S company, but it

470
00:19:36,590 --> 00:19:37,170
derives.

471
00:19:37,350 --> 00:19:38,870
And I don't remember what the number was,

472
00:19:38,870 --> 00:19:42,310
but, um, you know, 60% of its

473
00:19:42,310 --> 00:19:46,490
profits from overseas or whatever number is, forgive

474
00:19:46,490 --> 00:19:47,410
me for not remembering.

475
00:19:47,590 --> 00:19:49,830
And then they were like, but Unilever, well,

476
00:19:49,830 --> 00:19:52,450
that's a foreign company, but that gets most

477
00:19:52,450 --> 00:19:54,010
of its profits from the United States, you

478
00:19:54,010 --> 00:19:54,410
know, whatever.

479
00:19:54,550 --> 00:19:57,030
So, you know, it's an interesting dynamic where

480
00:19:57,030 --> 00:19:58,830
you can run into these kinds of scenarios

481
00:19:58,830 --> 00:20:02,650
where it's, um, it's not as, as, uh,

482
00:20:02,650 --> 00:20:07,310
clear, where it's domiciled doesn't mean it's, you

483
00:20:07,310 --> 00:20:10,070
know, and, but there's currency components of that.

484
00:20:10,110 --> 00:20:13,730
Cause as you make profit overseas, but then

485
00:20:13,730 --> 00:20:16,550
you, you turn that into dollars, what happens

486
00:20:16,550 --> 00:20:17,370
and so forth.

487
00:20:17,650 --> 00:20:18,210
Right.

488
00:20:18,930 --> 00:20:20,410
So I'm not sure.

489
00:20:20,590 --> 00:20:23,730
So when I was suggesting that this mistake

490
00:20:23,730 --> 00:20:26,590
was not having enough foreign exposure, I think

491
00:20:26,590 --> 00:20:27,890
the point is that a lot of people

492
00:20:27,890 --> 00:20:31,290
don't have any, you know, and it's reasonable

493
00:20:31,290 --> 00:20:33,190
to think that you should have some and

494
00:20:33,190 --> 00:20:37,930
you should have how much, maybe that's part

495
00:20:37,930 --> 00:20:40,550
of the art of your portfolio.

496
00:20:40,970 --> 00:20:42,670
It's not necessarily a science always.

497
00:20:43,350 --> 00:20:43,490
Right.

498
00:20:43,770 --> 00:20:43,990
Right.

499
00:20:44,470 --> 00:20:47,130
Uh, another common mistake that people make and

500
00:20:47,130 --> 00:20:48,770
you touched on it in the beginning of

501
00:20:48,770 --> 00:20:52,610
your comments, Chris is taking on too much

502
00:20:52,610 --> 00:20:54,630
risk near retirement.

503
00:20:55,790 --> 00:20:57,970
And, uh, I guess you could even say,

504
00:20:57,970 --> 00:21:00,170
uh, as you age, right.

505
00:21:00,170 --> 00:21:02,010
You know, it's just not, it's not just

506
00:21:02,010 --> 00:21:05,390
because if you retire at 65, which is

507
00:21:05,390 --> 00:21:07,790
a lot of people are retiring before that.

508
00:21:07,830 --> 00:21:08,350
Yeah.

509
00:21:08,870 --> 00:21:10,990
You know, as you noted, you have decades

510
00:21:10,990 --> 00:21:14,390
likely to be an investor, to be an

511
00:21:14,390 --> 00:21:14,870
investor.

512
00:21:14,870 --> 00:21:18,670
Even if you're 65, we project males, you

513
00:21:18,670 --> 00:21:20,170
know, we're just doing a, unless we have

514
00:21:20,170 --> 00:21:20,470
a reason.

515
00:21:20,550 --> 00:21:23,130
Otherwise when I'm projecting cash flows, we're predicting

516
00:21:23,130 --> 00:21:26,030
to 92 for a male and 94 for

517
00:21:26,030 --> 00:21:26,330
a woman.

518
00:21:26,490 --> 00:21:30,270
So, you know, you're 27 years or 29

519
00:21:30,270 --> 00:21:33,910
years that you will be needing to have

520
00:21:33,910 --> 00:21:36,250
that money last maybe longer, hopefully longer.

521
00:21:36,810 --> 00:21:39,130
And why, why those ages we, we use

522
00:21:39,130 --> 00:21:42,210
the top 25 percentile, those who make it

523
00:21:42,210 --> 00:21:45,530
to retirement, what's the life expectancy for men

524
00:21:45,530 --> 00:21:45,950
and women.

525
00:21:46,470 --> 00:21:48,770
If you're in the top 25 percentile, you

526
00:21:48,770 --> 00:21:51,190
get to the early nineties, 92, 94.

527
00:21:54,150 --> 00:21:56,350
So you are a long-term investor to

528
00:21:56,350 --> 00:21:57,050
your point.

529
00:21:58,470 --> 00:22:02,450
That being said, I think it is a

530
00:22:02,450 --> 00:22:05,070
fair critique to think that there are oftentimes

531
00:22:05,070 --> 00:22:07,430
people will try to race through the finish

532
00:22:07,430 --> 00:22:10,410
line, the finish line being their retirement.

533
00:22:11,630 --> 00:22:13,970
And it's go, go, go, go, go.

534
00:22:14,130 --> 00:22:16,330
I got to build that nest egg full

535
00:22:16,330 --> 00:22:16,970
speed ahead.

536
00:22:17,130 --> 00:22:18,710
Damn the torpedoes full speed ahead.

537
00:22:21,610 --> 00:22:25,010
And there can be times when, you know,

538
00:22:25,030 --> 00:22:27,550
you have a bad timing and you know,

539
00:22:27,590 --> 00:22:29,170
you're about to retire.

540
00:22:29,330 --> 00:22:31,010
And then the market goes down, you know,

541
00:22:31,070 --> 00:22:34,150
25, 30 percent and it takes three years

542
00:22:34,150 --> 00:22:34,770
to recover.

543
00:22:35,370 --> 00:22:37,650
That might cause you to have to push

544
00:22:37,650 --> 00:22:39,790
your retirement a year or two in the

545
00:22:39,790 --> 00:22:42,010
process to recalculate your numbers.

546
00:22:43,010 --> 00:22:44,210
So you don't want to be, you don't

547
00:22:44,210 --> 00:22:46,410
want to be ignoring your allocation as you

548
00:22:46,410 --> 00:22:48,990
get closer to this retirement.

549
00:22:49,090 --> 00:22:51,030
As you said, it's not as though you

550
00:22:51,030 --> 00:22:53,390
suddenly retire and you take everything off the

551
00:22:53,390 --> 00:22:57,790
table, but you don't necessarily want to overstate

552
00:22:57,790 --> 00:22:58,450
your risk.

553
00:22:58,450 --> 00:23:02,090
And I think there's a common inclination to

554
00:23:02,090 --> 00:23:06,590
be very aggressive with investing because prior to

555
00:23:06,590 --> 00:23:08,750
this time you're thinking I'm, you know, dollar

556
00:23:08,750 --> 00:23:11,290
cost averaging I'm putting in and that kind

557
00:23:11,290 --> 00:23:11,730
of mindset.

558
00:23:12,350 --> 00:23:15,710
And I've seen it recently.

559
00:23:15,870 --> 00:23:17,390
We had a conversation not long ago where

560
00:23:17,390 --> 00:23:19,870
it's just that kind of thing where you

561
00:23:19,870 --> 00:23:22,950
get a little nervous that someone's got, you

562
00:23:22,950 --> 00:23:25,810
know, the bulk of it is stock and

563
00:23:25,810 --> 00:23:27,270
you know, they're a year or two away

564
00:23:27,270 --> 00:23:29,390
from wanting to pull the trigger.

565
00:23:30,570 --> 00:23:34,790
And maybe that's, maybe that's getting to the

566
00:23:34,790 --> 00:23:36,430
point where we start to want to scale

567
00:23:36,430 --> 00:23:37,210
back a little bit.

568
00:23:37,690 --> 00:23:37,830
Yep.

569
00:23:38,030 --> 00:23:41,010
And, you know, developing a liquidity bucket is

570
00:23:41,010 --> 00:23:42,170
we like to talk about.

571
00:23:42,370 --> 00:23:43,430
Yeah, that's a really good point.

572
00:23:43,490 --> 00:23:44,690
Such an important part here.

573
00:23:44,790 --> 00:23:47,850
If you're going to be withdrawing stock and

574
00:23:47,850 --> 00:23:50,750
you're retiring for your income, that's one story.

575
00:23:51,290 --> 00:23:53,090
But if you have a liquidity bucket, meaning

576
00:23:53,090 --> 00:23:57,910
money that's segregated away from equity investments, maybe

577
00:23:57,910 --> 00:24:00,650
even away from bond investments, just cash.

578
00:24:01,470 --> 00:24:02,630
And that's where you're going to be drawing

579
00:24:02,630 --> 00:24:04,990
on a year or two, but you could

580
00:24:04,990 --> 00:24:06,850
draw a year or two on those funds

581
00:24:06,850 --> 00:24:08,450
without any market risk.

582
00:24:09,330 --> 00:24:11,790
Maybe that's a different story, right?

583
00:24:12,610 --> 00:24:13,210
Yeah, absolutely.

584
00:24:13,970 --> 00:24:15,710
I have one other note on this and

585
00:24:15,710 --> 00:24:17,050
Jeff, you've talked about this in the past

586
00:24:17,050 --> 00:24:20,210
too, where, you know, you'll get a job,

587
00:24:20,350 --> 00:24:21,530
you'll stay in that job for a long

588
00:24:21,530 --> 00:24:24,190
time, have your 401k and you have a

589
00:24:24,190 --> 00:24:27,350
S&P 500 fund in the 401k and

590
00:24:27,350 --> 00:24:28,930
then kind of just don't touch it and

591
00:24:28,930 --> 00:24:30,430
just wait until you retire.

592
00:24:30,550 --> 00:24:32,130
And then if that's the case, if you're

593
00:24:32,130 --> 00:24:34,210
not really like rebalancing or you don't have

594
00:24:34,210 --> 00:24:35,790
that target fund that does it for you,

595
00:24:36,370 --> 00:24:39,410
you could be really subject to that sequence

596
00:24:39,410 --> 00:24:40,150
of return risk.

597
00:24:40,310 --> 00:24:42,790
And the year after you retire, you're still

598
00:24:42,790 --> 00:24:45,030
in that 401k, you haven't rolled it over

599
00:24:45,030 --> 00:24:46,910
and you're all in S&P 500 and

600
00:24:46,910 --> 00:24:48,410
then the stock market goes down.

601
00:24:48,870 --> 00:24:52,590
So that's another plug to just keep track

602
00:24:52,590 --> 00:24:54,570
of your investments in your 401k.

603
00:24:55,410 --> 00:24:56,750
It's not really just like a set it

604
00:24:56,750 --> 00:24:58,630
and forget it forever type of thing.

605
00:25:00,150 --> 00:25:02,410
An analogy to this, if you're not ready

606
00:25:02,410 --> 00:25:04,810
for retirement and maybe you're saving money for

607
00:25:04,810 --> 00:25:08,870
your college, for your children, is you're save,

608
00:25:08,930 --> 00:25:11,430
save, save and invest in a 529 and

609
00:25:11,430 --> 00:25:13,810
you're getting close to the student going to

610
00:25:13,810 --> 00:25:14,290
college.

611
00:25:14,810 --> 00:25:17,750
As our listeners might know, this is very

612
00:25:17,750 --> 00:25:19,490
relevant to my family at the moment.

613
00:25:19,990 --> 00:25:22,490
And the funds that have been invested have

614
00:25:22,490 --> 00:25:26,190
been doing really well, but you're going to

615
00:25:26,190 --> 00:25:27,490
have to start paying tuition bills.

616
00:25:27,590 --> 00:25:29,970
Do you leave it in that market exposure?

617
00:25:30,270 --> 00:25:33,330
And maybe the bill comes due and we

618
00:25:33,330 --> 00:25:35,450
just had a 20% market correction, which

619
00:25:35,450 --> 00:25:35,950
is normal.

620
00:25:36,810 --> 00:25:38,330
So it's the same kind of thinking when

621
00:25:38,330 --> 00:25:41,310
you're getting into a new phase, whatever it

622
00:25:41,310 --> 00:25:42,710
is, it doesn't have to be retirement.

623
00:25:43,070 --> 00:25:45,870
It doesn't have to be college spending, but

624
00:25:45,870 --> 00:25:50,430
it's prudent to de-risk a bit so

625
00:25:50,430 --> 00:25:53,170
you don't get caught by market timing the

626
00:25:53,170 --> 00:25:53,690
other way.

627
00:25:53,850 --> 00:25:55,030
We talked about market timing.

628
00:25:55,190 --> 00:25:55,290
Right.

629
00:25:55,570 --> 00:26:00,410
I think that's really important not to overstate

630
00:26:00,410 --> 00:26:01,470
your risk tolerance.

631
00:26:02,810 --> 00:26:06,410
If you're timing, you have a finite time

632
00:26:06,410 --> 00:26:08,750
on when that college tuition bill is going

633
00:26:08,750 --> 00:26:09,790
to be due, right?

634
00:26:09,930 --> 00:26:10,110
Okay.

635
00:26:10,110 --> 00:26:12,110
I can maybe put it off a year

636
00:26:12,110 --> 00:26:14,790
or two because of, you know, bad market

637
00:26:14,790 --> 00:26:18,190
conditions and, oh, well, maybe we'll save it

638
00:26:18,190 --> 00:26:20,330
for junior year instead of sophomore year or

639
00:26:20,330 --> 00:26:21,410
whatever, you know, that kind of thing.

640
00:26:22,210 --> 00:26:26,170
But yeah, you want a portfolio that probably

641
00:26:26,170 --> 00:26:33,030
should be gradually reducing risk exposure so that

642
00:26:33,030 --> 00:26:34,570
when the time comes that you need those

643
00:26:34,570 --> 00:26:36,950
funds, you're not totally subject to the whims

644
00:26:36,950 --> 00:26:37,590
of the market.

645
00:26:38,150 --> 00:26:38,250
Right.

646
00:26:38,270 --> 00:26:40,290
Think about if you were in that situation

647
00:26:40,290 --> 00:26:43,530
and you're saving, you know, through the 2000s

648
00:26:43,530 --> 00:26:45,890
and your child's going to school in 2007

649
00:26:45,890 --> 00:26:48,290
or 8, you have a period there of

650
00:26:48,290 --> 00:26:50,970
several years that you were going to wish

651
00:26:50,970 --> 00:26:51,690
you took your...

652
00:26:51,690 --> 00:26:55,870
More recently, I remember seeing someone who hadn't

653
00:26:55,870 --> 00:26:59,010
been in an age-based plan and their

654
00:26:59,010 --> 00:27:01,950
student in 2020, their students in college.

655
00:27:02,710 --> 00:27:02,810
Right.

656
00:27:03,270 --> 00:27:05,970
Well, you know, fortunately for them, you know,

657
00:27:06,030 --> 00:27:07,050
markets recovered.

658
00:27:07,290 --> 00:27:07,710
Right.

659
00:27:07,990 --> 00:27:10,510
But it doesn't always, as we said, you

660
00:27:10,510 --> 00:27:10,710
know.

661
00:27:11,190 --> 00:27:11,290
Yeah.

662
00:27:11,890 --> 00:27:13,350
So that's a great point.

663
00:27:14,130 --> 00:27:16,090
So that whole issue of taking too much

664
00:27:16,090 --> 00:27:16,470
risk.

665
00:27:17,230 --> 00:27:18,970
I think a lot of times there was

666
00:27:18,970 --> 00:27:21,130
another item was mentioned here was the issue

667
00:27:21,130 --> 00:27:22,910
of interest rate risk.

668
00:27:24,250 --> 00:27:26,550
Market timing with interest rate risk, right?

669
00:27:26,870 --> 00:27:27,150
Yeah.

670
00:27:27,910 --> 00:27:29,930
What's going to happen and how does that

671
00:27:29,930 --> 00:27:32,950
affect my bond portfolio and how should I

672
00:27:32,950 --> 00:27:35,170
be positioning my bonds?

673
00:27:35,910 --> 00:27:40,150
Trying to take too much duration risk potentially

674
00:27:40,150 --> 00:27:43,530
can be a challenge.

675
00:27:44,110 --> 00:27:46,090
I think this is one of those examples

676
00:27:46,090 --> 00:27:49,690
where bonds, more often than not, clients will

677
00:27:49,690 --> 00:27:50,970
say, I just don't get bonds.

678
00:27:51,750 --> 00:27:52,910
I don't understand.

679
00:27:53,130 --> 00:27:54,850
It's not that it's all that complicated.

680
00:27:54,930 --> 00:27:56,710
I understand what a bond is, but I

681
00:27:56,710 --> 00:27:58,490
don't get how the whole bond market works.

682
00:27:58,730 --> 00:28:01,710
You know, this whole relationship between interest rates

683
00:28:01,710 --> 00:28:02,390
and prices.

684
00:28:02,770 --> 00:28:05,730
And it's just, it's a little bit confusing

685
00:28:05,730 --> 00:28:06,350
at times.

686
00:28:06,370 --> 00:28:06,710
Right.

687
00:28:07,110 --> 00:28:09,450
And when you think about the risks, okay,

688
00:28:09,450 --> 00:28:11,970
there's interest rate risk and how that can

689
00:28:11,970 --> 00:28:16,030
affect a bond pricing, but there's also credit

690
00:28:16,030 --> 00:28:18,550
risk and how that can affect bond pricing.

691
00:28:19,350 --> 00:28:23,430
And so oftentimes we'll see people take too

692
00:28:23,430 --> 00:28:25,090
much of one type of risk or another.

693
00:28:25,470 --> 00:28:26,910
Tracing yield perhaps.

694
00:28:27,210 --> 00:28:29,650
Tracing yield, taking on too much credit risk,

695
00:28:29,770 --> 00:28:33,290
or maybe going longer term on their bonds,

696
00:28:33,370 --> 00:28:36,630
trying to get more yield and taking on

697
00:28:36,630 --> 00:28:40,190
more interest rate risk that can fluctuate as

698
00:28:40,190 --> 00:28:41,430
interest rates move.

699
00:28:42,060 --> 00:28:44,630
So this is again, I think one of

700
00:28:44,630 --> 00:28:49,410
those instances where working with someone can probably

701
00:28:49,410 --> 00:28:50,170
add value.

702
00:28:50,650 --> 00:28:55,810
If you just buy the aggregate index, you

703
00:28:55,810 --> 00:28:57,790
know, you may not be exactly where you

704
00:28:57,790 --> 00:28:59,170
want to be on the yield curve.

705
00:28:59,530 --> 00:29:02,150
And there may be reasons to make adjustments

706
00:29:02,150 --> 00:29:11,290
over time with what's going on in the

707
00:29:31,210 --> 00:29:32,450
market.

708
00:29:32,450 --> 00:29:38,950
So not having enough inflation protection is the

709
00:29:38,950 --> 00:29:42,390
last mistake that the article we were referencing,

710
00:29:42,610 --> 00:29:45,270
which was a Morningstar article.

711
00:29:45,470 --> 00:29:47,530
We'll share that with our listeners and podcast

712
00:29:47,530 --> 00:29:47,890
notes.

713
00:29:51,050 --> 00:29:52,590
What do you want to say on this?

714
00:29:52,710 --> 00:29:55,510
I mean, stocks, great way to manage interest

715
00:29:55,510 --> 00:29:57,310
rate, the inflation risk, right?

716
00:29:57,890 --> 00:29:59,270
Typically, historically, yeah.

717
00:29:59,390 --> 00:30:01,790
Tends to help mitigate that risk.

718
00:30:02,270 --> 00:30:04,430
We tend to get better returns and therefore

719
00:30:04,430 --> 00:30:06,630
outpace inflation.

720
00:30:08,570 --> 00:30:11,890
When it comes to specifically on the bond

721
00:30:11,890 --> 00:30:14,510
side, there's a couple of bonds designed to

722
00:30:15,110 --> 00:30:16,410
keep pace with inflation.

723
00:30:16,690 --> 00:30:19,110
They don't always work the way investors expect,

724
00:30:19,510 --> 00:30:22,690
a little bit convoluted, but you can think

725
00:30:22,690 --> 00:30:28,070
in terms of inflation protected treasuries tips or

726
00:30:28,070 --> 00:30:29,030
an I-bond.

727
00:30:29,210 --> 00:30:30,910
Everybody went out and got I-bonds a

728
00:30:30,910 --> 00:30:34,130
few years ago when inflation was really high.

729
00:30:34,810 --> 00:30:35,330
Yeah.

730
00:30:35,330 --> 00:30:37,250
We keep running into that.

731
00:30:37,350 --> 00:30:38,610
I was smiling because Russ and I keep

732
00:30:38,610 --> 00:30:42,450
with people who had them when the 9

733
00:30:42,450 --> 00:30:45,010
% rate hit and it was pretty exciting.

734
00:30:45,350 --> 00:30:47,670
They didn't realize they were variable rates.

735
00:30:48,310 --> 00:30:48,630
Yeah.

736
00:30:48,810 --> 00:30:50,910
It's not as good right now, but still,

737
00:30:51,550 --> 00:30:53,870
it's a way to hedge that risk and

738
00:30:53,870 --> 00:30:58,510
manage some of that concern with low risk

739
00:30:58,510 --> 00:30:59,270
money.

740
00:30:59,270 --> 00:31:02,370
I almost say no risk money.

741
00:31:03,470 --> 00:31:06,550
Nothing's no, but there's nothing safer than a

742
00:31:06,550 --> 00:31:06,910
government bond.

743
00:31:07,330 --> 00:31:08,450
It's a government bond.

744
00:31:09,330 --> 00:31:13,230
Think of akin to a savings bond in

745
00:31:13,230 --> 00:31:15,750
terms of risk level, but this has an

746
00:31:15,750 --> 00:31:17,230
inflation component to it.

747
00:31:17,730 --> 00:31:20,930
Tips also are a form of treasury, but

748
00:31:20,930 --> 00:31:23,370
keep in mind, there's varying degrees of maturity

749
00:31:23,370 --> 00:31:24,330
dates.

750
00:31:25,350 --> 00:31:28,450
Most people buy it through a bundle, through

751
00:31:28,450 --> 00:31:28,890
a fund.

752
00:31:29,550 --> 00:31:32,410
You can buy them directly individually as well.

753
00:31:33,830 --> 00:31:35,970
These are ways.

754
00:31:36,170 --> 00:31:38,130
I think this is another example, though.

755
00:31:38,210 --> 00:31:41,230
Sometimes it's not as straightforward as it might

756
00:31:41,230 --> 00:31:41,510
seem.

757
00:31:42,970 --> 00:31:45,470
When I was looking at the materials and

758
00:31:45,470 --> 00:31:48,530
saw this topic about basically inflation risk, I

759
00:31:48,530 --> 00:31:51,830
thought of the individuals who are doing their

760
00:31:51,830 --> 00:31:55,750
financial plan by themselves, perhaps, and they are

761
00:31:55,750 --> 00:31:59,810
calculating how much they have for expenses and

762
00:31:59,810 --> 00:32:02,050
if they retire, where their income comes from.

763
00:32:02,910 --> 00:32:04,750
They have a kind of, oh, I have

764
00:32:04,750 --> 00:32:05,230
enough money.

765
00:32:05,310 --> 00:32:06,210
Let's put it in the mattress.

766
00:32:06,310 --> 00:32:08,530
Not literally, but let's just take the risk

767
00:32:08,530 --> 00:32:08,970
off.

768
00:32:09,530 --> 00:32:11,970
Let's put it in the bank or spread

769
00:32:11,970 --> 00:32:14,630
it around these banks where there's even insured

770
00:32:14,630 --> 00:32:16,710
concerns that people have at banks.

771
00:32:17,590 --> 00:32:21,710
They just don't appreciate the impact that inflation

772
00:32:21,710 --> 00:32:25,770
has on your cash flow over decades.

773
00:32:28,690 --> 00:32:29,810
That's a big risk.

774
00:32:30,110 --> 00:32:31,870
In some ways, I think it's a bigger

775
00:32:31,870 --> 00:32:33,930
risk than some of the risks that people

776
00:32:33,930 --> 00:32:34,990
actually worry about.

777
00:32:36,610 --> 00:32:39,550
Another one is where people will see the

778
00:32:39,550 --> 00:32:41,850
CD rates, which are higher than they've been

779
00:32:41,850 --> 00:32:44,130
over the last 20 years or more.

780
00:32:44,850 --> 00:32:46,970
They'll say, okay, well, if I have this

781
00:32:46,970 --> 00:32:48,270
much money and I put this much in

782
00:32:48,270 --> 00:32:49,890
a CD and I just keep rolling them

783
00:32:49,890 --> 00:32:51,670
into new CDs at 4% or 3

784
00:32:51,670 --> 00:32:53,290
.5%, that should be good.

785
00:32:53,990 --> 00:32:56,870
But not really thinking that CDs aren't always

786
00:32:56,870 --> 00:32:58,350
going to be at that high rate.

787
00:32:58,710 --> 00:33:00,390
Interest rates are going to change and so

788
00:33:00,390 --> 00:33:01,530
are those CD rates.

789
00:33:01,710 --> 00:33:03,370
Then inflation is going to continue and it

790
00:33:03,370 --> 00:33:05,690
could be higher than whatever percent you're projecting.

791
00:33:07,410 --> 00:33:09,150
Definitely, I think the article is just pointing

792
00:33:09,150 --> 00:33:12,970
out stocks have been historically the best hedge

793
00:33:12,970 --> 00:33:13,730
against inflation.

794
00:33:14,430 --> 00:33:14,730
Yeah.

795
00:33:14,890 --> 00:33:17,510
Are you really making ground with inflation when,

796
00:33:17,930 --> 00:33:19,270
let's say you're getting that 3.5%

797
00:33:19,270 --> 00:33:21,750
or 4%, but now you have to pay

798
00:33:21,750 --> 00:33:25,830
tax and inflation is maybe somewhere around 3

799
00:33:25,830 --> 00:33:28,450
% these days, a little bit below, but

800
00:33:28,450 --> 00:33:31,570
getting close to 3% on the core.

801
00:33:31,910 --> 00:33:35,210
Are you really making progress or are you

802
00:33:35,210 --> 00:33:36,110
just treading water?

803
00:33:36,530 --> 00:33:39,130
That's really what you should expect from a

804
00:33:39,130 --> 00:33:42,350
CD is really to be somewhere around the

805
00:33:42,350 --> 00:33:43,170
rate of inflation.

806
00:33:43,550 --> 00:33:45,110
I want to add one other thing before

807
00:33:45,110 --> 00:33:46,990
we wrap up, and that is the idea

808
00:33:46,990 --> 00:33:48,250
of commodities.

809
00:33:48,250 --> 00:33:51,210
We keep finding people thinking that the way

810
00:33:51,210 --> 00:33:56,050
they're going to hedge risk is through gold

811
00:33:56,050 --> 00:33:59,250
or precious metals or some kind of commodity

812
00:33:59,250 --> 00:33:59,790
exposure.

813
00:33:59,790 --> 00:34:04,410
As much as that can be a place

814
00:34:04,410 --> 00:34:09,250
where it can help manage inflation, it's not

815
00:34:09,250 --> 00:34:10,350
a riskless asset.

816
00:34:10,870 --> 00:34:13,270
It's one of these situations where you should

817
00:34:13,270 --> 00:34:16,050
think about commodities in a way that's similar

818
00:34:16,050 --> 00:34:19,070
to a risk asset like an equity in

819
00:34:19,070 --> 00:34:21,770
some respects, not moved by the same forces,

820
00:34:22,310 --> 00:34:25,710
but there may be higher performance opportunity, but

821
00:34:25,710 --> 00:34:30,230
we've seen for many years where it's been

822
00:34:30,230 --> 00:34:32,969
somewhat unappealing returns.

823
00:34:33,290 --> 00:34:37,590
When it comes to commodities, it's all driven

824
00:34:37,590 --> 00:34:41,949
by perception of value, not by revenue and

825
00:34:41,949 --> 00:34:43,350
earnings and profitability.

826
00:34:44,909 --> 00:34:47,929
To that point, we're going to talk about

827
00:34:47,929 --> 00:34:51,949
this more in a conversation with Brian Regan,

828
00:34:52,070 --> 00:34:56,050
our firm's senior portfolio manager, our team's senior

829
00:34:56,050 --> 00:34:58,370
portfolio manager in an upcoming episode.

830
00:34:58,630 --> 00:35:02,970
We'll talk more about gold as an investment,

831
00:35:03,790 --> 00:35:06,950
good, bad, indifferent, what to make of it

832
00:35:06,950 --> 00:35:08,430
in the future.

833
00:35:09,010 --> 00:35:09,970
Lots to consider.

834
00:35:10,550 --> 00:35:11,650
We've scratched the surface.

835
00:35:11,830 --> 00:35:13,250
We talked for over a half an hour

836
00:35:13,250 --> 00:35:17,790
about just these five topics that can be

837
00:35:17,790 --> 00:35:20,330
relevant to thinking about risk and mistakes you

838
00:35:20,330 --> 00:35:24,030
want to avoid, but there are others and

839
00:35:24,030 --> 00:35:26,050
there's always more.

840
00:35:26,690 --> 00:35:28,590
It's not just on a macro level.

841
00:35:28,890 --> 00:35:31,250
There's also what's happening in the world around

842
00:35:31,250 --> 00:35:32,330
us, how to interpret that.

843
00:35:32,490 --> 00:35:34,710
It's also on the investment level specifically.

844
00:35:35,470 --> 00:35:38,270
It can be very challenging for someone to

845
00:35:38,270 --> 00:35:42,230
navigate these kinds of issues as an investor,

846
00:35:42,590 --> 00:35:47,190
and there's a lot of room for challenge,

847
00:35:47,190 --> 00:35:48,450
mistakes to happen.

848
00:35:48,890 --> 00:35:51,490
It's a good idea to get some assistance

849
00:35:51,490 --> 00:35:52,330
along the way.

850
00:35:52,790 --> 00:35:57,390
Work with a quality financial advisor who is

851
00:35:57,390 --> 00:36:00,550
a fiduciary and can be a resource to

852
00:36:00,550 --> 00:36:03,090
you, both as a counsel and thinking about

853
00:36:03,090 --> 00:36:05,730
your financial plan, how it all fits together,

854
00:36:05,910 --> 00:36:07,830
but also in the way you invest your

855
00:36:07,830 --> 00:36:08,350
portfolio.

856
00:36:09,050 --> 00:36:11,910
We offer a complimentary consultation and welcome you

857
00:36:11,910 --> 00:36:13,650
to take advantage of that.

858
00:36:14,030 --> 00:36:16,610
Give us a call, reach out, and we

859
00:36:16,610 --> 00:36:17,990
hope to see you sometime soon.

860
00:36:18,090 --> 00:36:20,610
Until next time, everybody, keep striving for something.

861
00:36:21,770 --> 00:36:24,050
Thank you for listening to Something More with

862
00:36:24,050 --> 00:36:24,750
Chris Boyd.

863
00:36:25,090 --> 00:36:27,230
Call us for help, whether it's for financial

864
00:36:27,230 --> 00:36:31,170
planning or portfolio management, insurance concerns, or those

865
00:36:31,170 --> 00:36:33,190
quality of life issues that make the money

866
00:36:33,190 --> 00:36:34,290
matters matter.

867
00:36:34,650 --> 00:36:37,950
Whatever's on your mind, visit us at somethingmorewithchrisboyd

868
00:36:37,950 --> 00:36:41,150
.com or call us toll-free at 866

869
00:36:41,150 --> 00:36:46,670
-771-8901 or send us your questions to

870
00:36:46,670 --> 00:36:50,630
amr-info at wealthenhancement.com.

871
00:36:50,790 --> 00:36:52,730
You're listening to Something More with Chris Boyd

872
00:36:52,730 --> 00:36:53,570
Financial Talk Show.

873
00:36:53,710 --> 00:36:56,190
Wealth Enhancement Advisory Services and Jay Christopher Boyd

874
00:36:56,190 --> 00:36:58,510
provide investment advice on an individual basis to

875
00:36:58,510 --> 00:36:59,050
clients only.

876
00:36:59,210 --> 00:37:01,190
Proper advice depends on a complete analysis of

877
00:37:01,190 --> 00:37:02,370
all facts and circumstances.

878
00:37:02,630 --> 00:37:04,470
The information given on this program is general

879
00:37:04,470 --> 00:37:06,510
financial comments and cannot be relied upon as

880
00:37:06,510 --> 00:37:08,110
to your specific situation.

881
00:37:08,290 --> 00:37:10,270
Wealth Enhancement Group cannot guarantee that using the

882
00:37:10,270 --> 00:37:12,270
information from this show will generate profits or

883
00:37:12,270 --> 00:37:13,390
ensure freedom from loss.

884
00:37:13,610 --> 00:37:15,750
Listeners should consult their own financial advisors or

885
00:37:15,750 --> 00:37:17,850
conduct their own due diligence before making any

886
00:37:17,850 --> 00:37:18,610
financial decisions.