How to Outlast an Economic Downturn with Your Retirement Plan

TPoR #51 Transcript : Audio automatically transcribed by Sonix

TPoR #51 Transcript : this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to take point on retirement with your host, Eric Arnett. Eric is a fiduciary and licensed financial advisor who always places your needs first. The experienced team at Tape Point Wealth Management takes pride in knowing they've helped so many pursue the financial future of their dreams. And they can help you, too. And now let's start the show. Here's Eric Arnett.

Executive Producer Sam Davis:
And welcome to Take Point on retirement. I'm Sam Davis, joined by Eric Arnett and Randy Woodruff, the team over there at Tech Point Wealth Management. Eric, how are you doing this morning?

Erick Arnett:
Hey, good morning, Sam. How are you, sir?

Executive Producer Sam Davis:
I'm doing all right. The markets are having me a little bit down this week, but I know you wanted to come on this week and put together a special show for all the retirement warriors out there who are concerned with what's been going on in the markets, know even those who have a plan are a bit worried with what's been happening lately. So let's just get your opening remarks, Eric and Randy, regarding what's going on in the markets, how people should be feeling and what action can be taken.

Erick Arnett:
Sure. Yeah, absolutely. So, of course, the markets seem to be in an extended downward trend here, almost a freefall, if you will. And it's when you're coming off all time highs in the market, it seems extremely painful. It's it's kind of the analogy of climbed up. If you can envision a chart you've like climbed up this cliff and now you're at this really high peak. And if kind of the market's kind of stumbling and falling off that cliff here recently. So, you know, year to date, the S&P is down 16%. Most of that's come in the second quarter. The stock market's down almost 12% in the second quarter. And so, of course, people are fearful and people are scared. Volatility and measures of volatility that we look at in the market is also high. It's not at all time highs. However, pessimism is increasing. So it is high. So, you know, that's kind of the. What you see every day. That's kind of the, you know, in the headlines or if you're watching the headlines, you're talk you're looking at Fox Business or things like that. They're obviously talking every day about the increase in volatility, the increase in interest rates, the increase in inflation, the war in Ukraine. So and then the Fed having to raise interest rates to try to slow the economy down. And so you have four major, major headwinds that are facing our investors and our retirees and pre-retirees. So it's definitely a tough time.

Erick Arnett:
It's a gut check. However, these are the times more than ever that you have to be even more vigilant and even look at the potentials for opportunities as well as the potential to actively manage your portfolio or get on the phone with your advisor. If your advisor hasn't reached out to you, please reach out to us and we're happy to help you and talk to you about what's going on. But, you know, it's obviously there's a lot of concerns out there, increasing volatility. And really what's happening, Sam, is that because of the increase in interest rates, a lot of money is being sucked out of what we call high risk assets. As an example, we can just talk about the technology sector. You know, the technology sector typically is a high risk asset class or a high risk sector. And we're coming out of that post pandemic boost that that sector got and. After COVID and coming out of COVID in 2020, that sector really went through the roof. I mean, it was the tech sector was up astronomically every day. It was bewildering. Like you look at the market and it just kept going, going, going, going. And that in itself was nerve wracking for me because I felt as though it was getting way over overbought and sure enough, it was overbought. And now it's being sold off as the market and as stocks, particularly high risk stocks, adjust to the increase in interest rates.

Erick Arnett:
So as interest rates increase, that makes it more and more difficult for these stocks to to grow. And so. We'll talk about this and how it impacts your portfolio and what you should be doing and what you're not. So much what you could have done, but what you can do at this point. So I think there's still some good, strong, positive news out there. And even though we have these four major headwinds, there are some good, strong economic backdrops that are out there that still lead us to believe that. This isn't going to just continue into just a total free fall bear market. I feel as though there's going to be some resistance to that. And here's why. You know, economic conditions are still very strong. The job market is very strong. You know, we have earnings. Corporate earnings have been very good. Of course, there's been a few companies here and there, but for the most part, corporate earnings were very, very strong. And there's also a ton of money still out there in the system. So even though rates are rising, they're still very, very historically low. So companies will be able to adjust to those rising interest rates. And. More than ever. This is offering what I believe is a long term investment opportunity. So it creates a very long term opportunity and that's what you should be investing is for the long term anyways. And so, you know, I think that eventually here I'm not saying that the market is done going down at all.

Erick Arnett:
However, once we start to see that volatility kind of moderate, I do believe that's the time that will offer an historical opportunity for a buying opportunity. So, you know, I mean, Randy and I remember, gosh, this was over 12, 13, 14 years ago. We were out doing seminars and live events during the stock market crash in oh eight. And people were panicking. People were selling. People were running for the hills. We were telling them to do just the opposite. We were telling them to sell whatever they have, sell their kids, sell their homes, whatever. I mean, raise cash and invest it in this market. And it's going to create an amazing long term opportunity for you as an investor. And a lot of people looked at us like we were absolutely nuts. However, what we found was we went into a 12 year bull market. And so the stock market in particular, we got to you have to put things in perspective. It was very overbought and it ran to the high and the S&P 500 was really being pushed higher by five technology stocks. And so the S&P 500 is a market cap weighted index. And so the bigger the company, the more shares and the higher the price, the more weight it has in the index. And so. All the money post-pandemic was rushing into technology stocks like your Facebook, your Amazon, your Netflix or Googles.

Erick Arnett:
I mean, everybody was at home, right? And so these Internet type stocks, Internet based type commerce was receiving an amazing amount of attention. There was a ton of investment going in. And if you didn't have a weighting in that industry, you're really underperforming the market. So almost forced and pushed the markets and institutional investors into the big money to kind of flow into that. Really what we're experiencing here is that headache and we're still going back to and I think we've reached the pre-pandemic levels and so are given a lot of that back. However, if you are properly weighted and your portfolio was properly rebalanced and you had multiple asset classes, you whether you're weathering the storm just fine. And we'll get into that a little bit more detail as we I want to give our listeners a true. Kind of roadmap or concise kind of strategy and things to think about in ways in which they can weather the storm and come out of this really looking good in a positive way. So. So just to sum up, you know, yes, the markets are bad right now currently. There's a lot of volatility, however. This, too, shall pass and the market is offering a great opportunity. But you've got to be more selective. You've got to be more active. It's not about just throwing money at just everything or stopping overvalued stocks. And that's why literally last year in September, we started adding value stocks and reducing growth stocks in our portfolios.

Erick Arnett:
We started adding gold, we started adding commodities. So, you know, we didn't sell stocks completely, but you have to be able to readjust and rebalance. And more than ever, I can't stress this, the word of the day is rebalance. So you just can't have this kind of deer in the headlights. Oh, my gosh. I don't know what to do. If your stock market weightings have come down versus your bond ratings and your portfolio is currently not in line with your long term investment policy statement, you know, let's say you had a 6040 mix that you agreed on with your advisor. You know, that's probably gone down to a 4060 mix or a 5050 mix. You've got to rebalance your portfolio and reposition that and stay in line with your goals and stay along with your long term investment objectives. And so I been through these bear markets and these corrections. I've been in this for 25 years now and I've been through a lot of them. And so I see that as being one of the most common mistakes. And also one of the most common mistakes is just selling and panic and running for the hills. And we have not seen that panic yet in the markets. So we truly haven't seen capitulation yet. And capitulation is where the panic just gets so high that everybody just gives up and says, okay, I can't take it anymore.

Erick Arnett:
And I want to talk about that chart we talked about on some earlier shows as well. I want to bring that up and actually go through it and I'd love to share it with our listeners as well as they'd like to see it. I can email it to them and we'll tell them how they can get a hold of us. But so the inflation number came out this week and it was still very high. So the market is still selling off and it's still really resisting. These is really getting beat up by these headwinds. So. Until we see inflation kind of tame a bit and we see volatility tame a bit, we're still going to have some downward pressure. However, that shall pass. And more than ever, now is an opportunity. And don't make the mistake. I want to talk about a recent kind of condition that we're seeing. And Randy can probably attest to it to us. There might be people out there and I'm hearing from other advisors, even some of my colleagues, that, well, you know, the market's done for. I'm not making any money there anymore. So I'm going to sell out of the market and I'm going to go buy a house or a real estate investment, and I'm going to rent it out and make money. It might as well do that. Right. So there's so many problems and there's so many. And that's just such a big mistake right now.

Erick Arnett:
And we have Randy, who happens to be what I would deem a real estate investment expert. And I'll let him talk a little bit about that as well. But, you know, you're you're you potentially could be jumping from one frying pan to the other. So the real estate market had a massive, massive bull market, massive increase in prices like we've never seen in history. And so jumping from. One frying pan selling off an asset that's low right now and then jumping to an asset that's really high just really isn't probably the most prudent idea. And it sounds easy. I'm going to buy a house, I'm going to rent it out. I'm going to make income. Guess what? It's not that easy to keep it rented to pay all the expenses, to make sure you know, the maintenance and all this kind of stuff. And is it really going to be occupied enough to where it's going to offset all that, where you're going to actually make money more than you would in the stock market or index annuities or whatever it may be that we can discuss today. So. Brandi, I just want to bring you in here and kind of get your comments on that and tell our listeners a little bit about kind of your background and how we can help because retirement planning isn't just about stocks and bonds and annuities. It really you've got to talk about real estate, right?

Randy Woodruff:
Yeah, we have a41k plan at the company. We get limited options of what to pick from. There really isn't any advice. You basically just pour your money into this in this 41k plan in the years go by and you're looking at it, but it's not really being actively managed. And so we kind of develop this habit of not actively managing our portfolio while we're working, and then it kind of that habit kind of carries over into retirement. So to your point and it's so true, we need to constantly be looking at at our portfolios where we're working while we're in retirement to make sure that it's properly balanced, to help us achieve our goals and objectives. And I'm not saying we should be balancing every quarter, like totally rotating the portfolio and getting out of everything into new things. But just kind of take a look and make sure that what you're invested in, meet your objectives, your investment objectives. You know, and Eric, you bring up I want to just touch on something real quick. And I was you were as you were going through your open there. I been following a stock and you mentioned technology stocks and growth stocks that were doing so well during the pandemic. But over to the real estate, you know, Eric said that and he's so right about right now, especially here in Florida, where we're all pretty much located at. Let's listen. We have such a demand going on here in Florida, here, here in this, especially in the Tampa Bay area. You know, if you're if you're not buying a house with cash and if you're not offering, depending upon the price of the house, ten, 15 or more percent over the ask price, you're probably not going to get the house. And if you want to come in with any kind of financing, it's going to be hard to get the house. And so, you know, if you're going to if you think you're going to sell, you're selling off your portfolio now or part of your portfolio now, trying to find some rental property. Now is not the time to do that and try and then.

Erick Arnett:
Kind of miss the curve on that, right. Yeah.

Randy Woodruff:
I mean that time you that were three years ago. Right, right. And I'm not saying sell off your investment portfolio in stocks and bonds, but basically get into real estate. Three or four years ago was the time to really look at doing that. Prices have gone up so high, especially in residential real estate, residential rental real estate commercial is now following that we're seeing commercial properties flying off the if you off the shelves, you know people are buying up land to start building as well. So here in Florida, you know, there's been numerous stories written about this, numerous radio shows and TV shows about how hot demand here is in Florida for real estate. And that's not going to curve anytime soon. They're talking about a potential cooling off or real estate. I think it's going to be regionalized. I think parts of the country are already starting to see some pullback in real estate values or or they're not going up as much. I think that's going to continue. I think here in Florida overall, we're going to be stronger than pretty much the rest of the country because people want to come here to Florida for multiple reasons.

Randy Woodruff:
One, it's been happening for decades and people want to retire. They want to come to an area where they can enjoy the great outdoors. And we have that here. So so here again, if you think you're going to going to sell off your portfolio in the stock market and get into real estate and and recover all your losses is probably not going to happen. As Eric said, you're getting out of one asset class when it's at a low point. Right now, you're buying into another one when it's at a high and it's probably, you know. The worst thing you can probably do right now is to is to make that move. We are seeing record low inventory and especially in residential. A lot of people do if they're looking to get into rental property, residential is where they're looking to get into. And here again, I'm not suggesting that you don't look at it, but if you're looking to liquidate your portfolio or a portion of it to get into residential rental real estate, now is not the time.

Erick Arnett:
Retirees and even some pre-retirees, they are. We're in the process of following through with their retirement goals and downsizing. And so a lot of folks out there downsize, sold off their bigger home, put it in cash, and they kind of rent it or sat there while they're having their new, smaller home, built their retirement home, or they were going to go out there and search the market for it. And what they found was it's almost impossible. And it had some clients recently call me this week and they're in a conundrum and really kind of wanted some advice. And it was they went they went to their building site, you know, to check up on things. And they signed a contract a long time ago. They were supposed to break ground over six months ago, and they still haven't broken ground. And the builder hit them with an addendum and said, oh, by the way, we have a 40,000 price increase. And oh, by the way, now interest rates on a 30 year mortgage is six and one half percent versus what you could have got when we first sat down, which is two and a quarter. So my fear is that this these prices are running away from folks. And I just don't think it's a good idea to be chasing it. And, you know, unfortunately, Florida has now become one of the most unaffordable places to live because of the price is going so high. So and I'm starting to hear people talk and say, well, you know what? At some point, these prices are getting too high. I'm just not going to spend anything.

Erick Arnett:
I'm going to sit on the sidelines, put my money set, sit on my money in the bank, and I'm not going to do anything. So we could we could potentially see a slowdown across the board. And it just gets back to Sam. What we were talking about is investing with emotions can be very costly. And this is what we try to do at take point. Wealth management is take their emotions out of investing. And it may be time for some of our listeners out there to hand over the keys to somebody. That's not going to be emotional when it comes to managing their money. But I love this one chart. You know, when times are tough, we want to limit our losses, right? So when things are going well, we wish we had invested more. We're all we all have this fear of missing out. It's called FOMO. Right? And so but when you're investing, giving in to fear is often, often a very losing strategy. In fact, it's the number one mistake I see made. So more often than not, investors with this mindset tend to buy high. All right, which we just talked about. And then they sell low. So as they invest more in a rising market and pull money out in a falling market. And so I've got this chart in front of me and I know you guys out there listening can't see it, but I love to send it to your email to you. If you could reach out to us just you can Google take point wealth management our phone number is there or up in the upper right hand corner you can just click on my counter and set up like a 15 minute chat.

Erick Arnett:
Put your email in there and tell me, Hey, I want to see that chart and I'll email it right to you. But kind of envision this chart. It's kind of going it's a line going up and as it's going up, you know, people feel encouraged, is the emotion and then they feel confident and now things are riding high, kind of like they probably were. And in 2020, the end of 2020, they're feeling thrilled. And then they get this feeling of euphoria. And I remember Randy, it happens all the time. And I was thinking to myself, Oh, here we go. And there was these warning signs that I was getting. I was on the golf course probably about six months ago, and I was playing some golf with a group of guys. And let me preface this by saying there's nothing wrong with blue collar contractors and workers and stuff like that. I get that. But they don't work in my industry and then even know what I did. So I just kind of kept quiet and these guys or, you know, blue collar kind of builders and contractors, and they were talking about how they were just hitting home runs in the market and they were investing more and more in the market, trying to buy more buy. And they were just crushing it and crushing it. And, you know, all of a sudden these guys were stock experts, you know, and I felt like, oh, man, I remember what this felt like in prior to.

Erick Arnett:
Crashes before, and that's that feeling of euphoria. I can just do no wrong. You know, this is so great, and I'm making so much money. The market just keeps reaching new highs and I'm so euphoric and so smart. And then we get the sell off and the market starts correcting a little bit and it's slowly going down. It's okay. It's okay. Everything's fine. Yeah. Market go up, markets go up, markets go down. And they have this emotion and they're a little surprised what's going on here. And then things keep going down and we get to the nervous emotion. Right. And I think that was something that we felt January, February of this year. People were starting to get a little nervous, like, hey, maybe the party is over. I just bought all these stocks and things were great. Now what's going on, you know? And then the market keeps going down and we're kind of at that stage where people are worried and and we're at that worried stage, and we tend to see a little bit of a relief rally and kind of a pause in the market. But then the market can hit another low. And now we see the panic stage. And we haven't gotten to the panic stage yet, but that's when people will sell low. So they buy right before the market crash. When they feel that euphoria, investors tend to buy high. Right. And now they're going to sell when things are beat up and low.

Erick Arnett:
So how does that make sense? Right. So and that's what we try to really protect people from. Is is now is the time to be buying, repositioning your portfolio, rebalancing your portfolio, putting more money to work into the market. I would even go as far as saying, you know what the exact opposite is, sell real estate. If you have a bunch of real estate, take those big gains, pay capital gains. I want you to talk a little bit about capital gains and real estate, because I get this question all the time. Pay those gains while gains are kind of a capital gains rate's at an all time low. Right. And then reinvest in the market because of beat up. You want to buy low. You're right. You know, this is like what the smart investors do. So you never going to be able to time it perfectly. People nobody can. The best traders in the world are only right 50% of the time. So you just you can't time it. But I feel like we're somewhere close to that stage. And it makes sense because whenever you invest in something, no matter what it is, it should be long term five, ten, 15, 20 year commitment. So this is going to these types of markets tend to tell people a lot about themselves and also tells us of advisors a lot about our investors. And so it may be time to sit down with your advisor and redo your investment policy statement, realign your goals, talk about your long term goals, your retirement goals, and and put a plan together again.

Randy Woodruff:
Yeah. There's no right or wrong answer. There's no there's no you know, everybody has their own personal situations that that should help dictate these decisions. And here again, that's why we recommend coming in and talking to us. Let's take a look at what your overall overall portfolio looks like, both or your stocks, bonds and your real estate. And seeing how balanced it is, we've had clients that come in that have been in real estate, you know, ten, 15 or more rental properties, and they know they're out of balance. And one client particular comes to mind. They they purchased 15 of their rent, all the rental properties during the Great Recession. They're coming out of the Great Recession. Start buying them in ten, 11, 12, 13. So they bought in a great reductions in price. Now they've tripled in value from what they bought them at or more. And to your point about capital gains. Yes, capital gains is is capital gains tax has been around for just around round about 80 years. It's the second lowest point it's been in history. So I'm not an advocate of paying taxes any quicker than you have to. But at the same time, if you do make profit, whether you're working or whether you're in the stock market or real estate, you have to pay taxes and you're going to pay taxes. Now is the best time to go ahead and lock in those gains, pay taxes at a lower rate, and look to rebalance your portfolio into maybe over and just back in the stock market. Well, prices over here are much lower.

Erick Arnett:
There's ways that we can invest your money to create a tax free retirement. So imagine going from a very taxable situation to being able to invest your money into retirement, draw income and create tax free income. Because one thing we know for sure is taxes have to go up with a $30 trillion debt clock. I mean, we have to increase taxes. Obviously, we're not decreasing spending any time soon. So there's only one other way to kind of get things under control and that's to, you know, to raise taxes, take.

Executive Producer Sam Davis:
Point on retirement. We'll be back in a moment. You can contact Eric and his team at take point on retirement schedule, a quick 15 minute chat. Get your retirement plan looked at. If you don't have a plan, get one constructed for you. Take point on retirement. We'll be right back.

Producer:
You're listening to Take Point on retirement. To schedule your free no obligation consultation visit. Take point on retirement. At take point wealth management. We know you've worked hard to earn your money. And you've worked even harder to save it when it comes to wealth management and planning for retirement trust, Eric Arnett and his team of experts who have been helping individuals, families and business owners find financial freedom for more than 20 years. Let us help you protect and grow what you've worked so hard for. Schedule your free no obligation consultation now at TakePointWealth.com.

Producer:
I'm Matt McClure with the Retirement Radio Network. Next time you head to the pharmacy, you could be in for some sticker shock. So do you need to plan now for higher drug prices in the future? First, let's spell out the problem, and it's not necessarily a new one. Prescription drug prices have been rising faster than inflation for decades, according to AARP. To put it in perspective, the group says if gas had risen as much as prescription drugs have over time, regular unleaded would cost more than 12 bucks a gallon by now. For seniors on a fixed income, being able to afford prescription drugs is essential. Ron Mastro Giovanni of Health View Services recently told CNBC.

Ron Mastro Giovanni:
Whether you're affluent or whether you're the average person, I'll tell you what. When you look at your Social Security check, you're paying for health care.

Producer:
Prescription drug insurance plans provide some coverage, of course, but not all plans are created equally. And it's important that you know the details of your plan, especially what it will and won't cover.

Ron Mastro Giovanni:
You really need to look at the coverage in those types of plans to determine what makes the most sense for you.

Producer:
Lawmakers in Washington have been trying to come up with solutions on several fronts. They include things like allowing the government to negotiate drug prices, capping the cost of insulin and more. But those proposals have stalled. They were part of President Biden's build back better plan. It passed the House, but that massive piece of legislation hit a roadblock in the Senate, even though surveys show big majorities of U.S. adults approve of those measures. It seems like everyone agrees something needs to be done to control costs, but just can't agree on exactly what that might be. In the meantime, what should you do to prepare for higher drug prices in the future? Well, putting more money in savings surely couldn't hurt, according to the experts. But that can only go so far. And what can you do now to save money at the pharmacy? Well, that is a key question to consider as inflation continues its upward climb with the retirement. Radio Network. I'm Matt McClure.

Producer:
Welcome back to take point on retirement schedule your free financial consultation now at take point on retirement.

Executive Producer Sam Davis:
And welcome back to Take Point on retirement. And if you were just listening during the last break, you just heard a story from Matt McClure of the Retirement Radio Network regarding inflation, inflation, specifically regarding drug prices. And we know a lot of pre-retirees and retirees have those expenses included in their monthly budgets. And I thought the really interesting fact to kind of pull out of that was if gasoline had been subject to the same inflation rates as drug prices, we'd be paying $12 a gallon at the pump. So inflation just an additional headwind that pre-retirees and retirees are facing. And Eric and Randy, you guys are helping people be prepared for that.

Erick Arnett:
Right. And that's exactly why our retirees and even our pre retirees, they really need to be a little less concerned about stock market volatility and adjusting in the markets. And they really need to focus on income. And one thing we probably don't talk enough about is is really shoring up that income in retirement. And so you've got to have income and you've got to have an income plan. And this is exactly why, you know, when we have volatility in the markets like this, where you're could be losing portfolio value, it's going to drastically impact your income. But if you had your income sources and your income plan in place and you're getting the income that you need and even you can, there are strategies that we can show you that your income can increase with inflation. You know, you're not worried as much because your income is locked in and you're good to go and you always know that your income would be provided for. So you really got to and that's one thing we do at take point. First and foremost is we talk about budget, we talk about income sources, and then do we need to provide more income for you and lock that in and make sure that income gap that you potentially have is taken care of.

Erick Arnett:
So, you know, inflation, whether it's going to keep going up or kind of slow down here and go backwards, yes, that's very important. But, you know, inflation is probably been hidden and been around for quite a while. Some of the CPI numbers that the government puts out, it's kind of cherry picked what they what they like to put in that report. But, you know, really what's going on is, you know, the market's just adjusting to inflation because the Fed is going to have to raise rates if we continue to see these inflationary numbers kind of flow higher. So that's really what the market's worried about, is how much more is the Fed going to raise, how fast and how quickly. And then also they're tightening monetary policy, which will take liquidity out of the economy. So it's really, really important that we. At that income taken care of first and foremost. So but I wanted to also kind of flow into this show today. I wanted to really talk about and give people a place to go and strategies to implement and kind of help them create a roadmap out of the situation that that we're currently in. So one thing that comes to mind is, you know how I love these pictures and charts.

Erick Arnett:
Sam So one of them, I'm bringing up one now and I'd love to share it with our listeners. So reach out to us and Sam will provide all that contact information for you. But this is a chart that is is called Strategies for Volatile Markets and the graph below, if you can in picture, it's a bar chart. And basically what it shows is, is 100,000 investment that was put into the market 20 years ago in January 2002 and to December 31st of 2002. And so the example is, if you remained invested for the entire time, the entire period, you would have accumulated $616,317 on 100,000 investment, while an investor who missed just five. Just think about that for a second. An investor who missed just five of the top performing days during that period. And I'm talking about a 20 year period. If you just missed five of those top performing days during that period, you would have accumulated only $389,264. So, you know, we're talking about staying invested, rebalancing, making some adjustments, but don't panic here and sell out because that's going to be the worst thing you can do. So so if you missed ten days, you only had 282,000.

Randy Woodruff:
Isn't that.

Erick Arnett:
Amazing? Right. I want people to see this because they're going to think I'm crazy. But you've got to see this. This is real data, you know, past performance data put out by BlackBerry and Bloomberg. So if you missed 15 days, you only had 213,000. If you missed 20 days, 167. And if you miss 25 days, you only had 134,000 on 100,000 investment over 20 year period. So that right there shows you if you try to time the market and I've had people say, hey, can't we just get out for a while and then come back in? And when we when we feel a little bit better about things and no, you really can't, to be honest with you, because nobody has a crystal ball. And if you just miss these little intra day blips and, you know, like sometimes we might have a 5% relief rally and then the market will soar off a little bit or whatever. But that's this is mind boggling. It was even surprising to me as an investment advisor and know in the industry for over 25 years, but stay invested because missing those top performing days can really hurt your return.

Randy Woodruff:
And can we just come in there? Yeah, absolutely. I just pulled up my my phone and we started we started the morning out in the red. We're already back in the green.

Erick Arnett:
Oh, that's that's exciting.

Randy Woodruff:
Your point about staying invested and having these rallies. Right. So so it's good. It's good to stay invested and it can't be stressed enough. Yeah. And one of them go ahead. You know, talking about the last chart about emotion and that kind of stuff and how people get you for it and then get panic, you know, reason people panic if they don't have a plan. That's right. And they don't they don't have a plan. They don't understand what they're invested in or what they're doing. And we don't understand. That's when you have panic. That's when that's when you get those feelings. If you understand what you're doing, if you've educated yourself and spent time with with a professional that knows what they're doing and will help educate you, you don't have to have those fears. You don't have to have panic and let that control your decision making.

Erick Arnett:
You know, if communication has broke down between you and your advisor or you're not getting the communication that you think you should be getting and it's not frequent enough, then yeah, you're probably feeling like loss or I don't have a plan. I know what's going on. Constant communication is so, so important. And that's one thing that we put first and foremost on the list and priorities with our clients is constant communication. We may even overcommunicate sometimes. You know, our team here is immediately picking up the phone to our market downturns, you know, just immediately doing that. We're also immediately evaluating the markets and immediately evaluating what are the things that we can do to actively manage this portfolio to try to at least minimize the volatility. You know, here's a great another great chart. I love it. And I want I just really hope people reach out so I can send it to them so they can see this. But one strategy, if you're listening out there, maybe you have new money. I've got a client coming in today. A new client. Same situation, Randy. He built a couple of homes during the boom. He just sold them, made a ton of money. And he's like, I'm not so sure about what I'm going to build two more homes or not right now.

Erick Arnett:
Supply chain issues, cost increases, labor. You know, like his painter, I was like, wow, yeah. You know, I'm going to basically charge a double now. I mean, like, because they're so busy. So labor costs, all these kind of things are going up. So he's like, You know what? This just doesn't feel right. I'm going to come in and see you. I'd like to talk to you about what I can do with this money and for for new money or even maybe maybe you panicked and got out of the market in January or February. Or maybe you just got out again. I don't know. So let's talk about a strategy for you going forward here today. And this is great. It's called dollar cost averaging, which will help you achieve a better outcome when markets are volatile. So strategy number one, just systematically investing $1,000 per month every month for a year, regardless of share price. Look at the results. So the average share cost of dollar cost averaging in this example was $19.44 a share, and there was over 617 shares purchased during the same time frame. If you invested 12,000 just in a lump sum at the beginning of the year, you only had 480 shares and the average cost was 25 per share.

Erick Arnett:
So think about that dollar cost averaging back into the market, slowly taking advantage of these opportunities. And if you have new money or you kind of had money sitting on the sidelines or maybe you were an annuity or variable annuity or something like that, and you need to make a change. Then let's talk about putting a strategy together for you. The dollar cost average back into the market and back into a good, solid, diversified portfolio that has value stocks, that has some growth stocks. I have some international stocks, you know, small caps, mid-caps, you know, some short term bonds, some indexed annuities, like a very broad based portfolio, some gold, a little bit of commodities in there. Like we have to be able to make small shifts in what I call our satellite positions to enhance upside or to help minimize downside. However, the basic, basic premise is, is take advantage of these low share prices. So if you were investing and putting money into the market last year, why the heck would you not be doing it now? Yeah, if you're truly a long term investor. Right. So these charts are kind of fascinating to me. I'd love to email a lot to our listeners saying.

Randy Woodruff:
That one the stay invested chart that just can't be that. Everybody needs to call and ask for that chart because it really.

Erick Arnett:
It really is a cool chart and put it on your refrigerator. And when you wake up in the morning and you see the market kind of opening up with some red and you want to panic and freak out, put on a friend and look at it and look at it and remind yourself and be a contrarian, folks.

Randy Woodruff:
Yes, don't.

Erick Arnett:
Follow the herd. Guess what? Everybody's panicking. People are selling right now. And that's why you have downward pressure in the market. That's because the herd mentality is everybody follows the herd. I love this video. There's a video I saw years ago as a commercial, I think from some big firm. But it was funny. It was like all of these people were running through a field and you could see there was a big cliff like the Grand Canyon coming and they were chasing this bull. And all of a sudden, like these people, you could just see they were going to get to the edge of the cliff and they're all falling off, you know, like, oh, boy, what's going to happen here? So if you're following the herd, you know, you're probably I like momentum. I get strategy momentum and stuff like that. But don't follow the herd. Be a contrarian and rebalance here and put your plan together. And I want to talk about that, you know, after the next break or commercial, Sam, and get into what exactly the smart plan is and some of our recommendations for building what we think is a truly solid long term retirement plan and investment plan that will weather all storms.

Executive Producer Sam Davis:
Yes. Anyone who is interested in reaching out to Eric, Randy and the whole. I'm over there at Take Point Wealth Management. There's a few ways to do that. You can simply Google take point wealth or just go online to take point on retirement schedule, a quick 15 minute chat and start getting your plan put together. And Eric, I definitely want to take a couple of minutes and just let the people know if they're a current client of yours. They know what it's like. But if there's someone that's just reaching out to you for the first time, what's it like when they start working with you and the team over there at Tech Point Wealth Management?

Erick Arnett:
You know what? It's just laid back the first. It's a it's a three step process. I mean, we kind of pride ourselves on the process. It's a disciplined process. But the first appointment or even first chat session, you know, it's just to get to know you and who you are and where you're at in life and to kind of talk about your goals and to get and maybe you don't maybe don't even know what your goals are. But what's so we're going to help you determine what they are. And and then, you know, and then if we decide, like, hey, this makes sense, let's talk some more, we're going to set up another appointment and then we're going to start gathering the data and the information that we need to truly help you. And we're going to put together a full blown, optimized, long term, time tested, stress tested retirement plan for you. And absolutely free of charge. There's no expenses to you at all other than your time and your engagement and your willingness to educate yourself. And that's it, because we love to help people, and that's what we're passionate about. I mean, sometimes I literally lay in bed at night thinking about all the people out there that need help, and we're truly passionate about that. And so we're going to get you the help you need. And at the end of the day, if it makes sense to make some changes, great. We hope that you choose us to help you implement those. Let's see if we're a good fit and we can work together, but it's just going to be a laid back chit chat.

Erick Arnett:
We're nice people. No one's going to bite you. No one's going to put a gun to your head and say, Hey, you got to invest with us and you might not need to make any changes at all, or maybe just some small changes. And you're just going to build some confidence, you're going to build some clarity and what you're doing, you're going to feel better going forward. You're going to be able to sleep at night. You're going to be able to get on with your life, and you're also going to be able to get on with your retirement and really, truly focus up on those goals. If we don't have goals and if we don't have ways to measure those goals, then we're really just kind of flailing and don't really have any direction at all. So Randy and I talk about that all the time. In our business, what goes on measured doesn't get done, you know? So we've got to get this done for you first and foremost, and let our team build a plan out for you. And if it makes sense to you and you feel comfortable with it, great. If not, that's okay too. We're going to cherish the opportunities to chat with you and get to know you. So, Randy, you had you you wanted to you had something that you wanted to talk about. I know if it's still on your mind and we got kind of sidetracked with a commercial there. I'd love to hear your wisdom.

Randy Woodruff:
Coming out of the Great Recession. And here again, it gets back into education, knowing your market, knowing what you're looking to invest in, depending on what it is. And this is a real estate story, but it holds true for any kind of investment. You know, we were we I knew that there was a there was no warehouse space for release in the airport industrial park. And the county actually realized they had they they needed to incentivize local contractors, builders, whoever, to to take advantage because they knew they needed space coming. And I was able to put together myself and two of business partners, we built two warehouses, 11,000 square foot, and they were fully leased before they were done. And so we were able to take advantage of incentives and catch the market on the way up. And so, you know, when I was putting this together, I talked to several people and they were thought I was crazy, if you will, for wanting to do this at that time, because it just at the time there was it we were still here in the local market here. We're still feeling the effects of the Great Recession. And so but I knew that there was no supply. And so I knew that it was going to work out. And it did. So my my to Erick's point about the herd mentality, about being contrarian, if you if you educate yourself, you know your market, you know the investment, you've got to plan.

Randy Woodruff:
You don't have to worry about what the herd is doing here. Again, stick to your plan, work with your advisors and make sure you got a good plan. Make sure you're here again. Education. I can't stress that enough. You need to be educating yourself. I've said this before on prior shows, people spend hours and hours and hours planning a one week vacation for their family for the summertime. They're going to spend 20 years in retirement and they'll do any planning or educate themselves on that. So I can't stress enough. You need to educate yourself and don't just listen to some of the talking heads on TV, read some air shots and great suggestions and great books that we can give you to read, recommend that you read. Because the more educated you are, the more comfortable you're going to feel communicating with us, the better conversations we're going to have together when you're in the office and ultimately the better decisions you're going to make. And we're going to make together for your retirement. And you're going to have hopefully a less stressful retirement and a happier retirement, because one of the things that drives fear, especially in seniors, is, am I going to run out of money?

Erick Arnett:
Run out of money?

Randy Woodruff:
But if you got a good plan, you built a good plan and you stick to the plan and you change it when necessary. But if you do all those things, you're going to have a much better retirement, much happier retirement and less stress.

Erick Arnett:
We talk about it on the show quite often, and it's what we call the smart plan. And I wanted to pull this up and get into this a little bit more. And, you know, as an example, our smart plan, we always feel pretty strongly about following that rule of 100. And if you follow that rule of 100, you're not as panicky as someone who has not. But, you know, that rule of 100 is basically the amount of risk that you should have in your portfolio or your retirement plan. You take your age, subtract it from 100. So let's just say you're 60. That's 100 from 600 from 60 from 140. You should really have about 40% of your portfolio in growth or asset classes that can grow. And that's not just equities and stocks, that's commodities, that's real estate growth type investments, things that typically will outpace inflation. And so with high inflation, guess what, folks, we need more than ever to build a portfolio that's going to outpace inflation, right? Because your dollar that you had in the bank a couple of years ago is only worth about $0.68, maybe less than that, maybe $0.50. So we harp on this all the time is don't be too conservative, don't panic. Don't put your money under the mattress or in the bank because you got to fight inflation.

Erick Arnett:
And if you put a smart plan together and you get through the good times and the bad times, you will outpace inflation. But, you know, just having a plan and having a game plan, staying calm here when unexpected, unexpected events occur, you'll be fine. And in. What's what we. I mean, we kind of talk about it's braggadocious. But one thing that doesn't really happen here at take point, wealth management during market turmoil like we have is the phones really aren't ringing. You know, it's because we've already put those plans in place, in place to weather this storm. So, you know, you've got to have that smart plan and we can get into the details of it. But, you know, it's basically having about 40% and growth and then about 60%, what we call safe money or smart money's safe smart money. And that's utilizing indexed annuities to provide 100% principal protection. There's no interest rate risk. So if you're just have that traditional bond portfolio that's 6040 portfolio, guess what? Bonds are down 12% this year as well because of the interest rate risk. As interest rates rise, bonds get crushed. And so, you know, if you had this plan in place, then you would be weathering the storm quite nicely.

Erick Arnett:
And the smart plan is down a very, very small percentage versus the market, you know. And so, you know, if you have a combination of index annuities. Equity investments, some short term bonds, some commodities, gold, all that kind of stuff. Working together, good, strong value stocks. You've got to be rotating out of that growth and adding good strong value stocks. I mean, financials, as an example, bank stocks with rising interest rates, their earnings are going to increase and do really well. So there's opportunities to rebalance and refocus the portfolio to take advantage of what's going on here. But, you know, having that smart plan in place to weather all storms is so, so important. And so, you know, we have a checklist here. Take point wealth management. We sit down with you and it's it's really the one number one is to reduce your taxes. And that's why I got Randy here, CPA for close to 30 years. And then yeah, well, I guess we are getting old, unfortunately, but and then my job is to grow your assets during retirement. So the first thing we've got to do is analyze your portfolio for the risks, expenses, the fees, and then see what the correlation is. Are you truly diversified? You might not be.

Erick Arnett:
Assess your income needs. Now, they're very different than they were a year or two or three years ago and even maybe make some projections into the future, but assess monthly expenses and look at what your guaranteed retirement income sources are going to be, including Social Security, determine your future income gap. And so we can put things in place to to fill that gap. So you truly don't ever have to worry about running out of money, you know, and invest in that smart financial plan following that rule 100 Smart Risk, smart, safe and fixed indexed annuities, tax free accounts. You know, we're going to try to get you to that tax free retirement the best that we can. So Roth IRAs index universal life policies, which we call a life insurance retirement plan. Let us show you how that works. So follow the 4% rule. Don't be over tapping your portfolio and taking too much out 4% max and you'll never outlive your money even in bad markets. You're not going to outlive your money with that smart, safe plan. So we're super excited to share this stuff with you folks. You just got to take the first step and reach out to us. And we'd love the opportunity to to improve things and optimize your retirement plan.

Executive Producer Sam Davis:
Take that first step today and go online to TakePointonRetirement.com. Or you can simply pick up the phone and call (352) 616-0511 and online always available for you at take point on retirement. Well, Eric, thanks for joining us today. Even though it's a rough market right now, it's good to hear from you. And I feel at ease.

Erick Arnett:
At least it's easy to kind of hide, but that's not what we do here at Tech Point. So give us a call, folks. We'd love to help you out. And thank you so much for listening.

Producer:
Thanks for listening. To Take Point on Retirement. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets, to schedule your free no obligation consultation visit, take point on retirement, or pick up the phone and call (352) 616-0511. That's (352) 616-0511. Investment Advisory Services offered through Brookstone Capital Management LLC. Become a registered investment advisor and take point. Wealth Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results. Please refer to our firm brochure the ADV to a page four for additional information. Any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by BWA.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including upload many different filetypes, collaboration tools, automated transcription, automated translation, and easily transcribe your Zoom meetings. Try Sonix for free today.