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TPOR 0211.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Producer Sam Davis:
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Producer:
Welcome to take point on retirement with your host Erick Arnett. Erick is a fiduciary and licensed financial advisor who always places your needs first. The experienced team at Tech 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 Erick Arnett
Producer Sam Davis:
And welcome everyone to take point on retirement. I'm Sam Davis, joined always by Erick Arnett over at Tech Point Wealth Management. Eric, happy to be here with you today.
Erick Arnett:
Hey Sam, how's it going, buddy? Good to be here.
Producer Sam Davis:
I'm so glad that we were able to get together today as we do every weekend. And you know, there's been a lot of, you know, things going on in the markets, a lot of pre-retirees and retirees concerned. You know, February has started and we've had a bit of a bounce back, but January was was not a great month. So, you know, I'm sure you're getting a lot of calls from clients and potential clients, and they're concerned. And what would you say to those people that are concerned as we kicked off twenty twenty two with Omicron and continued COVID concerns? And what would you say to those folks?
Erick Arnett:
Yeah, yeah, great question. I mean, it certainly has been an extremely volatile time in the markets and particularly in January. And really, you know, that is a reaction to the federal interest rates, you know, potentially going up. At least the Fed has announced that they are going to tighten, which means they're going to start raising interest rates. And you know, this is something that we've been talking about with our clients for quite a while. You know, as far back as last year, something that we totally expected to happen and we get out in front and talk to our clients early on, you know, even prior to the volatility that started picking up in the market is, you know, when you have a market that's been basically kind of essentially going straight up over the last 12 years, it's completely normal and it's actually healthy to have these kind of contractions in, you know, what we hope for is that the Federal Reserve takes their time and doesn't get too overly cautious and corrects which would, could, could potentially hurt the markets even more. But but really, you know, what it boils down to is how were you prepared for this? You know, did you have a strategy in place that was going to essentially be able to weather all storms? Because when we sit down with our clients, you know, we talk about, Hey, you know, it's not stocks, just don't always go up, you know, the market just doesn't always go up, right? So typically, every three to five years, we'll have a sizable correction in the markets.
Erick Arnett:
And you know, we we predicted this and knew that this was going to be coming in twenty two. So getting out ahead of it. Talking to your clients, you know, having a plan, making sure that you have a portfolio that's well diversified. And I know that's a word that's used quite a bit in our industry and maybe gets overused, but it is really important to make sure that you have a very well diversified portfolio that your portfolio is being actively managed. And I say that again, actively managed, especially if you're a pre retiree or a retiree, you need to have active strategies in place, not just a passive portfolio where you just kind of have a bundle of stocks or mutual funds and and you're just kind of picking names or picking funds and hoping that the markets will continue to go up. That's really not a plan. So we started positioning our clients last year more into value stocks, taking money off the table and growth indexed annuities in our portfolio.
Erick Arnett:
So our clients really, you know, which is what which is great out of all of our clients, maybe one or two percent of them got on the phone and we're, you know, called us and say, Hey, I'm nervous about the market, you know, well over ninety eight percent of our clients, the phone never rang. And so, you know, we get out and talk to them ahead of time to make sure that they know the stuff's come and prepare them for that and then make sure their retirement plan is well positioned to weather all storms. Because this is normal, you know, the market's basically been going straight up, but got a little overvalued, and now it's correcting and we'll push through this like we always do. The economy, yes, potentially could slow down a bit, and that's why. You want to be. You don't want to be just in stocks and mutual funds that have really aggressive growth stocks in there because as interest rates rise, those stocks will tend to get hit a lot harder than your big blue chip names that have, you know, dividends and big, strong companies that weather the storms and whatnot. So just really important to make sure you have a tactically active managed portfolio and you'll be fine.
Producer Sam Davis:
Yeah, it's such a good thing to understand that, you know, the markets don't go up every day. The fact is, they go up and they go down. You know, if you're following following the markets day to day, it's not going to be green. Arrows pointed up every single day of the week, Monday through Friday, when the markets are open, you know? But if you zoom out and look at the markets over a longer period of time, which that's what investing is, is committing your money to these assets over a longer period of time, you'll you'll see that the markets generally do go in an upward direction, which is why they've been a valued investment option for for just so many years. And I think it's an important thing for people to consider that if you're feeling some anxiety when the market is going down, do you really want to be feeling that anxiety when you're in your retirement years, will you really be able to afford to to spend that mental energy to worry about what's going on in the markets or any particular stocks earnings report in your retirement years and a couple of things there? You know, that's why you want to have a financial expert that you can go to that actively manages your portfolio, tactically manages as well, like you're saying and and also someone that can make sure that your assets are protected so you can sleep well at night. You can turn off the Fox Business Channel or CNBC or whatever it is that you're watching, so you don't have to worry about it, right?
Erick Arnett:
Yeah. Yeah, great. Great points, you know, and like I said, it just goes back to having that solid plan in place prior to the events occurring. And we always know that there's going to be these events that trigger contractions in the market. But, you know, having that long term plan in place is just so, so important. And so you can sleep at night. You know, if you're not able to sleep at night and you're watching the markets, then that's not really a retirement, you know? And plus, if you are doing that, chances are you probably are taking too much risk in your portfolio. And I constantly try to educate folks. It's the most important thing for pre-retirees and retirees. It's not about what you make in the up years, Sam. You know, people talk about that, Oh, you know, I made 20 percent or my neighbor made 30 percent or, Hey, this stock is up 50 percent. You know, it's not about that. This may sound a little arrogant, but anybody can make money in an upmarket, you know, when you just pick anything and because of a rising tide, will float all ships. I mean, there wasn't many areas of the market that wasn't going up. And so it didn't matter what fun you picked or ETF. But the most important thing is is how is your portfolio reacting when the markets are in decline? And so it's so, so important, especially if you're in those first five years of retirement to not experience drastic declines in your portfolio because it's extremely hard to recover from those.
Erick Arnett:
So it's more important to see how your portfolio is reacting in a down market. So if the stock market's down five percent one day and you pull up your account and you're also down five percent, that means you have a very aggressive portfolio and you're weighted to the market. One hundred percent stocks. Your portfolio should really only be down maybe one or two percent on days like that. And because it's so much easier to climb out of a smaller hole, right? If you dig a big hole, how do you get out of it? If your portfolio goes down 10 percent, now you're going to make 20 percent just to get back to where you were the day before. So, you know, and markets tend to go down like an elevator and come back up like stairs. So you really it's really about protecting the portfolio in the down years, the down days, the down months, whatever down quarters, you know, those big declines. It's about, you know, protecting those those portfolios from the down days because it's so much harder to dig out. So we really look at this is this is where and when I start to actually get a little excited, to be honest with you, when the market's of all time like this, because I look at my portfolio, I mean, I can look at my portfolios and up days and everybody is up like, OK, big deal.
Erick Arnett:
But I look at my portfolios in my clients retirement plans on the big down days, the down months and say, how do they react? And you know, as long as my portfolios are, you know, down less than the market, then I'm happy because it's going to take a lot less for us to get back up. And and but you know, you've got you also going to be able to make shifts and make dynamic shifts. And so, you know, waiting to energy, waiting to value stocks as opposed to growth stocks and, you know, looking at different areas of the market. Money is always going somewhere, you know, even if money comes out of a stock and it goes into cash, it's not going to sit there very long. You know, it's going to deploy somewhere. So money is going to go somewhere. So let's find the trends, the momentum and really see what's going on and follow that. So just, you know, once again, just kind of reiterate it's not about what you make in the up year, what you protect in the down years.
Producer Sam Davis:
Yeah. And I love how you said it's it's not hard to make money when when the market is good. And you know, if you're invested aggressively and heavily in stocks like that, sure, you're going to get the benefit of all of those big gains, but you're also going to capture all of those bad losses as well. And one of the things that we like to to harp on a little bit here on this show, and I know you mentioned this when you talk to clients, as is the rule of one hundred. And at times we've we've played the chapter from Annuity 360 about the rule of one hundred. And and just to review what that is, is, is you take one hundred, you subtract your age and the resulting number is the percent of your assets that should be at risk in the market. So if you're younger, you'll have, let's say you're twenty years old and just starting to get invested well, you've got time on your side so you can have 80 percent of your assets at risk in the market. But let's say you're 80 years old and the resulting number is twenty. Well, you don't have time on your side to recover from any sort of big losses in the market. So really, you should have most of your assets 80 percent, according to the rule of one hundred protected from loss.
Erick Arnett:
Yeah. And more importantly, to think about this. So let's let's say you're drawing on your portfolio to supplement your income for retirement. And so you're taking out four or five percent. I don't know whatever. I'm just picking a number from your portfolio and then your portfolio also ends up down five to 10 percent for the year. That's really tough. You know, that's going to really put a dent in things in a very quick fashion. So it's so, so important to make sure that we first and foremost have that income secured. We don't ever want to run out of money in retirement, so we've got to have that income stream secure, you know, take a look at your take a look at your what we call guaranteed income streams like Social Security, maybe a pension, maybe annuity income. You know, look at those and see, are these going to want to keep up with inflation? And are they going to provide the lifestyle that I want and desire going forward in retirement? And it's really important to get that income locked up first and then worry about growth in the markets to fight inflation. So it's about having that well balanced plan, you know, having your income secure and then having money working in the markets to provide for that long term growth that you might need to outpace inflation.
Erick Arnett:
But if you've got all your money in equities and mutual funds, you know, and you're way over weighted to growth in your latter years and you're and you're having to take money out of your portfolios, it can be really devastating. So everybody's got a different situation. But if you're out there listening right now and you're wondering, like, Hey, I'm having to take money from my portfolio this year, but at the same time, we're looking at potentially negative a negative year in the market. How is that really going to impact my income and my long term savings? So, so, so important to kind of I think at this point more than ever is now that we have the volatility, now that the forecast is kind of changed for us going forward where we have a headwind with the Fed, you know, continuing to raise rates and try to slow down the economy as opposed to in the past. We had a tailwind with all the stimulus and the lowering of interest rates and basically free money out there. That party is kind of coming to an end. So we've got to look at things a lot differently now that traditional 60 40 portfolio, 60 percent stocks, 40 percent bonds, it's probably not going to get you where you need to be.
Producer Sam Davis:
Yeah, 60 40 was was a great fundamental investing strategy, but it was for another time entirely and for another economy entirely. And you mentioned another one of our rules there when you're talking about not over drawing on your accounts, and that's the four percent rule. And if honestly, if you can go under that and undershoot that and draw less than four percent of your account value each year, you're going to be even more assured that your assets are going to last throughout your entire lifetime, which at the end of the day, that's the goal. If you're thinking about retirement as a journey across the ocean or sea on a ship, you know, if you're having a down year in the markets, sort of think of that as a as a hole in the bottom of your boat. And if you're over drawing from your from your accounts, you're just making that hole bigger. Which means that you're going to sink before you make it to the end of your journey.
Erick Arnett:
So, so concerning. So that's why we do this show, right? Because we're trying to reach as many people as we can and hope where they hopefully there's people out there listening that we can make an impact on and really get them to kind of talk to us and come in and rethink things a bit because, you know, that's 60 40 blend or that 60 40 portfolio. Don't take my word for it. I mean, some of the biggest experts in the industry are out there saying, you know, maybe that maybe that 60 40 portfolio is going to average four percent, five percent, maybe over the next 10 years. And then you got fees on top of it. So it's going to be very, very challenging. You know, the when you're going into a rising interest rate environment for a long period of time, it's going to put a lot of pressure on stocks and it's also going to put a lot of pressure on bonds. And so you've got to really make sure your position in the right place in the marketplace to because there are places you can position your money to benefit from that. But you know, you've got to take a look at things again.
Producer Sam Davis:
Yeah. And if you're interested in receiving your free no obligation retirement consultation, you can schedule an appointment with Erick Arnett and his team over there at Take Point Wealth Management. You can go to take point on retirement. Just type in, take point on retirement. Click that little schedule an appointment button up in the right hand corner. And and Eric, what can folks expect in that first little appointment?
Erick Arnett:
Yeah, great question. I mean, real simple. We're just going to sit down and chat. I mean, it's really informal. You know, no pressure. I just want to get to know you. I kind of want to see what you're doing, what your goals are and how are things working for you? And we're just going to talk and chat and kind of see what retirement looks like to you and talk about your concerns. And and then we'll gather some data and some information, and we'll go back and we'll build out a plan. Maybe you have a plan already. We can test that plan. Maybe you don't have a plan. So I'll put one together for you and then we'll test it. So what we do is, you know, don't just take our word for it that our plan is a good idea. We actually test it against peers benchmarks and then what we call a Monte Carlo simulation where it throws a thousand scenarios at the plan and then spits out a probability of success. And so, you know, we're going to look at it and say, how is this going to hold up in a rising interest rate environment? Good markets, bad markets, combinations thereof. A thousand different scenarios we throw at the portfolio. It's called the stress test. And I think that's where we're a little bit unique.
Erick Arnett:
We don't just kind of do the traditional, Hey, you got a million dollars. We're going to put it in this portfolio or kind of expect this rate of return over the next 10, 15 years. And you know, you're going to draw four percent out of it. Everything's going to be fine. No, no, no. It's way more detailed than that. So we've got to see how that thing's going to hold up under different conditions and circumstances. Black swan events, you know, how is your portfolio going to hold up if we do actually go on an all out battle against Russia, or if there is some type of invasion into Ukraine that's called a black swan event, we can't really plan for it or we don't really know when it's going to occur. But you know, how is your portfolio going to hold up? So this is some of the things that our simulations do. And then what we're going to do is we're going to deliver that plan to you our best ideas where we can create a tax efficient portfolio because taxes are so, so important a fee efficient. You know, how many, how much, how much are you getting taxed fee wise, you know? And how is that hindering your growth? And then also talking about risk, you know, we want to risk efficient portfolio how much pull out and show you exactly how much risk you have in your portfolio.
Erick Arnett:
And are you actually getting the return you should be getting for the amount of risk you're taking? That's the key. I call that your financial speed. You wrote a book about it. What is your financial speed? You're more welcome to go to my website and request a copy of the book, but it's important that everybody finds out what their financial speed is. So tax efficient fee efficient and risk efficient has to be paramount in a retirement portfolio. And that's what we'll do. And then we just simply show you the plan, Sam, and say, Hey, what do you think? Does this improve things for you? And if the answer is yes, and I understand I feel comfortable, then maybe we'll move forward. If it's Hey, now, I feel good with what I'm doing, or thanks for the thanks for the plan. I've got some good ideas. I'm going to do stuff on my own. That's fine, too. No one's going to hold a gun to your head and say, Hey, you know, you've got to do business with us. And it's a $1500 value, so take advantage of it. It's completely free and complimentary to our listeners on the radio.
Erick Arnett:
So you know you got nothing to lose. Just go on the website, click set up an appointment with me or give us a call. (352) 616-0511. Or you can go right to my website, take point on retirement and up in the right hand corner, there's a little button you click and just set an appointment and it'll just be a 15 minute chat just to talk about things. And you know, it's kind of funny. We've been for the last year or two talking about taxes and how they're going to impact. And then once the market volatility picks up, we start kind of shifting to the market stuff. But let's let's stay focused on taxes too, because we're a full service tax office as well. And so we can look at what you're doing tax wise as well and see, Hey, how can we optimize your retirement plan for tax savings and tax efficiency? Because we know for sure that the amount of money that our government is spending is going to create some increases in taxes in the future. They're either going to have to cut way back on stuff or increase taxation. And I don't see very many politicians saying, Hey, we're going to cut, cut all these programs, right? Yeah.
Producer Sam Davis:
So I mean, we just saw the national debt eclipse 30 trillion dollars here at the beginning of at the beginning of 2022. And and some people will say, you know, hey, that's that's just a number, but you know, people who know what they're talking about, financial experts will say that's just that's just bad economics. So think about it in your own personal case, if you add a lot of debt, what are you going to have to do? You're going to have to cut expenses or increase revenues. Well, the federal government's way of increasing revenues is increasing taxation and based on the people that are currently sitting in those chairs in Washington, DC, you can kind of expect that they're not going to cut expenses. So it is kind of the idea that taxes are on sale, so to speak now. So you can utilize certain strategies, such as Roth conversion to kind of beat taxes as you move forward into into retirement.
Erick Arnett:
Yeah, great. Great points. I mean, there's so many things we can do. And the number one killer of of long term success in retirement plans is taxation and one that we overlook. We see these mistakes being made on a daily basis where folks are being overtaxed from just some decisions that they've made that could have been avoided. You know, also, I just met with a lady not too long ago, and she didn't even realize, I mean, she was in some what we call variable annuities. And she was paying almost five or six percent a year in expenses. And so, you know, and had no idea. And so you've got to get a second opinion. You've got to review things on an annual basis. You just can't get comfy and cozy and stay with the status quo sometimes. This has been costing this lady sixty thousand dollars a year. I mean, that is so deadly and was extremely alarming. So I just sometimes I sleep, you know, sometimes I just lay in bed at night, like how many people out there are in this position. You know that I would love to get out and try to save, you know, so it's all about keeping those fees as low as possible and those taxes as low as possible. And then and then, you know, of course, like we've been talking about how much risk is really in your portfolio if you're seeing a lot of volatility in your portfolio on a daily, weekly or monthly basis. It's time to get in and talk to us because we've got to really kind of smooth out that volatility, dial down the risk and at the same time, actively try to achieve the returns that we need long term to meet your goals.
Producer Sam Davis:
And that's another thing that take point wealth management can look into for you. You can go to take point on retirement to schedule that consultation or if you prefer to call, you can pick up the phone right now. (352) 616-0511 (352) 616-0511 Or you can just go to take point on retirement and you'll find the phone number there as well.
Erick Arnett:
Every once in a while, there's a really an employee that's really into their portfolio, and they do a lot of studying and they know exactly what's in there. But nine times out of 10, the employee has no idea what's in there, what's in their portfolio or their four one K, and it could have a lot of bonds in it, you know? And so bonds are an asset class right now that are completely out of favor that had a negative negative return last year. We're predicting that they'll have another negative return this year because bonds tend to work inversely to interest rates. So if interest rates are going up the value of your bonds and and your bond, mutual funds and even the bonds inside your mutual funds are going down in value, which is causing a big drag on any gains that you may have. You know, when rates are going up, bond values are going down. When rates are going down, bond buyers are going up. So now imagine if you have a portion of your portfolio that's really dragging, OK? And it's also paying a fee. So not only you're getting the negative performance, but you're also paying a fee on that. That's kind of more than likely eat up any interest that that particular. Bond or that portion of the portfolio is providing. So you just may even be treading water, but you're not making any headway. I see this all the time.
Erick Arnett:
People come to me and say, like Eric, I've had this for one K, and it just hasn't done anything over the last 10 years. And I'm like, What do you mean? The last 10 years we've had one of the biggest bull markets in our history. You should have doubled your money. No, I haven't really made anything. And when you dove into it, it's like one. They were just probably sitting in something culturally conservative or had a lot of bonds in it that weren't paying good dividends or a yield and also paying fees. And so they weren't being tactical. You know, you've got to be able to shift that portfolio at certain times to growth value, you know, reduce bond exposure, increased stock exposure and vice versa. So you've got you've got it's got to be an actively professionally managed portfolio, in my opinion. I just see too many mistakes. If if people don't believe me, then go out and Google. This study, it's called the Dow Bar study detail Baier. Just Google that and read it, and you'll be surprised to see that retail investors, which means just your common investor like people that are listening to us on the radio right now, they underperform the S&P 500 by more than 50 percent. So think about that over a five year, 10 year time frame. I mean, that's just devastating to a retirement plan and the money that you potentially could have made.
Erick Arnett:
So, you know, it's just so, so important to stay active and be able to really, you know, take advantage of opportunities that might be out there. You know, if we get a big decline in the market, it's an opportunity. It's an opportunity to go out and buy those stocks or allocate to equity more than you did in the past, because now you're getting everything cheaper and on sale. And if the markets do and when the markets do recover, you're going to come out out of that out of that so much faster than you would if you just kept things statically the way they are. So, you know, the portfolio is going to actively be managed and tactically shifting with all the different changes. So really, really important to find out what's dragging on your portfolio. Let's talk about it. We'll take a look at how is the portfolio performed? How is your four one K performed versus the benchmark and versus the markets that are out there? And so if it's underperformed, then hey, let's fix it and get it to where it's clipping along and really can outperform the market. We want to try to outperform the market on a yearly basis. Ok. I mean, that's that's what we do as advisors is our challenge is that, hey, we want to outperform. We don't want to just be static and just kind of treading water.
Producer Sam Davis:
Yeah. And you can find out what's possibly dragging and holding back your portfolio by scheduling a free consultation at take point on retirement or by scheduling an appointment by calling (352) 616-0511 more answers to your questions when we come back.
Producer:
You're listening to take point on retirement to schedule your free no obligation consultation. Visit Take point on retirement. Com. 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. ErickBarnett 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 Take Point Wealth. Welcome back to take point on retirement schedule, your free financial consultation now at take point on retirement.
Producer Sam Davis:
And welcome back to take point on retirement. Sam Davis, joined as always by ErickSchmidt. And you know, before the show, in the first segment, we were talking a lot about portfolio management, tactical asset management. And you know, one of the things that a lot of people are concerned about is inflation, and inflation is just presenting such an interesting challenge to people, especially as they are nearing retirement or currently in retirement. You want to have assets protected from loss, but you also need to be able to keep up with this inflation that's sort of out of your control. So, Eric, what sort of products, what sort of strategies can you recommend to clients that are concerned about inflation and looking to keep up?
Erick Arnett:
Yeah, great question. And in real stuff like, you know, I love. Talking about this stuff on our show and just being point blank and giving real ideas, you know, and not talking in generalities, and I'll tell people right up, you know, index annuities are a fantastic portion or allocation for pre-retirees and retirees because one, it acts as a great hedge against the stock market. And two, you can get good strong growth in an index annuity, but your principle is 100 percent protected. Now I know annuities kind of a dirty word out there. And, you know, but until you truly learn and understand, then don't just take somebody else's word for it. There are a lot of bad annuities out there. There's a lot of them that we don't like, but there's a lot of them out there that are absolutely fantastic. So think about this. If you can get market like returns long term but not have the risk of the stock market, then that seems to me to be a pretty good strategy for retirees and pre-retirees. Remember, it's not about what you make in the up years, but what you save in the down years. And I can show folks that, you know, if you have a portfolio that's clipping along but has a lot of volatility. And then we put together a portfolio with index annuities, a combination of index annuity stocks, bonds, mutual funds. I'll show you that we're down the risk way down, but still achieving the same returns without the volatility. So super important to educate yourselves on those, and it's really about the strategy of an indexed annuity that's so important and acts as such a great tool to put inside a retirement plan. And you know, and look, look, there's no reason that it's not a, you know, it's one of the fastest growing segments of the industry.
Erick Arnett:
I mean, a ton of money is going into indexed annuities. And you've got to be careful, though you just can't buy any index annuity because there's a ton of them out there. Some of them aren't as good as others, but that's why you come to us and we've screened for the very best ones out there that meet your needs. And so there's there's indexed annuities out there with no fees. You know, there's some that have better returns than others. Historically, some produce more income than others. Some are better for safe growth. So it's important to kind of educate yourself on that and find out what it makes sense to have an index annuity or a fixed indexed annuity in your portfolio. And, you know, more than likely, especially right now with what's going on in the markets and the volatility, it's a safe way to still provide safe growth. Ok, so think about it, that's 60 40 traditional portfolio or that mutual fund you have is going to average five six percent over the next 10 years because of all the market volatility and the interest rate risks that are out there. But but you still have the potential to lose money in a down market. Well, what if we could achieve almost the same returns on average without the risk, you know, so it's something you owe yourself to really take a look at. But there's, you know, it's it takes education. I mean, there's a lot of nuances to them. So it's important to just start that conversation and we're happy to do that with folks.
Producer Sam Davis:
Yeah. And I'm glad that you mentioned it does take a little bit of education. It does take a little bit of learning about how an annuity could play a role in your own personal situation. And you can schedule an appointment with Erickand his team at Take Point Wealth Management just by going to take point on retirement or by calling (352) 616-0511. And Eric, it's kind of all about balancing you that need for protection, but that desire to continue to grow your assets. And so I think this kind of plays into another question that we got from a listener and this listener is asking in general. So I guess this is sort of a general question how do you suggest arranging investments to meet that need for both income and growth?
Erick Arnett:
Yeah. So not as easy to do these days as it once was when I first started in this industry. So if you think about it, I've been doing this almost twenty four years. And so when I came into the business, you could make eight percent on a money market. So imagine that I mean, it just seems like impossible, right? You could just stick your money in a money market, no risk and get an eight percent interest sent to your bank account. And so we had bonds that were paying 10 15 percent. We had stocks, you know, clipping along at their average rate of return 10 12 percent. So back in the day, it wasn't quite as challenging. But now going forward, it is challenging. So we've got to utilize tools that, you know, traditionally maybe we didn't utilize in the past. And, you know, with bonds having so much risk with the interest rate environment and stocks having so much risk. You know, this is an alternative to look at an index annuity and how how an index annuity works. And you know, if there's a lot of programs out there where they'll guarantee you an income, you know, so they'll tell you exactly based on the amount of money you put in and based on your age, exactly what they'll send you each month in a paycheck, and they'll send that to you for the rest of your life. So if the markets go up, the markets go down, Russia invades whatever may happen. We shouldn't really be concerned about that. We should just be concerned, like is the check in the mail. And with those annuities, the checks never stop coming. And so, you know, maybe they weren't as attractive in the past, but now going forward, I really think they are, and I think they're a great, a great alternative to kind of that traditional portfolio. And and if you can lock in a guaranteed income stream for life and never have to worry about outliving your money, then then then that's something that we need to really take a close look at.
Producer Sam Davis:
You know? Yeah. And I think there's just so many people out there, especially those nearing retirement, that are concerned with uncertainty, whether it's, you know, a global event, a pandemic, you know, potential war situation, you know, like we were talking about with Ukraine and Russia. And this kind of I found a good question from a listener that I think sort of plays into, you know, people's, you know, are worried about uncertainty. And, you know, you don't really want to be following the news and the stock ticker the last 20, 30 years of your life. You know, don't you want to be enjoying that time as much as possible? This this listener is asking with the ongoing pandemic and economic troubles like the so-called great resignation. I think they're referring to the amount of people in the American workforce that have quit their jobs in recent months. How can I be sure I will have enough to live on if inflation continues to go up the way it has the last couple of years?
Erick Arnett:
Yeah, it's a great question. It's a it's a difficult question and it's not an easy one to answer, nor is an easy one to manage so. But the most important thing is, you know, we've got to take a look at your specific situation. We've got to look at what are your income sources, what are your expenses? What do you have saved for retirement? And you know, and then I'm confident that we can put together a plan that will meet those goals and needs by having secured assets in there, having guaranteed assets in there, like index annuities to complement the plan. So wouldn't it be nice to put your head down on the pillow and not even care about all this volatility in the market, you know? And so I personally own indexed annuities. I personally own stocks, you know, and I tell you one thing the money that I have in the index annuities I never even think about, you know, so it's and I'm back in the day when I didn't have any index annuities in my portfolio. I was a younger guy and I was aggressive in the markets. Sometimes my I would lose sleep over that, you know, because if the markets get volatile, you start to wonder, like, did I make the right decision? You know, am I in the right stocks or my position? And you're constantly like, focused on it and trying to make changes and and sometimes making changes and emotions can really hurt us.
Erick Arnett:
So, you know, I see the most important thing that we do at take point is take the emotion out of retirement planning, take the the emotion out of investing, you know, allowing our clients to know that their goals are going to be met and their head hit the pillow and don't have to worry about market volatility. And that's really putting together a strong combination of what we call that smart plan. You know, we've talked about in the past, that's smart plan is having a portion of your assets tactically managed in the markets to achieve growth and to have liquidity and all that good stuff and to beat inflation and kind of keep up with inflation. Because now with inflation being as high as it is more than ever, we've we've got to outpace it. Like like getting three or four percent on average isn't going to cut it for us. So that smart plan is going to have a nice combination of a tactically managed portfolio as well as the anchor, the indexed, the fixed index annuity. That one is either going to provide us that guaranteed income that we need to fill our income gap, which we've talked about in the past. If your expenses aren't quite meeting your guaranteed income sources, then you have an income gap. We've got to fill that to make sure that, hey, if it costs me $5000 a month to live for the rest of my life and I can be happy on that with inflation as well, knowing that inflation is going to be on average three or four percent, then that's what we need to do.
Erick Arnett:
We need to put that kind of plan in place to be able to meet that right. If you're worried about stock market and the volatility in the markets and things are going up and down and you're kind of, what should I do? Next, and chances are you might be in the wrong portfolio or the right or the wrong blend for you going forward. And so we can achieve beating inflation, but we've got to do it strategically and we've also got to make sure that you have the income that you need to put food on the table, pay the bills, take those trips, go see the grandkids and all that good stuff. So, so, so important. And the good news is with with rising interest rates, a lot of these annuity companies and insurance companies are also raising their rates, and their rate of return gets a little bit better when we have better and higher interest rates. So it's actually not a bad time at all to really start focusing on these and take a look at how they could complement your portfolio because I'm seeing the rates today a lot better than they were a year or two ago. So there's a positive right there.
Producer Sam Davis:
Yeah. And I think beating inflation and really just inflation in general is is on the public's mind a lot more these days as we're what we thought we were pulling out of the pandemic a little bit. But it seems like we're going to be dealing with the effects for a lot longer than we expected. You know, inflation used to just be, you know, maybe if you were drawing Social Security, you pay attention to it a little bit because it plays into that cost of living adjustment you get each year. But but now really anyone that's at the grocery store every week, I mean, have you seen what's happening to meat prices and food prices in general? Or if you've been shopping for a car or a home lately, just just what's happened to those prices over the last couple of years? And just don't think of it as something that's going to go away and is just something that we're dealing with for a period of time. You know, this pandemic has been been tough for everybody, you know, but at the at the end of it all, I think, you know, we're going to look at it as something that was was horrible and tragic, but it really wasn't that deadly of a disease. It was just a very small blip. And what is our normal everyday life? So you need to be prepared for things that could possibly be worse than the COVID pandemic.
Erick Arnett:
Like I said, throughout history, we've had these periods of time where things hit us, and the most important thing to do is not to panic and not to make big changes or big shifts, but potentially it offers us a time to reflect, you know, and I think that one of the silver linings and one of the positive things about COVID in the pandemic is it's given us some more time to kind of reflect on what's really important to us. Is it time with our family, you know, more balance in our life, getting in shape, getting healthier? You know, maybe maybe spending all that money to go on some extravagant trip wasn't really as important to me. We tighten the belt a little bit. You know, all different things kind of come at us in these type of situations, but we're resilient. We push through them. We always have. We always do. And, you know, markets go down, markets get hit, they form a base and they go and they hit new highs. And so if you look at a chart going back to the beginning of the stock market, yeah, there's periods of blips in it, but it's kind of a straight arrow upward. So history is our if history is our teacher, you know, we're going to go through these periods. But it's important just to make sure, like we said earlier in the show, that you're not going through a period that's going to dig you a hole that you can't get out of. You know, so that's why that smart plan is such a key, we believe, for our retirees going forward.
Producer Sam Davis:
Yeah. And I do want to spend a little bit more time today just talking about the importance of having a plan because none of us know not you or me or anyone listening has that crystal ball. No one can predict exactly what's going to happen. But, you know, I feel like for so many people out there, their plan is well. I've been working for X amount of decades and and I've been building up my 401k and it's it's a pretty big pile of money and I'm just going to I'm just going to live off that. And, you know, if that's their plan, at least they've got somewhat of a plan. You know, some people have less than that. But you know, what would you say to those people that are thinking about their retirement plan as just one big nest egg, or maybe people that haven't really considered what they're going to do after they stop working at all?
Erick Arnett:
Yeah, I mean, a great question. I mean, everybody's different. Every family, every couple, every person has a totally different situation and there's multiple variables. And that's why we, you know, I hate folks out there or noise out there just kind of gives these blanket recommendations across the board for all of America. And people think that it pertains to them and it really doesn't. You know, that's why I take point. Wealth management, you know, we feel as though everybody has to have a specific, tailored plan for them and their needs. And so, yeah, you know, if you've got a big 401k and and you've got plenty of income and you don't really even need that money to live on, then yeah, you know, just let it roll in. The markets might, might. Very well over time. You know, and I've heard that before. Well, you know, the buy and hold has worked well for me. But if you have to draw income from your plan, you know, you may have and you may have multiple types of accounts. You might have ROS, you might have IRAs, you might have annuities, you might have regular brokerage accounts. Where's the best place to draw from, you know, and keep it efficient? Because I think regardless of who you talk to, most people don't like to lose money. You know, most people want to keep their portfolio protected and want to continue to grow it for themselves or for their heirs and their beneficiaries. So, you know. Once again, I can't stress this enough is it's not about what you make in the up years, what you protect in the down years, and that's where a good adviser earns his stripes.
Erick Arnett:
If your adviser hasn't been calling you this past month, you know or isn't talking to you on a semiannual or quarterly or even annual basis and you haven't heard from him, then that's just not healthy either. There's got to be some good communication and there's got to be new ideas brought to the table, and there's got to be shifts in the strategies to kind of move with the times in a sense, you know, so I've heard numerous people tell me, Oh, I haven't heard from my advisor, you know? Well, the first thing that we did take point when the market started getting jittery is we just started calling everybody, How are you doing? How are you feeling about this? How is this going to impact your plan? Are we still positioned properly to meet your goals? What if we did take a 10 20 percent hit? How would it look? You know, so just putting people at ease and truly what's been exciting for us here at take point is during this time of market volatility, we were able to see how our retirees portfolios really held up strongly and people were just like, Hey, Eric, I'm good. I'm confident in what we're doing. I see, yeah, the market's going to go down a little bit, go sideways, go up and down. But the bulk of our portfolio is in place and we feel really happy about it. And, you know, we feel comfortable and we can sleep at night. That's what I like to hear. If there's people that are nervous and uptight and want to make changes and you know, that's OK, but there might be a reason for that, and we've got to really dove into it.
Erick Arnett:
Maybe you're allocated too much to growth and equity and you need to have something a little safer to where you can sleep at night. But we've got to make sure that we're not entrenching ourselves into something that's not going to produce enough to get us to age ninety five. You know, we do our planning all the way to age ninety five because people, you do live that long, believe it or not. So we have clients that take point in their nineties. It's important, like we said, for folks to educate themselves or reach out, we'd be happy to get you a free book that annuity three 360. It's a great book. It's really straightforward, easy to read and you can just read it on your own leisure. No pressure from an advisor telling you all these different things and numbers that you might not understand. Just, you know, get the book, request the book from us and we'll get it out to you and just read it on your leisure and educate yourself. And maybe you'll build trust and confidence in something that you may have never even known or looked at before. So, you know, Annuity 360 a great book, and we'd love to get it out to all our listeners today. So if you're listening and you would like to take a gander at that, just get a hold of us and we'll send it right out to you.
Producer Sam Davis:
Yeah, you can request your copy of that book and schedule your free 15 minute chat. You're free. No obligation consultation while you're at it. Just at take point on retirement. That's take point on retirement. And I love what you said there a minute ago, Eric. It's not what you make in the up years because it's not hard to make money in the up years. It's what you protect and the down years. And so if people are looking in to do, I have enough protected, am I still growing my assets as much as I should? They should definitely go online, take point on retirement or give you a call and schedule that consultation (352) 616-0511 And it makes me think of another thing that we've said before on the show. It's it's not necessarily what you make, it's it's what you spend. You know that that plumber next door may be a lot more wealthy than you think. You know, the plumber next door could be doing a lot better, you know, then then the surgeon around the block, if that surgeon around the block, you know, buying a couple Ferraris and taking care of his boat and all that. But the plumber is investing wisely. He's he's trusted the right people. I love the idea of the millionaire next door. Another book to look into.
Erick Arnett:
Yeah, I love that book. That's a great one. It's funny. I can't believe you said that. That's like my grandfather reincarnated in you. I mean, my grandfather used to say it all the time. You'd say, Son, it's not what you make. It's what you spend. You know, when you're a kid, you kind of think, OK, whatever, you know, I get it. But when you know, later on in life, when you get going, you realize it's all about that budgeting. And people ask me, Well, what's the most important thing about retirement planning? I'm like, Do you have a budget? And you'd be shocked that most people don't, and you've got to have a discipline, especially if you're five years, 10 years till retirement. You better start getting disciplined because things are not going to be cheap out there. Things are not going to be an expensive. It's going to be expensive to retire and live in this country. And so how long do you want to work? You know, so it's it's not it's really not about what you make. It's exactly about what you spend. But for most folks out there, we just don't have a ton of expendable income. We've got to squeeze everything we can out of what we've saved to make. Our goals and meet our needs so, so, so important to make sure that it's effectively manage and position properly to squeak out what you need.
Producer Sam Davis:
Think about how much time maybe you've spent planning other things, whether it's your last vacation or your next vacation or or your child's wedding, or or if you're a golfer in the area, how much time do you spend at the range? If you spent half that time just thinking about having a plan, having a budget, getting in touch with the right people, you know, that's that'll that'll put you in a far better place.
Erick Arnett:
Yeah, I'll tell you what we'll do all the work for you. If you just cooperate with us and get us the information we need, we'll do all the heavy lifting for you. And you can sit back and let us do that planning for you. And you know, retirement is to me. I mean, heck, I'm an advisor. I'm a money manager. Honestly, in retirement, I don't want to have to look at or deal with it anymore. I don't want to have to look at my portfolio and worry about the markets and everything else I want to make. You know, I want to be able to go out and have fun and enjoy myself and relax. And I don't want to have to look at my statements and turn on the computer and worry about my account. Go up, down all around and am I going to, you know, am I sweating bullets or whatever? I don't want to have to worry about that kind of stuff, so I want to I want to enjoy my retirement and that's what we take great pride in here. Take Point is truly developing a plan that people can be confident and confident in and have clarity and be able to just really enjoy their lives and make sure that and we'll do the heavy lifting for you.
Producer Sam Davis:
Yeah. And we've got a few more minutes left here and our second and final segment of the show. You're listening to take point on retirement with ErickArnett. This question, you know, I think really plays into what it means to be a fiduciary and what your responsibility is, Eric, as you serve your clients day in and day out. The question is, I've heard and read about people who do their own investing at a lower cost than those who use financial consultants and advisors. Why should I pay more to invest?
Erick Arnett:
Yeah, so great question and a common misconception. And, you know, years ago, probably advisory services, investment management fees, you know, might have been costly. I've seen them as high as two percent in my in my in my career. But what's interesting is that when you take a look at what people are doing and you pull out the costs and we'll do that complete cost analysis for you and show you what you're currently doing and what it's costing you. And keep in mind, there's a lot of hidden costs in there that we just don't know about. We don't see and we can help extract those for you and show you what you're truly paying. I love I love the answer. Well, I'm not paying any fees. You know, my money management is free and I say to myself, Well, how do they have all these big, huge towers in Wall Street? And, you know, even here in Tampa, you know, you get these big firms like Raymond James and whatnot. They have these massive buildings, just big, beautiful buildings. How do they build those? You know, they didn't build them, build them, not charging you any fees. So people don't understand there's a lot of layers between them and Wall Street. And so more than likely things have been marked up or you're getting charged. But even if you have an ETF that has a very low cost basis on it, like twenty five basis points and you're trying to manage it yourself, what if you what if you just maybe underperform the market by five percent on on an annual basis? What's that costing you? So if if an advisor can meet your needs and meet your goals? Fees should be as important as meeting your goals and your needs.
Erick Arnett:
I mean, they are important. Don't get me wrong. You know, typically what we show people is like, Hey, you know, you might be paying one percent already in your portfolio trying to do it yourself. Internal costs If you work with an advisor and you can still be involved, you're probably still only pay one percent, but you have that third party consultant by your side that's been in in this in this industry every day. And that's something that you know at this point with all this gray hair in my head that I kind of take some pride in is that I've been doing this for twenty four years, day in and day out. I've done nothing else. This is all I do. So, you know, if I can sit beside you and help guide you, you know, then why not? And if it's probably not going to cost you any more money to work with me and I'll show you that. And sometimes it does. And if if, if I'm not bringing value and you don't think that having an advisory relationship is important to you, then I get it. That's fine, too. But at least you owe it to yourself to look at what it would cost you to work with an advisor and what you're currently paying doing it on your own. So great. Question, I'm glad you brought that up.
Producer Sam Davis:
Yeah, and that sort of brings us to the end of today's show, and if today's show had a theme, it would probably be a saying you may have heard before. If you're failing to plan, you might be planning to fail. So give Erickand his team a call (352) 616-0511 or just visit. Take point on retirement and schedule your free consultation today. Eric, thanks for being with us, and I'm glad we could get this message out to a few more people today and I think we'll be back next week.
Erick Arnett:
Yeah, can't wait till next week and always great to be with you, Sam, and thank you so much to our listeners out there and the Tampa Bay Area. And please, please give me a shout. I'd love to chat with you.
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 the Brookstone Capital Management LLC. Bcm, a registered investment advisor, BCM and Take Joint Wealth Management are independent of each other. Insurance products and services are not offered through VCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and, unless otherwise stated, are not guaranteed. Fast performance cannot be used as an indicator to determine future results.
Producer Sam Davis:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges, as described in the annuity contract guarantees are backed by the financial strength and claims paying ability of the issuer. 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 project the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.
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