Making Sense of your Cents

38 - Investments 101: Building Long-Term Wealth

• First Century Bank • Season 2 • Episode 38

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Are you ready to take the intimidation out of investing? In this episode of "Making Sense of Your Cents," Daniel and Shanna break down the foundational concepts of building long term wealth. We’re joined by special guest Clark Denton, Sr. Partner with Denton Financial Group, to discuss the practical side of investment planning. We cover the power of the employer 401k match, the difference between Traditional and Roth IRAs, and demystify the role of annuities in a modern retirement plan. Plus, we answer common questions about getting started in your 40s and share our actionable tip: The 1% Bump—an effortless strategy to supercharge your retirement growth. Tune in to turn investment confusion into a clear path forward! 

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9729 Cogdill Road #101
Knoxville, TN 37932

Phone: (865) 588-3533
https://www.dentonfinancialgroup.com/

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Daniel Hill

So, Shanna, I think the number one reason people stay out of the investment world is fear. It's fear of losing money or feeling like you need to be a Wall Street insider. Just understand what's happening with your retirement.

Shanna Browning

Oh, yeah, I don't disagree with that. I mean, it's big words, right? So the jargon alone, asset allocation, diversification, equities, it's really enough to make your eyes glaze over.

Daniel Hill

And it's ironic because building wealth is actually much simpler than the industry makes it seem. It's really about time, consistency, and avoiding the big mistakes.

Shanna Browning

It's right. And it's the simplicity that's kind of what makes it hard. For some people, it's just boring, right? And it takes decades. Most people want the get rich quick scheme, but the reality is much more about the slow and steady approach.

Daniel Hill

Exactly. And today we're going to simplify everything even more. We're moving past the fear and looking at the building blocks of long-term wealth. And we've even brought in a special guest to help us pull back the curtain on exactly how to get started.

Shanna Browning

All right.

Daniel Hill

Welcome back to Making Sense of Your Cents. I'm Daniel Hill.

Shanna Browning

And hi friends, I'm Shanna Browning. So today we're going to talk about those big words and we're going to talk tackle it, and we're going to call it Investment 101. And we're going to break down the essentials of wealth building. And here in a few moments, we're going to talk with Clark Ditton, who's wonderful and our friend, and we think the world about him and how he professional, how his professional guidance can really bridge the gap between where you are and where you want to be.

Daniel Hill

And so, Shanna, we're going to start with the basics. If someone has never invested a dime, what is the first thing that they need to understand?

Shanna Browning

So it's really about time value of money. So it sounds fancy, right? But it just means that the money you invest today is worth more than the money you invest tomorrow because it has time to grow.

Daniel Hill

Right. It's kind of like you're familiar with the snowball effect. You start with a small snowball at the top of the hill, and by the time it reaches the bottom, it's huge. You know, my mind goes back to those cartoons you see where they start at the top, and you know, by the end, it's like the size of a you know a 747. You know, it just it just snowballs.

Shanna Browning

Snowballs, right? And that's really what you want it to do, right? It's the most common mistake is waiting for the perfect time or the perfect amount to get started. And do we really ever do that? No, we never have a perfect time. So people say, well, I'll start when I have 5,000, but you know what? You don't need 5,000. You need $50 and a plan.

Daniel Hill

So let's break that down. If you put $50 away every month at a 7% return. Now that may be generous, but this is just for our example. After 30 years, there's the time, you have roughly $60,000. But if you wait 10 years to start, you'd have to put away nearly triple that amount to reach the same goal.

Shanna Browning

And that's the worst part, right? It's the cost of waiting. And time is really your single greatest asset, even more than the amount of money you have.

Daniel Hill

And what about the psychological side of it? When the market dips, people panic. How do we explain that to you know a beginner?

Shanna Browning

Oh, that's kind of the hardest part. But like I tell people, don't panic, right? Like you just said, don't panic. It's a roller coaster. And I'm sure Clark has so exist so many examples of what that looks like, right? It's a roller coaster ride. But if you wait it out and you don't panic, because if you panic and you take it out, what happens, right? It dips.

Clark Denton

And you're starting again.

Shanna Browning

That's correct. So you just have to understand that market volatility is kind of the price of admission for the returns you get over the long term. If you want growth, you have to be willing to sit through those dips.

Daniel Hill

And it's it's a bit like driving a car. You wouldn't pull over and get out just because you hit a few potholes, right? No, you keep driving to your destination.

Shanna Browning

And sometimes that destination can be miles or decades away. But if you're investing for retirement and a market dip in June of 2026, it's just noise. It's actually an opportunity to buy more things while they're quote unquote on sale.

Daniel Hill

You know, we often hear people use the analogy of a casino when they're talking about stocks. But that really isn't right, is it?

Shanna Browning

No, it impures it's purely luck. Casinos are purely luck. But investing is more like really building a garden. You want a whole mix of plants that serve different purposes.

Daniel Hill

I I like that. So what are the stocks in our garden?

Shanna Browning

So starks are kind of like your high growth plants, right? They're the ones that need sun and rain, and they're gonna struggle in a drought. And that's what we call market volatility. But over the long term, they're gonna be the ones that produce the most fruit. And that's why they're gonna be driving your wealth higher.

Daniel Hill

And what about bonds? You know, stocks and bonds. What about bonds?

Shanna Browning

Bonds are your sturdy kind of hedges. They may not grow as fast as your fruit-bearing trees, but they provide your structure. They're there to protect the garden from being completely wiped out by a bad season.

Daniel Hill

So when we talk about a balanced portfolio, we're just talking about having a healthy garden, a good mixture of stocks and bonds.

Shanna Browning

Bingo, you wouldn't just plant fruit trees because a single bad pest or ant or anything like that could just ruin your whole harvest, right? And you wouldn't only plant hedges because then you wouldn't have anything to eat. So you have to have both to survive and thrive.

Daniel Hill

That is a much better way to look at it. Risk isn't about being dangerous, it's about having a garden that can handle the changing weather of the economy.

Shanna Browning

That's correct. And that is what we call asset allocation. It's your mix of stocks and bonds, and it's just you deciding how much of your garden should be trees versus hedges, based on how close you are to harvest time, which what we're gonna consider to be our retirement time.

Daniel Hill

That all just makes sense, which is exactly what our podcast is about making sense. That's right. And to help us with that today, we have Clark Denton. He is a senior partner with Denton Financial Group, a financial services firm in Knoxville, Tennessee. Clark's firm handles things for our bank that we aren't technically licensed to do. And our bank has had an alliance with his firm for over 16 great, wonderful years. Each Wednesday is his dedicated bank day, and he travels to our branches to meet with our customers. Clark, tell us a little bit about the alliance that your firm has had with First Century over these many years. Sure, Daniel.

Clark Denton

Hey Shana, how are you doing?

Shanna Browning

I'm great. Clark, thanks for being here.

Clark Denton

Well, thanks for having me on the podcast. Um, yes, my firm does help out with uh customers' retirement planning, tax-deferred investments, annuities, guaranteed income, stocks, bonds, life insurance, pretty much things that the bank doesn't do. And it's been a great relationship for over 16 years.

Shanna Browning

So, Clark, we're really glad you do that because Daniel and I don't do that. But we love talking about doing that. So we're so grateful for you. And I know that our clients and our customers are just thrilled too. So I know that our clients dictate what's important to them. But can you talk a little bit about what should be important to them?

Clark Denton

Sure, sure. Uh great question. My suggestions here are going to be painted with a very broad brush and assume certain things about individual situations, but financial planning by definition is tailor-made to that person's circumstances.

Daniel Hill

That makes complete sense. You know, you can't just fit the same size shoe on everybody. So where should someone in, let's say, their twenties or thirties start? That's great. That's great.

Clark Denton

So if possible, please max out your 401k plan and get on a budget. Um there are several resources online for budgeting. Um budgeting is supremely important. It lets you know where all your money is being spent. Um now going back to 401k, if you're unable to max out to the IRS limits, then at the very, very minimum, contribute the maximum to get your employer's full match. This is a mistake many people make. They don't realize the power of their employer match and how easy it is to contribute through their paycheck. You just go online, click on your percentage, contribution percentages, and invest. It really is that simple. Um, if your employer does not offer a plan through work, well, you can still plan for retirement. You can open up an IRA yourself and then contribute to those IRS limits.

Shanna Browning

Man, that's some great advice. See, it sounds really complicated, doesn't it? But Clark, you just made it sound so simple. So it's a very, very simple yet overlooked strategy, right? Always take advantage of what your your work is doing for you, your employer. And like Clark said, you know, like you just said, Clark, it's make your own IRA. So you mentioned a little bit in everything that you do that you mentioned life insurance. So can you talk a little bit about that?

Clark Denton

But yes, before I do, let me go into a little bit uh kind of off script here about some of the numbers that the IRS has this year. This year is probably the most complicated as far as ceilings and maximums go for contribution limits. So a lot of it depends on your age. And so in 2026, most people can contribute $7,500 to an IRA. But if you're 50 or older, you can contribute $8,600. And if if you're in a 401k under age 50, it's $24,900 a year. But check out what they did. If you are 50 to 59 years old or 65 64 plus, you can do an additional 8,000.

Shanna Browning

Oh wow.

Clark Denton

And then you may say, well, what happened to the people that are 60 to 63? Well, they changed that to an additional eleven thousand two hundred and fifty. So it's it's really interesting how all these maximums are based on your age. So if you are fifty or older, please look into the maximum you can do because it is different depending on your age. Um going back to the insurance part portion, um, I think that life insurance absolutely is foundational a part of everyone's financial planning because if you're not alive, then your plans aren't gonna happen. So uh most people early in life should just do some level term insurance. It's very inexpensive. Clients can lock in their health and premiums for 15, 20, even 30 years.

Daniel Hill

And uh we we've done an episode on term versus whole life insurance. If you've not listened to that, again, we're not insurance or investment professionals, but we did try to break it down a little bit. I encourage you to go back and listen to that episode. You talked a minute ago too, Clark, about IRAs. How many types are there and how do they work? And I know that's kind of a loaded question to put you to sleep here.

Clark Denton

So there are a lot, and uh, there's simple IRAs, and simple actually is an acronym. It stands for Savings Incentive Match Plan for Employees. It's often been called a poor man's 401k. Um uh there are traditional IRAs, of course, Raw Roth IRAs, and then even deeper in the weeds, 403 B plans are for teachers, nonprofits, priests, hospitals, 457 plans. There's simplified employee pension plans. Wait, wait, wait, hang on. That's a lot of information, Clark. No doubt. And all these names are how the IRS registers these plans or how the client sets them up. They're for clergy, the self-employed, small business owners, you know, for this discussion. And to make it simple, I'll just stick to traditional IRAs and Roth IRAs. And the main difference between those two is taxes. Uh, generally, a traditional IRA lets you deduct the amount off your taxes of that contribution. The Roth IRA does not.

Shanna Browning

Well, that's interesting because we just talked about taxes in one of our other um episodes of talking about from your pay stuff perspective. So you mentioned that the Roth IRA. Why would you want that if it's not tax deductible?

Clark Denton

It's a great question. The the Roth IRA, while it's not tax deductible, it grows tax free and is withdrawn tax-free. Free, my favorite word. That's unheard of. It's a great option for clients. Um there are even Roth 401ks, which most employers have now as well. So within your plan at work, you can add to a Roth 401k. Uh, but traditional IRAs have their advantages too. You know, it depends on pay me now or pay me later and which option best meets the client's long-term goals.

Shanna Browning

Well, and I love an N-Roth IRA, right? So I have a I have a Roth IRA within our 401k plan. So which I I love that. So we talk about annuities and um uh retirement planning a lot today. So can you tell us what an annuity is? Sure.

Clark Denton

Now that is that's the question these days. Uh and annuities can mean so many different things, but it absolutely means that an insurance company is involved at some level, and they may provide certain guarantees like safety, income promises, death benefit promises, market downside protection. There are as many annuities out there as car makers, or it seems. And just like cars, there's good ones and there's bad ones. But once again, it depends on the client and their specific situation and long-term goals. Um, annuities are there to transfer a specific risk. And today, one of the most popular are lifetime income annuities because our pensions are gone now. You know, used to. Our grandparents would work for 30, 40 years, same company, get a pension for life, that Social Security was all you needed. Um, these annuities now allow clients to create their own lifetime income stream. And insurance companies are uniquely qualified for taking on this risk. And but just again, just like many things in life, it has its place in a plan for certain folks.

Daniel Hill

Oh, that is great information. That's really, really good. And it's especially pensions. If you're interested, and I'm just gonna put this plug in there, if you're interested in talking to Clark about your financial plan, um, you can feel free to reach out to us or um we can put his information in our show notes and you can reach out to him as well and uh get your specific plan on on track sooner than later.

Shanna Browning

Oh yeah.

Clark Denton

Absolutely.

Daniel Hill

Now, Shanna, I know that we as a financial institution get a lot of questions about this. And I think it's important to acknowledge that there is no such thing as a stupid question when it comes to investing.

Shanna Browning

No, because it's hard to understand. I mean, we just heard Clark mention there's so many things out there, right? And we know a bit a little bit about it because we're in the banking world, but he's great at it. So, no, there is never, never, never. So I think the most common worry that we hear is I'm in my 40s and 50s and I haven't started yet. So is it too late?

Daniel Hill

And we see that all the time. People feel like they've missed the boat, so they just stand on the dock.

Shanna Browning

Yeah. And I don't want people to stand on the dock. So the truth is the boat's still at the dock. You still get on the boat, right? So you might have to catch up faster. I mean, we heard Clark talk about that, especially if you're over 50, right? In your 40s and 50s, you're gonna have to play some catch-up. But you can have a strategy that you might need to be more conservative or aggressive depending on your timeline, but just start, right? Just start. Don't do anything. I mean, just don't not sit there, just start.

Daniel Hill

So what is the first step for that person?

Shanna Browning

Talk to somebody, right? Go into your bank, um, talk to your branch manager there, ask questions because they can guide you exactly where you need to be. So just don't try to guess your way through it. That's the worst thing you can ever do. Because as we heard Clark mentioned too, there's a lot of taxes involved, right? Tax-free, pre-tax, after tax, all that kind of stuff. So whether it's our team, like I said, at a bank or somebody like Clark, who's really great at what they do, just ask. I think, and I can think that Clark would agree, and you would agree, Daniel, that the biggest mistake is just doing nothing.

Daniel Hill

Absolutely, absolutely. And and I love that mentality is don't be afraid. And and don't be afraid to ask about the fees too. People are often scared to ask, what does this cost?

Shanna Browning

Oh, 100%, right? But if they can't explain the the fees to you in in just common language, just keep looking because transparency, more than anything else, is truly a good financial partnership.

Daniel Hill

Exactly, exactly. This episode has just been a great foundational session, and we want to leave everyone with one concrete, impactful task.

Shanna Browning

All right, so the tip this week is what we're gonna call the allocation check. Log into your 401k, or if you just don't have a 401, but an hour rate, and see exactly what you have, what you own.

Daniel Hill

It sounds simple, but you'd be shocked how many people have money sitting in a default fund that they haven't looked at in a decade. Log in, look at the asset mix and see if it still makes sense for your age and for your goals.

Shanna Browning

I'm gonna add in here too. If you have changed jobs, and I think Clark would agree on this one, if you have changed jobs and you didn't pull that money with you from your other job, that money's just sitting over there. Just get transfer paperwork and pull that money with you at all times. And so I think this conversation highlights exactly that right there of how much control we have just to take that first step.

Daniel Hill

It really does. And you know, it's not about being a financial genius, it's about being a consistent one.

Shanna Browning

Right. And so, like we told our listeners, you got to grow your garden, right? So figure out what that is. So it's a simple way if you'll just log in to your 401k or your IRA or wherever you've got your money sitting, it's just a simple way for you to look at that and build momentum off of that.

Daniel Hill

Absolutely. And you know, Shanna, we have an exciting one coming up next week. We are going to talk about understanding your paycheck, gross versus net. What does that mean?

Shanna Browning

Oh, it means so much. So make sure that you're subscribed. So when that episode lands, it's in your feed next Tuesday morning.

Daniel Hill

Exactly. Thank you so much for trusting us with your time today. We'll see you back here next Tuesday.

Shanna Browning

And Clark, thank you so much for being here too.

Clark Denton

My pleasure.

Shanna Browning

It's been fantastic. So until then, next Tuesday, keep making sense of your Cents

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Daniel Hill

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Shanna Browning

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