Wealth from Wisdom

End of Year Volatility

December 29, 2018
Wealth from Wisdom
End of Year Volatility
Chapters
Wealth from Wisdom
End of Year Volatility
Dec 29, 2018
Carson Wealth
Show Notes Transcript

What if the market had a 50% correction? Would you be in a sheer panic, or would you be prepared? As 2018 comes to a close, Paul is joined by Erin Wood to discuss the recent volatility and how you can be ready for it.

Speaker 1:
0:00
Okay. And here's the legal Mumbo jumbo. The opinions voiced and well from wisdom with Rod Carson or for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm, LLC and SEC registered investment advisor.
Speaker 2:
0:30
It hit another all time. Records as much as $10 billion in social security benefits go unclaimed every single year. Federal Reserve announced that they will raise interest rates by 205 the skyrocketing cost of healthcare and retirement could now run $350,000 for retirement. Today is a whole new ballgame. It's loaded with challenges, obstacles, and trap doors that you can do this and we can be your guide. Welcome to wealth from wisdom with Barron's hall of fame advisor, Ron Carson, straightforward and objective advice and how you could make your money go further in retirement. And now here's your host Ron Carson. Let's play a game of what if, what if the stock market has another 10% correction? Or what if the stock market dropped 2,500 points next week? Would you even realize what percentage that actually is? Are you more fascinated with how many points there are? What if the market actually had a 50% correction?
Speaker 2:
1:24
By the way, this happened in 2008 10 years ago and it dropped by more than 12,000 points. I know right now the Dallas and somewhere, who knows? By the time the show is on 21,000 to 25,000 so imagine if it lost 12,000 points. Are you going to be in a sheer panic? Are you going to be saying to yourself, you knew this was going to happen, but you should have followed your gut, or do you have any anxiety? Are you wondering what to do? And it would you be saving yourself if you knew this was gonna happen and that you should have actually followed your instincts, your belief, or should you have listed, listen to a trusted professional? How that happens. Hey, welcome to wealth and wisdom on Paul West and today I'm joined by Erin Wood or director of financial planning. Hey Aaron, welcome to the show.
Speaker 2:
2:08
Thanks for having me, Paul. Yeah. Wow. Is All I can say. We're going to have to talk about the market today. I know in wealth from wisdom, we talk about a lot of topics, financial planning, social security, making the right decisions, income, and of course we talk about the market, but who would know that we would have this type of December? I mean it's just, I'm going to use the word fascinated and people may think I'm crazy for saying that, but it's been fascinating because volatility, I don't know if I would say is come roaring back, but it's come back in a way that has created more human behavior, feelings and emotions. Then we've seen maybe since August, 2015 but people probably forget that one. So I'm going to go all the way back to 2008 that's probably the most comparable time. And if you think about this, this isn't crazy talking, I'm not trying to scare you.
Speaker 2:
2:58
This is why we do show is we want to help educate you and give you advice so that you can make the right decision. And most people are concerned at the moment. But there are really two types of people out there right now. One is the people that believe they can do it on their own and they're going to trust their gut and their instinct to make the right decisions. And the second type of person, and this is where most people fall, realize that they got to work with trusted professionals to help them make the right decisions and have their right group of people around them. So did you know this, the average stock market correction over the past 70 years, you lost 13.3% in the last major stock market correction resulted in a 57% loss. So I want you to visualize this right now.
Speaker 2:
3:44
In your account you have $1 million and we had a 57% loss. So visualize that you now have $430,000 that hurts. Yeah, that is. Thank you. I think we just lost people as I fell to the floor or they flip the dial. I don't want you to do that, but I want you to understand that those things can and should have happened. This isn't some magic elephant. And by the way, we were talking about elephants earlier, you know, preparing for the show. And I think you've got a great story here for us, Aaron. So we on the show is I want to talk about what our five strategies that could really help protect you from yourself, but more importantly, what can help protect you from this risk we see in the market is volatility these days of down and then crazy days earlier this week of being up. Um, and how can you avoid taking on more risk than you want it?
Speaker 2:
4:32
We actually, we're going to show you a simple strategy that can help you save thousands of dollars in taxes. I can definitely let you know. Um, we haven't found a listener yet that doesn't want to save money in taxes. No, not at all. And we want to show you why attempting to time the market is a fool's errand and what you can do and said. So let's first talk about strategy number one here today on the show. And that is diversification. I know it's so simple, but as it is really one of the critical pillars of retirement and what happens in these emotional markets we're experiencing at the moment is people throw their game plan out the window and they, you know, make changes their diversification. And that's most likely the worst thing you can do. And I'm not saying you can't make a change, Aaron, you know, but you needed to make a change within that pillar.
Speaker 2:
5:19
So if you have a pillar of bonds and stocks and fixed income and alternative investments, you can make a change within that pillar. But don't just change the pillars and go from three pillars to one because now you're playing in that fool's errand of a guessing game. Absolutely. And you know, I've seen this happen so many times with clients. Um, you know, in the early two thousands, we had come out of another bear market and I had a client whose parents came in and they were very diversified and they got scared and they went from that multipolar approach to a single pillar approach. Um, and it was a really bad idea for them. And so when I started explaining what they actually did, they had no idea. I'm worse than that. The pillar they chose, um, had a 30 year payout that they were required to take, uh, and they were in their eighties.
Speaker 2:
6:03
So the likelihood of that 30 years ever happening was slim to none. Um, but putting your eggs in all one basket, we've heard people say it over and over again. Most people don't really understand what that means. They just say it and then they're doing it. They are, I mean, and this is why we call it a fool's game because preparing for your downturn is your retirement approaches is really a smart move. That is bull market was very impressive. Fellow eight to 18, or at least have the first three, eight Carter's here of 2018. Um, and I know we'll have a new year's Eve as one last day in the market. I mean right now it's shaping up that this month here in December could be the worst month we've seen potentially since the great depression. Uh, this quarter could potentially be the worst quarter since 2008 and I say the words 2008 my brain goes immediately.
Speaker 2:
6:55
I see. Like this Arrow in my head, Erin, I just, this is a downward red arrow. I see. Um, and actually oddly enough we were actually did extremely well because we were had downside protection in place. We're positioned, we didn't make any things, but I mean I'm just picturing this down Arrow on my head cause every time to think, oh eight and of course now I'm going to be thinking about for 2018 and so you and I love to talk about investor behavior. I mean I think that's really fun about the wealth from wisdom. We're not going to come out here and tell you which stock to buy. We're going to help you avoid making bad decisions. And one of them is how do you avoid investor behavior? And I know we were talking to prepare for the show. You have a great analogy you'd like to use from a book you've read.
Speaker 2:
7:35
So Daniel Crosby wrote a book called wealth for wisdom and it was a New York Times bestseller. One of the things in there has stuck with me forever and he goes through the story of this. Do not think of a pink elephant. All right, I got it. Did you get to purple on in my head right now? I got a blue one. Nope. Or gray keeps changing top colors on me. Okay, so everyone does it. You tell them not to think of the pink elephant and they think of the pink elephant. So you go even further. Do not think of the purple elephant who's holding a parasail has a hat on and his walking on a tight rope. He failed again. Didn't yet. I see a pink elephant walking on a tightrope. It's a lot. It's a perfect example though of what we all do. We cannot stop ourselves from thinking about the things that we don't want to think about.
Speaker 2:
8:30
And so you look at the market headlines and that is the only thing we're thinking about. And it causes fear and it causes a lot of anxiety. And so that behavioral side is learning what to not even turn on your television in market conditions like this. If it's going to cause you to go from the five pillars to the one, you have to eliminate those things that caused you to do bad behavioral things. Yeah. And his book is called the laws of wealth. So we said, well for wisdom, but it's called the laws of, well, yeah, that's okay. We don't know. Dr. Crosby, actually a friend of mine, um, you know, brilliant behavioral psychologist who you're in helping and looking at the finance space. But I think it's so right, because once you put something in your mind, and by the way, we're human. So at the end of the day, people tend to remember negative things so much more than they remember.
Speaker 2:
9:17
Positive. Yeah. I'm gonna look about if you have a bad hotel experience. Oh, it's easy. You just like your face right there, here. And I could see it like you got frustrated, you're wrinkled, your, your lips. I mean your eyebrows went up. I mean all those things happened and you're going to go tell. So we're gonna go tell our producer our answer. And by the way, our producer Andrew has been great. He's actually going to be moving onto a new project. So we're thankful for all you've done for us, Andrew. Uh, but I mean when people make behavioral base decisions in the, and when they think about negative things, they go tell everybody. So if you have a bad hotel experience and you're going to tell Andrew, are you going to tell me? And you're most likely and until eight more people, it's on average you tell 10 people about a bad experience.
Speaker 2:
9:54
You rarely tell one person about a good experience. Nope. Because we tend to like to complain and we do. So as you think about your overall investments, and I bring that up is, is watch your friends right now. And I say that is is, so if your friends and you're sitting there at holiday parties or you got one last ugly sweater party for some reason here at the end of December, you, you've got your New Year's Eve parties coming up. So those friends or years asking you, well, what are you doing about the market? What are you doing? What are you thinking? What are you doing? That should actually be a warning sign to you. If they're asking you questions, that means they have doubt, they have concern or they have a negative experience going on right now at grade. Those people who are confident and I don't mean arrogant, there's a big, big difference.
Speaker 2:
10:41
I mean confident with conviction and actually have a plan in place are going to be a lot different than those people who are trying to just get the latest someone else's best idea. And I would ask yourself, how have they been trained? I mean, have they actually been trained? You know, I'm going to share, you know, a recent story that uh, you know, as I look at, my wife just had a MRI surgery. She's not an MRI. She had MCL surgery a couple of weeks ago, so she had to go get an Mri done. Right? Yup. So that's technology at the end of the day. So you could train anyone to read Mri results. You really could because it is technology. But how do you interpret and apply those results across the entire body once you want a physician who actually went to medical school? Yeah. So I mean the technology is trainable and so it's technology on how to make a trade at TD Ameritrade or fidelity that is trainable.
Speaker 2:
11:34
But that doesn't mean you actually have the experience, expertise and actually passed the baseline level of knowledge. Like metal medical school gives you dental school. If you want to be a dentist can, you can be trained on how to read a dental x-ray. That doesn't mean I want you fixing my tea. And I look at the same way in the financial profession. So you can be trained again to how to place a trade or how to read a chart. It doesn't mean you look at the entire situation. And that's why Aaron, you and I talk about if you're a financial professional and his or her firm isn't full of CFPs certified financial planners that help you look at the big picture, then I really think you're making a really a big mistake and you're not going to last through this market volatility. You're going to make some tax mistakes.
Speaker 2:
12:20
And so I'm going to tell you, most people hear this from me a couple of times. You'll hear it from me on their show talking about this and then all of a sudden it, it sets in and they picture themselves working with a professional and a CFP and they decided to give it a try. So if it's that time for you and you want to give it a try and you want to just talk to someone and eight eight, eight, four one nine 85 13 that's (888) 419-8513 what you learn in this one meeting could literally change the course of your retirement. You're listening to wealth from wisdom, trust, transparency, accountability. These are the values that drive Ryan, Carson, Carson. Well, you're listening to wealth from wisdom with bear until the fame advisor, Ron Carson,
Speaker 2:
13:56
he's a published author and he's been featured in Forbes Investment News, the Wall Street Journal, CNBC, and more now back to, well from wisdom with Barron's hall of Fame Advisor, Ron Carson, trade wars, rising interest rates, geopolitical risks, the longest running bull market in history. These are just some of the reasons why the stock market has a really bad case of the flu right now. Actually a really, really bad case maybe and historically bad case and welcome back to wealth and I said, I'm Paul West Coast. Today is Aaron Wood and today we're revealing five essential strategies that can help protect you from this mega rollercoaster. I'm, I'm going to call it a rollercoaster, is mega roller coaster on Wall Street right now on air. And I mean I'm just a, I'll use the word flabbergasted by watching how people are handling this. I'm actually good. No aid. I'll use that word with how the news is handling this.
Speaker 2:
14:47
And you and I were talking about the news. They paid by selling advertising. So they try to influence our emotional brain and they don't try to influence it with, oh, you should feel so good, you should feel comfortable, you should feel great. They don't speak as you've heard. If it bleeds, it leads. That's how they make money. And so they run with it. Yeah, that's a great line. I'm sure plenty of a marketer will second that. But here we are. You know, we've talked in the first segment about making sure you have the right game plan in place via your asset allocation. And then really having the right diversified plan, keeping your pillars and tact. Don't adjust your pillars. You can adjust inside of it but not outside of it. And the second one is how do we avoid of emotional investing? And I think listening to the news is actually a thing you should avoid.
Speaker 2:
15:36
But if you do listen, I mean, and maybe we should talk about some of these headlines we've been seeing lately. I'd love for you to share what you've been reading and saving the headlines this week have been crazy. So, of course, you know, Christmas Day, Christmas Eve, it was the worst Christmas and history. Uh, it was all bad, bad, bad. Wednesday comes around and the headlines were boom stock or 5% Dow added a record breaking thousand, 80 sex, dow sores more than a thousand after worst Christmas. And then the very next day we go on to Thursday and the same types of words but in the opposite. So it was stocks, futures tumble. And then we have dow drops three 66 as reality sets in, investors are coming back to their sentence. So I thought it was fascinating that three 66 has words like tumble, but yet the record breaking side is 5% and more than a thousand.
Speaker 2:
16:27
Like those numbers aren't, aren't the same. But yet we're using very dramatic words. We are. And I think, uh, I mean I just listen to these words, boom. And you know, sink and tumble and catastrophic. I mean, it's just words that to scare you. I mean at the end of the day is, that's what's happening. You know what, Erin, this reminds me of a very famous, of course we're based here in Omaha. There's a pretty famous investor by the way, uh, who went to the University of Nebraska at Lincoln, my alma mater as well. So I'm happy about that. And it was Warren Buffett, if you've heard of him here, Andrew. And uh, he made the quote that be fearful when others are greedy and be greedy when others are fearful. It's one of my favorites, one of my favorites. So what do you think smart and sophisticated investors are doing right now?
Speaker 2:
17:12
Ignoring the headlines. They're not fearful. They're confident. Yes. They're following their game plan and they're potentially being opportunistic. Aaron, you and I were talking about this and let's talk about you personally. So this'll be fun on the radio. So here's, here's some good exposure for you. But when we were talking about when the market goes down, people have really three ways to look at it. One, they do nothing. They follow their plan, which is good too. They get scared and they sell and then they get paralyzed is what I call emotionally paralyzed at least or three. They look at it as I think you fall in. This camp is opportunistic. I do on this and the opportunity of volatility is amazing, but I don't look at it as the scary side of it. And most of that is because I do have a plan. I know what my long term objectives are.
Speaker 2:
18:02
I know what my correct asset allocation is. And so you were talking before about making some changes and I look at my pillars and see where do I have opportunity. Uh, and so I go after that opportunity. And this is, you know, not the first bear market. We've been in a it and it won't be the last. And so every single one of these I look for opportunities to put me in a better position in the long run. Yeah, well I think it makes sense. It's, you know, for, for a lot of people they don't think that way that they would rather run and hide. I call it a most people are conflict avoiders and so this now we're in a conflict situation is your, your brain, you know, it just, I want you to visualize yourself right now. We've all talked about, right, the angel and the devil on your shoulder and like we've all had those situations.
Speaker 2:
18:47
Should you do the right thing. So right now, even though it feels weird, the devil's telling you to run away and be, be fearful and get outta here and get out of the market and do all of that. The Angel. So think about that. The Angel is the better one here, right? It should be. It is. It is. It is for me. I hope it is for you to have the lizard. He just telling you stay the course. The Angel was telling you follow your plan. The Angel is telling you work with a professional if you need one, who can help you make these right decisions. Ain't just telling you to keep your asset allocation place. And the angel was telling you not to get emotional over this. I know it's hard because money is personal. I don't share a stat with you, Aaron, that we just got here and that is, this is from the Charles Schwab modern wealth index.
Speaker 2:
19:33
So they looked at Americans who have a written financial plan in place and what happens versus those that don't. So if you do not have a plan in place, you only 32% of people feel financially stable, stable, I'll use that word. But if you have a plan in place, it's double, almost double. It's 62% feel financially stable. That is amazing to me. Yes. Just by putting a plan in place, having it written down on what did that can do for you and that written down. I mean, we've seen this in lots of psychology and studies. Writing down your goals and actually having an action plan to accomplish those goals is something everyone can do. And it, it's so simple, but yet people skip it. They do. And by not having a plan in place, I don't mean to play on just on your investments. So I mean, I look at it, your investments of, you know, how close are you to retirement?
Speaker 2:
20:25
So if you're a 55 plus and you're thinking you're going to retire in your early to mid sixties you need to be adjusting your portfolio to what we call a little bit more in downside protection because we can't go through an o eight or by the way, if you invested in 2000 you were down for the entire decade. So you can imagine, right now you're 55 years old. Let's take, take a snapshot in your brain. So whatever your liquid net worth is, and let's just call it $1 million. So you imagine right now it's December of 2028 and it's worth $1 million. How does that make you feel? Tired if you're taking money out for sure. Yeah. Or you want to retire and you're going to change your mind because guess what? $1 million in 2028 is not worth what it's going to be here in 2018 that's a huge difference.
Speaker 2:
21:12
So one of the things that we always recommend is is that when you're, I'm going to call it 55 plus here, he need to start adjusting to what we call irreplaceable capital techniques or downside protection. Those ones that, I'm not saying you go straight to cash are all into treasuries or cds or things like that because those are also a zero sum game due to inflation. But there are ways and, and we like to call these the mission strategy approach where you can essentially have all the downside protection you need, which is very little risk of going down, but you can get 50 to 80% of the upside of the market. Those are ways that I can't believe more people aren't taking advantage of. And if you want more information on that (888) 419-8513 but as I think about that, I mean one of the things that, you know as I look at these two types of people is one of those people are those who leave all of their personal success in their own hands and they're just going to say, Hey, this is my plan.
Speaker 2:
22:10
This is what I'm doing. But it's all the plans in my head and I just shared with you this debt. If your plan is in your head on your financial success, you are half is likely to feel financially stable, half, which is crazy. I mean, if you think about all the things that you would do, if you could just double your output, if you could go to the bank and put it in a different type of savings account in double your return, what'd you do it in a heartbeat? There's so many things. If you could double your output, we would do, but just writing it down. But I'm like, nope, not gonna do that. That to me is crazy. Yeah. Like we're all looking for efficiencies. We're looking at like, how can I get more money out of my house? How can I, you know, eat faster?
Speaker 2:
22:53
How can I get somewhere faster? How can I drive twice as fast? How can I fly twice as fast? All of those things. Um, and I want to share, so we've been talking about, you know, some of this market volatility on a shift gears here for a second on is heroin and talk about what's happening. So certainly this week has been this massive rollercoaster. Really the whole month of December has been, it's really, as we've talked about on pace to be one of the worst ones I've ever, and again, I'm not doing this to scare you. I'm just, that's what I love about Western wisdom. We give you the stats and we help share that and we want you to understand what's going on. But I'm going to give you an example. So last, what was it? A Thursday, December 20th and I got this email. I'm out here to the wealth from wisdom radio network.
Speaker 2:
23:33
And by the way, if you wanna send us an email with questions, you're more than welcome to it's info@carsonwealth.com most people like it. It's easy for you to shoot an email from your phone or your iPad anytime. So Info at Carson Wealth Com and we respond to every question and help you with that. But here's a, a question from someone was I had a panic sell last Thursday on the 20th and then they were to sell off days Friday the 21st and Monday the 24th followed by Wednesdays. Historical update. This is now Thursday morning. The indexes are pretty much back to the same point as you can appreciate. My head is spinning, Spinning, spinning. I bet they're not sleeping. Oh, I'm sure. Uh, and so they want to know what are we gonna do, how, how, what should I do? I don't know what to do now. And they became, I call it emotionally and financially paralyzed at the moment because they are stuck.
Speaker 2:
24:30
And when you make calls to go to cash, you have to guess right twice when to get in and when to get out. And what I've learned about guessing in the market, guess what happens? It was just, I could use that word one more time. Well and the thing that kills me on this one is that getting right twice. Even if you had the crystal ball to say sell now you have to have the crystal ball to get back in and then you have to have the crystal ball to sell again and to get back in like it's this never ending battle and people miss one, they always are going to miss one. So if they get lucky once they think they're geniuses and they're going to keep trying it or they're just not paying attention. You look at the 20 years that is 5,036 trading days.
Speaker 2:
25:16
It's a long time that that's an extremely long time. And if you miss the 10 best days over that 5,000 do you know what the difference in return is by missing 10 days? All my shares. If you, you get like a 60% less of the return for the year yet 67% yeah. Yeah. This, I mean, just imagine how Aaron confident people would be if they had someone who would actually have a second set of eyes on what they looked at their, so we have a five step retirement action plan where we look at these biggest issues that can help you make sure you save the most money for your retirement. (888) 419-8513 imagine that crystal ball, but you've got more clarity as less foggy or snow year, whatever's inside of it. And you have the second set of eyes, and it may not be for you, but it could be if you want to feel more confident about your financial future. (888) 419-8513 that's (888) 419-8513 you're listening to wealth from wisdom. He seemed good times and bad times and he's got the gray hair to prove it. You're listening to wealth from wisdom with Erin's hall of Fame Advisor, Ron Carson.
Speaker 3:
26:50
Okay. Yeah.
Speaker 2:
27:22
He's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more now back to, well from wisdom with Barron's hall of Fame Advisor Ron Carson. You've seen it in all the headlines like Forbes, market volatility, a surgeon, and according to business insider, the recent chaos in the markets is the new norm. Ooh, that feels interesting. Uh, how does this volatility and what does it mean for you, your money and your retirement and how our smart investors not only preparing themselves now, but continuously preparing, educating and sticking to their plan. Hey, I'm Paul West. My Co was today's Erin Wood, and today we're talking about five essential strategies that could help protect you from this significant rollercoaster ride or hot and Wall Street today and maybe much more for the years to come. Yeah, that might scare you by me saying that. But in this segment, we're gonna keep talking about those five key strategies.
Speaker 2:
28:19
And we've talked about asset allocation and diversification. We've talked about emotional investing. By the way, if you've been listening to the prior segments, are you still picturing or excuse me, not picturing that pink elephant that's out there. There's another thing we need to talk about and that's called tax lost harvest team. And we hadn't had to do this for a while or while I would say, um, most individual investors haven't done this for awhile. But let's talk about tax loss harvesting because tax avoidance and tax techniques are really one of the most under utilized things that take that take effect in near retirement. So tax loss harvesting is a great way for you to lower your tax bill, but people don't understand how to do it, when to do it. There's this nasty little thing called a wash sale and they could maybe neutralize their decision.
Speaker 2:
29:08
And I've heard so many do it yourself. Investors have to learn this the hard way. So Aaron, I mean, as you work with successful advisers across our network and you and your team helps give them tax advice, what are some of the things that you'd like to share with them about how they best harness what they know about taxes and actually applying it to their overall game plan here? Sure. So you know, we've talked in the past about tax diversification of the different buckets of tax money and that is absolutely always one of the first things we focus on. But in a market like this, uh, there's huge opportunity to take advantage of this volatility and harvest some of those losses. And so let, let's talk about the power ball right now. The power balls, huge. Uh, so really I think it's like 300 and some, I don't know.
Speaker 2:
29:55
I don't, is that enough though? I miss 300 million enough. Oh God, I would hope so. It's not, we got big problems. You kind of have to go back to the plan on this one. But like, so someone wins that, that's a lot of tax. So going to, there's no doubt about it. But what most people don't know is you can actually put your losses on gambling against your winnings. So whether it's a casino or whether it happens to be the power ball, you could have saved all your casino losses are all your loser power balls for decades and put those losses against your winning. The same thing is true with tax harvesting when we're talking about the investments. And so if you have the ability to sell some gains and sell some losses, they get to offset each other so you can lower that tax bill.
Speaker 2:
30:36
So you're saying if I've been going to Vegas for the last 15 years and I've lost a lot of money, you should have been saving. That should have been saving that and document. So is that actually why you see so many wealthy people there? They are using that as a tax technique. I think this is going to go back to that behavioral thing we talked about and that might be an addiction. I think that has a lot. By the way, a free hotel room is not free. No. And there's really nothing, I would say very little free anymore. I was actually in Las Vegas, I shared on the show, I'm back in December. I can't actually believe how costly things are there. I went to dinner, I mean like, wow. I mean it's not, it's not. When the days when I was younger we went, oh my gosh, Vegas, it's a dollar 99 buffet.
Speaker 2:
31:15
Yes. Not, not that way at all. So I mean from a tax perspective, I think a lot of people forget about important techniques. I mean in one of them is, I mean he, by the way, if you haven't taken your required minimum distribution you have for the year, you've got one day left. So you better do that. But I mean, Aaron, I just, you know, here's a great example. I got an email in the other day. Somebody wants me to take their required minimum distribution in the first quarter here. And I talked with them again, again about a concept called the QCD, which stands for a qualified charitable distribution. And what that means is instead of taking required minimum distribution and having to pay tax on it, so say for example, if you had a distribution of 20,000 and you got to pay your tax and maybe you're netting 15,000 and then they want to pay $5,000 to a charity of their choice, Dreamweaver, JDRF, whatever those are, they're then paying that 5,000 so they net 10 but instead, if you can pay it the charitable distribution directly out of your account, and I pay tax, why wouldn't you do that?
Speaker 2:
32:19
It's better for everyone. You just saved yourself $1,250 Yup. Well I'm thinking about it. If you were given the whole 15 if you want it to give more and you had to pay the tax on it, well then you'd have to take money out of your other accounts. What if you just did the whole 15 everybody would win. So here's what happens there and is most people hear this from us or another CFP or another financial professional and like, wow, that's a great idea. And what do you think they do? Pretty good. Yeah. Or not, not only forget just nothing. They ignore it. They're like, oh, I'll get to that. And then what happens? Life and they don't. So if you're like most people this happens, but people who figured this out, they make sure it's just part of their overall plan. And so it does two things.
Speaker 2:
33:00
One, it's an expense or a gift that they're going to do anyways. So why pay taxes on it? It's just, I'm just baffled by that. What happens is people get lazy or what really happens is most people do this on their own. Uh, back in November, I got asked to do a couple of tax workshops here in Omaha and I mean there was, I dunno, 60 plus people in the room and everybody in the room and I said to everybody, the high majority of people were do it yourselfers on taxes. And I was asking this question because I think it's so important to retirement, especially in this crazy volatile market. We're back in here. You know, I say crazy is because it feels crazy to people. It's not. It's historically we've been here before. We'll get here to be here again. But so when you're doing your taxes on your own, how, how were you trained to do your taxes?
Speaker 2:
33:50
I mean that, that's what I want to ask people. How were you actually trained? Well, and I understand that there are some softwares out there for people to do their basic taxes, but I spend a lot of time talking with clients about taxes and I don't do my own taxes. I don't either. I just, but I mean, I know I talked about in a prior section, but it was like, it was my Mri example. My wife Courtney had a, you know, an MCL tear, she went to an MRI machine. That's the technology also. So like I said earlier, you can be trained on how to read results. It doesn't mean you were trained to actually be a physician. So that doesn't mean you were trained to be a CPA or tax professional. And so this is so fascinating to me is like people want to save a few bucks.
Speaker 2:
34:30
Yep. What they're actually doing is if they look at what they're, they're, they're losing money. Yep. So, I mean, if you actually just want to throw money away, I think that's actually a better technique for you. But you, you don't have to, I mean, this is the part for me that I hope people get to it. I mean, so besides that, I mean, let's look at how do you offset taxable income? And so taxable income, by the way, can increase the cost of your Medicare. Yes. It can increase the cost of your social security. What do you mean Paul at that costs me money for social security. Well, social security can be taxable. Yup. So now if you have a way, if here in 2018 or 2019 because we don't know what's going to happen is if you've got a way to take some chips off the table with tax bowl losses in your portfolio and keep your plan together and lower your tax bill, I think that's a win, win, win scenario.
Speaker 2:
35:20
I here and they can carry forward. Let's not forget. So if they don't use all those losses this year, we can carry them forward. Yeah. Holy Cow. I mean you, you now just either confused people or they're going to say, oh, that's a great idea, Erin, where they're going to do forget it. Well, I hope not. But the loss carry is again, an underutilized technique. People understand, and this is what I'm talking about is what we're in volatile times. We've already talked in other segments about market collapsing versus on the day was up on the 26 boom. So excited, you know, record day. I mean it is like this whole combination. So now I'm actually worried are people going to get insulated from all the noise? And my example is, so if you watch local news, actually you watch any news, CNN, Fox, you name it, Cable News.
Speaker 2:
36:07
I can't stand this and think about this. I want you to visualize this. What's the first story? Every time something terrible. Okay, well I think you're close there, but something even there, you're missing you. This just proves my point. Every time the show starts, whether it's the NBC today show, it's the local NBC News or ABC News and CNN, anytime a show starts, it starts with the following phrase. Breaking news breaking if think about that now, watch, watch the news again and you'll see it. Aaron [inaudible], everybody's is now completely desensitized to what breaking news is and I worry with these volatile markets, are people going to be desensitized to what reality is and things moving back and forth? Are they going to go in ignoring? And I don't want them to do that because I don't want him to be like we just said a great tax idea and or or shed.
Speaker 2:
36:58
I'm guessing you haven't got around to doing that qualified charitable distribution yet or those types of things. So there are a lot of critical questions that people need to answer related to their taxes and looking at it an up and down markets like we're experiencing by avoiding these, these consequences are severe. So you're really open minded. I mean to thinking about how you can get better at this. We have what's called a retirement tax analysis. This analysis doesn't cost you a dime, so you really have nothing to lose if you're interested and you're open minded. (888) 419-8513 that's (888) 419-8513 this customer analysis actually reveal strategy that can help save you thousands of dollars. (888) 419-8513 you're listening to well from wisdom. How could you make your money go further in retirement? Learn how next unwell from wisdom with Barron's hall of Fame Advisor Run Carson.
Speaker 3:
39:01
Yeah.
Speaker 4:
39:10
Is it possible you could learn right here and right now on wealth and wisdom with baron, telephone advisor, Ron Carson. What if the stock market correction continues?
Speaker 2:
39:26
Thinking about this, what if the market actually dropped another 2,500 points next week? Or what if we had another 50% correction like we did 10 years ago in 2008 and we dropped by more than 12,000 points? You're saying, Paul, there's no way that's going to happen. It did 10 years ago. It may seem like a lifetime. How'd you feel then? Where were you? What did that feel like? Where you in a sheer panic where you're saying to yourself, hey, I knew this was going to happen. I'm great. I'm well situated and you just followed your instinct. Well, we're going to keep talking with that saying I'm Paul West. I'm joined by Aaron Wood and today we're revealing five strategies that can help protect you from this ride. We've been on Wall Street, and by the way, this ride, it looks like it's going to continue for the Ana.
Speaker 2:
40:11
Hey, does really uncontrollable future. So coming up in our last segment here, we're going to talk about why going into alone could be a very dangerous strategy to you when it comes to investing plus the important things you need to be looking for an advisor. And I mean, we're talking about here we are. It's the end of the 2018. I mean, what a ride. I would say January was flying. February slowed down immensely. Uh, then we went up and things look pretty good. And then, uh, all of a sudden October and then really in November and now December is like been this, uh, I'm not gonna use the word free fall because that's what a news outlet would use, but it's been more of volatility, Aaron, than we'd had in so long. I can't tell you how many questions I've gotten this last month, and so it's, it's been fun actually to help people, I would say calm their nerves and certainly I would say people that aren't existing, you know, clients and relationships of our firm because most of them don't have a plan in place or they're not a hundred percent confident in the advice that they're getting at the moment is best for them and what they love.
Speaker 2:
41:19
What we do on the show is just we're real world. We're going to tell you exactly what's happening. We're not going to try to Sally's something that's the whole point is called wealth from wisdom. We are a fiduciary, so mean we have a legal by Jose. More importantly, an ethical obligation to always do what's in your best interest. And I bring this up because the other day I was helping a family readjust their asset allocation just to make sure it was cracked. And the original looked right at me and said, now Paul d you get paid any differently on this. And I sat and I looked at him and smile. If it felt great, it felt so good, I probably smirked and smiled and looked directly at him and said, absolutely not. My decision is the same no matter what. I don't get any additional compensation.
Speaker 2:
42:02
So that's one important question I want you to always ask your advisor. By the way, right now that they're making a move for you, which I'm not sure is right, but it could be depending on your personal situation, you better ask them, are they getting paid any additional money for this move they're making right now? Because I would hate that right now, if you're a listener, and by the way, most people still work with brokers who get paid on commissions. And if you're one of those people, there's still time to make a change and go work with a fiduciary is someone who is fee based that can help you out. But imagine this, they're using your emotion and your fear of the market to go make them more money. That, I mean, there's plenty of words I want to use, but I don't want to be find Andrew so I won't use it.
Speaker 2:
42:42
That just infuriates me, Aaron. I agree. And this is not the first time we've seen it. We've set up plenty throughout their show. Um, but involved all times. There are people who make a lot of money by helping clients supposedly move money around and it is not always the right decision. You know, I shared in the first segment about the 18 year old clients that came in and had moved everything. I can tell you that advisor made thousands of dollars off of what that client did. Um, and I was furious. And the client, my clients were furious when they realized it. Um, there's a lot of good advisors out there, but if they're not fiduciaries, I would be questioning any moves right now. Yeah, I mean, are they truly creating value? Are they talking to you about what we've talked with the show taxes, social security, income, healthcare, medicare risk, inflation.
Speaker 2:
43:29
I could keep going on at 100 bucks. Well, Aaron, for all of our listeners, um, the reality is that you need to be asking those tough questions for them. We actually have a sheet 10 questions to ask your advisor. If you'd like this from us, eight eight eight four one nine 85, 13 that's (888) 419-8513 or you want us to email it to you info at Carson, wealth.com as we look at the markets is you've gotta be making the right decisions, the right plan once they don't go it alone. If you don't work with a professional, I've already said I think that's a huge mistake, but you better have some sounding boards to make sure you're making the right decision there. By the way, like I said, if you're at a cocktail party or you're at your New Year's Eve party and someone else is like, what are you doing?
Speaker 2:
44:13
What are you doing? What are you doing? That concerns me right there because that means that they don't have confidence and clarity in what they're doing and you got to watch out for that. Um, but I think the big moral of this entire story is if you have a strong financial plan in place and you're getting the right advice, by the way, is we already shared. Most people do not. So switch become like most people that make the decision to get one in place and the financial confidence you gain is incredible. But I mean we look at this volatility and it continues to surge. I don't know where it's going to go in January, but I don't have a feeling right now. Aaron is going to go down significantly. We're not going to be here on the show telling you which of the Fang stocks to buy or what other is in fat or and invoke for the moment when I can't share with you and you and I've talked about this is downside protection.
Speaker 2:
45:02
Aaron. Yes, irreplaceable capital. All we like to call it, and I mean imagine this, you have a way right now and we call it the mission strategy approach that you can essentially have limited to no downside exposure. So if your account basically really can't go down, and by the way, that's not an annuity, it's just to be crystal clear. We don't need to go on that soap box there and how expensive annuities are and those types of things, but you also have some really good upside. So if the market does go up here in 2019 and 2020 you get the opportunity to participate, but you're not sitting out in cash or in small money markets or in small cds, not even earning enough to keep place of inflation. I don't know why people wouldn't take advantage of that. Well, I don't know why people want to take advantage of it or learn like that is that we've talked about it before, that just paying attention, writing it down, figuring out what you need to do.
Speaker 2:
46:02
You learn about these strategies to figure out how they fit into your big picture and then you put them in place. Yeah, five minutes less on Facebook or Instagram or any of the, I'm serious. It's like you have to control your life. You can't let it control you. I'm on social media also. You're more welcome to follow me on Twitter or Linkedin, other locations, but I'm out there only for a set amount of time. I'm sharing information or I'm learning information. I'm not loaded. Letting that be a time suck because it can be a time warp. And if you've ever done that, and I've, we've all fallen into this terrible trap, you're looking at it and you're like, oh my gosh, 30 minutes just went away. What did I do? 30 I ain't nothing. I've seen people sit there for hours flipping through those screens.
Speaker 2:
46:47
Yeah. Well now you can go read all of these articles on market volatility, which are interesting, but when you use the word important, is it interesting or is it important? I always want to fall in that important category because it is important for me again, when somebody is publishing an article of educational purposes, if they're a fiduciary, they're truly trying to educate you. If it's a news outlet or it's a broker, they are trying to influence you to do something that is not potentially in your best interest and you better watch out. Cause right now market volatility has you scared. So you may talk to one. I'm like, Oh yeah, I got this great solution for you. But they may be, you're applying it to everybody, they're not listening to your situation. And that's part of our job is to read all the news and figure out what to screen out and what to keep in hands down.
Speaker 2:
47:37
I mean in what tends to happen is, is people let time go fast. Like I say, I let those time sucks. So when actually would be a good time for you to discuss this. I mean seriously, if an advisor or their team only works from eight to four and they won't allow a good time for you. So we actually at the Carson group, we do meetings with clients when it's appropriate for them, whether it's at nights or on weekends. We have to be flexible in today's world. So let me ask you this, when would be a good time to discuss that with you? (888) 419-8513 we'll help talk through that. (888) 419-8513 are you truly open minded to having that discussion? (888) 419-8513 hey, this is well from wisdom. We've enjoyed talking about the market volatility and we'll see you here soon. In 2019
Speaker 5:
48:27
risk social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson.
Speaker 1:
48:40
Okay. And here's the legal Mumbo jumbo. The opinions voiced and Wellframe wisdom with Rod Carson or for general information only, and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged, I mean not be invested into directly investing involves risk, including possible loss of principle. No strategy. Assure success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through CW m LLC, an SEC registered investment advisor.
Speaker 2:
49:12
Yeah.