Wealth from Wisdom

Recent Market Volatility

October 13, 2018
Wealth from Wisdom
Recent Market Volatility
Chapters
Wealth from Wisdom
Recent Market Volatility
Oct 13, 2018
Carson Wealth
Show Notes Transcript

The “V-Word” reared it’s ugly head this week – volatility. No one can tell you what’s next, but we can agree that volatility is normal.

Speaker 1:
0:00
Okay, and here's the legal Mumbo jumbo. The opinions voiced and wealth from wisdom with Ron 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, an SEC registered investment advisor.
Speaker 2:
0:30
This Doug market 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 250 the skyrocketing cost of healthcare and retirement could now run 350,000 planning for retirement today is a whole new ball game. 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. He, deep down inside you knew this was going to happen. You know,
Speaker 3:
1:12
I knew this boring stock market just couldn't last forever. And even though we got more great news about the economy, what happened, volatility spiked, the market started tumbling down and trillions of dollars were lost in market value, not real foot market value in just a matter of days. And is it, the question is now what? How should you position your portfolio? How should you protect your investments? Should you make a change to your portfolio? Should I get in other market? Should I get out of the market? Should I go to cash? Should I not go to cash? All of those decisions. You're probably crossed your brain over this last week and if they have it, I don't know where you've been, but hey, welcome to wealth and wisdom on Paul West and thank you so much for joining us today. It's an important time. I'm joined here by my cohost, Jim Caldwell.
Speaker 3:
2:00
Jim, welcome to today's show. Thanks, Paul. Yeah. So you know, we've been talking about this for a while on the show, Jim, and uh, what reared its ugly head this week. The v Word volatility. Yes. Pull back. Yeah. I mean we've been, we've been talking about this for a long time on the show and I know people didn't want to listen or hear from us, but the reality is this happens. This is normal. We've just been in this extraordinary bull market. I mean, think about it. It's been just an immense amount of time. I mean, I'm going to talk about it later. I mean, the amount of days is going to be just fascinating to you. But is this party over? I don't know. I think we're gonna spend some time talking about this and no one can really tell you what's next. But I think what we can agree on is volatility is normal.
Speaker 3:
2:48
And so if you're retired or you're getting near retirement, volatility is not your friend. And by the way, this is no time for complacency. Jim is I about this, I mean, uh, lots of ups and downs. I'm going to use the word emotion. So when things go up, everybody's happy. When things go down, people are scared, they're fearful, they're wondering, they're anxious, they're nervous. There's, there's a lot of negative emotions. I didn't say the word happy. There'll be more negative than positive emotions. They are. Um, but why? Because no one likes losing anything, especially money. Um, but what we have to realize is, is that you build a plan for a reason. And just because the market goes down doesn't mean you blow up your plan. It doesn't mean you make an emotional base change because it could be more detrimental than anything else you do in your retirement or for your retirement.
Speaker 3:
3:50
So coming up on today's show, Jim and I, and we've got to do this for our listeners, especially after this week, is helping reveal those sound and practical things you can do to help protect your investments in a volatile market. This happens. Everyone I know we've shared this. Quarter three was one of the most historically boring. And what I mean by that is least amount of volatility markets we've ever seen is actually only the second quarter since 1996 where there were not any moves in the s and p greater than 1% or less than 1% in the whole trading. I mean, Jim, that's just fascinating. If you don't see that very often, obviously twice people become complacent. They think this is the norm. It's just going to keep going up and up and up. Yeah. I mean my analogy would be it's like somebody gets a hole in one and then somehow gets a hole in one in the same hole some other time in their life.
Speaker 3:
4:45
I mean, the odds of that happening, first of all, getting a hole in one in golf are pretty slim. Well not the way you hit the ball. No, I still don't have one. So what I mean is it slam, it's tough. I mean, you think about it and then for it to happen twice, and I think that's, you know what? We want to spend some time today. So let's give people some ideas and techniques here to help you out. So you're listening, you're concerned. It's a Saturday, Sunday, you're, you're wondering what do you do? You log into your account and it's not quite where it was before. Here's what I'm going to tell you. Number One, sell offs are normal. This is normal. Everybody stopped thinking this is a crazy world, or it's a political inspired, her trade inspired or any of that. This just happens when you buy a stock. Somebody has to sell one right there. There's two parties to a transaction. When you buy a house, you need to sell a house, right? So there's always two parties involved. So sometimes there's going to be more sellers than there are buyers. That's what happens. But if we look at the history of the stock market, have we ever had a time gym where people just keep selling, selling, selling, and the market goes to zero? No, that's never happened. Yeah, I hope it never happens in our lifetime because there's probably something way worse going on. Yeah.
Speaker 4:
6:00
Oral. If it gets to that point, we've got bigger things to worry about.
Speaker 3:
6:03
Yeah. But what's been the really the big surprising things about all of this is this infrequency of moves. So when we have a 2% or 3% move, Jim, I couldn't believe it. If I was talking about this earlier this week, I, I'm in our break room, I'm grabbing an apple and I'm, I'm looking at the TV we have on in there and if it says stock market crumbling is what it says, I'm like crumbling. That's a little far fetched. It sounds like, you know, um, those of you listening to your kids and your grandkids, right? They get an Owie on their foot. Like they stubbed their toe or they do something, but they act like they broke it and they're never going to be able to walk again. I mean, they're selling it to you in this, that's no different than CNBC and Msnbc and all of these places trying to get in touch with your emotion and get you to continue to watch. So their viewership goes up and they can sell more ads and that's why they use those words. So I will tell you because the third quarter quarter had these, none of these 1% moves is it volatility has this fantastic way of evening itself out at some point. And that's what we saw it this week. Don't you think Jim?
Speaker 4:
7:17
I agree. I mean, here's, here's what what we're saying. I mean it's, you're, you're, you're going to buy equities, you're going to have to be prepared mentally for volatility. You can't, you cannot not make emotional investing. It's so different than going into a football game. There's going to be good plays, there's going to be bad place. You got to let your players know how to deal with both ends of that spectrum. So this week we've seen both ends of that spectrum.
Speaker 3:
7:40
Yeah, we have, I mean, there's a lot of reasons why people say this. And I was he an interesting, I was like watch him Thursday. Yeah, I was standing there at the gym early in the morning market was down, three 50 inflation numbers came out better than expected. The market actually jumped positive and then by the end of the day it's way back negative again. And so sometimes there's not a specific news case, cause actually if you look at it, that should have been a positive news day because of the inflation numbers and where they were. But what happens is the behavioral bandwagon started is once people started looking at the headlines and reading these things, they started behaving on emotions. And so here's what I would share with you. This is the tip we as investors and the Fed, so you know, the Fed, the one that sets the interest rates see the world differently.
Speaker 3:
8:31
So think about that for a moment. Many of you listening are worried, is the Fed being really too hawkish? And as the economy actually showing signs of slowing, hence you start selling or making trades. Um, and this is there really a lack of additional stimulus or there's increasing rates. You know of that may finally trigger concerns. However, these indicators show us that that's not really happening, but people believe it because they want to believe it in their brain that they have this bias that's beginning to happen. And the real uncertainty I would say about the economy is when is this economic attack stimulus that we've received? When will that start to diminish? And I think that's something Jim, I'm going to tell you, you need to start, and this is number one thing I recommend to you and market volatility is you got to stop and you got to go back to your financial game plan and you got to go back to look what it's like.
Speaker 3:
9:22
Case in point. Earlier this week I was on the phone with a client of mine and I was sharing my thoughts and where the go on the market. And by the way, this is person. Um, like many of us, when markets start to go down, their anxiety or nervousness goes up and I s and you know, his direct question to me was, Paul, should I get out of the market? Is now a good time? Should I just get out completely? Well, the answer is no and I, and here's why. So I went back and reframe it this way. So you remember how we set up your asset allocation. We have approximately 70% of your investments set up in irreplaceable capitol. That is, we have downside protection afforded to you. So one of these market events happen, we are not going to participate as much in market downturns.
Speaker 3:
10:11
We then have another percentage allocated to specialty investments, things that make a lot of sense to you. And then really we only have about 15% allocated to growth. So if you really think we should pull the growth off the plate now I think you're making a bad decision because the markets could rebound 3% or whatever the next day. And I, Jimmy and I were talking about this before, getting ready for the show here today. So I mean if you miss the top 10 days of the market every year, you lose out on about a third of the growth each year. So missing 10 of all of the specific trading days you miss out on approximately one third of that entires year growth return. So if you chose to get out on Thursday and then we look over the next week and what happens, you could be making a dramatic mistake.
Speaker 3:
11:00
And let me remind everyone, let's go back to what was it, August of 2015 I believe Jim, where the market on a Monday was down 4%. It scared people remember that day. But by the end of the week the market was actually positive. But there's a great study that was done by Sig fig and online investor that showed a lot of people got out on that Monday cause they were scared and then didn't get back in. So now you just double punched yourself, right? You really did because you got out and then you are fearful of getting back in and you missed out on the next best days in the market. You lost out on a 5% return because you let emotion. So if you went out and made a trade this week to get out of the market, what is your plan to get back in? Seriously? I mean that's like saying, hey, you show up in Nebraska is playing Northwestern and you had a game plan and I'll send you got scared because they opened up a touchdown ahead or two Dutch downs, the head or whatever.
Speaker 3:
11:56
So you throw that whole game plan and other works. Does that mean you showed in the first quarter? No, no, you still got plenty of time left and if you're a 49 or 55 you need to go back and look at your plan to make sure your investments match your longterm decision because that will really, really help you out. So I mean I think I like Jim. Okay, now what? I'm sitting there, I don't know what to do. I'm trying to figure out what's best. There is something you should think about, which is making sure your portfolio is properly positioned. Since we're a fiduciary, we do this complimentary for people. So we will give you a second opinion. If you want a second opinion, give us a call. (888) 419-8513 it's an analysis that can help make sure you're on the right path and it's going to help you feel more comfortable. (888) 419-8513 or if you want to email info@carsonwealth.com we're happy to provide you that second opinion.
Speaker 2:
12:49
You're listening to Wellframe wisdom. He seems good times and bad times and he's got the gray hair to prove it. You're listening to wealth from wisdom with Barron's hall, the same advisor, Ron Carson. Is it possible you could pick fewer taxes in retirement and keep this money for yourself? You could learn right here and right now, unwelcome wisdom with bear and Taller Boom Advisor Ron Carson. Volatility is really
Speaker 3:
13:14
roaring back on Wall Street. I know you feel it. Hey, welcome back. You're listening to welfare wisdom. I'm Paul West and thanks for joining us. Hey, my co is today's Jim Caldwell and nobody is going to be able to tell you what's next for the stock market, but one thing's for sure, volatility came back and boy did we feel it. This vague 10 we just, we did. Yeah. And what also came back this week, emotions, what also probably came back, the number of people logging in to look at their account. Yes. The number of people checking on their 401k. Oh my gosh. I didn't even really think about this, so I can't even imagine. I hope, by the way, I hope this didn't happen. I hope people, especially if you're below the age of 55 I hope you didn't go in and make a major change to your 401k allocation this week. Or if you did, I hope you had the foresight to talk to your financial planner to make sure it was the right adjustment. If you didn't. Oh, I'm, I'm worried Jim, because emotion based decisions are the worst ones, especially, especially when it comes to money.
Speaker 4:
14:20
It. And Paul, we had a situation just just last night where we presented a financial plan to a new household. And one of the questions that the husband had before they left was, so how does all this affect by 401k? And he was, he was curious. He goes, I haven't logged in in a while. Um, you know, what do you think this downturn would do to it? And I said, well give me your end of the third quarter statement. We have the technology here, we can run a risk analysis. We come back with some answers, but we both agreed there's no panic button here cause he's 53 old.
Speaker 3:
14:52
No worries. Yeah, I mean it's not like it's going to dramatically change the decision to retire in the next year. Are any of those things that go with it. And I think what people have to realize is, is this is normal. I know I keep belaboring that point jam and it's just the third quarter didn't have volatility so people forget about it. People forget about 2008 and what happened? I mean, do you know the last time we had one of these back in 2008 10 years ago? We're a heck of a lot closer to the year 2020 then we are you love that. I you love that 2020 you're looking for, can't believe we're almost at 2020 but it also, I hope you know, if you're 55 years old and you, you haven't stopped to re look and get a second opinion on your plan, then you better because you're getting closer.
Speaker 3:
15:46
So this is the number I want to share with you. Jim. Americans lost 10 point $2 trillion in wealth the last time that happened. Ouch. And another 5 trillion back in the early two thousands those are huge numbers and why and why you should be concerned about this. Let's go into our next point on today's show that we want to share with you is so these back and what if we have a 10% correction or a 20% correction? So you're listening today and you're between the ages 55 and 65 or 70 and you want to retire. There's this risk we call the sequence of returns risk. And what in the world does that mean? Well here. So when you retire, those first five to 10 years are Uber critical. They, if you think about it, are going to help determine the pathway and that's why we often talk about do you have a one to 10 year plan?
Speaker 3:
16:44
Like how are yours using your money gonna be invested for the next one to 10 years, 11 to 20 and 20 plus. So one to 10 you got great concerns about volatility. So right now, Jim, we were actually looking, um, a listener shared this with us two weeks ago and they showed us their portfolio, they wanted a second opinion and they were using vanguard, they were using fidelity and like isn't this great? I'm in a bunch of different funds. And as part of this complimentary second opinion, what we showed them was that actually, even though they have different funds at fidelity and vanguard, there correlation between them was almost 99%. Meaning what they owned in them was almost the same. So they thought, oh, well, I own mutual fund a and I own mutual fund B, I'm great because I'm diversified. We actually show them they're not diversified at all.
Speaker 3:
17:37
Watershed is, it's basically like they got all their eggs in one gigantic basket and you should have seen their eyes like, holy cow, I can't believe this has happened. It. And by the way, they put themselves in that position, however they, and you too can make that decision to get yourself out of that position because now especially you felt the short term pain. What are you gonna do about it? So if you're over 55 you better be looking at this. You're really any age. Now, I would say if you've got a long runway, you're, you're, you know, 45 or under, I hope you have a good portfolio, tilted towards some growth. But I want you to be comfortable. I mean, one of the biggest things is you gotta make sure your asset allocation matches not only how long you have until retirement, but with risk. Jim, I mean there are people and that was on the phone the other day with a gentleman in his late thirties business owner and he just doesn't have a strong appetite for risk even though he's got a long time till he's 59 and a half, you know to get some money out of his retirement accounts or 55 and as 401k he doesn't want to take a lot of risk and that's okay, but we better stick to the game plan and keeping something invested. Makes a lot of sense.
Speaker 4:
18:59
Don't, don't. You see this a lot though. Paul and I and I've seen it a number of times this year, when people are listening to the radio show, they do call in, they want that second opinion. They come in, they bring their statements, a whole bunch of things and some of the questions we ask is, all right, so who put this portfolio together? I want to know did they do it themselves or do they have an advisor? Number two you should ask yourself is what, what that, what do you own? But why do you own it in like right now with all this volatility, look at your different holdings or go see a professional. Why do I actually have this particular stock or fund or whatever and then react from there?
Speaker 3:
19:36
Yeah. Um, I know this happens and I have some listeners are going to either, uh, give me, give me a wry smile while you're listening to us or a shake of the fist. But how many of you went home this week or woke up in the morning and you're retired, saw the market and logged into your account because you read an article or you heard something on the news and you made a trade? How much time did you actually spend on making a decision on your own? And I know you didn't spend a lot. Don't lie to yourself. Hey, I mean, I'm serious here because people take small tidbits of information to make monumental decisions. Yet I know we talked to him about it last week on the show, and I love it too, is Jim, you were sharing the story of like how much time people spend on Disney's website preparing for a vacation, not minutes, hours, and hours and hours. Yet earlier this week, many people across the country, I prompt sure across the globe to went in and made a change to their investment allocation or portfolio that affects tens or hundreds of thousands of dollars or millions potentially in a few minutes. And here's what they're worried about. Like almond, I spend a $199 for a hotel or 179 and yet they're going to go change something that it is worth just thousands or millions of dollars in a couple of minutes. I don't understand that.
Speaker 4:
21:07
Well, and I would almost take that a step further and say, I bet most of those people sold something. Yeah, but the majority did even consider buying something because if you like something at $12 wouldn't you like it more Paul at 10 or now you had anybody like that this week? Uh, actually I just got off the phone with a one one family who said to me, uh, because of his risk tolerance, he, we did the risk tolerance questionnaire and went through all the steps in the processes. He wanted to be more aggressive and he said I would be disappointed if my portfolio wasn't down a whole lot the last couple of days because if it isn't, that would tell me that I'm not being aggressive enough. But he's got a, you know, he's late forties a, he's got a longer timeframe. So He's planning ahead.
Speaker 3:
21:54
Yeah. And he's got that runway. But I mean, if I'm 55 and older and I want to retire when I'm 62 or 65 or 67 whatever that date is, Jim, I may not have it. So one of our, you know, comments to you on today's show is how much allocation do you have in that shorter term bucket or what we like to call irreplaceable capitol. That bucket that you cannot afford to have an o one or o eight scenario happened to you. And I can tell you, we can show you a plenty of people who lost their shirts and the previous market correction and what happened. They did not have an updated or a diversified portfolio. They took on more risk because they wanted more return. And what happens, there's a reason why they call it bubbles. And the herd mentality is because people tend to start following what others.
Speaker 3:
22:46
So if I can cost you stop less than the talking heads on financial TV and newspapers and those things who are trying to sell you something, getting it out, just get a second opinion, get fiduciary advice. By the way, don't go to a broker. I know a Belabor this point, but I can assure you there's plenty of people that go to a fiduciary. And we here at Carson are fiduciary is if we see somebody in a good allocation, we tell him, I can't even tell you how many times people have called us and we've walked through and we said, you know what? You're in a great spot and you know what they have. They go home with this sense of empowerment. They feel financially confident. I probably should. We don't have a sleep meter test on them Jim, and I bet they sleep better. Surely do cause they don't rethink it. I think if I'm going to do it yourself investor, by the way, and I have the benefit of having this entire investment research team who's part of our organization, but if I'm somebody this week, they watch in the morning and I'm drinking my morning coffee and I go make a trade, I'm probably spending all day long checking that account to see if my trade was the right decision. It's almost like the buyer's remorse, right? When you buy a vehicle or houses, do they do the right thing and then what happens? Second guessing continuous
Speaker 4:
24:04
talk about it. Do it yourself or three months ago we had, we had one of those situations come in and, and you know, was concerned that hey, I'm to the point where maybe I need to hand this off to someone and we went through all the processes that we do. The second opinion went through the risk of Lizer and all that. The good story was we were talking the other day and he says, Hey, if I wouldn't have moved, if I wouldn't have come in for that second opinion and I wouldn't have moved all my assets over here, I would be down double, double if I would've stayed where I was. Wow. That's a lot. And we're talking about two, almost $2,000 it, sorry, $200,000
Speaker 3:
24:42
ugly. Well, it doesn't matter what the number is. Money's important to anybody, no matter how much wealth you have. And that's something that we firmly believe in is, is you've got to do what's best for you. And if you want that complimentary analysis, give us a call. (888) 419-8513 if email's easier for you info I nfo@carsonwealth.com or phone's fine. (888) 419-8513 now's the time. Market volatility is back. If you want someone to review your investments and give you fiduciary advice, give us a call. (888) 419-8513 you're listening to well for wisdom and we're going to keep talking about this crazy market volatility.
Speaker 2:
25:22
How could you make your money go further in retirement? Learn how next unwell from wisdom with Barron's hall of Fame Advisor Ron Carson, he's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC and more. Now back to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson, fasten your seat belts
Speaker 3:
25:43
going to invest in the stock market. You have been and you could be in for a bumpy ride. Hey, welcome back. You're listening to wealth from wisdom radio. I'm Paul last joined with Jim Caldwell and thank you so much for being with us today. You know, we would spend some time on the show today here, Jim, and let's get back into it about, you know, we've been getting great news about the economy and yet the market didn't react so positively and how you use the word haywire, maybe it potentially and know a lot of money. I mean, we're talking trillions of dollars can be lost in just a matter of days. So you're probably left one or it's the weekend. Uh, what should I do? You know, how should I position and protect your investments? So coming up in this segment, we're going to keep talking about sound and practical strategies.
Speaker 3:
26:28
Yeah, I have to say that a good sound and practical strategies on how to position and protect position and protect your investments in a turbulent stock market. So let's just get right into a gym. I've been enjoyed sharing this with you and your insight here on the program today. I know you're an advisor across the network. Um, I'm a certified financial planner and as we talk about these things, let's talk about ways to protect yourself and especially those of you nearing or in retirement. If we do have a downturn, what should you do? And here's some things. So number one, just spend a little more conservatively, I hate to say it, but you know what, maybe we don't need to go out to eat tonight or maybe, um, we don't need to do whatever it is too. I love an income bond ladder. I just think for a lot of people, those are helpful. You take away some of the risk of rising interest rates and what you do. They're also figuring out a way, Jim, um, to have a rising, what we call a glide path into equity. So if, if you don't have a lot in there or you're thinking about adding more, there's a technique a lot of people use. Maybe you want to talk about what a DCA is, her dollar cost average.
Speaker 4:
27:38
Sure. So great way to, to put money into a market if, if, especially when you have volatility, dollar cost average in is just a systematic investment plants. So let's just say someone has $100,000 and it's sitting in a checking account doing nothing. The ability to transfer on a regular basis, x amount of dollars into one, two, three or four different strategies. So you're going to buy when the market's down, you might buy when it's up, you might buy in between, but you're going to average it out at the end of the, at the end of the time period. Great Way to get into the market.
Speaker 3:
28:13
Yeah, I mean, I look at, I mean, I've used it in five 29 plans for my kids. All these things I put a little bit in each month and now, so let's imagine you just got your third quarter bonus from your job and you're like, oh my gosh, what am I gonna do with this money? Should I put in the market? Oof, this is market with scary this week. I don't know what to do. Well, maybe you take a little bit and say, Hey, let's put a little in this month, a little the next month, and set up a prereq way. That way you're taking emotion out of decision. You've made just a good financial game plan decision on what to do. Here's another thing, make sure you have a cash reserve or what we often just call your emergency fund there. So if we have an o one or an o eight, do you have enough in it that you pull some out of it to go into the market?
Speaker 3:
29:03
People do Jim. And we've seen it here on the show and certainly across our network all the time. If you did let this week be a warning sign to you, you better maybe shift it back out of there into make sure you got enough in your reserve fund. There's nothing that scares me more gym than people who pull from their safety net trying to stretch for that extra income and what happens? Boom. They don't make it a, you know, I like golf. So I'll use a golf analogy here is like knowing you've got a um, a golf hole that your odds of making it are one out of 10 or one out of 20 long par four. Yeah, whatever they, and you like to go for it because it's fun. But what happens nine out of 10 times disaster disaster. Don't let that happen to you with not having enough in your emergency fund and the way you approach it.
Speaker 3:
29:55
So now let's talk about, okay, how with this volatility back, Jim, can I be efficient with taxes? I guess? Guess what? No one likes to pay taxes. We all know that. But if you're over the age of 55 you're going to have more control over how much you pay in taxes than any, any other time in your life. So I mean, imagine this now Jim, we have a downturn in the market and I just turned 70 and I'm going to have to take a required minimum distribution and that's going to come out of my account and it's now down 10% or 20% do I like that? No. No. Why?
Speaker 4:
30:34
Well, it's the wrong time. It's timing. Timing's everything. Yeah. And I think going back to that, when you look at how we do things here, have you always have a little bit of money in cash in those types of accounts? So that, so that if you have to pull that RMD, you could do it without upsetting the apple cart.
Speaker 3:
30:51
Yeah. And, um, there's so many things that you could miss here. I mean, um, you mean you don't want to pull it because you're worried that the stock's round than you don't do it and you make a mistake? Well, guess what? 50% five 0% penalty if you don't do this correctly. Um, and I mean, if the stock you liked was that whatever 50 and because the down markets down to 40, you got to sell. If you don't have that cash available, now you're double hit. Not only going to sell it, but guess what? You're gonna pay taxes. You're going to pay ordinary income if you're Paul on this money out of your Ira or four o one k, that's a problem. So how do you combat that? Again, if you are over 55, you want to look at how do you have what we call tax diversification, not even 55.
Speaker 3:
31:39
Everybody really is. So you're always going to have accounts that are continuously tax. So think about your checking account, your savings account, your brokerage accounts, these things you're going to pay tax on, dividends, interest, capital gains. And then we have what's called tax later. So these are your four zero one ks, your Iras, your four zero three BS, your Tsa real estate or other hard assets, but at some point, 70 and a half for sure. You got to pay the buyer you're going to pay. And then there's what we call tax rarely Roth Ira, maybe right now, little bit downturn in the market. And if you, if you have looked at your income stream, maybe now's a good time for a Roth conversion. Something to consider. Have you even thought about it? And by the way, don't just throw your numbers in a calculator on a website that gives you a one dimensional answer.
Speaker 3:
32:32
Whatever numbers you put in there is whatever it's going to spit out that doesn't talk about your spending habits. It's certainly, I can't very many. I can't even think of any. Maybe there is, I could be wrong. Uh, I'm, I'm wrong on other things, certainly for sure. And my kids do a wonderful job of that. Thank you. Um, but it's not asking you for tax projections. So if it says Roth conversion, it may ask you. So you may go on a website, may ask you Jim, oh are your taxes are going to be higher or lower? That's an absolute statement. What we see, people's tax rates aren't linear. They're not always the same. Some years they're more, especially in retirement. So the best thing, I mean, this is where this saves people just housings and thousands and thousands of dollars is setting up the sequencing of their distributions. So that way in your high tax years, you make the right decision and you're low tax years, you do Roth conversions or other things, but it looks more like a bar chart that moves up and down rather than something that is a straight line for you.
Speaker 4:
33:40
And we've seen this with a, with a number of people that have come in here that they're heavy in their four zero one ks or four oh three B's, right? So they're going to have to take those distributions when they're 70 and a half, but they want to retire in their sixties. So strategy for that. Uh, we take, we take some of that qualified money that 401k money in four o three B and we take it early or we take it out of there, their Iras and we use that in their sixties when their tax brackets lower so that when they get in their seventies and they've got so security on top of that Paul, that we're able to minimize that tax damage.
Speaker 3:
34:14
Yeah, I mean, I think about, I mean, so what started this week, I mean a sell off really started in these overvalued sectors. You know what I mean? Technology of course, um, uh, can certainly help push the market lower. It's been, you know, the accelerator over the last several years as well. Um, but I mean, when we look at what goes on here is how long will that happen? And if technology continues to decline and you're sitting there and you're holding, um, you know, Alpha Bighead and Netflix and Amazon and all those things in your retirement account and now you got to sell out of it, that's a problem. And something that you're going to have to look at. Making some changes. So I mean when I think about this is no one's gonna want to pay through their nose and taxes ever, ever, ever, ever. Um, but there's really the smart people figure out how to pay less, don't they?
Speaker 3:
35:02
Gym. It's fun to watch the light bulb come on when they figure this out. And there's ways in your retirement accounts to save you thousands of dollars. So really, I mean you're nearing that time period. Again, start at age 55 plus. You should look at this, be one of our first callers and we'll give you an analysis of how to sequence these re these really cashflow analysis that you need to make the right tax decisions. Eight, eight, eight four one nine 85 13 that's (888) 419-8513 AGM this and the answer's really simple, right? You have a choice. Either pay IRS or keep the money for yourself. I know which one I'm doing. I needed to (888) 419-8513 you're listening to [inaudible] from wisdom and we're going to continue to keep talking about the recent market volatility. And strategies to help you get more out of your money.
Speaker 2:
35:48
Trust, transparency, accountability. These are the values that drive Ron Carson and Carson wealth. You're listening to wealth from wisdom with and hall of Fame Advisor, Ron Carson. 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 noticed this week, right?
Speaker 3:
36:14
Has come flying back, roaring back, moving quickly against all of us, right? Yeah, I mean it it, this is, if you haven't updated or rebalancing investments recently, you should be scared. I mean, I don't blame you for having fear this week or anxiety you're listening to show today. Hopefully getting some tips to help you make the right decision. Hey, welcome back. You're listening to welfare wisdom. I'm Paul West and my cohost Jim Caldwell and thanks again for joining us. We're so glad he listened to the show and thank you so much for the many of you that send us emails and comments and calls about the value you're getting from it. I will say many of you say, Hey, I appreciate it. Um, but I'm not going to do anything for three months, six months, nine months. You're just kicking the can down the road, your liberty and your sleep.
Speaker 3:
36:58
So be smart about it. But we're going to help share with you in our final segment here, more sound and practical strategies and really how to position and protect your investments in a turbulent stock market. I mean, Jim, this week's been interesting. Uh, it could be a word for it. I can think of a lot of words that we've used and we've got to back time. I mean, it's been almost 3,500 days, 3000, 500 days since this bull market began. So we have a couple of days of market fluctuations and it creates panic. It creates concern. So we're going to give you the next tip, which is do not let emotions get the best of you. You know, I hate knee jerk reactions and sometimes, hey, we get all emotional, Tim, I made it. Do you know, we're watching sports, we get super emotional. We're dealing with family, we get emotional friends.
Speaker 3:
37:54
Money is probably one of the most emotional topics we have. So don't make a knee jerk reaction. And, and you know, certainly the oracle of Omaha people, you know his nickname, Warren buffet of or seat we're talking about here, his quote is one of the most famous ones of all time. Remember this one gym, be fearful when others are greedy and be greedy when others are fearful. What's happening right now? People are fearful. Oh yeah, yeah. So keep this in mind is you're making sense of diversifying your portfolio. I would say actually there's people that loved the volatility traders and really good portfolio managers because they're really happy with the do it yourself. Investor watches a TV show or reads one article, it goes and makes a trade at cells because they're picking up something and they want it to because somebody made an emotional based decision. So we as humans, this is very normal. We wear emotions on her sleeve. So of course what the stock market goes up, we're happy, we're celebrating, we're actually looking at our accounts less. But when the stock market was down, we concerned, scared, anxious, nervous, all of those things that come with it. And so making sure you just have the right asset allocation plan in place. And Really Jim, I would say the right game plan in place is something every investor should be doing
Speaker 4:
39:13
well and and sticking with that game plan, and I'll use a football analogy, I'm surprised. Yeah, I know I'd be more maybe don't know that you used to be a coach football coach. So I want to share that with them. That's why you love football. I love football. I love the kids too. But using that analogy there where okay, you watch film, you prepare for the game, you practice all week, you kind of script up what plays you think's going to work. And normally it's going to be a balance of running pass. But let's say you're in a situation where you know you're more physical than that other team and you know you can run that ball and you come out and you're chunking them. I mean you're getting three, five, seven yards and a pop. Chunking, chunking. As we used to call, we used to take chunks of yardage. All right, I like it. And here's the basket. Football did that back when Tom Osborne was there and they had all those big hog, he's up front. They were tough to tough to defense. But here's what you see on TV and you see it all the time. You Go away from it, you got something that's working and for some unknown reason, you either get greedy or fearful or you let your emotions get in the way and now it backfires on you instead of sticking with her.
Speaker 3:
40:16
Oh Man, look at the NFL. Why? Why do they pass so much? It sells, it sells tickets, sounds tickets against people into the stadium to then go buy popcorn and soda, beer and all those other things that go with it. And I mean Jim, I mean what, what do you do? I mean like you're a coach and you were players. Like what do you do with all those distractions? I mean, cause right now there's a lot of distraction.
Speaker 4:
40:36
Well, here's what we used to talk to our players about Paula and you know, which stadiums were the loudest, I mean Nebraska's stadium even regardless of their record is loud. Yeah. Iowa, the fans are right down on top of you. I mean you can't even hear when you're down on the sidelines. So we talk about blocking the crowd noise out or taking the crowd out of the game. And we do that by having a consistent game plan. We try to get first downs, not the big plays all the time, stay out of third long situations. So I think you analysis that with uh, the stock market people, they see a 10% drop, 5% drop. They want to make it all up overnight. You can't do that. You gotta just make first downs and make it up a little at a time.
Speaker 3:
41:18
Yeah. Well they're also, I'd say people listen to crowd noise and that is people trying to sell them stuff or they listened to a neighbor like, oh my gosh, you see the market? I got out. Well, shoot, if Johnny Year Sandy or whoever got out, I should get out. No, their qualifications are. How did he get trained to make decisions? Are they a professional? What training did they actually go through? I tell people this all the time, while investment advisers and financial advisers, you know, people pay them or they feel like they pay him to go up. Really your best ones, you're going to see their value. When the markets go down, all they have you in downside protection vehicles, do they help you from making an emotional base decision? Again earlier this week, I mean with this market jumping down and up and down and up, I get it. People get scared. They don't look at it all day. They haven't been trained like all of us have here, so stopping people from pulling all their money out of the park it or market, excuse me, reassuring them that they've got the right game plan in place. That's what it, that's really where you get the benefit of a professional
Speaker 4:
42:29
then, so here's how we do that at Paul. You brought up a great story earlier in the week about how, you know, we're out proactively calling our household and just so they can hear our voice and you know, which ones probably need it more than others. And you brought up the fact that you knew this one gentleman is a business owner and he's really tough to get ahold of during the day and you're calling this guy at 7:02 AM and he'll laugh, my phone calls, et Cetera. And he, yeah, he loved it and he blew it was his response. He said, I hadn't even been in the shower yet and I've got my wealth advisor me. That's good stuff right there.
Speaker 3:
43:00
Yeah. Well, I mean, but the reality is is we don't operate in an eight to five world anymore, Jim. We don't, I mean, look at all of us. I mean, we're all on our devices. I would say 24 seven but by the way, I don't, I do not have my phone on my bedside table. I don't, I don't want to look at it. I actually want to get good sleep because there's a huge mental, I think a longevity benefit of getting good sleep. We haven't talked about that before. They show there may be, it could be. Um, and I just, I don't want to look at it and I mean I know people were doing this this week. They are looking at their phones in the middle night to see how the overseas markets we're doing. There's anything you could do at two 30 in the morning gym. Not really. Could you have changed what was happening overseas in the markets? No. Where you going to get up and make a wholesale change to your investment plan for your clients?
Speaker 4:
43:47
Some people might have logged in and thought about doing that. You never know.
Speaker 3:
43:50
Well then they need to be checked because as I'm telling you, that's not safe. I mean there's a reason why good advisers know what they're doing and can help people through times like this. And that's why they have downside protection. They look at the tax ramifications. And Jim, I mean I have to share, I mean there's a reason why we do have confidence and conviction. What we do. There's a reason why baron's again here rated us as a top investment advisor in the country. There's a reason why Forbes and investment news and all of these places look at the Carson group because we show conviction what we do and we do it right and what's for our clients. So if you are nearing retirement or you're in retirement, if you want our five step retirement master plan, get no cost to call here, (888) 419-8513 what you're really gonna learn in this simple analysis is you can be saving thousands of dollars retirement and have a more protected plan against all this volatility. (888) 419-8513 or if you want to email us and want to schedule a time info@carsonwealth.com hey Jim, everybody's been listen to us about market volatility today. Hope you got some great insight. Remember this, be smart, be humble, don't make an irrational base decision market going down is normal. And are normal. You can do the right things. (888) 419-8513 thanks for listening to wealth from wisdom
Speaker 2:
45:17
risks, 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:
45:30
Okay. And here's the legal Mumbo jumbo. The opinions voiced and and wisdom with Ron 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, an SCC registered investment advisor.