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Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
People's growth now, as in 2026 and beyond, has to get more strategic. Welcome to the Retire On Time q and a podcast. I'm Michael Decker with David Franson here from Kedric Wealth. This show's all about the nitty gritty of retirement, not that oversimplified advice you've heard hundreds of times. We wanna put context into the equation.
Mike:Now that said, remember, this is just a show. It's not financial advice, but do text your questions to (913) 363-1234, and we'll feature them on the show. This next segment isn't really a question. It was just
David:a funny comment. We read the comments, so we decided, well, let's let's have
Mike:some fun with this. So here is a comment from one of
David:our videos on YouTube that we thought we'd have some fun with. Okay.
Mike:Alright, David. What does anonymous we'll leave the their ambiguous handle Absolutely. Absolutely nameless, but what what did they say?
David:Yeah. The from the comments, REITs are garbage. Take a list coming out swinging here. Take a look at performance versus any index fund. VOO, QQQM, anything.
David:Stop it.
Mike:I love the end. Stop it.
David:Yeah. Little slap on the hands for you there.
Mike:So this is a classic Dunning Kruger situation. Alright? Dunning Kruger effect is the person that lacks experience or the questions to ask typically overestimates their confidence. I'm willing to bet this person is mostly in two indexes, probably the S and P 500. Maybe they've realized that QQQ has historically had more growth too, and they're bit they're a little edgy with this.
Mike:Mhmm. K? Mhmm. So for background, this was a comment on a video where we were talking about real estate investment trust if you want to diversify your portfolio. If you want to diversify your portfolio out of the stock market, JPMorgan's research found that if you include alternative investments, namely real estate in the portfolio, like 30% or so, your overall portfolio historically increased its returns and decreased the roller coaster or the volatility.
Mike:That's a good deal. But you're also comparing a portfolio that's split between stocks and bonds in the traditional sense.
Mike:So this person's comparing apples to oranges and then ends with, stop it. Mhmm. Mhmm. So if if if you're 20 years old, you might not need bond funds. You can afford to take risk because risk is really a time weighted conversation.
Mike:And if you've got twenty, thirty years, you can ride it out. You can dollar cost average, and that's fine. This is a show about retirement. Yeah. K?
Mike:And if you're in, let's say, the S and P 500, and I'm gonna use 2,000 as an example. It's 2,000, you're down. It's 2,001, you're going down further. It's 2,002, you're now down 50% on just that part of your portfolio. But your QQQ is down like 70%.
Mike:So overall, let's say your portfolio is down 60%.
David:Okay.
Mike:Okay? You need to more than double your portfolio just to break even. That's over a 100% return. Doesn't happen very quick. Mhmm.
Mike:People don't put bond funds or real estate in their portfolios to try and get rich. Yeah. That's not how it works. I mean, do you know real estate? Do you I mean, you know people in real estate.
Mike:Yeah. Do you know any real estate investor that was like, yeah. I'm gonna just leverage the crap out of this thing and make billions of dollars in a couple of weeks? I'm being facetious.
David:No. I haven't heard that.
Mike:Real estate investors, they buy something with the intent of their cash flow. It's just receiving income. The property value is appreciating over time. It's kind of the the dual play, and it's very predictable. It's very boring.
Mike:Yeah. Okay? The reason why we have talked about it and will continue to talk about borifying. You see what I did there? Borifying Do have a trademark on that?
Mike:Your investments. Yeah. Let's go. Let's go do that after the show. I will.
Mike:please, let's do that. Yeah. Borifying. Works. Is when you're retired, it's not about getting rich.
Mike:It's about staying rich. And so you put less volatile assets, though you might miss out on some upside potential, but you're decreasing that downside risk. Because if the markets go down and you take income out of it, you are destroying your retirement. You accentuate losses. It's called sequence of returns risk.
Mike:And no, you don't need to buy an annuity for lifetime income to get around sequence of returns risk. You could have a rolling ladder of CDs and treasuries and MYGAs if you want. You could have a dynamic, like buy a fixed index annuity for a five year period certain in there. You could, instead of just trying to get rid of the, you know, risk in the the way we typically do it, which is have some sort of reserves that are protected, you could blend it with real estate and the stock market and a bunch of different places to try and diversify yourself most not out of the risk, but make it very, very low and make it very predictable. Typically, real estate is done better if you also go to the private placements and not what this, I don't know, Yahoo is is talking about.
Mike:I shouldn't say Yahoo. Probably a very smart individual that just gets frustrated by a bunch of crappy advice. Sure. And there's a lot out there. Yeah.
Mike:But you you don't compare real estate to an ETF that's publicly traded with probably a massive portfolio of a bunch of old real estate that needs to be sold and someone just needs to move on with it. Yeah. Right? So let's make sure we're comparing apples to apples here as well. But the idea of real estate or something else in the portfolio is to lower the volatility.
Mike:It is to make it less of a roller coaster and more of, I don't know, not teacups. That's scary. Yeah. What's a really boring Six Flags ride? Six Flags has great rides.
David:You know, just like that carousel that goes around for a little
Mike:Oh, the horses?
David:Yeah. The horses.
Mike:That's not gonna throw you off.
David:Yeah. You're just along for the ride and you're enjoying yourself and
Mike:it's You want predictability. And it's especially true if what we believe is gonna happen over the next ten years, which is you enter into a flat market cycle. Mhmm. Real estate did pretty well from 2000 to 2012, except for 2008. That was pretty nasty.
Mike:But if you weren't leveraged on your real estate, you had a reasonable cash flow, you had good tenants. I mean, the price of your the funny thing about real estate is people say, well, what's the value? You know, like, the stocks we track, you know, every single day, the value of it. People don't really track the value of their homes every single day unless they are forced to sell it. Right.
Mike:Unless they did something dumb. And a lot of people did a lot of dumb things which led up to the two thousand eight financial crisis. Yeah. You know, variable mortgages, having way too much debt, having way just not being able to pay for your mortgage. I can just go on and on and on.
Mike:But but the point being is let's make sure we understand the type of portfolio we're talking about and then compare things to apples to apples. If you're all in on growth, great. Maybe real estate's not for you. I have no problem with that. But let's not say stop it to one idea.
Mike:And one last thing, I can, if I may You got the floor. There are different seasons for a portfolio. In some seasons, the S and P or the the growth fund, which really S and P is a growth fund. It's not a dividend fund. It has some dividends in there, but it's not much.
Mike:It's a growth vehicle. Well, sometimes it doesn't grow very well, and it just tops out. And then it just sits there at the top, and then it's like, okay. The S and P is not very good. Maybe we move over to something like a dividend portfolio that's doing a lot better.
Mike:And maybe the markets crash, and and the stock market specifically. So maybe we should have been in bond funds. So unless you're a genius and you can time it, which is something that no one's ever historically done consistently, that's why people diversify. Yeah. That's why even active management will favor different sectors for different times.
Mike:Yeah. So let's let's stop pointing fingers about a specific investment or product, which is a tool, and say, that makes sense for these situations. It doesn't make sense for those situations. That is the appropriate look at it. I personally like, I would never have rental real estate as of today.
Mike:I don't want it. I don't have the responsibility of it. But I've known many people that it was the right tool for them, and man, they had a lot of wealth created from it. So let's just let's let's be matchmakers between what people want and the tools that are available to find the right situation for them. That's That feels right.
Mike:That's my response for the individual who told me to stop it.
David:I hope that they hope they hear it.
Mike:They won't. We're lost in the waves of YouTube or whatever, but anyway, they'll enjoy it. So that's all the time we've got for this question, or I guess I should say comment. If you enjoyed this though, don't forget to subscribe, like wherever you get either the podcasts or YouTubes and so on. If you want more information, go to retireontime.com for our book, our workbook, all of our resources, the calculators we make publicly available.
Mike:You can join us for our live weekly workshops. Or if you want just one on one attention, you can schedule a thirty minute call to talk to one of our planners. From all of us here at Kedric Wealth, we wanna thank you for spending your time, your most precious asset with us today. We'll see you in the next episode.