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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.
Welcome to How to Retire On Time, a show that answers your retirement questions. We're here to move past that oversimplified advice you've heard hundreds of times. Instead, we're we're gonna get into the nitty gritty here. Have some fun. As always, text your questions to (913) 363-1234.
Mike:And remember, this is just a show, not financial advice. David, what do we got today?
David:Hey, Mike. What's a common misconception you run into with DIY investors? So these are the people who maybe they wanna go it alone, they don't wanna work with an adviser, or they don't wanna trust other people to manage their money.
Mike:Yeah. I wanna categorize the DIY investor into two groups. There are some DIY investors that would probably make better financial advisers than most current financial advisers. They're brilliant. They have their systems.
Mike:They get up in the morning. They know what to do. They're really, really good about managing their portfolio. I have I have no problem Yeah. With them maintaining that.
Mike:I think it's a good thing. In fact, many of these individuals do a great job. It gives them purpose. You need critical thought and responsibility in retirement for it to be a healthy experience. So to say that all DIY investors are bad is ridiculous.
Mike:Personally, I've gotten to know many of them who are actually clients of ours that are really good DIY investors. They're really good about reading the markets. They know how to buy things and manage the portfolio. They're clients of ours for tax reasons. And I don't know any DIY investors that say, well, we're also professional tax experts, blah blah blah.
Mike:Tax is a whole another specialty. So that's one group. The other group is the person that has been taught over and over on TikTok and Instagram, and they've been told things like, well, most financial advisers can't keep up with the S and P, so just buy one ETF, and that's all you need, and forget this industry that just takes advantage of you. Blah blah blah blah blah. Well, you ever wonder why they're so upset?
Mike:You ever wonder, like, what's their incentive? What are they selling? Kind of awkward when you think about it, especially this one I'm thinking of in particular. This
David:is like an influencer you're thinking of?
Mike:Yeah. We'll call him an influencer. Okay. A former fund manager Yeah. Who only lasted a couple of months in the industry
David:Yeah.
Mike:Walks around the woods and says, if I have $3,000,000 in retirement, here's what I would do. Okay. Mhmm. Most people don't have $3,000,000, and then he has like some arbitrary just puts everything in the S and P 500 and dollar cost averages out, completely ignoring how the S and P isn't that good of a dividend play, completely ignoring that if he's selling some of his assets, their sequence of returns risk, and all these other things that were completely omitted from his short TikTok reel. Yeah.
Mike:And he says it in such a pompous way. And if you really understand finance, there's a reason why professionals don't go all in on just one ETF, and it's not to make us look sound or smart or whatever. That was a very unarticulate way. So I guess I proved my point. But there's a reason why some will put bond funds in a portfolio.
Mike:There's a reason why people like us have a bear market protocol with bear market reserves, so some assets that are protected. There's a reason why we diversify a little bit. There's a reason why a lot of these things are done, and it's difficult when you're getting this propaganda of, well, you could do better on your own. Yeah. You could do better on your own, but the odds are not in your favor.
Mike:You know those YouTubers? And by the way, have nothing against YouTubers and influencers, but the educational sharks or predators that say, I've got a system that works. Mhmm. And you buy the program for $10 or whatever, and I'll show you how to make millions. Well, first off, if that were true, you wouldn't be selling the course for $10.
Mike:You'd be selling it for at least like a $100,000. You'd have some sort of guarantee with it if it really worked. But if you look at the bottom disclosures, it says results are not common. So when you see these self made, self proclaimed people bragging about their alleged returns, saying they've got a system, look at the disclosure, and when it says results are not common, which they have to put that there because of FTC law, I'd question the methodology. The point of all this is to say, if you've already been an investor, if you already have a system and it's worked for you, and if you've managed money, this is key, during a down market, a bear market, and the corona crash really doesn't count, That was too quick.
Mike:You didn't really experience pain. The 02/2223, the slow burn, you didn't really experience pain in the market. The last time I remember the market truly being a bear market, truly being an ugly market was either 02/2002 or 2008. It's not really a bear market unless you think the financial global economy is about to collapse. Then it's a real market crash.
David:If maybe you think I I can't retire now. I gotta keep working.
Mike:Oh, yeah. That's a very sobering bet when we run a simulation. Say, alright. Here's now the 02/2002, and the 2008 simulation. Let's say you did do everything based on the S and P five hundred's return.
Mike:Uh-huh. And they show their 4,000,000 go to 2,000,000. How comfortable are you now? Oh, by the way, you're taking out income, so it's less than 2,000,000. How comfortable are you?
Mike:Some understand it and are comfortable because they lived it. And they were prepared, they had the systems that allowed them to manage money even in those situations. Others, especially those who are getting into investing, you might say you're tough. I wouldn't risk it. It's one thing to theoretically be prepared.
Mike:It's another to have actually done it. So what was the question again? Something like, what's a common mistake?
David:Yeah. What's a common misconception that you run into with DIY investors?
Mike:I would say it's the emotional stability or grit that you think you have. The last fifteen years have been easy. What's coming, I don't think will be easy. Are you really prepared for it? I have found that many people are trying to be DIY investors because they don't wanna pay fees.
David:Oh, right.
Mike:I get the fee issue. I think it's weird to charge someone a percentage of their assets when it's kind of the same job. That's why we're a flat fee model. It's the same amount per month regardless. So I get that side of it.
Mike:I get their questioning, but the conclusion that they make is not based on the evidence or argument given. It's almost like they're more focused on control and or they have trust issues because of a bad experience than trying to find what is right and who would make the most sense for them to work with. What's the system? It's all about systems. What's the system, not the sentiment?
Mike:What's the system for markets going up? What's the system for markets going down? And do you wanna maintain that system? There really is no set it and forget it system unless you don't need the money. If you don't need the money, great.
Mike:Stop looking at your statements. Stop looking at your portfolio. Yeah. But I know you are, and there's a reason for that. You need it to work, especially in retirement.
Mike:Most people when they retire need their money to work. So you have to take a little bit of humble pie, and ask yourself, are you really prepared for it? Now there's other things too. Most people that are in the DIY space that are newer to it will think more risk, more reward. And you see these stupid posts on X saying, my whole portfolio is in Nvidia and Palantir.
Mike:Well, that works until it doesn't. Mhmm. And that's another one that I'll I'll add to this list, is the amateur DIY investor thinks they're really smart because they tried something and it worked. And they're ignoring when it won't work. Everyone was a brilliant crypto investor until they're not.
Mike:Anyone that invested in Nvidia and Palantir and, I mean, even like Western Digital and these other anything that supports AI, a brilliant investor until you're not. So things cycle, things shift. It's happened over and over as old as time. What we've learned from history is that people don't learn from history. It's a Warren Buffett quote.
Mike:I can't take that. Or Charlie Munger. I think it was Warren that said it.
David:Sounded pretty brilliant. Yeah. It wasn't me.
Mike:But the point being, look up on YouTube the Dunning Kruger effect. When you lack sufficient experience, you don't know the right questions to ask. And if you don't know the right questions to ask, you will overestimate your own abilities. And that's my biggest concern is people are saying, well, I'm gonna start paying attention to my four zero one k. I wanna retire in the next couple of years, and I'm I'm going to really pay attention and start learning this.
Mike:Good luck.
David:Mhmm.
Mike:Now that doesn't mean you need to pay an adviser ongoing fees for the rest of your life, but it would make sense in my opinion. And yes, there's a conflict of interest because we offer this service. I'm openly admitting that. Okay? But whether you work with us or someone else, I would implore you to either get a one time plan fully understanding a written system to follow, or get an adviser or a coach that's gonna help you through the difficult times.
Mike:One or the other. The research is clear. Having a third party help you better yourself is better than trying to figure it out on your own. And no ChatGPT can't give you a perfect retirement plan that really understands what's going on. That's my thought.
Mike:That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcasts. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist. Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility.
Mike:This is not your ordinary financial analysis. Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date, go to ww.yourwealthanalysis.com today to learn more and get started.