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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 questions about all things retirement, including income, taxes, Social Security, health care, and more. This show is an extension of the book, how to retire on time, which you can grab today for free by going to www.howtoretireontime.com, or you can buy a physical copy on Amazon. My name is Mike Decker. I'm the author of the book, how to retire on time, but I'm also a licensed financial adviser, insurance agent, and tax professional, which means when it comes to money, dollars, cents, finance, investments, all of it, we can cover it all. Now that said, please remember this is just a show.
Mike:Everything you hear should be considered informational as in not financial advice. If you want personalized financial advice, you can request a wealth analysis from my team today by going to www.yourwealthanalysis.com. With me in the studio today is mister David Franson. David, thanks for being here.
David:Yes. Glad to be here.
Mike:David's gonna read your questions, and I am going to do my best to answer them. You can submit your questions in at any time during the week by texting (913) 363-1234. Just save that number in your phone when you think about it. (913) 363-1234, or you can email us at heyMike@howtoretireontime.com. Let's begin.
David:Hey, Mike. Where are you investing during these volatile times? So at the time of this recording, yeah, it's been a little bit up and down, hasn't it, in the markets?
Mike:Yeah. There's been a few shifts in the market. Yeah. Just a few. A little bit of a roller coaster.
Mike:Few percent here, few percent there. So I appreciate the question, but I wanna ask the question differently.
David:Okay.
Mike:What are your strategies for volatile times? Because I don't wanna get on the air and say, yeah, we're buying these stocks. That's out of context. You have to have it in coordination with the current plan. You have to understand the risk and the timeline associated with those strategies.
Mike:But overall, the strategies don't change. So I've got an expression that I use internally all the time that says, follow your systems, not your sentiment. Market uncertainty is a sentiment. It is an emotion. Because if you don't need to touch the asset for over ten year period of time, let's say, which is what would be appropriate for anything invested in the market, then you just keep following your systems.
Mike:You don't flinch.
David:Yeah. That might be hard because you can get caught up in the emotion of, oh, look at this dollar amount I had, and now look what I have.
Mike:Yeah, you think you can gain the system. Yeah. You might get lucky, but you won't. So something I'm personally obsessed with is behavior. I think behavior is the most fascinating thing.
Mike:Yeah. Emotions and behavior is a way that that people make really dumb decisions with their investments, and people admit it, but they don't want to acknowledge that they're gonna continue to make the same mistake. So a simple framework for behavior is experiences shape behavior, behavior shapes results. So if you, at some point in your life, timed the market, you're going to hone in on that one time that you did it right, and keep trying to do it, and ignore all of the other times that you didn't get it right. They have scientifically proven why people who are lucky are lucky, because they only focus on the times that it worked, and they ignore the times that it didn't work.
David:Okay.
Mike:And so that's great if you wanna do raffles, or bingo, or or whatever. Uh-huh. But when it comes to your investments, it actually plays against you. Oh. Okay?
Mike:Yeah. And then you've got the person that's fear based that goes to the conservative investments because they can't handle the ups and downs in both situations. It's an emotional position on how to try and handle your investments, and over the long term period of time, it doesn't work out in the investors behavior. No one has successfully timed the market over, over, and over, and over, and over again. Timing the market, just for clarification, is to be in the market, and then be in cash.
Mike:And then be in the market, then be in cash. Like for example, we have one of our models as a momentum model. So we have shifted our momentum or our exposure to certain sectors based on how the markets are operating. That's not time in the market, that's adjusting based on a system. It's a set of rules that we follow.
Mike:Okay. That's different.
David:Right. Right.
Mike:Right. So you don't need to buy and hold through the markets. You can make adjustments to your portfolio. If something's lost money, and you don't think it's gonna recover anytime soon to shift over to something else, could make sense as long as it's based on a series of rules or a system, not, hey, I think energy is gonna be really, really good, because Trump's saying drill, baby, drill. Yeah.
Mike:First off, no. Let's not make an emotional decision like that. What's your system? What's your calculation? And what's your exposure?
Mike:If energy's cheap, is that really going to make the stock price go higher? It might. It might not. If energy gets so cheap, then there's a point where they can't drill anymore. And if the price, if the market becomes inhibited to them actually doing their job, they'll just stop drilling, that hurts the stock.
Mike:So even in good conditions, it might negatively affect certain companies in certain ways in different situations. So every industry is very complicated. There's nuance to it. Yeah. Is the energy sector gonna boom?
Mike:It might. Is it guaranteed to boom? No. Even with Trump's agenda, it could still be hurt. Mhmm.
Mike:So you need to understand again, what is your system? How are you quantifying it? And if your system is just to buy and hold the indexes, no problem. Yeah. It's a system.
David:It's like a predetermined set of rules that you stick to no matter what.
Mike:Yeah. So in the book, I talk about our rule of planning that says predetermined guidelines can help increase your probability of future success. If you know what to do when markets are good or bad, it's less of an issue. Mhmm. The problem is when people try to figure it out as they go.
Mike:You see the difference? Yes. So are you gonna make all perfect trades in your life? No.
David:Not happening. Yeah. No one has that track record, do they?
Mike:Are you gonna buy some things, and it will lose money? Yes. Yeah. Just understand that's how it is, and that's okay. You've got to follow a system, and not a sentiment.
Mike:The unfortunate part about this industry, or investors in general, is their system is they were recommended a couple of mutual funds, and that was the system, and they don't really know why those mutual funds are there, or what they're really doing. It was just like, hey, recommend it, but don't ask questions. You know, like the white coat, the white lab coat conundrum. Did you ever hear about that study? I don't know if I have.
Mike:So basically, there's been several studies on this, but one of them was where they walk in, and they have to push a button that will hurt another person. Oh. It's for a test. Uh-huh. Okay?
Mike:They push the button, and allegedly electrocute someone or something like that. Yeah. Okay? And then the white lab guy said, they're with the clip order gal, says, alright, increase it, do it again. And then they'll increase it, and then they'll push the button, and then it allegedly hurts this person, and they can see it.
Mike:One questioned the person in the white lab coat. Alright. Because they were the professional. They knew what they were doing, and so they kept turning it up, and they kept hurting the person even more, and even more, and even more.
David:Right.
Mike:Now, in the reality of the study, the people experiencing pain, they were actors, they weren't actually hurting people, but it proved a point. People trust the professional blindly. In investments, stop it. Don't trust the investment professional blindly. Ask questions.
Mike:Even if you don't understand the answer, keep asking until you understand.
David:And so you invite your clients to do the same thing. Is that
Mike:right? I love it when they ridicule me. I love it when they question what I do, because there's nothing to hide. Here's what we're doing. Here's why we're doing it.
Mike:Are you comfortable with that? Yeah. They say, Okay. Let's explore other options. Yeah.
Mike:We're independent. We could do anything. Yeah. So what is right for you? And we do an extensive level of trying to explain how things work, and why we're doing it, and they have every right to say yes or no, and we want to find the right mix for them.
Mike:But we also, even without a financial background, want to help them understand what's going on, so that they're aware of what's going on, why it's happening. That white lab coat is a problem in this industry. The blind trust is a great way to be taken advantage of. Yeah. You've gotta have that rapport.
Mike:I call it healthy conflict. No one's getting upset. No one's feelings are getting hurt. Hey, why is this happening? Why are we making these trades?
Mike:It's a very healthy conversation. I know we're supposed to be politically correct and try not to hurt people's feelings. This is your money. Forget feelings. Yeah.
Mike:Have the conversation. Right. And if your professional can't handle that conversation, find someone else. Because at the end of the day, this is your money, and you gotta be able to spend it, and you gotta have control over it, and and you gotta have it in the right hands, which means you gotta, you know, hold your professional's feet to the fire, and see if if they flinch, or if they actually know what they're talking about. That's all the time we've got for the show today.
Mike: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. Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility. This is not your ordinary financial analysis.
Mike: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.