Why Should I Invest in the Stock Market?

00:00:00.000 | (sound of clock ticking)

00:00:08.920 | (music)

00:00:19.080 | Welcome back to Portfolio Rescue.

00:00:21.240 | Duncan, I would wish you a happy New Year, but I'm not a happy New Year kind of guy.

00:00:25.520 | I don't do it. Nothing against people who do it, it's just not my thing. I don't say it.

00:00:29.960 | Maybe this is kind of like my Larry David thing, but I'm just not a happy New Year kind of guy.

00:00:35.040 | No problem that people will say it, but that's just me. Kind of like investing.

00:00:37.520 | It's just as important to define what you won't invest in as what you will invest in.

00:00:40.640 | Today's show is sponsored by, yes, Liftoff Invest.

00:00:45.240 | That's our automated platform that is run through Betterment's technology.

00:00:47.960 | Duncan, I was looking at my Liftoff account.

00:00:49.760 | I have one account, but I have four goals under there.

00:00:52.080 | One of them is for me and my wife, just a general investment account.

00:00:54.600 | The other one, each one for three of our kids.

00:00:56.760 | I was looking, and surprisingly, the investments were down this year, but my market values were up.

00:01:01.360 | Why? Because I increased my savings rate.

00:01:03.880 | I think especially for young people, that's a really big thing these days.

00:01:07.960 | Yes, it hurts to see the value of your portfolio go down, but if you bump up your savings rate,

00:01:12.480 | especially when you're just starting out, that's where most of your gains are going to come from.

00:01:16.160 | They're not technically gains, but if you want to see growth in your portfolio,

00:01:19.800 | it's going to come from putting money to work.

00:01:21.680 | Go check out LiftoffInvest.com to learn more.

00:01:25.520 | Duncan, you told me that you finished my most recent book.

00:01:29.760 | It's a pretty short one. How many pages is that, 140?

00:01:32.520 | Let's see. I have it right here.

00:01:34.880 | It's like 116 pages.

00:01:39.560 | It's a short book, everything you need to know about saving for retirement.

00:01:41.560 | I wrote it for people with 401(k)s or 403(b)s who are just getting started.

00:01:47.120 | Maybe some of our clients' kids have read it, some people in our 401(k) plans.

00:01:51.320 | You told me that you finished reading and had some questions or had some thoughts.

00:01:54.880 | Yeah, I've had a lot of thoughts.

00:01:56.320 | I was like, "I wish I did a podcast with Ben because then I could ask him these questions."

00:02:00.720 | And then, yeah, it worked out.

00:02:02.560 | First of all, I just wanted to say, on behalf of a lot,

00:02:05.520 | we had a lot of people writing in and commenting,

00:02:07.400 | "We're all sorry for you getting so robbed of your take."

00:02:10.920 | Michael took your Bezos take and just got famous off of it.

00:02:15.600 | It was on TV yesterday, talking about it and stuff.

00:02:18.160 | He's going to be the new Michael Burry because he leased one of my takes

00:02:21.320 | about Jeff Bezos coming back to take over Amazon.

00:02:23.840 | That's the kind of podcast co-host and friend that I am.

00:02:26.240 | I'm willing to give my takes away to other people.

00:02:28.680 | I have too many of them.

00:02:30.120 | Very generous, very generous.

00:02:31.680 | But yeah, so a couple of things I just thought of that I noted down

00:02:34.360 | that I wanted to ask you about.

00:02:35.840 | They're very basic probably, but I think people would be curious to hear,

00:02:39.200 | or a lot of our younger people especially.

00:02:41.080 | But so, you're known as the target date guy.

00:02:43.920 | You're a target date expert, connoisseur.

00:02:46.760 | What happens to them when they hit their date?

00:02:48.400 | I mean, do they just go 100% bonds and stay that way forever?

00:02:51.960 | Does it just disappear into the ether?

00:02:54.120 | What happens there?

00:02:55.640 | Well, I looked at the Vanguard 2020 fund today.

00:02:58.520 | So, someone would have set that 10, 15 years ago and said,

00:03:01.600 | "I'm going to retire in 2020.

00:03:02.720 | This is going to be my glide path to that point."

00:03:05.680 | It's in roughly 45% stocks, 55% bonds right now.

00:03:09.760 | So, your investing lifecycle doesn't stop just the moment you retire.

00:03:13.240 | You still could have two, three decades.

00:03:14.680 | It just moves into a different phase.

00:03:15.840 | We actually have a question about this for today's show,

00:03:17.360 | which we'll get into more detail.

00:03:18.640 | So, yeah, it just gets more conservative over time.

00:03:23.840 | But yeah, still some stocks in there

00:03:25.080 | because you still need some growth in your portfolio.

00:03:26.760 | Okay. So, they don't end or anything like that or go away?

00:03:30.120 | No, it keeps going and it keeps going the glide path.

00:03:31.720 | It'll probably get more and more conservative

00:03:33.800 | the further you get away from that date,

00:03:34.920 | but there's still some stocks in there.

00:03:37.080 | Okay, cool. Good to know.

00:03:38.720 | Okay, another thing I was going to ask,

00:03:40.280 | you talk a lot about having to,

00:03:41.680 | you know, a huge part of the book is withstanding volatility,

00:03:44.200 | withstanding downturns in the market and just sticking with it.

00:03:48.480 | Have computers and algorithms and modern technology

00:03:51.520 | and retail traders, all of the stuff that we think about

00:03:54.000 | when we think about the market today,

00:03:55.520 | have they made the market less volatile

00:03:57.720 | and susceptible to downturns or more

00:04:00.320 | or not really impacted it?

00:04:03.120 | Overall volatility, like if you measured by standard deviation,

00:04:05.840 | is probably pretty similar, like annualizing that number.

00:04:09.000 | But the speed of the volatility has increased.

00:04:11.040 | I remember there was an interview with a guy

00:04:12.920 | who was a fixed income manager for Vanguard

00:04:14.520 | and he was retiring.

00:04:15.720 | And he said he started in the early '80s.

00:04:16.960 | And he said back in like 1981, when a news event occurred,

00:04:20.640 | you had time to actually sit and think about it.

00:04:22.160 | If something happened overseas,

00:04:23.240 | it might not affect the US market until like the next day.

00:04:25.240 | Now everything is instantaneous.

00:04:26.640 | Like you don't have time to think through these things.

00:04:28.200 | So I think the speed of volatility has certainly increased.

00:04:32.240 | Computers and stuff makes, you know,

00:04:33.760 | if there's a piece of news or economic data that hits,

00:04:36.600 | it immediately hits the stock market.

00:04:37.960 | I don't think that was the case in the past.

00:04:39.280 | You would have to get some of your news from the market

00:04:41.320 | over the radio back in the day

00:04:42.880 | instead of seeing it in real time.

00:04:44.560 | So I think the overall volatility

00:04:46.640 | is probably pretty similar,

00:04:48.360 | but the speed of the volatility and the speed of the moves

00:04:51.080 | is probably much faster.

00:04:53.760 | Okay.

00:04:54.600 | And I think that's probably gonna continue.

00:04:56.440 | Yeah, I was wondering because the behavioral aspect

00:04:58.280 | you would think would be getting better

00:04:59.400 | with all the automation and stuff like that.

00:05:01.160 | So in my head, I was thinking like,

00:05:02.800 | I wonder if that has made the market a little more stable.

00:05:05.600 | Well, on the other hand,

00:05:06.440 | it's never been easier to pay attention

00:05:08.400 | than ever before, right?

00:05:09.240 | Right.

00:05:10.080 | To have that long-term mindset

00:05:11.040 | 'cause you're being force-fed everything in the short term

00:05:13.400 | over and over again.

00:05:14.240 | It's harder to think and act for the long-term

00:05:15.840 | because you can see everything happen

00:05:17.680 | on a minute-by-minute basis.

00:05:19.600 | True, true.

00:05:20.680 | So along kind of a similar thread,

00:05:23.200 | one of my favorite stats in there

00:05:24.400 | was nearly 29,000 companies traded on the US stock market

00:05:28.160 | from 1950 to 2009.

00:05:30.040 | Almost 80% were gone by 2009.

00:05:32.400 | So my question for you is,

00:05:33.440 | do you think that we'll lose 80% of companies

00:05:36.040 | over the next 59 years?

00:05:37.280 | Or has that changed?

00:05:38.560 | Is the business world more resilient now?

00:05:41.240 | I don't know if your oat milk company

00:05:42.680 | is still gonna be in business by then.

00:05:44.640 | And so I think I got the stats from "Scale" by Jeffrey West,

00:05:48.080 | which is a really good book.

00:05:49.520 | And I actually think technology's

00:05:51.000 | only gonna speed this up.

00:05:52.040 | Companies of old required way more upfront investment

00:05:56.080 | in actual physical assets.

00:05:57.520 | Michael had a good one.

00:05:58.360 | I'm gonna steal this from him.

00:05:59.200 | He said like the first billion-dollar corporation ever

00:06:01.200 | was US Steel in 1901.

00:06:03.120 | And they had 170,000 employees

00:06:05.680 | and like $3,300 in sales per employee, right?

00:06:10.720 | And that's still like 90,000 in today's dollars.

00:06:12.800 | But today they have over 500,000 per employee

00:06:16.240 | because they've gotten more efficient.

00:06:17.480 | Technology has gotten better.

00:06:19.560 | Software makes it easier than ever to start businesses.

00:06:22.640 | I just think, I look at this as a good thing too.

00:06:24.320 | I think it's creative destruction

00:06:25.400 | where the quicker these old companies are being pushed out

00:06:28.720 | and the new companies are coming in,

00:06:30.880 | I think that's a good thing.

00:06:31.920 | And the one great thing about owning a diverse set

00:06:35.760 | of companies in the stock market is

00:06:37.440 | eventually those ones that rise to the top

00:06:38.960 | are gonna show up in your portfolio.

00:06:41.840 | I think the first trillion-dollar company,

00:06:43.920 | it's possible it hasn't even been created yet.

00:06:46.200 | And it's gonna be created in the future

00:06:47.360 | to solve some big problem that we don't even know yet.

00:06:50.360 | - All right.

00:06:51.200 | - So I think this is a good thing.

00:06:52.040 | - That makes sense.

00:06:53.640 | All right, so last but not least out of these,

00:06:55.920 | I just wrote down, what's a simple way

00:06:58.880 | for a young person to assess their risk tolerance?

00:07:01.160 | You talk a lot about risk tolerance

00:07:02.440 | and knowing your risk and different phases of life.

00:07:04.600 | How does someone figure it out?

00:07:06.560 | - One of the hardest things to do,

00:07:07.600 | it's probably the only thing you can do

00:07:09.560 | is have experience.

00:07:10.920 | I know people say, "Oh, put together a paper portfolio.

00:07:13.120 | "Pretend like you're trading, you've no money."

00:07:15.360 | Unfortunately, it's difficult to say how you'll react

00:07:17.240 | until you actually do it with someone,

00:07:18.480 | see your life savings get chopped in half.

00:07:21.120 | One of my favorite books of all time is this,

00:07:23.360 | "Where Are the Customers?" by Fred Schwed.

00:07:25.320 | It's, I think it was written in the 1930s or 1940s.

00:07:28.760 | He had this great quote that I use all the time.

00:07:30.120 | He said, "Like all of life's rich emotional experiences,

00:07:32.260 | "the full flavor of losing important money

00:07:34.520 | "cannot be conveyed by literature.

00:07:36.260 | "There are certain things that cannot be adequately explained

00:07:38.280 | "to a virgin either by words or pictures."

00:07:40.040 | And so I think sometimes you have to just live through it

00:07:41.680 | and see, I can keep 100% of my portfolio in stocks.

00:07:45.320 | I think I can.

00:07:46.160 | I have a high risk tolerance.

00:07:47.640 | But until you actually do it

00:07:48.680 | and go through something like last year

00:07:50.480 | and see that money fall,

00:07:52.160 | I think you have to kind of play it by ear and experience it.

00:07:55.620 | And the good thing about if you're a young person investing

00:07:58.280 | is that you probably aren't gonna have

00:07:59.920 | a huge amount of capital

00:08:01.080 | when you're learning these things, right?

00:08:02.560 | So you learn and make your mistakes

00:08:05.160 | or you kind of change the dial a little bit

00:08:07.640 | when you are young.

00:08:09.600 | - Right.

00:08:10.440 | And you write about this some, right?

00:08:11.640 | That a 50% loss when you have a couple thousand

00:08:13.960 | in the market starting out

00:08:15.480 | isn't nearly as bad as 50% loss

00:08:17.840 | when you have a much larger portfolio.

00:08:19.560 | - Yeah, or 20% loss could be more painful

00:08:21.960 | if you have more money

00:08:22.800 | 'cause it's more dollars going out of your account

00:08:24.200 | than even getting chopped in half

00:08:25.440 | when you don't have as much money.

00:08:27.320 | - Right, right.

00:08:28.320 | - Good plug for my book there, Duncan.

00:08:29.520 | Way to go.

00:08:30.360 | - Yeah, and I had one quote I wanted to share

00:08:32.760 | with people that I think, especially again,

00:08:34.640 | for everyone, but especially our younger

00:08:36.200 | and new investors.

00:08:37.840 | You say, or you have in there,

00:08:39.800 | your actions during down markets

00:08:41.080 | have a larger say in your success or failure as an investor

00:08:44.000 | than how you act during rising markets.

00:08:45.880 | So I think that's a good thing for everyone

00:08:47.600 | to acknowledge right now.

00:08:49.080 | - Giving up on an investment plan

00:08:50.680 | is no different than failure, right?

00:08:52.840 | Because if you give up and you just throw your arms up

00:08:55.340 | and you sell when things are down

00:08:56.560 | just because you can't take it anymore,

00:08:58.760 | that giving up on your plan is no plan at all

00:09:02.080 | is my way of looking at it.

00:09:04.040 | - Yeah, I like that.

00:09:05.440 | Cool, yeah.

00:09:06.280 | So strong recommendation, I enjoyed it.

00:09:08.360 | And I've been soaking in all the knowledge

00:09:11.160 | from all of you guys for years now

00:09:12.960 | and I still learned some stuff

00:09:14.440 | and still got a lot out of it, so yeah.

00:09:17.240 | - Perfect, all right, let's get into a question.

00:09:19.240 | - Okay.

00:09:20.600 | So first up today, we have 2022 was all about inflation.

00:09:24.520 | Now people are talking about peak inflation

00:09:26.400 | and possible deflation.

00:09:27.920 | What does deflation look like?

00:09:29.320 | Why do people say it's worse than inflation?

00:09:31.280 | Also, why do they say tech is deflationary?

00:09:34.560 | - All right, it does appear inflation is peaked

00:09:37.120 | for the time being.

00:09:37.960 | John, throw up the chart here.

00:09:39.400 | You can see if I'm performing technical analysis on this,

00:09:42.080 | I can see a line and a peak and a line down.

00:09:44.800 | That has to mean something.

00:09:46.160 | It is important to remind people though

00:09:48.360 | that we have had inflation before these past 20 months

00:09:50.560 | or so of rapidly rising inflation.

00:09:51.800 | Even before the current bout of high inflation,

00:09:53.720 | prices were still rising.

00:09:54.680 | They were doing so at a much more modest pace.

00:09:56.680 | So John, throw this other chart on.

00:09:58.400 | This is CPI from 2010 to 2020.

00:10:02.840 | It was modest.

00:10:03.680 | It was up like 21% in total, a little less than 2% a year.

00:10:06.600 | We still had inflation.

00:10:07.600 | No one just, people didn't really pay attention

00:10:09.320 | that much to it because it was a relatively

00:10:11.280 | stable increase over time.

00:10:12.640 | There weren't any huge jumps or falls.

00:10:15.960 | I guess you could call that price stability.

00:10:17.800 | I don't know if we're gonna go

00:10:18.720 | from inflation to deflation.

00:10:19.560 | It is a possibility if we get a nasty recession

00:10:21.680 | and things slow down considerably.

00:10:24.520 | To the point about inflation versus deflation,

00:10:26.240 | why wouldn't you want deflation, right?

00:10:28.280 | It's prices falling.

00:10:29.840 | Who wouldn't want that?

00:10:30.680 | Well, the economy for one

00:10:31.760 | and probably your paycheck for another.

00:10:33.560 | My view is not necessarily that inflation is good.

00:10:37.080 | It's just that it's less bad than deflation.

00:10:39.400 | Deflation is like this negative,

00:10:41.040 | crazy negative feedback loop.

00:10:42.360 | So prices start to fall because people,

00:10:44.640 | so people stop buying today in hopes

00:10:46.320 | that they'll be able to buy stuff cheaper in the future.

00:10:48.880 | And so people stop buying stuff today.

00:10:51.200 | Business profits go down.

00:10:53.280 | People are laid off.

00:10:54.660 | People get unemployed.

00:10:56.040 | As unemployment rate rises, people's paychecks fall.

00:10:58.480 | You know, it's like a death spiral of future price cuts.

00:11:01.420 | That's why there was huge deflation

00:11:03.280 | in the Great Depression.

00:11:04.440 | And trust me, people seeing their prices falling

00:11:06.240 | was not a good thing because that happened

00:11:07.720 | because there was 25% unemployment.

00:11:09.680 | I think prices fell like 10% across the board

00:11:12.320 | in the US economy.

00:11:13.800 | So I think if we want our incomes

00:11:15.440 | and standard of living to rise,

00:11:16.440 | we're gonna have to accept some price inflation over time

00:11:18.840 | because that's just progress.

00:11:20.360 | It's a natural by-product of growth.

00:11:22.540 | And so we're probably always gonna have

00:11:23.600 | a little bit of inflation over the long term,

00:11:24.760 | assuming we're still advancing as a species.

00:11:27.000 | So I look at rising prices as the lesser of two evils.

00:11:30.040 | People don't really like that,

00:11:31.260 | but if you wanna continue to see growth and progress

00:11:33.840 | in our economy, you're gonna have to accept some inflation.

00:11:37.080 | What we've seen this past year, year and a half

00:11:39.560 | is not normal, not what we'd like,

00:11:41.500 | but even if inflation goes down from here,

00:11:43.560 | it's still gonna be, prices are still gonna be rising,

00:11:45.400 | just not at as much of a high pace.

00:11:47.220 | - Okay, yeah, I'm most familiar with it

00:11:50.560 | because Kathy Wood seems to talk a lot

00:11:53.000 | about deflationary forces in tech, right?

00:11:56.720 | I think that's where a lot of people-

00:11:57.560 | - So I mean, people think it's a risk

00:11:59.100 | because that would probably mean a nasty recession.

00:12:01.920 | And so I think if you gave me the choice of inflation,

00:12:06.840 | but it's with economic growth and people's wages are rising

00:12:08.820 | versus deflation and people are losing their jobs

00:12:10.580 | and it's a recession, I'd probably take the lesser

00:12:13.080 | of two evils and have that inflation.

00:12:14.940 | - Right, yeah.

00:12:16.840 | - It's 'cause I'm one of the people.

00:12:18.120 | - AI is gonna change this, right?

00:12:19.820 | AI, Ben and Duncan will be doing this show

00:12:22.640 | in a couple of years, edited by-

00:12:23.960 | - Well, people ask, he asked why is technology deflationary

00:12:28.080 | and it's because it just makes us more efficient, right?

00:12:30.140 | And back in the 1800s, 80% of us were farmers.

00:12:33.160 | Now, I don't know, I think the percentage of people

00:12:35.920 | that work on farms is like 1%.

00:12:36.760 | It's 'cause we have technology that's available

00:12:38.560 | to make it easier so people can do other jobs.

00:12:41.200 | People have the ability to complain on the internet all day

00:12:43.720 | because technology has made our lives easier.

00:12:46.600 | - That's all right.

00:12:48.360 | - Yes, exactly.

00:12:49.960 | All right, let's do another one.

00:12:50.880 | - That question was from Yajur, by the way.

00:12:54.160 | And so next we have a question from Chuck.

00:12:58.020 | "Do you think the stock market is a form of Ponzi scheme?"

00:13:01.180 | And I gotta be honest, this question, I think,

00:13:02.980 | triggered me a little bit.

00:13:03.820 | I'm sure it triggered you a little bit,

00:13:04.820 | but we love you, Chuck, but yeah.

00:13:07.880 | "Do you think the stock market is a form of Ponzi scheme?

00:13:10.380 | "The average dividend payout for all stocks

00:13:11.980 | "is a little over 1%.

00:13:13.400 | "Back in 1958, the average lifespan

00:13:15.300 | "of a corporation was 58 years,

00:13:17.240 | "but it's now down to around 15 years.

00:13:19.160 | "So why are people investing in the stock market?

00:13:21.060 | "The answer is they hope to make money

00:13:23.360 | "from selling a piece of paper to someone else,

00:13:25.080 | "the greater fool, at a nice profit.

00:13:27.360 | "If there's no one there to buy your piece of paper,

00:13:29.180 | "you won't make money in the long run."

00:13:31.180 | Okay.

00:13:33.020 | - Listen, if Charles Ponzi's scheme

00:13:36.660 | did what the stock market does,

00:13:37.980 | it wouldn't be used as a way to talk down on someone

00:13:41.520 | for doing fraud.

00:13:42.580 | It would be a good thing.

00:13:43.680 | So the short answer is no,

00:13:44.520 | I don't think the stock market is a form of Ponzi scheme.

00:13:46.100 | In Ponzi scheme, old investors are paid off

00:13:48.420 | by new investors, investors in quotes,

00:13:50.820 | because there's no business plan, there's no revenues.

00:13:52.780 | Right, the stock market is made up of corporations,

00:13:54.780 | and those corporations make products,

00:13:56.260 | they perform services.

00:13:57.780 | Consumers and other businesses

00:13:58.940 | buy those products and services.

00:14:00.380 | That results in revenue.

00:14:01.540 | Some of that revenue is used to pay costs

00:14:03.000 | of running the business,

00:14:03.840 | but whatever's left over is used to pay down debt

00:14:06.300 | or buy back shares or pay dividends out to stock investors,

00:14:09.180 | or be reinvested back in the business.

00:14:11.020 | So the profits of the business

00:14:13.300 | actually accrue to the shareholders, right?

00:14:14.940 | They have a piece of that profit.

00:14:16.900 | And so as sales and dividends and earnings grow over time,

00:14:19.860 | stocks are worth more money.

00:14:20.860 | It is true that dividend yields are lower

00:14:22.100 | than they were in the past.

00:14:22.940 | I'm gonna do a chart on dividend yields.

00:14:25.020 | This is the dividend yield on the S&P 500 since 1950.

00:14:28.300 | You can see in 1950, it was like 7%.

00:14:30.020 | That was abnormally high,

00:14:31.300 | mostly because of the Great Depression

00:14:32.580 | and the hangover from that.

00:14:33.980 | But even in the '70s and '80s,

00:14:35.540 | we're talking three to 6% dividend yields, pretty high.

00:14:38.080 | Today, it's closer to like 1.6,

00:14:39.820 | so the trend has been down since then.

00:14:43.020 | Valuations are much higher.

00:14:44.220 | That has something to do with it,

00:14:45.220 | but there's also a reason that you can see,

00:14:47.660 | starting in the 1980s,

00:14:49.540 | there was a precipitous drop in the dividend yield.

00:14:51.740 | You can say, "Well, that's 'cause stocks were going up."

00:14:53.160 | But it's also because Congress passed a law

00:14:55.500 | in the early '80s that made it easier

00:14:56.580 | for corporations to buy back their own stock.

00:14:58.180 | John, do the next chart.

00:14:59.820 | This is buybacks and dividends.

00:15:02.220 | This is going back to 1988 from Yardenia Research.

00:15:05.500 | And I don't wanna go down the rabbit hole here,

00:15:07.660 | but essentially, stock buybacks and dividends

00:15:11.020 | are the same thing.

00:15:12.100 | If you understand how math works

00:15:13.780 | and how capital allocation works,

00:15:15.940 | they're essentially the same thing.

00:15:17.180 | So if you combine dividends and share buybacks,

00:15:19.460 | the yield picture doesn't look quite so bleak.

00:15:20.900 | It's closer to 5% now if you combine dividends and buybacks.

00:15:24.420 | They have it at 4.9% here.

00:15:26.580 | And so the shareholder yield is actually pretty good still.

00:15:30.220 | So that's actually not that bad.

00:15:32.820 | That's part of the reason.

00:15:34.700 | And actually, from a tax basis,

00:15:36.060 | it's actually better for investors

00:15:37.220 | if they do buy back their stock.

00:15:38.920 | So plus, you can't simply look at the yield itself

00:15:41.380 | to figure out the benefits.

00:15:42.540 | The S&P 500 has seen total dividends since that 1950

00:15:45.700 | rise at an annual rate of nearly 6% per year.

00:15:48.320 | Per year, that's above the 3% rate of inflation

00:15:50.620 | where dividends are growing above and beyond that.

00:15:52.940 | So it's not like that yield is just,

00:15:54.500 | the income is staying the same.

00:15:55.660 | The income is rising,

00:15:56.620 | but the stock market is rising a little faster.

00:15:58.220 | So you're getting an income stream

00:15:59.620 | that rises above the rate of inflation.

00:16:01.340 | Earnings rise above that same level.

00:16:03.580 | It is true that supply and demand matter.

00:16:05.100 | So if more people decide they want to own shares

00:16:07.300 | in the stock market and they rush in to buy,

00:16:09.340 | the amount of investors willing to pay for them will rise.

00:16:11.180 | So valuations go up.

00:16:12.040 | If fewer people want to own stocks,

00:16:13.820 | then valuations will fall.

00:16:15.460 | But even if fewer people wanted to own stocks in the future,

00:16:17.540 | it's not like profits would stop accruing.

00:16:19.780 | You'd probably just see more corporations

00:16:21.020 | buy back their own stock and whoever did own stock

00:16:22.780 | would just see their share of earnings and dividends

00:16:24.660 | and all that stuff rise.

00:16:25.860 | Plus money has to go somewhere.

00:16:26.980 | So if everyone decided,

00:16:28.860 | we're taking all of our money out of the stock market,

00:16:30.300 | we're putting it in cash and bonds, right?

00:16:32.700 | I wouldn't recommend that, but if people did that,

00:16:35.360 | the yields would be so low that the stock market

00:16:37.860 | would have to look attractive on a relative basis.

00:16:41.220 | So yes, there needs to be a buyer for every seller,

00:16:42.980 | but people aren't dumb.

00:16:43.820 | If the stock market continues to see profits

00:16:45.380 | and cash flows rise, someone is going to buy.

00:16:48.060 | So I think if you think the stock market is a Ponzi scheme

00:16:50.340 | and want to sit it out, that's fine.

00:16:51.920 | More profits for us who want to own shares

00:16:53.660 | in the stock market.

00:16:54.500 | That's the way I look at it.

00:16:56.140 | It's, yeah, it's not a Ponzi scheme.

00:16:58.680 | And the way that corporations work

00:17:00.700 | in as big and powerful as they are,

00:17:02.700 | they would just use their capital allocation

00:17:04.400 | to buy back shares,

00:17:05.320 | and then they'd be the ones accruing all the gains.

00:17:08.180 | The gains are going to go to someone.

00:17:09.460 | You might as well take a part in it.

00:17:11.180 | - Yeah, I think the buyback stuff is a little confusing.

00:17:13.180 | Yeah, I find that math a little confusing, honestly.

00:17:15.360 | But, and I think a lot of people think,

00:17:17.180 | oh, I'm buying ownership in a company,

00:17:18.940 | essentially with my shares.

00:17:20.420 | I should get some of the profit, right?

00:17:22.180 | And so I think that is the mentality sometimes.

00:17:25.200 | - Quick example.

00:17:26.040 | Let's say that you, there's $100 in profits.

00:17:28.580 | There's five shareholders.

00:17:29.820 | Each of them have $20 in earnings, right?

00:17:34.660 | Now let's say the company buys

00:17:36.500 | one of those shareholders out.

00:17:37.460 | There's four shareholders, still $100 in profit, right?

00:17:41.540 | Now those profits are shared

00:17:42.620 | among only four shareholders instead of five.

00:17:44.820 | So the profit per share goes up, right?

00:17:47.140 | - It's a white bull moment.

00:17:48.700 | - Even if the profits are the same.

00:17:50.440 | - Yeah, no, I haven't heard it explained that simply before.

00:17:53.300 | So yeah, that makes sense.

00:17:54.700 | - So whether they paid out dividends to people

00:17:57.720 | or bought back shares,

00:17:59.060 | the cash is gonna go out either way.

00:18:00.820 | And so it's either people are gonna be paid back in cash

00:18:03.780 | or their earnings per share is gonna rise

00:18:06.100 | 'cause the share count falls.

00:18:08.420 | So it's the same thing.

00:18:09.620 | A lot of people think this is like a,

00:18:12.340 | it's like a weird buybacks,

00:18:14.500 | like this big like Illuminati thing,

00:18:16.900 | but it's not, it's pretty simple.

00:18:19.340 | - Yeah, no, it sounds like it, yeah.

00:18:21.420 | Team buybacks now.

00:18:22.260 | - Do another one.

00:18:23.460 | There you go.

00:18:24.900 | - Up next, we have a question from Parker.

00:18:26.820 | I've been laid off twice, once in 2015,

00:18:30.260 | and again in 2020 due to COVID.

00:18:32.620 | I've had five jobs since then.

00:18:34.380 | Currently VP of sales at a logistics company.

00:18:37.320 | I've got about five months of household income saved,

00:18:39.540 | and for a few years, it sat in a brokerage account

00:18:41.860 | earning zero in a stable value fund.

00:18:43.980 | Stupid, maybe, but it was safe.

00:18:46.300 | So where do you recommend people put their emergency funds?

00:18:48.860 | What do you think about online banks?

00:18:50.940 | So this is one of those common things we get asked about.

00:18:53.620 | - Well, I mean, you talked about risk tolerance

00:18:55.540 | for investors.

00:18:56.460 | We talk a lot about that in the investing world.

00:18:57.820 | People rarely talk about tolerance for risk

00:18:59.660 | when it comes to personal finance.

00:19:01.260 | And I think this person, Parker,

00:19:02.980 | being laid off twice, changing jobs three other times,

00:19:05.660 | that's a lot.

00:19:06.500 | Hopefully, they're one of these people

00:19:07.500 | that is changing jobs and getting paid more.

00:19:09.900 | That's what the stats say now.

00:19:11.020 | People who are changing jobs are getting much higher wages

00:19:13.060 | and people are sticking, staying put.

00:19:15.100 | But if you're going to have some sort of career

00:19:17.780 | where you're gonna have that much volatility,

00:19:19.220 | I don't know what they do or what field they're in,

00:19:21.860 | but then you probably wanna have

00:19:23.540 | a little more set aside, right?

00:19:25.860 | So there's all sorts of different,

00:19:28.500 | should I have 12 months saved

00:19:29.820 | or six months or three months?

00:19:30.980 | A lot of it depends on your tolerance for volatility

00:19:33.860 | in your personal finances,

00:19:34.940 | but also how your career is set up.

00:19:37.500 | There are a lot more options these days.

00:19:38.980 | Like him, I had my money sitting in an online savings account

00:19:41.660 | for years earning nothing.

00:19:42.500 | I think it got as low as 25 basis points

00:19:44.740 | during the pandemic in 2020,

00:19:45.900 | when the Fed went down to zero.

00:19:47.860 | I did a quick perusal of them today.

00:19:49.940 | So you have places like Ally, Marcus, Capital One 360, SoFi,

00:19:54.620 | even like Wealthfront, Betterment, Robinhood

00:19:56.740 | have cash management programs.

00:19:58.220 | I found anything in the range of 3.3% to 3.8% for these,

00:20:02.060 | you know, and FDIC insured and fairly safe and liquid.

00:20:07.060 | You could find a one to three month T-bill ETF these days,

00:20:09.780 | pretty easy if you Google it, 4.3%,

00:20:12.500 | I think I saw this morning.

00:20:13.900 | I saw a money market account for a client this morning

00:20:15.580 | at Schwab yielding over 4%.

00:20:17.940 | 12 month CD, I looked today, 4.3%.

00:20:20.700 | Series I savings bonds, we've talked about them a lot here,

00:20:22.720 | still yielding 6.9% until April,

00:20:24.740 | at which point I would expect that number to fall

00:20:27.180 | quite a bit because inflation is falling.

00:20:28.500 | So there are tons of options today.

00:20:31.620 | And in the past few years,

00:20:32.920 | you had to go way out on the risk curve

00:20:34.460 | to earn anything approaching yield.

00:20:35.820 | This is all relatively safe stuff.

00:20:37.660 | It's FDIC insured for the most part.

00:20:39.660 | If you're investing in short-term government bonds,

00:20:42.740 | the chance of default is basically nil

00:20:44.500 | unless we get an alien invasion.

00:20:46.220 | So savers are no longer being punished by the Fed,

00:20:49.260 | is what I'm saying.

00:20:50.100 | This is one good thing the Fed is doing, I guess.

00:20:52.700 | I think my only rule of thumb is don't put your money

00:20:54.660 | into something you have to jump through

00:20:55.500 | a bunch of hoops through.

00:20:56.340 | Some of them will say you have to have a direct deposit,

00:20:57.860 | or you have to do like 10 transactions,

00:20:59.780 | or for an extra 10 basis points,

00:21:02.180 | to me, that's not really worth it.

00:21:03.660 | I just think it should be something liquid,

00:21:05.220 | an easy technology interface.

00:21:06.620 | And one of the reasons that these online banks

00:21:08.380 | can offer higher yields is because the brick and mortar banks

00:21:10.660 | have a lot more overhead.

00:21:12.020 | And the banks are just kind of jerks,

00:21:13.460 | and they just, I think I looked at the average today,

00:21:15.900 | the average savings rate at an FDIC insured

00:21:18.860 | brick and mortar bank is like 24 basis points still.

00:21:21.380 | It's ridiculous.

00:21:22.300 | That should be criminal.

00:21:23.420 | So you can get like 3.3, 3.5% at an online bank.

00:21:26.500 | I think my only advice is just don't try to go yield hunting

00:21:31.140 | and jump from bank to bank or place to place

00:21:33.180 | 'cause you can get an extra 10 or 20 basis points.

00:21:34.820 | Just find a place you're comfortable with.

00:21:36.660 | Make sure they're not taking advantage of you.

00:21:38.020 | But I'd say nothing less than at least three,

00:21:40.420 | three and a quarter right now.

00:21:41.300 | The fed funds rate is at four, four and a half percent.

00:21:43.940 | So I would say anything lower than three and 3.25

00:21:48.860 | is probably too low, especially in the liquid stuff.

00:21:51.780 | - Yeah, it kind of reminds me of you guys

00:21:53.900 | talking about refinancing a house.

00:21:55.420 | There has to be a big enough gap for it to be worth

00:21:57.540 | you switching all of your stuff around.

00:22:00.100 | You can't just do it for like 25 basis points.

00:22:02.260 | - But if you have money in a big bank

00:22:05.020 | and it's paying you 20 basis points, yes.

00:22:07.620 | Go through the process of opening a new account

00:22:09.180 | in the paperwork and move it over.

00:22:11.140 | - Right.

00:22:11.980 | And not to brag, but I'm getting 4.05, so.

00:22:15.260 | - Where at?

00:22:16.740 | - Enzo, so.

00:22:18.300 | - Okay.

00:22:19.140 | I'm sure I missed a ton of different ones

00:22:20.580 | that are out there.

00:22:21.420 | I know there's a lot of platforms these days.

00:22:22.900 | - Yeah, yeah.

00:22:23.900 | There's a lot.

00:22:25.460 | - You had to go two decimal points out there, didn't you?

00:22:27.660 | Just to 4.05%.

00:22:30.180 | All right.

00:22:31.020 | - Yeah, yeah.

00:22:31.860 | - 0.05% is doing a lot of work here.

00:22:32.820 | - Hey, well, 0.05 is what I was getting at my big bank,

00:22:35.620 | like you're saying before.

00:22:36.660 | So it's literally 4% more.

00:22:39.380 | - All right.

00:22:40.220 | Okay, so up next, we have a question from Hector.

00:22:43.340 | I have over 180 hours of PTO.

00:22:46.020 | That's paid time off, right?

00:22:47.860 | That will never come close to fully collecting.

00:22:50.500 | Those hours are equal to four and a half weeks of vacation

00:22:53.460 | or pay if I resign or get laid off.

00:22:55.220 | Do you think it's a viable option to use my unused PTO

00:22:59.340 | as an emergency fund?

00:23:00.940 | I'm building up my liquid cash emergency fund

00:23:02.980 | and I have close to two months saved.

00:23:04.500 | If this is a viable option,

00:23:05.660 | two months of cash savings is all I would need to save.

00:23:08.420 | Thoughts?

00:23:09.420 | - So I have some thoughts on this

00:23:10.820 | after whatever you have to say.

00:23:12.940 | - Can we use two questions about emergency savings funds

00:23:15.100 | as a way of how the market are going

00:23:16.900 | and potentially a recession indicator?

00:23:18.780 | - Yeah.

00:23:19.700 | - We definitely weren't getting these questions

00:23:21.020 | in 2020 and 2021.

00:23:22.620 | - No.

00:23:23.460 | - Four and a half weeks of pay

00:23:24.580 | is certainly a nice fallback plan.

00:23:26.460 | This depends on how you define emergency, I think.

00:23:29.100 | So I don't know, how easily could you cash in

00:23:32.020 | on that vacation paying and get it in a pinch

00:23:34.260 | if you really needed it?

00:23:35.100 | Like, would it take some time for a company to pay it out?

00:23:37.340 | Are you sure that money's coming to you

00:23:38.500 | if you get laid off?

00:23:39.980 | I just, I'm not questioning your company,

00:23:42.020 | but I would feel safer if that money

00:23:43.380 | was in my checking account or savings account

00:23:45.500 | and doing something for me.

00:23:47.100 | Maybe if you can cash it out every six months or 12 months,

00:23:49.580 | just in case.

00:23:50.420 | Again, I think a lot of it comes down

00:23:55.420 | to what you consider an actual emergency,

00:23:56.860 | like versus infrequent expenses.

00:23:58.500 | So some people plan for car expenses and home maintenance

00:24:02.460 | and healthcare expenses,

00:24:03.660 | and those aren't actual emergencies.

00:24:05.460 | Those are things that happen infrequently,

00:24:06.740 | but they're expenses you can plan on.

00:24:08.700 | An actual emergency is when the apartment above you

00:24:11.780 | leaves their windows open and turns their heat off

00:24:13.700 | and the pipes freeze, and then it floods your apartment,

00:24:16.860 | like you, Duncan, right?

00:24:18.540 | That's an actual emergency

00:24:19.660 | that you'd wanna have a fallback plan for, right?

00:24:21.740 | Which is why you're a vagabond right now

00:24:24.540 | and have nowhere to live.

00:24:26.100 | Losing your job is obviously an emergency.

00:24:28.900 | I think it also depends

00:24:29.740 | on what other kind of backup plans you have,

00:24:31.500 | like do you have a home equity line of credit

00:24:33.820 | or a taxable investment account

00:24:35.180 | that you could sell a Roth IRA contributions

00:24:36.780 | that you'd wanna tap?

00:24:37.820 | Maybe like a 0% credit card,

00:24:39.060 | something that could bridge the gap

00:24:40.820 | if you really need that money

00:24:42.380 | until you could get those four and a half weeks paid off.

00:24:44.940 | What do you think?

00:24:45.780 | What are your reservations here?

00:24:47.220 | - Yeah, no, I was gonna say basically the same thing.

00:24:49.580 | I was just gonna say, yeah,

00:24:50.460 | in my situation with an apartment being flooded,

00:24:52.940 | yes, we have renter's insurance.

00:24:54.660 | They're gonna cover most everything

00:24:56.380 | outside of the deductible, obviously,

00:24:58.140 | but we're having to pay out of pocket, right?

00:25:00.180 | And so there are a bunch of huge expenses upfront,

00:25:02.580 | like getting an Airbnb in Brooklyn

00:25:04.660 | or somewhere around New York City,

00:25:06.540 | ranges like I'm seeing 8,000, 10,000 plus for a month,

00:25:11.540 | that kind of stuff.

00:25:12.700 | And so yeah, just having like a fund

00:25:14.940 | that you can pull that from

00:25:16.180 | would be much more helpful than probably being like,

00:25:18.980 | oh, I would have to quit my job to get my PTO

00:25:22.460 | and be able to have this cash up front.

00:25:25.060 | 'Cause I don't think most places

00:25:26.260 | will give you money for your PTO

00:25:27.540 | until you literally are leaving, right?

00:25:29.060 | It's not like you can cash it out, I don't think.

00:25:31.140 | - Right, it could be that.

00:25:32.460 | So if that's what your biggest worry is,

00:25:34.980 | losing your job, then maybe it's it.

00:25:38.020 | But I think if I'm talking about

00:25:39.260 | an actual emergency savings, I want it to be liquid

00:25:41.460 | and I wanna get it within 24 hours or so.

00:25:44.020 | I want it to be relatively easy

00:25:45.860 | to get most online savings accounts.

00:25:47.860 | You'll have the money if you put in for a transfer withdrawal

00:25:50.580 | within that day or the next day.

00:25:52.620 | It doesn't take all, if you have,

00:25:54.060 | even if you have an ETF that you have it in short-term cash,

00:25:57.100 | it'll settle in a couple of days.

00:25:58.580 | So yeah, I'd be worried about using this

00:26:01.100 | as an actual emergency.

00:26:02.980 | But maybe if your emergency you're planning for

00:26:04.660 | is losing your job, then it makes sense.

00:26:07.040 | - Right, and yeah, and just a PSA,

00:26:09.880 | if you live in an apartment, be a good neighbor

00:26:11.620 | and don't leave your windows open and heat off

00:26:13.340 | when it's below zero outside, you know?

00:26:15.300 | But yeah.

00:26:16.140 | - That's rough.

00:26:18.340 | They should have to do the walk of shame

00:26:19.160 | and just out of the building.

00:26:20.340 | - They should, they really should.

00:26:23.380 | Okay, so-- - We got one more.

00:26:24.940 | - Yeah, last but not least, we have a question from Tom.

00:26:27.740 | I'm in my mid-60s with retirement coming very soon.

00:26:30.820 | There's a lot of doom and gloom for people in my position

00:26:32.660 | with the market dropping just as we're retiring.

00:26:34.820 | However, I hope to be in the market 20 years from now

00:26:37.380 | and still see myself as a long-term investor.

00:26:39.580 | Even after retirement, we're still investors, right?

00:26:43.020 | - Excellent point here, Tom.

00:26:44.420 | - And congrats-- - Great question.

00:26:45.260 | - Congrats on retiring, yeah.

00:26:47.100 | - Yes, now there's two ways to look at that.

00:26:49.240 | It stinks that you're retiring right when

00:26:51.860 | markets are dropping, but also you had 10 years

00:26:54.240 | of fantastic returns to get your portfolio to a level

00:26:57.740 | that made it sting when it dropped.

00:26:59.320 | So it's kind of a double-edged sword there,

00:27:02.300 | where you were doing pretty good up until this point,

00:27:05.100 | and your portfolio would not have been as high

00:27:06.620 | if we didn't have the gains that preceded this bear market.

00:27:09.420 | And it's possible the only reason stocks are falling a lot

00:27:11.580 | is because they went up a lot in the first place.

00:27:14.020 | So the average American now retires at 62.

00:27:16.380 | 100 years ago, the average American died at 51.

00:27:19.140 | Most people worked until they died.

00:27:20.460 | According to the Social Security Administration,

00:27:22.180 | they actually have this cool longevity thing.

00:27:24.100 | You can put in your age or your spouse's age

00:27:26.620 | and see how long your life expectancy is,

00:27:28.480 | based on some averages.

00:27:29.940 | A couple retiring today has a 50% chance

00:27:32.080 | at least one of them will live into their 90s.

00:27:34.380 | So most people want a retirement where they can relax

00:27:39.380 | and enjoy themselves, and most people probably retire

00:27:41.700 | quicker than they would have assumed.

00:27:43.580 | People think, oh, if I don't have enough money,

00:27:45.620 | I'll just keep working until retirement.

00:27:46.620 | A lot of times, your health won't allow for it,

00:27:48.660 | or just when you get to that age,

00:27:49.740 | you're just, I'm done with it, I'm ready to be done.

00:27:51.980 | So that could mean two to three decades

00:27:53.700 | of investing after retiring.

00:27:54.660 | Maybe four if you live long enough.

00:27:56.940 | So there is less human capital where you don't have

00:27:58.920 | as much income coming in, you're not saving,

00:28:00.600 | you don't have the ability to wait out bear markets

00:28:02.580 | as much as you did in the past as a young person,

00:28:04.840 | because your biggest asset should be financial assets

00:28:07.840 | at this point, right?

00:28:09.620 | So you're not like someone who's accumulating

00:28:11.680 | can take advantage of a bear market.

00:28:13.440 | So there's more balance involved at this stage.

00:28:15.600 | I just think you have to keep that balance

00:28:18.600 | of protecting your wealth on one side

00:28:20.440 | versus you need to keep up your standard of living

00:28:22.000 | on the other side, right?

00:28:22.840 | John, do a chart on of inflation here.

00:28:24.700 | This is just a simple thing that we've shown over time.

00:28:27.320 | How long it takes for different inflation rates

00:28:29.200 | to cut your money in half.

00:28:30.160 | So 3% inflation rate is about the long-term average.

00:28:32.620 | It takes 23 years to cut it in half.

00:28:34.640 | If you're a millionaire today,

00:28:35.480 | that million's worth $500,000 in 23 years.

00:28:38.840 | 4%, it would be 17 years, 5%, 14 years, even 2%,

00:28:42.720 | it's 35 years if we're using the handy rule of 72.

00:28:46.000 | So unless you have more money than you know what to do with,

00:28:48.880 | the stock market is likely gonna have to play a role

00:28:50.840 | in your portfolio in some fashion,

00:28:52.280 | because it remains the best bet for beating inflation

00:28:53.920 | over the long-term.

00:28:55.400 | Well, the short-term, obviously,

00:28:56.220 | inflation can ding stocks like it has recently.

00:28:58.960 | So one of the ways I like to think about this

00:29:00.560 | is in terms of spending.

00:29:01.400 | So let's say you land on 4% of your portfolio each year

00:29:04.560 | you're gonna take out for spending purposes, right?

00:29:06.060 | That's how you cover your spending each year

00:29:07.680 | and your way of living.

00:29:10.240 | If you had a 60/40 portfolio,

00:29:12.680 | that would give you 10 years worth of spending, right?

00:29:15.000 | A 40/60 portfolio would give you 15 years worth of spending

00:29:17.560 | in fixed income or cash or something like that.

00:29:19.600 | Now, this ignores inflation in your spending over time,

00:29:22.640 | so it's pretty back of the envelope.

00:29:24.480 | But I think this is a good way to look at things

00:29:26.200 | in terms of getting comfortable with some balance

00:29:28.280 | and the understanding that you have to have

00:29:29.880 | accept some volatility in your portfolio

00:29:32.760 | if you want to beat the rate of inflation over time.

00:29:35.600 | So a lot of retirees are gonna wanna leave money

00:29:37.460 | to next generation as well.

00:29:38.500 | Most retirees who have a lot of money

00:29:40.480 | don't end up spending at all.

00:29:42.200 | And so if that's the case,

00:29:44.200 | you're managing based on your children's

00:29:45.760 | or your grandchildren's time horizon and risk profile.

00:29:48.240 | And that's theirs, not yours.

00:29:50.660 | So I know it's a scary proposition

00:29:52.760 | once you're relying exclusively on financial assets

00:29:54.940 | to support your lifestyle,

00:29:55.760 | but you're gonna have to live to accept

00:29:57.960 | a little bit of volatility with part of your portfolio.

00:30:01.280 | Maybe you kind of mentally bucket this.

00:30:02.960 | You know, this part of the portfolio,

00:30:05.000 | this 20, 30, 40, 50% is for the next 10 plus years.

00:30:09.360 | This part is for the next one to three years.

00:30:11.640 | This part is for the next three to seven years.

00:30:14.120 | Whatever you have to do to get yourself comfortable there

00:30:17.360 | because you're balancing out spending some now

00:30:19.800 | and also growing it for the future.

00:30:21.220 | So that's the kind of thing where it stinks.

00:30:23.780 | It would be nice if you could just put your money

00:30:25.140 | into something that paid you 7% a year,

00:30:27.820 | year in and year out.

00:30:29.640 | It doesn't really exist, unfortunately,

00:30:31.700 | and you're just gonna have to live with some volatility

00:30:33.260 | because people are living longer.

00:30:34.900 | - Right, I think I like their attitude here

00:30:38.220 | of thinking about, you know, yeah, still staying invested.

00:30:41.500 | It's not like it's a end date

00:30:43.220 | where you're cashing out all of your retirement plans

00:30:46.140 | or something.

00:30:46.980 | They make the point that your portfolio management

00:30:50.000 | is never more important than when you are retired, right?

00:30:52.900 | 'Cause when you're accumulating assets

00:30:54.080 | and you're putting money to work,

00:30:55.860 | your asset allocation doesn't matter nearly as much

00:30:57.840 | as it does when you're actually retiring.

00:30:59.120 | And withdrawing money and financial planning

00:31:00.960 | and all this stuff, there's so much more that goes into it,

00:31:02.800 | which is why we have a lot of clients come to us

00:31:05.260 | when they're approaching retirement

00:31:06.240 | because there's a lot more complexities involved in that.

00:31:09.080 | - And that's actually what I was about to ask,

00:31:10.520 | if that's a popular time for people

00:31:11.960 | to get an advisor for the first time.

00:31:14.000 | It seems counterintuitive,

00:31:15.240 | but like when they're actually retiring.

00:31:17.500 | - Because financial planning and advice

00:31:19.500 | is so much more important.

00:31:20.340 | Taxes are more important.

00:31:21.180 | Insurance is more important.

00:31:22.660 | All these things, it's definitely a mindset shift too,

00:31:26.580 | psychologically, to go from being an accumulator of assets

00:31:29.700 | to someone who's then spending it down.

00:31:31.140 | That can be tough for people to turn on a dime

00:31:32.960 | and then spend because they just want to hoard it all

00:31:35.640 | their whole life.

00:31:36.480 | And then to turn around and have to spend it,

00:31:37.780 | it's tough when there's not anything else coming in.

00:31:40.500 | - Right.

00:31:41.500 | That makes sense.

00:31:42.340 | Cool.

00:31:44.500 | All right.

00:31:45.340 | Next week, we are going to be back

00:31:46.160 | going over all the changes

00:31:47.000 | to retirement contribution limits, tax code,

00:31:49.160 | everything else you need to know for the new year.

00:31:51.080 | So if you have any questions,

00:31:51.920 | remember email us, askthecompoundshow@gmail.com.

00:31:55.120 | If you're listening in podcast form,

00:31:56.800 | leave us a nice review.

00:31:58.580 | Every week you can just talk about Duncan's hats, right?

00:32:01.120 | The guy's never without a hat.

00:32:02.200 | - I got some new ones for the holidays too.

00:32:03.800 | So keep your eyes peeled.

00:32:04.960 | There'll be some new ones.

00:32:05.800 | - Perfect.

00:32:06.620 | If you're watching on YouTube,

00:32:07.620 | hit that like button, subscribe.

00:32:09.640 | You can also leave us a comment or a question.

00:32:12.120 | On YouTube, we always check it.

00:32:13.360 | I'm always in the comments battling it out with people.

00:32:16.300 | I don't mind heading in there.

00:32:18.260 | We have some nice people

00:32:19.100 | and they also have some good comments too.

00:32:20.640 | I don't mind.

00:32:21.480 | Keep those coming.

00:32:22.300 | Remember, email us, askthecompoundshow@gmail.com.

00:32:25.220 | We're looking forward to an awesome year here.

00:32:26.980 | Let's do it.

00:32:27.820 | We'll have guests going forward.

00:32:28.640 | - Happy New Year, man.

00:32:29.480 | - I'm not going to say it back.

00:32:32.140 | And we will see you next week.

00:32:33.860 | - See you everyone.

00:32:34.800 | (upbeat music)

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00:32:52.880 | you

Why Should I Invest in the Stock Market? | Portfolio Rescue 58

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