Should I Let My Winners Ride?

00:00:00.000 | [SOUND]

00:00:10.000 | Welcome back, Portfolio Rescue.

00:00:20.380 | We're on a little later today because Duncan is basically running a TV studio

00:00:24.420 | at our New York headquarters today.

00:00:26.220 | He's been a busy man, so we're here.

00:00:29.180 | Remember, if you have a question for us, askthecompoundshow@gmail.com.

00:00:33.320 | Last week, I mentioned a book by a quote by a guy named Myer Stattman,

00:00:36.360 | who is a behavior psychologist.

00:00:38.160 | And I mentioned his book, and a bunch of people asked.

00:00:40.240 | It's called What Investors Really Want, really highly underrated.

00:00:43.240 | And I kind of forgot about it until I mentioned it last week.

00:00:46.360 | And I went through, he's got a ton of these little anecdotes that I've

00:00:49.240 | never really heard on other books before.

00:00:52.400 | So I wanted to go on.

00:00:53.080 | He found this book called Watch Your Margin.

00:00:55.580 | An Insider Look at Wall Street in 1930 from an anonymous trader,

00:00:59.680 | which is great, perfect title for today.

00:01:02.360 | But in the book, he gave a back and forth between two guys.

00:01:05.520 | And one of the guys said, why do people speculate in stocks?

00:01:08.680 | And the other guy said, well, of course, to make money.

00:01:10.520 | And he said, no, no, not at all.

00:01:11.920 | They do it because they want a thrill.

00:01:13.760 | That is why we drink bootleg whiskey.

00:01:15.520 | This was written in Prohibition.

00:01:16.720 | Kiss girls and take new jobs.

00:01:18.400 | We want thrills.

00:01:19.000 | It's perfectly human.

00:01:20.200 | But Wall Street is a poor place to look for thrills for

00:01:22.240 | the simple reason that thrills in Wall Street are very expensive.

00:01:24.700 | Kind of funny how that's sort of, it's as old as the hill,

00:01:29.340 | Sunken, as they say, speculation, right?

00:01:30.900 | >> Yeah, no, I mean, yeah.

00:01:32.140 | That's quite a throwback to bring up Prohibition, yeah.

00:01:34.660 | >> All right, yeah, what investors really want.

00:01:36.020 | That's a good one.

00:01:36.780 | All right, first question.

00:01:38.380 | >> Okay, first today we have one that people might recognize from what are your

00:01:42.300 | thoughts, but we're gonna dig a little deeper into it today.

00:01:44.580 | So there's still lots here.

00:01:46.940 | I have a question for

00:01:47.900 | all the people who have had respectable gains in cryptocurrencies.

00:01:50.940 | I got into crypto during the COVID crash and I've had some great gains.

00:01:54.800 | Some of my trades were Bitcoin at 8,500 and Ethereum at 1,300.

00:01:59.080 | However, I started with a 10% allocation to cryptocurrencies,

00:02:02.220 | which grew to 20%, and I didn't change it.

00:02:04.720 | Then it went from 20 to 30, and I trimmed it to 20.

00:02:07.560 | And long story short,

00:02:08.560 | it just keeps taking on a larger and larger portion of their portfolio.

00:02:12.200 | So they wanna know, should they stick to their plan and trim back their allocation,

00:02:16.240 | or let their winners run and only allocate into stocks and bonds from here on out?

00:02:20.880 | >> Yeah, this was a question that we received, obviously, towards the peak.

00:02:24.080 | So that 50% is probably, I don't know, 30% now,

00:02:26.840 | depending on what else they're investing in.

00:02:29.120 | Obviously, this stuff is much easier to do when stuff is going to the moon.

00:02:31.840 | Now, Bitcoin and Ethereum, I think, are both down 45%.

00:02:34.560 | Solana is 60% off its highs.

00:02:36.440 | So this is the idea of, do I bank on mean reversion, or

00:02:40.080 | do I just let my winners ride?

00:02:41.760 | So I wanna give a little story from my first book about rebalancing.

00:02:45.600 | And it was a study of a prison in the Midwest,

00:02:49.040 | because I like these flyover states, Duncan.

00:02:51.200 | And this prison guard was noticing that all the inmates who were there for

00:02:54.600 | like six months or less were gaining an average of like 20 to 25 pounds in prison.

00:02:59.200 | And the guy said, this doesn't make any sense.

00:03:00.680 | Why would people gain weight in prison?

00:03:02.240 | They have the exercise yard, you can't get access to a ton of food.

00:03:05.680 | You kinda eat a little bit, but what is it?

00:03:09.040 | And they figured out the problem was the orange jumpsuits they wear,

00:03:12.760 | cuz they're really baggy, they don't have a belt.

00:03:15.800 | And it's not like they're wearing a pair of jeans where they put it on,

00:03:18.160 | everybody can feel it getting tighter.

00:03:19.600 | So the reason that they were doing it is cuz they're incrementally gaining weight.

00:03:23.320 | And they couldn't figure out that they were gaining weight because they had so

00:03:26.280 | much extra room.

00:03:26.840 | They had no benchmark or

00:03:28.240 | anything to really let them know that, you're gaining weight.

00:03:31.480 | And they said, so without these clothes,

00:03:32.880 | it was hard to tell that they were adding these unnoticed pounds.

00:03:36.680 | So this is the idea of rebalancing, right?

00:03:38.520 | It allows you to avoid parts of your portfolio getting overweight.

00:03:41.560 | See what I did there, Duncan?

00:03:42.560 | >> [LAUGH] >> So I think this is the idea,

00:03:46.200 | investing is always this form of regret minimization.

00:03:49.640 | Am I going to regret it if this thing goes to the moon and

00:03:52.840 | I sell a little bit too early?

00:03:54.800 | Or what happens if this thing goes to the floor and I held on to it?

00:03:58.400 | But let's give a simpler example, let's say at a 60/40 portfolio.

00:04:03.200 | Ten years ago you started 60% stocks, 40% bonds in the United States.

00:04:07.080 | Because gains in stocks have been so much more than bonds,

00:04:09.800 | you'd be at an 85/15 portfolio now.

00:04:12.280 | Now you'd probably say, great, I did awesome.

00:04:14.680 | If I would have kept trimming back the whole way through,

00:04:17.440 | I would have made much less money.

00:04:19.840 | The other side of that is your losses are going to be bigger now, but

00:04:22.520 | why did you create that 60/40 portfolio in the first place?

00:04:24.920 | It's like, what's the point of an allocation?

00:04:26.640 | So there's this difference between having a portfolio and having a plan, right?

00:04:31.160 | Having a portfolio is like, I go to the Golden Corral Buffet, and

00:04:34.720 | I grab a little of this, and I grab, that one looks good too, and I want some of that.

00:04:37.880 | And you put it on your plate, and then you realize, this isn't a meal,

00:04:40.240 | this is just a bunch of mishmash of foods, and

00:04:41.920 | they don't really all go together very well.

00:04:44.080 | That's a portfolio.

00:04:44.800 | Plan is like something that's really well thought out.

00:04:48.120 | You take into account expectations, and probabilities, and you have a process.

00:04:53.000 | And I think if you don't have these rules in place ahead of time

00:04:57.000 | to guide your actions, you're always going to be playing catch up to whatever

00:05:00.480 | the price is doing.

00:05:01.240 | So when things are going really well and things are going up,

00:05:03.480 | you're going to think, I don't want to trim now, what if it keeps going up?

00:05:06.120 | Then when things are going down, you're going to go, well,

00:05:08.120 | I can't buy now, because what happens if things go down further?

00:05:11.120 | So that's why you need to have a rebalancing policy in place and

00:05:14.880 | asset allocation to guide your actions ahead of time.

00:05:17.520 | Because in the moment, it's going to be so much harder to do.

00:05:20.840 | Now, could you have a type of buy and hold forever kind of thing for

00:05:24.920 | some portion of a portfolio?

00:05:26.160 | Sure, because there's a buy and hold forever, there's a buy and

00:05:28.840 | hold and rebalance, maybe there's a buy and hold and reassess.

00:05:31.920 | But I think investing is always about trade-offs.

00:05:34.120 | So especially when you get into concentrated positions,

00:05:36.440 | it's wonderful on the way up, but so much more painful on the way down.

00:05:39.080 | So I think you have to find a balance where you set some thresholds in place.

00:05:42.520 | And every time this position gets to 10% or 20%,

00:05:45.040 | I'm going to trim a little bit.

00:05:46.520 | And every time on that way down, it gets to 5% or 10% or whatever it is,

00:05:50.120 | I'm going to add back.

00:05:50.960 | And I think if you don't have that discipline in place,

00:05:53.120 | you're basically just guessing.

00:05:54.620 | And you're trying to follow the ways of the wind or something.

00:05:56.640 | And you're putting your finger in the air and going, wait, you have no idea.

00:06:00.320 | So I think you have to have those guidelines and rules in place.

00:06:03.280 | Otherwise, you're just going to be lost.

00:06:04.520 | >> Yeah, no, that sounds like good advice.

00:06:08.360 | To run with your analogy, if your stocks are kind of like the inmates in that

00:06:11.640 | prison, Facebook's a pretty dangerous prisoner today, right?

00:06:15.480 | >> Facebook got shanked today, big time.

00:06:17.280 | >> [LAUGH] >> Oof, that's tough.

00:06:19.680 | My diversification thing, though, I put this on Twitter this morning.

00:06:23.160 | Facebook is down 24%.

00:06:24.560 | That's the fifth biggest stock in the S&P 500, down 24% in one day.

00:06:28.360 | That's basically a Black Monday 1987 crash.

00:06:31.160 | The S&P, when I looked this morning, was down 1.2%.

00:06:33.720 | So this is why you diversify, and having a concentrated position like that,

00:06:37.480 | it's great when Facebook is going up.

00:06:39.480 | Now I looked at it, Facebook is underperforming the S&P 500 over the last

00:06:42.480 | like six or seven years now.

00:06:44.080 | After all those gains basically wiped out in a matter of hours, I guess.

00:06:48.460 | Yeah, it's crazy.

00:06:49.160 | All right, let's do the next one.

00:06:50.440 | >> Okay, so up next, I'm 38 years old, married with three kids,

00:06:55.160 | aged five and under, and I have five 29s for each.

00:06:59.000 | And a take home salary of $400,000 in Austin, Texas.

00:07:02.520 | Primary home is 1.5 million, just moved in, and

00:07:05.760 | we're house poor at the moment, maybe forever.

00:07:08.200 | Neighbors, I feel like this is kind of a stream of consciousness, but

00:07:12.560 | neighbor's house on the block is going for 900,000, and it's a rental gold mine,

00:07:16.560 | consistently rented for the last ten plus years.

00:07:19.080 | I'd like to go for it, but need to take out about 500,000

00:07:23.000 | of my 401(k) to make the rental cash flow positive.

00:07:26.120 | Do I stay the 401(k) course, or YOLO this rental property?

00:07:29.840 | I like YOLO being a verb there.

00:07:32.960 | >> Yeah, you're gonna be surprised here, but

00:07:34.560 | I don't think I would ever use YOLO as a part of financial advice.

00:07:37.480 | That's never really reasonable.

00:07:39.520 | I understand the idea here, like, have someone else pay for your mortgage,

00:07:43.200 | the equity's going up, Austin is this really hot housing market,

00:07:46.120 | like how can you lose?

00:07:48.240 | Pull up this Austin chart here, Duncan.

00:07:50.240 | Let's do a chart on for Austin over the last year.

00:07:52.960 | Housing, this is from Zillow, the average housing price in Austin is $625,000.

00:07:58.480 | It's up 40% over the last year,

00:08:00.160 | it's basically one of the hottest housing markets in the world.

00:08:01.840 | We pulled some data from apartmentdata.com that shows rent year over year

00:08:07.480 | up 25% in Austin.

00:08:08.760 | The months of inventory in the Austin real estate market is like 0.8,

00:08:13.640 | which is well, well under the rest of the country,

00:08:15.560 | which is having a short of its own.

00:08:17.360 | So you probably think to yourself, everyone wants to come here,

00:08:20.480 | all these people are leaving Silicon Valley and all these other places and

00:08:22.760 | moving to Austin, like it's this great place, it makes sense.

00:08:26.000 | And so you think, well, I don't have this concentrated,

00:08:28.600 | because that's the big problem, right?

00:08:29.480 | You have concentration risk, you're two biggest assets on the same block.

00:08:32.520 | What happens if the, forget the national market,

00:08:35.760 | the local real estate market, their slows or the local economy,

00:08:38.120 | for whatever reason, slows.

00:08:38.840 | No, you say, whatever, Austin's going to be hot forever.

00:08:41.640 | Sure, you might be right, it's going to be the new Silicon Valley.

00:08:44.880 | But, like, what happens if something happens to the house, right?

00:08:48.120 | You need a new roof, you need a new air conditioner, a new water heater.

00:08:51.960 | There goes like months of profit, potentially.

00:08:54.640 | And the other problem is you can't spend your house, right?

00:08:57.520 | You could take out some home equity line of credit.

00:08:59.440 | And honestly, if this person came to us and said, listen,

00:09:02.720 | I've got a ton of equity in my current home.

00:09:05.200 | I want to use some of that real estate equity, it's just sitting there.

00:09:08.320 | I'm going to borrow it and put it for a down payment on this new rental house.

00:09:11.920 | And that's going to be an investment.

00:09:12.840 | Then you're essentially shifting the balance sheet from one real estate

00:09:15.680 | investment to another.

00:09:17.440 | That actually makes more sense to me than someone who says,

00:09:20.120 | I'm already house poor, I'm going to buy another house to be double the house poor.

00:09:24.240 | I don't know, so put this one up,

00:09:25.720 | this chart up about the middle class and their housing.

00:09:28.440 | Obviously, this person has a $1.5 million house, so

00:09:30.640 | maybe they're not middle class.

00:09:31.520 | But this just shows your real estate portfolio and

00:09:34.640 | your primary residence to financial assets.

00:09:37.320 | So the top 1% has like less than 10% in their primary residence and

00:09:41.280 | 74% in financial assets.

00:09:43.360 | There's obviously a bunch of other stuff that's not in here.

00:09:45.560 | The bottom 80% has 63% of their home and just 5% in financial assets.

00:09:49.800 | And there's a reason that the top 1% keeps getting richer and richer.

00:09:52.800 | Obviously, the housing market has been on fire, especially these last 18 months.

00:09:56.960 | But owning financial assets is probably a better thing for

00:10:00.120 | the majority of the population because you can diversify.

00:10:02.880 | You can do so at a lower cost.

00:10:03.960 | I'm not even thinking through all the costs involved.

00:10:06.320 | And what if something did go wrong and you had to sell this rental property?

00:10:10.200 | All the costs involved in buying and selling it, the closing costs and

00:10:14.120 | the realtor fees and all this stuff.

00:10:16.080 | I know it probably seems like a no-brainer.

00:10:18.280 | But I just think that you're putting so

00:10:20.320 | much risk on this one asset class, on this one block.

00:10:25.140 | I don't know, I'd have a hard time signing off on this,

00:10:26.600 | especially if you're gonna pull from your entire 401(k) and

00:10:29.160 | you don't just have the money laying around for a down payment or something.

00:10:32.400 | >> Right, yeah, this kind of goes along with what you were saying on the first

00:10:34.640 | question, right, diversification, and yeah, you're kind of putting all your eggs in

00:10:38.400 | one basket.

00:10:39.120 | >> Yeah, it's boring, but I think this person kind of answered their own question

00:10:41.600 | when, again, yoloing into a rental.

00:10:44.560 | I think that, I don't know, again, I can't get my head around that.

00:10:47.680 | I understand the desire to rent these days and

00:10:50.000 | think that the equity's gonna go up so much more.

00:10:51.960 | Even if they're just covering my mortgage,

00:10:53.300 | I'm building in that equity, I'm slowly paying it off.

00:10:56.120 | That makes sense in theory, but

00:10:58.080 | this is a very risky proposition as far as I'm concerned.

00:11:00.320 | >> Yep, sounds like it.

00:11:03.680 | Okay, so up next, this is kind of a long one, but hang in there.

00:11:08.720 | We're 45-year-olds living in Ohio earning about $240,000 annually.

00:11:13.280 | We max out our 401(k) and HSA accounts, have $1.5 million in savings, and

00:11:17.480 | our house is paid off.

00:11:19.120 | No college savings for our two teens, but we plan to pay as they go.

00:11:22.880 | Maybe that's naive.

00:11:24.440 | I'm worried I'm too heavily in stocks and stock funds.

00:11:27.560 | I want to hold the after-tax stock portfolio for five years like a boss, but

00:11:32.280 | I'm afraid it'll crater if the Fed raises rates quickly.

00:11:35.640 | I've already lost $150,000.

00:11:37.760 | I'm planning to work until 55 and live on one salary because my wife likes to work.

00:11:41.920 | I just need some guidance on how to reduce risk.

00:11:44.320 | Am I taking too much?

00:11:45.640 | Should I stay with the stocks I've picked or migrate to a portfolio?

00:11:48.680 | >> There's a lot going on in this one.

00:11:50.760 | They actually had a lot more information here.

00:11:52.040 | We had to kind of trim it down a little bit.

00:11:54.320 | This seems like an investing question.

00:11:56.120 | And this kind of happens a lot with us at our wealth management practice is people

00:11:58.880 | come to us and think that they have a portfolio management question.

00:12:01.360 | When in reality, they need to talk to a financial advisor.

00:12:03.480 | So we're going to bring in a financial advisor, Chris Venn,

00:12:07.080 | who's the head of our wealth management practice.

00:12:09.160 | Chris has created hundreds, maybe thousands of financial plans over his career.

00:12:13.200 | >> That's fair. >> Right?

00:12:14.360 | So Chris, we got a lot going on here.

00:12:15.880 | The other one that we didn't put here is they told us that they spend like

00:12:18.800 | drunken sailors.

00:12:19.920 | Even though they're maxing out their accounts,

00:12:21.080 | everything else they spend like crazy.

00:12:22.480 | So someone comes to you like this.

00:12:24.120 | They give you all this information and they say, I don't know what to do.

00:12:26.400 | Do I need to sell my stocks?

00:12:27.680 | What do I do?

00:12:28.600 | Where do you start with something like this?

00:12:30.200 | >> So first off, this sort of reads like an incomplete CFP case study, right?

00:12:34.400 | There's a lot of stuff missing here.

00:12:36.280 | So giving direct answers to some of these questions is inherently problematic.

00:12:41.880 | That said, there are a few pieces I picked out of here that they can address like

00:12:45.240 | right off the bat.

00:12:46.000 | To begin with, whether or not the kids are a year or four years away from college,

00:12:52.520 | there's benefit to them being in an Ohio 529 plan.

00:12:56.160 | In Ohio, you're able to get $4,000 state tax deduction for

00:13:00.360 | each beneficiary that you set up.

00:13:01.760 | So if there's two kids, that's 8,000 a year, like right off their state taxes.

00:13:06.320 | The other thing that's like an immediate takeaway, they're 45.

00:13:11.920 | When we're building financial plans, we're putting it out,

00:13:14.200 | their lifespan, out to age 100, right?

00:13:16.840 | The idea is that we wanna plan for this excessive period of time.

00:13:20.520 | So to think about lightening up on stocks at 45, that's just silly.

00:13:24.360 | >> Yeah, so they say we're gonna retire by 50 or 55, but guess what?

00:13:28.280 | Your portfolio and your lifespan still goes after that.

00:13:31.040 | So you're planning your portfolio for not just the day you retire,

00:13:34.040 | it's while you're in retirement too, right?

00:13:36.240 | >> Yeah, and that's just some of the immediate things that jumped out to me.

00:13:40.720 | Answering this question, it's not the question they're asking.

00:13:44.920 | The question they're asking is, I've done well and

00:13:47.880 | I'm nervous that the stock market's gone down.

00:13:49.760 | What they should be asking is, do I need a detailed financial plan?

00:13:53.080 | And obviously the answer is yes, right?

00:13:55.240 | To be able to contextualize what it is that they're saving for,

00:13:59.040 | what these various goals that they have to accomplish over half a lifetime, right?

00:14:04.480 | Like that's the way they should be looking at this,

00:14:06.840 | not whether or not during a downturn they should lighten up on stocks.

00:14:11.240 | That's literally one of the primary value adds that we talk about when building

00:14:14.840 | plans for people.

00:14:15.480 | It's like, you're gonna run into situations that are just gonna make you

00:14:18.880 | uncomfortable.

00:14:19.960 | And if you rely on how you're doing versus the stock market,

00:14:23.640 | you're gonna get uncomfortable and make the worst decision.

00:14:26.320 | That's just the way it's gonna go.

00:14:27.280 | >> And this kinda gets back to the first question about a plan versus

00:14:29.840 | a portfolio, right?

00:14:30.560 | These people have done well, they've accumulated assets.

00:14:33.440 | They've put together a portfolio.

00:14:35.080 | >> House is paid off.

00:14:36.160 | >> Right, yeah, they've done really well personal finance wise.

00:14:38.480 | Obviously, they save a lot of money.

00:14:39.760 | They said they spend like drunken sailors too,

00:14:41.080 | which I think is fine as long as you're saving.

00:14:42.640 | They're maxing everything out, that's good for them.

00:14:44.920 | But I think you're right, what they need now, especially, and

00:14:47.520 | this happens to us a lot with clients that come to us, right?

00:14:49.840 | Is that, I'm approaching retirement, I'm approaching some life event.

00:14:53.440 | Now, help me put a plan together to figure out what to do with it all now that I

00:14:57.120 | have it, right?

00:14:57.920 | >> And it sounds like their life event is they participated in the bull market and

00:15:00.720 | made a bunch of money.

00:15:01.800 | And it's like, look, I applaud them.

00:15:03.920 | They point out that they over the past six years have visited 33 national parks.

00:15:08.200 | That's a really serious financial planning conundrum,

00:15:11.160 | is getting people to do that kind of stuff and enjoy their life while they can.

00:15:15.320 | But what you don't want to do is make those decisions at the detriment of your

00:15:19.120 | future liabilities, right?

00:15:21.000 | >> Yeah, so they come to you and they say,

00:15:22.360 | we want to continue to travel and put this together.

00:15:24.600 | So it's like build a plan that takes that into account, right?

00:15:27.480 | Help our kids pay for college, help us go to all these national parks, and

00:15:30.800 | also help us not worry about a portfolio crashing all the time if and when it does.

00:15:35.480 | >> Yeah, I mean, that's when you first sent me this question, Ben,

00:15:38.000 | my immediate response was like, this is literally a commercial for

00:15:40.800 | why you need to work with financial planner to think through this stuff.

00:15:43.680 | It really is.

00:15:44.360 | I mean, again, just like I cherry picked the example of the 529s and the age, but

00:15:48.880 | there's 100 other pieces of this that we could pick apart.

00:15:52.040 | But I really think that the most important takeaway that the question needs to be

00:15:59.360 | given as far as an answer is, no, you should absolutely not be thinking about

00:16:02.040 | lightening up, but it sounds like they're picking individual stocks.

00:16:05.440 | And he looks like he's interested in migrating towards some sort of a more

00:16:09.400 | diversified approach to invest, and clearly, that's what they should be doing.

00:16:13.760 | >> Right, all right, Duncan, we got another one?

00:16:15.800 | >> Yep, so this next one's from Chris, and

00:16:19.720 | Chris writes, I'm a 40-year-old government worker at a state hospital in California.

00:16:23.920 | I have a solid pension that will be worth 2 to 3 million when I retire.

00:16:27.840 | I max out my 403(b) and 457 and backdoor Roth for 6,000, and

00:16:33.160 | they give how much they put into their 403(b) and 457.

00:16:37.840 | Also have two rental properties that are not in California, and

00:16:41.840 | 200,000 in brokerages and savings.

00:16:44.120 | Should my pension be treated like the bonds in my retirement portfolio, and

00:16:48.360 | should I put 100% of my other retirement investments in an index fund?

00:16:51.360 | >> First of all, this person is in a good position, obviously,

00:16:55.360 | to actually have a pension.

00:16:56.360 | Not many people have that.

00:16:58.080 | My brother works for the government.

00:16:59.560 | I think the only reason he's staying in that job is because he's gonna get

00:17:02.040 | a pension in his 50s.

00:17:04.120 | It really- >> Makes sense.

00:17:05.160 | >> Yeah, this person put a dollar value on it.

00:17:07.520 | They didn't tell us how much they're gonna get.

00:17:08.600 | But how does having that income stream change things if someone comes to you

00:17:12.800 | from a financial planning perspective?

00:17:14.120 | They say, all right, here's my portfolio, and

00:17:15.960 | then I have this income stream on top of it.

00:17:17.280 | What does that do to your ability or need to take risk?

00:17:20.000 | >> Ben, in 15 years of doing this, anyone I've seen come through the door who's got

00:17:25.960 | a pension as part of the financial plan is infinitely more comfortable

00:17:30.600 | from their own perspective on their finance.

00:17:33.040 | It doesn't matter how many millions they have.

00:17:34.440 | It doesn't matter what else they've gone on.

00:17:36.480 | Knowing that there's a pension, if it's coming from, if it's a state pension,

00:17:39.920 | if it's a teacher pension, if it's coming from a solid company.

00:17:42.400 | Obviously, like you said, there just aren't many of these left.

00:17:45.360 | So that's a small group of people.

00:17:47.280 | But for those who are fortunate enough to be in that position,

00:17:50.120 | it changes the entire game.

00:17:52.200 | Now, when you're thinking about like bucketing out what that pension serves

00:17:56.240 | versus like any other investments you have, the only way to answer that question is

00:18:00.240 | to look at it through what your actual need is, right?

00:18:02.840 | So if you've covered, if he's covered his basic spending need with a pension,

00:18:07.560 | that makes everything else a little more creative, right?

00:18:10.520 | Like you can look at it from a goal to goal perspective.

00:18:13.040 | So I don't think it's binary, is what I'm saying.

00:18:15.240 | I don't think it's, all right, I have the pension figured out.

00:18:16.960 | Let's like, let's just jam the pedal to the floor with the rest of the stuff.

00:18:21.320 | - Right, it could mean that you take less risk, right?

00:18:23.040 | Because you have that pension, you don't need to take as much risk.

00:18:24.960 | So it like, it's kind of like both sides, right?

00:18:27.200 | - It's a matter of looking at through the lens of what do you want to have happen?

00:18:31.120 | I mean, this is a 40 year old, again, longevity, right?

00:18:34.000 | If the pension is going to be there to supply the basic living expense,

00:18:37.680 | and you don't have to, you know, take risks to cover your needs,

00:18:41.400 | then it's a matter of thinking through what exactly you want to do with the excess

00:18:45.520 | before you can answer that question.

00:18:47.120 | You know, what are the planning needs you're solving for?

00:18:49.440 | Not simply, well, this is covered, let's invest in all stocks.

00:18:52.880 | - Yeah, and does it even open you up to the fact that like,

00:18:55.560 | this pension allows me to like, invest for the next generation?

00:18:59.280 | Like, you could be taking more risk because, yeah,

00:19:01.600 | maybe you're investing for years or whatever.

00:19:04.080 | All right, Chris, we got one question actually from the chat here.

00:19:07.000 | Casey asks, and this is like asking a barber, do I need a haircut?

00:19:10.320 | Casey says like, how do I know if I need a financial planner?

00:19:13.440 | Like, what are some of the reasons people come to us

00:19:15.360 | because they need help?

00:19:16.200 | Like, what are some of the main reasons?

00:19:17.440 | - I think the easiest way to look at that is we're helping people make better decisions.

00:19:26.680 | You know, we're not here, and we being financial planners universally,

00:19:30.520 | right, not just at Riddell 12.

00:19:31.720 | Like, universally, financial planners are there literally to help people make

00:19:35.520 | decisions that are not only more well-informed, but without, like,

00:19:39.880 | all the baggage of that, you know, oh, my God, am I doing the right thing?

00:19:43.240 | You know, oh, my God, did I just like screw up my future?

00:19:46.160 | And that's the lens you have to look at that through.

00:19:47.800 | Do you have a situation where decisions in front of you are being made, you know,

00:19:52.600 | like, either on the fly or really uncomfortably?

00:19:55.280 | And if that's the case, then absolutely, start talking to someone.

00:19:58.480 | Why not?

00:19:59.200 | You know, at least do...

00:20:00.320 | I can't think of someone who's going to charge for an initial consultation.

00:20:03.320 | You know, sit down with the firm that you're comfortable with and, you know,

00:20:06.440 | see if the questions that you're faced with are actually, you know,

00:20:10.680 | of detriment to you in the future.

00:20:13.600 | So to put that in a box is really difficult, right?

00:20:16.680 | To say, well, you have to be this age and have this many assets or whatever.

00:20:21.080 | You know, I just think it's as simple as, are your future decisions or near-term

00:20:26.360 | decisions stressing you out to the point where you think you're going to mess

00:20:28.840 | something up?

00:20:29.920 | - Right, yeah.

00:20:30.760 | Or do you just want to find a place with expertise in a bunch of different areas

00:20:34.040 | that can help you make better informed decisions, right?

00:20:36.800 | - Yeah, and that's really the value we're bringing is, like, as planners is,

00:20:41.160 | you know, hey, I want to make sure, like, these questions here, hey,

00:20:45.200 | how should I view my pension in light of the fact that I've also got 457s

00:20:49.720 | and 401(k) accounts?

00:20:50.480 | Well, what are they for, right?

00:20:52.560 | I don't, you know, I don't think it's...

00:20:53.760 | I think most of these decisions aren't binary.

00:20:56.800 | - Do the flows of inquiries go up with market volatility, typically,

00:21:01.600 | for financial advisors?

00:21:03.080 | - Absolutely, absolutely.

00:21:04.880 | - I think especially from people who have advisors that don't have a plan,

00:21:09.000 | like we see that, and also people who have been doing it themselves and they go,

00:21:12.160 | "Okay, I've amassed enough wealth that I don't want to mess this up now and I don't

00:21:15.920 | have as much time as I used to have," right?

00:21:17.200 | Like, those are the things that we definitely see.

00:21:18.960 | - And that's true at any asset level.

00:21:21.120 | You know, I've heard all too often people with significant amounts of money,

00:21:24.440 | "Oh, I don't need a financial plan."

00:21:25.520 | Well, what do you mean?

00:21:26.280 | You've got everything figured out.

00:21:27.720 | You know the direction of all of these assets as long as your lifestyle is

00:21:30.760 | covered.

00:21:31.260 | Like, that's 99% of the time when you turn that question around on someone,

00:21:34.880 | it's like, "Well, no, I didn't think of that."

00:21:36.280 | - Yeah.

00:21:36.780 | I mean, like, if it's not fun anymore, right?

00:21:38.340 | Like, my Robin Hood's no longer fun, you know?

00:21:40.400 | - Yeah.

00:21:40.900 | - It used to be fun, and now it's not.

00:21:43.660 | - Duncan needs a consultation, Chris.

00:21:45.140 | All right.

00:21:45.780 | Next week, we are off.

00:21:47.340 | I'm taking the family, my wife, three kids, the in-laws, all going to Disney.

00:21:51.740 | Duncan, you're a Disney guy, what are my tips here?

00:21:54.700 | - Oh, I mean, I always like the pools.

00:21:56.580 | I'd hang out at the pools.

00:21:57.540 | Epcot, World Showcase.

00:21:59.260 | - Yeah, a pool sounds great to me.

00:22:00.700 | Yeah, I'd much rather be in a pool than waiting in line all day.

00:22:04.140 | Remember, if you have some thoughts on any of the questions here today,

00:22:07.620 | leave a comment for us on YouTube, have a question for the show,

00:22:11.300 | askthecompoundshow@gmail.com.

00:22:13.900 | Duncan, are we doing a ticker yet for 100,000 subscribers?

00:22:16.920 | Like, the national debt level in the country?

00:22:18.300 | - Yeah, we're getting real close.

00:22:19.540 | We're getting real close.

00:22:20.340 | But, yeah, share with your friends.

00:22:21.620 | Let's get to 100,000.

00:22:22.900 | - If you liked Chris's compound hoodie today, go to idontshop.com.

00:22:26.760 | Again, we're off next week.

00:22:28.460 | I'm in Disney.

00:22:29.780 | I'm going to be waiting in lines.

00:22:31.380 | It's going to be hot and sticky.

00:22:32.260 | I just can't wait, Duncan.

00:22:34.340 | We'll be back in two weeks.

00:22:36.100 | Thanks, everyone.

00:22:37.060 | - See ya.

00:22:38.520 | [MUSIC PLAYING]

00:22:41.880 | [MUSIC PLAYING]

00:22:45.240 | (upbeat music)

00:22:47.820 | you

Should I Let My Winners Ride? | Portfolio Rescue

Chapters