Should We Buy the Dips?

Speaker 1 (00:02):

Welcome to the Retirement Wealth podcast. Our goal is to help those retired or soon-to-be retired investors make more informed financial decisions and live an enjoyable retirement. Our host, Mike Lester, is the founder and CEO of Talon Wealth Management. Mike is an Investment Advisor Representative of Retirement Wealth Advisors, Inc an SEC registered investment advisor. Thanks for joining us today. Let’s get started.

Kristen (00:30):

A lot of folks are looking at the new year and trying to see what they can do to take advantage and maybe make a few extra dollars or save a few. Since December has been a little rocky, Mike, as a fiduciary financial advisor, are you advising your clients to jump on any of the dips? I guess I need to preface that with, you help people nearing it in retirement, but they still want to make money.

Mike Lester (00:53):

Well, of course. I mean, and so this sort of buying the dips, selling the highs is really more of a day trading thing. That’s, in my experience, not what somebody who’s retired or close to it wants to do with the majority of their retirement assets. I mean, we might set up an account on the side for fun that clients are trading in that way, but why risk your nest egg? Gosh, you brought it up in the past, things like Bitcoin, it’s all over the place. Markets are all over the place. We’re just looking at finding a way to have our clients navigate the volatility. All of our clients are looking for the same thing, which is basically the highest rate of return they can get. They’re just not willing to take a lot of risk to get those returns.

Mike Lester (01:35):

So when I look at the market right now, I see things like the market’s over-bought, which is risky. I see things like Biden is talking about raising taxes. I see things like people aren’t going back to work like we thought they would. I see people spending more money than they have. I see a lot of things that are reminiscent of 2007 before things got really bad in 2008, which is just this sort of euphoria like, “Oh, well. Everything’s okay. I’m spending more money. I have.”

Mike Lester (02:03):

Kristen, it just comes back to it’s not sustainable. It’s too good to be true. I feel the same way I felt back then. I’m not a doom and gloom kind of a person.

Kristen (02:12):

Never have been.

Mike Lester (02:13):

I’m just realistic. If it feels too good to be true, if it seems too good to be true, if it’s not sustainable, it’s not sustainable, at some point something’s got to give, and I’m not willing to risk our clients’ money to make it happen. Nobody can time the market, but you can be a smarter investor. So if you take a look at everything that’s going on, I think it’s time to be happy with the returns we’ve had, start batting down the hatches, come up with a plan if things get bad, because again, I don’t see a plan for things getting good.

Mike Lester (02:45):

If you take a look at people potentially taking profits before the end of the year because they’ll worry about taxes next year, probably volatility. If we take a look at taxes going up next year, probably volatility. If we look at inflation, probably not a great thing. Put all of that aside. Look at Russia and Ukraine, look at China and Taiwan. Where’s the upside versus the downside? I mean, we’re in a pretty good spot right now. Would you rather be invested in things doing well next year with the amount of uncertainty going on? Or would you rather be watching from the sidelines with a plan?

Mike Lester (03:20):

Our clients mostly want to be on the sideline with a plan, but the issue is most people with 401Ks or working with advisors that tell them to hang in there or anybody who doesn’t have a plan is in that situation. Here’s something that… We did a client event the other night and had a conversation with a client. He said, “You know, I never thought about that.” What about political will for things to go well next year? We need next year for things to go well in a lot of ways. We need Washington to get along and get together on things. When things get real bad, we would need them to get together on more spending.

Mike Lester (03:54):

It’s an election year. We’re going into 2022. Do you really think the Republicans are going to want to join hands and get together and make the economy better for Biden come November? I don’t think so. If you look at all of that, in my mind yeah, it’s been good. It might go higher, but we need a plan. That’s why we sit down with people every week and put together complete financial plans.

Kristen (04:19):

You know, the media has reported for many years that the baby boomer retirement surge was coming, and it looks like the floodgates are wide open. A Pugh research study says that between 2008 and 2019, the retired population of ages 55 and older grew by one million retirees per year. In the past two years, the group of retirees 55 and older have grown by three and a half million. Are you noticing this influx of retirement at your office?

Mike Lester (04:51):

Absolutely, and for a lot of different reasons. The front end of baby boomers retiring obviously is going to be smaller. Now we’re right in the heart of it, and more and more people are retiring. Kristen, if you add to that markets and where they’re at… If you go back to 2009, after people had just lost 40% sometimes of their retirement plan, their willingness to retire was pretty low. So fortunately, we’ve come back from that.

Mike Lester (05:17):

Markets are at or near all time highs. People are taking a look at their portfolio for their retirement accounts going, “Well, I think I could retire on that.” So, that’s contributing to it. If you take a look at what markets have done over that period of time, since 2009 markets went from basically about 6,700 to around 36,000 on the Dow Jones industrial average. That’s a 530% increase. You have basically five times as much money in your portfolio potentially as you had in 2009, if you hadn’t made any contributions over that period of time.

Mike Lester (05:53):

That’s really, really significant. When we look at stats like more people are retiring, we have to take a look at why. Well, first of all, probably a little more confident based on the value of their portfolio, but a little less confident based on things like inflation, maybe a little less confident in their job given everything that’s going on, maybe pretty frustrated with their job. I meet people every week that are just frustrated with the situation. Right now, if you were really loyal to your company and you’re sticking it out and working really hard, and then your company is turning around and paying people more than they were paying you when you started, and they’re probably less experienced. So they could have given you a raise.

Mike Lester (06:30):

Instead, they’re hiring the new people and paying them more than you feel like they should. I mean, these are just real emotions and this is what’s going on out there. We want to be able to empower people to say, “Take this job and shove it.”

Kristen (06:44):

Love it.

Mike Lester (06:45):

It’s hard to say, unless you’ve got-

Kristen (06:47):

The confidence to really follow through with it.

Mike Lester (06:49):

The confidence to really follow through, or the numbers to back it up. If you ask me my favorite thing about my career and our industry and what we do, its kind confidence and putting smile on people’s faces and just letting them know, “Hey, listen, you’ve made it.” The second thing is, every single time somebody says to me, “So you mean I can go in and tell my boss, I quit?” And just the satisfaction of that, I feel bad that they’re in a situation that they don’t really like their job.

Mike Lester (07:16):

I guess I’d rather be talking to somebody who says, “I love my job. I think I’m going to keep doing it as long as I possibly can. But if I did want to retire for some reason, maybe it’s health reasons or my wife or husband, or just give me a hard time also working, then I’ll leave.” That’s okay. But when somebody hates their job, Kristen, and we can say, “Yeah, you’ve done it. You’re there. If you invest your money this way, here’s your income plan. Here’s your financial and here’s your tax plan,” that satisfaction on their face is a really, really awesome thing.

Kristen (07:44):

Find out the hows and whens of your retirement, and when you can say that, “Take this job and shove it,” line. Hey, maybe even play Johnny Paycheck on your iPhone or something when you do it. You just choreograph the whole thing. Whatever it is you want to do, you need to know where you stand. Find out more at guardingyournestegg.com. If you had to ballpark it, how many hours of sleep do you get each night?

Mike Lester (08:06):

Well, that depends on if Finn’s in bed with me at night.

Kristen (08:09):

Yeah, that was what, last night? It was a little bit of a scene.

Mike Lester (08:13):

A little bit of a scene. So Finn has this… First of all, he’s awesome, but he’s five. He sleeps fine, but he twists and turns. His big thing is, his toes have to find the warmest spot in the entire bed.

Kristen (08:26):

Oh, he’s like a kitten.

Mike Lester (08:27):

Like a little kitten.

Kristen (08:27):

Or a puppy dog.

Mike Lester (08:29):

Yeah, and unfortunately tends to be my privates.

Kristen (08:33):

Oh, poor… [crosstalk 00:08:34]. My, that is not…

Mike Lester (08:34):

That will wake you up faster than you could… I’m like, “Excuse me, Finn.”

Kristen (08:42):

I know he doesn’t sleep with you guys every night. He must have had something wake him up.

Mike Lester (08:45):

Yeah, there was a whole thing.

Kristen (08:47):

Yeah, and so he meanders in there, and then you’re woken up by that. That’s a lot.

Mike Lester (08:50):

He meanders in and he goes, “I had a nightmare.” Then of course you’re going to be like, “Okay, come on in,” whatever. But I know ahead of time. It’s just like, all right, well I’m not getting sleep tonight. Honestly, last night, I’ve been through this a few times, I’m like maybe it might be time for dad to sleep on the couch. Not because I got in trouble with mom. Just because… I don’t know.

Kristen (09:09):

Nobody’s going to join you there.

Mike Lester (09:10):

I’m sure there’re some dads that have been there. I’m not the only. It’s just not getting any sleep when that stuff’s going on.

Kristen (09:15):

That is tough. A lot of people lose sleep over different things. In fact, a Bankrate YouGov poll found that 78% of Americans are losing sleep over something that has them concerned, be it relationship, work, even politics. But over half say they’ve lost sleep over their finances. Looks like the pandemic amplified money concerns because a similar survey three years ago found that 36% of people said they’d lost sleep over money. Now that figure is more than half. Mike is a fiduciary financial advisor that mainly helps baby boomers. What kinds of things do people usually say keep them up at night?

Mike Lester (09:54):

Number one, they’ve done plenty of surveys. Running out of money is a huge deal. It’s really, really hard to make that transition from going to work knowing you’re getting paid and being able to take that paycheck and apply it to your life, to your expenses, to your standard of living. Let’s say that you got an employer, they lay out your salary. If you’re married, they lay out your spouse’s salary. You take a look at your health insurance expenses, other expenses we’ve spent the past 30, 40 years mapping out. “This is how much is coming in. This is how much is going out. We’re going to be okay.”

Mike Lester (10:26):

But that’s based on waking up every morning, going to work and getting paid to do your job. Making the transition into retirement, for obvious reasons, it’s a little scary for people. It’s very, very different than what you’ve been doing for the past 20, 30, 40 years because instead of putting money into your retirement account, instead of going to work and having things covered like expenses in healthcare, you’re now having to pay for it yourself. And you’re wondering how long can I afford to pay for that?

Mike Lester (10:55):

So the whole, how long would it take me to run out of money given my expenses, given inflation, given taxes, giving all these moving parts, which are things like taxes and inflation, how long would it take? Then on top of that, most people with the retirement plans or work, frankly, they’re just used to the “hang in there” strategy, which is there was no help. There was no guidance. You went to work. They asked you if you wanted to participate in the retirement plan, you said, yes. They didn’t offer you any help on the allocation or what you should invest in. There were limited investment options on things like 401Ks, TSP, 403B, any retirement account.

Mike Lester (11:32):

And now you’re making a transition going, “Okay, well, I feel pretty good about where markets are. I made contributions. The company gave me a match,” I hope. And now it’s to a certain dollar amount. What do I do with it now? Kristen, I’d say that’s probably one of the biggest things that we’re dealing with on a weekly basis is, “I want to retire. I need to cover these expenses. I’m not sure how to do it with my nest egg.” People aren’t calling us if they’re not happy with their nest egg necessarily. They might not be happy with management. They might not be happy with their investment options.

Mike Lester (12:04):

But if you think you might want to retire, then you’re feeling like “Maybe I’ve got enough,” well, what we’re able to do through financial planning is answer questions like, do I have enough? How long will it last? What are you going to do about taxes? What are you going to do about inflations? How should it be invested? That’s everything that goes into financial planning. It’s financial planning, it’s tax planning, it’s estate planning. That’s why it’s a complete financial planning.

Speaker 1 (12:31):

If you would like to have a comprehensive financial plan and an analysis of your current portfolio, go ahead and visit our website at retirement.tips/plan, and we can do that for you complimentary.

Speaker 1 (12:46):

Thanks so much for joining us on today’s show. Be sure to subscribe to our podcast. Visit our website at retirement.tips for more free retirement planning and investment resources. Thanks for tuning in to today’s show. We’ll see you next time on the Retirement Wealth podcast. Exposure to ideas and financial vehicles discussed should not be considered investment advice or recommendation to buy or sell any financial vehicle.

Speaker 1 (13:13):

This information should not be considered tax or legal advice. Individuals should consult with professionals specializing in the fields of tax, legal, accounting or investments regarding the applicability of this information to their situation. Past performance is not a guarantee of future results. Investments may fluctuate and when redeemed may be worth more or less than originally invested.