Learning From Grandma’s Financial Wisdom

Well, hello and welcome in to Mr. Stillman's Opus.

I'm Ben George alongside John Stillman over at Rosewood Wealth. John approaching the holidays recording this. So I know we spend a lot of time around family and I know when we're around family, well, hopefully we're listening to our grandparents because they oftentimes provide us quite a bit of wisdom if we're willing to listen. Or if you just watch what they do. There's a lot of wisdom in how they live their lives even if they don't talk about it. It's very true, very true. So we gather some of that today to put together this podcast. We want to see what we can learn from Grandma's wisdom and apply it to our finance.

I know we love doing that and I think this episode will be fun because there are some just some general classic pieces of wisdom that you might have heard of and you think about something else when it comes to mind. But all of these, of course, can be applied to finance because like everything, John, there's always a lesson to be taken away. Always. That's why I can do videos about farm stuff and turn it into a financial analogy. There's always something there.

There's always there always is. And we need to do another financial farm topic before too long because I know you have more and more experience with that today than you did before. But today, though, we're talking about Grandma's wisdom.

And I want to start off with a very simple one, John. And this is one that we know we all I think have had those days where things go wrong and they just continue to pile up the old expression. When it rains, it pours.

When it rains, it pours. Yeah. So I think people usually use this in the context of bad news. Right. Like, oh, my alternator died on the car this month and we have to get a new roof because we have a leak. And then, you know, some other thing happens.

Big expenses. Right. Like that's when you hear people say things like when it rains, it pours. Or if you have health issues. First, I had this and then I broke my ankle.

Like we had a lady at church recently who she was about to have. Was it hip surgery? Yes, she was about to have hip surgery. And a few days before she had hip surgery, before it was scheduled, she tore her ACL or not her ACL, her Achilles tendon out on the other leg.

So she had to get the Achilles surgery, get that healed and then get back in for the hip surgery. So that's there you go. When it rains, it pours right there. Now, good news often comes in waves, too. I don't think people tend to think of good news as when it rains, it pours.

But, you know, you can get some momentum going in life and a lot of good things happen to you at one time. So what does this have to do with your financial life? Well, this kind of explains how and why the market behaves the way it does because you end up in this cycle of, ooh, you know, the market was down a little bit today. I wonder if I should be getting out of the market because we're about to have a downturn. And then you have a bunch of other people who have the same thought. And so then, you know, it becomes like a panic selling thing and the market goes down a lot more than it should have just based on sheer economic factors because you have the psychology of all these other people. It's the same as if there's about to be, I don't know, a toilet paper shortage at the beginning of a global pandemic, right? And you have people who are panic buying toilet paper and you're not panic buying yourself, but you just want to go make sure that you get the toilet paper before all the panic buyers get it, right? Which, of course, makes you indistinguishable from the panic buyers. It's kind of the same way with the market a lot of times, both up and down. The market has these wider swings, higher highs and lower lows than it would have to have. But for the fact that, you know, people get themselves all worked up into, oh, we have to buy now or we have to sell now.

And it just makes the roller coaster that much more wild than it would otherwise have to be. Well, we ever look back on those days and laugh, John? At the toilet paper? Yeah. Yeah. Just everything in that time frame. Well, so this was right about the time that we started using bidets at the house.

So really worked out for us. And now the next toilet paper shortage would be completely irrelevant to me. Well, I didn't know you were going to take it there, but it kind of takes us to our next thing. You never know. You never know what John might say and what life experience he might use to tell his story.

But that's what we are moving to next. You never know. And that's the expression here a lot, right? I mean, when you're looking for answers and if you're thinking about it, something's possible. Hey, you never know. And I think with financial planning, when I think of this, John, I just think of the way you have to answer things, right? It depends. You just never know what might apply to you, what might not.

But I'm sure there's another way you can take this as well. People love to ask all the time and they sort of preference it with, you know, I know I'm not going to hold you to this like a prediction or anything, but what do you think the market is going to do next year or in the next few months? And of course the answer is, I don't know. You never know. My entire investing philosophy is based on I have no idea what the market is going to do next and I'm not going to try to guess.

So let's make sure that you're going to be okay and in good shape regardless of whether or not it goes up and down and let's figure out what we need to do to make that true for you. So that's the biggest thing in the financial world that you have to say you never know about. You can't be 100% certain. You can't even probably be 50% certain about what the market is going to do next. Now there are things in life and things in your financial life that you can be certain about. For instance, you can be certain about maybe what your income is going to be in a particular year and do your tax planning accordingly. You can be certain about how much income you want to have when you retire next year, let's say.

You can be certain about what your interest rate is on your mortgage right now as you're assessing whether or not you want to try to pay that off early. You can be certain about what tax bracket you're going to be in next year because they can't change the tax brackets on you mid-year so we know going into the year what the tax brackets are going to look like and assuming you know what your income is going to be, you know what bracket you're going to be in. So there are things you can know and the key is taking those things that you know that you know and marrying that up with the things that you can't be certain about like market returns or what interest rates are going to do next or how taxes might look 10 years down the road. Let's control the things we can control and all that stuff that we have to say, well, you never know.

Let's be prepared for whatever the outcome ends up being. You always want to be prepared for that you never know but to your point, controlling what you can control is always a great way to approach life in general. All right, what about a bad apple spoils the whole barrel? You might have heard your grandmother say this at some point but how do we actually take that and apply it to what we're talking about with money, John? Is this like a be careful who your friends are kind of thing? That's the way I always thought of it, yes.

I heard it a couple of times. Could be true with your investments. Usually I would say we see this with company stock so people end up with entirely too much of their net worth tied up in the company that they work for or the company they used to work for. This was a big thing with GE employees 20 years ago and they were certain that GE was always just going to keep going up and up and up because it had been a great company for many years and if you look at what GE stock has done in the last couple of decades, not so great. People that worked there and loved the company ended up with just way too much money tied up in GE stock. They would have these 401ks from GE and maybe it's a million dollar 401k but they had half of it in GE stock.

Even as the market is going up as a whole, half their investments are doing well but the other half of the 401k is not doing nearly as well because the GE stock is a drag on the rest of it. You just have to be careful if you have one apple. The good thing about this saying, a bad apple spoils the whole barrel, that's not really true with your investments if you truly have just one apple that goes bad in your whole barrel.

This is the point of diversification, right? It's so that one bad apple doesn't spoil the barrel. The problem, what I'm explaining here with the GE stock is when people have half of their barrel with apples that go bad and that's not what you want. Yeah, or you're just completely relying on that one barrel, right? If that barrel goes bad, then you're in trouble. Yeah, well even better. Let's have multiple barrels.

Good idea. I've heard that before. Multiple bucket strategy, right? Is that true? Yep, you got it.

Next one here, some financial wisdom for you. I heard it straight from the horse's mouth. We always want to get our information directly from the source if we can, right? When grandma would tell us this, what are we talking about here? That was in gossip circles, right? Well, no, this is not secondhand information. I heard it from her directly.

I heard it from the horse's mouth. When it comes to technical questions like what I'm talking about, often, for most people, they're not going to know what technical questions to ask because if you don't live in this world, why would you know that? There are questions when people meet with a financial advisor, especially for the first time. They've often Googled questions to ask a financial advisor, which they're not necessarily bad questions, but when somebody comes in and starts to act like these are all natural questions that they've come up with off the top of their head, I know that they've Googled it because all these lists are basically the same thing. Those questions, if you don't really know what you're asking by asking those questions, the answers don't necessarily do a whole lot for you, if that makes sense. Yeah, a lot of it's just you don't know what you don't know in these situations.

Again, why you work with a professional. The last one here that I have for you is probably the one we all have both heard quite a bit and probably used with either our friends, family, children, whatever it is, but if your friends all jumped off a bridge, Jon, would you do it too? So I'm sure that before Olivia was born and you guys went to birthing class, this was one of the things that they taught you in birthing class that when your kid is a little older, you have to learn how to say this to them, right? When their friends are doing something stupid or dangerous or whatever, but it's part of the required training that new parents get is learning how to say, if your friends jumped off a bridge, would you do it too? A lot of people get peer pressured into certain financial decisions or approaches or strategies or particular investments, and sometimes it is like a conscious thing where it's like, well, my brother-in-law says I should do this and my neighbor says I should do this or that's what they're doing, so they seem kind of similar to me in life, so I guess that's what I should do too. Sometimes you think about it consciously, but more often than not, it's more of a subconscious thing where you see the way that other people are doing things and you just kind of assume, well, I'm the same generation, I'm roughly the same demographic, probably make roughly the same money or live in roughly the same neighborhood, so that's what I should do too, and the reality is they're not you. Just because they live in your neighborhood or work at the same company or go to the same church or whatever, that doesn't mean that they have the same life as you, and so you could have a couple of people, in fact, I see this all the time, people that on paper from the outside looking in, you would think need to do exactly the same thing financially, but the reality is I might give those two people completely different recommendations on how they need to approach a particular issue in their financial life because they're different people. They might have different family dynamics, they might think about money different ways, they might have different levels of responsibility with how they control their spending and things like that, so I'm not necessarily going to give different people the same advice, and so you have to be conscious of this just because all your friends are jumping off that bridge. That doesn't mean you should do it too, not that they're necessarily even doing something bad for them.

Maybe they're doing the right thing for them, but you are not them. It's really amazing that you can really apply that piece of wisdom to anything, and it's really, really valuable, though we never want to hear it as kids. That's why it's in the handbook.

That's why they teach you early on. All right, John, well, we appreciate you teaching us today a little bit more about financial planning and retirement planning and why we need to take grandma's wisdom and apply it to what we do with our money, but it's a lot of valuable lessons here, but again, if you have questions for John, you can always call or text 800-545-2991. All right, John, as always, we enjoyed it. Talk to you soon. Have a great one. Talk to you very soon. Carolina Weldstords Doing Business as Rosewood Wealth Management is a registered investment advisor in the state of North Carolina. The material presented is intended to be general information and should not be construed by any consumer as the rendering of personalized investment advice.