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July 25, 2021 9:00 am
HACKING! We have seen supply chain disruptions and large portions of entire sectors of the economy shut down due to hacking and cyber attacks. How does something like this impact the individual investor? Tune in as Peter Richon discusses this topic and more on this week’s episode.
Although you plan for success planning matters radio and will come into the program. I am Peter Rochon, founder advisor at Sean Manning. This is planning matters radio we talk about all different types of important financial topics things that you need no consider or do planning in order to optimize the results and we talk about the optimize retirement plan that we hope to put together for our clients across North Carolina Southern Lake County especially. We are located in Fuquay Marina but really all over with the ease and the convenience of technology we have science across the country at this point in time, some that have started here and moved away others that we have gotten as a result of of referrals or clients that we currently serve recommending us to their their friends or relatives, and in other areas, but you got questions or concerns. Bottom line is that we are a resource here to help guide you in a positive financial direction and and try to help you make informed and well thought through choices and decisions with your money and so let's talk about how to get rich on planning. You do need to have a plan in place and that's why we offer the optimize retirement plan. This really addresses, six things. First and foremost is is an introduction who you are who we are. A discussion of your goals and a snapshot of where you're at on that snapshot includes the five top financial categories or subjects your investments, your income, your taxes, your healthcare, your legacy, and in each one of those there's many subcategories and topics that can be addressed issues and questions that we will help you get answers and direction on but that is the optimize retirement plan and if you would like to get a plan for your financial future, pick up the phone and give us a call at any time, or even if you have a quick financial money related question that's on your mind. Would love to discuss it with you and help you get pointed in the right direction or at least more information to process to to make a good decision on your own.
919-300-5886 is our number 919-300-5886 is where you can reach me Peter Rochon at Rochon planning. You can also find us online. It looks like Rich on planning.com rich on planning.com is where you can go and I would love for you to take the time there's no cause there's no obligation.
If you could do me a favor and go to the site entering your name entering your email address and I'll send you out a copy of my book.
Understanding your investment options. It's just a little bit more than 100 pages and each section. Each chapter is anywhere from 5 to 10 pages, and it explains the difference between bank accounts, checking, savings, money markets are different types of bonds, corporate bonds, municipal bonds, government bonds, mortgage-backed security bonds. How did those leads to the 08 financial crisis stocks versus mutual funds versus ETF's gold crypto currency different types of insurance different types of annuities and it rates each one as far as where it should be utilized in your portfolio. What are the pros, the cons were the benefits. The disadvantages where is this an appropriate tool to be considered for utilization soap. I believe that it's a very helpful and informative educational resource for you to get a surface level education about a number of different financial options and the reason why it's important is because each tool each place that we can put our money has specific things that is designed to do in each dollar we want to be as efficient as possible.
But money is a terrible terrible multitasker out at its core, it's base money can do about four different things for us. It can be safe. It can be liquid. It can be an income producing tool work and provide growth, but it can't do really more than two of those simultaneously so money in the bank is about safety and liquidity but you don't expect a whole lot of growth from and if you try to take an income a reasonable income from it. You're probably ending up taking out more than the growth and you will deplete the account value money in the market is about growth. But we'll have safety have liquidity if you want to cash out of a fun door of a stock within 24 to 48 hours. You usually can do that but it does not have safety and again if you try to take an income from a fluctuating source like what the market or equities in the market are then can result in a fluctuating amount of income or an unpredictable amount of income, CDs, annuities, bonds, real estate, those are all generally more conservative.
They are about safety and they are about growth or income, and you sort of decide which which of those secondary goals is more important at the moment, you can let the money be reinvested and then it can be about growth or you can take the money out as as a withdraw and and create an income from it, but bottom line is, each place each different option that I described in my book there. Understanding your investment options serves a different purpose in your portfolio and to varying degrees within even some specific options. I go over that in the book to give you a baseline understanding so that you can correlate your goals to the financial tools that you are using to achieve them. That's what the book is all about to give you a good understanding if you would for me again as a favor, I'd like to kinda test this thing out. Go to rich on planning.com rich on planning.com enter your name, enter your email address will email you out a copy of that book so rich on planning.com understanding your investment options if it pops up right at the beginning of the site and you can navigate lots of tools, budgeting charts and and spreadsheets. There is a resource of the countdown to retirement is a handful of different reports that we have talked about over the weeks and months on this program the seven biggest financial myths are the three biggest expenses in retirement how to plan to control them. The six core issues at all plan should address the five planning mistakes to avoid the four approaches the long-term care are the two most important questions to answer in the number one determining factor for your retirement.
All of those collectively we refer to as the countdown to retirement.
You can request that on the website as well. Rich on planning.com today I want talk about some hot button financial topics, hot topics in the financial world before we get into that again.
All of these items that we talk about your they've covered in the planning strategy session that we do offer and similar reviews, similar plans to what we have put together for our clients and and radio show and podcast listeners and viewers.
They can go upwards of a thousand to several thousands of dollars and I can charge for my time. I can charge for just putting a plan together and putting that in my clients hands. I don't do it for radio show listeners for anyone, put in touch with through the Dave Ramsey program for anyone who tunes in for a podcast. Why would you not charge for something you can sometimes is the question because if I charged for the plan itself.
Do you think I would get more clients or or less clients I charge for the plan upfront you think more people would take advantage of it or less.
I can tell you that if I charge the planning fee that I can charge upfront, less people would take advantage of it and as a result, I would end up getting less clients and when I do bring a client on board we enter into that advisor client relationship officially that I'm compensated by the ongoing planning that I am doing by managing the plan so we are compensated like any other advisor would be compensated for managing the plan on an ongoing basis, but we make the plan itself available to you. No cost no obligation what we find is that some people feel they're perfectly capable of going alone, but more often than not, the plan does show some measurable benefit and we end up talking about how to implement that plan together after we get to know one another.
So if you would like that optimize retirement plan goes over your Social Security how to maximize that. What are your optimal strategies. There are how to make a good decision about when and how to take it a how to map out when and how to take income from other retirement accounts kind of your order of operations of of when to take dollars in withdrawals from certain accounts to optimize the rest of your financial your investment.
Your tax situation, how to control those taxes and minimize the amount that you will pay in your tax liability.
Over the course of your retirement life time. How to identify some of the strategies that will help you to address many of her time its greatest risk, market risk sequence of returns risk longevity risk healthcare risk all of those are included in in the optimize retirement plan and part of the follow-up discussion. No cost is give us call 919-300-5886 919-300-5886 or once again go to the website rich on planning.com Rochon planning.com so we been hearing a lot about this hot stock market and this is been a hot topic for quite some time mean, really, since the great recession since the housing market bubble that was 2007 through 2009. The market has been on a tear market has done fantastic just a couple blips on the radar 2015 was kind of sideways to down here, but it was short-lived and in the market bounce right back 2018. Toward the end of 2018.
We had a pretty sharp decline in in markets. They lost about 18%, but again I April or May 2019.
They had bounced right back. So a very short-lived downturn. No true traditional market correction or bear market that has lasted anything more than about six months and even with Kovic, which was a a a stork downturn in market but the, the largest percentage of value lost in a very short period of time. It bounced right back. We were about six weeks before the market came back to pre-Kovic levels and the average investor had their value back within 2 to 3 months and then, so long as you state invested were making profits through the duration of the year so the market has been hot all that to be said is that it's it's been 13 years now where we have not truly had a bear market are a true market correction but think back over that time there was a lot of money pumped into the economy. We had round one of Q quantitative easing out of back after the great recession. After the housing market collapse, the government started buying their own bonds. The Fed started buying back bonds that was known as quantitative easing.
It essentially amounted to pumping a lot of money into the bond market, which by the way, the bond market actually dwarfs the stock market. The bond market is a a much larger quantity of dollars than what the stock market represents and the Fed was buying US government bonds and treasuries at a huge rate at a very high rate they call it quantitative easing. It amounts to pumping more money into the market was round two of QE there was round three of Q eat those tapered off a little bit, but we kept putting money in our regular pace and then Kovic came along and there were several rounds of coded stimulus of the tune of multiple trillions of dollars. A lot of money has been pumped into the economy and where has that money gone well a lot has gone back into the markets so supply and demand Econ 101 when there's more dollars chasing a limited quantity of goods prices go up. That's how that works. Also, demographics of population as more of the baby boomer generation has reached their peak earning years and is turning the corner trying to save as much as possible to prepare for retirement or even get into retirement more of their personal dollars investment dollars have gone into the market so there's been this huge influx of buying in the market and that has really driven prices up for a number of years since the great recession pretty steadily, but do we expect this to continue over the next 10 years. Do we expect the next 10 years in the market to look like the last 10 years have looked will he go back historically over the last hundred years, there have been 14 different market downturns and were not talking about you know 2% or 5% within a day or week were talking about major bear markets.
Market corrections market downturns to the tune of one every 7 1/4 years about one once every 7 1/4 years on average.
The market has had a serious correction and drawdown and on average over the last hundred years. Those 14 different times where the market has corrected the average drawdown has been just under 40%. So we have not really seen one of those in the last 10 to 1213 years. Do we expect the next decade. Given everything that we are are seeing right now. Inflation that that the debt the deficit skyrocketing.
What we think may happen with with taxes. Do we see that the market will continue this historic rise that we've seen over the last 10 years or is there the possibility that things look a little bit more like the 10 years before that where there were two different downturns of 50% or more.com bubble between 2000 and 2002.
A three year downturn where the markets lost about 50% and then again 2007, 2008 2009, a downturn that stretched throughout over three year.
And and we lost about 50% of the value of the market in that time to now. The value of the market does not necessarily correlate to the value of your counsel. Yes, if you're invested in the market and if you are what you expect the next 10 years to look like it's been fantastic people of been money making money hand over fist in this hot stock market, but we do expect things to to sort of cool down and try to make sure that people are making well thought through and informed decisions about how much exposure we want to have to the market. So here's a thing we cannot control. None of us as individuals can control what ultimately happens in the market but we can control how much we are exposed to it and that's part of the, the job of managing your money or part of the job that if you trust somebody to manage your money for you. Your advisor that that relationship part of the job that they should be doing for you is is watching this and making sure that you remain in balance.
So if if we are flashing back 11 years to 2010 and let's say word were sort of toward the bottom of the market and things are beginning to recovering and climb back and we decide that hey we are 10 years away were 15 years away from our intended retirement, whatever our timeline is. I still have some time on my side I can afford to be fairly aggressive so let's set up a portfolio that is 60% equities and 40% fixed income. There's part of it that's a little bit more secure.
It's not safe, but it's a little bit more secure. It's less aggressive. That is the fixed income or bond side and there's a larger portion that is intended more for growth and is more aggressive that the equity side that's my 60% and then we let the market work. Not only do we let the market work, but we can continue to contribute because we've got 10 to 15 years into our intended retirement date. So over the course of the next five years as the market climbed from 2010 to 2015 that 60% became a larger portion of the portfolio now at 70% out 75% as were adding more money to it that side grows faster than the fixed income side. Now it's 80% it's 2020 now or 85% in equities and 15% in fixed income. We are a far, far cry away from the risk that we deemed appropriate 10 years earlier. Right. And now, 10 years has gone by. We should actually be less aggressive but her portfolio because we have not been rebalancing on an ongoing basis has skewed to become more aggressive and that's what a lot of people are missing about the amount of risk they are exposed to.
Currently, and it doesn't say it in red on the top in bold print on the top of your statements that you are now exposed to 85% risk. That's is actually 25% more than you thought was appropriate.
10 years ago. It doesn't say that. That's why having some kind of relationship with an advisor who's checking these things is monitoring it on an ongoing basis. Make sense. Rebalancing is a fundamental key to investment success every quarter you should be assessing your asset allocation and the mix of of investments that you have and if you decided that it should be 6040 10 years ago.
You should be bouncing back to that 6040 mix, and in fact every year on that annual review you should be assessing whether a 6040 mix is still the most appropriate mix for you now this is to say that if if you decide that you only wanted a 6040 mix, you may not get all of the upside of the market.
That's just how it works.
I hear a lot of people say well not want a good asset allocation.
I want a good mix of investments in my my goal is to beat the returns of the market. Well, if you've got a more conservative side to your portfolio. If you got some bonds or bond funds or fixed income funds are or bond mutual funds inside of your portfolio.
You're not going to experience the full upside of the market as it's climbing that's going to be part of your portfolio that is holding returns now, but during times were markets declined that side of your portfolio theoretically should be holding steady better than the equities portion so should help to not lose as much as the broader market decline that if you have maintained a proper balance and if you have done that rebalancing. But as I said you over the last decade as as accounts of grown as the market has done well as people have contributed more. Many people who began some time ago with with an investment allocation that was appropriate, are now exposed to a far greater degree of risk than they realize. Or then they were five years ago or 10 years ago. And if we haven't experienced a big D Kleiner downturn or bowl market. Sorry bear market in quite some time and you are overexposed to risk if we are taking that with this market can't carry on being red, white hot forever. Is this something that should be of concern and should be of alarm and should be paid attention to absolutely yes that's one of the things we do when we talk about one of the five topics that we help you address with that optimize retirement plan with your investments. How much risk are you truly exposed to how much could you lose if we experience another decline how much could you afford to lose and still be on track to achieving your retirement goals. How much are you paying in fees for the advice and the oversight that you're receiving and the investments that you hold in their portfolio. All of those things sort of go into the investments category of the optimize retirement plan all important things for you to know about pay attention to, and if you'd like to take a look at at even just that piece alone and do a portfolio comparison analysis we can show you how much risk you're taken we can quantify that we can show you the percentage of equities versus fixed income. We can show you what your holdings in your portfolio have done in previous downturns we can show you how much you're paying in fees 40 your investments in the advice that you're receiving to hold them all of those can be enlightening and and they can make the difference in several tens or hundreds of thousands of dollars over the course of years to know that information to to to to think through your decisions and to be well informed about how your money is positions can make a significant difference especially when you compound with time. If you like to see that again as part of the optimize retirement plan, pick up the phone. Give me a call be happy to talk with you be happy to run that report analysis 919-300-5886 919-300-5886. Another hot topic or hear a lot about inflation that's here it is. Is your plan designed to give you increasing income throughout retirement as I'll tell you a lot of financial projections that I see not only depend on the market.
Staying white-hot and consistently producing eight, nine, 10% returns year after year without falter, but they also kind of project that income is going to remain about the same that our need for income is not going to rise over time. That's just not the reality of the real world and how things work. You and I and everyone listening and watching this podcast we all know that inflation is a real factor were seeing it right now. But even in years where it is not been a high level hot topic inflation occurs.
It occurs slowly over time, so maybe it's a little less noticeable but there are spikes where it occurs rapidly over the last 60 years, the average rate of inflation has been about 3.7% in plenty of time during that 60 years where it's been below that, but the spikes when it happens quickly bring that average up. And if if we have just a 3% inflation your need for income your expenses, your bills will double in about 24 to 25 years and maybe we can say. I will have less activity in 24, 25 years I'll have some things paid off in 24, 25 years, but if you think back to 24, 25, 30 years ago what you were living on then is not what you are capable of living off of now, our member get my first job and and and he gave me a lot of financial freedom that I had never had before.
I was earning $4.15 an hour.
Well today I could not survive off that. Needless to say, you 10 years went by and and I need to be making significantly more than the $4.15 an hour, and another 10 years went by and I needed to be making significantly more than that inflation is a real factor. We need to include that into your retirement plan, and if if you've got a plan that does not include this or if you're not sure if you can use your assets effectively to account for an address inflation into and throughout retirement.
Give me a call and let's run through that optimize retirement plan. We can show you some strategies that can help you to address the potential risk of the silent thief. This de facto tax inflation. You know, with all the quantitative easing with all the stimulus the all the money that there has been added to the economy.
A solid chart from the Fred of Federal Reserve economic data is. It showed that 20% right about 20% of all money in circulation right now 20% of it was created within the last 12 months or since Corona encoded started S that's a lot of 1/5 of the money in circulation has has been created, digitized or printed whatever you want to call it since the start of coronavirus that's that's a lot of watering down of the power, the purchasing power of the dollars that were there previously so you are we going to see a 1/5 decrease in the power of the dollar. Maybe not exactly correlated but I am convinced that that this inflation. It's more than just a supply chain glut door or a problem.
It is here to stay in us because we put a whole lot more money in circulation is a de facto tax on the dollars that you had prior to them creating 20% more dollars you have less power with the dollars that you have now. That's going to continue that's that's how inflation works the other side of that would have low interest rates.
Another hot button financial topic. Now I had somebody on on a chat room talking about. It's a Facebook group talk about. We know where can I get safe rates of return that are better than .01% and everybody suggest will buy mutual funds by buy stocks you invest in the market just to get a good index fund and I my comment was take all missed the word safe. This person does not want to take risk with their money. There are some other alternatives now in a bank right now your CM .01% maybe 1/2 a percent. If you're lucky, you know, even a two or three or five year CD isn't paying 1%, but there are places that are there safe alternatives three-year five-year I can get you in the range of 2 to 1/2 3% over that period of time walk away with the funds at the end of that. Time the do something else with with your money. Maybe hopefully rates of improved by the end that three-year five-year. But if you're looking for safe alternatives to this low interest rate environment and let the almost insulting rates of interest the banks are offering. If if you're willing to dedicate again. You gotta make a trait money can only do certain things and if you are willing to trade a portion of liquidity for a period of time to be three or four or five years and you can get a more advantageous rate in a little bit higher rate in the choose may below three so if you'd like to find out about that or if you'd like to talk about the of the investment side of things and and you're willing to take some risk.
We could probably shoot for even on a conservative estimate rates that are a little higher than that.
Give me a call. We can compare to your goals and what you currently own and see if there's something that makes sense to you. 919-300-5886.
We can talk over crypto currencies there. There is access to crypto currencies within an institutional investment portfolio and platform. I know a lot of people are very interested in how do I get going with crypto currencies but maybe don't have the knowledge to take that task on and hope to learn everything enough to be comfortable with that. There are ways to do that. I don't recommend that you do that with a large percentage of I view crypto currencies is kind of an insurance policy against other other types of asset classes and even maybe the value of the dollar collapsing.
But that's that is one of the reasons why you would consider crypto currencies or gold or anything like that as part of your portfolio.
My question with gold is if you not hear these radio commercials and they're so certain that the that the end is imminent that the sky is falling with the dollars going to collapse and that's why need to buy gold. My question has always been well if you've got the Golden you're so sure that you're trying to convince me that dollars are going to be losing value, why are you willing to give me your gold and you want to take my dollars for them it's because there's a cost there's a transaction fee.
There's a commission to be made when when you buy or sell gold on either side of that so these are things that you need to consider your total planning. We try to pull them together for our clients. We look at income would look at investments. We look at taxes.
We look at healthcare we look at legacy we talk about these hot button financial topic sequence of return risk your shifting retirement timeline taxes cybersecurity hacking all of those things they they go into how we position our clients portfolios and how we design the plans and if you like to see and optimize retirement plan would would mean for your situation.
Pick up the phone to me. Call 919-300-5886 919-300-5886 be happy to talk it through with you, you can request a copy of my book. Understanding your investment options. Please do go to Rich on planning.com enter in your information there and will be sure to get out a digital copy and and get in touch leave your contact information if you would like a physical copy will get that in your hands as well with anything that we can do to help you make the most of your money at end and get you on a path to make all the best of your future financial success. We aim to do that we are here to help and assist. We are here to educate help you make more informed better decisions. Feel free to be in touch. In 193005886919300586.
Thank you for tuning into planning matters radio let's get rich on planning planning matters radio the content of this radio show is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy you are encouraged to think investment tax or legal advice from an independent professional advisor.
Any investment and/or investment strategies mentioned involve risk and possible loss or principal by three services offered through virtual capital management is a registered investment advisor. Fiduciary duty extends only to investment advisory advice does not extend to other activities such as insurance or broker-dealer services advisory clients are charged a quarterly fever as the management voluntary product pay a commission which may result in a conflict of interest regarding compensation