0:00:00 - Speaker 1
Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. Securities offered through registered representatives of Cambridge Investment Research Inc. A broker-dealer member, finra, sipc Advisory services through Cambridge Investment Research Advisors Inc. A registered investment advisor Cambridge and Greenway Wealth Advisory are not affiliated.

0:00:20 - Speaker 2
It's time to dive into some insider secrets of investing and retirement planning. To make your retirement as smart and as elegant as possible. This is Money Chic with Sherry Rash.

0:00:31 - Speaker 3
Welcome into another edition of Money Chic. Thanks for tuning into the podcast with Sherry and myself. As we talk investing, finance and retirement, we're talking learning through uncommon sense this week on the podcast, so we're going to find out what that means here in just a second.

0:00:46 - Speaker 4
Sherry, how are you doing? I'm doing great.

0:00:49 - Speaker 3
Yeah, what's been going on this week? You've had a good week.

0:00:51 - Speaker 4
So far, so good. It's Wednesday, so looking forward to the weekend, which is full of more kids' activities. Oh there you go.

0:00:59 - Speaker 3
Well, we're into the middle of the month now, so this year is moving, right. I mean, we're in the middle of June already, of 21. So next thing you know it'll be 4th of July. So we're just flying right along this. It seemed like 20 took forever, obviously, right with the pandemic. It seemed like 2020 was the longest. It seemed like it was a decade long, right, even though it was just a year.

0:01:19 - Speaker 4
But this year seems to be yeah, dog years, yeah, yeah, but this dog years.

0:01:22 - Speaker 3
I like that. That's great, but this one definitely is moving by pretty fast. So we're going to jump in and talk about our topic this week and just keep right moving along here. But uncommon sense learning through this. It sounds a little strange, but at first glance, each of these statements do make sense to most of us. These are all common sense statements that we can all agree upon when we hear things from a financial perspective. But when we actually stop and look at how we behave or others behave, or whatever the case might be, we find that we're actually really uncommon with our activities. So, for example I'll start with a very classic one here, Sherry of buy low and sell high. Now we've all heard that 8 million times. We know that's what we're supposed to do and in theory, we try to do that in many parts of our life. But when it comes to investing, it seems as though the majority of us get wrapped up and do this the wrong way. Talk to me about that.

0:02:16 - Speaker 4
You're absolutely right. It's the cardinal rule of investing buy low and sell high. But the reason why we don't follow it is because we're emotional. We're emotional when it comes to our money. We follow this rule for every other aspect of our lives. We bargain, shop, we clip coupons, buy one, get one free. We do this with everything, except for investments. Investments are one of the only things that, when the price goes down, it's looked at as a bad thing and we freak out and we panic.

0:02:45 - Speaker 3
Yeah, I got to get out of this right. Sell it now before it gets any worse.

0:02:49 - Speaker 4
Exactly.

0:02:49 - Speaker 3
Yeah, it's pretty strange and that's a great point that you make about clipping coupons and bargain shopping and buy one, get one freeze and all that kind of stuff. We're very, very adamant about that. Anybody who's ever worked retail will know that for sure. Right? People come in and they're like no, no, no, there's a sale on this and I want this or whatever the case is. And yet investing, so we think about right now, markets are continually at all time highs. We're on this.

I mean, you can make the argument, sherry, that we're still really on the bull run of the last 10 years. I guess we had the months of downturn during the pandemic, but the fact that it recovered in a calendar year was pretty amazing anyway, and so you can make that argument that we're still really on this bull run. And so the markets are high. And yet people are like, why need to get in? We're calling something now, fomo, fear of missing out, and so we don't want to risk not, you know jumping into Bitcoin or whatever the case might be, because it's only going to get higher. And then we have something like a downturn for whatever reason, and, to your point, we panic and then say, well, I can't. I can't handle the stress and is that really where a good strategy and plan is coming in? And in working with an advisor to help us ride the highs and lows? Because somebody can then use you as a sounding board to say, hey, talk me off the ledge here, right?

0:04:02 - Speaker 4
Absolutely. That's a major way advisors add value to their clients is by keeping their emotions in check. Most, everyone's largest asset is our retirement fund, our 401k, is our IRAs, and most people aren't using this money for a long time. We're saving into it and we're amassing this pile of money that we'll use in a future period, and I like to say almost the dollar amount right now doesn't matter and it really doesn't matter until you start using it and it becomes real money, real income in your pocket, and that's when we then need to be aware of the values that it is. So the ups and downs right now are perfectly fine and the downs are really when you should be buying.

My dad and I had this conversation the other day of when it comes to investments. By the time, everyone's learning about that hot investment to get into it's usually too late because it's high. That's at a high and you're jumping in at the high price and in most circumstances, it'll go back down. People will freak, hold the money out because they don't want to lose any money and then try to buy back in again when everyone else is buying back, buying into it when it's high. So, by keeping in mind that, when are you using this money? If you're not using it for a long time, don't worry as much about the account value, because it doesn't matter today. It'll matter in 15 years when you're retiring. But then, as your advisor, will be making shifts in the portfolio, so you're not going to have those high highs and those downloads. That's part of the portfolio progressing as you're getting closer to retirement.

But using the you mentioned retail, I always like to use the example. If I'm going to the store and I'm buying myself a pair of shoes and I have $100 to spend on these shoes and I get there and it's 50% off, I still have $100 to spend. I'm just going to buy two, right?

Why take the sale and buy one pair of shoes for $50? So I was planning to spend $100 anyway. So I'm going to buy two pairs of shoes and I'm going to walk home, and I'm going to go home and I'm going to be happy Because I got two pairs of shoes for the price I was going to spend for one. Conversely, if I were to go to the store with $100 now the shoes are $150, I'm going to be pretty bummed out because that's more money than what I wanted to spend. Investing is the same way when it's less, buy more instead of avoiding it.

0:06:30 - Speaker 3
And again it's getting through that psychological standpoint, and that's where an advisor really can bring value to the table and the conversation to help us balance that out when we're doing the opposite. And so that's the idea here of this podcast. So I've got many more examples of this, so let's get into the next one. Sherry, don't pay more in taxes than you have to, okay, well, that's a no-brainer, right? I don't think anybody signs up to say, yes, please, I would like to pay more in taxes over here, right? We don't see that really happening very much, but it does actually happen because people don't take the time to figure out how they can be as efficient as possible with their taxes. And again, this is where an advisor and a CPA can come in to help us be as efficient especially for retirement and pre-retirees with our tax situation.

0:07:15 - Speaker 4
Right. If you only think about taxes during March and April, when you're filing your taxes for the previous year, you're not doing what you need to do in order to potentially pay less in taxes. So by having a strategy, by talking to your CPA, maybe throughout the year, or creating a plan with them for action steps to take throughout the year to help potentially minimize your tax burden that's tax planning. What everyone is doing right now is tax preparation, which is just going to the CPA, dropping off your materials, complaining when you have to pay more and then doing the same thing over and over and over again. So by coming up with a strategy with your CPA that you can implement throughout the year will help to potentially reduce that tax bill that you have.

0:08:04 - Speaker 3
Yeah, sounds like you were talking to my wife, because that's what I do. She's like. She's like are you going to complain again this year? And I'm like, yeah, probably. You know, it's a rite of passage, I suppose, but that's a great point because it's really just the history, it's the accounting of what happened this past year versus can't change anything.

Can't change anything Right, yeah, versus looking forward and being, as a tax, efficient as possible. And there's, you know, you hear a lot of things out there. There's many ways to try to retire tax free and so on and so forth, and you hear all these kinds of conversations and it makes people skeptical. Well, there's no way I can do that. But there are ways within the tax code, right to you know reduce our taxes to be as tax efficient as possible. But it takes a little, you know. Effort takes a little work. Alright, so let's do another one here. Keeping costs low Again another no brainer. We all do this in many facets of life, but when it comes to our investments, many people are shocked to find out that they're not keeping the cost as low as they thought.

0:09:01 - Speaker 4
Yeah, and that's really because of hidden fees that they don't realize they're paying. Just because you don't see a fee coming out of your investment vehicle doesn't mean it's free. What's good, though, is that the industry is making a shift with this and becoming more transparent when it comes to fees and having the fee as a line item on the statement. Advisors are now clearly explaining the fees and the cost of the investments, and so it's way more transparent than what it has been in the past, but there are hidden fees that can take a huge chunk out of your account if, and by finding lower cost investments could only just end up helping your bottom line, which an advisor can certainly help you with.

0:09:45 - Speaker 3
Yeah, a lot of times I think what happens with this sherry is we get well, my guy or gal is only charging me, you know, 1%, right? Something like that is typically the statement that we hear, and they're not thinking about the vehicles that they're in and the fees that those vehicles have, because they're not doing that for free, to your point. So, and actually that really rolls nicely into my next topic here on this, which is kind of a grandma ism about not putting all our eggs in one basket. But let's talk about like, say, for the example of mutual funds. I've gotten emails We've seen emails before on various different shows and conversations, where someone's like I've got 25 different mutual funds, so I'm diversified, right, and so my topic or my question to you is a that's not really being diversified and, like you explained to us why. But also back to that fee conversation, they're also probably really doubling up on a lot of fees that they don't have to necessarily incur.

0:10:35 - Speaker 4
Exactly, having a bunch of mutual funds doesn't necessarily Guaranteed that you're diversified, because there could be a lot of overlap. The funds could be invested in similar investments within the mutual funds, so you might have three different funds from three different fund companies. They're not doing checks and balances on each other to say where are you allocated? Well, where are you allocated? So you could have big exposures to a handful of the same Companies or investments within those funds and you're not. You're not helping yourself. You thought you were diversified but you're really not. And to your second question there are hidden fees inside of funds, mutual funds. When you open up mutual funds, you'll see a lot of stocks in there, you'll see a lot of bonds in there and there's trading that goes on inside of the funds that do create cloth, and so there are hidden fees inside of those mutual funds and you know, on average could be about 1% of the portfolio, which, again, that's 1% from your bottom line, right?

0:11:39 - Speaker 3
Right, right. And if you're thinking about that conversation, look at it this way, folks. So let's say you've got into my example, that's, 20 different mutual funds, and you've got 20, well, let's say, 10 versions of whatever stock, just stock X. You know, that's all great when they're all going up, right, sherry? When the market is riding up, well, you're sure everybody's gonna be happy. But at the same time, and when they all falls, when the market takes a big downturn, they're all falling equally as well, most of the time, right, when you have that overlap. So that's why it's not really being diversified. Even if you've gotten 10 different mutual funds from 10 different companies, it doesn't necessarily mean, to Sherry's point, that you have diversification, because there could be a lot of overlap. So bear that in mind as well.

And that's where that uncommon sense, common sense conversation is coming into play. We know we're not supposed to put all our eggs in one basket. Yet we do a lot of these things just like by low and so high. We do them opposite of what we should be doing. And then that brings me to the final one this week on the podcast and I know it's one we still do and people still try to do it, but market timing is. It's virtually impossible. I mean, even if you're someone like Elon Musk, who you know when he makes a tweet it changes things and he knows when he's gonna say. Or the great Warren Buffett, I mean none of these people can time the market exactly right.

0:12:55 - Speaker 4
And why do we try to time the market? Because of our emotions. We want to hit it big. We want to get in before everyone else's or get out before everyone else's, and it just it can't happen.

The bold and rule of investing, like we said before, by low, sell high. It's also stay invested. By staying invested, you'll have a much better and smoother and positive investing experience versus the in and outs of the market. And I read a statistic the other day that 88% of active managers don't beat their benchmark, which is what they're managed. They're they manage to against, which is their measurement of success. So the in and outs don't necessarily work. Do they make you feel better sometimes? But do they help your bottom line? Absolutely not. So you know why, again, do you want to get in and out of the market? Is it because you want to avoid losses or because you want to because you're hearing your neighbor brag about the latest investment that he got into that made him all this money? What's your motivation behind wanting to move in and out of different investments and trying to market time?

0:14:03 - Speaker 3
Well, that's the Vegas conversation, too, right, because your neighbor is not also going to tell you about the dogs that he has, right.

0:14:08 - Speaker 4
That's right.

0:14:09 - Speaker 3
You know, you never hear anybody come back and say oh, I lost my shirt in Vegas, right, they're like oh.

I hit a, you know I won whatever. And if you're moving in and out a lot by trying to time well, you're also costing yourself more money back to our other uncommon sense conversation, because every time you move this stuff there's a fee involved. So you know, you're just really we're working against ourself and that's why it's not. What was it Warren Buffett's not timing the markets, time in the market, right. If you're not prepared to be invested I think you said something like for 10 years you shouldn't be in it for 10 minutes. So you know, a lot of those pieces come into play. And again, that's what you do as a money coach is try to help folks design a strategy and a plan and then work that plan so that it can be as effective as possible. And then you're there to make corrections along the way and talk through these things, because it's not a set it and forget it.

0:14:58 - Speaker 4
Exactly Create the plan. Why are we investing? What is the goal with this money? And we will create a plan to achieve the goal. So then that way, when markets go up, markets go down, you can sleep easy because you know you have a plan. Your money has a plan and a strategy behind it.

0:15:14 - Speaker 3
Yeah, and it's all about making those little tweaks along the way you know, hopefully we're going to have a nice long, you know retirement and all those kinds of things, and so whatever you needed at, you know well, it's like anything in life whatever you needed at 50, you might not need it 70. So you're going to have. It's going to have to change and ebb and flow, just like your life's going to, and that's why it's really important to have that good strategy in place. So that's our podcast this week learning through uncommon sense.

If you have some questions or you do feel as though that you're doing some of these things or you want to get you know work, a different strategy or a different approach, and you know you need a little tweak or some help or whatever the case is, and you've not been working with an advisor, reach out to Sherry, have a conversation. She's a money coach at Greenway Wealth Advisory here to help. You should always check with a qualified professional anyway before you take any action on something here on our podcast or any other, and you can reach out to her at 703-255-2808. At 703-255-2808 or stop by the website GreenwayWealthAdvisorycom. That's GreenwayWealthAdvisorycom. And don't forget to subscribe to the podcast Money Sheik on Apple, google, spotify, iheartstitcher, so on and so forth. Sherry, thanks for hanging out with me. I appreciate your time, as always. I hope you have a great week and I will talk to you very soon. Thank you, we appreciate your time here on Money Sheik with Sherry Rash, again from Greenway Wealth Advisory. We'll see you next time.