1 00:00:06,200 --> 00:00:09,760 Speaker 1: Tonight, an entire show dedicated to the one thing that 2 00:00:09,840 --> 00:00:14,720 Speaker 1: impacts your financial future more than anything else, your mind. 3 00:00:15,080 --> 00:00:17,599 Speaker 1: You're listening to Simply Money, presented by all Worth Financial. 4 00:00:17,640 --> 00:00:21,280 Speaker 1: I'm Bob Sponsler along with Brian James. Tonight, we're gonna 5 00:00:21,280 --> 00:00:26,280 Speaker 1: start with some emotional traps that can quietly sabotage your success. 6 00:00:26,440 --> 00:00:30,000 Speaker 1: And these emotional traps seem to impact people more and 7 00:00:30,160 --> 00:00:34,080 Speaker 1: more the larger your retirement nest egg starts to become. 8 00:00:34,960 --> 00:00:38,320 Speaker 1: And if you recognize even one of these traps in yourself, 9 00:00:38,680 --> 00:00:42,160 Speaker 1: it could save yourself hundreds of thousands of dollars. Brian, 10 00:00:42,240 --> 00:00:44,080 Speaker 1: let's get into it. Yeah, so picture this. 11 00:00:44,120 --> 00:00:46,400 Speaker 2: You've done everything right, You've built your pile of money, 12 00:00:46,440 --> 00:00:48,960 Speaker 2: you've saved aggressively, you've done all the right things, you've 13 00:00:49,000 --> 00:00:51,520 Speaker 2: checked all the boxes, but you still have that voice 14 00:00:51,560 --> 00:00:52,400 Speaker 2: in the back of your head. 15 00:00:52,240 --> 00:00:54,240 Speaker 1: Saying there's not enough. There's not enough, there's not enough. 16 00:00:54,480 --> 00:00:56,480 Speaker 2: That's kind of where we all start. We start with 17 00:00:56,560 --> 00:00:59,200 Speaker 2: this notion of scarcity. I don't have enough. I don't 18 00:00:59,240 --> 00:01:01,959 Speaker 2: have enough. The comparison I use with people when we're 19 00:01:01,960 --> 00:01:04,480 Speaker 2: sitting down doing a financial plan is to say, hey, 20 00:01:04,480 --> 00:01:06,240 Speaker 2: look at this pile of money you've grown and now 21 00:01:06,319 --> 00:01:08,800 Speaker 2: that you're in your late fifties, early sixties, whatever age, 22 00:01:08,880 --> 00:01:11,600 Speaker 2: now think back if you were told at twenty five 23 00:01:11,680 --> 00:01:13,399 Speaker 2: that you'd have this much money at this age, what 24 00:01:13,440 --> 00:01:15,920 Speaker 2: would you have thought back then? And the answer is always, oh, 25 00:01:15,959 --> 00:01:17,640 Speaker 2: my gosh, I thought i'd be in fat city, you know, 26 00:01:17,680 --> 00:01:19,679 Speaker 2: if I never thought I'd have this much money. Yet 27 00:01:19,720 --> 00:01:22,720 Speaker 2: here we sit worrying that there's just plain not enough. 28 00:01:22,840 --> 00:01:25,880 Speaker 2: So let's talk about those psychological hurdles that come in there. 29 00:01:26,080 --> 00:01:29,640 Speaker 1: Well in that sense of scarcity, and I'll just be 30 00:01:30,080 --> 00:01:32,440 Speaker 1: open about this. That's kind of how I was raised. 31 00:01:32,440 --> 00:01:34,200 Speaker 1: And we can get into that if you want to. 32 00:01:34,319 --> 00:01:36,600 Speaker 1: But it was always like you want money, you got 33 00:01:36,640 --> 00:01:38,360 Speaker 1: to go earn it, and there's never going to be enough. 34 00:01:38,400 --> 00:01:40,440 Speaker 1: There's never going to be enough. I guess it's that 35 00:01:40,959 --> 00:01:45,800 Speaker 1: quasi Westside Green Hills mentality, you know, having a paper 36 00:01:45,880 --> 00:01:48,240 Speaker 1: route when you're nine years old and just work and 37 00:01:48,280 --> 00:01:50,640 Speaker 1: work and working. That's kind of how I was raised. 38 00:01:51,200 --> 00:01:54,560 Speaker 1: And it tends to feed into this next bias that 39 00:01:54,600 --> 00:01:57,480 Speaker 1: we want to talk about, and that's action bias. And 40 00:01:57,480 --> 00:02:00,280 Speaker 1: this is the idea that when things go wrong, thing 41 00:02:00,320 --> 00:02:03,480 Speaker 1: goes wrong that will upset that giant nest egg. We 42 00:02:03,600 --> 00:02:06,280 Speaker 1: worked so hard to build. You know, say the market 43 00:02:06,320 --> 00:02:08,680 Speaker 1: drops ten percent or so in a week, our instinct 44 00:02:08,760 --> 00:02:11,040 Speaker 1: is we got to do something. We got to go 45 00:02:11,160 --> 00:02:15,480 Speaker 1: into protection mode. And for some of our clients, especially 46 00:02:15,520 --> 00:02:18,880 Speaker 1: those used to running a business or managing big teams, 47 00:02:19,800 --> 00:02:24,160 Speaker 1: doing nothing or in action feels like failure because, let's 48 00:02:24,200 --> 00:02:27,440 Speaker 1: face it, the thing that made us successful to a 49 00:02:27,520 --> 00:02:31,320 Speaker 1: large extent is we were the problem solving people. Right 50 00:02:31,440 --> 00:02:34,040 Speaker 1: if something went wrong, our job was to fix it, 51 00:02:34,440 --> 00:02:37,919 Speaker 1: fix it today, check the box, and move on. And 52 00:02:38,000 --> 00:02:41,120 Speaker 1: it doesn't work that way. We can't fix the global 53 00:02:41,160 --> 00:02:42,760 Speaker 1: economy in an afternoon. Brian. 54 00:02:42,840 --> 00:02:45,320 Speaker 2: Yeah, psychologically, this is really the same thing as you know, 55 00:02:45,360 --> 00:02:47,880 Speaker 2: sometime when you're driving somewhere and you realize that, hey, 56 00:02:47,880 --> 00:02:49,720 Speaker 2: i can get off the highway and take the back 57 00:02:49,760 --> 00:02:52,320 Speaker 2: roads and it's going to take longer, but at least 58 00:02:52,320 --> 00:02:54,480 Speaker 2: I'll be moving rather than sitting on the highway. It 59 00:02:54,520 --> 00:02:56,160 Speaker 2: doesn't help you in the long run, It doesn't help 60 00:02:56,160 --> 00:02:58,680 Speaker 2: you at all to have taken that step. But in 61 00:02:58,760 --> 00:03:02,200 Speaker 2: financial planning actually hurts you. Like you said, so, uh, 62 00:03:02,280 --> 00:03:04,080 Speaker 2: you know, we need to need to think of this 63 00:03:04,160 --> 00:03:06,480 Speaker 2: in terms of, for example, and then with the market drops. 64 00:03:06,560 --> 00:03:08,400 Speaker 2: Just think of in terms of this is something I 65 00:03:08,400 --> 00:03:10,720 Speaker 2: should anticipate and I should be I should know how 66 00:03:10,760 --> 00:03:15,160 Speaker 2: to how to uh deal with it, versus taking action 67 00:03:15,320 --> 00:03:17,560 Speaker 2: to actually do something different in response to it. 68 00:03:17,680 --> 00:03:20,799 Speaker 1: Yeah, the market doesn't respond to hustle. It doesn't care 69 00:03:20,840 --> 00:03:24,840 Speaker 1: if we try harder. And that's why sometimes the smartest 70 00:03:24,919 --> 00:03:27,880 Speaker 1: move when you peel it all back is do nothing 71 00:03:28,040 --> 00:03:32,000 Speaker 1: at all. And that's sometimes very hard for all of 72 00:03:32,080 --> 00:03:36,720 Speaker 1: us to comprehend and grasp. Let's switch into another bias 73 00:03:36,800 --> 00:03:38,560 Speaker 1: and you know, kind of flipping the script here, a 74 00:03:38,600 --> 00:03:41,520 Speaker 1: little bit over confidence. You know, we can get very 75 00:03:41,600 --> 00:03:45,760 Speaker 1: over confidence in our ability to handle things or manage 76 00:03:45,760 --> 00:03:47,360 Speaker 1: the market, or manage our portfolio. 77 00:03:47,480 --> 00:03:49,080 Speaker 2: Yeah, lots of people feel like, you know what, I've 78 00:03:49,080 --> 00:03:51,440 Speaker 2: always been willing to put in that much more effort 79 00:03:51,440 --> 00:03:53,360 Speaker 2: than the next guy. And that's how I got the job, 80 00:03:53,400 --> 00:03:55,280 Speaker 2: and that's how I've done this and raised my family 81 00:03:55,360 --> 00:03:55,920 Speaker 2: and so forth. 82 00:03:56,080 --> 00:03:57,280 Speaker 1: I put that extra effort in. 83 00:03:57,320 --> 00:03:59,600 Speaker 2: So if I just do a little bit more internet research, 84 00:03:59,840 --> 00:04:03,040 Speaker 2: I will find that one method, that one investment management 85 00:04:03,040 --> 00:04:05,320 Speaker 2: philosophy that has all upside and no downside. 86 00:04:05,360 --> 00:04:08,200 Speaker 1: Nobody says this, but this is nobody says it that way. 87 00:04:08,200 --> 00:04:09,920 Speaker 2: But this is sort of in the back of all 88 00:04:09,960 --> 00:04:12,200 Speaker 2: of our minds that I can control more than the 89 00:04:12,200 --> 00:04:14,440 Speaker 2: next guy because I am willing to put more work in. 90 00:04:14,760 --> 00:04:17,120 Speaker 2: And again, that works in ninety percent of the things 91 00:04:17,120 --> 00:04:19,440 Speaker 2: you'll run across in life, but not in financial planning, 92 00:04:19,480 --> 00:04:20,719 Speaker 2: financial planning and investing. 93 00:04:20,760 --> 00:04:22,320 Speaker 1: It's all about managing. 94 00:04:22,360 --> 00:04:25,320 Speaker 2: It's ninety percent managing your emotions and ten percent actually 95 00:04:25,360 --> 00:04:26,479 Speaker 2: doing things with your investment. 96 00:04:27,000 --> 00:04:28,640 Speaker 1: And this is a good time to point out there's 97 00:04:28,680 --> 00:04:32,640 Speaker 1: a there's an independent firm out there called Dowbar. Most 98 00:04:32,680 --> 00:04:35,520 Speaker 1: people have never heard of this unless you're in our industry, 99 00:04:35,560 --> 00:04:41,200 Speaker 1: but Dalbar basically just tracks investor behavior versus the markets, 100 00:04:41,240 --> 00:04:45,440 Speaker 1: and it really tracks how decisions make that are made 101 00:04:45,560 --> 00:04:50,080 Speaker 1: by self directed investors versus investors that have a good 102 00:04:50,120 --> 00:04:53,640 Speaker 1: financial advisor working for them. What are the results and 103 00:04:54,600 --> 00:04:57,360 Speaker 1: these these numbers, Brian, I've been in this industry over 104 00:04:57,440 --> 00:05:01,200 Speaker 1: three decades now, and these numbers have never changed. The 105 00:05:01,279 --> 00:05:04,880 Speaker 1: average investor out there underperforms the market. You know, a 106 00:05:04,960 --> 00:05:09,960 Speaker 1: benchmark apples to apples market return by several percentage points 107 00:05:10,000 --> 00:05:14,400 Speaker 1: per year, and it's one hundred percent because of their 108 00:05:14,560 --> 00:05:19,360 Speaker 1: behavior and the decisions they make with this overconfidence in 109 00:05:19,440 --> 00:05:22,800 Speaker 1: thinking they can outsmart the market. Two to three percent 110 00:05:22,839 --> 00:05:25,960 Speaker 1: a year is a big number, and you compound that 111 00:05:26,080 --> 00:05:29,760 Speaker 1: over twenty thirty, forty fifty years, we're talking about real money. Yeah. 112 00:05:29,960 --> 00:05:32,000 Speaker 2: And another analogy I like to use it to help 113 00:05:32,000 --> 00:05:34,599 Speaker 2: people understand this is whether you're working with a financial advisor, 114 00:05:34,640 --> 00:05:37,240 Speaker 2: if you're doing your own thing that person, or you 115 00:05:37,400 --> 00:05:40,239 Speaker 2: are the weatherman. It is not the weather man's job 116 00:05:40,400 --> 00:05:43,000 Speaker 2: to stop the rain. It is the weatherman's job to 117 00:05:43,000 --> 00:05:44,960 Speaker 2: give you a heads up on what might be coming 118 00:05:45,200 --> 00:05:47,280 Speaker 2: and how you might want to prepare for it. If 119 00:05:47,320 --> 00:05:50,480 Speaker 2: you take that mentality with financial planning and stop trying 120 00:05:50,520 --> 00:05:54,000 Speaker 2: to prevent the quote unquote failure of a down market. 121 00:05:54,040 --> 00:05:55,240 Speaker 2: And a lot of people think of it that way. 122 00:05:55,240 --> 00:05:57,240 Speaker 2: When the market comes down, I did something wrong. I 123 00:05:57,320 --> 00:05:59,680 Speaker 2: must have failed somewhere. I will find that point of failure. 124 00:05:59,720 --> 00:06:01,600 Speaker 2: Never man, make that mistake again, and lo and behold 125 00:06:01,600 --> 00:06:03,800 Speaker 2: two three, four years later, it happens again because we're 126 00:06:03,839 --> 00:06:05,040 Speaker 2: focused on the wrong thing. 127 00:06:05,360 --> 00:06:06,520 Speaker 1: So be a weather man. 128 00:06:06,680 --> 00:06:08,960 Speaker 2: Tell people, or tell yourself how to how to deal 129 00:06:09,000 --> 00:06:10,320 Speaker 2: with it, not try to prevent it. 130 00:06:11,480 --> 00:06:15,120 Speaker 1: Yeah. Another one that crops up often is this control 131 00:06:15,120 --> 00:06:18,760 Speaker 1: what we'll call control illusion. This is another trap again, 132 00:06:19,040 --> 00:06:23,119 Speaker 1: especially with people that are used to running things, controlling things, 133 00:06:23,120 --> 00:06:26,520 Speaker 1: whether that's a business or a family, or you're a 134 00:06:26,760 --> 00:06:30,240 Speaker 1: high level executive that manages people, you are used to 135 00:06:30,279 --> 00:06:33,280 Speaker 1: controlling the outcome. And we got to remind people all 136 00:06:33,320 --> 00:06:36,400 Speaker 1: the time you could control your planning, you could control 137 00:06:36,440 --> 00:06:40,159 Speaker 1: your own behavior, but you can't control inflation, the FED, 138 00:06:40,320 --> 00:06:44,479 Speaker 1: or global markets, and that illusion of control that we 139 00:06:44,640 --> 00:06:48,000 Speaker 1: all sometimes walk around with that can lead to micro 140 00:06:48,160 --> 00:06:52,120 Speaker 1: managing your investments or jumping in and out of things 141 00:06:52,160 --> 00:06:54,800 Speaker 1: and trends in the short term, and that's one of 142 00:06:54,800 --> 00:06:57,719 Speaker 1: the things that significantly harms returns. 143 00:06:58,120 --> 00:07:00,120 Speaker 2: Yeah, I think one of the concrete pieces of advice 144 00:07:00,200 --> 00:07:02,760 Speaker 2: we can give people here is but by control, we 145 00:07:02,839 --> 00:07:06,080 Speaker 2: mean we're talking about controlling again your behavior. So a 146 00:07:06,160 --> 00:07:08,720 Speaker 2: way you can mechanically do that is make sure that 147 00:07:08,760 --> 00:07:11,240 Speaker 2: the dollars you might need in the short run a 148 00:07:11,320 --> 00:07:13,240 Speaker 2: year twenty maybe it's twenty four months or whatever. If 149 00:07:13,280 --> 00:07:15,160 Speaker 2: you know you've got a certain pile of cash you 150 00:07:15,200 --> 00:07:17,360 Speaker 2: need because you're spending it down or to could just 151 00:07:17,400 --> 00:07:18,760 Speaker 2: pay the bills, or you've got a big thing you 152 00:07:18,760 --> 00:07:20,640 Speaker 2: got to do to the house, college tuition, so on and 153 00:07:20,680 --> 00:07:23,240 Speaker 2: so forth, carve that out and make sure that the 154 00:07:23,280 --> 00:07:25,720 Speaker 2: market doesn't touch it. That makes it okay for the 155 00:07:25,760 --> 00:07:28,760 Speaker 2: stuff that you can't control to impact your longer term investment. 156 00:07:28,920 --> 00:07:31,480 Speaker 1: You're listening to Simply Money presented by all Worth Financial. 157 00:07:31,480 --> 00:07:34,400 Speaker 1: I'm Bob sponseller along with Brian James. Let's get into 158 00:07:34,400 --> 00:07:37,520 Speaker 1: another trap that we see sometimes and that's one that 159 00:07:37,560 --> 00:07:42,000 Speaker 1: we will call status quo bias. Brian, you talked about 160 00:07:42,000 --> 00:07:45,800 Speaker 1: this with an actual case example here earlier this week, 161 00:07:46,120 --> 00:07:49,680 Speaker 1: talk about what status quo bias can do to negatively 162 00:07:49,720 --> 00:07:54,200 Speaker 1: impact our sense of enjoying our retirement. 163 00:07:54,320 --> 00:07:56,920 Speaker 2: Status quo bias is the notion that it ain't broke, 164 00:07:57,000 --> 00:07:59,080 Speaker 2: so why fix it, which which most of the time 165 00:07:59,200 --> 00:08:02,240 Speaker 2: is usually good. However, when we make this big transition 166 00:08:02,320 --> 00:08:05,360 Speaker 2: into retirement, we all tend to hide behind this the 167 00:08:05,400 --> 00:08:08,160 Speaker 2: notion of scarcity, that that's where we start. There isn't enough, 168 00:08:08,200 --> 00:08:09,800 Speaker 2: isn't enough. I gotta save, I gotta save, I gotta 169 00:08:09,840 --> 00:08:12,520 Speaker 2: save and then eventually the light will eventually go on. 170 00:08:12,600 --> 00:08:14,560 Speaker 2: Maybe you've done a financial plan or you've put the 171 00:08:14,560 --> 00:08:16,240 Speaker 2: pieces together and you realize, you know what, there is 172 00:08:16,360 --> 00:08:18,680 Speaker 2: enough I can be done with that. The big hurdle 173 00:08:18,760 --> 00:08:22,320 Speaker 2: hiding behind the notion of scarcity is that unwillingness to 174 00:08:22,400 --> 00:08:24,840 Speaker 2: start to spend down the nest ey. It is amazing 175 00:08:24,880 --> 00:08:26,840 Speaker 2: to me. And I just had this conversation yesterday with 176 00:08:26,880 --> 00:08:30,800 Speaker 2: somebody who just had no idea what the money machine 177 00:08:30,800 --> 00:08:32,640 Speaker 2: that they had built for thirty forty years, that there's 178 00:08:32,720 --> 00:08:35,040 Speaker 2: no concept of what that could spit out for them. So, 179 00:08:35,080 --> 00:08:37,600 Speaker 2: for example, a million dollars can easily spit out forty 180 00:08:37,640 --> 00:08:39,920 Speaker 2: thousand dollars. You know, a year in terms of income, 181 00:08:39,960 --> 00:08:42,240 Speaker 2: two million dollars is eighty thousand. You're talking you created 182 00:08:42,280 --> 00:08:44,840 Speaker 2: somebody else with a job in your household that brings 183 00:08:44,880 --> 00:08:47,959 Speaker 2: in income. People have a hugely difficult time getting over 184 00:08:48,000 --> 00:08:50,400 Speaker 2: that hurdle of spending the nuts that I've been saving 185 00:08:50,440 --> 00:08:50,920 Speaker 2: for the winner. 186 00:08:51,360 --> 00:08:53,920 Speaker 1: All right, and then in another emotional trap we want 187 00:08:53,920 --> 00:08:55,760 Speaker 1: to call out here and address is what we'll call 188 00:08:55,800 --> 00:09:00,360 Speaker 1: the herd mentality. It's common. We don't see it, you know, 189 00:09:00,679 --> 00:09:03,320 Speaker 1: too too often with our clients that come in, but 190 00:09:03,400 --> 00:09:06,120 Speaker 1: we all feel this. You know, you're our golf buddy 191 00:09:06,240 --> 00:09:09,000 Speaker 1: brags about, you know, the big profit they made in 192 00:09:09,120 --> 00:09:13,160 Speaker 1: Navidia stock or bitcoin, or you got a coworker that 193 00:09:13,280 --> 00:09:16,040 Speaker 1: moved all their money to cash one day before the 194 00:09:16,120 --> 00:09:18,600 Speaker 1: market went down four percent, still talks about it and 195 00:09:18,640 --> 00:09:21,040 Speaker 1: they want to brag about it. By the coffee machine. Yeah, 196 00:09:21,160 --> 00:09:23,680 Speaker 1: we've all been there. And then we get enough exposure 197 00:09:23,720 --> 00:09:26,320 Speaker 1: to that kind of stuff and we start questioning our 198 00:09:26,360 --> 00:09:29,960 Speaker 1: own plan. Well, wow, I'm not doing anything. My plans 199 00:09:30,080 --> 00:09:32,520 Speaker 1: just static and sitting there. I got to do something, 200 00:09:32,600 --> 00:09:35,960 Speaker 1: do something. And let's face it, the financial media does 201 00:09:36,000 --> 00:09:39,640 Speaker 1: not help either. There's always a new hot trend, a 202 00:09:39,720 --> 00:09:43,880 Speaker 1: scary headline. I mean, they're just constantly peppering us with 203 00:09:44,080 --> 00:09:47,800 Speaker 1: reasons to be fearful or greedy or both in the 204 00:09:47,880 --> 00:09:50,000 Speaker 1: same segment of the same show, you know, Bob. 205 00:09:50,040 --> 00:09:52,079 Speaker 2: When I was a kid, one of the first exposures 206 00:09:52,120 --> 00:09:54,080 Speaker 2: I had to investments in stocks and things like that 207 00:09:54,120 --> 00:09:55,680 Speaker 2: would this would have been in the eighties and dating 208 00:09:55,679 --> 00:09:58,079 Speaker 2: myself a little bit here, was when my dad and 209 00:09:58,200 --> 00:10:00,800 Speaker 2: his uncle, his brothers, my uncle's and some of their 210 00:10:00,800 --> 00:10:03,199 Speaker 2: friends would all kind of pass around their latest stockbroker 211 00:10:03,240 --> 00:10:05,160 Speaker 2: who gave them a tip that worked out and it 212 00:10:05,320 --> 00:10:06,840 Speaker 2: was It took it took me a while to figure 213 00:10:06,880 --> 00:10:08,160 Speaker 2: this out, but by the time I entered the career, 214 00:10:08,240 --> 00:10:10,040 Speaker 2: I realized that there had been like three, four, five 215 00:10:10,040 --> 00:10:11,959 Speaker 2: of these guys who got hot one time and gave 216 00:10:12,000 --> 00:10:14,280 Speaker 2: everybody a hot stock tip, and that he was the 217 00:10:14,280 --> 00:10:16,640 Speaker 2: guy for a while or the lady or whatever, and 218 00:10:16,679 --> 00:10:18,240 Speaker 2: then it would all kind of fade away and it 219 00:10:18,280 --> 00:10:19,599 Speaker 2: was never good for more than one or two. And 220 00:10:19,600 --> 00:10:21,400 Speaker 2: there's nothing wrong with the advice these people are giving, 221 00:10:21,480 --> 00:10:25,000 Speaker 2: but it's the wrong approach to make investment decisions based 222 00:10:25,000 --> 00:10:26,840 Speaker 2: off of one good, good turnout. 223 00:10:27,240 --> 00:10:32,160 Speaker 1: Here's the all Worth advice. Wealth amplifies your options, your choices, 224 00:10:32,320 --> 00:10:36,680 Speaker 1: but it also amplifies your mistakes if you allow emotion 225 00:10:36,880 --> 00:10:40,199 Speaker 1: to take over. What did you learn from your parents 226 00:10:40,240 --> 00:10:43,199 Speaker 1: about money? We'll look at the impact that may be 227 00:10:43,360 --> 00:10:45,960 Speaker 1: having on your behavior. Coming up next, you're listening to 228 00:10:45,960 --> 00:10:49,200 Speaker 1: Simply Money, presented by all Worth Financial on fifty five KRC, 229 00:10:49,760 --> 00:10:59,000 Speaker 1: the talk station. You're listening to Simply Money presented by 230 00:10:59,040 --> 00:11:02,839 Speaker 1: all Worth Financial Bob Sponsller along with Brian James Hey. 231 00:11:02,880 --> 00:11:05,920 Speaker 1: If you can't listen to Simply Money every night, subscribe 232 00:11:05,920 --> 00:11:08,400 Speaker 1: and get our daily podcast. You can listen the following 233 00:11:08,440 --> 00:11:11,840 Speaker 1: morning during your commute or at the gym or taking 234 00:11:11,840 --> 00:11:14,840 Speaker 1: your walk around the neighborhood. And if you think your 235 00:11:14,920 --> 00:11:18,200 Speaker 1: friends or family could use some financial advice, tell them 236 00:11:18,240 --> 00:11:21,280 Speaker 1: about us. As well search simply money right there on 237 00:11:21,320 --> 00:11:25,480 Speaker 1: the iHeart app or wherever you find your podcasts. Straight 238 00:11:25,480 --> 00:11:28,480 Speaker 1: ahead at six forty three. The hidden force that could 239 00:11:28,559 --> 00:11:32,800 Speaker 1: steer your portfolio in the wrong direction. All right, Brian. 240 00:11:32,880 --> 00:11:36,360 Speaker 1: We talk a lot about financial planning, tax strategies, and 241 00:11:36,480 --> 00:11:40,280 Speaker 1: investment allocation, but what if the most important part of 242 00:11:40,320 --> 00:11:44,959 Speaker 1: your financial life was something that happened decades ago at 243 00:11:44,960 --> 00:11:46,520 Speaker 1: your kitchen table growing up. 244 00:11:47,000 --> 00:11:49,040 Speaker 2: The money script is what we call this. We've all 245 00:11:49,080 --> 00:11:53,679 Speaker 2: had some understanding of financial financial success and or failure 246 00:11:54,520 --> 00:11:57,520 Speaker 2: ingrained in us from an early age. Very rarely, it 247 00:11:57,600 --> 00:12:00,640 Speaker 2: seems to do families actually talk about this, And my 248 00:12:00,679 --> 00:12:04,160 Speaker 2: clients always frequently say that that this is not a topic. 249 00:12:04,160 --> 00:12:05,040 Speaker 2: We didn't talk about money. 250 00:12:05,040 --> 00:12:05,559 Speaker 1: It was taboo. 251 00:12:05,559 --> 00:12:06,880 Speaker 2: You just didn't discuss it because you didn't want to 252 00:12:06,880 --> 00:12:08,679 Speaker 2: compare yourselves to other people or you know, show the 253 00:12:08,720 --> 00:12:13,040 Speaker 2: dirty laundry into that stuff. But it's not very often 254 00:12:13,080 --> 00:12:15,160 Speaker 2: at all that somebody will say that they had a 255 00:12:15,200 --> 00:12:17,320 Speaker 2: plan from kind of the beginning. So you know, for 256 00:12:17,440 --> 00:12:20,200 Speaker 2: me personally, I remember my first exposure at all this 257 00:12:20,320 --> 00:12:22,360 Speaker 2: was sitting in front of my dad's Apple two C 258 00:12:22,600 --> 00:12:24,520 Speaker 2: at the time, and I was My job was to 259 00:12:24,640 --> 00:12:27,880 Speaker 2: program in some fancy calculator or something that he got 260 00:12:27,880 --> 00:12:30,080 Speaker 2: out of Money magazine, And that was the very first 261 00:12:30,080 --> 00:12:32,560 Speaker 2: time I remember paying attention to what dad was doing, 262 00:12:32,559 --> 00:12:33,640 Speaker 2: and why are you putting money? 263 00:12:33,640 --> 00:12:35,640 Speaker 1: Why are we doing this? Why we're not outside playing baseball. 264 00:12:35,640 --> 00:12:38,480 Speaker 2: Well, he was planning for the future, you know, more 265 00:12:38,559 --> 00:12:40,560 Speaker 2: so than I think a lot of his peers were 266 00:12:40,600 --> 00:12:42,640 Speaker 2: at the time, because he kind of could see on 267 00:12:42,640 --> 00:12:44,800 Speaker 2: the horizon that they needed to have a little better plan. 268 00:12:44,880 --> 00:12:46,360 Speaker 1: But that's where mine came from. 269 00:12:46,400 --> 00:12:48,840 Speaker 2: A lot of people just don't have anything in their background, 270 00:12:48,880 --> 00:12:50,600 Speaker 2: and that's how we get younger people that make messes 271 00:12:50,600 --> 00:12:51,600 Speaker 2: of themselves in early years. 272 00:12:51,679 --> 00:12:54,480 Speaker 1: But how did that money script growing up impact how 273 00:12:54,520 --> 00:12:55,800 Speaker 1: you think about money today? 274 00:12:56,320 --> 00:12:59,440 Speaker 2: I honestly, Bob, I came to a conclusion of where 275 00:12:59,480 --> 00:13:00,880 Speaker 2: I you know what, I don't think I want to 276 00:13:00,920 --> 00:13:03,240 Speaker 2: work for the rest of my life, so if I 277 00:13:04,000 --> 00:13:06,640 Speaker 2: may as well get into helping people figure out how 278 00:13:06,640 --> 00:13:07,839 Speaker 2: to have to work for the rest of their lives, 279 00:13:07,880 --> 00:13:09,439 Speaker 2: because by the time it's my turn, I'm going to 280 00:13:09,480 --> 00:13:10,640 Speaker 2: be really goshtarn good at. 281 00:13:11,640 --> 00:13:14,079 Speaker 1: Sounds like you made a good choice. I did, well. 282 00:13:14,120 --> 00:13:17,480 Speaker 1: I'll share mine. I mean, mine is a story of scarcity, 283 00:13:17,520 --> 00:13:19,400 Speaker 1: and it was all well intentioned. I mean, I'm the 284 00:13:19,440 --> 00:13:21,800 Speaker 1: first of three kids in our family, you know, the 285 00:13:21,840 --> 00:13:25,439 Speaker 1: first child, so the parents are usually pretty buttoned up 286 00:13:25,520 --> 00:13:27,560 Speaker 1: and strict, and you know by the book with the 287 00:13:27,600 --> 00:13:31,760 Speaker 1: oldest child. And I vividly remember sitting at the kitchen table. 288 00:13:31,840 --> 00:13:34,760 Speaker 1: I'm nine years old, Brian, and my parents are looking 289 00:13:34,800 --> 00:13:38,000 Speaker 1: across the dinner table from me and saying, all right, 290 00:13:38,400 --> 00:13:42,640 Speaker 1: you're nine years old. Now you're not getting an allowance again. Ever. 291 00:13:43,120 --> 00:13:44,640 Speaker 1: You want a candy bar, you want to go to 292 00:13:44,679 --> 00:13:46,880 Speaker 1: the movies, you want to go, you know, do whatever, 293 00:13:47,000 --> 00:13:49,280 Speaker 1: you got to go earn that money. So there we go. 294 00:13:49,360 --> 00:13:52,000 Speaker 1: I'm out having two or three paper routes, and I'm 295 00:13:52,080 --> 00:13:56,280 Speaker 1: starting to think every day this all depends on me. 296 00:13:56,760 --> 00:13:58,600 Speaker 1: I got to make the money. I gotta work I 297 00:13:58,600 --> 00:14:02,800 Speaker 1: got and that has really stuck with me, you know, 298 00:14:03,040 --> 00:14:06,360 Speaker 1: till today, and there's always that voice in the back 299 00:14:06,400 --> 00:14:09,559 Speaker 1: of my head saying it's not enough, it's not enough, 300 00:14:09,679 --> 00:14:12,400 Speaker 1: it's not enough. The only person that's going to take 301 00:14:12,440 --> 00:14:14,880 Speaker 1: care of you is you, and that can lead to 302 00:14:14,960 --> 00:14:16,120 Speaker 1: some interesting behavior. 303 00:14:16,200 --> 00:14:18,520 Speaker 2: Funny you mentioned paper route that that was also my 304 00:14:18,559 --> 00:14:20,840 Speaker 2: first experience with earning money and blowing it. So I 305 00:14:20,880 --> 00:14:23,000 Speaker 2: had a paper route up and down Jessup Road that 306 00:14:23,080 --> 00:14:25,480 Speaker 2: had three candy stores on it. There was Whistles, Deli, 307 00:14:25,520 --> 00:14:28,000 Speaker 2: Supremeut Candy, and something else. I didn't bring home a 308 00:14:28,080 --> 00:14:30,400 Speaker 2: dime from that job, so. 309 00:14:30,480 --> 00:14:32,400 Speaker 1: You had literally spent the whole thing. 310 00:14:32,600 --> 00:14:34,360 Speaker 2: I would go get my money and then spend it 311 00:14:34,360 --> 00:14:35,800 Speaker 2: on candy before I got back home. 312 00:14:36,480 --> 00:14:38,480 Speaker 1: My middle son would love hanging out with you. 313 00:14:39,280 --> 00:14:42,120 Speaker 2: I've gotten better and I'll do this an All right, 314 00:14:42,200 --> 00:14:43,000 Speaker 2: let's talk about it. 315 00:14:43,160 --> 00:14:46,280 Speaker 1: You know a one one that these money scripts a 316 00:14:46,360 --> 00:14:49,320 Speaker 1: behavior that this can foster in us, and it's called 317 00:14:49,440 --> 00:14:52,720 Speaker 1: money avoidance. This is the belief that money is bad 318 00:14:53,120 --> 00:14:56,360 Speaker 1: or that wealthy people are greedy. Folks that have this 319 00:14:56,600 --> 00:14:59,920 Speaker 1: money avoidance tendency, they tend to feel guilty about their wealth. 320 00:15:00,040 --> 00:15:03,560 Speaker 1: They might give too much of money away as a result, 321 00:15:03,880 --> 00:15:07,920 Speaker 1: or underinvest because they feel guilty about having what they 322 00:15:08,000 --> 00:15:10,800 Speaker 1: consider to be too big of a nest egg actually 323 00:15:10,880 --> 00:15:13,520 Speaker 1: grow more. It could really set us back. 324 00:15:13,680 --> 00:15:16,440 Speaker 2: Yeah, and sometimes I also see it not not so 325 00:15:16,520 --> 00:15:18,440 Speaker 2: much greedy where they feel guilty about it, but just 326 00:15:18,560 --> 00:15:20,280 Speaker 2: terrified of it. There are there are a lot of 327 00:15:20,280 --> 00:15:23,360 Speaker 2: people out there who will bring all their life savings 328 00:15:23,360 --> 00:15:25,280 Speaker 2: to us to do a plan and invest, and they 329 00:15:25,400 --> 00:15:27,400 Speaker 2: dump it on our doorsteps so that we can manage it, 330 00:15:27,440 --> 00:15:29,200 Speaker 2: and then we can't get a hold of them sometimes 331 00:15:29,320 --> 00:15:31,840 Speaker 2: to review the plan. It's interesting to me that people 332 00:15:31,920 --> 00:15:33,200 Speaker 2: just want to avoid the topic. 333 00:15:33,280 --> 00:15:35,720 Speaker 1: Yeah. Another one that we need to nail down here 334 00:15:35,840 --> 00:15:39,400 Speaker 1: is what we'll call money worship, in this belief that 335 00:15:39,720 --> 00:15:43,440 Speaker 1: more money will solve all of our problems. And we 336 00:15:43,560 --> 00:15:46,800 Speaker 1: see this in folks who keep chasing the next dollar 337 00:15:47,040 --> 00:15:50,000 Speaker 1: even when they don't need it. And we kind of 338 00:15:50,000 --> 00:15:53,400 Speaker 1: talked about this already this morning, but this afternoon, but 339 00:15:53,440 --> 00:15:57,680 Speaker 1: we know people with millions and investable assets who still 340 00:15:57,960 --> 00:16:01,800 Speaker 1: feel broke. They feel bad about taking a vacation, They 341 00:16:01,840 --> 00:16:04,680 Speaker 1: feel like, you know, if I spend any of this money, 342 00:16:05,080 --> 00:16:07,480 Speaker 1: that means I'm gonna run out, and that's not a 343 00:16:07,480 --> 00:16:08,240 Speaker 1: good thing either. 344 00:16:08,440 --> 00:16:11,360 Speaker 2: Yeah, and I see this a lot of times where people, 345 00:16:11,440 --> 00:16:14,160 Speaker 2: again not necessarily from greed, for whatever reason they get 346 00:16:14,200 --> 00:16:17,560 Speaker 2: to they're fixated on the dollar amount. You know, I 347 00:16:17,600 --> 00:16:19,560 Speaker 2: had somebody the other day who told me that I'm 348 00:16:19,560 --> 00:16:21,440 Speaker 2: going to retire when I hit two million dollars. And 349 00:16:21,480 --> 00:16:23,120 Speaker 2: my answer to that is, how did you come to 350 00:16:23,160 --> 00:16:24,960 Speaker 2: that exact dollar figure? Why is it that you know 351 00:16:25,000 --> 00:16:26,960 Speaker 2: you need two million dollars if they've done a plan 352 00:16:27,040 --> 00:16:29,400 Speaker 2: and they've figured out, here's my cash flow that'll exist, 353 00:16:29,480 --> 00:16:31,160 Speaker 2: here's what I need to supplement, and the answer is 354 00:16:31,160 --> 00:16:32,960 Speaker 2: two million. That's one thing, but for a lot of 355 00:16:33,000 --> 00:16:35,000 Speaker 2: people it's simply well, I'm kind of in the ballpark 356 00:16:35,000 --> 00:16:36,600 Speaker 2: of that anyway. So I just want to squeeze these 357 00:16:36,680 --> 00:16:38,480 Speaker 2: last few years of workout so I can get over 358 00:16:38,480 --> 00:16:40,880 Speaker 2: the hump. And a lot of times people end up 359 00:16:40,920 --> 00:16:44,480 Speaker 2: sacrificing unnecessarily. Heaven forbid. You do all those things, you 360 00:16:44,520 --> 00:16:46,600 Speaker 2: save a little more money, and the market decides to 361 00:16:46,640 --> 00:16:48,600 Speaker 2: take a chunk away. Are you really going to work 362 00:16:48,760 --> 00:16:51,440 Speaker 2: an extra two three four years put off retirement because 363 00:16:51,480 --> 00:16:53,720 Speaker 2: twenty two happened. A lot of people had to make 364 00:16:53,720 --> 00:16:56,680 Speaker 2: that decision again because they're worshiping that dollar figure. I 365 00:16:56,680 --> 00:16:58,680 Speaker 2: want to see more zeros and commas with my name 366 00:16:58,720 --> 00:16:58,960 Speaker 2: on it. 367 00:16:59,360 --> 00:17:02,040 Speaker 1: You're listening to Simply Money, presented by all Worth Financial. 368 00:17:02,040 --> 00:17:05,919 Speaker 1: I'm Bob sponseller along with Brian James. Here's another one, Brian, 369 00:17:06,040 --> 00:17:08,760 Speaker 1: and we run into this one off in money status 370 00:17:08,800 --> 00:17:11,000 Speaker 1: and I think a lot of times this has passed 371 00:17:11,000 --> 00:17:14,560 Speaker 1: down to us from parents and grandparents, or peers, And 372 00:17:14,600 --> 00:17:17,880 Speaker 1: it's just the idea that our self worth or that 373 00:17:18,080 --> 00:17:21,720 Speaker 1: net worth number on that financial plan, the net worth 374 00:17:22,040 --> 00:17:26,040 Speaker 1: equates with our self worth. It's our whole identity. And 375 00:17:26,080 --> 00:17:29,400 Speaker 1: you see this with people who overspend to quote unquote 376 00:17:29,440 --> 00:17:32,920 Speaker 1: look successful to their neighbors and peers. Hey, the guy 377 00:17:33,160 --> 00:17:35,480 Speaker 1: parked next to me at the country club has this 378 00:17:35,600 --> 00:17:38,840 Speaker 1: kind of car. My car works just fine, it's super nice, 379 00:17:38,840 --> 00:17:40,919 Speaker 1: but boy, I gotta have the same car as this 380 00:17:41,000 --> 00:17:43,479 Speaker 1: guy next to me. Kind of the whole keep up 381 00:17:43,520 --> 00:17:47,119 Speaker 1: with the Joneses mentality, and that can result sometimes in 382 00:17:47,200 --> 00:17:51,080 Speaker 1: lifestyle creep and you end up spending more money because 383 00:17:51,119 --> 00:17:54,199 Speaker 1: you think you can not because it aligns with your 384 00:17:54,240 --> 00:17:55,439 Speaker 1: true financial goals. 385 00:17:55,640 --> 00:17:57,200 Speaker 2: Yeah, and I think a lot of times people run 386 00:17:57,240 --> 00:17:59,119 Speaker 2: into I want to do these things. I feel like 387 00:17:59,160 --> 00:18:01,480 Speaker 2: I've got the money, my cash flow supports it. You know, 388 00:18:01,480 --> 00:18:04,240 Speaker 2: maybe I've got to I've got a strong salary and 389 00:18:05,600 --> 00:18:07,560 Speaker 2: a good cash flow coming in, but I haven't sat 390 00:18:07,640 --> 00:18:10,240 Speaker 2: down to figure just because I can afford something. Now, 391 00:18:10,560 --> 00:18:12,920 Speaker 2: what impact does that have in the future. This actually 392 00:18:12,960 --> 00:18:15,480 Speaker 2: works in the opposite direction too. People sometimes have absolutely 393 00:18:15,520 --> 00:18:17,520 Speaker 2: no idea what they can get away with, so they 394 00:18:17,560 --> 00:18:20,240 Speaker 2: do nothing. The whole point of this is as always 395 00:18:20,359 --> 00:18:22,160 Speaker 2: figure out what it is that you need to do 396 00:18:22,240 --> 00:18:24,520 Speaker 2: and what resources are required to do it. If just 397 00:18:24,560 --> 00:18:26,800 Speaker 2: because you can afford something this year doesn't mean you 398 00:18:26,840 --> 00:18:29,159 Speaker 2: should because you may be sacrificing something you haven't yet 399 00:18:29,160 --> 00:18:29,960 Speaker 2: thought of in the future. 400 00:18:30,359 --> 00:18:33,879 Speaker 1: Yeah, sometimes people don't actually use this word, but the 401 00:18:34,600 --> 00:18:38,240 Speaker 1: sentiment comes across. It's almost like, well, I deserve to 402 00:18:38,320 --> 00:18:42,560 Speaker 1: have this because I've worked hard. Well, there's no such 403 00:18:42,640 --> 00:18:45,600 Speaker 1: thing as you deserve or it is what it is. 404 00:18:45,880 --> 00:18:48,320 Speaker 1: You've got to have a financial plan and follow it. Now. 405 00:18:48,359 --> 00:18:51,440 Speaker 1: If your plan suggests that you can do and have 406 00:18:51,480 --> 00:18:54,000 Speaker 1: some nice things that are really important to you, then 407 00:18:54,040 --> 00:18:59,280 Speaker 1: by all means, let's do it. But not often but sometimes, 408 00:18:59,320 --> 00:19:02,040 Speaker 1: And I'm sure you've gotten these calls or emails too. 409 00:19:02,800 --> 00:19:05,240 Speaker 1: I think sometimes clients will go out and buy the 410 00:19:05,440 --> 00:19:08,840 Speaker 1: RV or buy you know, book the three cruises and 411 00:19:08,880 --> 00:19:12,120 Speaker 1: then tell us after the fact because they knew if 412 00:19:12,160 --> 00:19:14,760 Speaker 1: they asked us in advance whether this is gonna work, 413 00:19:15,080 --> 00:19:17,879 Speaker 1: they knew the answer would be no. So they'll just 414 00:19:17,920 --> 00:19:20,840 Speaker 1: tell us after the fact and ask for forgiveness rather 415 00:19:20,880 --> 00:19:22,119 Speaker 1: than permissions. 416 00:19:22,320 --> 00:19:23,879 Speaker 2: With you Oh yeah, and the answer, well, this's your 417 00:19:23,920 --> 00:19:25,800 Speaker 2: plan it's not my money. You don't need permission to 418 00:19:25,800 --> 00:19:27,320 Speaker 2: spend your own money. I'm just telling you what the 419 00:19:27,359 --> 00:19:28,000 Speaker 2: outcome might be. 420 00:19:28,400 --> 00:19:31,800 Speaker 1: Here's the all Worth advice. Your biggest financial challenge might 421 00:19:32,280 --> 00:19:36,120 Speaker 1: not be math. It might be a childhood story that 422 00:19:36,200 --> 00:19:41,879 Speaker 1: you've never questioned or really gotten your emotional arms around. Next, 423 00:19:41,920 --> 00:19:45,840 Speaker 1: why reinforcing what you already believe could wreck your financial future. 424 00:19:45,880 --> 00:19:48,800 Speaker 1: You're listening to Simply Money presented by all Worth Financial 425 00:19:48,800 --> 00:19:57,640 Speaker 1: on fifty five KRC, the talk station. You know you're 426 00:19:57,640 --> 00:20:00,119 Speaker 1: listening to Simply Money presented by all Worth Financial. So well. 427 00:20:00,160 --> 00:20:03,359 Speaker 1: I'm Bob Sponseller along with Brian James. One of the 428 00:20:03,400 --> 00:20:08,000 Speaker 1: most dangerous things in investing isn't inflation, taxes, or even 429 00:20:08,160 --> 00:20:12,919 Speaker 1: market downturns. It's your own brain, specifically the way it 430 00:20:13,000 --> 00:20:17,440 Speaker 1: filters information to match what you already believe. It's known 431 00:20:17,520 --> 00:20:22,240 Speaker 1: in the behavioral finance world as confirmation bias, and boy, 432 00:20:22,280 --> 00:20:24,120 Speaker 1: this is a big one that I want to make 433 00:20:24,160 --> 00:20:26,720 Speaker 1: sure we dive deep into and tackle tonight. 434 00:20:26,760 --> 00:20:29,159 Speaker 2: Brian, Bob, tell me if you've run across anybody like 435 00:20:29,240 --> 00:20:32,520 Speaker 2: this lately, they're absolutely convinced that the market is coming down. 436 00:20:32,520 --> 00:20:34,160 Speaker 2: It's at an all time high, and it just can't 437 00:20:34,160 --> 00:20:36,680 Speaker 2: go any higher. It's coming down. They got this information 438 00:20:36,800 --> 00:20:40,480 Speaker 2: from from articles online. Every article they read is worse 439 00:20:40,520 --> 00:20:42,120 Speaker 2: than the last one they read, and it's just kind 440 00:20:42,119 --> 00:20:43,080 Speaker 2: of backing up on them. 441 00:20:43,440 --> 00:20:45,920 Speaker 1: What they don't realize, however, though, is Google. 442 00:20:45,560 --> 00:20:48,040 Speaker 2: And social media is doing this on purpose because all 443 00:20:48,040 --> 00:20:50,440 Speaker 2: they care about, all those companies care about, is making 444 00:20:50,520 --> 00:20:53,240 Speaker 2: sure your eyes stay glued to that screen. So if 445 00:20:53,240 --> 00:20:55,720 Speaker 2: this guy's interested in bad news about the market, then 446 00:20:55,760 --> 00:20:58,000 Speaker 2: absolutely we're going to serve it up on a platterform 447 00:20:58,040 --> 00:21:00,840 Speaker 2: because that'll keep him here looking at these ads. And 448 00:21:00,880 --> 00:21:03,040 Speaker 2: that's how we all make money, we being Google and 449 00:21:03,080 --> 00:21:06,000 Speaker 2: social media and so forth. That is confirmation bias. They 450 00:21:06,040 --> 00:21:08,000 Speaker 2: know that you are seeking out opinions and you'll be 451 00:21:08,000 --> 00:21:10,119 Speaker 2: happy to read more things that you already agree with, 452 00:21:10,160 --> 00:21:11,000 Speaker 2: so they're going to shove. 453 00:21:10,880 --> 00:21:13,320 Speaker 1: It in your face. Well, and this this is one 454 00:21:13,359 --> 00:21:15,240 Speaker 1: of the benefits. You know, you and I have both 455 00:21:15,280 --> 00:21:18,359 Speaker 1: been doing this a long time, so we've got many clients. 456 00:21:18,359 --> 00:21:20,720 Speaker 1: And I don't know about you, Brian, but you know 457 00:21:20,800 --> 00:21:23,160 Speaker 1: I'm going to talk about politics here for a minute, 458 00:21:23,320 --> 00:21:26,359 Speaker 1: because depending on who the occupant is in the White 459 00:21:26,400 --> 00:21:30,560 Speaker 1: House and who's controlling Congress, and all that I can 460 00:21:30,640 --> 00:21:33,879 Speaker 1: almost predict, you know, from each side of the aisle, 461 00:21:34,320 --> 00:21:36,480 Speaker 1: the four or five clients that are going to be 462 00:21:36,560 --> 00:21:40,600 Speaker 1: constantly in my ear telling me how and why the 463 00:21:40,760 --> 00:21:44,320 Speaker 1: entire global economy is going to collapse because so and 464 00:21:44,400 --> 00:21:47,880 Speaker 1: so is in the White House and they're purposely ruining 465 00:21:47,920 --> 00:21:50,119 Speaker 1: the country. Do you have do you have those little 466 00:21:50,160 --> 00:21:52,760 Speaker 1: handful of clients that you know come out of the 467 00:21:52,800 --> 00:21:56,320 Speaker 1: woodwork depending on who's occupying the White House at any 468 00:21:56,320 --> 00:21:56,920 Speaker 1: given time. 469 00:21:57,359 --> 00:21:59,320 Speaker 2: Okay, I'm I'm gonna hit you with the phrase here Bob, 470 00:21:59,359 --> 00:22:01,080 Speaker 2: I rehearsed on the way and know we're going to 471 00:22:01,119 --> 00:22:04,879 Speaker 2: talk about this political passion has no place in prudent planning. 472 00:22:05,280 --> 00:22:07,359 Speaker 1: Wow, that's a lot of peace. I'm not even going 473 00:22:07,400 --> 00:22:09,480 Speaker 1: to try to repeat that. Thank you, Thank you, Iverharst, 474 00:22:09,600 --> 00:22:11,400 Speaker 1: Like I said, anyway, No, yeah. 475 00:22:11,240 --> 00:22:13,639 Speaker 2: Clients, all the time, we all and it's not you know, 476 00:22:13,640 --> 00:22:16,000 Speaker 2: there's nothing wrong with this thought process. We're simply looking 477 00:22:16,080 --> 00:22:18,680 Speaker 2: for that mechanical button or the lever that we can 478 00:22:18,720 --> 00:22:21,040 Speaker 2: say if this, then that, if so and so is 479 00:22:21,080 --> 00:22:22,920 Speaker 2: in office and in control and I don't like them, 480 00:22:23,160 --> 00:22:25,560 Speaker 2: then that means I should do this black and white 481 00:22:25,600 --> 00:22:28,080 Speaker 2: process meaning liquid at everything or go to gold or whatever. 482 00:22:28,359 --> 00:22:30,760 Speaker 2: We have this all the time, but in reality, the 483 00:22:30,840 --> 00:22:33,720 Speaker 2: history shows that the market could absolutely care less who's 484 00:22:33,760 --> 00:22:36,280 Speaker 2: in office. It goes up no matter who's in office, 485 00:22:36,280 --> 00:22:38,320 Speaker 2: because that's how the economy works. There are always more 486 00:22:38,320 --> 00:22:40,280 Speaker 2: and more people buying more and more things. Again, I'm 487 00:22:40,280 --> 00:22:42,359 Speaker 2: talking about the longer term, not the short term swings, 488 00:22:42,359 --> 00:22:45,920 Speaker 2: which we can't control or predict. But the economy will 489 00:22:45,960 --> 00:22:50,240 Speaker 2: function underneath presidents and leadership of any stripe. And there 490 00:22:50,280 --> 00:22:53,080 Speaker 2: is ample history going back through all the way back 491 00:22:53,119 --> 00:22:56,440 Speaker 2: through the Great Depression and including the most recent administrations 492 00:22:56,440 --> 00:22:59,040 Speaker 2: that it just doesn't matter who's in charge. That causes 493 00:22:59,080 --> 00:23:02,120 Speaker 2: short term swings. Heaven knows, we've seen enough of those. 494 00:23:02,440 --> 00:23:05,200 Speaker 2: But in the longer term, generally speaking, things go up. 495 00:23:05,440 --> 00:23:07,560 Speaker 2: Just don't let the short term whack the dog. 496 00:23:07,880 --> 00:23:10,320 Speaker 1: Yeah, I've already made kind of the cardinal rule mistake 497 00:23:10,400 --> 00:23:13,880 Speaker 1: here mentioning politics. So I'm going to use another one 498 00:23:13,920 --> 00:23:16,800 Speaker 1: here at the risk of angering even more and more people, 499 00:23:16,840 --> 00:23:20,879 Speaker 1: And that's talking about the importance of having both spouses 500 00:23:20,880 --> 00:23:23,200 Speaker 1: in a room when we do planning and we talk 501 00:23:23,200 --> 00:23:26,200 Speaker 1: about risk tolerance and all that. Because Brian, I don't 502 00:23:26,200 --> 00:23:29,840 Speaker 1: know about you, I find almost always the people that 503 00:23:29,880 --> 00:23:33,880 Speaker 1: are coming to me with this deep embedded confirmation bias. 504 00:23:34,480 --> 00:23:38,399 Speaker 1: Almost one hundred percent of the time, it's men. It's men. 505 00:23:39,000 --> 00:23:41,639 Speaker 1: Men in their egos are our egos. We want to 506 00:23:41,680 --> 00:23:43,840 Speaker 1: be right, we want to predict the future, we want 507 00:23:43,880 --> 00:23:47,120 Speaker 1: to protect our family, all that stuff, and we come 508 00:23:47,160 --> 00:23:50,560 Speaker 1: in thinking we already know how it's all going to work, 509 00:23:50,600 --> 00:23:53,439 Speaker 1: depending on who's in the White House or what have you, 510 00:23:54,080 --> 00:23:58,639 Speaker 1: And we start consuming media sources to just confirm that bias, 511 00:23:59,080 --> 00:24:03,359 Speaker 1: where I find that the women are way more level headed, 512 00:24:03,560 --> 00:24:08,600 Speaker 1: even keeled, and that can oftentimes balance out a good 513 00:24:08,640 --> 00:24:12,399 Speaker 1: financial planning review. By making sure both spouses are in 514 00:24:12,440 --> 00:24:16,000 Speaker 1: the room, we're hearing from both spouses and we're kicking 515 00:24:16,040 --> 00:24:20,520 Speaker 1: around this confirmation bias, you know, identifying the elephant in 516 00:24:20,560 --> 00:24:23,679 Speaker 1: the room and hopefully hunting it down and killing it 517 00:24:23,720 --> 00:24:26,480 Speaker 1: so we can move on with more productive conversations. 518 00:24:26,520 --> 00:24:28,639 Speaker 2: If this then that, if this happens, then I know 519 00:24:28,720 --> 00:24:30,639 Speaker 2: I'm going to do that that way, I'm forcing it 520 00:24:30,680 --> 00:24:33,720 Speaker 2: to be predictable, and I'm forcing myself to pretend and 521 00:24:33,760 --> 00:24:36,240 Speaker 2: I'm going to put that in caps, pretend that I 522 00:24:36,280 --> 00:24:39,399 Speaker 2: have control over this, because that's that's how as a 523 00:24:39,400 --> 00:24:40,800 Speaker 2: man like you said. As a man, I want to 524 00:24:41,000 --> 00:24:42,359 Speaker 2: I want to fix things. I want to tackle it, 525 00:24:42,400 --> 00:24:44,119 Speaker 2: take it on, take the bull by the horns and 526 00:24:44,119 --> 00:24:46,040 Speaker 2: fix the problem. But no, it doesn't work that way. 527 00:24:46,080 --> 00:24:48,080 Speaker 2: As matter of fact, that assumption can get us into 528 00:24:48,119 --> 00:24:50,840 Speaker 2: a lot of trouble. That confirmation bias comes back to 529 00:24:50,920 --> 00:24:53,159 Speaker 2: haunt us in terms of forcing us to think that 530 00:24:53,200 --> 00:24:54,560 Speaker 2: we have way more control than we do. 531 00:24:54,880 --> 00:24:57,480 Speaker 1: You're listening to Simply Money presented by all Worth Financial. 532 00:24:57,480 --> 00:25:01,159 Speaker 1: I'm Bob sponseller along with Brian James and Brian. It seems, 533 00:25:01,200 --> 00:25:03,879 Speaker 1: at least to me, the more money people have, the 534 00:25:04,000 --> 00:25:07,680 Speaker 1: more costly a mistake can be if we allow this 535 00:25:07,800 --> 00:25:13,240 Speaker 1: confirmation bias to really take hold on major decisions. Do 536 00:25:13,280 --> 00:25:15,040 Speaker 1: you find the same thing? Yeah? Absolutely. 537 00:25:15,160 --> 00:25:16,960 Speaker 2: And the thing to remember too, a lot of people 538 00:25:16,960 --> 00:25:19,320 Speaker 2: when they've built a good, solid nest egg, you know, 539 00:25:19,359 --> 00:25:21,280 Speaker 2: a market to client of one percent can look like 540 00:25:21,320 --> 00:25:23,639 Speaker 2: a massive amount of money. If I have ten thousand 541 00:25:23,720 --> 00:25:25,720 Speaker 2: dollars and I lose one percent, well I just lost 542 00:25:25,720 --> 00:25:28,800 Speaker 2: one hundred dollars. That's not obviously a huge amount of money. 543 00:25:28,880 --> 00:25:31,359 Speaker 2: But if I have five million and the market takes 544 00:25:31,840 --> 00:25:34,560 Speaker 2: one percent away, that's fifty thousand dollars, but it's the 545 00:25:34,600 --> 00:25:37,240 Speaker 2: same one percent, and it's affected by the same streams 546 00:25:37,280 --> 00:25:40,119 Speaker 2: of the market no matter how big the investment is. 547 00:25:40,160 --> 00:25:42,439 Speaker 2: So the idea there is pay attention to the percent, 548 00:25:42,480 --> 00:25:44,760 Speaker 2: it's not the dollar amount. I just had the conversation 549 00:25:44,800 --> 00:25:46,440 Speaker 2: and not the other day with a client who's really 550 00:25:46,520 --> 00:25:48,560 Speaker 2: worked up over a one percent loss. 551 00:25:49,720 --> 00:25:53,399 Speaker 1: Yeah, I mean, people don't like looking for dissenting views 552 00:25:53,480 --> 00:25:55,840 Speaker 1: or anything that goes against that bias. And I think 553 00:25:55,880 --> 00:25:57,879 Speaker 1: to talk about you know, we've talked about what not 554 00:25:58,000 --> 00:26:00,520 Speaker 1: to do. Let's spend a little time talking about to do. 555 00:26:00,680 --> 00:26:02,840 Speaker 1: And I think you got to get different ideas from 556 00:26:02,880 --> 00:26:06,639 Speaker 1: different people. People that are intelligent, people that are well read, 557 00:26:06,760 --> 00:26:10,239 Speaker 1: people that can check their emotions at the door, and 558 00:26:10,280 --> 00:26:12,879 Speaker 1: that helps, you know, kind of filter out some of 559 00:26:12,880 --> 00:26:15,000 Speaker 1: that strong bias. And this is where I want to 560 00:26:15,040 --> 00:26:18,239 Speaker 1: give kudos to our chief investment officer here at all 561 00:26:18,280 --> 00:26:20,800 Speaker 1: Worth and Andy Stout, because he is wonderful at this. 562 00:26:21,400 --> 00:26:23,680 Speaker 1: And every so often, I don't know, Brian, every three 563 00:26:23,760 --> 00:26:26,280 Speaker 1: or four months, if a headline comes across or something 564 00:26:26,359 --> 00:26:28,680 Speaker 1: happens where I'm starting to get a little worked up. 565 00:26:29,119 --> 00:26:32,480 Speaker 1: It's always I enjoy having a little dose of reality 566 00:26:32,520 --> 00:26:35,199 Speaker 1: fed to me by andy, because he'll pull out the 567 00:26:35,200 --> 00:26:39,840 Speaker 1: inflation scorecard, he'll pull out all the data that's actually 568 00:26:40,040 --> 00:26:42,320 Speaker 1: is making the markets move in one way or the 569 00:26:42,840 --> 00:26:45,320 Speaker 1: one way or another. And when you actually look at 570 00:26:45,320 --> 00:26:49,200 Speaker 1: the reasons behind why markets move and how they move 571 00:26:49,280 --> 00:26:53,199 Speaker 1: and when they move, it has literally nothing to do 572 00:26:53,359 --> 00:26:55,640 Speaker 1: usually with what we see in the headlines or these 573 00:26:55,800 --> 00:26:59,240 Speaker 1: articles that we want to consume just to confirm our 574 00:26:59,280 --> 00:27:02,119 Speaker 1: own biases. Yeah, I would agree with that. 575 00:27:02,160 --> 00:27:03,960 Speaker 2: It's a great tool that we have to be able 576 00:27:04,160 --> 00:27:06,080 Speaker 2: to rely on our own teams internally. 577 00:27:06,119 --> 00:27:10,240 Speaker 1: Of course, again it's important to get a second opinion, 578 00:27:10,240 --> 00:27:14,280 Speaker 1: and this is where a fiduciary advisor can provide enormous value. 579 00:27:14,400 --> 00:27:17,240 Speaker 1: And we are not here, or a good advisor is 580 00:27:17,280 --> 00:27:21,439 Speaker 1: not here to agree with everything that you're thinking, with 581 00:27:21,600 --> 00:27:24,240 Speaker 1: your fears or hype or articles that you've read. We 582 00:27:24,359 --> 00:27:28,200 Speaker 1: are here to challenge those assumptions and protect you from 583 00:27:28,240 --> 00:27:31,280 Speaker 1: blind spots that you might have. Here's the all Worth 584 00:27:31,320 --> 00:27:35,480 Speaker 1: Advice confirmation. Bias isn't just a mental quirk. It's a 585 00:27:35,520 --> 00:27:38,760 Speaker 1: financial risk and the more wealth you have, the more 586 00:27:38,920 --> 00:27:42,600 Speaker 1: damage it can do if you don't identify and address it. 587 00:27:43,520 --> 00:27:46,600 Speaker 1: All right, your neighbor just bought Navidia. Should you jump in, 588 00:27:47,040 --> 00:27:49,480 Speaker 1: we'll talk about a powerful factor that could pull you 589 00:27:49,560 --> 00:27:53,440 Speaker 1: away from your financial plan. Next, you're listening to Simply Money, 590 00:27:53,440 --> 00:27:56,680 Speaker 1: presented by all Worth Financial on fifty five KARC, the 591 00:27:57,119 --> 00:28:04,520 Speaker 1: talk station. You're listening to Simply Money because not all 592 00:28:04,560 --> 00:28:08,040 Speaker 1: Worth Financial. I'm Bob Sponseller along with Brian James. Do 593 00:28:08,080 --> 00:28:10,479 Speaker 1: you have a financial question you'd like for us to answer. 594 00:28:10,800 --> 00:28:13,280 Speaker 1: There's a red button you can click while you're listening 595 00:28:13,320 --> 00:28:16,439 Speaker 1: to the show right there on the iHeart app. Simply 596 00:28:16,520 --> 00:28:20,679 Speaker 1: record your question and it'll come straight to us. All right, Brian, 597 00:28:20,800 --> 00:28:23,520 Speaker 1: Let's be honest. None of us like to feel left out, 598 00:28:23,800 --> 00:28:27,080 Speaker 1: especially when it comes to money. And when your coworker 599 00:28:27,160 --> 00:28:30,760 Speaker 1: brags about their bitcoin gains or your neighbor says they 600 00:28:30,880 --> 00:28:35,119 Speaker 1: doubled their portfolio in six months, it triggers an emotion 601 00:28:35,440 --> 00:28:38,320 Speaker 1: in us that we want to identify. That fear of 602 00:28:38,440 --> 00:28:39,760 Speaker 1: missing out or. 603 00:28:39,640 --> 00:28:43,800 Speaker 2: Fomoho fomo fomo fomo fomo can cause a lot of 604 00:28:43,840 --> 00:28:48,800 Speaker 2: problems in terms of making terrible financial and otherwise decisions. 605 00:28:48,840 --> 00:28:51,800 Speaker 2: So the world of investing that you'll feel some pressure 606 00:28:52,440 --> 00:28:55,120 Speaker 2: just from you know, the people you're golfing with or 607 00:28:55,160 --> 00:28:58,200 Speaker 2: people at a cocktail party, everybody's talking about, you know, 608 00:28:58,320 --> 00:29:01,280 Speaker 2: something that you weren't aware of or didn't do, and 609 00:29:01,320 --> 00:29:02,800 Speaker 2: it may or may not be a good idea. But 610 00:29:02,800 --> 00:29:05,040 Speaker 2: but what your brain kicks into is have I missed 611 00:29:05,040 --> 00:29:07,160 Speaker 2: out on an opportunity? Is there something out there that 612 00:29:07,200 --> 00:29:09,480 Speaker 2: I should do, that I should be doing right now? 613 00:29:09,480 --> 00:29:10,760 Speaker 1: And how can I fix that problem? 614 00:29:10,760 --> 00:29:12,680 Speaker 2: Well, so, maybe there's people out there that you know, 615 00:29:13,080 --> 00:29:15,160 Speaker 2: you know, you know, somebody's got a solid retirement plan, 616 00:29:15,200 --> 00:29:17,320 Speaker 2: They got everything they need, a couple million in assets, 617 00:29:17,320 --> 00:29:19,360 Speaker 2: but they read this one article about AI and all 618 00:29:19,360 --> 00:29:21,120 Speaker 2: of a sudden, they've pivoted their you know, a good 619 00:29:21,200 --> 00:29:23,520 Speaker 2: chunk of their portfolio toward towards the big names and 620 00:29:23,600 --> 00:29:26,680 Speaker 2: AI good idea, bad idea? I say, not so much, 621 00:29:26,720 --> 00:29:29,360 Speaker 2: because they did that with their heart, with their emotions, 622 00:29:29,400 --> 00:29:31,920 Speaker 2: not with their logical brain of does this help my plan? 623 00:29:32,000 --> 00:29:33,640 Speaker 2: Do I need this kind of growth? Or am I 624 00:29:33,720 --> 00:29:36,080 Speaker 2: just in the casino playing with playing with poker chips? 625 00:29:36,640 --> 00:29:38,600 Speaker 1: All right, well, let's get down to brass tacks here. 626 00:29:38,640 --> 00:29:40,560 Speaker 1: I mean, how many of your clients come to you 627 00:29:40,600 --> 00:29:42,880 Speaker 1: with this kind of stuff? Hey, I love the plan, Brian, 628 00:29:42,960 --> 00:29:46,520 Speaker 1: Everything's fine, But let's I think people get bored. Sometimes 629 00:29:46,560 --> 00:29:49,200 Speaker 1: they get bored with their plan because it works so well, 630 00:29:49,800 --> 00:29:53,160 Speaker 1: so they just create this fomo emotion again, back to 631 00:29:53,480 --> 00:29:56,320 Speaker 1: needing to do something or wanting to do something, or 632 00:29:56,840 --> 00:30:00,360 Speaker 1: introducing some juice to the whole situation. Do you have 633 00:30:00,400 --> 00:30:02,160 Speaker 1: clients that come to you with that and how do 634 00:30:02,240 --> 00:30:02,720 Speaker 1: you deal with it? 635 00:30:02,800 --> 00:30:04,640 Speaker 2: Yeah, I'm going to go the other way on you, Bob. 636 00:30:04,640 --> 00:30:06,360 Speaker 2: I'm going to go with myself on that one. We 637 00:30:06,400 --> 00:30:08,400 Speaker 2: feel this too as advisors, we run into it too. 638 00:30:08,480 --> 00:30:10,640 Speaker 2: So I was actually with my family was considering an 639 00:30:10,680 --> 00:30:13,200 Speaker 2: investment and I talked to another advisor here at Allworth 640 00:30:13,240 --> 00:30:16,240 Speaker 2: who had some experience with it, and his answer was, 641 00:30:16,320 --> 00:30:17,080 Speaker 2: why do you want a. 642 00:30:17,040 --> 00:30:19,960 Speaker 1: More complicated life? And that put me on my heels. 643 00:30:19,920 --> 00:30:22,200 Speaker 2: Because this was a private equity type thing with some 644 00:30:22,240 --> 00:30:23,840 Speaker 2: moving parts too and all that, and I hadn't even 645 00:30:23,880 --> 00:30:25,880 Speaker 2: thought about that. I was just interested in the you know, 646 00:30:25,920 --> 00:30:27,600 Speaker 2: it's just a portion of my portfolio and so on 647 00:30:27,600 --> 00:30:29,920 Speaker 2: and so forth. But there's moving parts to any decision 648 00:30:30,000 --> 00:30:33,080 Speaker 2: like that that you make. So it is always valuable 649 00:30:33,120 --> 00:30:34,840 Speaker 2: to tea just take a breath and figure out what 650 00:30:34,960 --> 00:30:37,080 Speaker 2: the big picture is. If I'm going to throw and 651 00:30:37,400 --> 00:30:39,360 Speaker 2: let me be clear, I have absolutely no problem with 652 00:30:39,400 --> 00:30:40,880 Speaker 2: people wanting to play with the stock market. 653 00:30:40,880 --> 00:30:41,960 Speaker 1: Go ahead, knock yourself out. 654 00:30:42,240 --> 00:30:43,800 Speaker 2: Just don't do it with the notion that I'm going 655 00:30:43,880 --> 00:30:45,760 Speaker 2: to double my money next week and all my problems 656 00:30:45,800 --> 00:30:47,760 Speaker 2: will be solved. Do it with the idea that this 657 00:30:47,800 --> 00:30:49,800 Speaker 2: is an interesting thing and I like the story behind 658 00:30:49,840 --> 00:30:52,000 Speaker 2: this investment and I want to participate in it, and 659 00:30:52,000 --> 00:30:55,120 Speaker 2: that's fine. Just don't hang your entire financial future on yeah. 660 00:30:55,160 --> 00:30:57,600 Speaker 1: And I'll tell you how I handle this, because if 661 00:30:57,640 --> 00:30:59,800 Speaker 1: somebody comes at me and at me and at me long, 662 00:31:01,200 --> 00:31:04,440 Speaker 1: I just tell them, hey, fine, let's split it. Let's 663 00:31:04,480 --> 00:31:07,320 Speaker 1: split your portfolio into two pieces. And I've done it 664 00:31:07,320 --> 00:31:10,240 Speaker 1: this way for over thirty years. We got your serious money. 665 00:31:10,480 --> 00:31:13,239 Speaker 1: This is the money you can't afford to lose and 666 00:31:13,240 --> 00:31:14,960 Speaker 1: it's got to take care of you for the rest 667 00:31:14,960 --> 00:31:18,520 Speaker 1: of your life. And then there's play money. And as 668 00:31:18,520 --> 00:31:21,040 Speaker 1: long as they're willing to talk about I'm like, hey, 669 00:31:21,160 --> 00:31:23,720 Speaker 1: have at it. Let's slice off a piece of play money. 670 00:31:24,280 --> 00:31:26,600 Speaker 1: I'm not going to manage the play money for you. 671 00:31:26,600 --> 00:31:29,720 Speaker 1: You go do it this. Go show me how good 672 00:31:29,760 --> 00:31:32,360 Speaker 1: you are. Look at all your charts day traded, you know, 673 00:31:32,920 --> 00:31:37,680 Speaker 1: buy AI stocks to your hearts, heart's desire, gold, whatever 674 00:31:37,720 --> 00:31:39,480 Speaker 1: you want to do, go get in and out of 675 00:31:39,520 --> 00:31:41,680 Speaker 1: all of it, get back to me in six months 676 00:31:41,720 --> 00:31:43,560 Speaker 1: and let me know how you're doing, because it can 677 00:31:43,760 --> 00:31:47,600 Speaker 1: oftentimes if people actually have to go out and do 678 00:31:47,680 --> 00:31:51,080 Speaker 1: this and have the time and the inclination and study 679 00:31:51,080 --> 00:31:53,920 Speaker 1: all the details and execute on what they think can 680 00:31:53,960 --> 00:31:56,760 Speaker 1: be very easy to do. I like to give them 681 00:31:56,760 --> 00:31:59,360 Speaker 1: six months to a year to actually go out and 682 00:31:59,440 --> 00:32:01,440 Speaker 1: do it and then come back to me and let 683 00:32:01,520 --> 00:32:02,320 Speaker 1: me know how it's going. 684 00:32:02,440 --> 00:32:05,360 Speaker 2: Yeah, the serious money permits the existence of the play money, 685 00:32:05,440 --> 00:32:07,280 Speaker 2: and so you have to think about it in terms of, 686 00:32:07,440 --> 00:32:09,000 Speaker 2: you know, if I want to throw a very small 687 00:32:09,040 --> 00:32:11,400 Speaker 2: amount of you know of into something take a. 688 00:32:11,400 --> 00:32:13,600 Speaker 1: Flyers as usually the word word that people use. 689 00:32:13,960 --> 00:32:16,560 Speaker 2: That's perfectly fine, but it shouldn't be treated as something 690 00:32:16,600 --> 00:32:18,640 Speaker 2: that's going to change your life. If you're willing to 691 00:32:18,680 --> 00:32:21,400 Speaker 2: bet half or more of your portfolio on some crazy bet, 692 00:32:21,400 --> 00:32:22,760 Speaker 2: then I'm going to go ahead and say that you're 693 00:32:22,800 --> 00:32:24,800 Speaker 2: going to create financial problems for yourself down the road. 694 00:32:24,920 --> 00:32:26,680 Speaker 2: On the other hand, if you're willing to invest a 695 00:32:26,720 --> 00:32:29,440 Speaker 2: small amount, then even if it doubles triples, it's not 696 00:32:29,480 --> 00:32:31,880 Speaker 2: going to change your life. Anyway, So just remind yourself 697 00:32:31,920 --> 00:32:33,680 Speaker 2: of how important this really will be to you. 698 00:32:33,680 --> 00:32:36,240 Speaker 1: You're listening to Simply Money, presented by all Worth Financial. 699 00:32:36,280 --> 00:32:39,680 Speaker 1: I'm Bob's sponsorer along with Brian James. Brian, let's get 700 00:32:39,720 --> 00:32:43,720 Speaker 1: into how that FOMO or fear of missing out emotion 701 00:32:44,480 --> 00:32:47,320 Speaker 1: starts to rear its ugly head. What causes people to 702 00:32:47,400 --> 00:32:49,880 Speaker 1: feel that? Yeah, well, what causes it is exactly that. 703 00:32:49,960 --> 00:32:51,880 Speaker 1: It's the fear. It's you know, somebody's doing something. 704 00:32:51,920 --> 00:32:54,200 Speaker 2: Somebody has found an opportunity that I'm aware of, but 705 00:32:54,240 --> 00:32:56,440 Speaker 2: I'm not executing on. Am I missing out? That's where 706 00:32:56,440 --> 00:32:58,880 Speaker 2: it comes from. But the very first thing that happens 707 00:32:58,960 --> 00:33:00,960 Speaker 2: is it causes you to abandon in your overall plan 708 00:33:01,200 --> 00:33:03,760 Speaker 2: if you had a solid financial plan, which you mentioned 709 00:33:03,800 --> 00:33:06,160 Speaker 2: it earlier about a solid financial plan can be boring. 710 00:33:06,240 --> 00:33:08,280 Speaker 2: Let's call it call it what it is. Right, I've 711 00:33:08,280 --> 00:33:11,520 Speaker 2: built my machine. It's in good, solid, running shape. Now 712 00:33:11,560 --> 00:33:13,320 Speaker 2: what you know, think of a if you're a person 713 00:33:13,320 --> 00:33:15,560 Speaker 2: who's into repairing cars, the most boring thing is a 714 00:33:15,600 --> 00:33:17,520 Speaker 2: couple of cars in the garage who that are running 715 00:33:17,560 --> 00:33:17,960 Speaker 2: just fine. 716 00:33:18,000 --> 00:33:18,800 Speaker 1: I want a project. 717 00:33:18,800 --> 00:33:20,160 Speaker 2: I want to buy something and beat it up and 718 00:33:20,160 --> 00:33:22,880 Speaker 2: fix it and so forth that Again, that's okay with 719 00:33:22,760 --> 00:33:25,520 Speaker 2: it with a tiny amount of the portfolio, but you're 720 00:33:25,560 --> 00:33:27,560 Speaker 2: going to be you're forcing yourself to do things that 721 00:33:27,640 --> 00:33:28,640 Speaker 2: you don't have control over. 722 00:33:29,440 --> 00:33:32,240 Speaker 1: Yeah, that's that's the key point here. The key point 723 00:33:32,280 --> 00:33:35,000 Speaker 1: I want to drive home is make sure we separate 724 00:33:35,120 --> 00:33:38,920 Speaker 1: play money from serious money and make sure that we 725 00:33:39,080 --> 00:33:43,120 Speaker 1: do not do anything that's going to violate the viability 726 00:33:43,120 --> 00:33:46,400 Speaker 1: of that serious money, meaning your long term financial plan. 727 00:33:47,000 --> 00:33:49,160 Speaker 1: And as long as people are willing to do that, 728 00:33:49,600 --> 00:33:52,160 Speaker 1: things tend to work out fine. And if they want 729 00:33:52,160 --> 00:33:54,720 Speaker 1: to carve off that piece and get speculative, we just 730 00:33:54,800 --> 00:33:57,040 Speaker 1: carve that out of the financial plan so you can 731 00:33:57,160 --> 00:34:01,160 Speaker 1: we can always demonstrate for our clients viability of that 732 00:34:01,200 --> 00:34:05,480 Speaker 1: financial plan factoring just the serious money piece. So take 733 00:34:05,520 --> 00:34:06,320 Speaker 1: three steps here. 734 00:34:06,360 --> 00:34:08,640 Speaker 2: First, ask yourself, does this fit the plan that I've 735 00:34:08,640 --> 00:34:10,960 Speaker 2: already put in place or am I just reacting to 736 00:34:11,000 --> 00:34:13,279 Speaker 2: that fear of missing out. Second one, look at those 737 00:34:13,320 --> 00:34:15,839 Speaker 2: goals again. Maybe if you've built a solid financial plan, 738 00:34:16,000 --> 00:34:17,880 Speaker 2: make sure the goals still match what you want because 739 00:34:17,880 --> 00:34:20,120 Speaker 2: things change over time, what are you really trying to achieve? 740 00:34:20,360 --> 00:34:23,000 Speaker 2: And number three, talk to your advisor or a trusted 741 00:34:23,680 --> 00:34:27,200 Speaker 2: accomplice or somebody else that knows the situation and just 742 00:34:27,239 --> 00:34:29,120 Speaker 2: get an opinion from an arm's length away. 743 00:34:29,680 --> 00:34:33,880 Speaker 1: Here's the all Worth advice. Chasing heat can often result 744 00:34:34,000 --> 00:34:39,320 Speaker 1: in getting burned. A good financial plan keeps you cool. Next, 745 00:34:39,480 --> 00:34:42,920 Speaker 1: the most valuable part of financial advice. You're listening to 746 00:34:42,960 --> 00:34:45,960 Speaker 1: Simply Money presented by all Worth Financial on fifty five KRC, 747 00:34:46,520 --> 00:34:54,799 Speaker 1: the talk station. You're listening to Simply Money presented by 748 00:34:54,840 --> 00:34:57,880 Speaker 1: all Worth Financial. I'm Bob Sponseller along with Brian James. 749 00:34:58,640 --> 00:35:01,799 Speaker 1: Here's the truth. When people think about financial advice, they 750 00:35:01,800 --> 00:35:07,160 Speaker 1: think about investment picks, stat tax strategies, state planning, and 751 00:35:07,239 --> 00:35:10,680 Speaker 1: all those things are important, but maybe the most valuable 752 00:35:10,719 --> 00:35:15,719 Speaker 1: thing your advisor should be doing behavioral coaching. Brian, Why 753 00:35:15,719 --> 00:35:16,279 Speaker 1: do we know this? 754 00:35:16,320 --> 00:35:19,839 Speaker 2: Well, morning Star, which is a big investment research firm 755 00:35:19,840 --> 00:35:22,320 Speaker 2: out there, has done some research and they've they've shown 756 00:35:22,320 --> 00:35:25,000 Speaker 2: through those studies that good behavior, which means sticking with 757 00:35:25,080 --> 00:35:27,359 Speaker 2: that plan and avoiding the urge to try to time 758 00:35:27,440 --> 00:35:29,800 Speaker 2: the market, that can add one and a half percent 759 00:35:29,800 --> 00:35:32,040 Speaker 2: to two percent in returns annually. And that is that 760 00:35:32,120 --> 00:35:34,759 Speaker 2: is not magic, that's guidance. That's somebody standing in arms 761 00:35:34,840 --> 00:35:37,799 Speaker 2: length away looking at your situation. And again, this can 762 00:35:37,840 --> 00:35:39,759 Speaker 2: be a professional advisor, it can just be somebody who 763 00:35:39,760 --> 00:35:42,120 Speaker 2: bounce ideas off of and so forth, but just somebody 764 00:35:42,160 --> 00:35:44,440 Speaker 2: to kind of act as checks and balances to your 765 00:35:44,480 --> 00:35:47,640 Speaker 2: own decision making skills. That literally results in real dollars 766 00:35:47,680 --> 00:35:49,359 Speaker 2: because somebody can pull in the reins on you if 767 00:35:49,360 --> 00:35:51,240 Speaker 2: you're about to make about to make a bad decision. 768 00:35:51,719 --> 00:35:53,960 Speaker 1: Yeah. I bring this up all the time, especially when 769 00:35:54,000 --> 00:35:56,880 Speaker 1: people are kind of fee avoidant, kind of wanting to 770 00:35:56,920 --> 00:36:00,000 Speaker 1: talk about the advisory fees and why do we charge 771 00:36:00,239 --> 00:36:02,359 Speaker 1: this and what do they get out of it? I 772 00:36:02,400 --> 00:36:05,480 Speaker 1: think the default provision most people are a lot of 773 00:36:05,480 --> 00:36:08,120 Speaker 1: people could come to us with as well, if I'm 774 00:36:08,120 --> 00:36:10,640 Speaker 1: going to pay an advisory fee of one one and 775 00:36:10,640 --> 00:36:14,480 Speaker 1: a half percent, what have you? My investment returns better 776 00:36:14,560 --> 00:36:18,560 Speaker 1: be better in excess of that every single year, or 777 00:36:18,640 --> 00:36:23,280 Speaker 1: you aren't doing anything. And all these studies have shown 778 00:36:23,440 --> 00:36:28,480 Speaker 1: people completely forget about the behavioral impact of being left 779 00:36:28,520 --> 00:36:31,560 Speaker 1: to your own devices and making these decisions on your own, 780 00:36:31,920 --> 00:36:34,560 Speaker 1: to say nothing of the tax alpha and the other 781 00:36:34,640 --> 00:36:38,440 Speaker 1: benefits that come with good financial planning. It's this behavioral 782 00:36:38,880 --> 00:36:43,440 Speaker 1: coaching and taking people by the hand and helping them 783 00:36:43,800 --> 00:36:47,560 Speaker 1: not make mistakes from which they can't recover. That really 784 00:36:47,600 --> 00:36:49,439 Speaker 1: add the value here at the end of the day. 785 00:36:49,560 --> 00:36:51,520 Speaker 2: Yeah, and again there's nothing wrong with being to do 786 00:36:51,560 --> 00:36:53,520 Speaker 2: it yourself as well, But you're going to run into 787 00:36:53,520 --> 00:36:57,440 Speaker 2: these same things, same situations, even if you're making your 788 00:36:57,440 --> 00:36:58,560 Speaker 2: decisions on your own, which again. 789 00:36:58,480 --> 00:36:59,799 Speaker 1: Is a perfectly acceptable way to go. 790 00:37:00,320 --> 00:37:03,680 Speaker 2: I like to think of it in terms of reminding 791 00:37:03,719 --> 00:37:06,319 Speaker 2: people that, hey, when the market goes down, that is 792 00:37:06,400 --> 00:37:08,279 Speaker 2: not a failure. It's a failure if you lost a 793 00:37:08,320 --> 00:37:10,440 Speaker 2: lot more than the market, because you probably weren't invested 794 00:37:11,560 --> 00:37:14,080 Speaker 2: in a very diversified manner to begin with. However, just 795 00:37:14,160 --> 00:37:16,160 Speaker 2: viewing the normal ups and downs of a market as 796 00:37:16,280 --> 00:37:18,640 Speaker 2: up as good, down as bad as a failure. I 797 00:37:18,680 --> 00:37:20,840 Speaker 2: would compare that to you know what, if it's raining, 798 00:37:20,880 --> 00:37:23,520 Speaker 2: you know, if it's raining outside today, maybe we should 799 00:37:23,560 --> 00:37:25,399 Speaker 2: just break up these windows. Think of the money we'll 800 00:37:25,440 --> 00:37:27,760 Speaker 2: save on heating if we just don't have any windows 801 00:37:27,760 --> 00:37:30,200 Speaker 2: anymore because it's raining today. Therefore the sun will never 802 00:37:30,200 --> 00:37:32,480 Speaker 2: come out again. That's not the way to think about it. 803 00:37:33,120 --> 00:37:36,000 Speaker 2: A brief period of you know, bumping, his volatility or 804 00:37:36,040 --> 00:37:38,640 Speaker 2: losses is to be expected and dealt with, not to 805 00:37:38,640 --> 00:37:39,960 Speaker 2: be attempted to be avoided. 806 00:37:40,000 --> 00:37:41,879 Speaker 1: That's the trap that a lot of people fall into. Now, 807 00:37:41,960 --> 00:37:43,960 Speaker 1: what we're trying to do here is paint a picture 808 00:37:44,000 --> 00:37:46,280 Speaker 1: of why you would want to work with a good, 809 00:37:46,640 --> 00:37:49,520 Speaker 1: solid fiduciary advisor. And this isn't meant to be a 810 00:37:49,560 --> 00:37:52,080 Speaker 1: commercial for all Worth. I mean, we do this kind 811 00:37:52,120 --> 00:37:54,200 Speaker 1: of planning, but other people do it as well. The 812 00:37:54,280 --> 00:37:58,080 Speaker 1: key is to find a good fiduciary advisor who can 813 00:37:58,440 --> 00:38:00,239 Speaker 1: tell who won't just sit there and tell tell you 814 00:38:00,280 --> 00:38:03,279 Speaker 1: what you want to hear, but oftentimes tell you what 815 00:38:03,320 --> 00:38:06,080 Speaker 1: you need to hear, because at the end of the game, 816 00:38:06,320 --> 00:38:08,520 Speaker 1: at the end of the day, job one here, at 817 00:38:08,640 --> 00:38:11,040 Speaker 1: least in my mind, is to make sure all of 818 00:38:11,080 --> 00:38:15,200 Speaker 1: our clients have above a ninety percent probability of meeting 819 00:38:15,239 --> 00:38:18,160 Speaker 1: all their long term financial goals and not running out 820 00:38:18,160 --> 00:38:21,200 Speaker 1: of money in spite of what may come down and 821 00:38:21,239 --> 00:38:24,360 Speaker 1: often will come down the road. Here's the all Worth advice. 822 00:38:24,440 --> 00:38:28,120 Speaker 1: A great advisor won't just manage your money, they'll protect 823 00:38:28,239 --> 00:38:31,440 Speaker 1: you from yourself. Thanks for listening. You've been listening to 824 00:38:31,480 --> 00:38:34,800 Speaker 1: Simply Money, presented by all Worth Financial on fifty five KRC, 825 00:38:35,400 --> 00:38:36,400 Speaker 1: the talk station