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Speaker 1: Tonight how to handle your money when tariff talk can

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Speaker 1: cause perhaps even some major market volatility. You're listening to

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Speaker 1: Simply Money, presented by all Worth Financial on Bob Sponseller

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Speaker 1: along with Brian James. Well, obviously there's a lot going

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Speaker 1: on right now. President Trump, you know, literally landed in Davos,

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Speaker 1: Switzerland earlier today to begin talks actually address the World

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Speaker 1: Economic Forum, and you know, all the big shots, you know,

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Speaker 1: governmental and financial leaders are there. He'll give a major

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Speaker 1: talk and he'll also meet with folks, and we've got

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Speaker 1: a lot going on there. There's a lot of unsettled

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Speaker 1: things around the world, to say the least, ongoing negotiations

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Speaker 1: over Greenland that involves some tariffs. We've got unrest in Iran.

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Speaker 1: We shoot, We've got unrest in you know, cities in America,

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Speaker 1: to say nothing of Venezuela and everything else.

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Speaker 2: So there's a.

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Speaker 1: Lot going on, and Brian, let's just remind folks tonight

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Speaker 1: about how to actually handle your money during times when

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Speaker 1: I would say the media shows you know, both sides

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Speaker 1: of the aisle, both extremes or at fever pitch. You know,

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Speaker 1: everybody's trying to get everybody else riled up. Let's just

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Speaker 1: try to, you know, do some basic blocking and tackling here.

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Speaker 1: Let's help people walk through what we should be doing

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Speaker 1: and more importantly, what we should not be doing when

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Speaker 1: it comes to our money.

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Speaker 3: Well, Bob, I think the first thing that everyone should

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Speaker 3: do before any time like this, no matter what the

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Speaker 3: headline is that terrafor socidey for the moment, the first

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Speaker 3: thing you should do is exhale. Maybe go outside, touch

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Speaker 3: the grass, go breathe the frigid air for a little bit.

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Speaker 2: Great advice.

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Speaker 3: I mean, if you had a balanced portfolio, a well

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Speaker 3: asked allocated portfolio, and you had a plan in place

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Speaker 3: six months ago, three months ago, well guess what, those

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Speaker 3: things are still in place. And so you shouldn't be

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Speaker 3: in a situation where any headline right, any headline ever,

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Speaker 3: is really caused you'd.

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Speaker 2: Have to go do something right now now.

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Speaker 3: Now, if you've got yourself in that position, you chose that,

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Speaker 3: and that's fine, have at it. But at the same time,

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Speaker 3: this is the downside of trying to get super speculative

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Speaker 3: in leaning into things that might be super impact.

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Speaker 2: And now why this matters. Let's get back to tariffs here.

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Speaker 3: Why do markets care about tariffs, well, when they come

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Speaker 3: out of nowhere, or when they could look like they

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Speaker 3: could escalate into a full blown trade war or multiple

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Speaker 3: trade wars. As we've been doing this for the better

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Speaker 3: part of a year now, investors of course get a

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Speaker 3: little bitterary. You know, tariffs often means slower global growth.

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Speaker 3: We're simply drilling a big hole in the bucket of

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Speaker 3: revenues and things of money that goes kind of nowhere.

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Speaker 3: It doesn't become profit, it doesn't get circulated back into

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Speaker 3: the system except to maybe the government that is receiving

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Speaker 3: it if it's used properly.

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Speaker 2: So that means there's less trade.

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Speaker 3: Inflation will go up because there's less activity for certain companies,

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Speaker 3: especially these big multinational ones. We've got a few around here.

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Speaker 3: Tariffs can actually put profits at risk. So you want

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Speaker 3: to make sure you understand where are you in with

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Speaker 3: regard to your portfolio and how this stuff is going

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Speaker 3: to actually impact you. Do you understand the nuts and

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Speaker 3: bolts there inside your portfolio?

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Speaker 1: Yeah, and you brought up, you know, putting profits at risk.

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Speaker 1: I think that's a reason again to pay more attention

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Speaker 1: to actually corporate earnings. And let's face it, no one's

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Speaker 1: talking about the fact that we're in the middle of

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Speaker 1: earning season right now, companies are giving out their fourth

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Speaker 1: quarter report cards and tariffs no tariffs, President Trump, No

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Speaker 1: President Trump. I mean, that's what tells the story. What

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Speaker 1: have corporate profits been and how are they escalated to grow?

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Speaker 1: And at what pace is the rate of growth going

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Speaker 1: up or going down in the future. That's really what

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Speaker 1: moves the markets, you know, over the long term. But

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Speaker 1: in the short term. Yep, all this headline news can

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Speaker 1: make people very unsettling. And you've already made the point here.

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Speaker 1: It is it is a fool's errand to try to

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Speaker 1: trade this thing up or down, you know, based on

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Speaker 1: headline news stories over a one to three day period.

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Speaker 1: People that try to do that usually come out regretting

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Speaker 1: that they did so. And shoot, we don't have to

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Speaker 1: look that far back. We can go back to late

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Speaker 1: March early April of last year when this same kind

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Speaker 1: of thing was going on. Markets do not like uncertainty,

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Speaker 1: and when they get it, the natural reaction is to

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Speaker 1: sell and then stay out and see what happens, so

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Speaker 1: to speak. How many times have you and I have

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Speaker 1: heard that from clients. I just want to wait till

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Speaker 1: things settle down, and then I'll get back in. And

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Speaker 1: by the time things settle down, or at least you

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Speaker 1: feel like things have settled down, most of the time,

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Speaker 1: we've missed out on a lot of growth and potential

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Speaker 1: increase in our portfolio. And the same thing happened last year.

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Speaker 1: You only have to look at twenty twenty five to

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Speaker 1: see kind of how this works.

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Speaker 3: Yeah, and I think, you know, we can look at

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Speaker 3: actually twenty eighteen and twenty nineteen and get a little

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Speaker 3: bit of a primer in what happens with regard to

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Speaker 3: the markets when tariffs occurred. There aren't that many instances

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Speaker 3: throughout history where we can look at actual tariff activity.

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Speaker 3: You know, you have to go all the way back

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Speaker 3: prior to twenty eighteen nineteen. You really have to go

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Speaker 3: all the way back to the Holly Smoot days and

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Speaker 3: get your Ferris Bueller flashbacks, you know, back in the

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Speaker 3: years ago when we went through this and during the

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Speaker 3: Great Depression. But twenty eighteen twenty nineteen, that was the

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Speaker 3: first Trump administration, and we did have the threat of tariffs,

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Speaker 3: and we did actually have tariffs, not to the extent

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Speaker 3: that we have them now. But to look at what

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Speaker 3: the market did. And I remember this too. Twenty eighteen

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Speaker 3: was not a fantastic market year.

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Speaker 2: It wasn't a.

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Speaker 3: Terrible year either, but I remember everybody pouting. I feel

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Speaker 3: like we were at twenty eighteen was kind of like

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Speaker 3: a like the disappointing year after some really good run

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Speaker 3: up years, still recovering from twenty eight So in twenty eighteen,

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Speaker 3: the S and P five hundred was up about maybe

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Speaker 3: actually lost about four percent. And then twenty nineteen, though,

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Speaker 3: for those of you who were sitting on the sidelines,

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Speaker 3: and as Bob just mentioned, you know, for those who said,

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Speaker 3: you know what I think, I just want to sit

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Speaker 3: it out and I'll keep I'll stay in cash until

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Speaker 3: things clear up. Well, twenty nineteen the S and P

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Speaker 3: was up about thirty one percent because those trade tensions ease,

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Speaker 3: the agreements got hammered out, and the markets rebounded quickly.

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Speaker 2: That's what happens.

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Speaker 3: But unfortunately, if you step off normal normally we wait

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Speaker 3: to get out until the horse is already out of

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Speaker 3: the barn, and then we're really really hesitant to close

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Speaker 3: that barn door after the horse is back in. So

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Speaker 3: so a lot of people left that on the table

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Speaker 3: that big upswing and that's the usual cycle. Our guts

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Speaker 3: don't give us good indicators because that is a two

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Speaker 3: part decision. If I want to get out because things

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Speaker 3: are a little scary, yep, then I also have to

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Speaker 3: follow that up by deciding when I'm going to get

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Speaker 3: back in.

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Speaker 2: And whatever indicators I've chosen are gonna tell me that

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Speaker 2: you have to be right twice.

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Speaker 1: And it's hard enough to be right once, it's really

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Speaker 1: hard to be right twice. That's great, So let's get

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Speaker 1: back to what we should be doing. Brian, You and

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Speaker 1: I both have been doing this for well over thirty years.

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Speaker 1: We have clients come in and meet with us all

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Speaker 1: the time, and you know, correct me if I'm wrong here.

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Speaker 1: But when folks come in, they just want to know

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Speaker 1: a couple of simple things. How are things going with

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Speaker 1: my money? And more importantly, how am I on track

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Speaker 1: to meet my long term goals based on what we've

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Speaker 1: laid out from my personal financial plan? And are we

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Speaker 1: earning enough return relative to the risk that we are

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Speaker 1: or are not taking to achieve those goals? At the

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Speaker 1: end of the day, that's what everybody wants to see.

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Speaker 1: They express it in different ways, but that at the

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Speaker 1: end of the day, that's what people are really wanting

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Speaker 1: to do. So, at the risk of repeating ourselves here,

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Speaker 1: let's just go through some of this basic blocking and

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Speaker 1: tackling that we got to keep focused on in spite

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Speaker 1: of some of this headline risk. And let's start with

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Speaker 1: just making sure that your allocation and your risk exposure

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Speaker 1: is still current. And we've talked about this often. We've

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Speaker 1: had a nice three year run up in markets, and

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Speaker 1: you know, you got to rebalance, take a little few

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Speaker 1: chips off the table now and then to keep your

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Speaker 1: overall portfolio in alignment with what your true risk profile

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Speaker 1: is in preparation for potential volatility like what we could

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Speaker 1: be seeing here. And just as a reminder, we're in

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Speaker 1: a mid term election year and volatility tends to be

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Speaker 1: higher during a mid term election year. The average, over

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Speaker 1: an average year, the market at some point in time

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Speaker 1: declines by about fourteen percent sometime for some reason throughout

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Speaker 1: the year. During mid term election years, that average decline

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Speaker 1: goes up to about nineteen percent. It happens all the time,

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Speaker 1: and you've got to be prepared in advance. Checking your

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Speaker 1: risk and rebalancing is one way to do that.

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Speaker 2: Yeah.

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Speaker 3: The other thing I'd point out too is for a

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Speaker 3: lot of people who have been listening to this show

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Speaker 3: in the hopefully you've put in some some different strategies

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Speaker 3: than you had ten twenty years ago. Right, I'm talking

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Speaker 3: about direct indexing buffer ttfs, harvesting of tax losses. And remember,

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Speaker 3: we can't harvest tax losses until we have losses to harvest.

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Speaker 2: And that's what this looks like, right, So the stuff

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Speaker 2: is going to happen. We're gonna get bad headlines.

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Speaker 3: If we didn't have bad headlines, we would never bother

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Speaker 3: with tax loss harvesting because nothing wouldever, would ever go,

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Speaker 3: would ever come down. But when we have these scary headlines,

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Speaker 3: that does drive certain positions down. There are, of course,

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Speaker 3: some industries, some companies who are more exposed to terriff

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Speaker 3: activity than others. Those are going to take a bit

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Speaker 3: of a hit. And as you look at your portfolio

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Speaker 3: across all those different positions, you might notice that some

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Speaker 3: of them are sitting at a loss. Well, your tax

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Speaker 3: loss harvesting vehicle should be doing its job and selling

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Speaker 3: those out to stack up some gains for you to

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Speaker 3: give you a silver lining. And also I'll throw out

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Speaker 3: there that hopefully you've got a financial plan in place. Right,

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Speaker 3: If you're listening to the show, you at least subscribe

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Speaker 3: to the idea that I probably should have a plan

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Speaker 3: instead of just a bunch of investments, and so hopefully

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Speaker 3: that plan also included illustrating moments.

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Speaker 2: Like this via a stress test.

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Speaker 3: Right, So what we always do when we do a

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Speaker 3: plan is, let's figure out if here's the honky doory outcome,

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Speaker 3: nothing bad that ever happens.

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Speaker 2: Again, here's what you look like. Now, let's do it

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Speaker 2: again and take away.

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Speaker 3: Twenty to twenty five percent of your financial assets right now,

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Speaker 3: because that is literally what you know. If we have

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Speaker 3: a two thousand and eight Heaven forbid, then that's what

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Speaker 3: that will look like. Can your portfolio, more importantly, your plan.

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Speaker 3: Can your plan withstand it? The portfolio will take a hit,

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Speaker 3: but the plan doesn't have to as long as you

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Speaker 3: have allocated things properly and understood that you had in

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Speaker 3: the first place.

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Speaker 2: So make sure you're staying rebalanced, right.

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Speaker 3: The volatility tends to knock portfolios way out of whack.

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Speaker 3: If equities come down and bonds go up, then that

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Speaker 3: allocation could shift in a way that increases your risk

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Speaker 3: in a way you didn't intend, or it might take

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Speaker 3: you out of your ideal growth zone.

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Speaker 2: If you want to be growth oriented.

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Speaker 3: Stocks are coming down and bonds are going up, then

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Speaker 3: you're gonna need to make sure that you're paying attention

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Speaker 3: on the way down and rebalance occasionally. We're not saying

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Speaker 3: do nothing, but be very intentional. Right, if you've got

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Speaker 3: a tactical tilt, you know, maybe your overweight international and

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Speaker 3: a new tear regime looks like it's gonna destroy some

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Speaker 3: of these foreign economies, well then that might justify a shift.

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Speaker 3: Or conversely, what might be happening is if you don't

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Speaker 3: have enough international because you've subscribed to the all I

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Speaker 3: need is the US theory, then you have left money

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Speaker 3: on the table over the last over last year, and

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Speaker 3: so far this year. As international stock markets, international companies

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Speaker 3: are finding ways to do business with each other to

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Speaker 3: react to the way the United States is treating its

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Speaker 3: customer base currently. So just make sure you understand what

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Speaker 3: your allocation is and where you might be exposed and

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Speaker 3: where you're not.

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Speaker 1: Yeah, you raised the great point of tax loss harvesting,

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Speaker 1: and this is where this is a situation where I

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Speaker 1: look at volatility not as a threat, but as an opportunity, Brian.

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Speaker 1: And here here's what I mean by that. You know,

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Speaker 1: when you have these tax loss harvest programs going, and

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Speaker 1: we're talking about for non IRA accounts, okay, taxable accounts,

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Speaker 1: your portfolio can stay fully invested at all times. You

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Speaker 1: just switch out one holding for another which invests very similarly,

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Speaker 1: and you're harvesting that short term loss to be used later.

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Speaker 1: It's a wonderful opportunity to make quote unquote taxable accounts

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Speaker 1: extremely tax efficient. And the other thing I mean, Jude,

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Speaker 1: I think I talked about this yesterday on the show, Brian.

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Speaker 1: It's not a bad idea, you know, to have a

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Speaker 1: little bit higher emergency fund, have a little bit of

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Speaker 1: dry powder during times where you might expect a little

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Speaker 1: volatility if we get that thirteen fourteen, nineteen percent pullback,

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Speaker 1: having a little dry powder available to buy low is

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Speaker 1: not a bad thing. So if you have a plan

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Speaker 1: back to your original point, these are great opportunities. You

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Speaker 1: don't need to be scared, and you know, think about

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Speaker 1: bearing your money, you know, in a coffee can in

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Speaker 1: the backyard. Here's the all Worth advice. Don't let terras

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Speaker 1: push you into panic.

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Speaker 2: Mode.

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Speaker 1: Smart investors use volatility as a checkpoint and as an opportunity,

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Speaker 1: not a trigger. Coming up next, the average fifty something

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Speaker 1: now has a net worth of over a million dollars,

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Speaker 1: but it's how they got there that matters most. We'll

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Speaker 1: explain the wealth building playbook that actually is working. You're

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Speaker 1: listening to Simply Money presented by all Worth Financial on

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Speaker 1: fifty five KRC, the talk station. You're listening to Simply

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Speaker 1: Money presented by all Worth Financial on Bob Sponsller along

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Speaker 1: with Brian James. If you can't listen to Simply Money

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Speaker 1: every night, subscribe and get our daily podcast.

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Speaker 2: You can listen the following.

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Speaker 1: Morning during your commute or at the gym, or while

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Speaker 1: you're out walking around in your neighborhood in sub zero temperatures.

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Speaker 1: And if you think your friends could use some financial advice,

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Speaker 1: tell them about us as well. Just search Simply Money

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Speaker 1: on the iHeart app or wherever you find your podcast. Well,

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Speaker 1: some new data is in. We love data, Brian, don't

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Speaker 1: we And it's clear Americans in their fifties are hitting

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Speaker 1: some major financial milestones. Tonight, we're breaking down what the

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Speaker 1: numbers say why this group is building well faster than ever,

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Speaker 1: and what that means for how you plan for your

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Speaker 1: next decade.

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Speaker 2: Let's go over the stats first.

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Speaker 3: Pop, So, the average fifty something American now has a

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Speaker 3: net worth of one point four million dollars according to

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Speaker 3: a report from Empower, the financial services firm. The average

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Speaker 3: sixty something while they're worth about one point six million.

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Speaker 3: So these numbers are estimates that it comes from anonymized

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Speaker 3: data from Empower users. By the way, Empower is a

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Speaker 3: they do a lot of four one ks. That's where

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Speaker 3: you might run across from, or you might have heard

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Speaker 3: of them before. They may run your company's four O

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Speaker 3: one k pretty big company. But this study was done

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Speaker 3: in October of this past year, consistent with findings of

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Speaker 3: the Federal Survey of Consumer Finances, which is that's a

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Speaker 3: little bigger study that comes out every three years.

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Speaker 2: But they're both making the same conclusions.

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Speaker 3: That last federal survey well in twenty two, it showed

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Speaker 3: an average net worth of about one point one million

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Speaker 3: for Americans age fifty to fifty four and one point

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Speaker 3: four million for age fifty five to fifty nine. Now,

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Speaker 3: they don't say when in twenty two this survey was done.

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Speaker 3: Twenty twenty two was one of the worst market years

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Speaker 3: we've ever had. It was one of the five worst

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Speaker 3: years we've ever seen. So if they did this at

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Speaker 3: the end of the year, it would show a different result,

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Speaker 3: I think, than at the beginning.

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Speaker 2: Of that year.

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Speaker 3: But nonetheless, what we're talking about is a group of

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Speaker 3: people of a certain age who are hitting their financial mileset.

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Speaker 2: Now, this isn't too shocking, Bob. The market goes up,

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Speaker 2: not down.

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Speaker 3: If you've been investing in participating in it for decades

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Speaker 3: until you reach your fifties, I would hope you have

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Speaker 3: a decent network.

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Speaker 1: Well, Brian, that leads me to my point. And I

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Speaker 1: would love to be wrong here, And if you already

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Speaker 1: have data that proves that I'm wrong, just please put.

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Speaker 2: It out there.

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Speaker 1: But whenever I see the word average, especially with a

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Speaker 1: survey like this, I get a little skeptical.

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Speaker 2: Here's what I mean.

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Speaker 1: Yep, the average fifty something American has a million one

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Speaker 1: point four million dollars. But if you actually looked at

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Speaker 1: a distribution chart of every fifty year old in the

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Speaker 1: in the country, I think you're going to find a

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Speaker 1: couple of things. You're gonna find, you know, a third

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Speaker 1: to a half the people have virtually no money saved

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Speaker 1: for retirement. And then you've got a third to half

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Speaker 1: of the people that have done things well, they've been

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Speaker 1: blessed in their career, they well, they've stayed healthy, and

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Speaker 1: they probably have two to five million dollars or more.

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Speaker 1: In other words, I think this these average numbers are

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Speaker 1: a bit deceiving. Do you agree with that?

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Speaker 2: Yeah?

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Speaker 3: I know you. You asked me to prove you wrong

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Speaker 3: if I could, and you know I love doing that,

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Speaker 3: but no, this time I have to I teed it

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Speaker 3: up for you. And this let's be real careful here.

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Speaker 3: This is this is data from empower. This is not

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Speaker 3: a survey. They're not asking any questions. They're just looking

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Speaker 3: at the data that they have and anonymizing it. They're

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Speaker 3: so they're just looking at the participants of their various

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Speaker 3: retirement plans. But you, but even to your point, I

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Speaker 3: would still question this a little bit because sure, there's

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Speaker 3: lots of fifty year olds out there that have networth

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Speaker 3: north of a million dollars, but there's a lot of

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Speaker 3: there's a lot more who don't. They might be at

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Speaker 3: a quarter million or a half million or something like that.

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Speaker 3: So regardless, I think the point is simply that, you know,

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Speaker 3: is simply to confirm that despite all the crazy scary headlines,

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Speaker 3: despite two thousand and eight, despite twenty twenty two, the

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Speaker 3: conclusion we should draw here is that it's a good

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Speaker 3: idea to have some chunk of your money expose to

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Speaker 3: the capital markets. Understand what that history is. Yes it

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Speaker 3: goes up and down, and yes it can be scary,

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Speaker 3: but these people didn't get there by burying these dollars

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Speaker 3: in their backyards and coffee cans, as you often like

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Speaker 3: to say. Right, these people are investing. They understand the

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Speaker 3: ups and downs, and it's simply compounding. And you know,

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Speaker 3: like I'm talking about market participation, be in the game

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Speaker 3: if you want to win the game, consistently contributing to

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Speaker 3: four oh one ks for twenty five plus years, riding

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Speaker 3: out those bull markets. Right. The best thing that can

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Speaker 3: happen for anybody is to see a full market cycle

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Speaker 3: early in their careers.

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Speaker 2: Oh, I get it.

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Speaker 3: Sometimes it sucks and then it retop recovers, and then

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Speaker 3: it's like a slingshot on the way back up, all right,

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Speaker 3: and then you start rooting for those down markets because

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Speaker 3: you have seen what happens when the upswing occurs.

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Speaker 2: Yeah, yeah, said another way.

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Speaker 1: You've got to find a way, you know, to get

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Speaker 1: to this point of saving or spending a little bit

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Speaker 1: less than you make and then saving it and compounding

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Speaker 1: it for years and years and years in appreciating assets,

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Speaker 1: the compound over time. You, like you just said, you

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Speaker 1: got to be in the game. And you know, the

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Speaker 1: people that figure this out sooner rather than later do

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Speaker 1: very well. The folks that just spend, you know, exactly

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Speaker 1: what they make or maybe even a little more, have

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Speaker 1: credit card debt or what have you, and never get

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Speaker 1: in the game of owning appreciating assets. It's very hard

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Speaker 1: to make this up when you're in your fifties or sixties.

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Speaker 1: And let's face it, if you just want to live

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Speaker 1: on fifty thousand dollars a year, you know, plus social Security,

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Speaker 1: you're gonna need a million dollars more to generate that

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Speaker 1: kind of cash flow over the rest of your lifetime. So,

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Speaker 1: you know, a million dollars has nothing to sneeze at,

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Speaker 1: but in terms of replacing your earned income is not

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Speaker 1: It's not as much money as it used to be.

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Speaker 1: So again, you got to be in the game. Control

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Speaker 1: your debt, compound money over a long period of time

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Speaker 1: and have that largely concentrated and growth oriented, diversified assets.

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Speaker 3: Yeah, and so for those of you, maybe we're getting

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Speaker 3: somebody's attention to think about their own situation. So between

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Speaker 3: now in retirement, you're going to have the most income,

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Speaker 3: the most financial tools you've ever had in your life.

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Speaker 3: Speaking to the people who are your late forties early fifties.

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Speaker 3: Now you've got access to catch up contributions, you can

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Speaker 3: put more away in your four to one case, and

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Speaker 3: there might be stock compensation out there. Estate planning strategies

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Speaker 3: to make things more efficient. Make sure you use this. Remember,

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Speaker 3: millionaire status doesn't mean what it used to. It's not

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Speaker 3: the finish line anymore. If you're now in the two

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Speaker 3: to ten million dollar range, those goals are going to

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Speaker 3: be more focused on income planning, tax strategy, legacy design,

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Speaker 3: those things, not just growing the pile.

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Speaker 2: Right.

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Speaker 3: Things get a little more complicated the closer you get

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Speaker 3: to that hole. You need to be a little choosier

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Speaker 3: about which club you're going to use.

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Speaker 1: Here's the all Worth advice. Hitting a million dollars in

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Speaker 1: your fifties is no accident. It's the result of consistent saving,

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Speaker 1: smart investing and strategic planning in the next phase well

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Speaker 1: making that wealth work for you for the long term.

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Speaker 1: Thanks for listening tonight. The day of your basketball is

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Speaker 1: coming your way. Next. You've been listening to Simply Money,

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Speaker 1: presented by all Worth Financial on fifty five KRC.

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Speaker 2: The station