Money Guy Show: How to Make Money in a Market Crash

Release Date: April 23, 2025
Hosts: Brian Preston and Bo Hanson
Description: In this episode, Brian and Bo delve into strategies for thriving financially during market downturns, addressing listener questions with practical advice and insightful discussions to help you navigate uncertain economic times.

1. Introduction to Making Money During a Market Crash

[00:06] Brian Preston kicks off the episode by presenting a timely and pertinent topic: "How to make money during a market crash."
[00:10] Bo Hanson expresses enthusiasm for the subject, acknowledging that while market downturns can induce fear and uncertainty, they also present unique investment opportunities. He emphasizes the hosts' commitment to providing listeners with better financial strategies:
"I love that we get to speak to all kinds of questions that you guys care about because we believe that there is a better way to do money."
[00:51] The episode transitions to answering listener questions, starting with Mike J's inquiry about reinvesting assets after a market peak.

2. Listener Question: Reinforcing Investment After Selling Assets

Question by Mike J:
"We, 32, have inadvertently sold about $70k in pre-tax assets at the peak. Would you recommend we buy back in dollar cost average or wait for a low point and reinvest everything at once?"
[00:51 - 02:30]

Discussion:

• Bo Hanson begins by analyzing Mike's situation, noting his age and the significance of selling assets in a pre-tax account unexpectedly.
  "I do not understand how you inadvertently sold a bunch of assets in a pre-tax account..."
• Brian Preston underscores a fundamental investment principle:
  "Time in the market is better than timing the market."
  However, he also acknowledges the role of luck in short-term market movements:
  "Sometimes it's better to be lucky than good."

[02:30 - 06:44]

• Bo Hanson discusses the nature of pre-tax versus after-tax accounts, deducing that Mike likely cashed out a traditional 401(k) rather than a Roth IRA.
• He emphasizes the long-term horizon at Mike's age (32 years) and advises against emotional decision-making, suggesting that time is on his side for wealth accumulation.
• Creative Director Rabe then introduces the "Goldilocks Rule for Dollar Cost Averaging," outlining strategies based on the proportion of the lump sum relative to the total investment portfolio:
  • Less than 10%: Lump sum invest.
  • 10-20%: Spread over four months.
  • 20-30%: Spread over six months.
  • 30-40%: Spread over eight months.
  • 40-50%: Spread over ten months.
  • Greater than 50%: Spread over twelve months.

[06:44 - 07:09]

• Brian Preston adds a dynamic aspect to this strategy, suggesting an accelerated dollar cost averaging approach if the market enters a bear market (losing 20%). He recommends adjusting the investment timeline in response to further market declines to optimize growth potential over the next three decades.

3. Listener Question: Prenuptial Agreements and Financial Dynamics

Question by Trevor M:
"My fiancée and I are struggling with if we should get a prenup or not. She makes about double what I make but has no invested assets yet. I have $70k in invested assets but make much less. We are both 29. Thoughts?"

[06:44 - 15:12]

Discussion:

• Brian Preston humorously references a fable to illustrate differing financial contributions in a relationship but admits to not fully grasping the initial analogy.
  "It's that fable where they give up the opposite... They've both done it, but it doesn't really fit."

• Bo Hanson explains that prenuptial agreements are typically used when both parties bring substantial pre-marital assets that they wish to keep separate post-marriage. He clarifies that future earning potential and income generally do not fall under prenup considerations.
  **"Another aspect is that income and future earning potentials are generally not considered in prenuptial agreements."[08:32]

• Brian Preston emphasizes the importance of maintaining a healthy relationship dynamic, where money doesn't become a tool for power imbalance:
  "Money is nothing more than a tool. But I have seen this... you will find in a marriage, if... money as a blunt instrument in the relationship, that's not a healthy thing." [10:05]

• The hosts advocate for focusing on future financial goals as a couple rather than past or present income disparities. They encourage open communication to address the underlying reasons for considering a prenup rather than viewing it strictly as a financial safeguard.

[15:12 - 15:08]

• Creative Director Rabe and Bo Hanson interject light-hearted remarks about their own content offerings, briefly diverting from the main discussion to promote subscription services like "Making a Millionaire Mondays," "Mini Show Wednesdays," and "Full Form Fridays."

4. Listener Question: Handling a Profit Sharing Bonus

Question by Hunter M:
"My fiancée, 26, and I, 23, both work for General Motors and just recently got our profit sharing check. It's $21,000, and we are already hitting the 25% investment rate. What should we do with the money?"

[15:22 - 19:09]

Discussion:

• Bo Hanson first seeks clarification on whether the profit-sharing is a bonus or tied to retirement accounts. Assuming it's a bonus, he reflects on how substantial this sum would have been years ago and underscores its significance for young earners.
  "At 26 and 23, this is a substantial sum now."

• He questions whether the couple is truly saving 25% of their total income, including bonuses, or just their base salaries.
  "Did you factor in that $21,000 bonus or was your 25% savings just on your base salary?"

• Brian Preston introduces the "Financial Order of Operations," implying that since the couple is already saving a significant portion, they can strategically decide on allocating the bonus for long-term growth or immediate enjoyment.

• Bo Hanson advises balancing the investment of the bonus with both future financial goals and present enjoyment, suggesting investments that compound over time and allocating a portion for experiences like vacations to enhance happiness without undermining financial growth.
  "Maybe there's a healthy balance... a little bit of both, you know, a little bit." [18:51]

• The hosts highlight the importance of communication between partners to align on financial priorities and ensure that both immediate and long-term goals are met without jeopardizing their investment momentum.

5. Listener Question: Paying Parents Rent and Saving for College

Question by Tyler Koenigt:
"Any advice for an 18-year-old that pays their parents? I pay my mom about $20k a year, which is $1,667 per month for rent. So it's hard to save for college."

[19:09 - 27:42]

Discussion:

• Brian Preston commends Tyler for his responsibility in supporting his mother at a young age, recognizing his admirable work ethic and the challenges he faces. He relates to Tyler's situation by sharing his own humble beginnings and emphasizes the importance of education and financial planning.
  "It's great that you're also using that talent and that blessing to try to pay help your mother out." [21:07]

• Bo Hanson addresses the high rent relative to what is typically recommended (not exceeding 25% of gross income) and suggests negotiating with his mother or exploring more affordable housing options, such as finding a roommate or relocating to a less expensive area.
  "Is there some way to negotiate on this rental amount or two... maybe rent an apartment for $1,000 a month." [22:08]

• Bo Hanson further advises on minimizing student loan debt by:

  • Dual Enrollment: Taking college courses while still in high school to reduce overall education costs.
  • Scholarships: Encouraging Tyler to prepare for standardized tests like the SAT or ACT to qualify for merit-based scholarships.
  • Community College: Starting education at a local community college to complete core classes affordably before transferring to a four-year institution.

• Brian Preston adds life tips, emphasizing the importance of understanding financial aid processes and seeking scholarships to alleviate the burden of college expenses. He warns against accumulating excessive student loan debt that could hinder financial stability post-graduation.
  "Don't sleep on the fact that you need to probably go take a prep course so you can get [scholarships]." [25:26]

• The hosts also touch on the emotional and relational aspects of financial responsibilities within a family, cautioning against scenarios where financial obligations prevent personal independence and growth.

6. Concluding Remarks and Disclaimers

[27:42 - 27:42]

• Bo Hanson provides a standard disclaimer about the show's content, clarifying that Abound Wealth Management does not offer personalized financial, tax, investment, or legal advice through the podcast.
  "The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment or legal advice."

• The episode wraps up with light-hearted banter among the hosts and Creative Director Rabe, maintaining an engaging and personable atmosphere even as they conclude the financial discussions.

Key Takeaways:

• Market Crashes as Opportunities: Emphasize the importance of time in the market over timing the market, utilizing strategies like dollar cost averaging to mitigate risks and capitalize on long-term growth.
• Financial Dynamics in Relationships: Open communication about financial contributions and future goals is crucial to maintaining a healthy relationship, especially when income disparities exist.
• Strategic Use of Bonuses: Allocate unexpected financial gains thoughtfully, balancing investment for future growth with enjoying present opportunities.
• Managing Financial Responsibilities at a Young Age: Explore all avenues to reduce financial burdens, such as negotiating living arrangements and seeking educational funding through scholarships and community resources.

Notable Quotes:

• Bo Hanson [00:10]:
  "I love that we get to speak to all kinds of questions that you guys care about because we believe that there is a better way to do money."

• Brian Preston [01:40]:
  "Before we answer your question, I have to give you the basic understanding that time in the market is better than timing the market."

• Bo Hanson [02:38]:
  "Time is on your side, in all likelihood, it will not matter what strategy you employ to get back into the market, because 30 years is such a long time to have those dollars working."

• Brian Preston [10:05]:
  "Money is nothing more than a tool. But I have seen this... you will find in a marriage, if... money as a blunt instrument in the relationship, that's not a healthy thing."

• Bo Hanson [18:51]:
  "Maybe there's a healthy balance... a little bit of both, you know, a little bit."

This episode of the Money Guy Show provides valuable insights into navigating financial challenges during market downturns, managing financial dynamics in relationships, and balancing responsibilities while pursuing personal and educational goals. Brian and Bo offer practical advice grounded in experience, encouraging listeners to adopt strategic and thoughtful approaches to enhance their financial well-being.