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- [00:00]
Brian Preston
Serious question for the moment, do these tariffs have you terrified? Better yet, what does this mean for your 401k friend?
- [00:14]
Bo Hanson
I am excited to talk about this. Believe it or not. I actually am excited because sometimes the world throws us some unknown unknowns and sometimes we as investors experience kind of a rocky, a volatile, a shaky and uncertain market. And I love that we get to sit in this spot where we get to speak to that. And Brian, this past week has certainly been that rough, rocky and shaky.
- [00:42]
Brian Preston
Oh, man. And some of the phone calls. I wish you guys could be flies on the wall as I'm trying to explain things to some of my more emotional clients on why staying the course, not making permanent decisions on things that very well and more than likely will pass within a few weeks to a few. This is the, this is what we're here for. I mean, and that's what. And so far, gotta have one of those catch up calls right after we record here today. Things have worked out as I had shared that I was hopeful they would, but I think this is important because I don't want people out there in the audience making, you know, emotional behavioral decisions that impact your long term success. So I think it's important if we could give you some, some context, some background, some things that you can use so that you can go through this very emotional experience and come out better on the other side.
- [01:36]
Bo Hanson
Yeah. This year, 2025 was already a volatile year. And then we saw the tariff announcement come out and then volatility came even stronger. And we know that from the all time high. So from the all time high this year it's been about, as of close yesterday, 17.6% drop. So we have seen not, not necessarily bear market territory, but we are near bear market territory.
- [02:03]
Brian Preston
It did cross 20% for a split second.
- [02:06]
Bo Hanson
And so people have questions, they're asking, okay, well what does this mean? Should I be worried? Should I be concerned? And this never fails. Financial media is certainly answering that question. Oh, yeah, yeah, yeah. No, you, you should be concerned. You should be worried. And we even see headlines like this, this is an opinion headline, over 50 and terrified about tariffs in your 401k. And then it walks through. So it sounds like the general sentiment is people are concerned, people are nervous and especially when it comes to their nest egg, the thing that they are counting on to one day provide for themselves and take care of themselves. And I think there's a lot of apprehension and uncertainty out there.
- [02:47]
Brian Preston
Well, and I know typically when we cover this type of content, we get a lot of people in because you're hungry for somebody to just shoot you straight, just give you the context, tell you what's going on. Because so much of our world's gotten where it's either got the influence from politics or people are trying to sell you something or some angle. Our goal is, I really do want you to kind of see how to look at this experience. Because whenever we have anything that resembles a bear market, I do think that it's a unique moment in time that you can actually bottle this up and get an education to make yourself even better on handling your finances for the future.
- [03:28]
Bo Hanson
Brian, you actually said that to me when I first started out in my career. It was 2008 and you said, bo, bottle this up, bottle up these feelings, bottle up what you're experiencing. Because what you're going to recognize is down the road, once we get past this moment, it's going to be incredibly valuable for you. But there are a lot of people out there that are looking at their retirement accounts that are looking at their investment account statements and they're like, oh man. What I'm seeing account statements is really, really, really making me nervous. And one of the things I wonder is if maybe the issue is not so much volatility that is the problem. Maybe the issue might actually be what's going on in your specific portfolio. Do you have your account, your structure, your portfolio truly attached and aligned to your financial well being and to where you should be, both from a risk tolerance as well as a risk capacity standpoint?
- [04:23]
Brian Preston
Yeah, let me give them some case on this because this is where your em can betray you multiple ways. I was on a call last week with a client and by the way, her portfolio, 60 plus percent super conservative. So what was crazy is at the moment we were having the call, she was still up here today.
- [04:43]
Bo Hanson
Right.
- [04:43]
Brian Preston
And she was freaking out though, completely panicked. And, and this is why it's important to make sure you understand your emotions. Because if you look at the actual plan and your plan was, and we'll talk more about this was good before, it's going to be good during and it's going to be even good after, and the asset allocation is adjusted appropriately, the world could completely, in a lot of ways implode. And in a lot of those very conservative assets would cover this individual's living expenses for literally probably beyond a decade. Many, many, many years. We could have whole new structures built in this entire time. But that still didn't take away even the good, didn't take away the emotional side. And that's why I do make. I try to always bring in the education of don't let your emotions betray you. And that's the biggest thing. And look, be careful who you let in your head because the financial media, they have learned the most powerful way that they can keep your eyeballs and your ears glued to it is by making everything as drama field as emotionally terrifying as possible. Because they don't really care about your wallet or your purse. They more about if they can keep your eyeballs, keep your ears, they can sell more and more ads and that's what drives their profit. So you have to ask yourself what is actually out there looking for my financial well being to figure out how to navigate this well. And that's why we want to give you key points on how you can navigate this well. And then we're going to just like a good chef, we're going to splice in there all kind of little data nuggets that are going to let you say, okay, this makes more sense. These guys are actually going to feed me with some nourishment of data that will help me not fall into the traps that the news media is hoping they can create for me.
- [06:36]
Bo Hanson
And keep in mind we're specifically talking about market and portfolio movement. What are the key points that you need to know as it relates to the market? And one of the big ones is that bear markets, right we sit. You know, Brian already alluded to this. We hit technically intraday bear market territory. Market was off 20% from its all time high. Generally speaking, bear markets often offer strong recoveries. If you don't believe us, we can use history as our tutor. You've seen this chart a number of times. But if we go all the way back to 1942 up through present day, you can see how often bear markets happen and then how often bull markets happen. You can also see how severe are the bear markets relative to how robust the bull markets are. And then you can also see how long do the bear markets last relative to how long the bull markets last. And what you recognize is that when it comes to investing, when it comes to putting your dollars to work, more often than not the markets are moving in a positive direction. And even when we do see these downturns and even pullbacks, they generally set you up for really exciting future performance moving forward.
- [07:49]
Brian Preston
Yeah, I mean I want to. I always love when I see this first trust chart because it shows me really for a long term investor, a person who's lived through enough of the down markets that they bottled it up. They've learned how to overcome the emotional reactions that are being driven out there from media and so forth. When you actually look at the data points, it's amazing because I want to share this now. It's really small on my comfort monitor, so if I screw this up, hopefully Beau will be able to fix this. But if you look at just bull markets, the periods typically last 4.3 years with an average cumulative total return of around 150%.
- [08:29]
Bo Hanson
So four years, 150% total return on your dollars.
- [08:32]
Brian Preston
That's some good living.
- [08:33]
Bo Hanson
That's great.
- [08:34]
Brian Preston
Now let's contrast that with the bear market. The typical bear market lasts 11, a little over 11.1 months with an average cumulative loss of 31.7%.
- [08:45]
Bo Hanson
Oh, wait, so, Brian, so you're talking the average cumulative loss is 31%. But I just went through this thing and we hit bear market territory already down 20%. It doesn't seem there's a ton of meat left on that bone.
- [08:57]
Brian Preston
Well, here's where I'll take it a step further. When we manage clients assets, I've been working with a lot of clients since even the early 2000s. And one of my favorite things is because we have on our performance, we show cumulative performance since inception of when you became a client. And it's net of all fees and everything. So you actually get see what you have made since we've been managing it. What I like to do is on the bottom of the performance page is actually a graph that shows their money, how much they put in, and then we have a separation of what the now market value of it is. I show them, I say, look, this is what you've put in, but this is what the market value has been over the last 20 plus years. I said, let's do a little history ride. Do you remember the dot com bubble? And they're like, oh my gosh, that was horrible. Because the reason it was so bad is because not only did it, you know, you started seeing some, some the wheels were falling off at the end of 99, but then this thing dragged on until November of 2002. This is multiple years that the markets were getting their teeth kicked in. I was like, look on your chart. Do you see how it's just a little indentation? It's not, it's not, it's not, it's not the cliff that it was back in 2002, 2003. It's just a little indentation. I said, okay, let's fast forward to the Great Recession and this is what's so cool. Looking at actual clients assets. I was like, do you remember 2008 was the year that the market lost 50% in less than like a six month period. Because it was just after we had the Bear Stearns, the Lehman Brothers. It was banks we didn't know. The analogy of that time was it was kind of going through a drive through where you put your order in at the first window. You're scared to give them your money because when you drive to the window to pick up your food, they might not have anything to give you. Because banks were essentially done so much bad mortgage stuff. The money supply was all screwed up. It was bonkers. So the whole economic world is trying to be doing shotgun marriages and getting restructured. But I always zoom out and look at that on the client's portfolios. I was like, look at that. We once again survived that too. And yeah, that's a little U. You, you can see the U where it went down and then it covered. But if you look at your overall graph of your portfolio, it just wasn't that big of a deal. And I think that that's. And I'm not trying to minimize the emotion you feel while you're this because it's one thing as I was talking to this client yesterday or really Friday, she's like, Brian, I'm losing $16,000 a day. And if I lost $16,000, $16,000 a day for the next hundred days, I'm going to be broke, I'm going to.
- [11:35]
Bo Hanson
Run out of money. Yeah.
- [11:35]
Brian Preston
And I'm like, trees don't grow to heaven. And I was like, at some point the emotional stuff does. There's enough people who realize value can get disconnected. It gets very disjointed from what the trading prices are. It's very inefficient in the short term. But at some point and there's opportunistic people that will jump in. But I tell you this is because so much more money has been lost trying to time bear markets than actually what's actually been lost in bear markets. And even if you are thinking about making the jump, we have another data nugget we wanted to share with you guys the recovery. So if you sell to go get the comfort of cash, the problem is is the recoveries typically happen very quickly. So we have another chart we wanted to show you is how quickly. So think about this. You sell to get the emotional relief of you just went to cash. But what's, what's the rest of the story of what happens as Things start to recover.
- [12:36]
Bo Hanson
Yeah, we know that after we have a bear market and the average loss that we're looking at, the time frame that we measure was about 35% total loss, and it lasted for about 14 months. So slightly different time period than First Trust. We knew that in the first month after the bottom, the market on average recovers about 14.5%. In the first three months, about 21% in the first six months, about 28%. In the first 12 months after the bottom of a bear market, the market recovers about 43.5%. That's why when this thing turns, it turns incredibly quickly. So while you might be experiencing pain and while you might be experiencing volatility, you might see your account balances moving rapidly. One thing we would remind you is that nobody knows what tomorrow is going to bring. If you wake up in the morning and you begin looking at futures like, oh my gosh, the futures are down, the market's gonna. And then the market opens. You're like, oh, wow, that didn't happen. By the time that you feel better about things and you feel like things feel more comfortable and you feel like things feel more secure, by the time you get to that point, it's likely already too late. And you've likely missed out on a ton of opportunity that you would have had, had you just stayed the course, kept a level, pragmatic mind about you, and let your dollars work inside of the markets.
- [13:58]
Brian Preston
And this is why it's a great transition. I've already said it, but it's worth repeating. A wise financial plan should succeed before, during, and even after the market volatility. So if you're finding yourself like you're just, you're going, what have I done? Because maybe you are five years from retirement, but you've been VOO for life because you read on a blog somewhere that you should just buy the s and P500 and just ride it all the way until you retire. This is a good time to probably take a gut check, especially if we are in this because the market's up today. Take a moment to actually realize. Does your asset allocation reflect your goals, your desires, and everything you're trying to build financially? Or was it on that razor's edge of fear and greedy where you were trying to maximize this with the understanding that if you got caught swimming naked and the tide went out, it was going to expose that your financial life maybe wasn't as stable as it should have been.
- [14:59]
Bo Hanson
And remember, when it comes to portfolio construction, as you're thinking about how to manage your assets from where you are today to the ultimate finish line you're moving towards. Whether that be financial independence or whether it be retirement or whatever that is. Your portfolio should be adjusting through time. We talk about this as the glide path. When and you're young, it's okay if your portfolio is more aggressive and has a higher equity bet, but as you do get closer and closer to retirement, you should be figuring out how do I adjust my glide path so that if I am near retirement, I am near financial independence and I am near needing these dollars. I know that I have emergency reserves in place. I know that I have diversification. I know that I have conservative assets that will allow me to weather this storm. So if your portfolio and your construction is not something you've thought about for the last 5, 10, 15, 20 years, this might be a great time to relook at it and say, okay, does this portfolio. Does where I'm at right now accurately reflect where I should be or should I be thinking about how to rightly align on the correct glide path? So these are the things that you ought to be thinking through because a lot of people, I think what they're recognizing right now is that if you're all in on the s and P500 and you have all of your assets, while you are technically spread across 500 different companies, you're probably not quite as diversified as you think. We think when it comes to looking at a well diversified portfolio, you should have exposure to a number of different asset classes. You should have conservative risk off assets. You should have aggressive assets. You should have large cap, small cap, international alternatives. You should make sure that your assets are spread appropriately again for your unique risk tolerance, your unique risk capacity, and the unique timeline and time horizon that you are on.
- [16:48]
Brian Preston
We also tell you to be careful that you, you just need to be honest with yourself and know just what your blind spots are. What you don't know. That's right, because don't assume the talking heads on TV when they tell you about all these inflationary things and what interest rates are going to do or even what the stock market is go do. They don't know. Things can go in a lot of different directions, especially in the short term. I even saw some, some popular social media people who this morning were issuing apology saying, hey, I've taken down my post from yesterday because to be honest, it's true, I don't know what the market's going to do either. And I felt like it was kind of inciting, you know, bad Behavior just because I was making predictions. And that's why, look, every. We're humans. People do it for political purposes. They do it for their own. You know, if they got money in one way and they're betting another way, they have a conflict. There. There's, there's all kind of reasons that people will, will do things in an irrational way. Just don't let that get caught up into that. And that also leads you to, and this is something I've tried to do my whole life, is what's the right questions I should be asking myself? And let me tell you, this is when we even threw out, are we going to cover tariffs? Because just saying the word tariffs right now in this moment has all kind of political. And, you know, what side are you on? And you guys know the money guy show. We're doing everything in our power so that I go to Thanksgiving and I get along with everybody in the family that there's no issues because we don't do politics. We don't push all that stuff in front of you because I feel like you get it enough everywhere else. But every now and then, something gets thrown in our way, whether it's tax policy or even now this tariffs that people say, give us your opinion, like, oh, hold my. Hold my coffee while we try to figure out how we don't tick off, you know, half of our audience. But here's what I want to. What I've been telling everybody who's been calling me is that when somebody asked me about this tariff. So I take a deep breath and I say, let me ask you a serious question. Is this a season or is this a permanent change? Without a doubt. What I think the president is pushing out there is. It's dangerous. I also can see what he's trying to accomplish. I don't know. I'd have done it the way that he's necessarily doing this. But I still, at the end of the day, I think if you really zoom out, America is not trying to become an isolationist economy like you've seen in the past when tariffs were thrown out. I think this is. It's more about this crazy dance negotiation that's going on. But all this to say, I'm putting this as a season. This is not a permanent thing. I think that there's some pieces on the table being moved around and negotiated with, and that is all part of a season play. So I don't like when people are making permanent decisions with their portfolio off of something that very much is artificial and could be just a Moment in time.
- [19:58]
Bo Hanson
And then the other question that you can ask in addition to is this a seasonal thing? Is it permanent? Is what can I control? What are the things that I actually can impact? Because frankly, there's a good chance that in the position that you're sitting, you're not going to get to impact macroeconomic policy. What you're able to impact are, do I have appropriate cash reserves in place? Is my asset allocation correct for where I am, and what am I letting into my brain? What am I allowing to influence me? Am I doom scrolling and paying attention to every terrifying headline? Or am I thinking through, man, the market's on sale right now. There are some opportunities that I should be taking advantage of. Because if you do that and you begin to reframe your mind, what you're able to do is you're able to keep a long term perspective. Because what's going on for most people in the markets today, yesterday, the day before, the day before that does not matter as much as what happens in the markets over the long term. And we've shared this chart a ton over the years. We love this one.
- [21:01]
Brian Preston
Well, I know you're about to show it, and it's the key at payoff, but I want to just caution one word because I think this is the key to everything. Be careful of anybody who says this time is different, because I'm hearing that a lot.
- [21:14]
Bo Hanson
Yep.
- [21:15]
Brian Preston
And anytime I hear it's a new paradigm, I'm like, every time there's something going on, everybody's like, this time is different. And then I always go to pull the slide up. Bo, does this look different when you take it all into account?
- [21:31]
Bo Hanson
If we look at the last 20 years of market performance, we just say if you started investing in any given year, 2004-2005-2005-2006, what was your annualized performance X number of years in the future? Well, even if you started investing in 2008 and you started investing during the Great Recession and you put your money to work at the world's worst time, do you recognize that five years in the future you would have had a positive annualized rate of return? And if you fast forward 10 years into the future, you've annualized over that last decade an 8% annualized rate of return. And these numbers are incredibly consistent through time. So even though right now may be painful, and right now you may be experiencing volatility, if you can reframe your mindset to recognize that it is an opportunity and that over the long term, calm, patient PRAGMATIC investors are likely going to be rewarded. And you look at any historical evidence that would suggest that there's a really good chance that you're going to be able to set your future self up for financial success.
- [22:34]
Brian Preston
Yeah. I mean, that's why I think if we just did a mini show titled Time to Panic and I dropped just straight up knowledge bombs on why you can't let your emotions get caught up in this stuff. And that's why I would encourage. Guys, we've been doing this so long, since 2006. I know a number of you have watched us do these, these pep talks. We ought to call it a pep rally, essentially. You know, we all dress in our favorite bull outfit and get excited for the future. But if you have experienced this, where you maybe found our content during maybe the pandemic or maybe even the Great Recession and, or, you know, 2022, I mean, there's always stuff every two to, you know, it seems like every two to four years, we're going to have to have these pep talks. If you've come to us earlier and we have talked you out of making bad decisions, share it in the comments section. Because, I mean, there's so much negativity out there. I'd love for our comments section to be a great place for people to say, you know, these guys, I had my doubts in the beginning, but I've been. They're so consistent. I mean, you can basically set your clock to them that they're going to be there for you when negative things happen. They're going to actually leave the light on the porch on and let you know that there is a safe place and a better way to do money. And they're not going to try to sell you into something or try to scare you into taking action one way because they have this conflict that they're hiding from you. I just want you to be the best version of yourself financially. And if we can load you up and get you to the better side of that, we're all going to be better for it.
- [24:09]
Bo Hanson
Brian already said it. We love dropping knowledge bombs. It's what we do around here. We love that we can answer your questions and speak to things that you care about, like, hey, what's going on in the market and what does that mean for me and how should I react and how should I behave and how should I think about it? And we love that we get to sit here and be that voice of reason, that voice of calm amidst the chaos. And we love that we can answer your questions and Speak to things that you care about. So right now, if you have a question that you'd like for us to weigh in on, you want to get our take on, you want to have our opinion on what's going on in your financial life, we would love to hear it. So right now, we have the team out in the wings collecting your questions because we really do believe that there's a better way to do money. So with that creative director ribeye, I'm gonna throw it over to you.
- [24:56]
Brian Preston
I have a question, though.
- [24:58]
C
So do I, but go ahead.
- [25:00]
Brian Preston
My question.
- [25:00]
Bo Hanson
She has a couple.
- [25:01]
C
I had a lot of questions.
- [25:02]
Brian Preston
Did the team give us how long they wanted us to do that intro?
- [25:05]
Bo Hanson
We'll talk about that later.
- [25:07]
C
I wasn't gonna mention that.
- [25:08]
Brian Preston
Basically, we just did a full show. We just did a full show. We went way outside. Nick, Megan, I apologize. We just kind of. We grossed on poetically, I don't know, get excited about these things. Did people show up for this, though? Is this going to be helpful?
- [25:22]
Bo Hanson
Caleb actually slapped me. He said we forgotten to take this live. So I don't think there's anybody out there. Right. This is actually just us right now. Yeah, there's some people out. I think. I think there's a lot of people out there that are, you know. You know, someone who's in the chat. Actually a good friend or who is kind of like a solid acquaintance friend. Humphrey Yang's in there hanging out with us. How nice is that? Humphrey, huge fan of your stuff, man. Thanks so much for hanging out with us.
- [25:43]
Brian Preston
Wait till he sees the new set. We got plans for you, Humphrey.
- [25:50]
C
I mean, not wrong.
- [25:53]
Brian Preston
Y'all gotta tell me what I can and can't say.
- [25:56]
C
I stopped trying to do that a long time ago.
- [25:58]
Bo Hanson
Brian tell you I don't think it matters, does it? Right?
- [26:01]
C
But we have said, yeah, we're making some upgrades to the set. May have some good features on it soon. Okay. Do you want to answer some personal finance questions? Because we do have a lot coming in the chat.
- [26:11]
Bo Hanson
Love it.
- [26:12]
C
We've talked a lot about how are.
- [26:13]
Bo Hanson
People freaking out like in the chat? Are people nervous and uncertain?
- [26:16]
C
We do have a number of questions.
- [26:18]
Brian Preston
Not after I did. Not after. I just.
- [26:20]
Bo Hanson
I soothed that you said you rubbing their bag. Is that what that is?
- [26:24]
Brian Preston
The practically hear him purring.
- [26:31]
C
Well, Joey's question. I think he needs a little more of a pep talk.
- [26:37]
Brian Preston
Okay.
- [26:38]
C
So he says, should we forego an international vacation and hold on to cash? I'm not expecting any big changes in job or Housing, but everything feels precarious. I'm 28, married, and I have no kids. So this, as much as it's a financial question, I mean, there's a lot of emotion in that, right? Like, everything feels precarious probably has to do with this current market situation. So what would you say to Joey?
- [27:05]
Bo Hanson
So, like most things in our world, we think that a little bit of planning can be tremendously valuable in how you make your financial decisions. Is one of the ways that we do even retirement analysis. And now, Joey, you didn't ask about retirement analysis. You didn't ask about any of that kind of stuff. Stuff. But one of the things that we do is we say, okay, when you're in retirement or when you want to live the life you want to live, what's your travel look like? Well, I want to, you know, spend this much every year. I want to go on this many trips. And we say, great, let's put together a plan that allows you to do those things. No matter what's going on in the financial world, even if it is the Great Recession, even If it is 2022, even if it is April of 2025, we don't want you to feel like you have to not make the decisions that we already planning on making. And so one of the questions I would ask you, Joey, is, have you been doing the things that you're supposed to be doing? Have you been, Brian, do you have a thing you can hold up over there? Have you been following the financial order of operations? Have you been working through your steps? Are you saving the 25% for your future? Are you doing the things that you're supposed to be doing? And if the answer to that is yes, and you've also saved up to be able to go on this international vacation and create this memory and have this experience, I have no problem at all with you doing that. Now, if what you've done is, you said, hey, well, I'm going to not save in my Roth and I'm going to cut off my 401k contributions. Actually, I'm going to go on this trip, but my good buddy American Express is going to help me pay for it, then I start to have a little bit of pause. But what we want you to be able to do is if you have a really good plan in place, we want you to be able to live the life you want to live. No matter what life throws at you, we want you to have a vacation planned. And just because there's volatility, downturn, all of a Sudden you can't do it. I don't think that's the way that I would approach that.
- [28:54]
Brian Preston
Yeah, I'm pretty much echoing you. This is definitely a measure twice. There's nothing wrong. When the economy starts getting a little shaky, you go, you know, let's go, let's go. Double, double check to make sure cash reserves, check. Okay. I look like I'm good. Check in with my boss, see if he's acting weird around me. Okay. It seems like my job's in a good place. Industry check. All right. It seems fun. Then I go into the financial order of operations and go, you know, how am I doing on, you know, making sure I'm getting retirement assets built up, the Roth IRAs, keeping the credit cards down. If all that stuff is still all systems go and you're thinking about canceling this trip just because emotionally it feels extra to do that right now, I would caution you on that is because there's always going to be things that can scare you. Every season, there's going to be things that can scare you. But you're only going to have a moment in time where you don't have kids and you're that age and you can go make those memories. So I would strongly encourage you, of course, button down the systems, do a double check on them, make sure everything's all systems ago. But then once everything looks like it's okay, go live your best life. I mean, because I feel like there's so many things out there that try to scare you into inaction, that if you're careful and let too many of those negative things into your head, you're just not going to have the stuff that you'll look back on with fondness when you get to be my age. I mean, I think back, you've heard me tell all my stories. Nothing's a secret anymore. I mean, about going to Italy before we had kids. Doing it on the bare bones, cheapest way possible. I mean, that trip, priceless.
- [30:32]
Bo Hanson
Fondly on that. I love it.
- [30:34]
Brian Preston
I mean, I think about all the ways we got ripped off on that trip. And even the negative stuff has a tendency to blossom into funny, great memories. So, Joey, if you assuming that. Now, look, if you measure twice and figure out, oh, wow, no, maybe I might be losing my job, I can already see the company's restructuring its way.
- [30:54]
Bo Hanson
Yeah.
- [30:54]
Brian Preston
I'm not going to ever tell you to make a bad financial decision just so you can go do the vacation. But a lot of times this might just be fear more than reality. And I just don't want you to have regret when we come out of this questionable period, just like we had questionable periods in 2022 and 2020 and so forth. I just want you to kind of build up that ab ability to be able to navigate what's going on in life. And so you come out the other side building memories and building financial assets through the good, the bad, and the ugly.
- [31:24]
Bo Hanson
Love it.
- [31:25]
C
Yeah. Love that. There's a lot more to that answer than just how you feel about the markets right now. And I thought you guys spoke to that very well. Joey, thank you for the question. We'd love to send you a Money Guy Tumblr as a thank you.
- [31:36]
Bo Hanson
I was just wondering, do we even do that anymore? Honestly, if you weren't going to do it, I was going to overrule you and be like, look, in the midst of a crazy world, you know what people need? They need tumblers.
- [31:43]
C
Tumblers.
- [31:44]
Bo Hanson
They need tumblers.
- [31:44]
C
So I'm so Money Guy tumblers, specifically. So just email winner, money guy.com, joey, if you would like one. Since we chose your question today, Matt.
- [31:53]
Bo Hanson
Do people ever, like, post, like, do they ever, like, tag us in pictures of them using their Tumblrs? Like, do we have like, like, hey, here's me at the beach. Hey, here's me at the bowling alley. Hey, here's me. You know, whatever. I don't know about beach and bowling alley.
- [32:06]
C
I mean, we literally have.
- [32:07]
Bo Hanson
When the dances go hang, we either do beach or bowling alley.
- [32:10]
C
I've never seen bowling alley, though.
- [32:11]
Bo Hanson
So people do that.
- [32:12]
C
If you want to be the first.
- [32:13]
Brian Preston
Awesome.
- [32:15]
Bo Hanson
Oh, he said, where could somebody get a copy of that at, by the way?
- [32:22]
Brian Preston
Well, now it's even easier if you.
- [32:24]
Bo Hanson
Want to just listen to me.
- [32:25]
Brian Preston
If you got like the premium Spotify, if you got Apple Music or whatever. I think. I think it's pretty much free now, isn't it? Or something like that.
- [32:33]
C
It's not free.
- [32:37]
Brian Preston
I don't know how people pay on it, but it's. But I just know that it used to be only on Audible. You can still get it on Audible. Yeah, the audiobook side. But now there's a lot more options because it's considered a mass market distribution, meaning we sold a lot of copies. Thank you.
- [32:52]
Bo Hanson
Yeah, buddy.
- [32:53]
Brian Preston
And it's still. The hardback copy is rock and rolling. Reading comments left and right. Thank you, thank you, thank you.
- [33:00]
C
Love it. All right, I got another question for you. It's from Revy.
- [33:04]
Bo Hanson
One other thing I was going to throw out. Look, we don't Know what the financial future is going to hold? Like, I want to be very clear. Like, we're talking. We don't know exactly what tomorrow's going to hold. But here's what I do know. As things happen and as stuff like unfurls, we are going to stay abreast of it. We're going to update you guys. You know, the only way that you can stay updated on what we're keeping you updated on is if you subscribe. So that way you get a notification every time we put out new content. So if you have not subscribed, make sure you subscribe right now so you can stay in the loop.
- [33:32]
Brian Preston
No, that's. That's a good point. During 2020, like, we got nominated for these awards for being best content to current events. Current events. And I was like, how did we get. But we found out that a lot of bankers and others, when all Covid and pandemic stuff was going on, they were coming and tuning into us as we were reading, you know, what was some of the legislation that was coming down the pipe. And we'll do the same thing when the tax policies, because I know that they're getting closer and closer. When those things look like we have a new tax plan, I will. We will be first to kind of put it out there, let you know what you need to know. I just try not to get into all the horse trading that they're doing when it's the political stuff, because there's a lot of things behind the scenes. We try not to. To fill you in on all that noise.
- [34:15]
Bo Hanson
This is not a Tumblr question. Somebody said, does Brian read the audiobook?
- [34:18]
C
What's the answer to that?
- [34:19]
Bo Hanson
Brian, did you read?
- [34:20]
Brian Preston
Oh, yeah, yeah.
- [34:20]
Bo Hanson
I was there.
- [34:21]
C
I watched him do it.
- [34:22]
Brian Preston
I'll go ahead and tell you. Audiobook day one, they tried to make me speak. I don't think it's not the Queen's English in America, but it's. They were trying to make me. They were trying to make me sound like I spoke English. By day two, I broke them. By day two and three, they're like grip and rip, brother. You just do it your way. So when you listen to the audiobook, I think you're gonna notice it gets better. Once they unleashed me to just live my best life. But that day one, Ribi saw it. It was like I felt like I was being tortured.
- [34:56]
C
Like, again, again, you did great. They just had to tell you how to pronounce a couple words. Okay, are you ready for the next question? Actually, a Few words.
- [35:09]
Bo Hanson
I thought she was gonna start naming some.
- [35:10]
Brian Preston
Is that how you say that word?
- [35:12]
C
I forget what they were. I would have to think about it. Okay. I really do want to get to some more questions.
- [35:16]
Bo Hanson
Oh, yeah, Questions really do.
- [35:18]
C
Okay. Revi's question says, for step three of the foo, what does it mean to prioritize paying off high interest debt? Should I not be eating out or should I aim to contribute 25% of my income to debt payoff? Thank you.
- [35:34]
Bo Hanson
All right, so should you not be. There are. There are some folks out there who would take the position, hey, if you're in debt, you should not see the inside of a restaurant unless you work there. Like, that's like a common thing that gets thrown out there. When we say, hey, step three, high interest debt, what we're saying is this is the thing that you need to focus on. And how you focus on that depends a little bit on you. Would we love for you to cut your expenses the bare bone? Absolutely. Do we want you to shift all of your investing outside of your employer match? Brian, will you hold up the thing real quick? Do we want to shift all of your investing outside of the employer match to that high interest debt? Absolutely. Absolutely. Let him keep going.
- [36:14]
Brian Preston
Asmr.
- [36:15]
Bo Hanson
And the reason is, as we know, that compound interest is the eighth wonder of the world, that it can be so valuable as it works for you and helps you build towards financial independence. But if you allow it to work against you, it can dig a hole that gets deeper and deeper and deeper and deeper. So when you are in step three, we do want you throwing the kitchen sink at it. So if that means, all right, hey, you know, I'm not going to do my Ross, I'm going to do that. Hey, I'm not going to put extra my 401k. I'm going to do that. Hey, I'm not even going to worry about building up my emergency fund. I'm going to attack the high interest debt. That's what we mean when we say attack it in step three.
- [36:53]
Brian Preston
I like to think, you know, look, I'll say, Coach Ramsey, Coach Ramsey would be a great college football coach because in college football is like the last stop traditionally where you can basically get in the face of the players, chew on them and pull them by the helmet and say, get in there and give me the best version of yourself. And that's what. That's what. That's what Coach Ramsey does is he basically says, you can't do that. T total nothing else. I like to think we're good NFL coaches because we recognize, look, we're not dealing with the baby steps. This is the financial order of operations. You're out here on your own. I'm still going to probably judge you pretty hard if I find out that you're out there squandering and living the best life, going out on the weekends and eating out all the time when you're running up high interest debt. Because if you've got 20 plus percent credit card debt, you'll never ever, ever build wealth. But it just means that at some point if I'm not getting on to you, I've given up on you. It is a coach tactic. So I want you to don't mishear us. We are nicer about this. But it doesn't mean Dave's wrong. Is that I would. If you have credit card debt, you probably should really hyper focus on your life because you're missing out. The most valuable thing you're missing out on is the time component. Because every month that you're using that bridge to nowhere of debt is months that you could have gotten out of that debt and then started funding a Roth ira, funding your employer plan with that. You know, all the things that are going on with tax savings and so forth. That's the reality situation. I'll treat you like an NFL coach. Is that meaning I'm going to try to treat you like you're a grown person. You can make good decisions, but as soon as I realize you're a lost cause, we cut you. And that's what, you know, be careful. You know, taking our niceness to assume that you can work around the edges and do foolish when we know that is so foolish.
- [38:59]
Bo Hanson
Trying to imagine me and you as football coaches.
- [39:02]
Brian Preston
I thought about that. I mean, I really do think we're the NFL style of things because, you know, you can't tell these grown men that, you know, you can't get in their face and yell at them. You're never going to persuade them to change. Yeah, but in college those, I mean, Nick Saban and all those guys, they've done a great, great job and it works. But that's why a lot of those college coaches, when they get up to the pros, you're like, why can't they win in the pros?
- [39:25]
Bo Hanson
It's different.
- [39:25]
Brian Preston
Different styles.
- [39:26]
C
Different styles, different style.
- [39:29]
Brian Preston
That's why we're graduate level work here. Love it.
- [39:32]
C
Revy. If you would like a money guy tumblr, just email winneroneyguy.com, we'd love to Send you one since we chose your question. Mabby's question is next says if you are young, 28, what is better? Buying the dip in the vu or picking safer options like gold or bonds that bring a yield during bear markets and economic downturns. We're so mean, we all slap. The market downturn brings us out. I have seen gold and bonds mentioned in the chat a handful of times today, which we don't normally see that to be honest in money guy, like.
- [40:11]
Brian Preston
A serious one on this here. I think it's funny, first of all Bo, how much gold you own? Yeah, that's, that's me too. And then here's the other one I had calls realize it's so bizarro Friday. The calls I'm taking from clients because I got 83 year old client telling me just how bad things are and I'm talking her off the ledge with it. And then I've got 80 something year old client who's very successful, master of an entire business industry and he's calling going, hey, I need you to sell some of my bonds and get it into equities. And I'm like what a bizarre. I got two 80 something people, one is scared to death and then the other one is like full bore all in on this. So that's why it's so interesting to me is that I think everybody, your worldview is going to shape this and that's a bad thing. I think that it shouldn't be your worldview that shapes this. It should be what do you need to reach financial success and accomplish your goals with the right risk profile. Understanding risk capacity. Hello 80 something year olds trying to take on even more risk. These are all the things we think about and you really gave us a broad spectrum there. Voo, which is S&P 500 gold and then bonds. Bo, you're the CFA. I'll let you say something, then I'll sprinkle nuggets of knowledge.
- [41:46]
Bo Hanson
I'm going to speak like purely mathematical here, right? So I'm not going to say like, okay, is VOO the investment you should do, but when we think about like buying the dip, when you buy the dip, you want to go buy the thing that dipped, you want to buy the thing that went down in value, you want to buy the thing you're perceiving as undervalued. It's one of the reasons we love dollar cost averaging, we love dollar cost averaging across the equity spectrum because as we see volatility, as we see the market go up and down and as we see periods like we're seeing right now, there are some fantastic opportunities that present themselves. So. So if the whole strategy you're trying to employ is buying the dip, then you would want to buy the thing that's done poorly. You'd want to buy the thing that's gotten hammered. You want to buy the thing that's gone down in value. So that would immediately rule out gold as an option, and it would also probably rule out bonds technically as an option. So then you're left with equities. But here's what I would encourage my young 28 year olds to think. I, I don't really want you just buying the dip. What I really want you doing, Mavi, is I want you to always be buying. I want you to be buying last month and this month and next month and the month after and the month after and the month after. What's great is if you can kind of set it and forget it. You don't have to really figure out, oh, okay, am I going to buy gold this month or am I going to buy bonds this month? Am I going to buy equities this month? Hey, I'm just going to have low cost index fund. I'm going to have a low cost target retirement fund. I'm going to have a low cost fill in the blank. And every single month and the same day of the month, I'm just gonna have it go to work, go to work, go to work, go to work, go to work, go to work. And if you're doing that over time, you're naturally going to buy the dip anyways. If you're trying to take advantage of market opportunity, it does not benefit you to go buy the safe thing right now. And I'm not going to go, and I'm not going to answer the question, is gold the safe thing or is bonds the safe thing? But whatever you perceive as the safe thing, trying to buy the dip and capitalize an opportunity would not be buying that. It'd be buying the other stuff. That shows where there is opportunity and shows that. Just like you always talk about the pluck effect, Brian, the further it goes down, the faster it goes down. When it releases, when it rebounds, likely the higher and faster it is to rebound. So that's how I would think about deploying my dollars.
- [44:03]
Brian Preston
Well, I mean, when I see gold, that's, that's system protection, meaning the whole system's imploding. So sometimes that's a key to me that this person's concerned that the whole system's Going down, I saw I'm on all these business forum groups and there was one that came across a few days ago and I was like, man, this is just mentally filed it away asking if anybody else was turning all their emergency reserves into crypto, into crypto.
- [44:31]
Bo Hanson
For their business, their business. I was on the same email.
- [44:34]
Brian Preston
So that's why see people throw gold or the cryptos. I'm like, I would just encourage people to. You realize how bad things will be if gold and crypto is the only way you're going to be able to pay for food and services for the family. I mean, you need to think bigger because you really need to be thinking water supply, protection, ammunition and guns and things like. Because that's more fruitful than just buying gold that you have to go pay somebody to keep safe. It's like Warren Buffett talks about gold. The problem is that you typically have to pay somebody to keep it safe.
- [45:15]
Bo Hanson
Or you have to keep it safe.
- [45:16]
Brian Preston
If you buy gold, it doesn't generate any dividends or yield whatsoever. It's one of those things where you lock it up. It's pretty, but it's just going to be there the same way. It's the same problem with crypto in a lot of ways too. The only way you make money off of gold and crypto and other things like that is you convince somebody to pay you more than what you paid. It's not like there's going to be innovation, there's not going to be interest, there's not going to be dividends. It's just, it's a little different. So that's why when I see gold, that's more systemic risk, which I'm not willing to have those equations when those discussions I have people, by the way, two years ago, it would have been a completely different. Different neighbors coming into the swimming pool asking me the question. Now it's this. And it just, it cracks me up. I give the same answer every time when people start talking about those things.
- [46:10]
Bo Hanson
Love it.
- [46:11]
C
Awesome. Mabi, if you would like a money guy Tumblr, just email winneroneyguy.com and we will send that out to you. Alex G's question's up next. It says, when is the best time to change your investment strategy? When I first started investing, I used Dave Ramsey's strategy but later changed my allocations and now I might want to switch to a target date fund. What do you think about this?
- [46:38]
Bo Hanson
All right, so when is the best time? Here's something I would argue that I think a lot of people Miss, I'm actually not a proponent of changing your investment strategy. I don't think you should change your investment strategy. I think that an investment strategy is something that naturally adjusts through time. It matures. And so if you're someone who's like, oh, I've got this investment strategy where right now I'm doing options, okay, I'm gonna get out of option, do individual stocks. Okay, I'm gonna stop doing individual stocks. I'm gonna go start doing crypto. I'm gon doing. If you find yourself bouncing back and forth or even from an allocation standpoint, if I could look at your portfolio this year and you were an 8020 portfolio, 80% risk on, 20% risk off, and I look at it next year and you were 20, 80, 20% risk on, I would argue that you're likely doing it wrong. What should happen is you should define based on where I am today, my unique circumstances, my age, my risk tolerance, my risk capacity, my goals, my time horizon based on those things, what portfolio makes sense for me today? And there's a really good chance that the portfolio that makes sense for you today probably made sense for you last year, and it's probably going to make sense for you next year. And so what happens is as you move through time, it begins to gradually and systematically shift. It's not like you pull the lever and it all changes over. It naturally shifts through time. So when you think about your investment strategy, that that's what I would think through. Okay, what end goal am I working towards? What finish line am I moving towards? Where am I at today? And what savings strategy should I be employing to move me along in that path? And really, the investing strategy on that course likely should not change a whole lot and certainly not rapidly at unique and distinct moments in time.
- [48:23]
Brian Preston
And it usually doesn't have to be an apple cart turnover, because, I mean, it's not. Look, if you go off of you start off at Dave's plan, well, there's going to be some of the funds that are growth funds. There's going to be some that are growth in income, there's going to be some that are international. Guess what? A lot of those things will fit into a nice diversified portfolio. And you might even have embedded gains in some of those things. So just to go turn them over because you've gone to a new plan, why not triage your financial life, figure out how you can use those components into your now updated, more modernized, more mature asset allocation that reflects all those things that Beau talked about, risk profile, Goals when you'll use the money. I get frustrated and I get it. I did the same thing when I first started out. I chased the hot dot, whatever was the most popular thing that people were talking about. So my first investments ever was a regional bank fund from John Hancock Special equities which was doing these technology. It was also a John Hancock salesman was selling me all this stuff.
- [49:24]
Bo Hanson
So weird that these B shares, all B shares too.
- [49:29]
Brian Preston
So I get why people get sold or caught into these trends. But at some point you do need to mature and start asking the why and what's this money? And that's why really when we were designing the financial order of operations, it was so you knew what to do with every dollar. And it was kind of built in. And that's why people pick on us because we say use those index target retirement funds. But man, oh man, with all the people getting so distracted with all the things that you can put your money into these days, how nice is it to say, hey, how much can you save? When will you need it? And then there's actually this low cost option that just does it for you. Now is that going to be the only investment you'll ever have? No, because by the time your portfolio reaches critical mass, 4, 5, $600,000, you're going to probably realize life is complex enough that you need to go even a step further and figure it out. That's when you once again triage that and figure out how you divide and conquer that existing holding. If it was held in retirement accounts, we can sell it all at once and then diversify it. If it's in taxable accounts, we'll take into account the taxes. But you can do the same thing for yourself, Alex, and just quit flopping around to different strategies because then you're never giving yourself time to catch traction and see that compounding growth work.
- [50:44]
Bo Hanson
There is one thing I'll throw out there and I think that the present volatility has really brought this to light. A lot of people will get to the stage in their financial life where they recognize that the gravity of their financial decisions is so large, they begin to get uncomfortable. Not that they don't necessarily know what to do or how it works or, or that sort of thing, but they just want to make sure that they've checked all, they've dotted all of their I's and they've crossed all their T's. And so you might find yourself at that place where, man, okay, there's a lot of volatility and I want to make sure. My portfolio is correctly aligned and I think it's good, but I just don't know for sure. Or maybe, maybe I'm so busy and I'm not focusing the time and attention on this thing that I should be focusing on this thing and I really wish I had someone to help me think through those. Or it's just gotten complicated and I don't know what, I don't know. If you find yourself in one of those three areas or maybe you find yourself in pieces of all three of those areas. That might be a very good indication. Hey, this may be the time that I should consider taking the relationship to the next level. Maybe I need a copilot to come along with me to help me make sure I am making the right decisions and thinking through things the right way and moving in the right direction towards my ultimate goals. That's what we call the abundance cycle around here. You learn, you apply, you grow, and then you reach the point to say, man, okay, I'm ready for someone to help me take it to the next level. So if that sounds like you, maybe this is the time that it makes sense to consider reaching out and connecting with an advisor.
- [52:12]
C
Awesome. Alex G. Thank you for your question. If you would like a money guy. Tumblr. It's Tumblr day, so email winneroneyguy.com all right, we have another potential recession question. One more. It's Nick's question. He says, I am 22 years old and last year maxed my Roth HSA and put 13% into 401k.
- [52:36]
Brian Preston
Nice.
- [52:36]
C
Should I stop contributing to my Roth to boost my emergency reserves from four months to six in preparation for a potential recession?
- [52:49]
Bo Hanson
Nick, you were doing so good.
- [52:52]
C
He really has.
- [52:53]
Bo Hanson
Now here's what I don't know. I don't know, Nick, based on where you are, your financial life, what the appropriate emergency fund number is for you. It could be three months, it could be six months. He's 22 years old. I don't know if you're married, I don't know if you're single. I don't know how specialized your job is. I don't know how easy it would be for you to find new work if you lost your current job. The answer to those questions will dictate. Okay, should I have a three month emergency reserve or should I have a six month emergency reserve? If you're going to be doing it the right way. Brian, can you hold the thing up for me? Our financial order of operation tells you what you should do with your. Tells you what you should be doing with your next dollar and in what order. So if you've already been doing your Roth and you've already been doing your HSA and you're already putting more than just the employer match requirement into your 401k, then you've kind of blown past step four. But maybe that's okay. Maybe three months is appropriate. And so if three months is the appropriate emergency reserve for you, but you'd still like to have an extra buffer, I think that you are in a position where you could likely do both. You can say, okay, I'm still going to save, I'm still going to do my Roth, I'm still going to do my hsa, but I'm going to choose to have a little bit extra cash right now because I have some job uncertainty or recession uncertainty or whatever. If, however, six months is the number that you should be at because you are worried, oh, I'm going to lose my job or this, I do think you have to, in step four, prioritize getting that emergency fund where it needs to be. Because what you don't want to have happen is the unknown, unknown thing happens. Market tanks, economy tanks, your job tanks. And now all of a sudden you do not have enough money in your reserve to give you time to recover.
- [54:36]
Brian Preston
Yeah, just go measure, see what your risk is on this. And if you make the determination, needs to be five months, six months, back out on that 401k, since you were already kind of doing a step six with that. And then I think you'll quickly, and it does have to be all at once. This could be something. If you risk assess, you say, I think my industry's okay for the next two months, three months, you figure out back into what you've now figured out your time of adjustment and then back, you know, let that be an adjustment that can fix itself. And then as soon as you filled up bucket four to where you think it is, load it back up on that step six of the 401k. This seems like just a straight course correction just to kind of make sure that you're, you're covered no matter what comes your way. Love it.
- [55:22]
C
I love it too. Um, Nick, that was this question. You get a money guy Tumblr. Since we chose your question, we would love to send you one. Just email winneroneyguy.com Great chat today. Moments like this are always crazy in the financial world, but we love that we get to show up and talk with you about them. So thank you for being here. We hope that this was helpful and helps you get gain some confidence about your financial situation. That's the whole purpose of this show. We'll be back here Every Tuesday at 10am Central answering your questions. And don't forget to check out moneyguy.com resources for tons of free downloads and calculators that will help you along your financial journey.
- [56:03]
Brian Preston
It's closing time.
- [56:05]
C
There it is.
- [56:05]
Brian Preston
Are we going to talk about it every.
- [56:07]
C
I figured you would. Honestly.
- [56:10]
Bo Hanson
We wanted you to say.
- [56:13]
Brian Preston
Been paying attention. This is the last recording in this set.
- [56:18]
Bo Hanson
So all of you who've been telling.
- [56:19]
Brian Preston
Us this sign is crooked, you're welcome. We know it is. We just had no way to fix it. So we're gonna get fixed.
- [56:26]
C
Yeah, it's kind of protective OCD fans.
- [56:28]
Brian Preston
We're gonna get that Bo's known it for since day one. We're gonna get that fixed. I can't wait to see. I'm a Chachki's son of a gun so I can't wait that there's gonna be more junk on my side because I felt always jealous of sitting over here longingly looking at all Bo's stuff behind me.
- [56:45]
Bo Hanson
Because we thought you wanted to look at it. That's what we thought is we. You want to see it? It's behind you. You can't see it.
- [56:50]
Brian Preston
Pretty exciting stuff. I can't wait to see what Caleb has cooked up for us. But this is the last recording we have. If all this chaos wasn't coming, we're gonna actually have some fun. Probably make a clickable title for this, but it seemed very toned up stuff in light of all the. The wildness.
- [57:08]
C
You will do that when we live stream from the new set in a little while. Here we will have. We'll still be here Tuesday at 10am Central with new videos with Q and A's. Just so you know, some of it'll be.
- [57:19]
Brian Preston
We put Caleb on a tight deadline to get this thing fixed.
- [57:23]
C
Yeah. We will be back with the new set very soon, so stay tuned for that. Should be really fun.
- [57:29]
Brian Preston
Oh, I guess y'all want me to close this thing out now.
- [57:34]
C
I mean, I thought you wanted to.
- [57:36]
Brian Preston
So.
- [57:37]
C
Yes.
- [57:37]
Bo Hanson
I got nowhere to be. I can stay on, honestly.
- [57:39]
Brian Preston
Hey, here's one for you. Wasting time is more expensive than wasting money. I'm your host, Brian Preston. Mr. Bo Hanson. Moneyguy Team out.
- [57:50]
Bo Hanson
The Moneyguy show is hosted by Bryan Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission in accordance and compliance with the securities laws and regulations Abound. Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. 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. All investments involve a degree of risk, including the risk of loss.