Podcast Summary: Money Guy Show – "What The Tariffs Mean For Your 401(k)"

Release Date: April 9, 2025

Hosts: Brian Preston and Bo Hanson
Description: Bringing confidence to your wealth building with simplified strategies, The Money Guy Show offers financial tactics that transcend common sense to help you achieve your money goals faster. Learn to make your assets work for you, alleviating worries and fostering a more fulfilled life.

1. Introduction: Navigating Turbulent Times

The episode kicks off with Brian Preston posing a crucial question to listeners: "Do these tariffs have you terrified? Better yet, what does this mean for your 401(k) friend?" (00:00). Bo Hanson counters with enthusiasm, highlighting the unpredictable nature of the markets and the opportunity such volatility presents for investors (00:14).

2. The Impact of Tariffs on 401(k)s and Market Volatility

The hosts delve into how recent tariff announcements have intensified market volatility. Bo notes that despite not having entered full bear market territory, the market is teetering on the edge, citing a "17.6% drop from the all-time high" as of the previous day (01:35). Brian adds that the market briefly dipped over 20% (02:03), illustrating the gravity of the situation.

3. Emotional Reactions and the Importance of Staying the Course

Brian emphasizes the emotional toll tariffs can have on investors, sharing anecdotes of clients panicking and making hasty decisions. "I wish you guys could be flies on the wall as I'm trying to explain things to some of my more emotional clients..." (00:41). Both hosts stress the necessity of maintaining a long-term perspective and avoiding emotional, behavioral decisions that could harm financial success.

4. Historical Perspective on Bear Markets and Recoveries

Bo provides a historical overview, explaining that bear markets, while concerning, often lead to strong recoveries. "Generally speaking, bear markets often offer strong recoveries. If you don't believe us, we can use history as our tutor." (06:35). Brian supports this by presenting data from First Trust charts, illustrating that bull markets typically last around 4.3 years with an average cumulative return of approximately 150% (08:29). In contrast, bear markets average an 11.1-month duration with a 31.7% cumulative loss (08:45).

5. Portfolio Construction and Asset Allocation

The discussion shifts to portfolio management, where Bo questions whether market volatility is the real issue or if it lies in portfolio misalignment. "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." (04:22). They advocate for diversified portfolios tailored to individual risk tolerance and capacity, emphasizing the importance of a rigid asset allocation strategy that adjusts over time, known as the "glide path" (14:58).

6. Dealing with Financial Media and Emotional Decision Making

Brian critiques the financial media's tendency to sensationalize market downturns for viewership, advising listeners to guard against letting media narratives influence their investment decisions. "The financial media... make everything as dramatic as emotionally terrifying as possible... they don't really care about your wallet or your purse." (04:43). Both hosts encourage focusing on reliable financial data and maintaining composure amidst market noise.

7. Practical Financial Advice for Investors

The hosts provide actionable strategies to navigate market volatility:

• Stay Invested: Bo advocates for consistent investing, such as dollar-cost averaging, rather than attempting to time the market by buying the dip selectively. "I want you to always be buying... set it and forget it." (41:46).

• Reevaluate Asset Allocation: Brian warns against drastic changes based on short-term market movements, urging listeners to ensure their portfolios align with long-term goals and risk profiles. "A wise financial plan should succeed before, during, and even after the market volatility." (13:58).

• Build and Maintain Emergency Funds: Emphasizing the importance of having cash reserves to weather unexpected downturns, Brian shares a client's panic despite a conservative portfolio, underscoring that emotional stability is as crucial as financial planning (04:42).

8. Audience Q&A Highlights

The latter part of the episode features a lively Q&A session where listeners pose specific financial concerns:

• International Vacations vs. Cash Reserves: Joey, a 28-year-old married listener with no kids, questions whether to forego an international vacation to bolster his cash reserves amid economic uncertainty. Bo responds by advocating for disciplined financial planning, ensuring essential savings are intact before indulging in discretionary spending. "If you have a really good plan in place, we want you to be able to live the life you want to live." (26:37).

• Investment Strategies During Volatility: Mabi, another listener, asks whether to invest in VOO (S&P 500) or safer assets like gold or bonds during a market downturn. Bo recommends consistent, automated investing in diversified, low-cost index funds rather than attempting to time the market, as this approach naturally captures dips through dollar-cost averaging. "If you're doing that over time, you're naturally going to buy the dip anyways." (40:11).

• Changing Investment Strategies: Alex G inquires about the optimal time to switch investment strategies, such as moving to a target-date fund. Bo advises against frequent strategy changes, emphasizing that investment strategies should evolve naturally with an investor's life stages and goals. "If you find yourself bouncing back and forth... you are likely doing it wrong." (48:22).

• Emergency Reserves vs. Roth Contributions: Nick, a 22-year-old, asks whether to stop contributing to his Roth IRA to increase his emergency fund in anticipation of a potential recession. Brian suggests assessing individual risk factors and determining an appropriate emergency fund before adjusting retirement contributions. "Measure, see what your risk is on this... as soon as you filled up bucket four, load it back up on that step six of the 401k." (52:35).

9. Conclusion: Staying the Course with Confidence

In wrapping up, Bo and Brian reinforce the show's mission to empower listeners with confidence in their financial decisions. They encourage ongoing engagement through subscriptions and accessing free resources available on their website. "We love that we get to show up and talk with you about them... helps you gain some confidence about your financial situation." (56:05).

Brian humorously hints at upcoming changes to their recording setup, maintaining an engaging and personable tone until the very end.

Key Takeaways:

• Stay Calm and Informed: Market volatility, such as that caused by tariffs, can lead to emotional decision-making. It's crucial to maintain a long-term perspective and adhere to a disciplined investment strategy.

• Diversification and Asset Allocation: Ensure your portfolio is well-diversified and aligned with your risk tolerance, capacity, and financial goals. Regularly review and adjust your asset allocation as you approach different life stages.

• Historical Resilience: Bear markets are typically followed by strong recoveries. Understanding historical market behavior can provide reassurance and guide investment decisions during downturns.

• Avoid Market Timing: Strategies like dollar-cost averaging and consistent investing in diversified index funds are more effective than attempting to time the market by selectively buying dips.

• Build Emergency Funds: Prioritize creating and maintaining adequate cash reserves to buffer against economic uncertainties and personal financial challenges.

• Discern Reliable Advice: Be cautious of sensationalized financial media narratives. Seek information from trustworthy sources that prioritize your financial well-being over sensationalism.

By adhering to these principles, listeners can navigate turbulent financial landscapes with greater confidence and resilience, ensuring their 401(k)s and broader investment portfolios remain on track toward their long-term financial goals.