Our Top 5 Favorite Parts of a Well-Crafted Financial Plan SB1652

Summary

Podcast Summary: The Stacking Benjamins Show – "Our Top 5 Favorite Parts of a Well-Crafted Financial Plan SB1652"

Release Date: March 5, 2025

Hosts: Joe Saul-Sehy and OG
Podcast Network: StackingBenjamins.com | Cumulus Podcast Network

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Introduction

In episode SB1652 of The Stacking Benjamins Show, hosts Joe Saul-Sehy and OG delve into their Top 5 Favorite Parts of a Well-Crafted Financial Plan. Emphasizing a holistic approach to financial planning, Joe and OG share insights that transcend mere investment strategies, advocating for comprehensive planning that integrates risk management, goal setting, tax strategies, and more. Their engaging and conversational style ensures that listeners, whether seasoned investors or financial novices, find actionable advice wrapped in humor and relatability.

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1. Risk Management

Timestamp: [63:10] Joe Saul-Sehy

Joe highlights risk management as the pinnacle of effective financial planning. He underscores the common misconception that financial planning revolves solely around investments. Instead, he emphasizes the importance of mitigating risks through strategies like maintaining an emergency fund, optimizing insurance policies, and reducing dependence on credit.

Joe Saul-Sehy: "Risk management is my favorite part because it ensures that you can be more aggressive with your investments without the constant worry of unforeseen events derailing your financial stability. When you have a solid risk management strategy, you sleep better at night."

OG adds that emotional resilience is crucial in financial decision-making, drawing parallels with sports strategies where emotional control dictates performance outcomes.

OG: "If something bad happens and you haven’t game-planned it, you're likely to make poor decisions driven by emotional stress. A solid risk management plan prevents that."

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2. Milestones

Timestamp: [58:20] OG

OG discusses the significance of setting milestones within a financial plan. By breaking down long-term goals into manageable checkpoints, individuals can track their progress and stay motivated. This approach transforms daunting financial objectives into achievable tasks, fostering a sense of accomplishment and direction.

OG: "Milestones allow you to celebrate small victories along your financial journey. Whether it's funding your child's college education or paying down your mortgage, reaching these checkpoints keeps you engaged and on track."

Joe echoes this sentiment, illustrating how milestone tracking shifts the focus from overwhelming long-term goals to actionable short-term steps.

Joe Saul-Sehy: "Milestones turn the gigantic elephant of financial goals into tiny breadcrumbs you can follow, making the journey less intimidating and more rewarding."

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3. Timelining Your Goals

Timestamp: [49:32] Joe Saul-Sehy

Joe introduces the concept of timelining goals, a method he elaborates on in his book, Stacked. By placing goals on a timeline, individuals can visualize how different objectives interact and prioritize them based on their life's trajectory.

Joe Saul-Sehy: "Timelining your goals helps you see which objectives coincide. It forces you to prioritize based on what truly matters, ensuring that your financial resources align with your values and immediate needs."

OG complements this by highlighting the alignment of personal life events with financial strategies, ensuring that planning accommodates both current and future priorities.

OG: "When you timeline out your goals, you realize how interconnected they are. It helps you allocate resources more effectively and avoid conflicts between competing priorities."

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4. Challenging Savings Goals

Timestamp: [46:34] Joe Saul-Sehy

Joe reminisces about his experience as a financial planner, where he motivated clients to challenge their savings habits incrementally. By setting small, achievable savings goals, clients often found the motivation to increase their contributions over time without feeling overwhelmed.

Joe Saul-Sehy: "Challenging yourself to save a little more each time, whether it's an extra $50 or $100, creates a momentum that leads to substantial financial growth without the stress of drastic changes."

This strategy not only fosters disciplined saving but also builds confidence in managing finances, making long-term planning more sustainable.

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5. Tax Strategies

Timestamp: [44:44] Joe Saul-Sehy

The final pillar in their top five is tax strategy, where Joe emphasizes the importance of optimizing tax liabilities to enhance overall financial health. He discusses techniques such as Roth conversions, strategic asset placement, and aligning tax planning with investment goals to minimize tax burdens and maximize returns.

Joe Saul-Sehy: "Effective tax strategies are about more than just reducing what you owe this year—they ensure that your long-term financial goals are met without unnecessary tax penalties. It's about harmonizing your investments with your tax obligations."

OG adds that thoughtful tax planning can influence retirement distributions and overall financial sustainability, highlighting its critical role in comprehensive financial planning.

OG: "Tax planning impacts everything from retirement income to estate planning. Proper strategies ensure that you maintain your financial trajectory without unexpected tax burdens derailing your plans."

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Conclusion

Joe and OG wrap up the episode by reiterating the importance of a comprehensive financial plan that integrates risk management, milestone setting, goal timelining, challenging savings, and tax strategies. They advocate for a disciplined yet flexible approach, encouraging listeners to focus on actionable steps while maintaining the bigger picture in mind.

Joe Saul-Sehy: "Your financial plan should be like a well-oiled machine—complex in its design but simple in its execution. By focusing on these five areas, you create a robust framework that can adapt to life's uncertainties and help you achieve your financial goals."

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Notable Quotes

• Joe Saul-Sehy: "Risk management is my favorite part because it ensures that you can be more aggressive with your investments without the constant worry of unforeseen events derailing your financial stability." (63:10)

• OG: "Milestones allow you to celebrate small victories along your financial journey. Whether it's funding your child's college education or paying down your mortgage, reaching these checkpoints keeps you engaged and on track." (58:20)

• Joe Saul-Sehy: "Timelining your goals helps you see which objectives coincide. It forces you to prioritize based on what truly matters, ensuring that your financial resources align with your values and immediate needs." (49:32)

• Joe Saul-Sehy: "Effective tax strategies are about more than just reducing what you owe this year—they ensure that your long-term financial goals are met without unnecessary tax penalties." (44:44)

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Final Thoughts

The Stacking Benjamins Show episode on the top aspects of financial planning serves as a comprehensive guide for listeners aiming to build a resilient and flexible financial plan. By highlighting the interplay between various financial strategies and emphasizing a structured yet adaptable approach, Joe and OG provide valuable insights that empower individuals to take control of their financial futures.

For more in-depth discussions and resources, listeners are encouraged to visit stackingbenjamins.com and subscribe to their newsletter, 201, for ongoing financial advice and updates.

Transcript

[Joe Salsihai]

Well, debt can really take a toll on you.

[OG]

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[Joe Salsihai]

Don't just have debt.

[OG]

Figure out exactly what your plan is and then use Navy Federal tools like these. Right now, Navy Federal Credit Union is offering a 0% intro APR on credit card balance transfers for 12 months plus you can get 250 when you spend 2500 in your first 90 days on a cash rewards or cash rewards plus credit card. Don't let that drag you down. Visit navy federal.org to start dominating debt today. Navy Federal Credit Union Our members are the mission. Navy Federal is insured by NCUA. After the intro rate expires, variable APRs are 15.15% to 18%. There's why you want a debt strategy based on credit worthiness. Rates are subject to change. ATM fees for cash advances are up to $1 at non navy federal ATMs. And now word from our sponsors at Betterment when investing your money starts to feel like a second job, Betterment steps in with a little work life balance. They're an automated investing and savings app, which means they do the work while they build manage your portfolio. You build manage weekend plans. While they make it easy to invest for what matters, you just get to enjoy what matters. Their automated tools simplify the complex and put your money to work optimizing day after day and again and again. So go ahead, take your time to rest and recharge. Because while your money doesn't need a work life balance, you do make your money hustle with Betterment. Get [e-mail] that's B E T T E R m e n t.com investing involves risk performance not guaranteed. Hey there Stackers. Happy Wednesday to you. I'm super excited to press play on today's episode. Before we get to that, I want to just rewind to Monday because I asked you specifically a question. Monday's show was from 10 years ago, 2015 and we featured Phil Reed from edmunds.com and the question I asked was do these points, Even though they're 10 years old, still hold up when it comes to buying a car? And I'm happy to report that to the person you all said that they totally held up. And isn't that funny how we all think about the, you know, the new, new thing? We're all looking for the new new thing and yet it's often the timeless stuff that resonates, even going all the way back there. And that's what makes financial planning, by the way, fun for me. And it's little bit like riding a bike, you know, once you know, you know, and this stuff is all learnable, it doesn't change that quickly. And that knowledge is power that you can use for a long, long time. In this case even ten years later. Here are two comments from our Stacker community that I'd like to highlight. The first one is from JK Sheets, JK said I'd like to hear a follow up conversation that addresses tariffs on car purchases. Of course the President spoke last night. It's estimated the tariffs will add around $12,000 to the cost of a new car. How do we factor that into negotiations over price when purchasing a new car? I did, J.K. exactly what I think we're really good at, and that is finding the best sources. And so eight hours ago as I record this in the Wall Street Journal, Mike Coleus, Deputy bureau Chief, Autos, wrote, how will Tariffs Affect Car Prices? Mike said American car buyers will eventually shell out more for new wheels as a result of the 25% tariffs on imports from Mexico and Canada, according to auto executives and Wall street analysts. The impact likely won't be felt for a couple months as car dealers work through inventories already on their lots. Shopping site Cars.com says if the tariffs remain in place for several weeks, though, the layers of cost injected into the industry could tack on thousands of dollars. JK said 12,000 estimates on Wall Street Journal site JK are ranging from an extra 3,000 to as much as $10,000. Prices could go up most sharply on vehicles built north or south of the border, including popular models like the Toyota RAV4 sport utility vehicle and the Chevrolet Silverado pickup truck. But it also says inflation is likely to hit every car model sold. I also went by the way to, of course, the Detroit Free Press. If you're talking cars, you gotta, you gotta go to the Detroit Free Press. Jamie Laro wrote this also yesterday as you're listening to it on March 4th mini disaster for automotive industry experts. Project impacts of extended Trump tariffs Similar similar numbers in this piece as well. However, this was much more around job losses, supplier closures, overall recession in Michigan and in towns where the auto industry looms large if they remain in effect for an extended period. While some argue that tariffs could bring manufacturing jobs back to the U.S. others warn of severe consequences for the auto industry and consumers alike. And I think that's a short term, long term thing, right over the short term pain. But if over the long term they're able to bring manufacturing back to the United States and how long would that take? The answer simply is is I don't know. But specifically to the question how do we use that in our negotiation? I don't think you're going to be able to because of the fact that the cost to the good is going up. So I've mentioned before that I've used TrueCar. I've also used Phil's technique, pitting different car dealerships against each other. I think that's still your best way to negotiate. I also think that if car sales slow, certainly salespeople are going to be more excited about making sure that you get a deal. It's not going to feel like a deal, it's going to be higher than it is now. But there's ever time to no negotiation. It's of course when you're negotiating across from a company that really, really needs you to buy this car. Silent Shade had a comment as well. The car tips were all still relevant. An update video be useful to address recent trends in car market and EV hybrid vehicle buying new used I almost bought a plug in hybrid great online price last year when trading in my very old vehicle but backed out when I learned that dealers are now allowed to submit the tax credit paperwork to IRS on your behalf and bake it into the price deal. My income's too high for this credit but dealer didn't get it. I do not like the dealers can submit on your behalf. I didn't know that either. Sideline Jade so thank you for that note and certainly playing these from 10 years ago definitely shows me that baked into the cooking later in 2025. We need to talk about cars again. Definitely something we want to do. So thanks for the suggestion. And before we roll, if you're listening to this on the day that this comes out, March 25, 2025 today we are releasing our tax guided I'm so excited guys. It is so full of strategies, explanations and ideas for you to plan your taxes better and also to uncover every rock when you're filing your taxes it's broken into two halves. The first half is all tax strategies. That is these are things that you're going to want to use all year. Then over the next six weeks, right until tax filing day. The second half is all different tax filing scenarios and all the little things that you need to know, including a segment we're going to do next Wednesday here on the show. Which tax software should you use? You'll get a preview in that. In the guide, it's stacking benjamins.com taxguide I'm super proud of the work our team did on this, the same level of work they did on the HR Guide. If you know the way we do our guides, you purchase it once, we update it every month. As your situation changes and the government makes change the tax code, you're all set. You never have to pay for it again. And we update it consistently. I just got to give a big shout out to Kevin Bailey, who was in the trenches helping me write this thing. The two of us together. Tina Eichenberg with all of her layout work. Speaking of that, our layout man, Ted Nosic did an amazing job as he did on the HR Guide on this. It was all a team effort. Stacking benjamin.com tax guide pays for itself immediately, I think, because you'll know what you're doing when it comes to your taxes. All right, onto today's episode, I reached back and pulled out one of my favorite top five episodes. I love the top five episodes where OG and I go back and forth on lists that we haven't shared with each other. This one is exactly the top five things we love about financial planning. And I want to play this today because just this morning I saw a couple of posts from people online which could easily have been answered if you looked at life from a more holistic perspective. And I'm thinking of Stephen Covey, right. 7 Habits of Highly Effective People. He says you pick up one end of the stick, you automatically pick up the other. You got to think about what's on the other end of that stick. I'll give you an example of exactly what I'm talking about that you won't hear in today's show. These stupid risk assessment quizzes. Now, I like a risk assessment quiz, so hear me out. But the way that they happen a lot of the time drives me crazy. Lots of companies give these to you when you're picking out your 401k or your 403b funds, your whatever, your workplace retirement funds. I think they're horrible because you can't assess risk in a vacuum. If you knew that the risk you were taking had a hundred percent chance that this strategy wouldn't reach your goal, would you actually have that level of risk, or would you ask first, what risk do I need to take to meet my goal? And then ask myself, can I stomach that type of risk? That's the other end of the stick, right? If I just say I don't want to take any risk, well, you're never going to go anywhere. I'd vote strongly for the second one. We're going to ask first, what do I need to do? And then can I, can I actually stomach doing that? One last note before I hit play on this. You know, this episode came out in 2022, and this was before we had figured out how to make the commercials and sponsor spots make a little more sense. What driven a lot of us crazy is that of course, commercials in your episode are necessary evil. We can keep on keeping on and you don't have to pay a dime for it. So our goal is decrease the friction that they create. Right? And in this episode, you're going to find that because our headline spot is a little short, the the sponsor spots are all near the front of the episode. So we stop for a sponsor spot and then we're going to stop maybe 17, 18 minutes later. I don't like that. What we figured out since then, by the way, is if we flip the episode upside down, which we now do, we now have a longer period between them. The good news on this, though, and the reason I'm telling you this, is that the second half of this show is more like the last two thirds of the show. Almost 40 minutes of non stop action when we're talking about our top five favorite parts of the financial plan. So want to address that beforehand. Love this episode overall though. Thanks everybody for your comments on Spotify and Mom's basement Facebook group. Wherever you been, commenting. That was so fun talking about Monday's episode. Without further ado, our top five favorite parts of a coherent financial plan. Good morning, Christopher Robin. Oh, good morning, Winnie the Pooh.

[Doug]

Live from Joe's mom's basement, it's the Stacking Benjamin show. I'm Joe's mom's neighbor, Doug, and it happens to the best of us. But I'm stuck in a window. Yes, Winnie the Pooh style. Long story, tell you later. But luckily my mic has a long cord and Joe's arms aren't tired yet. Keep pushing back there, Ma. I may be stuck, but today we'll help you get unstuck with your money. And we'll list our top five parts of financial planning in our headlines. Chinese stocks are rocking. Should you invest? We have thoughts and Since I'm stuck here in the window, why don't we make lemons out of lemonade and I'll share some berry good trivia. Wait, is Winnie the Pooh even a bear? He's a poo. Right? And now two guys who will never let you get stuck in the hole of bad investment. It's Joe and O. J. J J.

[Joe Salsihai]

And a happy Wednesday to you stackers. Hey, let me be the first to welcome you. You're here. You made it. Sit back, grab your favorite beverage, and let's enjoy some money nerdery for an hour with a guy across the card table from me, my good friend OG how are you, man?

[Doc G]

What's happening, bro?

[Joe Salsihai]

Dude, I am ready.

[Doc G]

What's happening, bruh?

[Joe Salsihai]

No, no, no, no. We're not going to be too finance pros of microphones.

[Doc G]

My. My daughter, who's 6, says instead of dad or daddy, she says Bro Dad. Bro dad.

[Joe Salsihai]

Oh, man.

[Doc G]

Bro dad. Oh boy. My Bro Dad. Of course, Bro Dad.

[Joe Salsihai]

Now, when did they grow out of that? Do you like it?

[Doc G]

I don't know.

[Joe Salsihai]

Like being Bro Dad.

[Doc G]

Well, the. All the boys call each other bros Bro. Come on, bro.

[Joe Salsihai]

I will. I'll pass on all that. But what I won't pass on is we got a top five today. No guests, just you and me. Some of my favorite episodes are our top five. And today we're going to talk about two financial planners, one current, one former, talking about our favorite parts of the process. And the reason I wanted to do this OG is that I think it surprises people when they hear from the other side of the table what we like. Because especially when I'm in online forums, people like, well, you can diversify your own investments. Why do you hire somebody to pick investments for you? I think people are going to find when they hear our top five things we love about the financial planning process, whether using a advisor or not, that true financial advising is not at all, not at all that. And it's going to be super fun. Oh, so boring. But before all that, you know, I was just.

[OG]

I had this weird dream.

[Joe Salsihai]

Did I tell you about the dream I had last night?

[Doc G]

Not another one of these.

[Joe Salsihai]

Oh, it was horrible. Listen to this.

[OG]

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[Joe Salsihai]

Well, I guess it was really good. Isn't that good?

[Doc G]

Intriguing.

[Joe Salsihai]

Yes. We got top five things we love about financial planning. Before that, a great headline. So let's get started.

[Doc G]

Hello darlings. And now it's time for your favorite part of the show. Our Stacking. Benjamin's Headlines.

[Joe Salsihai]

Our headline today comes to us from MarketWatch. You know, we haven't talked about this topic in a while and this headline OG gives us a great opportunity to do it. This by Steve Goldstein. Steve writes, Chinese stocks have been on a tear. Morgan Stanley says is turning even more bullish on China. Steve writes, no matter how miserable 2022 was for investors of all sorts, they could have undone all manners of sin with one simple move going long Chinese stocks in late October. I like I'm sure you did. Oh gee, that's exactly.

[Doc G]

Absolutely. Writing was on the wall. How could you not have done it?

[Joe Salsihai]

The Crane shares CSI China Internet etf China Internet etf. So not just China, but we want to go China. Internet stocks.

[Doc G]

Nice.

[Joe Salsihai]

Yes.

[Doc G]

Any solar wind farms?

[Joe Salsihai]

Yeah.

[Doc G]

The next layer.

[Joe Salsihai]

Why wouldn't you have been in this, in this area, with 100% of your money, has exactly double. Okay, he writes, rose 99.88% from its January 24 intraday low. Of course, no one in their right mind would have made that investment allocation. So here in the real world, the question really is how far the rally can go.

[OG]

Then they dive into the fact that.

[Joe Salsihai]

This rally seems like it's going to be a long one, that this may last for a while. And then I started thinking, oh, gee, you know how much I love emerging markets. I'm over diversified emerging markets in my portfolio. I read stuff like this, and I know the average person jumps on market watch and goes, chinese stocks. Okay, let's go. Let's buy the Chinese etf.

[Doc G]

I'm in.

[Joe Salsihai]

Tell me, og, Tell me, og, why I might want to do that or I might not want to do that?

[Doc G]

Well, when you think about diversification and you're trying to decide how much money to put in different places, anything that you do that is above weighting it based on their production or their economic value to the entire economy, anything that's above that is your best guess, is your market timing, right? It's your stock selection. If you said, hey, I'm going to put 20% of my portfolio in Chinese Internet stocks, you're making a bet on that. And that doesn't mean that your bet will be incorrect, but it's overweighted based on what they actually produce relative to the economy, you know, in the universe. So we do that already. We do that with home bias. If you look at the average investment portfolio of an American, they're mostly American stocks, right? And the argument, of course, is, well, a lot of these companies are international. So Coke sells Coke all over the world, right? But part of the benefit of being diversified internationally is you get currency differences, you get tax law differences, you get, you know, economic differences, you know, rule differences and all that sort of stuff. So when you look at an average person's portfolio, they're overweight us. Why is that? Well, it's home bias, right? If you look at the average Norwegian, they're overweight Norwegian stocks. Why is that? It's home bias. So we're already doing that to some degree. The question is, is to what other degree do you want to do it with some of these relatively small subsets of the. Of the economy, right? If you say, well, I want Chinese stocks, or now I want Chinese Internet stocks, now I want Chinese Internet Bitcoin mining stocks, you know, I mean, you can kind of whittle it down like how much do you want to allocate to that? Because if you have a Chinese ETF or like you talk about an emerging market etf, you probably already have all that stuff. You know, sometimes clients will say to us, I really want to make sure that I own, you know, some technology or I want to own alternative energy stuff or I want to own AI type, you know, kind of the emerging things. It's like, well, that's already there. If you have a Russell 2000 small cap fund, you have those positions, you're just not overweighting them because obviously you're making a bet. You're saying, I think that this is going to pay off. And if you're right, then you benefit a whole bunch. And if you're wrong, you don't. So it's impossible to predict in advance what's going to happen with a specific sector or specific part of the economy or a country or, or an individual stock. And so since it is impossible, since it is impossible, I can't see a better way than just saying, well, I'll just evenly split it amongst all of the profitable companies in the US or all of the profitable companies in the world based on their value to the economy.

[Joe Salsihai]

People talk about risk in the portfolio and I don't think we think enough about the risk of second guessing markets or overemphasizing how smart we think we are.

[Doc G]

Well, I mean, it's a, you know, it's like, who is the author, the radio personality who did the Lake Wobegon stories? My grandma used to listen to them. Where everybody's above average.

[Joe Salsihai]

Yeah. Garrison Keiller.

[Doc G]

Yeah. So there you go. If you ask anybody if they're above average, I would venture to say that everybody says that they are. So my definition, some of those people are incorrect. And it's kind of the same thing with stocks. It's, people get confused with this. They say it's impossible to beat the market. And I would say, no, it's not, it's not impossible. People do it all the time. Roughly a third to 50% of investors beat the market. The problem is predicting that performance in advance. And so if you can't predict it in advance, and the second part of that is it's not repeatable. So there's no, there's no persistence of that. So it's like if, if you did it 10 times in a row, there's no evidence to suggest that means that you'll likely do it the 11th. So if there's no persistence to it and there's no evidence to predict that performance or that outperformance in advance. And generally it costs a lot of money to do that to try to outperform. It seems like a losing proposition to try. It doesn't mean you won't be successful because there's plenty of people who try and who are successful. I was reading an article about the top hedge funds from 2022, and some of them were producing 50, 60, 70% returns. That's outperformance. It's significant outperformance. Does that mean that they're going to do it this year? Can we bet that they will because they did it last year? Of course not. Are the people who invested, they're super happy that they got it right? Yes, they are. You know, they made half their money again last year. They're super excited about that. So you just have to weigh, I think as you're looking at your investments, you have to weigh how much of this do I want to put in the hands of luck versus academic science and research that says that this is the path to success?

[Joe Salsihai]

Speaking of academic science, I think then the logical question people are asking is, okay, then, where do I start from? I'm not going to bet on China. I'm not going to bet on, you know, whatever the topic du Jour is on MarketWatch. This is today's. There was a different one yesterday. Yeah, where do I start with? And that brings me to a piece I'll share in the show, notes from Investopedia, which is what is an investment policy statement? Because I think this is a great place to start. Because an investment policy statement is this written draft that says exactly how you're going to manage your money. And really, what's the. How's the machinery going to work? I am going to have this allocation. I'm going to change it when these things happen. I'm not going to touch it when these other things happen. So if I see something about China, I can now look at my investment policy statement and go, okay, one of two things. Either I change my investment policy statement to include this, which now then you start to see the sea change, I think in your head, like, wow, I'm going to change everything to go long on China, or China Internet stocks or whatever it is. Is it really worth changing my whole investment policy around China stocks? Or the second thing is, which is 99.9% of the time, then you let it go. You give yourself permission to let it go, which I think is a pretty powerful thing because you had the temerity is the word. If you had. You had the fortitude.

[Doc G]

Use it in a sentence. To build country of origin, to build.

[Joe Salsihai]

An investment policy statement first. Right.

[Doc G]

You know, an investment policy statement does all of those things. I think the other thing that it also does is it's not only sets up the rules of the road, but it also sets up the expectations. People get frustrated with investment performance because they don't know what to expect. If you've ever caught yourself looking at your investment account and going, oh, I didn't know that could happen, or if you ever find yourself surprised by the outcome, Your account's up 10% or it's down 22% or it's up 31% and you're surprised by that, that means that you didn't do a good enough job explaining to yourself, or someone didn't explain it to you the rules of the road and the expectations that you should have moving forward. And where investors get in trouble is those expectations don't line up with what's actually happening. So nobody is really excited in 2022 to have their investment account go down 20%. I didn't talk to anybody that was like, I'm so happy this is happening. But I talked to a lot of people who knew it could happen and who were not excited about it, but also not fearful, not petrified, not ultra worried about how this is going to impact things, because we knew that this is a logical outcome. And you can look at it kind of as a postmortem and say, well, yeah, I guess it makes sense. 2020 and market was up 2021. The market was up a whole bunch both times. Makes sense that maybe it would go down a little bit in 2022, but in the moment, it feels a lot different. When you had $100,000 and now you have 80. When you look at your quarterly statement yesterday, you looked and it was 91. Now you look again and it says 77. And you're like, what the heck is going on? Or those bigger numbers. I had a million, and I thought I was, you know, I was right on the precipice of that second comma. I ticked over it, and Now I have $810,000, and it feels like I just blew my chances of retirement. That's because the expectations that you have and what's actually happening with your investment portfolio is not aligned. So an investment policy statement does all the things that you talked about in terms of giving you the rules, but it also says, here's what you should expect in a normal, functioning 95% of the time economy. You shouldn't be surprised if your account goes down 10% every six months. That's normal, based on your investment policy statement. And then where that leads to is it leads to you making better decisions. Because the biggest determinant in long term investment success is investor behavior. And we all have bad behavior in different areas of our life. If you're an investor that ever thought about buying call options in the last couple of years, or if you got wrapped up in Tesla stock because it was the next great thing, that's the greed side of the equation. Right. That's like, I'm gonna miss out if I don't get in Tesla today. I'm never gonna be able to get it again at this price. Right. If I don't learn how to trade options, that's the new thing. If I don't know how to do this like these guys on the Internet are doing, I'm gonna miss out. So that's one side of the equation. The other side of the equation is it's October of last year, the market's down 24% or something. You go, I can't take it anymore. I'm going to do something different now. I'm going to put my money in Chinese Internet stocks or something, which actually would have been a good thing based on that previous article.

[Joe Salsihai]

Yeah, I love the idea of a monitoring and control process. And that's really the key to, I think, the investment policy statement for me.

[Doc G]

It's really quite astonishing to me to look back and look at the impacts of compounding. It's so hard to see in the short run, and it's so hard to see just over short periods of time with your money because you can't really make it, make it logical in your brain. But Joe, you were born slightly before 1970, but 1970 was 52 years ago now. Right. So if you invested $100,000 in 1970 in the S and P, how much money would you have today?

[Joe Salsihai]

I'm going to say $700,000.

[Doc G]

$700,000. $100,000 invested for 50 years, dividends reinvested. You think is $700,000? Would you like to change your answer?

[Joe Salsihai]

Yeah, it's going to be higher than that. I'm just trying to do the rule of 72.

[Doc G]

So your first guess was $700,000? Pick another number.

[Joe Salsihai]

Yeah. 1300 or 1.3 million? Sorry.

[Doc G]

Yeah, 1300. Okay. DOC G. Oh, you didn't say if I was investing in Chinese Internet stocks starting with $100,000. Yeah. Now the right answer is 14 million.

[Joe Salsihai]

14 million. I only missed it by a factor of 10.

[Doc G]

That much? Yeah. Factor of 20 on the first go round. So I doubt that initially you could think that, you know what I mean, like you can get there. You could do the math, like 72 and you, okay, it has seven years. It's going to double every seven. There's seven of those. So I can do. But it's still impossible to even believe that we just have to invest money and not bleep and touch it. That's the key to all of this is stay away from market watch and stay away from anything that doesn't rhyme with leave it the hell alone. Because if you play with it too much, you might go blind. I don't know.

[Joe Salsihai]

Is that our takeaway? I hope that's not our takeaway.

[Doc G]

You play with it too much, you might run out. I mean, that's the key. So build an investment policy statement and then there's no surprises. That's what you're trying to do. Don't have surprises.

[Joe Salsihai]

If you want to know details about how to build an investment policy statement, we have a free newsletter that goes out the day after our Monday and Wednesday shows called the 201 people that get the 201 open. The 201. We have one of the highest open rates of any newsletter that I've seen, about a 50% open rate. And for an email that gets sent out twice a week, we're incredibly proud of that because we try to make sure this email is our newsletter is worth it. Super proud of it. But we're going to dive into investment policy statements. We'll dive into everything we talk about on the show with links and get more granular in the 201, of course, named because this is the 101. 201 will teach even more how to do it. Stacky Benjamins.com 201. Of course, it's always free and if you find you're not opening it, unsubscribe whenever you'd like. But I think you're going to open it if you get the 201. Coming up next, OG and I dive into our top five pieces of putting together and monitoring financial plans. What do we like best about the financial planning process? Haven't done this top five before in almost 12 years. So we're super excited to dive into that. But before that, Doug, I think you've got some trivia for us we haven't even mentioned, by the way. Oh, gee, Doug, still stuck in the window. Not sure what that's all about, but like anything here in the basement, I think we'll go ahead and. Go ahead and run with it.

[Doc G]

Just yell, Doug. It'll be fine.

[Joe Salsihai]

Doug, your turn.

[Doug]

Hey there, Stackers. I'm Joe's mom's neighbor, Doug. It's Winnie the Pooh day. And yes, that's how I got into this predicament in the first place. That and all my holiday candy. It was Joe who wanted to take a pic for the socials. Get in the window. He said, it's gonna be awesome. It'll be just like Pooh. And next thing you know, I'm making duck faces. And Texarkana Emergency Services is coming to our photo shoot. Oh, God, I think I hear the sirens. Alright, let's wrap this up. As you know, one of Pooh's friends is Eeyore, the chronically gloomy donkey. So my question is, what was the market value of the antidepressant drug market in 2021? Was it 16 million, 600 million or 16 billion? I'll be back right after I try a bit more wiggling. Oh, bother.

[Joe Salsihai]

Who.

[Doug]

How high is the interest rate for the new Laurel Road High Yield Savings Account?

[Joe Salsihai]

This high?

[Doug]

The air is really, really thin up here. The Laurel Road Very High Yield Savings Account Account.

[Doc G]

Variable annual percentage yield APY is subject to change at any time. No minimum balance required. Fees may reduce earnings on the account. For full terms and conditions, see laurelroad.com savings. Laurel Road is a brand of KeyBank, member FDIC.

[OG]

And now, word from our sponsors at Betterment. When investing your money starts to feel like a second job, Betterment steps in with a little work life balance. They're an automated investing and savings app, which means they do the work while they build manage your portfolio. You build manage weekend plans. While they make it easy to invest for what matters, you just get to enjoy what matters. Their automated tools simplify the complex and put your money to work optimizing day after day and again and again. So go ahead, take your time to rest and recharge. Because while your money doesn't need a work life balance, you do make your money hustle with Betterment. Get [e-mail] that's B E T T E R M E N T dot com. Investing involves risk performance not guaranteed. Today's show is sponsored by Strawberry Me Stackers. All right, everybody, let's talk careers. You know, you work hard, you bring in a paycheck, maybe even contribute to your 401k like a responsible adult gold Star for you. But here's the thing. Making money is great, but making the right moves to actually grow your career and earn more, Are you doing that because, let's be honest, hoping your boss finally notices you and hands you a raise. That is not a plan. That is a gamble. And unless you're the type of person who gets excited about betting their retirement on meme stocks, you probably want a better strategy. I certainly do. I have a coach, Mary Lou, that I meet with every Monday morning. And Mary Lou and I lay out my week. We talk about doing the things that are important to my family, that are important for my health, and the things that are important for financial literacy and stacking Benjamins and the intersection of all those things. And that's where Strawberry Me career coaching can help you. They'll match you with a certified career coach. Somebody knows how to help you get ahead. Like my coach helps me negotiate better pay and actually make smart money moves. So you're not leaving money on the table. You've heard me talk about this before. The key is to have people around you, smart people around you who hold you accountable to getting those things you say that you want for yourself. If you're anything like me, you've been meaning to, quote, update your resume for, like, the last five years. I remember what Mary Lou said. Are we going to keep talking about this book? Are you finally going to write it? And I'm very proud of Stacked. But without Marie Lou, I would have never had Stacked. Your career is your biggest financial asset. It's time to start treating in that way. When I started treating it that way, things change. It can be the same for you. So here's the deal. Go to Strawberry Me. It's Strawberry Me stacking, and you'll claim your 50 credit. That's strawberry Me Stacking. Because maximizing your earnings is just as important as maximizing your investments. Strawberry Me does not facilitate or provide healthcare services. Please consult with a healthcare professional. But, guys, let's get some more people around us, shall we?

[Doug]

Hey there, stackers. I'm human wall cork. And this afternoon, Dieter, Joe's mom's neighbor, Doug. Poor Eeyore. It's not his fault. And thanks to better living through pharmaceuticals, he can get out there doing the happy dance with Tigger. So according to Allied Market Research, what was the market market value of the antidepressant drugs market in 2021? $16 billion. That's a lot of honey. And now here with their top five favorite parts of financial planning, let's send this back to Joe and OG.

[Joe Salsihai]

All right. Always something. Always something with that guy going on. Hey, time for a big top five. You know, the financial planning process, OG Is far more comprehensive, I think, than a lot of people think that it is. They tune into a show like Stacking Benjamins and they initially think that we're just going to talk about Chinese Internet stocks all day. And these long time stackers know that's rarely the case. It's a lot more holistic. And I'm super excited to see really how holistic yours, your list is. But I want to start with this. My list. Looking through this, I wanted to talk about investment policy statements about Chinese stocks at the beginning because my top five includes very. I don't know about yours, but mine includes very little about investing. Like very, very, very little about, well, maybe investing, but not investment management. How about yours?

[Doc G]

Yeah, I might not have understood the assignment as well as you understood that. So we'll, we'll just run with it. I don't have any investing things on mine either, but yeah, we'll see if, if I did that, if I did the, if I did the homework correctly.

[Joe Salsihai]

What I like about this type of homework is, you know, favorite subjective anyway. So I don't think there's a, don't think there's going to be a right or, or a wrong approach to this thing, but it'll be fun.

[Doc G]

I'm glad you say that. Now. You might, when we're done, you might say, okay, that was the exact wrong approach.

[Joe Salsihai]

Actually, I haven't seen yours. Your list, obviously. You even see mine. We're going to just, we're going to run with it.

[Doc G]

Do you want to show me yours and I'll show you mine?

[Joe Salsihai]

Pass on that. We'll just, let's expose them as they, as they come up. It's getting bad in a hurry. All right, Mr. UK announcer, let's do this. Number five, you want to go first? You want me to go first?

[Doc G]

First? I don't care. It's fine. I think the easiest one, when I think about the things of, of planning, is how you can take something like we talked about just a few minutes ago. In 50 years, you get $14 million by starting with a relatively small sum in the grand scheme of things, 100 grand's a lot of money. Yeah, I get that. So taking all of the stuff and saying, okay, you're 45 and you want to retire when you're 65, you only need to have $4.5 million. And you look at your investment statements and you're like, yeah, there's no way, I'm not sure. There's no way that this is so off the charts. And instead what we try to focus on is let's not think about that 20 year goal. Instead let's think about the next six months. So what are the two or three things that you guys need to do over the next six months? Two or three things that we're going to do over the next six months. So basically taking that gigantic elephant, turning it into these little teeny tiny breadcrumbs of stuff to do and how that progress compounds on top of one another. So that's my number five.

[Joe Salsihai]

It's funny because that particular thing appears in two of my top five because I am right there with you. Mine are further up because I love that piece. I love the fact that we can focus on the next six months and eat just a little piece of the elephant and we will get there and we just focus on these little things now. We don't got to focus on that big huge picture. We're going to get there. And I just find that so exciting and refreshing and enlightening to so many people. You're kidding me. If I do these little things today, I'm going to reach that 4.5. Yes, yes. Just need to focus on this little stuff.

[Doc G]

Yep.

[Joe Salsihai]

It makes that day to day so much more powerful. And you and I have talked about, we've had guests talk about being present. We said Dr. Bob Waldinger on last Monday talking about happiness. You know, happiness being in the moment, experiences in the moment. If you can do things that are in the moment, not only is it better planning, it's more fun. It just makes, it makes it a better time. My number five is, is the tax strategy piece. And certainly money nerds og already know Roth conversions and I kind of roll my eyes at that. And you know, mega backdoor, Roth ira. Okay, that's good. Some of that stuff I'll tell you what I really like are some of the little nitty gritty things like when you can look at somebody's situation and change the way dividends get paid around so that it saves them some money on taxes and makes their portfolio hum better. Like often we spend a lot of time talking about the investments and what investments we need. Do we need Chinese Internet stocks, but we don't think about the right place to put those. And when we can make the goals align with the tax strategy and the tax strategies more than oh this year I can put X amount of money in the Roth ira. So let's do it instead. It's this comprehensive how am I putting money in pre tax after tax tax free and how am I taking money out? And there's a plan for both of those things. And I also know that my taxes that I'm giving to my tax person or doing myself this year are not only minimized for this year, but they're also congruent with my long term tech strategy that gets me super excited. Like that gets me. It's just so amazing when I can say no, no, we're going to keep the same investments. We're just going to put these ones in the Roth, we're going to move these ones to the 401k, we're going to move this one to the pre tax IRA and we're going to put these in the non qualified account. And I remember over and over clients would go damn, damn. Wow. Like that was super, super fun. Super fun. So tax strategy is my number five.

[Doc G]

There's a lot of secondary effects, especially as you get into retirement distribution planning that that affects, right Medicare taxes and your social or Medicare premiums and your Social Security taxes and all these other sort of things. You can have the same lifestyle but depending on where the money comes from.

[Joe Salsihai]

It goes back to the Stephen Covey thing, doesn't it? The picking up the end of the stick. We focus on the end of the stick, we're putting money in all the time, but the other end of the stick is taking money out. And if I put it in the right way, then it comes out the right way, you know. Good, good stuff. Number four, we gonna ping pong or do you want the number four?

[Doc G]

Sure, yeah, whatever.

[Joe Salsihai]

Yeah, I'll do this one. This was always fun for me in the financial planning process is, you know, we get together back when I was an advisor a couple times a year and then we'd have a couple phone calls maybe during the year, depending on, on the year and the situation, but at least we would try to meet a couple times and during those meetings challenging people to save money just to say, hey, let's see if we can put 50 bucks more away. See if we can put 100 bucks more away. See if we put 200 bucks more away. Man, it was always so fun to have people take that challenge. They never knew if they could do it. And you know how this ends. OG it always worked like we'd say, hey, you know what, what's cool? They go, well, I don't know if I can do that. Well, guess what? If you Can't. Then we can lower it again. Like, let's just try it for one month and see if it works. Oh, but I can, you know, we can go ahead and lower it if it. Yes. Yeah, let's, let's.

[OG]

Okay.

[Doc G]

Yeah.

[Joe Salsihai]

I'm going to go to work, I'm going to raise my 401k and let's see if it works. Nobody ever called me. Nobody ever called me. Sixteen years as a financial planner, nobody ever called me back. That was awesome. Like, challenging yourself a couple times a year to go bigger and do more was always exciting. That was. That's my number four.

[Doc G]

I like that one. Yeah, that's not on my list, but that's kind of a staple in conversations with clients. It's like, just do that one. Just 1%. Like, who cares? You know, it's super.

[Joe Salsihai]

It's like we were talking about the new law, right? The new secure 2.0 where you start at 3%, then you go up to 4, go up to 5, go up to 6, like that's, that's great.

[Doc G]

Just do it.

[Joe Salsihai]

Good stuff.

[Doc G]

Just try it out.

[Joe Salsihai]

What's your number four?

[Doc G]

Oh, let's see here. Number four. I'm going to go. Just. The sheer act of goal attainment I think is a really fun part of the overall process because a lot of times, especially with intermediate term goals or something, that just seems too over the top. We want to buy a new house or we want to send the kids to college, or you think about retirement, of course, as kind of the big one. But those other ones that happen along the way, whether it's we want to get the house paid down a little bit faster or whatever, and you get to the spot and you say, oh, well, hey, by the way, college is funded now. I go, my kid's only eight. Surely I have to keep investing money for college. It's like, well, no, you don't have to anymore. Because remember a couple years ago when you got that bonus and we talked about it and you said, well, I'm going to put two thirds of it in the college fund so I could be done with that. And the markets responded positively over the last couple years. So now you have enough money, it's like, oh, I don't have to think about that anymore. Nope, nope, you're good. Check the box. Next activity. It's like, I'm trying to pay my house off and it's like, oh, that'll never happen. I can never pay it off. It's 30 year mortgage. It's like, well, let's just do this and then you're refinanced to a 15 year term, you pay a little extra and then you get down to like, oh, all I have is 32,000 left on my principal in my house. And I've got, got 62,000 in my checking account now.

[Joe Salsihai]

So we used to go the other way sometimes, as you know. Oh gee, we would go with pay the minimum on your house, open up a side fund, right? Like an S&P 500 fund and stuff. Money there. And it was cool when we would get to the point when client would come in and I go, hey, there's enough money in this S&P 500 fund for you to pay off your house. Now like whichever way you get there just. I feel like as you were talking, I was just thinking about how every time I go, I go on vacation, I try to close my suitcases, I'm coming home because, you know, you buy some trinkets, went to these Christmas markets and I think about the three sides of the suitcase. Like, I feel so good as I close up one side of my suitcase, I'm shoving my hand out on the others. But the fact that this one is done right when you, when you tell your client, hey, college is funded, kids only 8, I feel like you close that part of the suitcase. I don't worry about it anymore. It's fine. That part's going home. That part of the plan is going home. Now I can shove even harder on the next part of the suitcase to try to get that part squeezed in.

[Doc G]

Try to get the rest of it in there. Yeah, that's good. Goal attainment number four.

[Joe Salsihai]

Number three.

[Doc G]

We'll just go back and forth. So for me, number three is kind of is your number four. I think more along the lines of complex problems. There is some truth to the. And we have to be respectful of this. You and I have talked about this on the show. We're like, hey, didn't we cover this before? Do we have to talk about it? Financial planning is a lot like your daily dose of vitamin C. And preaching the good news of financial planning. And the stuff that we talk about is you don't retain it. It's like vitamin C. You could take all the vitamin C in the universe today and tomorrow you'll just pee it right out. You have to take it again tomorrow. You just have to. Some of the stuff that we talk about a 12 years ago there were 24 year olds today who were 12 that didn't know that Stacking Benchmade existed. So they're just starting their journey and going, I don't know anything about this stuff. Where do I start? The monotony of that we gotta have a lot of respect for. Because for us, it's the 700th time we've talked about, put money in your roth and it's $510 or money, like, whatever, just do it, it'll be fine. And add 1% to your vote. We've said that 7,000 times, but it's the first time some people have heard it. That being said, for me personally, I really like it when it's like this gigantic puzzle of chaos. Whether it's just too much stuff going on, too many goals, not enough money, too much complexity. Whether it's things like, oh, I don't know, I mean, you could have, hey, we're doing this, and we've got this inheritance and we've got this complex tax issue and we're business owners and we have employees and all of this stuff and taking it and turning it into. How do we get each one of these things to work together? Because financial planning is not, like we said at the very beginning, it's not just investment returns. And a lot of people get frustrated with their advisor when all they do is talk about money, talk about investments, because that's one of the areas of financial planning. But when you make decisions in your investment plan, you're making decisions having effects in your tax plan, you're having effects in your estate plan, you're having effects in your cash flow. And if you don't know how all those things work together, I think you're doing yourself a big disservice. So being able to kind of take all those different pieces and have an idea of how each one of them interacts with all the other areas of your financial life, kind of that complexity, I think that's the most fun that I have doing planning now.

[Joe Salsihai]

Yeah, I love making it all dovetail. Seeing all these things which are going all different ways and making it all streamlined. And we know that every. It's almost like, you know, ynab, where every dollar has a purpose right ahead of time. That type of a budget for people don't know. YNAB is a. Is a popular budgeting system where you budget out every dollar before it even enters your wallet. So you know exactly it's got a job before it goes out. It's kind of like that on a macro scale, on a planning scale, that you're doing the same thing. Which is funny because that's very close to my number three, which is in my book Stacked, I begin chapter one with timelining out your goals. And timelining goals was always one of my favorite things to do. And that's my number three for the very much the same reason OG we have all of these different goals and ideas and things that we want to do. And I found that by visually putting them out against each other and making them MMA style, kind of fight it out, right? Which one of these goals is going to survive? Because as I put myself as a stick figure down at one end of the piece of paper and I draw a line that represents the rest of my life and I put all these goals on the timeline, then I naturally go back to today and say, okay, how much do I put toward each of these? And to your point, if there's not enough money for all of them, then I finally have the discussion that matters, which is, what are my values? Do I really value retiring at 55 over putting my kids through college? Do I value college over retiring at 55? Do I value the second home? Do I value the, you know, all these goals? Start fighting it out for your dollar and for your attention. And we often find that we're focused on completely the wrong things. Our money is flowing to the things that we care about the least when we timeline out our goals. And it's funny, I've had some pushback because I really think this is a good book for people in their early 20s. And I had some pushback of, listen, you know, these people are thinking day to day, they're thinking about how do I, how do I make ends meet? I was there. And if I had started earlier on thinking about what are these long term things that I'm trying to reach? If I had focused more on that, my early 20s versus what I did, which was just think about the next paycheck and the next dollar I could spend and how I could screw it up more. Man, I would have been so much further ahead. But so, so much further ahead. Like, if you ever want to get out of that day to day thinking, if you're listening to this and you're in this day to day thinking, start timelining out your goals, timeline out the big stuff. It'll frustrate the crap out of you, by the way, because you're like, I can focus on none of this. I got to focus on how to eat tomorrow. That's fine. But that first extra dollar you finally make, when you make a break, when you get a break, you're going to put it in the Right spot. And that win will then propel you to more wins. So I love this idea of timelining your goals. And the aha's that people got when we would show them where the money was going versus what we valued was a big aha. Super fun.

[Doc G]

Yeah. Add to that the other people that you care about in your life. So if you put your OG's 45 and then you put wife, kids, grandma's grandpas, and you start putting timelines on the different college for the oldest and weddings and you know, that sort of stuff, you go, holy crap. This lines up the same time that all these other things line like, I thought I was 15 years from now going to be buying my vacation house. It's like, well, no, because that's when my daughter's going to college.

[Joe Salsihai]

I got these other priorities.

[Doc G]

Yeah.

[Joe Salsihai]

And for the first time ever, you're thinking about the fact these are happening at the same time.

[Doc G]

Yeah, possibly. Yeah.

[Joe Salsihai]

Yeah.

[Doc G]

I'd like to retire in 15 years.

[Joe Salsihai]

Nope.

[Doc G]

Psych. You'll have a junior in college. Nice try.

[Joe Salsihai]

Well, and that's why between your number three and my number three, that's why I think it's so much more valuable than just writing your goals down. You know, we hear this especially this time of year. Write your goals down. No, man, just timeline them out.

[Doc G]

It helps for sure.

[Joe Salsihai]

Number two. My number two is the other half of what we've been year number five. Also your number three, which is milestones. I love milestones for these big, big, big goals. To your point, when you say if we focus on these things the next six months, what I liked about this, I would have my team put together. Oh, gee. Where my client needed to be by today. And my client would come in and often they'd be, oh, did you see all the nastiness going on in Congress lately? It's all crazy. I don't know what the he they're doing. Oh, the stock market. Oh, the economy. I don't know what's going on with the Fed's gonna all this stuff. And I go, well, hey, okay, all that if you want to. We'll talk about that later. But today, right now, I have my team put this together. When you add up all your money, we need to be at $62,000. Oh, okay. How much is in your 401k? Oh, I didn't look that. Let me look it up on my phone. Oh, look, I'm at whatever. How much is in your Roth ira? Oh, this. Oh, I've got these other numbers and you Put those numbers together and you're like, okay, we're at 61 5. We're 500 behind. 500 buying what? Oh, you know that four and a half million we need to get to? Yeah, we're 500 behind. So we can do one of two things today. We can talk about Congress, the economy, the Fed, Chinese Internet stocks, or we can talk about how we find 500 bucks because that's all we need. We got to keep doing the things we're doing and we got to find 500 bucks. And all of a sudden we switch from all this, excuse my language, we switch from all this bull to the stuff that we can actually control. And the whole milestone thing, twice a year was just a godsend. It was so, so, so fun. And the celebration when we were ahead, when we were ahead, we'd go, okay, do you want to take a break for the next six months? What are you talking about? Well, we're way ahead. Why don't you go ahead and take the trip to Italy? Oh, we could save less. Or we can step on it like you were saying earlier. Junior's eight years old and we already have it locked down. We can lock this thing down early if you want. You can stop saving later, take a break, stop saving later, maybe lower it permanently for the rest of your life. Like, which of these do you want to do? Wow.

[OG]

I, I can choose.

[Joe Salsihai]

Yes. Yeah, we can do any of those things. Super fun. Milestones was my number two.

[Doc G]

Coolio number two for me. Back to the complexity piece. And thinking about how all this stuff works together, it's always super profound how the right answer is often the simplest answer. We were talking about investments earlier. You get the statement from the stockbroker and it's 382 pages for your 7,000 positions that you own that they're day trading to justify their existence. And it's like, well, I mean, basically you just own the S and P, right? You own 500. I get why direct indexing looks cool on paper, but I also can't understand for the life of me why a normal person would do it. I get it. I don't need somebody to sell me on it. But for 99% of the population, buying Spy is exponentially better than buying an equal weighted or a market weighted allocation of all 500 stocks in the S and P. It just doesn't make any sense to me. And the same thing is true with all of these other things. It's like we can make it very complicated to accomplish our goals. We can make it very complicated to invest money. Very complicated from an estate planning standpoint and behind the scenes I think that's okay. Like it's okay if your plan is complex, but the implementation of it needs to be simple. You're talking about breaking it down into like all this stuff that's going on. All I need to do is focus on the next 500 bucks. It's like all of the complexity of a multi generational estate plan. I mean I've got one, it's like a binder that thick. And yes, I've read the whole thing to make sure that it's the way that I want it to be. That's insanely complex. But the implementation on it is we need to sign these forms, we need to open this account and buy this life insurance. That's the simplicity of how do we make all of this stuff happen. You think about how is the complexity of financial independence with multiple income streams and all the taxes and all that sort of stuff. All that boils down to today, back to kind of our six month thing, check ins, milestones, everything that we've talked about is today we're going to put 15% in your 401 in this allocation and you're going to write a check for $6,500 for your Roth. That's the simplicity of your plan. So I think it's perfectly fine to have lots of complexity behind the scenes, but from an implementation standpoint we want it to be very simple. And simple is better than complex.

[Joe Salsihai]

No. I remember the wealthy barber. You know, one of my favorite favorite all time books on finance and talking about how your basics of your plan, which could be, could be complex on the inside. But if you can't write the gist of your plan on a cocktail napkin, you're doing it wrong. It should be cocktail napkin, a bowl. And I totally believe that, that you should be able to explain your plan. If you have an advisor and you can't explain your plan, you've no idea really what you're playing. It ain't your plan, it's their plan. And I think that's important no matter how complex it has to be because of your net worth or whatever the things are. What I also loved about this OG about when you were talking was how important does that make it then? Even if it's not an advisor, if it's just a friend to just share like your goals with somebody else or share like what you're thinking with somebody else. Because how many times have you had all this crap in your head There's a guy that you know in Detroit who was a coach of mine who I went to meet with one time. I'm like, oh, I can't think because I got, like, these 50 things. He goes, let's write them down. I'm like, it's going to take like, six hours. Like, we. How about if I come back next time and I have because. Nope, nope. You're clearly freaked out. We're gonna write them down right now. You know how long it took me to get that crap out of my head?

[OG]

Like, two minutes, right?

[Joe Salsihai]

Like, there were clearly three things that were clogging all Joe's wheels that were so big in my head that once I wrote them down, just telling it to somebody else took this complexity that I thought and made it far simpler. He's like, okay, now that we have these written down, let's just create a plan. Boom, boom, boom. And within, like a week and a half, we had all three of those huge things in my head solved. Which I think is the importance of just running this stuff by somebody else. Because often where we see complexity or we freak out, somebody else who's not there in the trench with us won't freak out in the same way. I think it's time for a number.

[Doc G]

One, I think so.

[Joe Salsihai]

You want to do your number one drumroll?

[Doc G]

Yeah, yeah. No.

[Joe Salsihai]

That'S.

[Doc G]

That's O.G. o.G.

[Joe Salsihai]

I missed the drumroll days. All right, what's the number one? OG oh, wait a minute, Mr. UK Guy. Number one. There we go. Oh, it's my number one, isn't it? I'm sorry.

[Doc G]

Well, I mean, you can go, I can go. I don't care. You want to rock, pipe your scissors for it.

[Joe Salsihai]

I think yours is going to be the better one. I think yours getting a better one. So I think we'll. We'll wait on yours. Mine is just surprising. I don't know that it's big. Aha. But it's going to be surprising people. My favorite thing and the reason I thought of this, my favorite part of this whole thing is risk management. I just love talking about risk management because I think so many people get risk management wrong. They do it wrong. They think about insurance, which is wrong. They think about, you know, they don't want anything to do with it. But when you put together a risk management strategy, you sleep better at night. It's congruent with your investment plan. Meaning you can be more aggressive. Like, because my risk management's in place, I'm more aggressive with my investments, and I don't worry about them as much because I know that if I need money the next six months, I got a place to go for it. Right. So once I put together my risk management strategy that is always so neat, like we can raise our deductibles. I've got money in an emergency fund. Whenever I see people cut corners on these things, it kind of cracks me up. And we've been fighting this fight for almost 12 years now. Oh, gee, why do I need an emergency fund when it doesn't earn anything? You've got the ROI and your emergency fund all wrong. ROI in your emergency fund is fewer dollars that you're paying to premiums. Fewer dollars in conservative positions in your investment strategy, just in case. Right. Less reliance on credit cards in the credit maybe, you know, because as we saw in 2007, 2008, it is a big maybe they'll cut that crap in a hurry. They go, nope, you don't have.

[Doc G]

They've already done it. Yeah, yeah.

[Joe Salsihai]

You don't have this access to credit that you think that you had. So all this reliance on all this other stuff in this. Man putting together a great risk management when I could save people a bunch of money on insurances and at the same time we had better insurance. It just still makes me giggle. Still makes me giggle. My favorite part of this whole thing, risk management.

[Doc G]

Yeah. Nobody makes a really good decision when. When there's a lot of emotional stress going on. We were watching the national championship football game a couple of last week.

[Joe Salsihai]

You mean the national championship blowout?

[Doc G]

Yeah, exactly.

[Joe Salsihai]

The national blowout.

[Doc G]

The Georgia senior night is what they called it. Nick Saban was one of the commentators early in the pre game and he was like, you know, they're like talking to him like, well, how are the players feeling? Are they nervous? Are they excited? Are they emotional? And he's like, listen, if you're too emotional, you make bad decisions. If you're too jacked up, you're making bad decisions. And that's the same thing that happens with your financial plan. If something bad happens. If you haven't game planned that already, you're going to make a bad decision because you're too emotionally charged in the moment. You think about the terrible things that can happen that end up turning into money issues. Somebody gets sick or hurt for a period of time, or you hit by the mail truck or something like that. You hear these things and you go, how did that person make that decision? Well, it was because they hadn't game planned it in advance. Not to mention, you're actually probably saving money by having extra money in cash. Because while you're not getting a return on your cash, you are getting half less car insurance premium because Your deductible is 2,500 instead of 500.

[Joe Salsihai]

Yeah. We get so focused on, I'm only getting 1%. No, you're not. Getting huge numbers all over the place.

[Doc G]

And then Mrs. OG smashes the minivan, and you got to write a $2,500 check, and you're like, why did I pick that? That was ridiculous. What? Did that happen? No, that didn't happen. Of course it did. Recently.

[Joe Salsihai]

Not that you're bitter and we're bringing up on a podcast.

[Doc G]

Not that I'm bringing it up at all. Every week it's a little passive aggressive. We'll see if she listens to this episode. All right. My number one is being the guide. Thinking about financial planning is pretty interesting when you're doing it on your own. You're going, okay, I've got this time, I've got this money. I've got these resources. I want to retire by this date. I want to send my kids to school. I want to do all these things. And you've got your life to live. And I've been lucky enough to have been doing this for now almost 25 years. What's fun is kind of going up and down this path back and forth. It's like we go all the way to the end with somebody, and then I come back to the beginning, and I'm like, okay, cool, check this out. We went a slightly different way this time, but there's some good parts and some not so good parts. So let me go with you this time, and I'll show you where all the good parts work. You know, I'll show you all the pitfalls. Because while you have one retirement journey or one financial independence journey or, you know, you've got the one thing. We've done it hundreds of times, kind of up and down. You know, you're dealing with, how do I pay off my student loans? It's like, oh, yeah, yeah, we know how to do that. Done that before. Been there, done that, got that T shirt. You know, it's like, how do I manage? You know, I got two kids, I need to send them to college. I got da, da, da. It's like, cool. Yep. Know how to do it. Let me show you all the success rates. Let me show you the things that failed. Like, we talk about efficiency and your favorite phrase, broke professors with the mortgage stuff. And it's like, okay, yes, I get it. Mathematically, it makes sense. You should have the biggest ass mortgage you can find and invest the difference. Okay, yes, you should do that mathematically. And then on the other hand, it's like, But I've seen 200 people retire in the last several years and none of them had mortgages.

[Joe Salsihai]

So you get to see some of the evidence.

[Doc G]

Yeah, yeah, maybe we'll do it. The, you know, the success says math says this, but I can observe this, you know, as an example. So that's probably the most fun for me.

[Joe Salsihai]

Seeing the skeletons in the closet was what was the big aha for me? That these mistakes that people think that the smart people aren't making right now, they're making those mistakes too. I mean, the, the smartest among us are making mistakes. And that actually gave me more confidence as an investor. I kind of wish, which is why I kind of wish we were more open. It's also why I wanted to go into podcasting, was to be able to talk about this, that you know what, the smartest among us, the richest among us, have made some monster mistakes. The difference is really, it's almost like customer service. You know, they say good customer service is one thing, but service recovery as a statistic, far more valuable. Like if you can recover from making a mistake, which we all make, that level of customer service is even more valuable than getting it right the first time. Like it is just statistically, that's when you win people for life is you mess it up. That's what I think the best among us do is they make these mistakes and they learn from it and they respond in a stronger way. They don't give up.

[OG]

They keep going.

[Joe Salsihai]

Yeah, that's awesome. I think you got the assignment right, man.

[Doc G]

Okay. All right.

[Joe Salsihai]

That was great. We're going to list these on our show notes page. Of course, as I mentioned earlier in the 201, we will dive even further into these. Kevin's got his work cut out today with a bunch of links going a.

[Doc G]

Lot of yappy, yappy today. Yeah, sorry about that.

[Joe Salsihai]

Kevin, going even further into the stacky Benjamins.com for the show notes. You'll find those right on the front page. When you can just scroll down to the bottom of the front page with our show notes and then the 201stacking benjamins.com 201. On that note, OG speaking of risk management, we talked last Thursday on Fireside to Eric Sorenson about getting your homeowners and car insurance better. Some people brought their homeowners a car insurance to that and were able to save some money. We're going to play clips from that in an upcoming headline. Oh, gee. To bring people some of that. More firesides to come. We'd like it when you're able to ask questions. Ask your own questions of our guest as well. All right, that's going to do it, I think. Doug, Doug, it's your turn, man. I don't even know what to say. Doug, what should we have learned today?

[Doug]

So what should we have learned today? First, take some advice from our top five list. Think your financial plan is all about investing. Invest, invest, invest. You may not be thinking wide enough about your financial house. Second, Chinese tech stocks, maybe. But begin with your investment policy statement and work backwards. What stocks do you need to reach your goal? That's where you begin. But the big lesson. Never install a tiny window in a basement. These things dig into your ribs. Oh God, that's my pocket knife, man. This show is the property of SP Podcasts, LLC, Copyright 2023 and is created by Joe Salsihai. Our producer is Karen Repine. The show is written by the brilliant Paulette, perhaps with help from me, Joe and Doc G from the Earn and Invest podcast. Take a deeper dive into all the topics we cover on each episode by checking out our newsletter, the 201. You'll find the 411 on all things money at the 201. Just go to stackingbenjamins.com 201. Tina Eichenberg makes the video version of this show. And once we bottle up all this goodness, we ship it to our engineer, the amazing Steve Stewart. Steve helps the rest of our team sound nearly as good as I do right now. Want to chat with friends about the show later? Mom's friend Gertrude is our social media coordinator and the room mother in our Facebook group called the Basement. So say hello when you see us posting online. To join all the Basement fun with other stackers, type stackingbenjamins.com basement I'm Joe's mom's neighbor, Doug, and we'll see you next time back here at the Stacking Benjamin show. Not only should you not take advice from these nerds, don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor.