In this episode, Joe and Lindsay delve into a pressing question that many investors have: "My portfolio is down $100,000 - will it recover?"

Drawing from a client's concern, we navigate the emotional and practical aspects of dealing with portfolio losses. We emphasize the importance of understanding market volatility and highlight the need for a well-diversified investment strategy. Joe introduces the concept of "buckets," which separate assets into defense (stable and low-risk) and offense (growth-oriented) categories, enabling investors to weather market fluctuations while still ensuring a sustainable income stream.

We want to provide valuable insights on maintaining a long-term perspective, controlling what you can, and finding peace of mind amidst market ups and downs.

In this episode, Joe and Lindsay delve into a pressing question that many investors have: "My portfolio is down $100,000 - will it recover?"

Drawing from a client's concern, we navigate the emotional and practical aspects of dealing with portfolio losses. We emphasize the importance of understanding market volatility and highlight the need for a well-diversified investment strategy. Joe introduces the concept of "buckets," which separate assets into defense (stable and low-risk) and offense (growth-oriented) categories, enabling investors to weather market fluctuations while still ensuring a sustainable income stream.

We want to provide valuable insights on maintaining a long-term perspective, controlling what you can, and finding peace of mind amidst market ups and downs.

What You’ll Learn in Today’s Episode:

·       We address a client's recent concern about a perceived significant loss in their portfolio and explore the question of what to do when your portfolio fluctuates.

·       Joe and Lindsay emphasize that market fluctuations are normal and should be expected and that volatility is necessary for long-term portfolio growth.

·       Joe introduces the concept of "buckets, where a portion of a portfolio is allocated to safer, low-risk investments for short-term spending (defense bucket) while the rest is invested in higher-risk assets for long-term growth (offense bucket).

·       The importance of having a perspective shift when reviewing portfolio results. Instead of being emotionally reactive to market ups and downs, we advise focusing on what can be controlled, following evidence-based investing principles, and believing in the power of markets over the long term.

·       We want you to know about the importance of having a plan, regularly reviewing, and updating it with the help of a financial advisor, and measuring success based on long-term goals and financial objectives rather than short-term market fluctuations.

Ideas Worth Sharing:

·       "The first thing is to remember that whether you're down $20,000 or you're down $200,000, if your portfolio has come down 10%, it's 10% in either case."

·       “Markets will work if we give them enough time.”

·       “Look at investment returns more in terms of decades, rather than in terms of months or years.”

·       "It is important to have a plan, it is important to kind of track. Are you on track, right? Are you headed in the right direction? And an advisor is a great resource to be able to help you understand that in kind of a third-party manner."

·       "Make sure you have a plan you're invested in properly from the start and then continue to manage and update that plan. We should look at our investment returns more in terms of decades, I would say, rather than in terms of months or years."

Resources in Today’s Episode:

Joe Curry

Lindsay Wilson

Retirement Planning Simplified – Retirement Navigator

Retirement Planning Simplified Youtube

Dave Goetsch

Retirement Planning Simplified - Top 5 Retirement Risks

Ep# 15 – Retirement Income Bucket Strategies

Ep # 33 – Pursuing a Better Investment Experience

How to Master Investing Principles for a More Confident Retirement

Today, we're diving into a topic that could change your perspective on retirement investments – how to educate yourself on investing principles and expectations for a pleasant investing experience.

As retirement nears, the financial landscape can seem increasingly complex and unpredictable. It's a critical point in life wherein making informed decisions becomes vital. That's where a solid understanding of investing principles and expectations comes into play. It's not about predicting the ebb and flow of the market, but about building a robust investment strategy that can weather market fluctuations. This knowledge will not only guide you towards a more positive investing experience but also equip you with the confidence to navigate the financial seas of retirement.

Here are the key steps:

·        Understand Market Fluctuations: Recognize that markets naturally fluctuate, but over time, they generally tend to recover.

·        Implement a Balanced Portfolio: Diversify your portfolio with a mix of growth and safer, low-risk investments.

·        Adopt the Defense and Offense Bucket Strategy: Separate your assets into two categories - immediate income needs (defense) and long-term growth potential (offense).

·        Develop an Evidence-Based Investment Philosophy: Pay attention to what you can control such as your saving and spending habits, rather than trying to predict market movements.

·        Stay Focused on Long-Term Goals: Concentrate on your long-term financial objectives and avoid getting swayed by short-term market performance.

1. Understand Market Fluctuations: Recognize that markets naturally fluctuate, but over time, they generally tend to recover.
Market fluctuations are as much a part of investing as the sunrise is a part of a new day. While they can cause unease, it's crucial to understand that these ebbs and flows are natural and, over time, markets have a general tendency to recover. This is particularly relevant when it comes to retirement planning. A healthy outlook towards market volatility is not just about withstanding the storm but leveraging it to your benefit. One way to do this is by employing a strategic mix of growth and safe assets, creating a balanced portfolio that can weather market ups and downs.

To maximize portfolio potential while minimizing risk, it's recommendable to diversify holdings. We emphasize the effectiveness of a diversified investment strategy. There are the 'defense bucket', essentially low-risk investments that promise steady returns, as well as an 'offense bucket' comprising more volatile yet potentially high-reward investments. This principle of 'bucketing' simplifies asset allocation by categorizing investments based on their purpose and risk level.

Understanding market fluctuations and staying the course despite them is a compelling step towards a more positive investing experience. This understanding generates confidence in your investment choices and helps you to better navigate periods of economic instability. Remember, investment is a marathon, not a sprint. Every investment journey experiences its share of peaks and valleys, but what truly matters is your long-term progress. Additionally, maintaining our calm during market turbulence allows us to stay true to our investment plan and prevents us from making impulsive decisions that could jeopardize long-term financial goals. Overall, recognizing and accepting the inherent volatility of markets allows us to invest wisely, while maintaining a balanced emotional state. In essence, the market is a machine, and understanding its functioning helps you drive it better towards your financial objectives.

2. Implement a Balanced Portfolio: Diversify your portfolio with a mix of growth and safer, low-risk investments
Learning to navigate the financial market and understand the principles of investing is like mastering a new language. It has its alphabet, grammar, and even idioms or phrases that seem to only make sense to those well-versed in it. Becoming conversant in this language, however, can open up a whole new world of opportunities, and like learning a foreign language, the process requires time, dedication, and patience. It involves understanding the fundamental concepts, the subtle nuances, and the dramatic shifts that can occur in the landscape. Perhaps most importantly, it means accepting that there will always be more to learn and discover.

Often, beginner investors are intimidated by the seemingly complex world of finance and may have misconceptions about investing. This perspective, while understandable, can lead to a distorted view of the portfolio's overall growth and performance. Instead, they recommend an approach that encompasses a broader time frame, looking at the portfolio's progress over decades rather than at specific high and low points. Understanding the larger picture and developing realistic expectations can result in a more positive investing experience. The intricacies of investing and the frequent market fluctuations can be intimidating, yet, it becomes less daunting when approached with a sound plan and a long-term perspective. Having a diversified portfolio, and the ability to discern between defense and offense investment buckets equips an investor to weather market volatility with grace.

Mastering this new language of investing principles not only allows for a gradual building of wealth but also enables the investor to face any financial ebbs and flows with resilience. With a steady, educated approach toward investing, you can navigate market fluctuations with ease, ensuring a secure financial future while also leaving room for potential growth. Today, investing is no longer a luxury or an optional endeavor; it's a necessity for anyone seeking financial security and independence. Having a foundational understanding of investing principles is the first step in these pursuits.

3. Implement a Balanced Portfolio: Diversify your portfolio with a mix of growth and safer, low-risk investments.
Exploring the realm of retirement investments can be both exciting and daunting, as it is a journey of strategic planning and consistent actions. One essential step forward is the implementation of a balanced portfolio. Diversifying your investment portfolio with a mix of growth and safe, low-risk options opens opportunities to generate income while providing a safety net for unpredictable market circumstances. Whereas growth investments, although more volatile, have the potential to grow your wealth over time, safer, low-risk assets promise stability amidst market fluctuations. This dual approach forms a relatable framework for maneuvering the economic waves without jeopardizing your lifestyle during retirement.

With the economic fluctuations, we look at the experience of Dave Goetsch (producer of The Big Bang Theory), who familiarized himself with the dynamics of market operations, directing focus on the controllable aspects like saving and spending habits. The influence of this decision on his mental health further underscored his faith in the market's rebound capabilities. This illustration resonates with the principle of investment diversification by shielding immediate income needs from market volatility using low-risk investments, while allotting room for potential growth through riskier assets. This perspective creates an appealing narrative as it mentally allocates the immediate and long-term needs into separate compartments. Understanding and implementing a balanced portfolio becomes a crucial lever in retirement investments. This flexible framework permits you to independently manage the progression of immediate spending needs and long-term wealth growth.

By assigning safer investments to short-term spending needs, you are cushioning your lifestyle from immediate market shocks, providing peace of mind. Conversely, allotting risky assets to prospective financial needs ensures the advancement of your wealth. This strategy empowers you to shift focus from short-term market performance to long-term financial goals. In running the retirement investment marathon, remember the importance of keeping an eye on the end goal rather than getting winded by the intermittent hills and slopes. Ultimately, it is about creating a secure economic environment that enables you to devote time and resources to the things and people you cherish the most. Both the host and the audience reaffirm that despite the fluctuations in the depicted portfolio’s value, it is significantly better off than if the investment was in low-risk options such as term deposits or savings. This conversation clearly stresses the indispensability of fortifying your financial future through a diversified portfolio.

4. Stay Focused on Long-Term Goals: Concentrate on your long-term financial objectives and avoid getting swayed by short-term market performance.

Their clarion call is for individuals to appreciate the capacity of markets to recover, underscored by their defense and offense buckets principle; designating immediate income needs to stable assets (defense bucket) and potential growth investments to volatile ones (offense bucket). The long-term view, coupled with a diversified plan, has the potential to shape a secure retirement, even during unprecedented market downturns like the current pandemic. In these financial advisors stress the importance of a flexible, balanced plan tailored to fit individual retirement needs and risk capacities. They echo that while there might be a decrease in the portfolio's value, the ultimate focus should be on cumulative growth.

5. Stay Focused on Long-Term Goals: Concentrate on your long-term financial objectives and avoid getting swayed by short-term market performance.

The journey towards a fulfilling retirement requires financial wisdom and savvy investment strategies. In today's volatile and often unpredictable financial landscape, understanding investing principles is a must. Remember, the markets will fluctuate, but maintaining a balanced portfolio, adopting the bucket strategy, focusing on what you can control, and keeping your eyes on your long-term goals are all part of a successful investment strategy. The more you understand these principles, the more confident you'll become in your investment decisions, ensuring a more positive investing experience. Retirement should be a time of peace and enjoyment. Make it so by building a solid financial foundation today.