Having an investment strategy is a critical component to your long-term investment plan. This week, The Invested Dads walk through the three important factors to an investment strategy, which are time, tolerance, and goals. They then talk about what is going into these accounts, how much work is involved, and even give some tips if you are uncomfortable managing this on your own. And do not worry, they didn’t forget the dad joke of the week. Listen to this episode now!
Main Talking Points
[2:03] – What is an Investment Strategy?
[3:26] – Why Does Time Matter in an Investment Strategy?
[4:52] – Tolerance in an Investment Strategy
[8:47] – Goals & Future Needs for an Investment Strategy
[10:26] – All Three Together: An Investment Plan
[11:53] – What Do You Need & How Much Work Do You Want?
[18:05] – A Less Involved Approach
[19:02] – Dad Joke of the Week
[21:51] – Revisiting Your Strategy
[24:34] – It’s Not So Simple – Find Someone to Help
Links & Resources
Invest With Us – The Invested Dads
Free Guide: 8 Timeless Principles of Investing
Social Media
Full Transcript
Intro:
Welcome to The Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments, here are your hosts, Josh Robb and Austin Wilson.
Austin Wilson:
All right. Hey, hey, hey. Welcome back to the Invested Dads Podcast. The podcast where we take you on a journey to better your financial future. Today, we are asking the question, why do you need an investment strategy? So Josh, why?
Josh Robb:
Yeah, so, you know, as a financial advisor, we spend a lot of time helping clients build a financial plan. And so this is something that encompasses their whole financial life. So financial planning includes all different aspects, tax planning, estate planning, insurance planning, investment planning. And that’s the piece we’re talking about right now. The investment strategy is one of the pieces that comprises the overall picture. But it is important because again, when we’re spending a lot of time talking about investments, we just kind of went through recently all different types of investments. So we’ve spent a lot of times talking about that, but where does that fit in the overall picture? So that’s what this investment strategy is right now. Now I need to pause real quick though and give this disclaimer.
Austin Wilson:
Time out.
Josh Robb:
Yep. We’re using the word investment strategy. We’re using planning. We’re using some words in here that especially for my wife, can be trigger words, all right? And so what I’m talking about is when she hears the word plan or planning, she immediately goes to budgeting and she immediately starts to run away. And so I want to tell you guys upfront, we’re not talking budgeting today.
Austin Wilson:
That might be another day.
Josh Robb:
That’s coming unfortunately, but you’re safe to keep listening. We’re talking strategy and planning of your investments.
[2:03] – What is an Investment Strategy?
Austin Wilson:
So I’m going to take a deep breath. I’m going to relax. I’m going to stop sweating because budgeting is one of those things that if you don’t enjoy it, can kind of make your skin cringe. I don’t know. So what do you mean when we’re talking about an investment plan or strategy?
Josh Robb:
Yeah. So investment strategy or investment plan are really the rules or the framework that you put in place for your investments that really dictate what they’re there for and how you operate. And so, first of all, a good investment strategy’s goal is to maximize your returns while minimizing the risk. And that could mean a lot of different things, but that’s really the goal is, I want to get as much out of it as I can while only getting as little risk as possible. So you really have kind of three pieces to this. From a high level standpoint you say, Okay, what’s the timeframe? You’re asking yourself these three questions. What’s the timeframe? How much tolerance do I have for that volatility, the up and down? And then what are the goals or the future needs from this investment piece that I’m talking about?
Austin Wilson:
I was trying to come up with a handy dandy, little thing to remember, like the three Ts of your financial strategy, but I not come up with a T for the number-
Josh Robb:
Time.
Austin Wilson:
You got time and tolerance. What’s the T for the goals of future needs of the asset?
Josh Robb:
That a good question. The trophy. I don’t know.
Austin Wilson:
The end goal maybe. So if you think of what the T for the goals or future needs of your financial plan should be, email that to us at hello@theinvesteddads.com.
Josh Robb:
We would love that.
Austin Wilson:
We would love to include you in our revised show notes.
Josh Robb:
Yeah, the T, the third T.
[3:26] – Why Does Time Matter in an Investment Strategy?
Austin Wilson:
So, let’s break down those questions one at a time, Josh. So first, T, is time. Why does time and timeframe matter in your investment strategy?
Josh Robb:
Yeah. Because we talked about find a good investment, and you want to hold it long term. So what does the time matter-
Austin Wilson:
It’s forever, right?
Josh Robb:
In a company? Right. Just hold on to it.
Austin Wilson:
Yeah.
Josh Robb:
But time is important because you’ll see that all three of these questions, actually, they overlap each other. So you can’t ask one without the other two coming into play. But time is important. Because if I have, let’s say it’s January of 2020 and I think, you know what? I want to buy a house and I have some money to put aside for a down payment, January of 2020. And I’m like, you know what? If I could get a little more, I might be able to buy a bigger house or have less of a mortgage. I’m going to throw it into the stock market for three months until I’m ready to buy this house. Well, January of 2020, by March 31st, the stock market’s down what? About 30%, and 30% of my down payment’s gone.
Austin Wilson:
Yeah, you’re not buying a house.
Josh Robb:
My timeframe-
Austin Wilson:
Or you are putting a lot less down.
Josh Robb:
I may have had the ability to tolerate the volatility-
Austin Wilson:
But your timeframe did not match.
Josh Robb:
My timeframe did not match that plan. So timeframe is important, because that will help dictate what investments should be in that account for that goal. And so timeframe is important. The longer timeframe you have, the more volatile assets you can use. Because in investing, the longer you have, the short term volatilities are muted, and the longer term return overrides that short term volatility.
[4:52] – Tolerance in an Investment Strategy
Austin Wilson:
So, that goes right along with question number two, which is tolerance. Which is really talking about risk. But you hinted at it when you were talking about volatility. And volatility is really a measure of ups and downs, a measure of risk. So that’s the second question. How much volatility can you handle? What’s your tolerance? It’s not necessarily a bad thing in general when you think about investing. Volatility is perfectly normal historically. And even like, we really haven’t experienced a ton of it in the past decade until this year. And boy, did we get it real quick. So volatility perfectly normal. But like Josh said, it kind of ties in with timeframe and time can help mute some of that volatility. So, understanding how you react to those market swings will really go a long way in helping your overall performance. JP Morgan put out some research that showed the difference between an average investor and then the overall market over the last 20 years. So from 1999 through 2019-
Josh Robb:
Pause. Just stop and think. That’s 20 years backwards.
Austin Wilson:
20 years.
Josh Robb:
And we’re almost in the 2000 like-
Austin Wilson:
In the 20s.
Josh Robb:
Yeah. So if you ask a 20-year-old, when were you born? 1999.
Austin Wilson:
I know.
Josh Robb:
Oh geez.
Austin Wilson:
I know. I’m like, if you can’t remember your millennium party, like 2000, then you probably are a child, you actually Tik Tok, yes. And I don’t even know what Tik Tok… I don’t have Tik Tok.
Josh Robb:
When you ring a doorbell, that’s what it is.
Austin Wilson:
Tik Tok, that’s what the clock sounds. So anyway, 1999, 2019, 20 years. The S&P, so the S&P 500, 500 largest publicly traded companies in the United States, generally speaking, 6.1% return each year.
Josh Robb:
Yeah. Average.
Austin Wilson:
Per year, average, over that timeframe. So a portfolio with 60% equities or 40% bonds had a return of 5.6%. And a portfolio with 40% equities and 60% bonds had a 5.4% return. So that’s really, really, really close actually. Which really helped by 2008 and 2009.
Josh Robb:
Yes. But in general too, you will see that in the long run, those are pretty close together. I mean, there is just about a 20% difference in those asset allocations. You are going to see them pretty close in the long run. And it’s really the worst is, ’08, ’09, those types of years, which of those two make the most sense to you? Would you rather be down less in those years and not so far up in like a 2013 or 2019 when the market’s up 30%? But in general, those were both pretty close to the S&P 500, about a half percent or more under performance, but that’s to be expected because you’re not all in the stock market.
Austin Wilson:
Exactly. So for reference, inflation during that period was around 2.2%.
Josh Robb:
So both of those earned money above inflation.
Austin Wilson:
Above inflation-
Josh Robb:
They grew…
Austin Wilson:
… by over 3%.
Josh Robb:
Yep.
Austin Wilson:
So that’s good. So, based on investment behaviors, the average investor over that same period only had a 1.9% per year return. That is not even keeping up with inflation. Which is bonkers. But that’s why creating and sticking to a strategy really has a big impact to your success, because it takes away some of the emotion.
Josh Robb:
And that’s that JP Morgan research was, they looked and said, okay, what is this based off of? And their whole research was off of the actual trading that happened in inflows and outflows of funds and transactions. And it was chasing performance and selling at the worst times. And it was all emotional based. And you’re right, that’s why having a plan matters. And that’s why your asset allocation or your investment strategy matters.
Austin Wilson:
It matters.
Josh Robb:
Because if I can’t handle those swings in ’08, ’09, and I make that decision to sell, I’m eliminating any chance of recovering when I get out of the market. And so-
Austin Wilson:
Or for this year, to bring it a little bit closer to home. Because the stock market dip wasn’t as far, but it was a lot faster. And I’m sure that there were a lot of people who did not have plans that sold at the bottom, and really toasted themselves. Because it’s come back really strong. And historically speaking, the stock market will come back.
[8:47] – Goals & Future Needs for an Investment Strategy
Josh Robb:
Yes. And that’s what brings us to that third question of, we need to find the T for that, but your goals, right?
Austin Wilson:
Exactly, what’s the T, remember.
Josh Robb:
What’s your goal or future needs, all right? And so again, if I’m looking at that, and we’ll use kind of that JP Morgan survey. If 20 years ago, I’m putting this money for retirement and I’m a 30-year-old, but I’m not going to need it until I’m 60 if I stayed invested I would get closer to that 6% return. But these people, when you look at the real results, for getting 1.9. Because they forgot what the goal was. They reacted emotionally to what was going on in the short term and didn’t say, okay, I need the growth stocks. I need those growth to get to where my goal is long-term. And so goal is very important because you need to know why you’re doing it. The why is very important. Why am I risking this money in the stock market for this short-term volatility? The answer is that long-term goal of growth.
And we know again, when you look back, the chance of having a successful positive return in the stock market for a 10 year time period is in the 90s, 90% plus. And if you’ve invested for 17 years, you’ve never historically lost money in the stock market if you have over 17 years of time. And that’s why these all go together, can I tolerate the whole stock market? Do I have enough time and do my goals need that kind of exposure? Now what’s interesting is if you have that balanced portfolio, whether it’s the 60/40, or 40/60, even a 10-year time period, you’ve never lost money with that combination.
Austin Wilson:
Because their downside is a lot lower.
Josh Robb:
Yep. You have less upside, but your downside risk is reduced. And so that’s why you take all three of those questions together. What’s my time, what’s my tolerance, and what’s my trophy? I’m heading for… I’m sticking with that until I hear it better.
Austin Wilson:
So, I think it’s okay.
Josh Robb:
I’m sure somebody-
[10:26] – All Three Together: An Investment Plan
Austin Wilson:
But if you think of something better, let us know. So, when you put these three questions together, you’re going to start to narrow your investment choices. So what’s left is what you’re going to be using to build your strategy from. And this is a side note, but you an have more than one strategy and more than one account to use for different types of things. So one account could be something similar that Josh was talking about. If you’re saving a down payment of a house or whatever, put your $100,000 of cash into an investment account in something low risk, with a little bit of upside, maybe some yield or whatever, to help it grow just a little bit. But you can’t, hopefully, lose too much money on it. So the risk is really low. But then you’re long-term thinking, so your 401k in your twenties or thirties, whatever you have that really growth oriented. Because you don’t need it. You don’t care if… If it goes down, you’re putting more money in and buying-
Josh Robb:
As long as you can tolerate it.
Austin Wilson:
As long as you can tolerate it keep your different… keep your hat on where they’re all going there, but all different… They can be different purposes for different accounts and different uses.
Josh Robb:
I’d rather have somebody in a 40/60 allocation, 40% stocks, 60% bonds, and stay there the whole time, which is what we sell at JP Morgan, than somebody who tries to get in and get out with emotion. You’re going to get even a better return, even though you’re not taking the full volatile risk as all stocks.
[11:53] – What Do You Need & How Much Work Do You Want?
Austin Wilson:
So I also think this is probably a good opportunity to talk about what is going into these accounts. And that is what I’m trying to bring to the table here, as opposed to Josh who understands a little bit more of the intricacies of the actual putting the plan together. So there are some things you must consider some buckets. One of those is what buckets are you looking for investments for? And then how much work do you want to do to manage or research it? And then what investment vehicles may fit the product of those two factors combined together. So, number one, what buckets are you looking for investments for? So in my mind, there are really like three to four categories that you need to think about are the ways you can look at things.
Number one is a growth piece and a growth piece is typically, we’re going to think of that typically as equities. Number two is an income piece, which can be either equities with a nice dividend yield or fixed income. Number three is a protection piece. And that protection piece is generally fixed income. Sometimes people get into precious metals and stuff like that. Also number four, which you could kind of lump in with number three, is what I’m going to call dry powder. And that is cash or cash alternatives that when the market dips you can deploy quickly, or you can just have it there as needed for whatever you… If you need to buy something, that’s great. If you need to withdraw something, that’s great, or you can invest it if you’ve had an opportunity.
Josh Robb:
Yep. And those are all great high… looks at strategies. And what’s cool is, you can combine and mix those. Like we said-
Austin Wilson:
Exactly.
Josh Robb:
… you don’t have just one investment strategy for your whole life. You may have pieces that are falling in different strategies for different purposes and goals. And so you may say, okay, like we talked about, this 401k is growth oriented, this one’s… Or you may combine and say, you know what, I want some growth in income. So I’m going to look for some growing stocks, but also have some dividend yields or something. And so I’m combining these two together. Or I’ll have the dry powder mixed in with my growth so when I can even deploy more into there and I’m going to just choose what percentages or how much goes into each.
Austin Wilson:
Exactly.
Josh Robb:
That’s great.
Austin Wilson:
Second question. How much work do you want to do to manage and research this stuff on your own? So myself, this is what I do for a living. So a lot of people that is what… professionals do this. This is what they’re in all the time. They’re watching the news and the economic reports and the earnings reports, and they understand what’s going on. A lot of other people have different day jobs in different industries, and that is often not something they have a lot of time for. So there’s kind of two different sides there. So number one, do you enjoy researching, balancing portfolios, allocating, your assets within those portfolios to meet your goals for your investments? If you do, great, if you don’t, there are options. Number two, do you want a choose it and forget it type of investment strategy? Or do you want to build one from the ground up? Because there are options for both as well.
Josh Robb:
Yeah. Choosing your own individual stocks as opposed to buying an ETF or mutual funds.
Austin Wilson:
Correct.
Josh Robb:
Which we’ve talked about in past episodes where they do that for you. And so, yeah, you’re right. And on top of all that too is, I may love the research, but when you go back to the higher level, what bucket should it be in? And there’s that, so the other piece is, where does it go?
Austin Wilson:
Exactly. Yeah. So the third is combining those two factors. So you’ve got, what buckets do you have and need to fill? Growth, income protection, yada, yada, yada. And what amount of work can you tolerate or prefer to do for this? Because if you’ve got unlimited time and a lot of risk tolerance, you can do anything you want, but not everyone has that luxury. So combine those two together. What do you need product wise? Like, securities and assets. And then how much work are you willing to do? So, number one, if you are excited, passionate, and have time, yeah. Actively manage a portfolio or multiple. You can mix individual stocks, bonds, individual bonds, ETFs, mutual funds, whatever you want to do, you name it-
Josh Robb:
Bitcoin.
Austin Wilson:
And you can put it together.
Josh Robb:
Whatever.
Austin Wilson:
Yeah. You can put it together to meet your goals. That takes a lot of time, it takes a lot of work and it takes a lot of discipline, which is what we just talked about. The average investor does not have that discipline on their own.
Josh Robb:
Yes. Because really the way investing works is, it works counter to your normal reaction to life. As when you see money leaving your reaction is to stop that, right. And so I want to do something, I want to be active. Sometimes the best decision you can make is to do nothing that that’s a good decision to make. But it’s hard to do that because you want to be at least doing something. I don’t want to watch it just go to zero. And so I want to do something, even if that means locking in a loss at least I did something. And that’s the normal response. And that’s when a good advisor comes in is just to help talk you through it and remind you of why you originally set up that strategy. This is what we were aware of, this is what we knew could happen. And we know that even if it does happen in the long run, this is the end result we’re trying for.
Austin Wilson:
Exactly.
Josh Robb:
It gives us the best chance of getting there.
Austin Wilson:
Yeah, there’s really three different ways that this can go. Number one, you can time everything perfectly and do everything correctly all the time.
Josh Robb:
Yep. That’s what you do.
Austin Wilson:
That’s what I do all the time. Okay. So that’s, that’s option A.
Josh Robb:
That’s a joke by the way, it’s not perfect.
Austin Wilson:
Option B is, you can sell at the bottom and buy at the top. Which is the opposite of what you should do, but actually what most investors on their own without a plan would do. Option C, moderation-
Josh Robb:
It’s both.
Austin Wilson:
I love that. Because if you put a plan together, you don’t worry about timing the tops and the bottoms. Because you can’t do it anyway. I can’t do it. No professional can do it. You also don’t time the bottom the wrong way.
Josh Robb:
And you don’t need to. You remove that need to be perfect.
Austin Wilson:
Exactly.
Josh Robb:
Remove the stress-
Austin Wilson:
That’s a lot of pressure.
Josh Robb:
… level of saying, I have to get this right in order for it to succeed. Find a plan that gives you the highest chance of success and use. And another piece of the buckets that we were talking about, or the different strategies, tax planning comes into that as well. And this is again why, it’s a bigger picture than what we’re talking about today. A lot of these overlap. But, which account should have what strategies? If I’m going to have a lot of income coming in, some accounts are better than others based on taxes. And we’ve talked about taxes in the past. But these strategies, you need to think through all the different implications before applying it, saying, okay, if I do individual stocks in this strategy and I’m going to be trading, what will my tax tax impact be? If I’m doing a buy and hold strategy, which one makes the most sense to put that I? Those types of things?
[18:05] – A Less Involved Approach
Austin Wilson:
So the second piece of the vehicles that may fit the overall goal that you’re working towards, the second piece of that, is if you would rather take a less involved approach. So obviously number one, you can hire someone to do it for you. And we’ll talk about that in a little bit. Number two, you can utilize ETFs or mutual funds. And Josh mentioned, we just had an episode recently where we kind of compare the two. But you can tailor your approach to exactly what you’re looking for and balance those things. I’m thinking of things like target date funds for mutual funds and stuff like that, which automatically, adjust your asset allocation over time and keep things really simple, but also keep you on a plan.
Josh Robb:
Yep. And if you don’t like target date, they have asset allocation funds to where it says growth, growth and income, moderate growth, balance conservative. And you can say, okay, that’s kind of where my strategy needs to be. Someone’s already put a grouping of basket of fun stuff together for me, I’ll just buy that instead of trying to buy one of everything.
[19:02] – Dad Joke of the Week
Austin Wilson:
And, Josh, I’m going to give you the dad joke of the week.
Josh Robb:
Dad joke of the week.
Austin Wilson:
So, I don’t know if you’re ready for this. Because I-
Josh Robb:
I will not drink, so I don’t spit it anywhere. I’m ready.
Austin Wilson:
I know. You got that Chick-fil-A cup, it really makes we want Chick-fil-A and excited about my…
Josh Robb:
Half lemonade, half iced tea.
Austin Wilson:
… chicken tonight. I’m glad that I have Chick-fil-A sauce to-
Josh Robb:
Don’t get me started.
Austin Wilson:
… to dip my chicken in.
Josh Robb:
Somebody threw away all my Chick-fil-A sauce.
Austin Wilson:
I know, that’s just a crime. All right, Josh, why did the coffee call the police?
Josh Robb:
Why did the coffee call the police?
Austin Wilson:
Because it got mugged.
Josh Robb:
Mugged.
Austin Wilson:
That’s funny, because Josh doesn’t drink coffee.
Josh Robb:
I don’t. But I have a mug.
Austin Wilson:
But he has a mug.
Josh Robb:
And actually, I just got a new mug. My wife bought me a mug, it was on clearance. And it’s a sloth mug.
Austin Wilson:
You have to drink it real slow?
Josh Robb:
It says, live slowly on the back, so, that’s my life.
Austin Wilson:
So, yeah, Josh drinks chai tea and it smells so good.
Josh Robb:
Oh, it’s so good.
Austin Wilson:
Everyday. So speaking of mugs. My wife and I, when we got married almost five years ago, we got nice dishes and stuff, and they all matched. And so our plates, our little plates, our bowls, our mugs, they all are red. And I love these dishes. But, first of all, we’ve moved since then and our kitchen no longer is red, but we still have red plates, and they’re great, they’re fine. We’ll use them until they all break. But the mugs are dropping like flies.
Josh Robb:
Oh yeah, mm-hmm.
Austin Wilson:
And I picked up… I poured a cup of coffee the other day. And it was early, so maybe I messed up. But you know, 6:00 in the morning, but I poured a cup of coffee, and I went and picked up my mug and I hear this… it just cracked. And I went, “Oh no.” And I did not spill a drop, but I poured that cup… I still was able to hold it… I poured that cup into another cup and set the cup down. And then I took the mug over to the trash can because I was like, “This feels like it’s going to break.” And in my hand, the handle just mostly broke off.
Josh Robb:
That’s crazy.
Austin Wilson:
It’s insane. And then, so our house is really old. And so our kid… I don’t know if this has to do with the age of the house but, our kitchen cabinets for the mugs specifically is on the outside wall. So think in Ohio winters, you have a negative 10 degree day, it’s really cold. So that outside wall is naturally colder than the rest of the house. You pick up a mug and you go to make yourself-
Josh Robb:
Hot coffee.
Austin Wilson:
… a cup of hot coffee or hot tea, and you pour hot liquid in there and it breaks.
Josh Robb:
It breaks, it cracks.
Austin Wilson:
All over the counter. So we’ve broke so many mugs, and we’re actually kind of liking our eclectic mug collection is building up.
Josh Robb:
I think that’s more fun than having just all the same mugs.
Austin Wilson:
I know. I’m way more exciting than just a normal mug.
Josh Robb:
You need donut mugs.
Austin Wilson:
I know. He has a donut mug which has a hole in the middle.
Josh Robb:
Mm-hmm.
Austin Wilson:
And you drink-
Josh Robb:
So it’s horrible.
Austin Wilson:
I don’t know how you would drink in it, because it…
Josh Robb:
It spills everywhere.
[21:51] – Revisiting Your Strategy
Austin Wilson:
… goes around the outside. But it looks so cool. All right, so back to finance. So, Josh, what’s next?
Josh Robb:
So we talked through the strategies, we have those questions that you asked. So let’s say we built this strategy, all right? We know what our goal is, what our timeframe is, what our tolerance is, what do we need to do?
Austin Wilson:
Well, first of all, it’s not just a… you build your-
Josh Robb:
I’m done, right?
Austin Wilson:
… strategy and your done for the rest of your life. Because you need to periodically revisit that strategy. Set a schedule, review those holdings, review if they’re doing what they need you to do to meet all of your goals, and review it regularly, right?
Josh Robb:
And that’s talking kind of from two things, right? So you want to review your holdings, okay. So if I have an asset allocation of 60/40 like we talked about, 60% stocks, 40% bonds, last year 2019 was a great year. Stocks were up about 30% give or take here in the US. And if I had that allocation I may be now heavier in stocks than I had intended. And if I’m not periodically reviewing, whether that’s once a year, twice a year, you just need to set a schedule.
Again, don’t try to time anything, you’re just going to review it periodically and say, where am I at? Do I need to make adjustments? If you went into 2020 and said, Oh, everything’s going great. I don’t need to switch it. I know I had the strategy, but I’m not going to follow it, you ran into some trouble. Had you rebalanced back to where you should have been-
Austin Wilson:
Even downside would have been better.
Josh Robb:
You would have had less downside because you would be rebalancing out of the things that did well, and did the things that were not so high on the growth and bring it back in line. But then you also need to review your investment strategy as a whole. Because if I, for instance, we talked about that 401k. Most of the time when you’re in your 20s or 30s you’re invested for growth. Because you’re looking for, I’m not touching this money. I can’t touch it without penalty until I’m 59 and a half anyways, looking long-term. Well, what if I’m 55? Am I still that long-term? You need to review that asset allocation and say, are my goals still the same? Is my timeframe still the same and is my risk tolerance, has that adjusted at all? And so do that periodically. It’s not daily. It’s not weekly. Just periodically set up a time to say, I’m going to just think through everything and look through it and make sure I’m in the right spot.
Austin Wilson:
And that plan takes the emotion out of a rebalance.
Josh Robb:
It does.
Austin Wilson:
So if you know that every quarter or twice a year, or once a year even, or whatever, you look and make a decision to get back to the plan, to rebalance your portfolios to the target that you’ve set, you do it whether things are up, or down, or sideways, or whatever they are. And that is proven, based on what we talked about with the JP Morgan study, that over time having that… it’s discipline. Having that discipline in place is going to work how better over time.
Josh Robb:
Yes. The rebalancing discipline is key to set a schedule and stick to it. Set an asset allocation and stick to it.
[24:34] – It’s Not So Simple – Find Someone to Help
Austin Wilson:
So you’re saying that this is not so simple. And it requires a lot of revisiting, it requires a lot of work. So you’re not saying that I can just buy the stocks I see on TV that are up 500%.
Josh Robb:
Right. Really, you got to ask yourself those questions. Is what I’m doing helping me meet my goals? And is this the best way to get there? And we always recommend having someone help you do that. Again, there’s people who are experts in what they do, an if that’s not your field of expertise, find somebody that it is their field of expertise. And so, obviously we work in the industry, we’re fans of having advisors or someone helping along the way. That’s not to say you can’t do it on your own. I’ve seen people successfully manage their money on their own. It does take time. It does take effort. And if you’re willing to do that. Great. But if you’re worried about it, then by all means, find somebody who does this for a living and enjoys it that can help you along the way. But you need to be able to trust them.
Austin Wilson:
Yeah, trust is the key. And I think that you can’t effectively sleep at night and make sure that you’re on track to meet your financial plans if you don’t trust the advisor that you’re working with.
Josh Robb:
Right.
Austin Wilson:
I know that without trust, you’re just going to worry all the time and probably have… You’re going to switch advisors or you’re going to make wrong choices and that’s tough.
Josh Robb:
And it adds one more, if you’re already going to be worrying about your investments, why would you add worrying about whoever’s helping you with your investments on top of that? Just get rid of them and worry about your investments on your own, but that’s why you need somebody to trust. And you know, Austin and I, we love what we’re doing. We’re here to help. That’s why we’re doing this podcast. We want to educate and help people along the way. If you have additional questions, please feel free to reach out to us, email us. If you’re thinking about you may need an advisor, talk to us, we may not be the perfect fit for you, but we’d love to have that conversation.
Austin Wilson:
Yeah. Check out the Invest With Us tab on our website if you have any questions. There’s a little bit of information there, but we would love to talk with you. And as always check out our free gift to you, it’s on our website. It’s a brief list of eight principles of timeless investing. These are overarching investment themes meant to keep you on track to meet your long-term financial goals. So check that out. Also, don’t forget to email us if you come up with that T. That’s the goal-based T.
Josh Robb:
Yeah. Something that goes well with that.
Austin Wilson:
And we’ll use it. So check that out.
Josh Robb:
We’ll credit you too, if you wanted to-
Austin Wilson:
Exactly, that’s right.
Josh Robb:
We’d love to.
Austin Wilson:
So, Josh, how can people help us grow this podcast?
Josh Robb:
Yeah. So make sure you subscribe, that way you always get the alert. We put these out every Thursday and then every once in a while we would do additional one if something crazy pops up. So make sure you don’t miss anything with subscribing. Leave us any reviews. If you love this podcast on Apple Podcasts especially, that helps us rank. That helps us reach more people. That’s really why that matters for us. If you have any ideas or want to answer that question of what the T word should be, email us at helloattheinvesteddads.com. And then if you think this would be useful for somebody who is talking about investment strategies, go ahead and share it with your friends or family.
Austin Wilson:
All right. Well, thanks for being here this week. We will talk to you next Thursday. Talk to you later. Bye.
Outro:
Thank you for listening to the invested dads podcast. This episode has ended, but your journey towards a better financial future doesn’t have to. Head over to theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode and we had a positive impact on your life, leave us a review, click subscribe, and don’t miss the next episode.
Josh Robb and Austin Wilson work for Hixon Zuercher Capital management. All opinions expressed by Josh, Austin or any podcast guests are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only, and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses, which would reduce returns. Securities investing involves risk, including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.
