Eric Douglas and Aaron McAndrew are going to be discussing DIY mistakes they see most often! Having a good solid plan is a huge part of the success of your financial puzzle. Seeking professional help is a great first start even if you don’t have all the information. As always phone lines are open during and after the show. If you’d like to speak with one of our advisors or need more information regarding any of the topics discussed on today’s show, please give us a call!

Speaker 1 [00:00:21] And welcome to the money puzzle, my name is Cynthia DeFazio, and I’m joined today by Eric Douglas and Aaron Aaron McAndrew of Family Wealth Planning Partners. Eric, how are you today?


Speaker 2 [00:00:31] Good morning. I’m doing well.


Speaker 1 [00:00:32] Thank you. Good. It’s good to see you again. And Aaron, how are you?


Speaker 3 [00:00:35] I’m doing well. I’m happy to be here.


Speaker 1 [00:00:36] Great. And I’m so glad that we’re back together today because obviously you’ve been so incredibly busy. You’re helping people every single day of the week, putting their own money puzzle together, because that’s obviously the theme of our show. And just want to talk to you quickly, Eric, if I can put you on the spot for a moment. How does retirement planning fit into a money puzzle?


Speaker 2 [00:00:57] Well, the retirement plan is the puzzle we’re always having to, you know, fiddle with it a little bit and make changes. But you always want to find all the different pieces of your portfolio of your life, of what your goals look like. We want to take all of those different things and put them together for you in a nice, clear picture that you see, but not only see, understand, we want you to be able to understand what your roadmap to retirement looks like in totality.


Speaker 1 [00:01:23] Thank you, Eric. I know so many people in the viewing audience have questions about that, about how to plan their perfect retirement. The theme of our show today actually is Do it yourself mistakes, because obviously people can go to the internet right now. They can google anything. And sometimes a lot of times they’re getting the wrong information. So Aaron, I’m going to guide this directly to you, actually. How can it be an issue if someone is non diversified in their retirement, if they’ve heard that they don’t have to be? How can that be an issue that


Speaker 3 [00:01:55] that can become a very good issue? Big issue. Not good. And so I work with a lot of retirement participants, meaning participants in retirement accounts. And, you know, a lot of times they are not necessarily forced to do it themselves when they first enroll in the plan. If they don’t know or they choose to do something themselves here, they will pick index funds so they may pick just the S&P 500 and put all their money in the S&P 500, all their contributions or whatnot going into the S&P 500. Or they’ll pick a couple of different index funds. And I’ve even seen times where there’s two different S&P 500 funds in the same portfolio, which is just different fund companies version of their index fund is all it is. Wow. So index funds are great and it can be used, but not just only the index fund in the portfolio because it’s great while the stock market is great or the indexes are doing well when index starts taking a dip backwards. A lot of times it’s the same people that are in those index funds that are wondering, you know, I don’t I’m not comfortable losing this much or I’m not comfortable with what’s happening in my account. And a big, you know, a lot of times I look at what the cost is or the expense on the index. Funds and index funds are some of the lowest cost funds that are in in these options for retirement plans. So. So typically see that a lot.


Speaker 2 [00:03:18] Well, it’s also worth noting, too. There are so many different indices out there that you can track so so much focus gets paid on the S&P 500 or the Dow Jones. Those are the ones that you hear about the most in financial media. There’s all kinds of different indices and all these different index funds that you can track. So if you build a portfolio with three different S&P 500 index funds, you’re really not well diversified whatsoever. You might have three funds, three index funds, and they’re all three low cost index funds. That’s not a diversified portfolio because if the S&P 500 goes down, all three of those funds are going to go down together. Wow. That’s why you want to track different index funds that track different indices, so you’re not totally just tracking one specific index. Another thing that we see is, you know, especially over the last few years where the stock market has been revving, right? We’ve had a fantastic couple of years in the stock market since since the crash of 2020, you know, so, so much focus has been put on individual stocks and some of those stocks have done particularly well. Well, now you look at them and we’re kind of in the middle of a correction. Well, if you look at certain sectors of the economy, the tech sector specifically is really in a bear market right now. Wow. When you look at those specific types of stocks and if you were so wholly focused on like tech stocks, you’re probably not very happy with what your portfolio has done over the last six months, to be perfectly honest. That’s why you always want to build a well-diversified portfolio so you’re not putting all your eggs in one basket, so to speak.


Speaker 1 [00:04:49] Sure. So then picking stocks that represent different things, making it well-diversified, not just focusing on one specific area. Mm-Hmm. OK, Eric, what about trying to time the market? Because so often people google that how to time the market? What’s your response to that?


Speaker 2 [00:05:05] We don’t do it. OK.


Speaker 1 [00:05:07] I know. All right.


Speaker 2 [00:05:09] If you’re if you’re going to do it, if you’re trying to time the market, that really is probably your full time job or should be your full time job because there’s so much information that you have to pay, pay attention to on a daily basis and so much noise that you. Have to weed through, and it’s just it’s really a it’s fool’s gold that you’re chasing after. What we see for the most part is individuals thinking, Oh, well, everything’s kind of going down. We’re in the middle of a correction I need to sell. Well, that’s an overreaction on the emotional side. That makes sense because right now, when most people are selling, that’s typically the time for you to be buying. Yeah. You know, Warren Buffett was famous for saying, Well, when everyone else is selling, I’m going on a buying, I’m going on a shopping spree.


Speaker 1 [00:05:48] Oh yeah,


Speaker 2 [00:05:49] it’s it’s almost really the only time in your life where you know you don’t go to a store looking for a deal. Yeah, it’s in the stock market. Every time you go to target, where do you go the sale? I’ll try to find things on sale. Stocks are on sale during a correction, but it’s weird because emotionally people get scared when stocks are going down and they want to sell, which is the absolute worst thing to do is trying to time the market because inevitably what will happen is the market will come back up and you’re going to miss, you know, the gains that are going to come with that.


Speaker 3 [00:06:22] Just to add to what Eric mentioned there, the big as some of the big mistakes of the time in the market is, you know, there’s there’s charts out there that will literally literally show you when we go into a correction or markets down 10 percent, 15 percent or whatnot, people start making those mistakes and selling out at that at the wrong time. They don’t have a plan as to if they’re going to sell out. When do we get, when do we get back in? So what happens is, is when they typically get back in as you see a day that the market jumps four percent in one day or three percent in one day or two days in a row that you see it jump really big and they’re like, Oh, OK, I feel better about where the market is now. And then what happened is what happens is they miss some of the biggest jumps that weren’t some of the biggest gains in their portfolio because they’re buying now back in at a different price and then it could take another dip backwards or something, and they go back in the same cycle over and over again.


Speaker 2 [00:07:13] I heard I heard a fantastic analogy recently that I think is really appropriate for today’s environment where we’re in a little bit of a correction. Investing in the stock market is like using a yo yo walking up a mountain.


Speaker 1 [00:07:26] Wow.


Speaker 2 [00:07:27] When you step back and look at the mountain, you’re you’re constantly going up. But if you’re only paying attention to the yo yo as it’s going up and down, it’s going up and down. But on a long enough trajectory, it’s still going up the mountain. It’s still increasing in value. I think that’s a really good analogy to keep in mind. You know, when you start thinking about, you know, worrying too much or getting too overly emotional about these corrections in the market, I think that’s a great way to to conceptualize the long term purpose of what investing really does for you.


Speaker 1 [00:07:57] Absolutely. Well, Aaron, I know that you and Eric have a very special offer to present to the viewers at home today. Why don’t we talk about what that is and then open the phone lines? Yeah.


Speaker 3 [00:08:05] So we’re talking today about do it yourself mistakes, so you know, whether people realize their mistake or not a mistake eventually when they do. If you if there’s anything that we’re talking about that you’re thinking, Hey, did I do that or should I do that? Or You’ve got questions? That’s what we do. So we’re happy to take a look at it. We offer a complimentary retirement plan analysis here. We’ll take a look at what you’re doing if you feel like you’ve made a mistake in there. We’ll give you our we’ll review the whole portfolio. We’ll give you our our feedback on it and then help put it together in an actual plan. So the idea that these mistakes don’t continue to to come up. So give us a call the numbers on the bottom of your screen. One of the hardest things to do is just pick the phone up and make the call. So pick the phone up, make the call. It’s eight four four nine zero zero five two one zero.


Speaker 1 [00:09:00] Aaron, thank you so much. Eric, thank you so much to the viewers at home. The phone number to call is on your screen and that number is eight four four nine zero zero five two one zero. We know you have a lot of questions for Eric and Aaron about how to put your own money puzzle together. They have the answers for you. Again, that number is eight four four nine zero zero five two one zero. We’re going to take a very short commercial break, but when we come back, we’re going to talk a little bit more about some mistakes if you try to do this yourself. Stay tuned.


Speaker 4 [00:09:31] How confident are you and your current financial plan, do you know with certainty how the recent market volatility will affect your future hopes and dreams? How much are you paying in taxes and how much are you losing to unnecessary high fees? You didn’t work to save this money so that you could spend your time worried in retirement. Now is the time to take charge of your finances so you can feel confident about your future. Call in during the next 30 minutes of today’s show, only to set up an absolutely complimentary, no obligation full blown financial review that will result in your own customized, written plan. This is a $999 value that we’re giving away, complimentary to the first 10 people who respond. We’ll start with a full blown analysis of what you already have by running a report to untangle how much you are currently paying in fees, how you’re allocated for risk and what it’s costing to work with your current adviser. Next, we’ll identify your goals. Where do you see yourself in the next five years? Where do you want to go? And who do you hope to go there with? Is your current financial plan set out to get you there without mishap? Let’s design a roadmap to create a financial plan you can follow with confidence. Get the peace that so many people are missing from their retirement. Find out how having a written plan can make a difference to your retirement dreams. Call now to schedule your complimentary no obligation. Full blown Financial Review today.


Speaker 1 [00:11:06] And welcome back to the money puzzle, my name is Cynthia DeFazio, and I’m joined today by Erika Douglas and Eric Mackay, Aaron McAndrew at Family Wealth Planning Partners and Aaron, Eric, Aaron and Eric. I know, right? It’s a tongue twister. So staying on the same line of do it yourself mistakes. Aaron, I want to ask you about this next one. Obviously not allocating based on risk. Let’s talk about that. Yeah.


Speaker 3 [00:11:30] So one of the first questions that I typically ask someone when I take a look at their portfolio is, well, which risk tolerance? And they’ll say, Well, what do you mean? So that that follows with a series of other questions that kind of get to that risk tolerance. So a lot of times we’ll see people when they first start their career, they’ll get into something and they’ll they’ll they’ll get into these funds or whatnot in their retirement plan, and they’ll never make any changes period to it. And they get closer to they get closer to when they’re needed to retire, maybe not right at retirement, but they get closer to that. And they’re not one. It’s not out. It’s out of balance. It’s not. It’s not look away. It’s a lot more risky than what it was because as the stock market continues to perform, that makes those other funds worth a lot more of their portfolio holdings. So they’re so it doesn’t. The allocation is not where it used to, not what, not what it was originally. Okay. So you know, that’s that’s the one thing. The other thing is is I get a lot of feedback on it as well. I should be more aggressive. I want to be more aggressive and that feels great when the markets are good, right? But when we have downturns or corrections or it starts having a pullback, that’s when you typically find out people that want to be some people who want to be aggressive,


Speaker 1 [00:12:47] like not so much.


Speaker 2 [00:12:48] Correct? Yes. Another mistake we see as well on that same topic is not necessarily applying different risk profiles to different types of accounts. What I mean by that is especially as you enter into retirement and you start drawing income from certain accounts, you’re not necessarily going to draw income equally or pro-rata across all of your different accounts. Think of your think of your retirement plan almost like in buckets. OK, so you’re going to draw from bucket one and bucket one needs to have quite a bit less risk attached to it because that’s income that you’re going to need within the next couple of years. OK, bucket two is going to be income that you’re going to need really in years two to 10 give or take. So you want to take more risk because you want to keep up with things like inflation and get some level of return, but you’re also not trying to hit home runs with that bucket. OK, the home runs come in bucket three. That’s your long term growth strategy. You’re not going to need that money for 10 years, so you have the time to weather the volatility in the stock market, so you don’t necessarily need to apply the same risk profile to every single account you can. You can assign different risk profiles based upon when you need to start drawing income from those types of accounts. Another example is if you have an account out here designed specifically for an estate or legacy play and you have no intentions of ever drawing money from that. Why do you need to be ultra conservative with it and invest it like it’s going today to your maybe 30 year old kids? OK, how would they invest it? Because ultimately, that’s who’s going to end up getting it. So, so things like that need to come into consideration versus just investing the same way across all of your accounts.


Speaker 3 [00:14:23] OK, I’m going to flip the script here and to add to it a little bit. Originally, we were talking about people being too aggressive initially. There’s also people who are ultra conservative, and when they start, you know, maybe they’re twenty five years old. Twenty six years old, start saving for retirement, or even 30 some years old. But they want to be conservative, and they put more money into fixed investments or money that, you know, in places where they don’t, they don’t really want to lose any anything. There is a there’s a time and a place for that. But when you’re using a retirement plan or something for a vehicle, the accumulation vehicle to help grow and you’ve got 20 30 years before you’re going to retire. Typically, you can afford to be more aggressive the longer you are before you’re going to need to be able to use that money. So if you keep that money just sitting in something that’s earning one percent or a fixed rate or whatever for that certain time period, it really hinders the compound growth that you can get. Setting you up for retirement?


Speaker 1 [00:15:21] Wow. OK, excellent points. Thank you so much, Eric. This next one, I’m going to give it to you. What about someone not having a plan? And what if they think they can just do it themselves and they don’t need to have a plan in place?


Speaker 2 [00:15:34] Well, we see it a lot. Well, I’ve I’ve gotten X amount of return over the last couple of years. I’m doing pretty good on my own. Hmm. Fantastic. Good for you. And that’s great. Everyone’s done well on their own. Over the last decade, we’ve had the greatest 10 year run in the stock market in the stock market’s entire history. Yeah. You know, you could pretty much throw darts and pick stocks, and you’ve done pretty well over the last decade, to be perfectly blunt. That’s not a plan to keep doing the same things that you’ve been doing that will make. Continue to be what you need to do going forward. You need to do it. We call it planning for a reason. Sure, it’s not just coming up with a plan, it’s going through the planning process and adjusting that plan on an annual basis. You know, are you are you planning for taxes? Because most people think specifically about investments or what their return is in the stock market or what your tax planning look like? You know, what types of accounts are you contributing and growing to? Do you have different accounts with different tax liabilities? Because typically you want to build up different accounts in conjunction with one another, you don’t want to put all your eggs into just like your 401k basket, for example. Sure. So are you? Are you properly allocating to different accounts? Are you properly allocating risk? How does this fit into what your goals and what your time horizons look like? All of these different things fit into a plan as opposed to just what most people think right off the top as well. I’m I’m getting a decent return on my investments. OK, once again, that’s fantastic, and there needs to be a level beyond that that you need to prepare for, especially when you’re planning to thrive and live in retirement. You can’t just keep winging it, right?


Speaker 3 [00:17:11] And we find that a lot. There’s there are people that, like Eric said, just keep their investments like that, then do it themselves or whatnot. But they’re also in the back of their mind. They don’t feel like they need a plan because they kind of rely on Social Security being their income or race, excuse me, income replacement and retirement. And what we’ve come to find out is really a lot of retirees that we work with. Social Security is making up around 40 percent of their retirement income. So if you wait until later on in your your life and you realize, Oh, jeez, I’m 55, I want to retire at 60 and I’m finding out that my Social Security projections and you know, my income is not where it needs to be, and now I need to start saving. Yes, you can make catch up contributions. You can start doing things like that. But the biggest value that everyone really has, and we just don’t know how much we have of it is time. So the earlier you can start saving, even if it’s just a little bit of money, putting away the time component is the variable, and that’s really the most important piece of of of what we are. You know, with the compounding growth is on these people’s retirement accounts on her,


Speaker 1 [00:18:21] that makes perfect sense. Erin, thank you so much. Eric, I know that you and Aaron have a very special offer for the viewers at home. Let’s talk about what that is before we reopen the phones.


Speaker 2 [00:18:30] Absolutely. So let’s take that a step further. Do you have a plan in place? You know, we’re talking about one of the biggest DIY mistakes that we see is individual investors that don’t have a plan. Do you have a plan or have you reviewed your plan in the last year? If the answer to either one of those questions is no, give us a call. Pick up the phone eight four four nine hundred five two one zero. That’s the hardest thing you’re going to do through this whole process, quite frankly, because after that, we’re going to get you into our offices. We’re going to sit down. We’ll have a cup of coffee together and we will go through what your current plan looks like if you have one and if there’s any adjustments that we might be able to make on the, you know, on the end to really best optimize your retirement plan and put those puzzle pieces together so you truly understand what your retirement roadmap looks like.


Speaker 1 [00:19:15] Eric, thank you so much. Aaron, thank you so much to the viewers at home. The phone number to call is on your screen. That number is eight four four nine zero zero five two one zero. Don’t miss this opportunity to put the pieces of your money puzzle together again. The number is eight four four nine zero zero five two one zero. We’re going to take a very short commercial break, but don’t go anywhere. I have a few more. Do it yourself mistakes that you’re going to want to listen to. Stay tuned.


Speaker 5 [00:19:42] As a good saver, you’ve been putting away money during your working years. Studies find that the biggest fear of retirees is running out of money. Market volatility isn’t just a downward movement of stock prices. It’s the size and frequency of change. The more dramatic the ups and downs, the higher the volatility. This can put savers who are newly retired or a few years away from being retired at greater risk. Today’s generation of retirees is not receiving traditional pensions as our parents or grandparents did. Instead, we have a retirement account such as 401Ks or 403 B’s. These accounts typically exposure money to market risk. The last thing you want right before retirement is to lose a portion of the money you need for income. But how do you turn these accounts into a retirement income? Is it safe to keep all your retirement money sitting in the stock market? The last thing you want is to lose a portion of the money you need for income due to market loss by working with a financial professional. You can learn how to turn a portion of your savings into an income stream for life and income for the life of your spouse if you’re married. We all have moments in our lives when we wish we had taken action sooner. Don’t let procrastination reign on your retirement parade. Act now before it’s too late. Please call our office to set up your no cost, no obligation. Retirement Income review today.


Speaker 1 [00:21:10] And welcome back to the money puzzle. My name is Cynthia DeFazio, and I’m joined today by Eric Douglas and Aaron McAndrew of Family Wealth Planning Partners. A wonderful show we’re having today talking about the importance of putting those pieces in place of the money puzzle and some mistakes you can do when you’re trying to do it yourself. So, Aaron, I’m going to guide this next one to you. This is a great one as well. Let’s talk a little bit about this. What about not saving enough to different accounts, Aaron?


Speaker 3 [00:21:38] This is a an issue that typically or a mistake that typically we see quite often. Unfortunately, a lot of people are just saying, Hey, we want to save money and put it into your retirement account. Throw it in your 401k, maxed out everything. Put, you know, put everything into that 401K plan or wherever you’re getting a match at a four or three, be whatever that account might be. And unfortunately, they say pretax, all those dollars or saved pretax. So it goes into the tax area pretax account when you get to retirement. All that money eventually is going to be taxable. Well, that creates an issue on a couple of fronts. One, you’re not diversified at all on the type of accounts that you have saved in one hundred percent of your retirement savings is going to be taxable to when you have to start taking money out, when you have required minimum distributions and you have to start taking money out at age 72. All of that, it’s going to create a tax bomb. So what could happen is is they’re going to force you to take that money out. At 72, you met. You’re already draw on Social Security. It could be more money than what you need to live off of and you’re having to pay extra taxes on on that money. So it could be a big tax issue there. We’ve always heard we need to be diversified, so diversify your investments, right? But also diversify the types of accounts that you’re saving in. So are we saving in tax free accounts like Roth IRA? Non-qualified accounts because I had a client that did just this saved all of our money into a retirement account, but decided at 55 we were going to retire. Company was offering a buyout in terms of her pension and 55 she was going to retire, take it, took her early retirement. Well, all of that money is taxable. So if you’re saving a non-qualified money at that point in time, you can pull that money out. You know, you can you can get to that money with without the 10 percent early withdrawal penalty or in and that money is obviously taxed different. Roth IRAs The same way that money goes in, you’ve already paid taxes on it. It grows tax free. When you take money out in retirement, you can pull that pull that money out. You’re not taxed on it. So. So it’s not. It’s not just important to just diversify your investments, but also diversify the different types of accounts you’re contributing to for retirement.


Speaker 1 [00:24:05] That makes perfect sense. Thank you so much, Aaron. Eric, this next one is for you. I’m going to take it over to you taking advice from friends and family. Why can that be a risk for doing it yourself?


Speaker 2 [00:24:16] Are your friends and family qualified to give advice in the first place? This is a big question. We see this a lot with Social Security while the Social Security, you know, I filed for Social Security at age, and that’s what you should do, too. While that might not be appropriate for you, yeah, or let’s say someone who has a million dollar portfolio giving advice to someone with a $300000 portfolio, you aren’t the same. Maybe that person can afford to take more risk or do different types of things that are not appropriate for you. Your advice needs to be tailored to you specifically. And the problem with most advice that you’ve received from friends and family is that talking about what worked for them, that’s not something that’s going to be tailored for you. You need advice that’s tailored to your specific situation. You don’t need to hear about what work best for your neighbor or your friend. That doesn’t matter. And quite frankly, usually what you also hear about, you usually hear about the highlights, right? Only invested. I invested in Amazon at the bottom, and now it’s the biggest company in the world, right? Well, OK. Great. Well, Amazon is already the biggest company in the world, is probably not the best time to start that strategy. Yeah. So you need to do something different that’s going to be applicable for you. So, so really, that’s what it’s most important to, to focus on yourself and not try to hear about what works for everyone else, because that’s not going to be necessarily what works best for you.


Speaker 1 [00:25:33] Sure, that makes perfect sense. So, Aaron, it’s not a one size fits all situation when it comes down to designing someone’s money puzzle.


Speaker 3 [00:25:41] No, absolutely not. It’s it’s tailored and tailored. It’s a tailored plan. Obviously, somebody is going to come in to me with a whole, you know, different types of accounts somebody has saved into different types of accounts we were talking about. And then there’s other people that come in and all they have is the retirement account that’s there. So all the money is there. So we’ve got to be a little bit more creative as to how they’re going to be able to get that income in retirement or if they’re not at retirement. How are they going to be saving? To be able to set themselves up to have a successful retirement,


Speaker 1 [00:26:12] because that’s really what it comes down to having peace of mind and success in retirement. Eric, with about a minute and 40 seconds left of the show this week, I know you have final words of wisdom and advice that you want to give the viewers at home. So let’s take it. Let’s take a few moments to do that.


Speaker 2 [00:26:25] No, absolutely. So the theme of this show has been mistakes that we see investors make on their own. Going it alone, maybe you’ve done that before. Have you been doing that? Do you have a plan in place? Have any of these mistakes apply to anything that maybe you’ve done in the past? The worst thing you can do going forward is to let previous mistakes compound upon themselves and become worse. The hardest thing you can do right now is to actually pick up the phone and make the call. That’s the hardest part of this entire process is to get the ball rolling in, putting together the pieces of your puzzle and start going through the planning process. Give us a call. Pick up the phone eight four four nine hundred five two one zero.


Speaker 1 [00:27:06] And Eric, it’s a living breathing organism, if you will, so it’s going to change and adjust to people as they go through different life changes, correct? Constantly. It’s not a set it and forget situation.


Speaker 2 [00:27:17] We don’t give you a plan and, you know, give you a pat on the back on the way out the door and say, good luck. It’s a constant process and it’s always evolving.


Speaker 1 [00:27:25] Eric, thank you so much. Aaron, thank you so much to the viewers at home. Most specifically, we’d like to thank you for spending time with us today. The number is eight four four nine zero zero five two one zero. We know you have a lot of questions about the pieces that are in your money puzzle. Don’t miss the opportunity to call in today. Eight four four nine hundred fifty two one zero. Be safe, be happy, be blessed, and we look forward to seeing you back here one week from today.