The Mindset for a Successful Investor during a Market Pullback | The Retirement Income Show

Mark Elliot: Welcome back to the Retirement Income Show with Troy Sharpe, the CEO and founder of Oak Harvest financial group located I-10 in Bunker Hill at 920 Memorial City Way. You can always go to the website to learn more, OakHarvestFG, oakharvestfinancialgroup.com. A lot of great information there about the team, but also some great information for you as a pre-retiree or even as a retiree, a lot of great information there. Of course, Troy and the team have now got over 300 videos on their YouTube channel. Just search Troy Sharpe and Oak Harvest. I’m Mark Elliot, glad you’re with us today. Talking about a lot of things as we always do on this program, and I know you want to get into the numbers that you said you were going to look for during the break.

You have found them. I wanted to start with just a continuation of where you are, because you’re talking about the markets going down and that people tend to panic. Boy, I better go to cash, because I can’t afford to lose anymore. You go back to the 2007 through 2009 time, March of ’09, the great recession. The 401ks are becoming, 201ks. Holy cow, I’m never gonna be able to retire. One of the things, it’s always interesting, because people love sales. You go to the mall, hey, the clothing store’s got sales on clothes on shoes or what have you. Hey, the golf stores got some sales, the pro shops got some sales going. The cars, hey, they discounted this car, because it’s discontinued or whatever. We like sales. Why do we get so nervous when the market is on sale? That’s basically what’s happening, isn’t it?

Troy Sharpe: Yes, absolutely. If you don’t believe long term in capital markets, you have no business being in the stock market at all. At the same time, I feel your pain. I understand. The closer you are to retirement or if you’re in retirement, the pain becomes more real, because you’re no longer receiving paychecks. Many of you, unfortunately, just have an investment portfolio. You don’t have a plan. You have no idea what this drop in your account values means for your security. What does it mean for your income? What can I do? One of the reasons why people obviously start to panic and feel anxious is because they’re more close to retirement and the paychecks won’t be coming in, they’re dependent on that portfolio. It’s a ton of weight, it’s a ton of pressure, because you don’t have any connection to what the stock market’s downturn means for your security.

Now, if you have a plan and you understand where your income’s coming from, how much income you’re going to take, you have multiple streams of income, you’re not dependent on just the stock market growth for your income, our clients in that situation tend to feel much better, because we reach out to them. We have a conversation and we say, “Look. This is what’s going on and this is why it’s happening.” This is when we expect it to rebound based on the data, the trends, the historical information, and also what we’re seeing behind the scenes as far as activity in the options market and what hedge funds are doing. There’s a lot of behind the scenes data that we look at, which gives us really, really good insight into the general direction of the market over the next three to six months.

It’s not a 100% accurate, of course, but it does give us a pretty good insight. If you want, follow Chris. He shares this information, our Chief Investment Officer, Chris Paris. If you go to our YouTube channel, just go to YouTube search Oak Harvest Financial Group, you’ll come to the channel. If you subscribe to it, hit that little bell icon. There’s no cost, there’s no fee, we’re not selling anything or you don’t have to pay us any money. It’s just for information. The goal with the YouTube channel is to help people understand more about retirement, because we’ve seen so many people over the years make so many bad decisions and so many mistakes that if they just had more information, if they just had a better relationship with someone, they would be hundreds of thousands if not more than that most likely, dollars in their account.

Every week Chris puts out his stock talk podcast on Fridays, and he very clearly lays out what we see, what’s going on. I encourage you to go to the YouTube channel and check those out. That can at least help you, but it’s only part of the plan. You also need to know, do I have enough income? Where is my income coming from? What am I doing to reduce taxes? Troy, am I missing opportunities? Yes, you probably are missing opportunities right now if you don’t have a tax plan. This is what we do for our clients in the Oak Harvest process. First, it’s a get to know you, see if you’re a good fit for us. You’re trying to see if we’re a good fit for you. If we pass that first stage, gather some information, some data. We simply go on to starting to analyze and look at your situation. Look at income project out into the future. Look at your tax situation. If you do this, this is how much tax you’ll pay over retirement. If you do this, this is how much you’re estimated to pay over tax. Which path do you want to go down? We partner with our clients. It’s not you hire us and you must do this, this, this, and that. We customize the plan, we build the box around you, but we work with you to make those decisions. Ultimately, you are the CEO of your family, you are the CEO of your wealth, but just like a CEO has people, he or she relies on to provide information and to provide different perspectives and then back those perspectives up with data points and facts and information, you need that as well. That’s our role in retirement. Yes, we have a tremendously talented team of individuals here, but we’re very humble. We operate in congruence with your values, with who you are, but also having those conversations about what’s important to you.

What all this means for you is you feel more confident. We tend to find our clients feel more confident with the decisions they’re making, with what’s going on in the economy, how it’s impacting their future, because we have an investment strategy, a risk management plan, we have an income strategy, we have a tax plan, we have a health care plan, we have an estate plan. I know I went off the side here Mark as far as why people panic when it comes to retirement when the market is down and not take advantage of the sales that are out there, but these are important things to know.

If you are not yet in retirement, then you’re in the accumulation phase. You can take advantage of the opportunities by reinvesting, by putting more money into your retirement accounts, take advantage of that opportunity, 1-800-822-6434, Oak Harvest Financial Group. Check out the webpage, check out the YouTube channel, tons of content there for you to learn on your own time and get to know us a little bit better. Maybe you’ve listened to this show for 10 years, maybe you’ve just tuned in for the very first time. We have a ton of content on YouTube to help you be a more educated, more informed investor, get better prepared for retirement and that’s whether you choose to work with us or not that information is available.

Mark: It’s 800-822-6434 if you’d like to chat with the team at Oak Harvest, 800-822-6434. It goes back to what you said earlier that really what your Oak Harvest plan is all about is a behavioral plan, it’s how we look at things, and let’s make an educated decision not an emotional decision which is certainly what happens when the markets get all bouncy. You were going to look for some numbers during the break you said being the IT genius that you are you found the numbers you were looking for.

Troy: I shared that story about Betty Bad Luck and that was the name, but you have to also include market watch in the search bar there. Great story if you’re just tuning in, Betty Bad Luck, it’s on market watch. Just put in the search bar there, Betty Bad Luck market watch. If you’re anxious about what’s going on in the economy, in the marketplace. If you’re getting close to retirement, if you are far away from retirement and you just don’t like seeing your accounts go down. This is a really good feel-good, but also a factual story, factual in the context of the math.

I don’t think this person actually exists, but it’s a great article just to read to reinforce the power of not timing the market, but it’s all about the time you spend in the market. The gist of it, in case you forget, Betty very anxious investor, she invests six times over the course of her life about 500 bucks each time. Every time she does it, she did it on the cusp and made the investments into the market on the cusp of one of the great crashes of the past 40 years.

Going back to 1987, Black Monday, into the ’90s, the dot-com bubble burst, et cetera. Every time she invested, the market took a significant dive over the next day, weeks, months et cetera, and her combined investment I think of about $2,000 or $3,000. Even though she invested the exact worst time possible over the past 30 years, still to this day is about $17000. If she would have put her money in, saw it crash by 40% the next day, got scared pulled it out, and then did that every single time, she’d have probably about $400 today. It’s a great article, it’s a nice little feel-good piece, definitely check that out.

Mark: You’re going through all those different pillars. It starts with the investment plan, but that is not the entire retirement plan. It also goes into income, where’s it going to come from, how much do you need, what about taxes going forward, you know taxes are changing when we get to 2026 will they change in the interim. The health plan, the estate plan social security is in the income part, Medicare is in the health care part. That’s a lot of moving pieces. 800-822-6434.

Troy: I talked a little bit about the Retirement Nest Egg calculator on the website. If you just Google Oak Harvest Nest Egg Calculator, I want you to play around with some of the variables your age, the amount of money you currently have saved, the amount of money that you can contribute moving forward and also the rate of return. Keep that rate of return in that 5 to 7% range, 7% is pretty comfortable if you’re going to be stock heavy in your investment plan, because we’re projecting out over many years. I don’t want you to put 10 or 11% in there like some people tell you to do or just because the markets have performed that way over the past 60 years or 70 years or 50 years. Looking forward, forecasting forward most people who do this for a living as well as us feel there are significant challenges the country, the markets, the economy face over the next 10 years.

The next two to three to four years could be particularly challenging with lower growth, higher interest rates, the federal reserve pulling back all the free money that they’ve put into the economy. It doesn’t mean things are going to crash and you should be on the sidelines, but it does mean that you need a more intelligent, selective approach. This is one where we’re going to go going to firmly state that owning funds may not be the best approach whereas owning particular companies that are best in breed within the right sectors could possibly give you a much better opportunity to perform other than just owning broad market funds in this market.

It’s going to be a challenging market the headwinds are significant, but play around with the nest egg calculator and I want to also give you a couple things to look at. Many of you are in target date funds, if you’re in a target date 2030 fund look to see what you’re actually invested in. I looked at the Vanguard 2030 retirement fund the other day it’s 50% stocks, 30% bonds or excuse me 60% stocks, 30% bonds and 10% cash right now. Bonds are projected to earn about 0% after inflation actually negative after inflation, the inflation that we’re seeing today.

Realistically, you can’t expect your bonds to return more than 1 or 2% prior to inflation over the next few years and then the cash obviously that’s not earning much. If you’re in a 2030 target date fund and you’re trying to grow your account understand the risk, talk to your advisor, give us a call, talk to whomever you trust, I’m not telling you to sell it I’m just educating you about what it is invested in. 40% of it is in what is expected cash and bonds to perform very, very poorly over the next several years. You have to ask yourself do I want 40% of my money saving for retirement where I’m trying to get there sooner rather than later. Invested in something that’s expected to average let’s call it 3% best case scenario realistically I don’t own any bonds.

The reason is when I’m young I’m working I’m 41, but more importantly I think it’s a horrible asset class to be in right now if we’re looking to build wealth over time. Now if we want to just preserve and we’re in retirement, short term bonds can absolutely be a viable option, but do not expect growth in these types of tools there are more preservation tools. Know what you’re invested in, if you’re in these target date funds see how much exposure you have to bonds and cash. Also I want to get people thinking outside the box do you want to be a millionaire or do you want to live like a millionaire, because people with wealth in retirement understand it’s not about how much money you have it’s about how much income you generate.

You may not need a million dollars this big round beautiful number to retire, you may just need the same level of income that a million dollars can provide. We’re going to pick this up after the break talk little more about what you can do to live like a millionaire in retirement even if you don’t quite have a million dollars. These principles apply to you even if you have one, two, three million dollars or whatever that number is. Oak Harvest Financial Group go to the webpage, check out the YouTube channel and if you’d like to sit down and have a conversation and see how we can help you add value to your life in your retirement give us a call at 1-800-822-6434.
Mark: How can you live like a millionaire? That’s where we’re going in our final segment right after this, this is the retirement income show at Troy Sharpe, the CEO and founder of Oak Harvest Financial Group.

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