The Story of Betty Bad Luck: Should I Keep My Retirement Money In the Market While it’s Crashing?

I’m retired, the stock markets are down, and I’m confused about my retirement planning. Should I pull out of the market? Did I time the market wrong? Will I lose my retirement income? In this video, Troy Sharpe discusses the best mindset to have when the markets are down and how to keep your retirement portfolio safe and sound!

Beginning with Betty:

Mark: Troy gave me a story, and this was probably a month or two ago, would you say, Troy? Does that sound right?

Troy: No, time goes fast, Mark. I think that was about six months ago.

Mark: I know my buddy– see, I’m 62 now. My buddy says, “Hey, when you think it’s a year it was probably two or three.” It’s always longer so I’m going to go with that. This is a fictional story, but I’m going to give this story because I think it’s really interesting. You can comment on because it’s what we’re talking about. Down markets, boy, we don’t want to panic and just go all to cash. Sometimes that’s maybe the right decision. Everybody’s situation is different.

This is a fictional story but the math is real. This is a story of Betty bad luck. She has the worst luck of any stock market investor ever. Betty invested in the stock market only six times during her lifetime. Each time her timing was a disaster. She first invested $400 in September of 1987. A few weeks later the stock market had its biggest one-day collapse in history even worse than the worst day of 1929. Betty lost a quarter of her money.

She stayed the course, she didn’t pull her money out, but she did not buy more stocks though until 1990 when the markets had recovered. In late July 1990, she invested another $450 in the market again. A few days later, Saddam Hussein invades Kuwait, sending oil prices up. Stock market down she again took a hit with her investment. Betty learned her lesson. She didn’t add to her 401(k), but she didn’t pull that money out either. After years of watching the markets rise she finally gave in investing $560 in 1998, in July of 1998.

A few weeks later Russia defaults on its debts, sparks a global financial crisis. Betty bad luck did not buy any more stocks for a few years but did buy again at the end of March of 2000, which ended up being the start of the longest bear market since the 1970s. She bought again at the end of August 2001, right before 9/11. She bought more stock at the end of August ’08 just before Lehman Brothers collapsed.

Her timing was always terrible, but she did stick to a broad global portfolio. Even after watching her investments plunge she just left it there. Even though she picked the worst six moments since the 1980s she was in the black after every 10-year period. Even though her initial investments totaled just $3,500, her portfolio at the end of the day is worth $17,500. She got killed every time she invested Troy, but at the end of the day, her portfolio grew by more than five times.

Troy: That story goes on to compare it to someone else in this hypothetical example that is moving in and out of the market and it compares the two at the end. Long story short, Betty bad luck has a significant amount of more money than the other person. To recap that every time she went to invest money the stock market essentially crashed. Because she held on for let’s call it that, what 30-year period had a significant amount of more money than that person who was in and out and actually did some pretty good timing.

The moral of the story, of course, and you’ve heard this before, but I want to reiterate it right now and then I’m going to tie it back to retirement planning. It’s not about timing the market, it’s about time in the market. Now I understand that it is emotional when you no longer have a paycheck coming in. When you no longer have a paycheck coming in and the market goes down, one you have a lot more free time. Many of you are watching the news or watching the financial channels a lot more. The more you watch the more the subconscious brain wants to act.

Because you’re receiving so much more information it stokes fear and it stokes fear more so than when you were busy working. Not to mention you don’t have the paycheck the mind starts going crazy, and you’re worried about running out of money. The safe thing it feels like is to run, to get away. It’s the flight mechanism that we all have ingrained in us, but that is the exact wrong thing to do.

Now is the time to fight. It’s not the time for flight. Now, how do we insulate ourselves against these poor decisions? How do we insulate ourselves against having to be in this situation in the first place? This is what I– a great example I got a prospective client sent me an email the other day. He’s like, “Troy, why should I pay you guys 1% to manage my money?” First and foremost we’re not like a lot of other firms out there where you’re paying us 1% just for managing your money.

Yes, we manage the money with the focus on risk management and growth of course. It’s the income planning, it’s the tax planning, it’s the healthcare planning, it’s the estate planning. It’s all of that that we do working with the attorneys, the CPAs. We have CPAs here at Oak Harvest Financial Group who can work on your taxes and then the advisor can work with the CPA.
It’s the planning and the investment management combined with times like this where we can keep you on track. Left to your own devices too often in our career we’ve seen people come in and those that have been left to their own devices make sometimes irreparable decisions when it comes to harming the portfolio that were based on fear or based on greed. The most value we provide if I really wanted to boil it down it comes to three main things.

One, it’s being there by your side during times like this to help you understand what these market movements have from an impact standpoint on your security. Keeping you connected to the plan, staying on course with the plan, building that plan in the first place of course. Number two, managing risk, and then number three, tax planning. For many of you out there, there are hundreds of thousands of dollars if not well over a million dollars in potential tax savings just from having an income distribution and tax plan working together. This is not an exaggeration. We’d see this every single day doing analysis. When you come in to see us for a first visit, we gather the information. We’re trying to see if you’re a good fit for us, and likewise, you’re seeing if we’re a good fit for you. If we move to that second visit, and we do that tax analysis like we do for everyone.

Every single day when we go through that second visit with prospective clients and we’re showing them, Mr. Klein, if you continue doing it the way you’re doing it looks like from a projection and estimation standpoint here based on the two different distribution and tax strategies that there could be $600,000 maybe a million dollars. Different scenarios there. but there is a significant amount of savings.

Many of you– I’ll keep it simple. If you don’t have a tax plan there’s a potential of hundreds of thousands of dollars you’re leaving on the table. When it comes to what are you paying an advisor for to manage your assets, in my opinion, you better be getting a lot more than investment management. For years, people have told me, Troy, there’s going to be fee compression in the industry.
For years I’ve responded there’s not going to be fee compression there’s going to be value differentiation. Now, there will be fee compression for those advisors that only provide investment management. If you have a tax question and they tell you go see your CPA that’s not providing a value. Honestly, I don’t even think it’s acting in someone’s best interest if you’re not looking at retirement from a tax planning perspective.

1-800-822-643 Oak Harvest Financial Group. Check out the website, check out the YouTube channel. All of these videos these examples where I’m telling you the tax analysis where hundreds of thousands of dollars are on the table potentially for you. We have this analysis on YouTube. We go through multiple case studies. Go to YouTube, search the channel, find the tax videos.
They are out there. We have tons of these. We do case studies. I’m 62 with $1.2 million. What should I do for my tax plan? I’m 64 with $1 million. I’m 58, I’m 55. All of these case studies very powerful stuff. You have to go to the YouTube channel, Oak Harvest Financial Group, just do a search, go to our website. If you are ready, if you’re about to retire, if you’re going to retire in a few years, if you’ve been retired.

Whatever category you fall into there and you’re ready to have a conversation because you want to be proactive, you want to be the bull that runs towards that storm. Give us a call, 1-800-822-643. Send us an email through the website. If you call us and it’s on the weekend you’re going to leave a message. As a matter of fact, you can just call you don’t even have to leave a message. We’ll call you back because we have Caller ID, it’s 2022. 1-800-822-643. Now, I mentioned that story about being the bull running towards the storm.
Mark: It really might be the buffalo or the bison.

Troy: Thanks, Mark. It is the buffalo, I believe. That bull sounds good too though, right?

Mark: Yes.

Troy: The buffalo it’s a great story. I’m ripping it off from someone I think it’s Rory Vaden, I believe. I heard him speak and he’s an amazing speaker and he used this story and it really, really stuck with me. I’m going to summarize it here. In the Midwest, the storms always roll in from west to east, and the cows in the pasture they sense the storm coming and the storm starts to crest over the mountains and starts to roll in.

They start running as fast as they can and they’re cows so they don’t move that fast, but they start running away from the storm. The storm of course catches them and they prolong the amount of time that they stay in the storm. They’re essentially unable to outrun the storm and so they get soaked for a much, much longer time. The buffalo, on the other hand, they sense the storm coming and as soon as it crests over the horizon they just start charging at the storm.

They just take it head on and they minimize the amount of time that they spend going through the thunderstorm. When I say I want you to be the bull I want you to be the buffalo. That’s what I mean. We’re in the middle of an economic storm right now. There could be more economic storms on the horizon– short-term horizon. We know there are significant storms you’re going to go through over the next 30 years.

That is part of being an investor in the markets. How much do you have at risk? Where is your income coming from? What is your tax plan? These are the things that we can help you with and then when the storm hits we’re going to run straight through that storm. Put ourselves into the best position possible to make good decisions which the end goal is to optimize retirement planning so you have those big questions answered.

Do you have enough? Can you retire? How much income should you take? Where to take that income from? How are you going to pay less tax? If something happens to you, will your family be okay? We call it the retirement success planning process. We walk you through it. It’s a very structured step-by-step process from risk management and investment planning, to income planning and taxes and healthcare.

The estate side of things where we quarterback the ship, but work with your attorneys, make sure those documents get put in place, the entities if needed. Titles get transferred, so on and so forth. 1-800-822-6434, 1-800-822-6434 Oak Harvest Financial Group. Visit the YouTube channel, search Oak Harvest Financial Group, start to learn more about this retirement success planning process. If you’re ready now, reach out to us. Let’s sit down have a conversation, and start to get you on that retirement success path.

Mark: Investment advisory service is offered through Oak Harvest Financial Group LLC. Oak Harvest Financial Group is an independent financial services firm that helps people create retirement strategies using a variety of insurance and investment products. Investing involves risk including the loss of principle. Any references to protection benefits or lifetime income generally refer to fixed insurance products, never securities or investment products.

Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Oak Harvest Financial Group LLC is not permitted to offer, and no statement made during this show shall constitute tax or legal advice. You should speak to a qualified professional before making any decisions about your personal situation. We are not affiliated with the US government or any governmental agency. This radio show is a paid placement.