Announcer:
It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indexes mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer, member FINRA, SIPC. Investment advisor representative, Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice.
Announcer:
Now, here’s today’s financial focused program.
Nate Kreinbrink:
Good morning and welcome to this week’s financial focus brought to you each and every Wednesday morning right here on KROS. This is Nate, James joining me again this morning, middle of March. We’re almost there. Spring training you see on TV is as under full swing and on the countdown. The opening day is there. Hard to believe that we are getting to that point, although the weather that we’ve been having almost makes it feel like baseball weather.
James Nelson:
Yeah, no doubt. Pretty easy spring so far, early spring I should say. Yeah, weather’s cooperated. Looking forward to start a baseball season. I think your Reds are coming for the Cubs this year. We didn’t do anything this all season. You guys made some pretty big moves, so we’ll see how that goes this year.
Nate Kreinbrink:
We’ll see how it goes. Expectations are one thing. We’ll see how actual results once we get to the season is another thing and it’s exciting. It’s good that I think Cincinnati is one of those organizations and that has the history in baseball, so hopefully they can get competitive again. It’s a tough division. We’ll always be Cardinals Brewers, Pirates, Cubs obviously and hopefully the Reds can be a part of mix of that.
Nate Kreinbrink:
Again, this time of the year, optimism is high with every team that’s out there. Everyone’s in first place once they kick off opening day, but it’ll be interesting to see and ready to get gone. I know the weather being outside a little bit to just get that going. I know from… we’re talking the weather standpoint, March has been a relatively calm and pretty upbeat. On the flip side, markets in March have been quite the opposite.
Nate Kreinbrink:
We’ve seen obviously a lot of volatility that has been in the markets. Most notably with the impact that the Coronavirus has had globally, with some of the things, some of the reaction the Fed has done with interest rates and so on and so on and so on, markets have acted accordingly. A lot of volatility, but again, it’s one of those things that we want to just caution people, is to make sure that obviously your allocations are adjusted accordingly is one of the biggest things that we want to look at from that standpoint.
James Nelson:
Yeah, exactly, and this is the time where you need to have a plan in place, right. It’s way too easy to panic and get out of the way and sell while things are down and that’s probably the worst time to be doing anything. Now, that doesn’t mean you just hold current allocation and ignore it. I feel like there’s two extremes, people that panic and want to get to the sidelines as quickly as possible. Then others that have the mindset of just having a static allocation and set it and forget it and hopefully at some point it works out.
James Nelson:
Neither of those are really great options. We try to find that middle ground and that’s making tweaks and making changes as far as the allocations, depending on what markets are giving us. The lot of the markets in general have been going down, but there have been pockets where things have been pretty positive.
James Nelson:
The longterm government bonds, which are the most boring positions in the world have really rallied and been the best performer year-to-date. That’s really interesting to see in the bond market, how the long term government bonds have been the biggest winner so far by a long shot.
James Nelson:
Anyway, that’s something that we look at. We spend a lot of money and time on research and trying to help make these decisions, but sticking to a plan and having a sell discipline in times like this is vitally important. We find with a lot of new clients that we sit down with that doesn’t exist right now. They just put the money in and hope it works out and so far year to date, it’s not working out.
Nate Kreinbrink:
Right. I think it just goes back to the old adage that, “There’s times you want to play offense, there’s times you want to play defense”. Obviously we’re in a time right now where playing defense is probably the best bet to go out there. We’ve had a nice little run up over the last 10 years. We don’t want to give it all back.
Nate Kreinbrink:
We know when anytime that you’re in an investment, there’s risks that that are associated with any type of investment that you go into. We know that this isn’t the first time we’ve had a drawback like this. We know that this isn’t going to be the last time we’re going to have a drawback like this. It’s just how you’re positioned and how mentally prepared and are you to be able to take that, take the emotions out of it and being able to, as James said, have a plan to be able to react to it when that happens.
Nate Kreinbrink:
Again, a lot of the focus has been on markets. We put a big adage obviously… The importance of your investments is key, but that’s just one piece of the puzzle. I think this fits into the whole scheme of what we preach about every single week that we come up here, is having a plan, having a comprehensive plan where investments are just one piece of that puzzle. How are we looking at as far as tax planning? Tax planning is a big key when it comes into some of this stuff as far as your withdrawal schedule, your withdrawal plan to do that. Lower tax environments. How are we going to look at our assets that we have accumulated over the years and what is our plan to start breaking these down?
Nate Kreinbrink:
That’s the part that I think a lot of people forget about and oftentimes gets overlooked. The focus is on, “Okay, how much are you contributing? What are you invested in? I’ve got this big pile, now I’m at retirement or nearing retirement. How do I break this thing down most effectively?” How you do that is going to have a much bigger impact on how much you saved as far as over the course of the year. When our coal pile was the biggest, we want to effectively be able to break that down and turn it into an asset, into income for me throughout retirement.
James Nelson:
Yeah, that’s exactly right. The investments we preach it all the time, is one component. We’ve got Social Security and Medicare and estate planning taxes, investments. All this stuff goes together and the part of the plan is coordinating those. We got to know what tax implications we have if we’re going to sell a position outside of a 401(k) plan. We have to know how this investment is going to affect our total income and our Social Security benefit, our Medicare premium, so you’re right, this is something that we spend a ton of time on.
James Nelson:
Going over the the comprehensive plan makes these conversations much easier at times like this. The programs, the scenarios that we run account for downturns. They account for times like this. When somebody knows that their plan is still funded and I can still retire even given the current market conditions, because we’ve run the plan and we’ve looked at the numbers and we’ve accounted for scenarios like this, it makes these times a lot easier.
James Nelson:
People aren’t focused on statements and focused on rates of return every single day on what the markets are doing. They know that they’ve got a good plan in place and we’re accounting for a lot of these scenarios.
Nate Kreinbrink:
Right and I think what you just mentioned as far as that withdrawal schedule is key, especially in up markets and down markets and having that plan in place. I know we hit it quite often, James just mentioned it again, but taking into account when we sit down with an individual, when they are making that decision on whether or not to retire, we are as he mentioned, taking this into account because we know it’s going to happen. It has happened before, it’s happening sort of right now. It will continue to happen into the future at some point.
Nate Kreinbrink:
These things are part of the markets and it’s not anything new. We just got to look at it from a historical standpoint and say, okay, “How are we going to take this into account with our actual portfolio or actual retirement plan and how do we move forward for that” and know that during these times of volatility, there’s certain things we want to do. There’s certain things we want to stay away from. Large withdrawals during this part of time are extremely detrimental.
Nate Kreinbrink:
We want to make sure that if there’s something that we need to take out, that we want to try not to lock in some of these losses at this time and understand that one adage that “You put it into there and hope and that it’s going to come back at some point.” That’s really not a plan that I think is really sustainable to a lot of people, or that they feel good about, because who said it is going to come back? If it does, how long is it going to take for that to come back to where it was?
Nate Kreinbrink:
Again, have that plan, that discipline plan, being able to maneuver your assets inside of your account during these times, to take advantage of some of those opportunities when they arise, but again, let’s play defense for the rest of the time.
James Nelson:
Yeah, and I think for people who are listening and maybe have questions or are feeling the heat a little bit with the uncertainty of the markets, it’s worth sitting down with us. Come on in, sit down, let’s take a look at how your retirement plans positioned, how your… any other investment accounts are positioned. We can sit down and tell you where our head’s at. Where we think there’s some opportunities and where we think things may continue to unwind.
James Nelson:
This Coronavirus isn’t going away tomorrow. We’re expecting volatility for quite some time. Saudi Arabia poured gas on the fire this weekend with the oil issues, pushing up demand. They’re supplying oil to a large extent now. They’re pumping the heck out of it and cutting prices, trying to put others out of business. This stuff isn’t going away this week or next week. There’s going to be uncertainty potentially for the whole year. Then we’ve got an election coming around in November, so who knows.
James Nelson:
Sit down with us, have the conversation. Well, we’d be happy to give you our objective, view of the portfolio and help with any allocations that you may have.
Nate Kreinbrink:
Right. At this point in time, the worst thing that you can do is just not do anything. Just push it under the rug and then hope that it’s going to go away. As James said, it’s not going to go away anytime soon. You’ve seen some of the planning on the news as far as what people, leaders are looking at doing going forward as far as public events, sporting events, whatever the case, college classes being strictly online.
Nate Kreinbrink:
James said this isn’t going to go away anytime soon. That’s going to have an impact, not only in the immediate term, but in the longer term as well. Once some of those decisions trickle out through the economy, how is that going to affect us? As James said, that leads us right up into that election, which is the uncertainty that the markets don’t like it at certain times. Again, have an approach. Have a plan, don’t do nothing and call that your plan, because that’s a lot of times the worst thing that you can do. Not knowing what you don’t know hit absolutely hurt you and during this time, that is evidently true.
James Nelson:
Yep, no doubt. Give us a call and we’d be happy to sit down with you.
Nate Kreinbrink:
Again before we run out of time, did want to mention that every Friday, Nelson Corp Wealth Management is wearing jeans for charity. Money raised in the month of March will be donated to the Clinton Symphony Orchestra.
Nate Kreinbrink:
James, I appreciate you joining me again this morning.
James Nelson:
Sure.
Nate Kreinbrink:
Again, this is Nate and James with Nelson Corp Wealth Management bringing you this week’s financial focus. Thanks again for tuning in and have a great rest of your week.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indexes mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer, member FINRA, SIPC, Investment advisor representative, Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com