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 indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative. Cambridge Investment Research, Inc., a registered Investment Advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s Financial Focus program.
Nate Kreinbrink:
Good morning. And welcome to this week’s Financial Focus brought to you each an every Wednesday morning right here on KROS. Well, this is Nate, James joined me again today. Hard to imagine that we’re the last show of October all ready and this month has already flown right by and next week live program first Wednesday of every month into November moving right along to the end of the year.
James Nelson:
Yeah, exactly. Halloween week this week. Kids are pretty excited, hopefully the weather is a little bit better than it was last year. I remember stomping around in some smell taking my kids out and about but this year looks okay. I guess we can’t complain too much.
Nate Kreinbrink:
Not too much. I think it’s starting to warm up a little bit as we head into the weekend and looking at the extended forecast. I’ve seen a couple mid 60s towards the early to middle of next week. So any day that we can get into there, that’s into November and not a day that we have that white stuff covering the ground, I think is a positive and anyone would take it [inaudible 00:01:42].
James Nelson:
Yeah, exactly. Keep that common.
Nate Kreinbrink:
I know getting into today’s show. I know James and I last week we kind of reviewed some of the upcoming changes to the Social Security System. Most notably the cost of living adjustment that was announced earlier this month for the Social Security Benefit of 1.3% and then ended the show and transitioned into looking at those assumptions that if you’ve done any planning on your own or with an advisor, whether it was five years ago, 10 years ago, last week, you want to really make sure that you’re understanding what assumptions are being made and constantly reviewing those plans as you transition into the future.
Nate Kreinbrink:
Because again, when you’re projecting anything into an extended period of time into the unknowns, there brings on a lot of uncertainty. And I think it’s been fairly well shown in the news, shown in the media everyone knows as far as the uncertainty that’s surrounding any election and then obviously most notably the upcoming election coming up here in a few weeks.
James Nelson:
Yeah, exactly. And we go back to it all the time on the radio show here and in the office as far as sticking to a plan that’s easy for people to look at the election or any other big event like that and think, “Oh, I’ve got to make some changes or I got to get conservative.” The data shows that the amount of billions of dollars that have flooded out of the stock market in the last two months has been pretty dramatic, but it’s like that every time. Anytime we go into election, people think that and sometimes that comes to fruition and sometimes things pass and it’s not a big deal.
James Nelson:
So that’s where we go back to sticking to the plan and not just kind of floating in the wind based on your feelings as far as the next headline. Having that plan and sticking to that plan becomes crucial in times like this not hitting a panic button at the wrong time.
Nate Kreinbrink:
Exactly. And then we talk much a different times as far as that uncertainty and having that plan. A lot of times people, they kind of go with it and think “Oh, it always come back. It’ll always come back.” It may get hit a little bit, but hopefully it’ll be back. Well, nobody likes seeing their account balance get drastically cut as far as knowing that hopefully it’s going to come back. And I think when we look at just the simple comparison as far as downside protection, everyone wants to focus on upside, upside, upside. And what did you make? But people negate a lot of times the downside and the importance of protecting that downside. And just that simple, if your account is up 50%, down 50%, where’s your account at? And most people just simply say “Well, we’re back to even.”
Nate Kreinbrink:
When in actuality you’re lower than that. If your account goes down 50% to say you have a $100,000 in your account, it goes down 50%. So you’re at 50,000. Now it goes up 50%. You’re at 75,000. So again, understanding the downside protection and the magnitude of the rate of return after those big losses to get back to even. And if you can do anything in as far as planning, looking ahead and doing some active management with some of those accounts, with some of those assets, you’re going to be much, much better off as far as getting ahead later on when times look better.
James Nelson:
Yeah, exactly. The other reality of the situation right now is just what are those conservative investments paying anymore? Years ago, if we didn’t like stocks, we could go to bonds and pick up, 3%, 4% or 5% pretty easily. Well, now the current interest rate environment where rates have just been almost brought to zero, those, those so-called conservative investments hardly even look worth it. There’s a little risk associated with those bonds and for what the interest rate level, I think the tenure was 0.7, 0.8, somewhere in that range as of yesterday. So it’s amazing to see what interest rates have done to bonds in general and what those conservative portfolios look like these days. It’s, it’s really too bad to see what they’re paying. So that’s the other reality is just, “Hey, I don’t like stocks.” Where am I going? Well, used to be a pretty easy decision anymore. Makes us think a little bit. And again, there is a risk associated with those conservative portfolios as well, especially in the current interest rate environment we’re dealing with.
Nate Kreinbrink:
Right. And I think then a lot of people look at you and they throw their hands in air and say, ” what are we suppose do?” And that’s just the challenges that we’re facing in today’s environment. It’s unlike anything we’ve seen for a very long time. If ever historically, as far as where we’re at with all these things. But again, there are opportunities out there being smart, being disciplined. And a lot of times when we look at the investments and in how you’re allocated or whatever, it really comes down to two just emotions and it’s fear and greed. How greedy do I want to get when times are great? How fearful am I when times are not so great and where do I fall in between that? And being able to maneuver back and forth between those, and it’s an emotional aspect of it. People get emotional when it comes to finances, when it comes to their assets.
Nate Kreinbrink:
And again, if we can make decisions without emotion, having someone help us that is looking at it from a different perspective to help us maneuver through some of those, you’re probably going to end up being much better off than trying just to wing it on your own and hoping that your account balance is higher whenever that time comes when you do need those assets.
James Nelson:
Yeah, well, and you’re right Nate, you of joke about it. “What am I supposed to do when people look at us like that?” And we get that but even through all of this, even through the election, COVID dominating the discussion all year long, practically, there’s been some substantial winners in the stock market. There’s been some sectors that have done very well. There’s obviously been some sectors that have done very poorly, but there’s always going to be winners. There’s always going to be opportunities. And when there is a lot of uncertainty, generally some of those opportunities start to show themselves a little easier. It becomes a little bit more attractive at that point in time.
James Nelson:
So uncertain as times are there’s always opportunity. It’s finding those opportunities and being able to capitalize on them. And that’s what we’re trying to do. And even going into the next week with the election, we’re seeing some volatility today in the markets. We’re going to probably see some volatility for the next couple of weeks but the world’s not coming into an end. There’s going to be opportunities to find some good positions as well.
Nate Kreinbrink:
Right. And I think too, just understanding exactly where you are in your specific situation. Obviously advice and direction of someone that’s looking to retire at the end of the year is going to be a lot different than somebody that’s maybe in their mid 30s, early 40s or whatever that has a little bit of time. Then understand, “Okay, yes, there’s a downturn in the market, but that means different things to different people when they’re in different phases of their working of their working career, retirement, whatever. So again, some of these downturns could possibly be opportunities depending on where you’re at and understanding how you can take advantage of them by contributions. What you need to be looking at is, again, discussions that need to be heard.
Nate Kreinbrink:
Just because you’re 10-plus-years out from retirement, doesn’t mean that there’s still not planning that you should be possibly looking at now, as opposed to waiting until the very end when sometimes there’s not a whole lot that can be done at that point in time.
James Nelson:
And knowing what you now own. Right?
James Nelson:
That’s the biggest thing people… Oh, I don’t know what I have in my 401(k). I don’t know what these positions are. I haven’t made changes. I don’t look at it very often, knowing what you own is most important. People think, “Oh, I’m in a bond portfolio. I’m conservative.” Well, what type of bonds? Or “I’m in stocks right now.” What type of stocks are they? Domestic, international growth versus value. Knowing what you own is crucial. Because again, all of these positions don’t go up and down at the same time. They don’t correlate exactly with each other, knowing what you own and knowing how your portfolios position going into these uncertain times is absolutely crucial.
Nate Kreinbrink:
Obviously, it all good stuff. And again, we don’t want to just be doom and gloom, but we want to be reality and understanding exactly what the real life discussions are and questions are. When you have questions, give us a call we’d be happy just to sit down and review things with you and see kind of where you’re at and go from there. But before we do run out of time, I did want to mention that every Friday NelsonCorp Wealth Management is Wearing Jeans for charity. Money raised in the month of October will be donated to the Med Tree sponsored by MercyOne here in Clinton. James, as always appreciate you joining me this morning.
James Nelson:
Absolutely.
Nate Kreinbrink:
Nate and James with NelsonCorp 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 indices mentioned are unmanaged and cannot be invested into directly. Registered representatives, securities offered through Cambridge Investment Research, Inc.,, a broker dealer member FINRA SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors Inc., 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.