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 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.

Announcer:
Now here’s today’s Financial Focus 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. Well, this is Nate joined by James this morning again. What a change in the old weather, James. We were just kind of talking on the way up, I think fall’s definitely here and getting all the transition from summer to fall. We’re here, I think.

James Nelson:
Yeah, yeah, exactly. Fortunately, it looks like temperatures are going to bounce back up later this week, next week, but yeah, it’s been pretty cool last couple of days

Nate Kreinbrink:
It’s been chilly, and then obviously that precipitation that’s been falling the last 24 to 48 hours, not having much of anything for basically the past month and a half, and then all of a sudden getting caught up all in about a day or so.

James Nelson:
Yeah, yeah.

Nate Kreinbrink:
And more to come.

James Nelson:
Yeah, no time at all.

Nate Kreinbrink:
Yep. So we always joke, I think, when we talk weather, we talk Midwest as far as if you don’t like the weather, blink and close your eyes and wait 24 hours and it’s going to change. Well, I think that’s true to kind of tie into the markets with what we’ve been having over the last couple of months, as far as the volatility that’s been present there, as well. And I think that’s been pretty evident within the last three days of what we saw. Going back a few months prior to here, we’ve been pretty much in a rebound mode from where we were with the lows back in mid-to-late March, been gradually grinding the numbers forward, but I think it’s important to understand how those numbers are calculated and how we’ve gotten to those and digging a little bit deeper, as they say, in car mechanics, as far as lifting up the hood and really digging in to see what that means. And I think the last three days of volatility has definitely proven some of that.

James Nelson:
Yeah, it has. The last three days have been a little rough. I mean, we’ve seen kind of a sell-off in the tech sector and that’s kind of led the way on the way down, it’s certainly led on the way up in the last couple of months, as you had mentioned, Nate, too. You know, this whole year has kind of been a roller coaster. Like you said, going back to March, April to some extent, things looked pretty bad. I mean, we had a 30 plus percent sell-off in the markets, COVID was really ramping up, people didn’t really know where that was going and then things come roaring back the last handful of months. And now up until just recently, we’ve seen some pretty heavy volatility. I think the NASDAQ’s down about 10% in three trading days.

Nate Kreinbrink:
Right.

James Nelson:
That’s the quickest move that index has ever seen on the downside. So yeah, it gets your attention and it makes you wonder how long can this go? Where is it going? We’re going into an election cycle here before too long. Well, I guess we’re already in it, but we’re really closing in on it here next month or two. So yeah, it comes back to sticking to the plan, right, Nate? We talk about it all the time with clients, you can’t make emotional decisions based on the latest headline or the latest market activity. It’s putting a plan together and having these discussions ahead of time so people aren’t hitting the panic button and wanting to bail in the rough times like right now.

Nate Kreinbrink:
Right, and I think this understanding where we are with things, I mean, you go back to January, February, markets are hovering and notching record highs, record territories for a while. Obviously those three months hit, we kind of bring ourselves back to where NASDAQ and then some of the other major averages where we’re hitting record levels again. So again, we’re hitting those things, sell-offs trying to happen, and we always talk a lot and it’s a big thing in our office as far as our money management is, is understanding your risk reward, and the risks that you are taking, and managing risks throughout your investments, whether through diversification, fund allocation, and things like that, to try to go along with it. And again, as people go into this thing blindly, whether it’s in their own 401k at work, personal accounts that they have, and not necessarily really knowing.

Nate Kreinbrink:
And that downside protection is absolutely critical when you’re looking at a long terming approach to your investments. And just that simple analogy that we always use is as far as just asking people that simple question. If you have a hundred grand, as far as in your account, markets go up 50%, markets go down 50%, where’re you at? And if you’re like most people, the simple answer, you think you’re up 50, you’re down 50, but you’re right back to where you started. Well, obviously that’s not the case where you’re at. You have a hundred grand, markets go up 50%, you’re at 150,000. Markets go down 50%, you’re at 75,000.

Nate Kreinbrink:
So again, it works the other way as well. If you have a hundred thousand dollars, markets go down 50%, you’re at 50,000, markets go up 50%, you’re at 75,000 again. So if you have a 50% drawdown, which again, I think, ’08, ’09, and over the last couple of months, you can see that that is very much possible. If you have a 50% drawdown, you have to make up a hundred percent just to get back to even. So again, that downside protection and minimizing that in any way that you can, through diversification, asset allocation, money management, tactical allocation, those type of approaches is going to hopefully put you in a better position to be able to get back to even, and then start making money again.

James Nelson:
Yeah, and I think unfortunately, a lot of people don’t pay a whole lot of attention until times, like right now, right? I mean, it’s kind of on autopilot and then, “Oh no, the bottom’s fallen out of this thing and now it’s time to look at it.” And that’s not the right approach. It’s got to be taken care of ahead of time. And again, the platforms, as far as the trading platforms, go along with that. Most of the activity is around volatile periods of time, and it’s usually people on the reactionary end versus being proactive and making changes ahead of time. So I think it’s just having the conversation and being proactive about it. Not waiting until something happens before, “Oh, yeah, maybe I should have done something, or maybe I should look at something different.”

James Nelson:
You said not knowing what you own, Nate? We feel like that’s the case a lot of times with people and their 401ks, right?

Nate Kreinbrink:
Mm-hmm.

James Nelson:
They maybe… A lot of people pay attention. Some people kind of put it on autopilot. They’re plowing the money in, they’re busy with kids, they’re busy with work, and it’s not a priority and that’s fine, but there may be a better option and there may be a better allocation for those type of people, rather than just kind of closing your eyes to it, and hoping things work out. So it’s important to know what you own, and if you don’t, you need to talk to somebody about that and figure out how you’re allocated, and how you’re positioned, can you take a downturn? Is the portfolio going to get roughed up or how should things be positioned a little bit differently?

Nate Kreinbrink:
Right. And I think as James said, it’s all part of the overall big picture plan as far as preparing for your retirement and funding your retirement. David was on last week with the 30-minute Live Show, but prior to that, I was on with Andy Ferguson with NelsonCorp Tax Solutions, and we spent two weeks literally talking taxes and tax planning and tax preparation and things that you can look at from the tax perspective to help your situation. Again, the tax planning, the investment planning, the social security planning, the income planning, all of these pieces of the puzzle need to start fitting together.

Nate Kreinbrink:
And the earlier that you can get on board and get on a path, as far as coordinating these investments, coordinating your tax planning, coordinating what your income is going to be roughly in retirement. Obviously we don’t know what tax rates are going to be in the future, the same way we don’t know what markets are literally going to do tomorrow, but again, having a plan in place and trying to put some of these safeguards in place around your accounts, around your entire portfolio, because again, it’s not like these things have never happened before. It’s not like these things are not going to happen in the future. It’s not an if, it’s a when. And again, we need to know that those risks are out there, anytime that you have investments in the market, but again, do what we can to help protect them whenever we can do that.

James Nelson:
And going along with the tax discussion, this should be the time that people have a pretty good idea of what their income’s going to be, right? We’re starting to get a little bit later in the year, most people have a general idea of what their income’s going to look like. This is when you need to up the 401k contributions if that’s a priority, to save more. Of those type of work plans, 401ks, 403bs, simple IRAs through work, those contributions have to be done by the end of the year.

Nate Kreinbrink:
Right.

James Nelson:
So, not being able to get it done in your last paycheck, but this needs to probably take place now if somebody is looking to increase contributions. The IRAs are a little bit more flexible. Certainly contributions could be made to those right now through the end of the year, but you also have up until the tax deadline, which is April 15th, to make those contributions. So going along with the tax discussion, people should really be trying to figure out where they’re at for the year, tax-wise where they’re at. And, “Hey, can I save a little bit more money? Can I put a little money here or there to save a few bucks on taxes?” This is the time to do it.

Nate Kreinbrink:
All great stuff, James. And again, as we always say, it’s all intertwined. If you’ve got questions on any of this, you’re just like everyone else out there trying to make this transition, come to somebody that has done it, that does it every day, and has helped people during this transition. Let us answer any questions you may have to, again, make sure that you’re on that right path. Because, again, when people retire, they want to do once, they don’t want to have to go back to work. And if they do go back to work, it’s because they want to, not because they have to. Did want to mention real quick that every Friday, NelsonCorp Wealth Management is Wearing Jeans for Charity. Money raised in the month of September will be donated to the Harvest Hurrah Event on October 17th at First United Methodist Church in Clinton.

Nate Kreinbrink:
James, appreciate you joining me again on this rainy Wednesday morning.

James Nelson:
Absolutely.

Nate Kreinbrink:
Again, 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 representative 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.