Ep 05: How to invest in an unpredictable market

Episode Transcript

Intro/Closing: 0:03
Welcome to the Real Talk Retirement Show, where we explore the financial side of retirement and beyond. Whether you’re currently retired or planning for the future, we offer real, relatable conversations about money and personal finances. Most importantly, we dive into all these topics using Real Talk. Now, let’s get real about your money and your retirement. Now, let’s get real about your money and your retirement.

Brian Graff: 0:28
Hello everyone and welcome to another episode of the Real Talk Retirement Show. I’m Brian Graff, a retirement educator, here with Conrad Siegel. Now our loyal listeners, which we have. Many, know that I am joined every episode by my colleague, Tracy Burke. However, we’re going to give Tracy an episode off I promise it wasn’t for bad behavior or anything like that and in his place we do have a very special guest. Today I am joined by Dave Lytle. Dave is our Chief Investment Officer here at Conrad Siegel. He’s a partner in the firm, leads our investment research team and consults with many of our valued clients. So, Dave, welcome to the podcast.

Dave Lytle: 1:10
Hey, thanks for having me on, Brian. Really appreciate it and look forward to trying a new format for us to have these discussions.

Brian Graff: 1:15
Absolutely. We’re going to have a good time, Dave, I promise Sounds good.

Brian Graff: 1:18
But, dave, we brought you in today specifically to tackle the elephant in the room at least most of the rooms that you and I visit these days which is market unpredictability. Now we could replace that word unpredictability with a much stronger, maybe less friendly word, but let’s stick with unpredictability as we dive into things. So, dave, can you start us off by discussing what’s going on right now? And to timestamp this, remember we’re in early 2025. But what’s going on right now? And to timestamp this, remember we’re in early 2025. But what’s going on now that has investors panicking a bit and unsure what to do with their retirement investments.

Dave Lytle: 1:54
Yeah, absolutely so. Right now, anything investment related, I mean you have the normal earnings, interest rates pop up, but tariffs I mean tariffs is the key word that’s coming up constantly. And very smart to timestamp this. I’ve been saying that. You know, with the market moves we’ve seen both up and down. The volatility data is going stale, incredibly quick. So we are doing this recording early May. Things you know could change quickly, but we do think that we’ll give you an update on where the markets kind of stand. But the steps we’re going to talk about of you know, think of market volatility. How do you invest through it? How do you kind of go to sleep at night, those kind of hold in all situations. So, starting off kind of what we’re seeing right now, you know tariffs have been big really the whole year.

Dave Lytle: 2:36
President Trump was very direct on you know he was going to use tariffs, got back into office when he was campaigning, came back into office in January and he has held true to that campaign promise. So really the first, you know January and February and March markets were down. A lot of that was on tariff stress. So you know it started with tariffs on Canada and Mexico and China and then some more targeted ones on sectors like metals and autos and Q1. Ones on sectors like metals and autos in Q1. So markets were already a little stressed about tariffs and the idea of you know okay, you know, tariffs get paid when products come into the US. How’s that going to impact pricing? How’s that going to impact consumer confidence and spending? Is there going to be a business shift because of that? Are companies going to spend less or we’ll have kind of economic slowdown? So market was already kind of keyed on and kind of stressed about this. But then we got a big shift on April 2. So there was a big announcement after markets closed.

Dave Lytle: 3:31
President Trump was in the Rose Garden and they kind of rolled out these reciprocal tariffs, what they were labeled. So everyone was very keyed into this address. It got a lot of attention and what we saw come out of it was actually very different than market expectations. So reciprocal tariffs everyone was thinking the idea was going to be okay, well, if you have a tariff of 5% on the US, we’ll put a tariff of 5% on you. We actually got something very different where it was based much more on trade surplus. So the idea was that it wasn’t necessarily tariff driven. But if we buy more stuff from your country than we send to it, we’re going to give you a tariff, thinking this wasn’t a fair trade practice. So to give you an idea of kind of the scope of it leading into this, tariffs were about 2.5% on average for US imports and this had actually ticked up in recent years with some levies put in place by Trump and Biden both their administrations so everyone’s thinking, okay, you know 2.5, the average tariff for the US on our exports is about five, maybe things will double here. Actually went up to 25 percent, so increased by a factor of 10.

Dave Lytle: 4:33
So market was not ready for that and we saw a huge sell-off those next two days, on Thursday and Friday. So it wasn’t a big one-day move historically, but the two-day move we saw actually got put in consideration of the biggest since World War II. So the flash crash we had back in the late 80s great financial crisis or dot-com type moves. It was up there.

Dave Lytle: 4:56
Markets were obviously very stressed and there started to be discussions about will this cause a recession, how big a recession, how quickly, is going to come in? The market was very anxious here and the market also got very volatile to think, okay, maybe these are negotiations versus long-time policy. We got some different you know feedback from administration on what that was, where they’re certainly open to negotiations and have more fair trade, but at the same time they’re saying you know, these are here to stay and they’re going to drive a lot of revenue. So market wasn’t quite sure what to make of it. And then again, just a couple of days later, the following Wednesday, we got a 90-day pause to a lot of these bigger tariffs and the market reacted just shot skyward. Brian, you and I were actually in the office together, if you remember, and I had apologized at the time. I had my phone on the table. Now it’s just hitting refresh, because we were in that type of environment where I wanted to see what was going on. I wanted to keep tabs on it.

Dave Lytle: 5:50
I definitely remember that day, dave, yeah, and you know things were choppy and we’re kind of. I was giving updates once in a while, just watching it then and we left that meeting. I do a couple things around the office and I went out to drive home in the parking lot. I pulled up the app one more time just to see where it was. Markets had shot up I mean six, 7%. At the time I actually sat in the parking lot.

Dave Lytle: 6:08
I’m like what the heck happened in the past 20 minutes from when I put my phone away that I got in the car and it turns out we had this pause and ended up being one of the biggest days ever for the S&P 500% gain, just astronomical gains across pretty much all industries, all stocks Just astronomical gains across pretty much all industries, all stocks. What’s interesting here is that, looking at this, we were paused. The biggest tariffs, those tariffs on Canada and Mexico and China were still in place. The 10% base on all imports still hold. So we’re actually at a much higher level than we were at the start of the month, even what expectations were. But it wasn’t as bad and it gave hope that a lot of these might be negotiated. They might change. The markets took that very, very, you know, favorably.

Brian Graff: 6:50
Yeah, investors were just looking for a glimmer of hope, kind of right, dave, correct.

Dave Lytle: 6:53
Like it. You know it’s not good but it’s so much better than where we were that that was all the excitement. And you know that’s something we talk about. You know, historically, getting into that larger picture, we see that a lot when we look through past market stress, where these best and worst days happen really closely together. And doesn’t you know it’s true in a lot of times, these market events, that the rebound’s very swift.

Dave Lytle: 7:15
But even on the way down you get these times where, hey, maybe things are oversold or maybe we’re in a type of environment right now where things are going to change, and you get these huge rallies and there’s some great charts out there by a bunch of providers that you know how impactful it is missing these great rallies. And you know if you sold out after Thursday and Friday, it’s hard to say that. You know you weren’t looking and making up a stressful scenario. There was a lot of stress in the markets. There was real world concerns there, man, but if you missed that Wednesday, if you went to cash or sold out a lot of your equity holdings before that day, really could have long term impacts on your portfolio.

Brian Graff: 7:54
For sure.

Dave Lytle: 7:56
So, looking at that, you know the idea of, you know investor sentiment, like what do we really expect and how do investors really kind of handle this? So you, you know, looking at what we saw in those early April, you know it’s hard to see those dollar losses and I know you mentioned this speech, brian to your people say that like I looked at my portfolio and I lost X dollars of those two days. Like we are seeing those comments a lot.

Brian Graff: 8:17
Yeah, we see them all the time and you know I try my best to remind investors that. You know it’s really only on paper, right, we’re on online and I guess you might say these days too. But until you make that sale and you know, get out of the investment, you have to really convince yourself that. You know, I still have the same amount of units or shares in this investment that I had the day before. The value just happens to be a little bit down. So it’s a psychological game which we’ve talked about in some other episodes.

Dave Lytle: 8:44
Yeah, and you know it’s so fluid that if you think of you know 23 and 24, I mean there was just fantastic gains in the equity markets Investors really benefited. So yeah, I mean you did, your portfolio is worth less than it was earlier. There’s no way getting around that. But you’re right, you know you’re essentially giving back some of those great gains you had earlier and if you do sell out you lock in that loss. If you stay invested, then you know that loss and gain can easily be fluid, kind of moving forward.

Dave Lytle: 9:09
But you know it’s hard to see that dollar loss and there’s a natural instinct like I need to put a floor on it. Yeah, I might have lost this much but I don’t want to lose more. But when you know we talked about, you know those rallies happen and they happen unpredictably and I mean to be honest with you a lot of the gains we’ve seen in april. It’s hard to really reconcile them sometimes because these concerns, these long-term problems or hurdles or difficulties, were talked about in early of april. They’re still there. They haven’t been resolved.

Dave Lytle: 9:38
we haven’t gotten more certainty around them yeah so I mean, that’s the whole idea, is that you know, if you say you sold out and you’re like you know I’m done, I’m going to kind of wait until this resolves the problem is, you might not have any more dollar losses, but that opportunity cost, the idea that you know, if I had stayed invested, I would have gotten that, you know, 8% rally on that Wednesday. So, yeah, I didn’t lose any more dollars, but, like, what opportunities did I lose by making kind of those short-term moves? So, like, I think it’s always good to think about that cost too. Yeah, huge part of the equation, for sure. So, you know, looking at the current environment, I think it’s really important to think about the idea that you know sentiment is important to the markets, obviously, that you know whether people are optimistic or they’re pessimistic, it can move the markets. So there’s something to that.

Dave Lytle: 10:25
But in this current environment, to you know sentiment is so fluid. You think of some of those past big crisis. You think of, you know, the covid crash, um, the great financial crisis. There was this external shock that was trying to be understood, couldn’t really be controlled. I mean, we had to work through it and kind of figure it out. Um, you know this is.

Dave Lytle: 10:46
This tariff is definitely external force coming in, impacting the markets, but, um, the level of control is very different. So the administration has put these tariffs in place and they’ve shown themselves to be very nimble and fluid and you know making pauses, making exceptions, you know shifting and you know maybe if we get trade deals they’ll remove them and they could. If we don’t get trade deals, they could get changed in a different way. Now we’ve seen with China their tariffs have increased a lot, as China’s responded, given some tariffs on US goods, I think. Currently it’s standing about 145%, which is almost an embargo. If that number were to come down, if we had some real progress with China, it could be a huge shift in market sentiment and performance. So I think in this situation, with the control the administration has, it’s one of those things to know that sentiment can really turn on a dime, and we’ve seen it do it there too. So just one more thing to be thinking about as we kind of try to navigate this situation.

Brian Graff: 11:44
Yeah for sure, dave. It’s crazy, and you know you think about the last two times we had like this. You’ve got the pandemic right, which is one totally separate thing, way different than tariffs right? So the event that caused this market stress and the volatility, where you know, tariffs versus a pandemic two completely different things, but really the reactions to investors and the uncertainty, that’s what’s so similar, and we’ve seen it before in history with other types of events. We’re going to see it again. So this is nothing new, at least. The volatility, the uncertainty.

Brian Graff: 12:22
So I think the logical next thing for us to talk about, dave, would be whether we’re talking about early 2025 or maybe three years from now, in 2028, if something happens again, what are some practical steps we can take? What are some things we can do as long-term investors to kind of protect ourselves from making bad mistakes with our account, to feel a little bit more at ease with the market environment. And I think the first thing I’ll bring up is something that we say all the time here at Conrad Siegel be diversified within your portfolio. Don’t put all your eggs in one basket. Have exposure to several different asset classes and market categories, which really helps ride out the storm in difficult times. Can you talk a little bit about the importance of diversification in a portfolio, dave?

Dave Lytle: 13:04
Yeah, absolutely. You know shouldn’t come surprised to your listeners that you know the things we’re going to talk about. Aren’t these really cutting edge, exotic strategies? They’re kind of those tried and true investment principles, but they can be really impactful and you know they’re not always easy to do in stressful times. So the first is diversification. It’s the idea that you know, yes, the US equity markets have really had a rough run in April, but that’s a good thing to think of is, you know, we recommend a diversified portfolio. So you’re going to have, you know, fixed income, domestic equity and foreign equity.

Dave Lytle: 13:36
And you know, looking back, the month of April actually turned out to be not that bad. The idea of you know S&P 500 ended down, I think, less than 1%, so it had a huge rally in there. But you know, fixed income was up 0.4%, foreign equity was up 3.6%. So the idea that you know, if you had all your exposure to the domestic equity market, you felt all the pain, all the huge drops we saw going on. If you actually had some diversification, you had your fixed income, you had your foreign equity, which have been out of favor in recent years. We kept saying it’s okay, there’s a reason to keep them. They’re going to help in different market environments. We saw that play out and if you look at some intramonth data it plays out much better.

Dave Lytle: 14:18
So on, you know, before the big rally we had with the pause we saw from their peak levels, s&p was down 19%. About Small caps, us are down closer to 25. So you know we always say a bear market’s a loss of 20%. S&p 500, I think intraday it might have got there. Small caps were firmly in that. So you had that big sell-off. Bonds were down a little bit. Foreign equity is down about 10%. So they had losses, but not nearly as big. So there’s a real diversification kind of benefit you can see there. If we actually step out year to date, you can see that we’re coming through a little bit more.

Dave Lytle: 14:54
So we mentioned this tariff talk is really ramped up in April but it’s been present pretty much for all of 2025. So I’m showing that. You know, in 2025, s&p 500 still down about seven and a half percent and other portions of the market. You know maybe mid value or growth style equities could be down even more. You know, at the fixed income’s up over 2.5% and foreign equity’s up close to 5%. So there you kind of see that diversification impact and I know some of our clients have been pleasantly surprised when they see their kind of recent performance and they’re only down 1% or 2% and they’re like, oh, that’s actually not that bad considering what we’ve gone through. And part of it has been the idea we stayed invested. We saw that rally in the second half of April. But the other part is we weren’t all in on domestic equity. We had exposure to these other buckets and it really did add some value.

Brian Graff: 15:45
Yeah, for sure, dave. So diversification, you can see, really mitigates some of that downside risk that we’re taking as investors. We also talk about the idea of rebalancing a portfolio as well. Some comments on that, dave.

Dave Lytle: 15:57
Yeah. So rebalancing again not a very fancy or cutting-edge idea, it’s just the idea that if you have a long-term target, you should be going back to it, selling the things that have done well and buying the things that are down low. I will say, for a lot of investors, rebalancing and up markets is much easier. I will say, for a lot of investors, rebalancing in up markets is much easier. It’s much easier idea that, hey, you know the stocks have stock markets on great in 23 and 24. I’m going to lock in some of those gains and buy bonds. That’s a much more natural kind of reaction.

Dave Lytle: 16:27
Rebalancing when equity markets have done bad is not as easy, but it’s just as impactful. You kind of do both sides of the coin here to get the full benefit. So there the idea is that, okay, things really sold off the first half of April. If I had a 60-40 portfolio, maybe my stock exposure is lower than I want it to be. You know what? I’m going to sell some bonds and I’m not saying it’s going to be the market bottom right now. There’s no call on that. But the whole idea is things are much less expensive than they were just a couple weeks ago. I’m going to get back to my target, try to buy low, and you know there’s a lot of things in there that you know buying low is really impactful and even if the market does go down more, just kind of doing that constant approach and capturing those when things are a little bit lower, have more exposure there.

Dave Lytle: 17:16
When you do have rallies going forward, it can be really impactful. So we recognize that there’s been a big rally. There’s still a lot of market risks out there, but it’s a good practice to have at all times. And at the same time too, with rebalancing, it’s impactful that if you had that great 23 and 24, if you didn’t rebalance at all during those years, you were going to be overweight equities coming into this. So that would be a little bit of extra pain too. So you know, if you were, you know, very regimented, rebalanced in late 24, maybe early 25, you came into the sell-off on overweight equities and then you maybe had an opportunity here to add some to equities when things had sold off and kind of get a little extra boost to your portfolio from that technique as well.

Brian Graff: 17:58
Yeah, dave. I think it’s good to point out too that a lot of retirement plans kind of have built in tools like automatic rebalancing within their portfolios.

Brian Graff: 18:05
That way, you know every three months, just without you having to do anything as an investor. The system you know will automatically, you know, kind of sell and buy to get you back to your original portfolio objectives. And when you add, like one of those automated tools, in this case, it kind of prevents the again, keeps the emotions out of it. You’re not trying to time the market, it’s just the mechanism of those portfolios. I think that’s very helpful as well if offered through your retirement plan.

Dave Lytle: 18:32
Yeah, it has a disciplined approach where it’s like, hey, I’m going to do it, I’m making this decision once, and then it kind of is done for you.

Brian Graff: 18:39
Happens automatically. Okay, good. So that’s our tip number one Just make sure, kind of going into these market environments, you are properly diversified, You’re rebalancing your portfolio, either on occasion or through an automated tool. I think the next thing that’s super important, Dave, for all investors, is to make sure you’re taking an appropriate amount of risk within your portfolio so you know how you invest your money. Early in your career versus the middle of your career, versus pre retirement should be probably different for most people, and you know somebody that called me in panicked a couple of weeks ago when the market was not behaving very nicely. You know if they were, you know, a year or two away from retirement, but they were taking you know, appropriate amount of risk. They were a lot more confident about where things stood than the 65-year-old. That was still maybe 90% or 100% equities right, Because they were taking an appropriate amount of risk for their age. So risk comes into play quite a bit, Wouldn’t you agree, Dave?

Dave Lytle: 19:40
I agree it’s like you said earlier that those losses get locked in when you sell. And if you’re looking at a retirement plan or even a young investor, if you’re in your 30s, realistically you might not need to sell if that money is saved for retirement. So you can kind of ride down those ups and lows and have a higher equity exposure. Now if you’re closer to retirement or you know you’re a young person who’s putting money aside for a house and you’re like, okay, I’m going to have to kind of liquidate this portfolio near term horizon, then it’s a very different you know strategy.

Dave Lytle: 20:09
So I agree that you know idea to kind of ride out underperformance and stay invested for long terms versus no, I need these funds for other things. They need to be sold out and used is very impactful and I’m a component of always having some fixed income in a portfolio, especially with yields being higher. Now I think they can offer some competitive total return. But I think that, as we talked about diversifying and rebalancing, I think always having some fixed income really allows you to do those things better. And then, certainly, as you go through the risk of early mid retirement or short-term savings, that’s when you really factor in that risk and allocation becomes really impactful.

Brian Graff: 20:48
Absolutely. So those are some things you should do, we think, as a prudent investor Diversify, rebalance, visit your risk profile, make sure you’re invested appropriately for where you are in your career and your retirement goals. Maybe we can now talk about some things you might not want to do, Dave, as a long-term investor, and maybe try and avoid some common mistakes that we see all too often. So the first thing we’ll talk about here is and I mentioned earlier, timing the market. We recommend for most people really trying to avoid market timing, constantly trying to predict when the market’s about to drop so you sell out of your riskier investments and let’s say you get that right. Then it’s trying to also buy back into the market before it goes back up. So you have to be right twice to be an effective market timer. And again, we don’t think that that’s a great idea for long-term investors no-transcript.

Dave Lytle: 22:09
You know, I think the market’s really bottomed out there in late March of 2020, when the Fed came in with some pretty unprecedented and very large policies to support the market. We all lived through COVID. It didn’t bottom out in March of 2020. It was very impactful, impacted our lives, our abilities to travel, spend money, do business for much longer after that, and that kind of plays out throughout history where the market bottoms well before the actual event gets better. So it makes it very tough to time and I kind of also recognize, though it’s human nature you feel like all this is going on, like I need to do something. I can’t just sit here. So, brian, I know we both enjoy some sports. I’m a big hockey fan. I’m enjoying the NHL playoffs, right now.

Dave Lytle: 23:02
It’s playoff season, there’s no fighting. But then when you do fight, here are things you have to follow. So you know, we kind of say the same way with market timing Okay, don’t time the market. If you’re going to time the market, here are some things to think about how you’re going to go about doing it. So the first thing I think of is that the idea that you know, maybe think about overweight and underweight. So a lot of times I think of investors. If they’re nervous about the market, they go to cash. Or if they’re really bullish on maybe something happened, they’re like oh, I’m going 100% equity and that’s really a very aggressive swing that can be really impactful, both good and bad, and the bad can wipe out again any good you might have done. So the one thing I really think of here is the idea of overweight and underweight, and I see here a lot of institutional investors like the big fund shops, the big banks, talk about it, and maybe you have a 60-40 portfolio and you’re thinking, hey, I have real concerns about equity markets. Maybe valuations are high, or maybe this crisis is going on. You think it’s going to get worse. Maybe you drop down to 50-50. You make kind of that incremental change. So obviously our first line is always don’t time it. But then just things to think about if you’re going to time it. Another thing is that don’t stop contributing if you’re saving, whatever it is, whether it’s retirement plan towards a house, anything like that. But maybe you’re strategic about how you walk in new money. Again, don’t sell out what you have. But you can kind of think, hey, I’m gonna keep contributing, but maybe I’ll let it sit in a money market for a week or two, then I’ll put it in Again. If you’re going to take steps, it’s something reasonable to do.

Dave Lytle: 24:35
I think the one that’s actually probably the most healthy we talk about with comes to timing. The market is rebalancing. So you got your portfolio and you know, maybe you saw things really sell off with the um announcements of tariffs. Rather than going 100 equity, you could say, hey, I’m going to a special rebalance, I’m going to take my equity port right back up the target now kind of off cycle. So I think it’s one thing is that you know, don’t rebalance because again, sorry, always rebounds. Don’t time the market If you’re wrong once it can be so impactful. But if you’re going to kind of make some of these decisions. Where you think you need to do something, do small, incremental things. Don’t make those big swings with. You know, I think Tracy has a great saying don’t make short-term decisions with long-term money.

Brian Graff: 25:20
I think that really holds through here. And baby steps. That’s a term I use all the time too, Dave. Take baby steps when somebody’s panicked on the phone and they’re really nervous about where the world’s headed. I don’t want to tell them all the time, just don’t do anything, Just forget about it. But maybe if you’re going to make a move, just do it small. Make a small adjustment now.

Dave Lytle: 25:48
Revisit again for six months a year from now and maybe look at changing something again, but avoid those big drastic changes in your account. Yeah, I agree, and I said too and we talk all the time that if you’re at 100-0 and you’re really nervous about the equity market, it might be a good time to think too should I be 100-0? Because this is kind of extreme circumstances. But you should have kind of that allocation that lets you sleep at night and not think you have to market time to be positioned for what’s happening right now.

Brian Graff: 26:07
Yeah, yeah. Hey, dave, shifting gears a little bit, but I don’t want to forget to ask you this what about the old, the notion of let’s buy gold? You know I get that a lot now too. Anytime the market’s very stressed and people are worried about the direction of the world, inevitably I get callers that say I’m just, what do you think about selling off my stocks and just buying gold? What do you think about that?

Dave Lytle: 26:26
Yeah, it’s one of those things like the whole idea of like chasing returns is kind of factors right now too, because gold has been on quite a run. I mean it’s delivered some very big returns. You know you can talk about inflation hedges or you know kind of concerns of the stock market. Gold prices have just skyrocketed. So I think idea of buying gold might even be getting more headlines right now just because people have kind of seen what it’s done.

Dave Lytle: 26:50
We’re not big gold fans here personally, just because we recognize it’s a store of value. People think it’s been around for thousands of years. A lot of currency used to be tied to the gold standard. What we don’t necessarily like about gold is that there’s no dividends, there’s no interest. It’s just kind of holding that physical commodity and the whole idea is that that’s only really worth what someone’s been willing to pay it for you in the future.

Dave Lytle: 27:14
So that can be up, that can be down, but if you hold a bond you’re promised to get back the same amount plus interest. There’s always a default risk but that’s pretty low if you hold high quality bonds. So our thinking is that you know some people want some exposure there, but we think it’s really a good long-term investment because it’s all based on price change. There’s no idea of, you know, owning a business that has some earning stream or owning a bond that’s going to promise you interest payments. So it’s something that we tend to encourage you know investors to stay away from. Or, if you’re going to have a small holding, have it be a small allocation, don’t have it be, you know, a big kind of center portion of your portfolio.

Brian Graff: 27:53
Right yeah. So avoid chasing those returns of gold or any other hot stock or mutual fund component and most important thing we say it all the time, Dave, I think is to really stay invested. Another saying at Conrad Siegel here is that it’s not about timing the market, it’s more about time in the market. So try to avoid exiting the market just because of your emotions. Don’t be overly aggressive when you’re close to retirement, but don’t be overly conservative in the early part of your career either. We want to make sure we’re maximizing our returns, but really just stay true to your objectives. Be in the market and, historically speaking, things have always worked out okay.

Dave Lytle: 28:34
Yeah, I think it’s a good thing to think of too, and the whole idea, too is invest in a way that lets you stay in the market too. I think coupling those two together is a really strong tool that stay in the market and be invested in a manner that lets you do that without you know financial hardship or a lot of extra stress portfolios and things maybe to not do within their portfolios, you know, based on circumstances.

Brian Graff: 29:04
But as we kind of wind things down today, I’d always like to go over some action items, some practical steps people can take, or maybe some tips that we can pass along, and I’ll start off by saying this one’s a huge one for me. We may have touched on it a little bit earlier as really trying to avoid checking your retirement account balances every single day. Try and avoid checking your retirement account balances every single day. Most 401k or 401k type plans out there are daily valued, so technically, you could log on to your provider’s website each day and see your account either went up or down, depending on how the market performed. But it’s really frustrating. I don’t know how people have the stomach to do that.

Brian Graff: 29:40
Dave, and you know, something I hear all the time from people that do check daily is well, you know my neighbor, joe. He lost $100,000 in 2020 when COVID hit, and my normal reaction to that is you know, did Joe really lose that money? Did he sell everything and not buy back in, or was it just a short-term? You know, paper loss because he was looking at his website every day, went down $100,000, but you, but he forgot to mention that it went right back up a few weeks later. So you agree, dave, checking balances every day not necessarily the best thing to do.

Dave Lytle: 30:09
Yeah, I think too. You think of like you could say lost or like gave back some gains, which I think you could say certainly right now in 23 and 24. And yeah, I agree, I mean I keep a very close watch of the markets with my job here, and even intraday I’m looking at the markets too. But I tend not look at the idea of, well, how many dollars is my account up or down. So I think that adds like extra emotion to it. That’s probably not helpful. So I think absolutely be informed if you want to be nothing wrong with being well-read, understanding what markets are doing. But I agree, like putting dollar terms on it on a real frequent basis, I’m not sure that adds investment value. I know it does definitely add stress.

Brian Graff: 30:47
Yeah, 100%. So know what you have in there, know how you’re invested. But again, the daily checking maybe not the best thing. Something else I talk to retirement savers about all the time is really trying to avoid pulling money out of your retirement account, Like I know, sometimes it’s. People think that if the market’s not doing very well, why am I in the market? I could use this money to pay off other debt. I’m just going to pull it out of my account. Enough of this already. I always like to warn people too. When you take early withdrawals or distributions from a retirement account, not only is that money you’re giving up on in terms of compound interest and market returns, but there’s tax implications there. A lot of times you do face a 10% early withdrawal penalty if you’re under age 59 and a half. So unless it’s a real emergency, we do typically recommend that people avoid taking money out of their retirement accounts.

Dave Lytle: 31:41
Yeah, I think you’re right. The power of compound interest is a strong one, so keeping it in and let it accumulate over time can make a real difference.

Brian Graff: 31:53
Yeah, and again, going back to the risk thing, that’s another action item. If you haven’t thought about how risky your portfolio is, it’s never a bad time to revisit that. Take a risk quiz if your provider offers one, or talk to a financial advisor. You know, especially when you get closer and closer to retirement, a good financial advisor is certainly worth their weight in gold. So, going back to the gold reference, so you know you do it on your own, talk to a professional and just make sure you are taking the appropriate amount of risk now to achieve your future goals.

Dave Lytle: 32:20
Yeah, I think it’s a good thing to think of too is, you know, it’s not just age-based. You know that certainly is a portion of it. But you know, if you’re someone going into retirement and you have a large pension, you have a large social security, you know, maybe you don’t need as much from your investment so you can be more risky in the next year. What should I invest in? My response is money market or short-term bonds, like a one-year time horizon, where you plan on taking everything out. That doesn’t really line up with equities. Even if you are in your 20s or early 30s, that’s still a mismatch. So I do think it’s good to take a risk quiz and it’s good to think too. It’s not just how aggressive you are, it’s not just the idea of how old you are, it’s the idea too of, like, what are the circumstances? What else do we have going on in the picture and that can make a difference.

Brian Graff: 33:09
Yep, great point. And then, once you take that risk quiz or that assessment, then make sure that your current investments, that you have in your retirement plan we always like to focus on retirement here make sure it lines up with your risk quiz results and your long-term goals. So again, we go back to asset allocation. Diversification, dave, huge, huge factor in all this, I agree. And then, a very important everybody keep saving. I know. Again, we talk about human nature, we talk about emotion. Why would I want to save in a market that’s acting really wonky I’ll use that very technical term wonky why would I do that? But remember, when you continue to save for retirement, making regular contributions, you’re using dollar cost averaging, which we talked about in previous episodes. You’re kind of softening the blow. When the market’s down, you’re buying some of these investments at a discounted price. Is that all? Would you agree with that, dave too? I mean, keep saving.

Dave Lytle: 34:07
Yeah, I think keep saving is really important, just because you know if you skip those months of saving now, it’s pretty hard to do extra saving in the future. It’s much easier to have it budgeted, be consistent, keep those savings going in, you know, whether it’s to, you know, a house fund or retirement fund. It’s good to kind of keep that disciplined approach. And I agree you know everyone was good investing in 23 and 24. Those prices were much hot, especially late 24, much higher than they are now. And certainly I can say too, if you look at you know different valuations, portions of the market are less expensive now. Some portions are still have a higher price tag.

Dave Lytle: 34:38
But we’ve seen too is we don’t know where the market’s going. So I think that dollar cost averaging is good to lean into and by having that approach, yeah, you’re not going to time the market perfect, but you’re also not going to be wrong. You’re doing a very, you know, tried and true, consistent approach. That you know, will you be the biggest winner? No, but will you have a probability of success going up? Yes, and that’s kind of our approach of like let’s make sure we’re doing everything we can to meet our goals versus let’s have the best score up there.

Brian Graff: 35:07
Yeah, great point, dave, and yeah, thanks. This has been, I think, a very productive session. I hope there were some things that Dave and I talked about today that really resonate with you. But if you know, even after today’s podcast, you still have concerns, you have questions, just remember we are here to help. That’s what we do at Conrad Siegel, so you can email us at podcast at conradsegelcom, please. We always like to mention at the end of these podcasts if you liked what you heard. Please give us a good review, subscribe to the podcast, tell your friends, family members, colleagues where you found us, and we’d love to have as many listeners as we can get to help as many people as possible, because that’s what this is all about. So, dave, before we sign off for today, any final comments or words of wisdom to our investors out there.

Dave Lytle: 35:53
No, I mean I would say that April has been a roller coaster. If you feel kind of stressed and tired of keeping up with it, that’s not a wrong reaction, A lot of people are sharing it but, yeah, just keep that long-term approach, make incremental changes and be invested in a way that meets your goals, helps you weather the storm and Brian thanks so much for having me on and doing my first podcast.

Brian Graff: 36:15
It’s been great, Dave. I’m sure it won’t be your last. We’ll definitely have you on here again in the future. And, Tracy, we miss you. Uh, get, come back to us soon here, which I’m sure you will. And you Come back to us soon here, which I’m sure you will. And for now, we will go ahead and sign off and thank our loyal listeners and just tell you that we’ll see you next time on the Real Talk Retirement Show. Take care everybody.

Intro/Closing: 36:35
Thank you for tuning into today’s show. The Real Talk Retirement Show is created and produced by Conrad Siegel, an advisory firm that specializes in helping people prepare for retirement and beyond. If you want to learn more about our work or meet the team, you can visit conradsegelcom. Information on this show is for educational purposes only and should not be considered personalized investment tax or legal advice. Before making decisions, you should consult with the appropriate professionals for advice that is specific to your situation.